AGC (Commercial) Ltd v City Centre Toowoomba Pty Ltd & Ors [1993] QSC 306

( \ ( (\ IN THE SUPREME COURT OF QUEENSLAND No. 470 of 1991 BETWEEN: AND: AND: AND: AND: AND: AND: AND: AND: A.G.C. (COMMERCIAL) LIMITED (ACN 002 944 569) (formerly Standard Chartered Finance Limited) CITY CENTRE TOOWOOMBA PTY LTD (ACN 010 629 697) Plaintiff First Defendant WESTERN PROPERTIES DEVELOPMENTS PTY LTD (ACN 010 379 647) in its own capacity and in its capacity as Trustee for the "Western Properties Unit Trust" Second Defendant WESTERN PROPERTIES PTY LTD ACN 009 934 105) in its own capacity and in its capacity as Trustee for the "Jamies Lodge Trust" JIONA INVESTMENTS PTY LIMITED (ACN 009 963 553) GEORGE SKLAVOS IOHN STEPHEN JEFFERIES EUSTACE JOHN MARTIN JOHN PETER FEROS JUDITH FAY FEROS JUDGMENT - DERRINGTON I. Delivered the 8th day of October 1993 Third Defendant Fourth Defendant Fifth Defendant Sixth Defendant Seventh Defendant Eighth Defendant Ninth Defendant -- 1 of 5 -- 2 This is an application for summary judgment pursuant to 0.18 of the Rules of the Supreme Court against the first, second, third, fifth, sixth and seventh defendants. The claim is for the balance of moneys owing under a loan and interest thereon as secured by a bill of mortgage and guarantees. The sum claimed apart from interest is the balance of the advance less an amount received on a mortgagee sale. ( The defendants rely upon three suggested defences: 1. An allegation that the mortgaged property was sold substantially below its ( ' correct value due to the negligent conduct of the plaintiff; "' 2. Fraud on the part of two members of the real estate agency which was the agent of the plaintiff in the sale of the mortgaged premises; and 3. Misleading and deceptive conduct on the part of the plaintiff's servant or agent in informing the defendants through the fifth defendant that the fourth, eighth and ninth defendants were people of financial substance capable of meeting their obligations as eo-guarantors; and without that assurance none of the defendant respondents to this application would have entered into any part of the transaction. As to the first, there appears to be some serious issue to be tried for the complaint seems to have been contemporaneous with the sale of the mortgaged property. The second ground is deposed to in the vaguest of possible terms without any reference to the source of suggested belief of the deponent. It should be treated with scant respect. -- 2 of 5 -- 3 The third ground has been raised very recently for the first time notwithstanding long negotiations for settlement between the parties. It is difficult to see how total success in this matter would provide a defence other than by way of relief to those parties who are guarantors in respect of the amount of contribution which they could have lost if the information were not true. There could be no relief to the recipient of the moneys received by way of loan and interest thereon. In any case, in view of the proposed order the guarantors will have the j ( ''. opportunity of making out the suggested defence. The mortgage document contains a clause requiring the payment of the sums due under it without any deduction for counterclaim or set-off. The guarantees ( contain a similar though not so explicit clause and it has not been argued that it is not of the same style as that contained in the mortgage. The effect of this has been made clear in The Fedora (1986) 2 Lloyd's L. REP. 441. It means that in applications for summary judgment, the mortgagee is entitled to have judgment for the sum due under the loan but with the mortgagor and guarantors to have liberty to set-off and/or counterclaim. The question of stay of the judgment is a discretionary matter, but in normal circumstances a commercial entity such as the plaintiff here should be free of any such stay. That is subject to some qualification where fraud is alleged. In such cases the Court may exercise its discretion, particularly in respect of a stay. Although the allegation of fraud in the present case is very suspicious, it is a factor which should not be disregarded along with other matters relevant to a stay. There has been substantial delay, particularly but not only over the last ten months in this matter. Much of it is accounted for upon the basis that long -- 3 of 5 -- ( ( 4 negotiations for settlement have taken place between the parties. Nevertheless there was something less than speed in the plaintiff's pursuit of recovery of its moneys, the action having commenced in 1991. Added to that is the need for the parties to canvass on the trial of the set-off and counterclaim by the defendants all of the issues which appear to be raised by the defence. Moreover, it was fairly conceded that the plaintiff's practical prospects of recovering any judgment will not be adversely affected by a stay, and its loss of the use of its moneys can be cured by an order for the payment of interest, which is what it would have received by using its moneys. It is true that delay no longer constitutes a jurisdictional bar but goes to the discretion of the Court: Queensland Truss & Frame Pty Ltd v. Grenadier Constructions No. 2 Pty Ltd [1992] 2 Qd.R. 428, 431. Because of the total effect of these competing factors, it would be just to give judgment for the plaintiff against the defendants in the amount claimed but subject to a stay of judgment pending the determination of any set-offs or counterclaims by the defendants. They should have liberty to proceed with such set- offs or counterclaims conditional upon their paying to the plaintiff the interest payments presently falling due under the mortgage. If there is any question as to the amount thereof, that may be resolved by this Court and to that effect liberty to apply is given. Accordingly there is judgment for the plaintiff against the first second third fifth sixth and seventh defendants in the sum of ${1fo,_ 3.::f~. tt. The said defendants are to have liberty to proceed with their set-offs and counterclaims subject to their payment to the plaintiff of interest payments falling -- 4 of 5 -- 5 due on the said sum in accordance with the bill of mortgage exhibited to the affidavit of Paul Charles Dashwood filed herein on 30th September 1993. The said judgment is stayed pending the determination of the said set-offs and counterclaims or until further order. The parties are to have liberty to apply on three days' notice in writing. Costs are to be costs in the cause. (- ' -- 5 of 5 --