Equititrust Limited v Gamp Developments Pty Ltd & Ors (No 2) [2009] QSC 168

SUPREME COURT OF QUEENSLAND CITATION: Equititrust Limited v Gamp Developments Pty Ltd & Ors (No 2) [2009] QSC 168 PARTIES: EQUITITRUST LIMITED ACN 061 383 944 (plaintiff) v GAMP DEVELOPMENTS PTY LTD ACN 106 875 147 (first defendant) and ALAN LESLIE IKIN (second defendant) and GRAHAM LINTON CLEMENT SPOTTISWOOD (third defendant) FILE NO/S: BS 6057 of 2008 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 19 June 2009 DELIVERED AT: Brisbane HEARING DATE: 16 June 2009 Supplementary written submissions on 16 and 18 June 2009 JUDGE: Applegarth J ORDERS: 1. Pursuant to rule 294(2) of the Uniform Civil Procedure Rules the plaintiff be granted leave to make the application filed on 28 May 2009. 2. The application for summary judgment made in paragraph 2 of that application be dismissed. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – SUMMARY JUDGMENT – where basis of plaintiff’s claim is not pleaded – whether summary judgment may be given under UCPR r 292 in respect of a claim that is not pleaded – where a cause of action against a guarantor arose when a demand was made after the commencement of the proceeding – whether the claim which the plaintiff now seeks to make against the third defendant is within the claim made or the relief sought in its unamended claim Uniform Civil Procedure Rules 1999, r 5, r 22, r 139, r 292 -- 1 of 7 -- 2 Carey v Carey [2005] QDC 120, cited Equititrust Ltd v Gamp Developments Pty Ltd & Ors [2009] QSC 115, applied Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, cited COUNSEL: G J Handran for the plaintiff G Coveney for the third defendant SOLICITORS: Tucker & Cowen for the plaintiff Bell Legal Group for the third defendant [1] The plaintiff reapplies for summary judgment against the third defendant. On 15 May 2009 McMurdo J granted summary judgment against the first defendant, but declined to grant summary judgment against the third defendant. 1 Summary judgment was granted against the first defendant in the amount of $5,428,226.61, being the amount of the outstanding principal owed by the first defendant to the plaintiff arising from a loan or loans of money. The argument raised by the third defendant upon which he succeeded in resisting summary judgment against him was that a demand upon him as guarantor was required before a cause of action accrued. The third defendant’s liability to pay under the Deed of Guarantee and Indemnity dated 19 September 2008 arose upon demand, and there was no evidence of such a demand. McMurdo J concluded: “The point precludes the grant of summary judgment against the third defendant at least until there is such a demand. I was not asked to adjourn the application to enable that demand to be made. Therefore this application for summary judgment against the third defendant must be dismissed. This will not preclude the making of another application for summary judgment when the demand is made.”2 Demand was made by the plaintiff upon the third defendant by notice dated 15 May 2009. [2] The third defendant submits that the new application for summary judgment should be dismissed because the plaintiff seeks judgment on the basis of a cause of action not pleaded in the statement of claim. The same argument was made in respect of the plaintiff’s application for summary judgment against the first defendant before McMurdo J. This argument failed because the plaintiff’s cause of action against the first defendant was and remained the same: one for the recovery of its debt. McMurdo J stated: “The power to give summary judgment to a plaintiff is according to the terms of r 292. The rule requires attention to a plaintiff’s claim. It does not expressly refer to a plaintiff’s pleading. A plaintiff’s claim must be that within the document by which the proceedings were commenced or as that has been amended with the leave of the court or a registrar. A plaintiff cannot seek summary judgment for relief which is not within its claim as filed or as duly amended. There is no express requirement within r 292 for the plaintiff’s case for that relief to be entirely according to its pleading. But ordinarily that 1 Equititrust Ltd v Gamp Developments Pty Ltd & Ors [2009] QSC 115. 2 Ibid at [20]. -- 2 of 7 -- 3 would be required because a defendant is entitled to be fairly informed of the case against it. And because summary judgment may be sought only after a Defence is filed, an application for judgment upon an unpleaded case might be considered premature. Nevertheless they are discretionary considerations. In my view the rule does not limit the power to give summary judgment to instances where the plaintiff’s argument precisely accords with its pleading. In the present case, there could be no disadvantage to the first defendant in not having an amended statement of claim which pleads the September 2008 agreement and the default under that agreement. To the extent that the plaintiff’s argument goes further than its pleading, this provides no basis for not giving judgment if the plaintiff establishes that there is no real prospect of defending all or part of its claim and there is no need for a trial of the claim or part of the claim.”3 I respectfully agree with his Honour’s analysis. Under r 292 of the Uniform Civil Procedure Rules 1999 (UCPR) the Court may give judgment “for all or part of the plaintiff’s claim”. In accordance with the approach which commended itself to McMurdo J, and in accordance with the terms of r 292, attention must be paid to the plaintiff’s claim against the third defendant. [3] The document that is described in the UCPR as a claim is filed pursuant to rr 9 and 22 and may be amended pursuant to r 377. A plaintiff must state briefly in the document “the nature of the claim made or relief sought in the proceeding”. 4 The claim as filed on 27 June 2008 is unamended. Relevantly, it seeks against the third defendant (and the first and second defendants as well): “1. the sum of $15,485,000 being the balance of the Principal owning [sic] pursuant to the Loan Agreement, the Mortgage and the Guarantee; 2. the sum of $446,367.55 being the Expiry Fee owning [sic] pursuant to the Loan Agreement, the Mortgage and the Guarantee…” The Guarantee referred to in the claim is identified by the attached statement of claim as a Deed of Guarantee and Indemnity between the plaintiff and the second and third defendants dated 7 June 2007. [4] The state of affairs that existed when the proceedings were commenced in June 2008 and when the first and third defendants filed a defence in July 2008 were altered by entry by the parties into a letter of agreement dated 18 September 2008 (“the agreement of September 2008”) in which all three defendants acknowledged in writing that: “(a) as at 19 September 2008, the amount of $19,424,983.16 ($15,517,527.08 of which is principal)... $528,960.74 of which is expiry fee and $3,378,495.34 (which is interest at the higher rate) is owing by the [first defendant] to [the plaintiff] under the Loan Facility; (b) interest continues to accrue on that at the higher rate...” 3 Ibid at [12], citations omitted. 4 UCPR r 22(2)(a). -- 3 of 7 -- 4 A Deed of Variation was executed by all parties dated 19 September 2008 and a further Deed of Guarantee and Indemnity was executed by the plaintiff and the second and third defendants of the same date. The material terms of these agreements are described in the judgment of McMurdo J,5 and I shall not repeat those matters in this judgment. [5] The plaintiff proved that it was entitled pursuant to these agreements to accelerate the date for repayment of the principal sum. The main argument of the first and third defendants before McMurdo J was that the plaintiff was not entitled to judgment because its statement of claim made no reference to the agreement of September 2008 or to the default in the performance of the obligation under that agreement to withdraw the Defence, and, so it was argued, the plaintiff was suing upon a cause or causes of action which had not been pleaded.6 McMurdo J did not accept that argument “at least insofar as the claim against the first defendant [was] concerned”. 7 The plaintiff’s cause of action against the first defendant was and remained the same, namely one for the recovery of its debt. 8 [6] The issue for my determination is whether the claim in respect of which the plaintiff now seeks summary judgment to be given against the third defendant is within the claim made or relief sought in its unamended claim. Expressed in different terms, the issue is whether the cause of action against the third defendant remains the same as the one sued upon in its claim. The claim against the third defendant that is made in the claim filed on 27 June 2008 is for the payment of monies owing pursuant to a Deed of Guarantee and Indemnity dated 7 June 2007. The cause of action upon which the plaintiff now seeks to obtain judgment is one which only came into existence upon the making of the demand dated 15 May 2009, and relies upon the agreement of September 2008. [7] The Notice of Demand to Guarantor for Payment dated 15 May 2009 that was sent to the third defendant is based upon the Deed of Guarantee and Indemnity between the plaintiff and the third defendant dated 19 September 2008 in which the third defendant guaranteed certain obligations of the first defendant to the plaintiff. Clause 3.1 of that deed provides: “The Guarantor unconditionally guarantees to the Lender the punctual performance and observance by the Borrower of all the covenants, terms, conditions and other provisions of the Security including without limitation, the payment of the Money Secured by the Borrower at the time or times and in the manner provided for in the Secured Agreement and/or the Security and undertakes to pay the Money Secured to the Lender on demand.” (emphasis added) The amount of outstanding principal owed by the first defendant to the plaintiff, as determined by the judgment of McMurdo J, namely $5,428,227.61 falls within the definition of “Money Secured” in the Deed of Guarantee and Indemnity dated 19 September 2008. Clause 24.1 of the Deed relevantly provides “the Guarantor shall upon demand immediately pay to the Lender the Money Secured.” (emphasis added) 5 Equititrust Ltd v Gamp Developments Pty Ltd supra at [4] – [8]. 6 Ibid at [10]. 7 Ibid at [11]. 8 Ibid. -- 4 of 7 -- 5 [8] The liability of the third defendant to pay the amount determined by the judgment to be owing by the first defendant to the plaintiff arose upon demand. This is a material distinction between the liability of the third defendant, and the liability of the first defendant, as determined by McMurdo J. As his Honour stated: “The case of a guarantee which requires a demand is different from that, which I have discussed, in relation to a present debt expressed to be payable by the principal debtor on demand. A demand upon [the] guarantor is essential because in the case of a sum of money payable under a collateral agreement, no cause of action arises until the demand is made: see Phillips & O’Donovan, The Modern Contract of Guarantee (2004, 4th ed) at [10.1710] and the cases there cited.”9 [9] The claim which the plaintiff now seeks to make against the third defendant is not within the claim made or the relief sought in its unamended claim. It also is not pleaded in the statement of claim, but that is not the reason that I decline to enter summary judgment. In some cases, and the plaintiff’s case against the first defendant is one of them, the power to give summary judgment exists where the matters relied upon by the plaintiff do not precisely find expression in the statement of claim, but fall within the plaintiff’s claim. This is not such a case. The cause of action upon which the plaintiff now sues the third defendant, and in respect of which it seeks summary judgment against him, was not a cause of action that it made the subject of its claim. The plaintiff may have had a cause of action against the third defendant upon the Deed of Guarantee and Indemnity dated 7 June 2007: a matter which I am not required to decide, and am not in a position to decide. The plaintiff did not have a cause of action, and did not assert a cause of action based upon the Deed of Guarantee and Indemnity dated 19 September 2008, when it commenced the proceeding. It did not have such a cause of action until its recent demand. It has not obtained leave to amend its claim to incorporate such a claim. [10] In his judgment of 15 May 2009 McMurdo J states: “A plaintiff cannot seek summary judgment for relief which is not within its claim as filed or as duly amended.”10 I consider that this is what the plaintiff seeks to do in the present application. Accordingly, I decline to grant summary judgment against the third defendant. Other matters [11] The third defendant advanced a further argument, namely that the plaintiff’s action on the guarantee was not an action to recover a debt. The third defendant submitted that the action on the guarantee was one which sounds in damages. The plaintiff’s supplementary submissions on the point contend otherwise. In short, the plaintiff submits that its cause of action against the third defendant is an action on the guarantee for a money sum rather than a claim in damages. 11 It submits that the subject of the guarantee “is the payment of a debt or a sum of money which has accrued due” 12 and is a claim for a liquidated amount. The third defendant contends in supplementary submissions in response that his undertaking falls within 9 Supra at [19]. 10 Ibid at [12]. 11 (1988) 166 CLR 245; see O’Donovan and Phillips Modern Contract of Guarantee at [10.3100]. 12 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 255. -- 5 of 7 -- 6 the second category identified by Mason CJ in Sunbird Plaza Pty Ltd v Maloney. 13 This is “an undertaking that the debtor will carry out his contract”, and the third defendant submits that it follows that the plaintiff’s cause of action against him is for breach of the contract of guarantee, not debt. It is unnecessary for me to resolve this point. If the plaintiff’s claim is a money claim, then for the reasons that I have given, that claim only arose upon the making of the demand dated 15 May 2009. [12] The present inability of the plaintiff to obtain judgment against the third defendant may appear to be an odd result in a matter in which there is no factual dispute. The third defendant does not dispute that the agreement of September 2008 was entered into, that he executed the Deed of Guarantee and Indemnity dated 19 September 2008, that the judgment sum is guaranteed by that Deed, that demand has been made upon him to pay the sum and that he has failed to do so. His reliance on the absence of a pleading of these uncontested matters seems unmeritorious, especially where, in substance, if not in form, a compromise of the plaintiff’s claims in the proceedings was reached in the September 2008 agreement.14 Each of the defendants acknowledged the amount that was owing by the first defendant to the plaintiff as at 19 September 2008. The third defendant agreed, after receiving advice from a solicitor, to guarantee the first defendant’s obligations to the plaintiff. [13] The consequence of my decision is that the plaintiff requires leave to amend its claim against the third defendant in order to enforce the third defendant’s liability under the September 2008 Deed of Guarantee and Indemnity. [14] The importance of pleading is emphasised in the third defendant’s submissions, which cite a number of authorities to the effect that cases must be decided on the issues contained in the pleadings, and if it is sought to raise other issues, they must be forthcoming in an amended pleading. The relevance of pleadings in the context of an application for summary judgment is apparent from the fact that such an application may only be made after a defendant files a notice of intention to defend 15 and the notice must have the defendant’s defence attached to it. 16 [15] The present matter, however, is akin to the enforcement of a settlement reached in the course of proceedings. There is no factual dispute concerning the plaintiff’s cause of action. The third defendant raises no defence to it. To require the plaintiff in those circumstances to formally plead matters that are not in dispute as a prelude to a further application for summary judgment seems inconsistent with the purpose of the rules of facilitating the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. 17 The rules are to be applied with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of the rules. 18 I will hear the parties about the terms of further directions and whether I should impose conditions about the future conduct of the proceeding pursuant to UCPR r 298. I also will hear the parties as to costs. 13 Ibid. 14 As to the enforcement of a settlement agreement in a proceeding by an application for summary judgment in that proceeding see Carey v Carey [2005] QDC 120. 15 UCPR r 292(1). 16 UCPR r 139(1)(b). 17 UCPR r 5(1). 18 UCPR r 5(2). -- 6 of 7 -- 7 [16] Had it not been that the claim remains in its unamended form and the claim that the plaintiff now makes does not fall within the claim made in that document, I would have awarded summary judgment. The fact that the September 2008 guarantee, the demand made under it, the failure to pay the sum demanded and other undisputed matters of fact have not been pleaded would not, in the circumstances, have provided a basis for not giving judgment. The plaintiff has established that there is no real prospect of defending all or part of its claim based on the September 2008 guarantee and I consider that there is no need for a trial of that claim. Conclusion [17] The plaintiff is presently not entitled to summary judgment on a cause of action that arose only upon the making of the demand dated 15 May 2009. This conclusion is not based on the fact that the cause of action upon which the plaintiff seeks summary judgment against the third defendant has not been pleaded in a statement of claim which pre-dates the commercial compromise reached by the parties in September 2008. It is based on the fact that, until the plaintiff amends it claim, the cause of action upon which it seeks to obtain summary judgment does not form part of the claim made by the plaintiff in this proceeding. Presently the plaintiff unamended claim does not seek to enforce the cause of action that arose when it made the demand dated 15 May 2009. Accordingly, I decline to grant summary judgment. [18] I order that: 1. Pursuant to rule 294(2) of the Uniform Civil Procedure Rules the plaintiff be granted leave to make the application filed on 28 May 2009. 2. The application for summary judgment made in paragraph 2 of that application be dismissed. -- 7 of 7 --