Elders Finance Ltd v Sydney Strata Securities Pty Ltd [1990] QSC 208

10 20 30 40 50 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE RYAN BRISBANE, 21 JUNE 1990 No. 621 of 1990 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: ELDERS FINANCE LIMITED Plaintiff - and - SYDNEY STRATA SECURITIES PTY. LTD. Defendant JUDGMENT HIS HONOUR:. On 1 May 1990 the plaintiff issued a writ 10 20 of summons claiming recovery of possession 6f land as mortgagee 30 the defendant having defaulted under the terms of the bills of mortgage and possession of the lands having been demanded. An appearance was entered for the defendant on 21 May. On 24 May a summons was filed on behalf of the plaintiff seeking an order that summary judgment pursuant to the provisions of 0.18 r .1 be entered for the plaintiff against the defendant and that as a consequence the plaintiff recover from the defendant the possession of the lands situated at various units at 107 to 109 Stanhill Drive, Chevron Island and at 113 Stanhill Drive, Chevron Island. On 29 May 1990 an application was made on the part of the defendant that the proceedings be transferred to the Federal Court of Australia New South Wales District Registry General Division and that further proceedings herein be stayed -Govt. Printer, Qld. l 40 50 60 -- 1 of 11 -- 10 20 30 40 50 60 pending the hearing of matter Gl23 of 1990 in the Federal Court of Australia New South Wales District Registry General Division. Mr. Jones, a senior manager in the employ of the plaintiff has deposed that the defendant is the registered proprietor of the relevant lands. On 9 January 1989 the defendant executed in favour of the plaintiff various bills of mortgage over the lands to secure the repayment to the plaintiff of "the moneys hereby secured", as that term is defined in the mortgages and a deed of master agreement made between the plaintiff and the defendant and dated 9 January 1989. The mortgages provided inter alia: "(a) that if at any time default is made by the defendant in payment of any interest owing hereunder at any ~i~e allmoneys hereby secured and or costs, charges and expenses as aforesaid shall thereupon as at any time thereafter become and be payable to and be recoverable by the plaintiff as if the time for payment thereby had arrived; (b) that the powers of sale and possession, distress, ejectment, foreclosure and al 1 other powers contained ih the Real Property Act 1861-1981 and the Property Law Act 1974-1981 as amended may be fully exercised in respect of the land or any part thereof at any time after default in payment of any of the moneys hereby secured." -Govt. Printer, Qld. 2 I 10 20 30 40 50 60 -- 2 of 11 -- 10 20 30 40 On 11 February and 11 March 1990 the defendant made default under the mortgages by failing to pay an interest instalment due on each of those dates. On 16 March the plaintiff exercised its option to declare the whole of the "moneys hereby secured" payable to and recoverable by the plaintiff. On the same day, it made demand 9ni.the defendant for $1,126,117.90. On 27 March the plaintiff caused a Notice of Power of Sale under s.84 of the Property Law Act to be served on the defendant. It is deposed the defendant had not satisfied the demand, had not remedied the default referred to in the notice, remained in default and remained in possession of the land. Mr. Dempsey, a director of the defendant, deposes that the defendant borrowed a substantial sum from the plaintiff for a property at Chatswood, a Sydney suburb. In 1988 the directors of the defendant decided to engage in a new property development. He states that in July 1988 Mr. Kristap; a representative of the plaintif~ told him that "We will arrange finance from Elders to fund the purchase and construction of the project." Late in 1988 the defendant entered into contracts to buy some of the properties which are the subject of these proceedings. The money to complete the projects came from the defendant's own funds. He deposes that he was told by Mr. Kristap~ "The loan is definitely O.K." In January 1989 the defendant completed the purchase of the balance of 10 2.0 30 40 50 50 60 the properties which form the basis of this claim. The purchase moneys were provided by the plaintiff, and the plaintiff at the same time reimbursed the defendant the amount of the mortgages in respect of those properties for which completion had taken place at the end of the previous yea . 60 ,f;-r-•;• 0 :inter, Old. 3 -- 3 of 11 -- 10 20 30 40 50 60 Late in January 1989 Mr. Krista_p confirmed with him that the plaintiff would provide the finance to enable the defendant to complete the purchase of the real estate for the development. In June 1989, the defendant entered into contracts to buy the remaining six units necessary to acquire the real estate for the development. By arrangement between him and Mr. Krisbag settlement of the sales to the vendor took place in December 1989. In September 1989 Mr. Swan, who had replaced Mr. Kristap, told him the money would not be forthcoming, and the plaintiff would not be funding the project. Mr. Dempsey deposes the money needed to finance the :deveJopment was to cover not only the cost of acquisition of the land, but also the demolition of existing buildings and the erection of new buildings, and landscaping and marketing of the development. As the plaintiff had failed to lend the moneys needed to complete the development, the defendant had to place the development in abeyance. On 15 March 1990 the defendant commenced.,proceedings against the plaintiff in the Federal Court of Australia, New South Wales District Registry General Division. This application came before Davies J. on 12 April 1990 when certain directions were made, and the matter was stood over to 19 July 1990. In a further affidavit, Mr. Dempsey deposes that at a second meeting with Mr. Kristap in or about:July 1988, he explained to him the arrangement the defendant made with the plaintiff in Sydney in relation to the development at Chatswood, and Mr. Kristap agreed that Elders would then lend 85 per cent of the purchase price of each property whilst the G 214-Govt. Printer, Old. 4 10 20 30 40 50 60 -- 4 of 11 -- 10 20 30 40 50 properties were being bought individually. He said further when all the purchase contracts had been executed and the site was tied up and council approval given, Elders would provide finance for 100 per cent of the purchase price of the properties, and 100 per cent of the development costs of the developments provided the defendant company paid interest monthly on the borrowing. The total purchase price for the eight properties, the subject of this action, was $1,542,000. Pursuant to the agreement between the plaintiff and the defendant, the plaintiff loaned to the defendant in January the sum of $1,083,000 which represented 85 per cent of the total valuation of the properties, and executed bills of mortgage over the properties. It is disposed that in breach of the agreement, Elders did not provide finance for the purchase of the six properties in relation to which the defendant had expended $146,500 prior to December 1988, and further it did not advance to the defendant a sum representing the difference between 85 per cent of the valuation of the properties, and the actual price to be paid for the properties by the defendant. Because of its failure to do so, the defendant had not received from the plaintiff the sum of $498,000 and had not been reimbursed the sum of $146,500. It is deposed that it was the intention of the defendant to use those moneys towards meeting its monthly interest payment commitments to the plaintiff, and because of the failure by the plaintiff to provide finance and reimbursement, the defendant was unable to meet the interest payments due under the G 214-Govt. Printer, Old. 5 10 20 30 40 50 60 -- 5 of 11 -- 10 20 30 40 50 60 By the proceedings in the Federal Court the defendant claims specific performance of an agreement to provide finance to enable it to canplete: the purchase of five properties and to erect certain buildings. Alternatively, it seeks a declaration that Elders Pty~ ~td. is estopped from denying the existence of the .binding contra~t. It seeks alsodamages and a declaration that Elders is not entitled to possession of the buildings erected on eight lots, and a declaration that Elders is not entitled to exercise any of the remedies usually applying in the case of a mortgagor or in default in respect of the bills of mortgage. It was submitted for the plaintiff that it was plain there had been default by the defendant and there was nothing in Mr. Dempsey's affidavit which sets up any equitable ground 10 20 or any ground based on the Trade Practices Act which could 30 effect the right of the plaintiff to summary judgment. It was submitted that there was no triable issue. For the defendant, it was submitted there was evidence of deceptive or misleading conduct, and there was evidence of reliance on representations by the plaintiff that money would be provided. It does seem to me there is evidence which raises a triable issue in relation to breach of contract, promissory estoppel and under s.52 of the Trade Practices Act. There is, I consider, evidence that the plaintiff engaged in conduct that was .misleading or likely to mislead, that the representations he made were calculated to induce the defendant to enter into a contract, and that the representee relied on the representation to enter into a contract. It was submitted for the plaintiff that any claims of the -Govt. Printer, Qld. 6 40 50 60 -- 6 of 11 -- 10 20 30 40 50 60 defendant must be for unliquidated damages only. For the defendant it was submitted that it was entitled to assert a cross claim or a set off. In this regard, I accept that, as the Full Court of the Supreme Court of Victoria said in Indrisic v. General Credits (1985)v;~:·2s1 that in order to rely upon a cross clai as an equitable set off, there must be such a nexus between the claim and the cross claim that the cross claim can be said to impeach the plaintiff's claim. Old. 7 10 20 30 40 50 60 -- 7 of 11 -- 10 20 30 40 so 60 In Eagle Star Nominees v. Merril (1982) V.R. 557 it was held that a claim for unliquidated damages may not be raised by a purchaser of land to resist a claim by the vendor for possession or for payment of the purchase moneys unless the purchaser's claim can be said to impeach the title to the vendor's legal demand. In British Anzani. v. International Marine Ltd.(1980}1Q.B. 137 Forbes J. held that it was not necessary that the cross- claim necessarily arises under the same ihstrument as the claim, but that there must be that close connection between the claim and cross-claim which equity requires. Cases to which he referred indicated that if it would be manifestly unjusti where that close connection exists to allow a plaintiff to recover without taking into account the cross-claim, there is a right of set-off in equity of an unliquidated claim. See (1980) lQ.B. atp.145. I am satisfied with respect to the claim that there is a question in dispute that ought to be tried, and I give the defendant leave to defend on condition that it pays an amount into Court. It appears that the interest outstanding on the loss as at 1 June 1990 was $95,740.38. To that sum should be added an interest amount of $765.38 per day for six months on the basis that the matter will probably not come to tric::tl for at least six month& That amounts to $233,509. In order to give adequate protection to the mortgages~I give leave to defend on condition that the defendant pay that amount into Court. I turn now to the application to transfer the proceedings. The application was supported under s.5 (1) (b) (ii) of the Jurisdiction of Courts (Cross-vesting) Act 1987, but I do not -•Ar, Qld. 8 10 20 30 40 50 50 -- 8 of 11 -- f \ \ 10 20 think that having regard to the matters set out in that provision that it is more appropriate that the relevant proceeding be determined by the Federal Court. It was submitted that Westpac v. Altran (1987) 74 A.L.R. 45 was decisive, but that case was decided prior to the amendment of s. 86 of the Trade Practices Act by the Jurisidic~~on of Courts (Miscellaneous Amendments) Act 1987~! But I am required to transfer a proceeding to the Federal Court where it is pending in the Supreme ,,court and it appears to me that it is related to another proceeding pending in the Federal Court and it is more appropriate that the proceeding be determined by the Federal Court. The present proceeding pending in this Court appears to be related to the proceeding commenced by the defendant in the Federal Court of Australia. There are strong 10 20 30 30 40 50 60 considerations which suggest that the proceeding should be determined in this Court. The agreements in question were negotiated and made in Queensland; the relevant documents are in Queensland; and the law of Queensland is extensively referred to in the documents. Why, then, should it be considered more appropriate that the proceeding be determined by the Federal Court? The answer put forward on behalf of the defendant was that proceedings had been commenced by it in Sydney on 15 March 1990, and that certain directions were given on 12 April 1990 at a direction hearing before the Federal Court. The proceedings in this court were not initiated until 1 May, and the summons seeking summary judgrnent was not filed until 24 May. Under the directions given on 12 April, the respondent was to request particulars by 23 April, the - ·•nter, Old. 9 40 50 60 -- 9 of 11 -- { 10 · 20 30 40 so 60 applicant was to provide particulars by 30 April; the respondent was to file and serve its defence by 21 May; the applicant was to file and serve his reply by 28 May 1990; parties were to exchange verified lists of documents on or before 18 June; parties were to allow inspection of documents by 25 June and parties were to exchange proofs of evidence by 17 July. It is deposed that it is likely that the proceedings in the Federal Court will be heard late this year. On balance, I consider that it is more appropriate that the proceedings in this court be determined by the Federal Court, having regard to the fact that the proceeding in that court has progressed to the stage it has attained, and that the proceeding before me is closely linked with the proceeding in the Federal Court. Accordingly, I make an order in terms of para. 1 and 2 of the defendants summons of 29 May 1990. -Govt. Printer, Qld. 10 10 20 30 40 50 60 -- 10 of 11 -- 10 20 30 40 50 60 In relation to the matter of costs, it seems to me that there is no reason why the costs should not be reserved to the judge who will try this matter. The whole of the material which is before me will be before him including my~reasons for deciding the way I have. I will leave the matter for him to decide. So far as the security is concerned, the order I made will stand. -Govt. Printer, Qld. 11 10 20 30 40 50 60 -- 11 of 11 --