Dexter v Webb
[1997] QDC 199
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- Dexter v Webb[1997] QDC 199
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Dexter v Webb[1997] QDC 199
Dexter v Webb[1997] QDC 199
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND |
|
[Before Brabazon Q.C., D.C.J.]
[Geoffrey Robert Dexter and Clifford Webb as trustee for the Indian Pacific Equity Foundation and Alan Crawford and Clifford Webb]
Plaint No 1296 of 1996
BETWEEN:
GEOFFREY ROBERT DEXTER | Plaintiff |
AND:
CLIFFORD WEBB AS TRUSTEE FOR THE INDIAN PACIFIC EQUITY FOUNDATION | First Defendant |
AND:
ALAN CRAWFORD | Second Defendant |
AND:
CLIFFORD WEBB | Third Defendant |
JUDGMENT
Judgment delivered: 3 October 1997
Catchwords:
Counsel: | Mr. T. North for plaintiff |
| Mr. A. Crowe for 1st and 3rd defendants |
Solicitors: | Paul Hudson for the plaintiff |
| Hunt & Hunt for 1st and 3rd defendants |
Hearing Date(s): | 28 July, 1 August 1997 |
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Plaint No 1296 of 1996 |
BETWEEN:
GEOFFREY ROBERT DEXTER | Plaintiff |
AND
CLIFFORD WEBB AS TRUSTEE FOR THE INDIAN PACIFIC EQUITY FOUNDATION | First Defendant |
AND
ALAN CRAWFORD | Second Defendant |
AND
CLIFFORD WEBB | Third Defendant |
REASONS FOR JUDGMENT - JUDGE BRABAZON Q.C.
Delivered the 3rd day of October 1997
This is an application by Mr. Clifford Webb, named as both the first and third defendant in the action, to set aside a judgment by default. The application is made under Rule 146. It is a regularly entered judgment.
Matters to be Considered
It is common ground that the court has to consider these things:
- (a)whether Mr. Webb has given a satisfactory explanation for his failure to appear;
- (b)whether there has been any delay in making the application; and
- (c)whether Mr. Webb has a prima facie defence on the merits to the claims which have led to the default judgment.
The first two issues can be disposed of shortly, for present purposes. First, Mr. Webb swears that he did not appear to the plaint because it was not served on him, and because he had no knowledge of it. That position is also sworn to by his wife. On the other hand, the evidence read for Mr. Dexter, the plaintiff, showed at the least that the papers had been regularly served according to an order for substituted service made by Judge Forde on 15 August 1996. That order allowed postal service of the papers on Mr. Webb's wife, who was living in Melbourne before joining her husband, who was overseas. It is impossible for this court to resolve, on the evidence presently before it, the true facts about the question of service. There must be a strong suspicion that Mr. Webb knew of these proceedings, at the latest, shortly after the time of substituted service. There is also reason to think that Mrs. Webb was doing her best to shield her absent husband from the attentions of the process server.
On 1 April 1997, Mr. Webb's Australian attorney was served with a bankruptcy notice, based on the default judgment, which was entered in this action on 21 October 1996. He then responded appropriately, and after some investigations his solicitors filed the present summons to set aside the judgment on 7 July 1997. It is necessary that Mr. Webb be given the benefit of any doubt, about his failure to enter an appearance. He should be taken to have given a satisfactory explanation.
Secondly, the facts set out above show that there was no undue delay in making the application, once the existence of the judgment definitely came to Mr. Webb's attention. Therefore, attention needs to be focused on the third issue - does he have a defence or defences on the merits, to Mr. Dexter's claims?
The Application
The application to set aside the judgment came on for hearing on 28 July. Counsel handed up their outlines of submissions and read the affidavits. Mr. Webb was then granted an adjournment for some days, to enable his legal advisors to further investigate some documents that had recently become available. The hearing was resumed on 1 August. More affidavits were filed on that day. Mr. Webb gave evidence, and was cross-examined, by telephone from London. Counsel later delivered further written submissions. In the result, the evidence and submissions are rather more elaborate than would normally be available on such an interlocutory application.
Preliminary Issues
It is possible to dispose of some contentious issues. As the pleadings show, Mr. Dexter seeks to recover money lent under a written agreement, and guarantees, dated 19 April 1994. It is now quite clear that Mr. Webb was a party to those agreements, and signed them. It is appropriate to proceed on that basis.
It was suggested that a demand before action was an element of the right to proceed against Mr. Webb on a guarantee. There is nothing in that point, as it is now clear that written demands were served on him and his co-guarantor, Mr. Crawford.
It was also suggested that the guarantee might have been discharged by the release of Mr. Crawford. However, that is only a speculation - there was no evidence at all that such an event took place. On the contrary, Mr. Dexter says that it did not. There was no evidence of any defence based on the well-known principle, that the release of a co-guarantor may discharge the other guarantor.
Mr. Webb also wishes to dispute Mr. Dexter's right to sue for his money by saying that it has been assigned to a man called Groves. He swears to an arrangement with Mr. Groves, in paragraphs 19-21 of his affidavit sworn on 30 July. Mr. Webb also gave oral evidence about Mr. Groves - see transcript p.3, line 55 and at p. 17. Mr. Dexter swears to his dealings with Mr. Groves, in his affidavit sworn on 1 August.
Is it possible to extract out of those versions an assignment of the benefit of this transaction to Mr. Groves, so that Mr. Dexter is no longer able to enforce it? The evidence is insufficient to support the idea of an assignment. It appears that each of Mr. Groves, Mr. Dexter and Mr. Webb (or their interests) had financial dealings each with the other. Mr. Webb owed money to Mr. Dexter. Mr. Dexter owed money to Mr. Groves. On balance, as between Mr. Groves and Mr. Webb, Mr. Groves owed money to Mr. Webb. It may have been the case, that Mr. Dexter wanted to resolve matters and so invited Mr. Groves to go and see Mr. Webb and get his money back that way.
In the result, Mr. Webb does not attempt to say that he came to an arrangement with Mr. Webb, which took into account his obligations to Mr. Dexter. Rather, he says that they had a meeting, and that Mr. Groves “...brought details, ... of the money that he owed me ... and we had agreed at that particular point in time that it was something to talk about and that we would, you know, make arrangements to set one off against the other. Now after a period of time I then had not spoken with Alec Groves since then. I have not seen him, I have not spoken with him ...”
Earlier in his cross-examination he said, with respect to the money that was advanced to Mr. Dexter, that he actually owed it to Mr. Groves (p.3). In the absence of any concluded agreement, or any payment between Mr. Webb and Mr. Groves, it is impossible to see that there was an assignment of the right to sue for the money. It seems to have been, at the most, a potential arrangement that came to nothing. In my opinion, the evidence does not show the possibility of a good defence involving Mr. Groves. That is so, apart from Mr. Dexter's own evidence that he made no such arrangement with Mr. Groves apart from paying what was owed to him. The fact that Mr. Dexter had started legal proceedings in Victoria against Mr. Webb, and then discontinued them, is consistent with Mr. Webb's version of events. But it does not supply any positive evidence of an assignment.
That leaves the matters of substance. They are two - the proper construction of the agreements of 19 April, 1994 and the potential impact of the Victorian Credit Act 1984.
The Real Issues
A copy of the agreement and guarantee is attached to this judgment. It can be seen that the loan agreement for the $80,000 and interest, refers continually to “Mr. Clifford Webb as trustee for the Indian Pacific Equity Foundation”. In contrast, the guarantee refers to him simply by his name. That distinction is consistent with some earlier correspondence, in which Mr. Dexter made it plain that he required “the personal guarantees of Mr. Crawford and Mr. Webb”. In that correspondence, Mr. Webb described himself as a trustee of the Foundation.
It was submitted for Mr. Webb that he was careful to distinguish the capacities in which he signed the two agreements, so that he is not personally liable to answer for the full amount owing under the loan agreement. It was also pointed out that the guarantee is limited to “THE TOTAL AMOUNT” which is the sum of $89,205.28. On the other hand, counsel for Mr. Dexter suggested that Mr. Webb is personally liable for the full extent of the loan agreement.
The answer to those submissions can be found in established principles about the liability of trustees. The basic position is this:
- (a)A trustee who enters into a contract will normally incur unlimited personal liability unless by appropriate language or express stipulation such liability is restricted;
- (b)A mere description of the capacity in which he or she contracts as that of trustee is insufficient to exclude full personal liability.
See Helvetic Investment Corporation Pty Ltd v. Knight 9 ACLR 773. To the same effect, see also the decision in General Credits Limited v. Tawilla Pty Ltd (1984) 1 Qd.R. 388. There, the basic principles, along the above lines, were stated. It was pointed out that a judgment cannot be enforced by execution levied upon trust assets, even though the judgment against the trustee is founded on a debt incurred by him in the capacity as trustee. If, in a particular case, a judgment is to be satisfied out of the trust assets, then it is not appropriate to achieve that result by merely adding the description “as trustee of ...” after the name of a defendant. See also the decision by Justice Gummow (now of the High Court) in Elders Trustee and Executor Co Ltd v. E.G. Reeves Pty Ltd 78 ALR 193, where he summarised the principles this way:
“It is fundamental that the common law does not recognise a trustee as having assumed an additional or qualified legal personality. This means that the liability of the trustee for debts he incurs includes those incurred in the course of performance of the trust. His liability to creditors is not limited or quantified by reference to the extent of the trust assets ... However, the law does permit a trustee to contract with third parties on the basis that his personal liability is limited, for example, to the extent of his right to resort to and apply trust funds for the discharge of liabilities incurred by him in the authorised conduct of the trust. ... Clear words are necessary to achieve a result whereby what is prima facie the unlimited personal liability of a trustee is so qualified.”
See also re: Skinner and Smith's application, 45 ALR 553 at 557.
Here, it was suggested that a term might be implied in the loan agreement and guarantee, to the effect that Mr. Webb was limiting his liability. There is no need to attempt to imply a term. The question is one of construction - is the meaning of the loan agreement and guarantee, that Mr. Webb limited his personal liability?
It is apparent that the two documents read together do have that effect. The guarantee limits his personal liability to the $89,205.28, called “the total amount”. That limitation and the very existence of the guarantee, indicate that the loan agreement was meant to limit his personal liability. If not, there would be no point in having a limited guarantee. The emphasis in the loan agreement on his role as trustee means that he did not accept unlimited personal liability for the interest, which accrued after the 14 days at almost 300% per annum. Rather, he was accepting liability “as trustee”, and that meant to the extent that he could be reimbursed out of the assets of the trust.
It now appears, I understand, that the trust has no assets. It is suggested by Mr. Webb that his guarantee is therefore worthless. But that does not follow. The purpose of the guarantee was to protect Mr. Dexter against that possibility. Under the guarantee, he is liable to the extent of the $89,205.28.
In this action, his name appears on two capacities - as trustee, and personally. When the matter came before the Registrar, the loan plus the interest amounted to much more than $200,000. The excess was abandoned in this court. The form of judgment was this:
“It is this day adjudged that the plaintiff do recover against the first defendant the sum of $200,000 together with costs in the sum of $1,045.65, and against the third defendant in the sum of $89,205.28, together with costs in the sum of $1,045.60.”
It follows that the first part of that judgment must be set aside. In principle, Mr. Dexter is entitled to proceed on the basis of an appropriate order, limiting Mr. Webb's liability to the assets of the trust. If necessary, counsel may care to suggest the precise form of order. If the trust is worthless, or worth less than the $89,205.28, then it may be a useless exercise. That is a matter for Mr. Dexter.
Whether or not the judgment for $89,205.28 should stand depends upon the impact of the Victorian Credit Act 1984.
It was common ground that the this court has jurisdiction to entertain Mr. Dexter's claim. Submissions were directed to the effect of The Service and Execution of Process Act 1992, and the proper law of the loan agreement. The matter may be complicated by some uncertainty as to the precise sequence of events by which the contract was made.
Counsel for Mr. Webb suggested that the judgment should be set aside, and the action stayed, with Mr. Dexter having to start a new action in Victoria, that being the most appropriate court to deal with the matter. He suggested that the Victorian court would then apply the Credit Act 1984 which provides (so it was accepted for the purpose of this application) that both the principal and interest could not be recovered by Mr. Dexter. If the action were to remain in this court, then there would be no power here to enforce the Victorian legislation, which otherwise should apply to this contract.
On the other hand, counsel for Mr. Dexter suggested that the task was to find the proper law of the contract. On established principles, he said, that would lead to the selection of Queensland law as the proper law. In that case, the Victorian Credit Act would not apply at all. Neither would its Queensland equivalent, as it does not, in terms, apply to this agreement. The result would be the enforcement of the guarantee.
It should be kept in mind that this is an interlocutory application. It is not appropriate to make final orders unless the position is quite clear. Ordinarily, if there is a controversial question to be decided, then it should be done at a trial of the action. I am mindful of the fact that there may still be some factual uncertainty about the formation of this agreement, and that counsel should have a full opportunity to argue contentious questions about any conflict between the legal systems of Queensland and Victoria. It seems inappropriate to decide this issue in this judgment. However, I should say for the assistance of the parties, that my preliminary view is that Mr. North's submissions about the conflict of laws should be accepted.
There is no prospect of a stay of this action, even if judgment is set aside. There is no reason to think that another action should be started in Victoria. The remaining narrow issues can be dealt with in Queensland.
I propose to give Mr. Crowe an opportunity to say whether or not he wishes to lead further evidence, or raise further arguments, on the remaining issues. Because of the course this hearing has taken, and of the above findings, it seems appropriate to leave the judgment for $89,205.28 on foot, and allow Mr. Webb to proceed further as part of the present application to set aside the whole of the judgment. The narrowness of the remaining issues would seem to make that the preferable course. It is quite likely that a definitive answer can be given without the expense and inconvenience of a conventional trial. I am also mindful of Mr. Webb's absence in England.
I should say, that if I were persuaded that all of the judgment should be set aside, and that there has to be a trial of the action in the usual way, limited to the remaining issues, then that course would only be permitted on condition that Mr. Webb pay into court, or otherwise secure to the satisfaction of both parties, the sum of $89,205.28, together with interest at 10% from 21 October 1996. That condition would be imposed for two reasons. Despite the bankruptcy notice, there is no suggestion that Mr. Webb is impecunious, so that such a condition would frustrate his potential defence of the action. On the contrary, he seems to have been able to travel extensively, and support his family in England. Also, I have considerable doubts about the strength of the defence based on the Victorian Credit Act.
Therefore, the orders of the court are these:
- (a)Set aside the judgment of 21 October 1996, to the extent that the plaintiff recovered against the first defendant the sum of $200,000 and costs;
- (b)Order that the parties be at liberty to ask for further directions about any further evidence and submissions with regard to the formation of the contract, Victorian Credit Act, and the proper law of the contract, if there is to be a further application to set aside all of the judgment.
- (c)Costs reserved (subject to any submissions by counsel about costs).
FROM OF AGREEMENT
The Firm “The Wattle Group” who's office is located at 9 Peppard Street McDowall has advanced the sum of $80,000.00 to “Mr Clifford Webb as Trustee for Indian Pacific Equity, Foundation”, whoes address is located at 500 Queen Street, Melbourne Victoria. The advance is to aid the cash flow requirements of “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation” for a period of 14 days from the date of this agreement. In consideration of the advance. “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation” guarantees irrevocably to refund the $30,000.00 (eighty thousand dollars) to “The Wattle Group” together with an amount of $657.52 per day on the principle funding of $80,000.00 for as long the principle funding is outstanding. The term of this agreement is from 20th April 1994 to the 3rd May 1994 inclusive, equating to a period of 14 days. Interest and principle due on 3rd May 1994 amounts to $89,205.28 (eighty nine thousand two hundred and five dollars twenty eight cents) herinafter referred to as THE TOTAL AMOUNT.
THE TOTAL AMOUNT will be paid to “The Wattle Group” on or before the 3rd May 1994; failure to do so places “Mr Clifford Webb as Trustee for Indian Pacific Equity foundation” in default and “The Wattle Group” may take all actions open to it to recover the outstandings at the time of default, interest will continue at the rate of $857.52 per day on the TOTAL AMOUNT of $80,000.00 until such time as the advance has been repaid in full together with all outstanding interest due at the time of payment by “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation”
In further consideration of the advance, Mr Alan Crawford of 116 O'Shanassy, North Melbourne, Victoria 3051 and Mr Clifford Webb of 116 O'Shanassy, North Melbourne, Victoria 3051, have agreed to irrevocably guarantee the performance of “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation” in relation to the payment of the THE TOTAL AMOUNT to The Wattle Group, in the event that “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation” defaults under the terms of this agreement Mr Alan Crawford and Mr Clifford Webb will of demand ??? The Wattle Group pay the THE TOTAL AMOUNT to The Wattle Group. This guarantee is marked Annexure 1 and forms part of this agreement.
SIGNED BY A DULY AUTHORISED OFFICER OF THE WATTLE GROUP.
SIGNED BY Clifford Webb
As Trustee for Indian Pacific Equity Foundation.
SIGNED BY Mr Alan Crawford
As understanding the terms of guarantee
THIS AGREEMENT IS DATED THE 19th April 1994
FORM OF GUARANTEE
MARKED ANNEXURE 1 TO FORM OF AGREEMENT DATED 19/4/94.
The Firm “Geoffrey R. Dexter trading as The Wattle Group” who's office is located at 9 Peppard Street McDowall has advanced the sum of $80,000.00 to “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation”, whoes address is located at 500 Queen Street, Melbourne Victoria
In further consideration of the advance, Mr Alan Crawford of 116 O'Shanassy, North Melbourne, Victoria 3051 and Mr Clifford Webb of 116 O'Shanassy, North Melbourne, Victoria 3051 have agreed to irrevocably guarantee the performance of “Mr Clifford Webb as Trustee for Indian Pacific“, Equity Foundation in relation to the payment of the THE TOTAL AMOUNT referred to in “the form of agreement to which this document is marked Annexure 1 to Geoffrey R. Dexter trading as The Wattle Group, in the event that “Mr Clifford Webb as trustee for Indian Pacific Equity Foundation” defaults under the terms of that agreement.
Mr Alan Crawford and Mr Clifford Webb will on demand by Geoffrey R. Dexter trading as The Wattle Group irrevocably guarantee to pay the THE TOTAL AMOUNT referred to in the form of agreement to which this document is marked Annexure 1 to Geoffrey R. Dexter trading as The Wattle Group.
Mr Alan Crawford and Mr Clifford Webb acknowledge that Geoffrey R. Dexter trading as The Wattle Group has given consideration to “Mr Clifford Webb as Trustee for Indian Pacific Equity Foundation” on the basis of the guarantees in support of the advance.
SIGNED BY A DULY AUTHORISED OFFICER OF
THE WATTLE GROUP
GUARANTEED BY Clifford Webb
GUARANTEED BY Mr Alan Crawford
THIS GUARANTEE IS DATED THE 19th April 1994