Bryant v Wild & National Australia Bank Ltd [1990] QSC 179

/ ,l ( 10 20 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR JUSTICE MOYNIHAN BRISBANE, 13 JUNE 1990 No. 3 7 7 8 of 19 8 9 J 0 qo 11-, .Sv (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without tne wri~ten authority of the Chief Court Repor~er,Court2Reporting Bureau.) BETWEEN: JOHN BRYANT -and- ROBERT McGREGOR WILD -and..:.. Plaintiff First Defe.ndant NATIONAL AUSTRALIA BANK LIMITED Second Defendant JUDGMENT 10 20 30 30 40 so 60 HIS HONOUR:, Essentially, I have said that I am prepared to grant the relief sought by the plaintiff. I publish my reasons. --Bovt. Printer, Qld. 1 40 50 60 -- 1 of 5 -- n / - ' / \ IN THE SUPREME COURT OF QUEENSLAND BETWEEN: JOHN BRYANT ROBERT McGREGOR WILD NATIONAL AUSTRALIA BANK LIMITED JUDGMENT - MOYNIHAN J. Delivered the T 1-t IIZ'Tl:l:NTH day of ·.svtvc No. 3778 of 1989 Plaintiff First Defendant Second Defendant 1990 This action arises out of the plaintiff and the first defendant having guaranteed to the second defendant, by an \,__) instrument dated 15 July, 1988, the obligations of a company called Corrales Pty. Ltd. in respect of accommodation provided (:) it by the defendant Bank. It is convenient to note at this stage that the liability of the sureties was limited by the instrument to $5,500,000.00 and the equivalent of a year's interest calculated in accordance with cl. 3 of the instrument of guarantee. The evidence revealed that Corrales Pty. Ltd. went into provisional liquidation towards the end of 1989 and since that date, by the terms by which it was provided, the bank's accommodation was no longer available to the principal debtor. There was also evidence to the effect that the company is not -- 2 of 5 -- 2 trading or otheiwise erigaged in activity except, those directed to its winding up~ By notice-dated 6 October, 1989 the defendant Bank called on the ·plaintiff and the first defendant to pay "$5,500,000.00 plus interest accumulated· from 6/10/88" · pursuant to the guarantee. To date nothing has been paid. There was evidence, and there is no occasion not to accept it, indicating that the bank was prepared to take steps to recover the amount of the indebtedness from the plaintiff leaving it for him to seek contribution from his co-surety. The evidence is that the debt was $623, 6:88. 15 as at 30 March, 1990; that interest from that date to the trial (4 June, 1989) totalled $22,502.00 and that interest was accruing at $344.53 per day. The circums-tances being those I have outlined the plaintiff instituted these proceedings against the Bank and his co-surety. So far as is now relevant he seeks a declaration that, as against the latter, he- is entitled to contribution of one half subject of course to the limit imposed by the guarantee and to which I have referred. The plaintiff also seeks a declaration that upon his paying his contributi6n the first defendant is bound to indemnify him against further liability and an order that on that basis the first defendant pay the other half to the bank or otherwise exonerate the plaintiff. The plaintiff gave evidence of his financial position which was not controverted. This established that his position was such that · were he obliged to discharge the whole of the principal's liability to the bank he could only~o so by selling (_) 0 -- 3 of 5 -- 3 farming properties which he owns on most unfavourable terms. He, as I understand it, no longer works himself but depends on the rent earned by the properties to which ,I have referred for income. There was on the other hand evidence that the plaintiff had reasonable prospects of obtaining financing so as to.permit him to pay one half the liability under the guarantee without his having to dispose of the properties to which I have referred. There is little evidence as to the financial position of the (; first defendant and certainly nothing to suggest that he. cannot pay his share. (_) u I should mention at this stage that counsel for the first defendant, who did not give or call evidence, acknowledged (in my view undoubtedly correctly) that there were insurmountable obstacles in the path of the first defendant obtaining the relief claimed by a count~r claim. There is no need for me to concern myself further with this aspect. The defendant: Bank was represented at the trial but its representative took no part in the trial and made no submissions. The issues arising on the pleadings are more wide ranging than the issues litigated at the trial. The outcome of the trial turns essentially on whether cl. 7 of the instrument of guarantee excluded the plain&iff's right to contribution at least pending full discharge of the principal debt, perhaps at least to the extent of the guarantee. Clause.? of the instrument of guarantee provides:- "Whilst any moneys or other liabilities are owing or outstanding from the customer to the Bank (whether or not the guarantor is liable hereunder to make payment to the Bank in respect thereof) the guarantor will not in any way claim the benefit or seek the transfer of any security or any part thereof and generally waives -- 4 of 5 -- 4 in favour of.the Bank all rights against the Bank and the customer and any other person, estates and assets including rights of subrogation, contribution and marshalling." It is material to note that, cl. 7 aside, there is nothing else in the instrument of guarantee which appears to be in any way to regulating the rights of the co-sureties as between one another. Clause 7 is, to my mind, directed to regulating the rights of each surety "as against" and "in favour of" the Bank and not to the regulation of the rights of the sureties as between themselves. In the face particularly of those aspects of the clause which I have just identified the reference to "subrogation contribution and marshalling" in the clause cannot operate to extend its operation to the regulation of relationships between co-sureties in the way contended for by the first defendant. . .. () CJ Counsel for the plaintiff submitted that the authorities supported a right to quia timet relief when accounts between the Q creditor and principal were closed, where there was an accrued and definite liability immediately due and payable and where (as here) there was a demand with the prospect of recovery by the bank in reliance on its surety. He referred particularly to the Modern Law of Guarantee by O'Donovan and Phillips at p. 438, Wolmershausen v. Gollick (1893) 2 Ch. 514 and Molten v. Roberts (1977) Qd. R. 135. The circumstances being those to which I have referred and, any submissions counsel may wish to make as to the form of the order, I am prepared to grant the relief sought by the plaintiff. 0 -- 5 of 5 --