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Bank of Queensland Limited v Amos


[2010] QSC 237





Bank of Queensland Limited v Amos & Ors [2010] QSC 237



ACN 009 656 740
(first defendant)


(second defendant)

SMITH ALLURE PTY LTD ACN 108 894 784 in its own right and as trustee for the Smith Allure Trust

(third defendant)

PEARLRANGE PTY LTD ACN 083 784 089 in its own right and as trustee for the DJA Allure Trust

(fourth defendant)


SC No 12959 of 2009


Trial Division




Supreme Court at Brisbane


6 July 2010




2 July 2010


Chief Justice


1.That the counterclaim be struck out;

2.That judgments be entered for the plaintiff against the first defendant, second defendant, third defendant and fourth defendant in the amount of $1,279,409.20; and

3.That the defendants pay the plaintiff’s costs of and incidental to the proceeding, including this application, to be assessed on the indemnity basis.  


M Drysdale for the plaintiff

M Martin for the defendants


HWL Ebsworth Lawyers for the plaintiff

Whitehead Gupta Lawyers for the respondent

  1. CHIEF JUSTICE: The plaintiff sues for amounts owing under guarantees.  The defendants guaranteed the indebtedness of Magnetic Allure Pty Ltd to the plaintiff under a “facility agreement” dated 14 September 2007.  Each of the first and second defendants gave a separate guarantee, and the third and fourth defendants gave a joint guarantee.  The guarantees also are dated 14 September 2007.  The plaintiff advanced approximately $1.7 million to Magnetic Allure, which made no repayment.  The plaintiff made demand on the defendants as guarantors and they made no payment in response.
  1. Some of the grounds of defence are not pressed. Mr Martin, who appeared for the defendants, confirmed that these defences are not pressed: as to the 12 months extension of the terms of the facility agreement, as to estoppel, as to whether the guarantees were sufficiently clear in their relation to the facility agreement, and as to the calculation of the amount due if judgment should be entered.
  1. In addition to the guarantees, the plaintiff had the benefit of several mortgages over five properties. The defendants contend that the plaintiff was obliged to realize those securities by selling the properties “as one amalgamated site”, to preserve the value of a development approval. It in fact sold two of the properties separately. The contention is that optimal value was therefore not obtained. Otherwise, the principal debt would have been discharged without the need for recourse against the defendants, or the amount payable by them substantially reduced.
  1. The defendants contend that the relevant obligation on the plaintiff arose implicitly, through the combination of these circumstances (taken from the amended defence):

“XIIt was a term of the Magnetic Allure Facility Agreement that the Plaintiff receive a valuation report dated 28 June 2007 from Knight Frank Townsville in respect of the secured properties referred to at paragraphs 2(j)(I) to 2(j)(VII) of this amended defence and that valuation report reflect a minimum market value of $2,950,000.00 being the value of the properties as one amalgamated site;

XIIThe Plaintiff did receive the report referred to at paragraph 2(i)(XI) above and the report valued the secured properties at $2,950,000.00 and that price reflected the minimum market valuation as required by the Plaintiff at paragraph 2(j)(XI);

XIIIThe valuation of the secured properties referred to at paragraph 2(j)(XII) above more than satisfactorily covered the indebtedness of Magnetic Allure under the Magnetic Allure Facility Agreement;

XIVIt was an implied term of the Magnetic Allure Facility Agreement that, in obtaining the valuation at the minimum market value of the secured properties as referred to at paragraph 2(j)(XI) above, the Plaintiff in exercising their rights as to a power of sale would sell the secured properties as one amalgamated site;

XVBy the plaintiff’s conduct concerning the terms of the Magnetic Allure Facility Agreement requiring the amount of secured property that was valued at the minimum market value for the amalgamated site the Plaintiff induced an assumption from all four of the Defendants that the Plaintiff would exercise their rights of a power of sale prior to demanding from all of the Defendants payment pursuant to any of the guarantees;”

  1. The plaintiff resists the implication of any such term, and relies on the traditional formulation in BP Refinery (Western Port) Pty Ltd v The Shire of Hastings (1978) 52 ALJR 20, 26.  The plaintiff relies on all the pre-requisites for implication (reasonable and equitable, necessary for business efficacy, obvious, capable of clear expression, not contradictory of any express term), though the submissions before me focused on the requirement that the proposed implied term not contradict any express term of the contract. 
  1. Mr Drysdale, who appeared for the plaintiff, relied on these provisions in the guarantees:

“Clause 13:

For as long as an amount payable under a guaranteed agreement remains unpaid, you [the Defendants] may not, without our [the Plaintiff] consent:

a)Claim the benefit of:

  1. Another guarantee or indemnity; or
  1. A mortgage, charge or other security interest; given to us in connection with an amount payable under:
  1. A guaranteed agreement; or
  1. This guarantee and indemnity or any other guarantee or indemnity given in connection with a guaranteed agreement.

Clause 26.2: 

We may claim against you under this guarantee and indemnity before we enforce any of our rights or remedies:

(a)against the debtor or any other person; or

(b)under another document such as another security interest.

For example, we may ask you to pay us first without our having made the debtor bankrupt.

Clause 26.3:

If we have more than one guarantee and indemnity or security interest, we may enforce them in any order we choose.”

  1. While clauses 13 and 26.2 would not appear to conflict with an obligation to realize all of the securities over the real properties as one amalgamated lot, cl 26.3 clearly would. Clause 26.3 confirms the plaintiff’s right to enforce the “security interests” it holds in any order it chooses. In other words, the plaintiff was not obliged to realize them collectively, by selling all of the parcels together.
  1. In addition, such an implication is not necessary for business efficacy, and it does not “go without saying”.
  1. The implication for which the defendants contend cannot be sustained.
  1. Mr Martin relied on this passage from the judgment of Dixon J in Williams v Frayne (1937) 58 CLR 710, 738:

“If the guarantee is given upon a condition, whether express or implied from the circumstances, that a specific security shall be obtained, completed, protected, maintained or preserved, any failure in the performance of the condition operates to discharge the surety, and the discharge is complete.  But otherwise the surety can complain only if the creditor sacrifices or impairs a security, or by his neglect or default allows it to be lost or diminished, and in that case the surety is entitled in equity to be credited with the deficiency in reduction of his liability.” 

See also Omlaw Pty Ltd v Delahunty [1995] 2 Qd R 389, 392.

  1. Mr Martin submitted “that the plaintiff’s conduct in exercising power of sale constituted a breach of the duty…to preserve any security for [the defendants’] benefit”.
  1. The position covered by the first of those sentences expressed by Dixon J is inapplicable here, because no such condition obtains. As to the position covered by the second sentence, that position applies absent the condition referred to in the first sentence. That is not the present situation. In the present situation, the guarantors submitted to a regime in which the plaintiff expressly reserved to itself the right to realize the securities in any order it chose.
  1. The defendants allege that the plaintiff breached its “equitable duty” (para 31 amended defence) by not selling the secured lots as an aggregation. The defendants refer in the amended defence to s 85 of the Property Law Act 1974, but the duty under that section was of course owed to Magnetic Allure.  The delineation of any “equitable duty” owed to the guarantors is affected by the terms of the guarantees, and especially for present purposes, in addressing the issue whether there is any “real prospect” of success for the defence, the effect of cl 26.3.
  1. On this basis, the plaintiff must succeed in its claim against the defendant guarantors, and the proposed counterclaim against the plaintiff brought by Magnetic Allure (whose joinder was sought) would be unfounded insofar as it depended on the proposed implied term. Insofar as such a claim would depend more generally on alleged breach of duty under s 85, Magnetic Allure would be free to commence a separate proceeding were it so advised.
  1. Each Counsel made submissions in relation to the approach one should adopt when dealing with a summary judgment application brought under Rule 292 of the Uniform Civil Procedure Rules.  I have of course had regard to Bolton Properties Pty Ltd v J K Investments (Australia) Pty Ltd [2009] QCA 135. I am satisfied that there is “no real prospect” of success for the defence pursued in this proceeding by the defendants.
  1. The parties were agreed as to the amount of the judgment, should I take this view.
  1. There will be orders:
  1. that the counterclaim be struck out;
  1. that judgments be entered for the plaintiff against the first defendant, second defendant, third defendant and fourth defendant in the amount of $1,279,409.20; and
  1. that the defendants pay the plaintiff’s costs of and incidental to the proceeding, including this application, to be assessed on the indemnity basis.
  1. There was not dispute about paras 2 and 3 above, were I to consider judgment should be entered summarily.

Editorial Notes

  • Published Case Name:

    Bank of Queensland Limited v Amos & Ors

  • Shortened Case Name:

    Bank of Queensland Limited v Amos

  • MNC:

    [2010] QSC 237

  • Court:


  • Judge(s):

    de Jersey CJ

  • Date:

    06 Jul 2010

Litigation History

No Litigation History

Appeal Status

No Status