Advance Bank of Australia Ltd v Zarro & Ors [1991] QSC 294

TRANSCRIPT OF PROCEEDINGS State Reporting Bureau, 4th Floor, The Law Courts, George Street, . BRISBANE, 0. 4000 Tel. (07) 227.4360 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPRE 1 ME COURT OF QUEENSLAND CHAMBERS WHITE MASTER No.1105 of 1991 ADVANCE BANK OF AUSTRALIA LIMITED and PASQUAL ZARRO and WITAN INVESTMENTS PTY LTD and NOSNOR HOLDINGS PTY LTD and P Z HOLDINGS PTY LTD and DECANTER DEVELOPMENTS PTY LTD and 1 IREVIS. ED COPi.ES ISSUED Court Reporting Bureau Date: l 6 S'EP 19 91 Plaintiff First Defendant Second Defendant Third Defendant Fourtn Defendant Fifth Defendant -- 1 of 8 -- 100991 JUDGMENT CLAUDEL INVESTMENTS PROPRIETARY LIMITED and COOLAMURT NOMINEES LIMITED and HINATEE PROPRIETARY LIMITED and LAKE HOPE PTY LTD and LAKE EERIE PTY LTD·. and BALASHORE PTY LTD and SADDLEBOND PTY LTD and SABELLIA PTY LTD and WITAN INVESTMENTS (SURFERS PARADISE) PTY LTD BRISBANE •. DA'IE 10/9/91 4.05 P.M. JUDGMENT 2 Sixth Defendan Seventh Defend Eighth Defendai Ninth Defendan; Eleventh Defenc Twelfth Defenda Thirteenth Defendc, Fourteenth Defenda -- 2 of 8 -- ( 10 20 30 10099 JUDGMENT MASTER: This is a summary judgment application by the plaintiff against the first and third to fourteenth defendants for the sum of $4,670,032.15 together with interest occurring since the date of the issue of the summons which was on 7 August 1991. The defendants are guarantors of the obligations of the principal debtor, Witan Investments (Queensland) Pty Ltd, (Witan). Witan is liable under two facility agreements and has defaulted. Demands were made upon Witan which were not satisfied. Two guarantees are in place. It seems clear that all defendants represented before me are liable under the second guarantee. Both are all accounts guarantees. In addition, the first to the ninth defendants are liable pursuant to the first guarantee. Demands were made upon each of the defendant guarantors, of which more must be said in due 10 20 30 40 40 50 60 course, which have not been satisfied. The bases for the respondents resisting to the summary judgment application are twofold; the first is that demand has not been made against the defendants with the exception of the tenth and thirteenth defendants in accordance with the guarantees and the second is that the plaintiff has sold a security at under value. Clause 13.01 of the second guarantee provides as follows: Govt. Printer, Old. 3 50 60 -- 3 of 8 -- C 10 . 20 30 40 50 60 100991 JUDGMENT "13.01 (a) All notices, notifications, consents, demands, agreements and other documents and communications required or permitted to be given under this guarantee shall be in writing and may be addressedto the Bank at its or to the Guarantor at its address set forth herein or at such other address as a party may have substituted therefor by notice · to the other party and shall be delivered personally or sent by telex, facsimile, telegraph or by-ordinary mail postage prepaid and shall be deemed served: (i) in the case of telex, on receipt by the senderof the answerback code of the recipient at the end of the transmission; and (ii) in the case of facsimile, on transmission; and (iii) in the case of ordinary mail, on the seventh day in the place of address following the day of posting. ( b) The addresses, telex numbers and facsimile numbers of the Bank and the Guarantor shall, until other details are substituted in accordance with Clause 13.0l(a), be as set out in the Schedule." Mr Hack submits for the defendants that "be delivered personally" means to be delivered to a person. The various affidavits of notice of demand indicate that this occurred only in the case of the tenth and thirteenth defendants, see the affidavits of Williams and Code. In the case of the first defendant, notice was left in the letterbox of the address in the schedule; in the case of the third, ,sixth, seventh and eighth defendants by affixing it to the front door of the premises at 3 Bank Street, South Melbourne, Victoria - the address in the schedule; in the case of ihe fourth, fifth~ eleventh, twelfth and fourteenth defendants by sticking the letters up on the wall adjacent to the tenants' directory, at level 11, Broadview Terrace, Govt. Printer, Old. 4 1( 30 40 50 60 -- 4 of 8 -- (_ 10 20 30 40 50 60 100991 JUDGMENT 14 Marine Parade, .Southport,- again-the address in the schedule. I have concluded that that expression must be read in the context of the other words used-in clause 13.01 and that it takes its colour from them. These are all modes of delivery which may be utilised. The clause stipulates that notices be in writing and addressed as set out in the schedule to the guarantee (unless changed but which is not relevant here). To convert that expression into a requir,ement to deliver to a person seems to me to change completely the plain and grammatical meaning of the expression. As to the fifth defendant, it was sent a notice to the correct address as set out in the first guarantee. In relation to the first to ninth defendants covered by. the first guarantee, no demand is required-under that guarantee pursuant to clause 1 thereof. Accordingly in my view there is no merit in the first submission made.on behalf of .the respondent defendant. As to the second, the defendant~ rely upon the affidavits:of Messrs Cameron,_Burges~ and Zarro. ,One ofcthe.securities held by th_e plaintiff. is a shopping centre. at. the. Gold Coast which was.sold for$-7,4_68;_5.87 in June 1991. Mr Cameron,, whose expertise for this application was not challenged, was of the .opipion that the property would h 9 ve sold for between $8 and $10 million. -He criticises the marketing of the Govt. Printer, Qld 5 10 20 30 40 50 60 -- 5 of 8 -- ( 10 20 30 40 50 100991 JUDGMENT property deposing that a budget of $80,000 to $100,000 was appropriate rather than that of $32,000. A further criticism was 'that the sale was advertised to take place in ·January and t~at that ~as a poo~ time to sell. Another criticism was that the auction was scheduled to take place on Wednesday, which was a bad choice of day of the week. Mr Cameron further deposed to the fact that the siting of the auction at the Sheraton Mirage Hotel on The Spit at Southport was ill-advised. Another criticism advanced was that the vacancies in the shopping centre complex should have been filled prior to the auction. All of~these matters of opinion have been challenged and quite convincingly by material in reply by the plaintiffs but, nevertheless, they are matters of contest and ought, on the authorities, to go to trial. However, the amount in issue is relatively small. Mr Cameron deposes that $8 to $10 million would have been the expected price for the shopping centre, thus the $8 million may be taken to be accepted as reasonable by the defendants. This could have been achieved, according to Mr Cameron, by greater advertising expenditure~ $48,000 more than the $32,000 actually expended. Accordingly, using those calculations, the"set-off would amoun~t to $483,413. The first defendant's house property is a further security which Mr Zarro deposes to the bank holding. He exhibits a 1C 30 50 60 60 Govt. Printer, Old. 6 -- 6 of 8 -- ( 10 20 30 40 100991 JUDGMENT conditional contract fo~ the sale of that property for $4.7 million. Mr Hack for the defendants submits that this will substantially extinguish the debt. However, I accept Mr Doyle' s submission that there .is nothing in .the material. before me, and, particul.arly,. nothing in the guarantee documents, which would require the plaintiff to enforce its securities before resort can be had to the guarantorI see 0'Day v. Commonwealth Bank of Australia (1933) 50 CLR 200 at p 224 and 0'Donovan and Phillips, Modern Law of Guarantee at p 314 et seq 2nd edition. I conclude therefore that there is a triable issue in relation to the set-off of.the sale price of the shopping centre but that is limited .to the amount of $483,413. It has been suggested that security for the plaintiff's costs of the trial and the security for the payment of interest on the sum in dispute be conditions upon which leave is granted. However, in view of the_considerable sum which will be either by way of judgment or by way. of payment into Court, which I shall require, I decline to make any conditions on the leave to defend. 10 20 30 40 50 50 60 MASTER: I give the outline of what my orders will be. Counsel to bring i.n. draft minutes of order and reflect them. The first one will be that there be judgment for the plaintiff against the first and third t.o fourteenth defendants in the sum of$ - that will be provided, Mr Doyle, by your side. Govt. Printer, Old 7 60 -- 7 of 8 -- ( 10 20 100991 JUDGMENT with the approval of Mr Hack's side some time tomorrow. MASTER: Stay the judgment for seven days, that is, until 17 September 1991, to enable the respondents to the summons to bring an application to stay execution of the judgment for a further period. Such application to be brought on or before 17 September 1991 or such other date as may be agreed between the parties. Give unconditional leave to the first and third to fourteenth defendants to defend the balance of the action. Now, directions as to the delivery of the defence: this is 30 a matter that ought to be disposed of quite speedily in my 40 50 60 opinion. MASTER: Defence within fourteen days, (and put the dates in). Reply seven days after delivery of defence. Mutual discovery fourteen days after close of pleadings. inspection seven days after that. I will certify the action for a speedy trial. Govt. Printer, Old. 8 Mutual 1( 30 50 60 -- 8 of 8 --