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  • Unreported Judgment

Pacific Seaboard Transport and Finance Corporation Pty Ltd v Thynne

 

[2014] QSC 294

 

SUPREME COURT OF QUEENSLAND

  

CITATION:

Pacific Seaboard Transport and Finance Corporation Pty Ltd v Thynne and Anor [2014] QSC 294

PARTIES:

PACIFIC SEABOARD TRANSPORT AND FINANCE CORPORATION PTY LTD (ACN 000 472 300)

(Respondent/ Plaintiff)

v

BENEDICT JOSEPH THYNNE

(Applicant/ First Defendant)

and

NATHAN LAMBERT THOMAS THYNNE

(Second Defendant)

FILE NO:

BS 1123 of 2013

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

4 December 2014

DELIVERED AT:

Brisbane 

HEARING DATE:

28 November 2014

JUDGE:

Douglas J

ORDER:

That paragraphs 4AA(e), 4AA(f), 4AB and subparagraphs 4A(a), 4A(b) and 4A(c) be struck out. I shall hear the parties further as to the form of the order and costs.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – STATEMENT OF CLAIM – where the plaintiff claims that there is money owing pursuant to a guarantee executed by both defendants – where the guarantee related to repayment of a loan advanced to a borrower – where the advance was not made directly by the plaintiff to the borrower – where certain paragraphs in the pleading alleged how the word ‘lend’ in a loan agreement is to be properly understood – whether those allegations were of evidence that would not be admissible in interpreting the agreement - whether the allegations were clearly linked in the pleading to the allegations that the loan was advanced to the borrower – whether these allegations can be said to have a tendency to prejudice or delay the fair trial of the proceeding – whether the offending paragraphs ought be struck out

Codelfa Construction v State Rail Authority of NSW (1982) 149 CLR 337, cited

Robert Bax & Associates v Cavenham Pty Ltd [2011] QCA 53, followed

Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209, followed

COUNSEL:

K E Downes QC with D Chesterman for the applicant

R Anderson for the respondent

SOLICITORS:

Thomson Geer for the applicant

Cooper Grace Ward for the respondent

  1. This is an application by the first defendant to strike out several paragraphs in the second amended statement of claim. The claim is for moneys said to be owing pursuant to a guarantee executed by that defendant in consideration of the plaintiff as lender at the request of the guarantor “making an advance … in the amount of AU$5,000,000.00 … to BCN Holdings International Pte Ltd …”.[1] 

Background

  1. The obligation of the applicant to pay the plaintiff on demand all secured moneys which may from time to time be owing by BCN Holdings as borrower to the plaintiff in consideration of the applicant’s request as guarantor is pleaded in paragraphs 10 and 10B of the second amended statement of claim. The advance pleaded to have been made by the plaintiff to BCN Holdings was not, on the allegations in the pleading, made in a straightforward manner. It is particularised in paragraph 4A of the pleading as follows:

 

“4A.On or about 19 March 2007, pursuant to the Loan Agreement, the sum of $5,000,000 was advanced to the Borrower in that:

(a)   Healthe paid $11,000,000 to the Borrower (which included $5,000,000 paid on behalf of the plaintiff as an advance under the Loan Agreement);

(b)   further and in the alternative, the plaintiff released Healthe from its liability under the $5 million Pacific-Healthe Facility; and

(c)   further and in the alternative, each of the plaintiff, the Borrower and Healthe made journal entries in their respective books and records recording the advance of the Loan Amount and the repayment of the $5 million Pacific-Healthe Facility.

  1. The entity described as “Healthe” in that paragraph was earlier defined as a company known as Healthe International Pte Ltd in paragraph 4AA, which reads as follows:

 

4AA  On its proper construction, the reference to ‘lend’ in clause 1.1 of the Loan Agreement was able to be satisfied by any provision of financial accommodation, including but not limited to:

(a)   the payment of money to the value of the Loan Amount by the plaintiff to the Borrower;

(b)   the payment of money to the value of the Loan Amount by the plaintiff as directed by the Borrower;

(c)   the payment of money to the value of the Loan Amount by a third party, on behalf of the plaintiff, to the Borrower;

(d)   the payment of money to the value of the Loan Amount by a third party, on behalf of the plaintiff, as directed by the Borrower;

(e)   the release, by the plaintiff, of the liability of Healthe International Pte Ltd (Healthe) to repay $5,000,000 pursuant to a written loan agreement dated 28 May 2006 between the plaintiff and Healthe as amended by deeds of amendment dated 26 September 2006 and 12 October 2006 ($5 million Pacific-Healthe Facility); or

(f)   the making of journal entries in their respective books and records by each of the plaintiff, the Borrower and Healthe recording the advance of the Loan Amount and the repayment of the $5 million Pacific-Healthe Facility.

  1. The proper construction of the reference to the word “lend” in cl 1.1 of the loan agreement referred to in that paragraph was then said to be supported by the matters pleaded in paragraph 4AB which reads as follows:

 

4AB  The construction in paragraph 4AA is supported by the following matters:

(a)    As at 8 February 2007:

(i)    Healthe owed $11,000,000 to the plaintiff comprising:

(A)   $5,000,000 owing pursuant to the $5 million Pacific-Healthe Facility; and

(B)   $6,000,000 owing pursuant to a written loan agreement dated 28 May 2006 between the plaintiff and Healthe as amended by a deed of amendment dated 26 September 2006 ($6 million Pacific-Healthe Facility); and

(ii)   the plaintiff owed $6,000,000 to the Borrower pursuant to a loan agreement dated 28 May 2006 between the plaintiff and the Borrower ($6 million BCN-Pacific Facility).

(b)    The $5 million Pacific-Healthe Facility:

(i)    had been advanced by the plaintiff to Healthe as follows:

(A)  a payment of $4,000,000, made on or about 29 May 2006, by telegraphic transfer from the plaintiff’s account at Westpac Banking Corporation (account number 179532) to the trust account of Gilbert + Tobin (BSB: 082-001; Account Number: 51765 9887), reference ‘Oracare/Healthe’;

(B)  a payment of $993,424.65, on or about 13 October 2006, by telegraphic transfer from the plaintiff’s account at Westpac Banking Corporation (account number 179532) to the account of Healthe Singapore Pty Ltd at HSBC in Singapore (Account Number: 260 427 448 178); and

(C)  an offset, provided on or about 13 October 2006, of $6,575.35 being the amount of interest owing to the plaintiff by Healthe as at 13 October 2006 under the $5 million Pacific-Healthe Facility; and

(ii)   was secured by, inter alia, guarantees given by each of the first defendant, the second defendant and Corey Brown.

(c)    In or about January or February 2007, Corey Brown (on behalf of the Borrower and Healthe) approached Ray Brown (on behalf of the plaintiff) and requested that the financing arrangements be restructured so that:

(a)   the Borrower would assume the liabilities of Healthe under the $5 million Pacific-Healthe Facility;

(b)   each of the first defendant, the second defendant and Corey Brown would continue to guarantee the obligations assumed by the Borrower; and

(c)   the Borrower would not require the repayment of the $6 million BCN-Pacific Facility in exchange for the plaintiff not requiring repayment of the $6 million Pacific-Healthe Facility,

(Proposal)

(d)   Corey Brown did not explain the Proposal to Ray Brown in detail, saying words to the effect ‘I don’t have time to explain but Pacific Seaboard won’t be any worse off. You just need to trust me, Dad.’

(e)   On 6 February 2007, Ray Brown and Debbie Brown (on behalf of the plaintiff) and Corey Brown (on behalf of the Borrower and Healthe) participated in a telephone conference call with Andre Vosloo, of TVP Law, in which Corey Brown explained the Proposal to Andre Vosloo and Ray Brown authorised him to urgently prepare documents to give effect to the Proposal.

(f)   Immediately following the telephone conference, Andre Vosloo prepared, inter alia:

(a)   the Loan Agreement referred to in paragraph 4 above:

(b)   the Guarantee Deed referred to in paragraph 7 below

(c)   the First Defendant’s Guarantee referred to in paragraph 9 below; and

(d)   the Second Defendant’s Guarantee referred to in paragraph 10A below.

(g)   In the premises, the construction of clause 1.1 set out in paragraph 4AA above is the construction that is most consistent with giving effect to the Proposal as it allowed the parties flexibility to ensure that the restructure could be effected with a minimum of transaction costs.

  1. The application asks that paragraphs 4AA(e), 4AA(f), 4AB and 4A be struck out. The submissions in respect of paragraph 4A focussed on its subparagraphs in particular. The principal rationale for the application is that the pleading is unclear in alleging in paragraph 4A(a) that an amount paid by Healthe to BCN Holdings of a sum other than $5 million could constitute an advance by the plaintiff under the loan agreement within the meaning of the guarantee.
  1. Ms Downes QC also argued that the allegations in paragraphs 4AA and 4AB concerning the proper construction of the word “lend” in cl 1.1 of the loan agreement were an unnecessary diversion from the critical issue of pleading how the advance was made to BCN Holdings, that the allegations in paragraphs 4AA(e) and 4AA(f) were untenable on any view and that the allegations in subparagraphs 4AB(c) to 4AB(g) were allegations pleading the subjective intention of the parties to the alleged “proposal” between BCN Holdings and Healthe. These were said to be irrelevant as no evidence in support of them could be led at any trial of the action so that the inclusion of them in any pleading would tend to delay the fair trial of the proceeding.
  1. Consequently she contended that it was impossible for the first defendant to understand the case alleged against him without proper particulars being provided of the advance by Healthe to BCN Holdings and the pleading of material facts to support the allegations that a component of an advance by Healthe to BCN Holdings was an advance by the plaintiff to BCN under the loan agreement.
  1. Mr Anderson for the plaintiff supported the pleading on the basis that the matters set out in paragraph 4AB are allegations of material facts constituting the surrounding circumstances from which the use of the term “lend” is properly to be understood; see Codelfa Construction v State Rail Authority of NSW (1982) 149 CLR 337.
  1. His argument is that a loan can be constituted by the assumption of the debt of another and that that is what is sought to be established as surrounding circumstances in paragraph 4AB. If that proposition can be made good, he submitted, then the advance date for the purposes of the guarantee will be read as the date on which the debt was assumed. That argument was designed to meet a further assertion by Ms Downes QC that the construction of the word “lend” was inconsistent with the definition of “advance date” in the loan agreement.

Discussion

  1. The essential argument made against the pleading as it currently stands is that it is internally inconsistent, displays gaps in logic which the defendant should not be called upon to fill and is inconsistent with the terms of the loan agreement, causing confusion on the part of the first defendant in knowing the case actually made against him. There is substantial merit in the argument.
  1. Any link on the face of the pleading between the allegations about the proper construction of the word “lend” in paragraphs 4A(e), 4A(f) and 4AB and the making of the advance alleged in paragraph 4A is tenuous. It is not clear what consequence flows from the allegation in paragraph 4AA that the agreement to lend was able to be satisfied by “any provision of financial accommodation, including but not limited to” the alternatives pleaded there. The allegation is very wide. In particular, it is argued for the applicant that the release of a liability of Healthe pleaded in paragraph 4AA(e) and the simple act of making the journal entries pleaded in paragraph 4AA(f) cannot amount to the provision of financial accommodation to BCN Holdings. When one tries to discern the true meaning of the pleading from reading what is alleged, that submission makes sense.
  1. Those allegations do not clearly provide a rationale to support the allegation in paragraph 4A that $5 million was advanced to BCN Holdings by Healthe on behalf of the plaintiff. They do not inform the applicant properly of the case it has to meet, are difficult to follow and, if left as they are, “can be said to have a tendency to prejudice or delay the fair trial of the proceeding”.[2] 
  1. The width of the allegations about the provision of financial accommodation and the imprecision of the link sought to be made to the advance alleged to have been made to BCN Holdings illustrates the problem of understanding the pleading. The consequence is that paragraphs 4AA(e) and 4AA(f) should be struck out.
  1. Similar considerations apply to the allegations in paragraph 4AB. Some of those allegations may well be relevant to the background circumstances sought to be relied on by the plaintiff in making its case that it, through an intermediary, Healthe, advanced money to BCN Holdings. The link between those allegations and the making of the advance is not, however, at all clear. Quite apart from the pleading of evidence of the apparent intention of some of the individuals connected to the parties pleaded in paragraphs 4AB(c) to 4AB(g), rather than the relevant material facts, the allegations suffer from a similar vice to those contained in paragraphs 4AA(e) and 4AA(f). They are not clearly linked to the relevant allegation in paragraph 4A(a) that $5 million was advanced to BCN Holdings pursuant to the loan agreement in a manner that enables the applicant to understand the case against him.
  1. As was submitted in writing for the applicant:  

“38.The facts relied upon to allege that a payment made by a company other than the plaintiff, of an amount which differs from the loan amount under the loan agreement, to BCN ‘included $5,000,000 paid on behalf of the plaintiff as an advance under the loan agreement’ are not pleaded.

  1. The proposed payment by Healthe to BCN of $11,000,000 is not referred to as part of the Proposal in 4AB(c) and nor are any particulars provided such as the date of the advance and the bank account into which the funds were paid.
  1. It is impossible for Mr Thynne to understand the case that is being alleged against him without proper particulars being provided of the advance by Healthe to BCN and the plea of material facts to support the conclusionary allegation that, of the amount which was advanced by Healthe to BCN, a component of that was an advance by the plaintiff to BCN under the loan agreement.”

Orders

  1. The consequence is that the order sought by the applicant first defendant, that paragraphs 4AA(e), 4AA(f), 4AB and subparagraphs 4A(a), 4A(b) and 4A(c) should be struck out, should be made. I am inclined to give leave to the plaintiff to replead but shall hear the parties further about the form of the order and costs.

Footnotes

[1] See, eg, the Guarantee executed by the applicant at p 74 of the exhibits to the affidavit of J B Daniel filed 2 October 2014.

[2] See Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209 at [38] and Robert Bax & Associates v Cavenham Pty Ltd [2011] QCA 53 at [16].

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Editorial Notes

  • Published Case Name:

    Pacific Seaboard Transport and Finance Corporation Pty Ltd v Thynne and Anor

  • Shortened Case Name:

    Pacific Seaboard Transport and Finance Corporation Pty Ltd v Thynne

  • MNC:

    [2014] QSC 294

  • Court:

    QSC

  • Judge(s):

    Douglas J

  • Date:

    04 Dec 2014

Litigation History

No Litigation History

Appeal Status

No Status