Rebetzke v Fenech[2016] QDC 276

DISTRICT COURT OF QUEENSLAND

1. [1]
   The applicant (“plaintiff”) has sought summary judgment against the respondent (“the defendants”); or alternatively that the defence of the defendants be struck out. In the proceeding the plaintiff claims repayment of a loan of money made to the defendants and referred to in a contract (“the Loan Agreement”).

2. [2]
   On or about 15 April, 2015 the plaintiff and the defendants entered into the Loan Agreement in relation to monies owing by the defendants to the plaintiff, in the sum of $650,000.00 (“the loan amount”). One of the terms of the Loan Agreement was that part of the loan amount, the sum of $210,000.00, was to be paid by one or more of the defendants to the plaintiff by 15 September, 2015 (and was in fact paid by the defendants on or about 30 October 2015) and the balance of the loan amount was to be paid by 02 March 2018, unless an “Event of Default” under the Loan Agreement occurred. The balance of the loan amount after the part payment was made was thus $440,000.00. That was the balance of the loan amount as at 24 May 2016.

The alleged breaches

3. [3]
   A refinancing agreement between the defendants and another lender was made on 24 May, 2016. The plaintiff says that refinancing agreement adversely affected his interests: that is, in contractual terms it had a “Material Adverse Effect” on him; that he did not consent to the refinancing agreement; and that it constituted one or more breaches of the Loan Agreement.

4. [4]
   The alleged breaches of the Loan Agreement are the basis of the claim in the proceeding for repayment of the balance of the loan amount.

The several agreements

5. [5]
   There are two other relevant matters, in addition to the Loan Agreement, to consider: firstly, the plaintiff had at an earlier time commenced proceedings in the Supreme Court against the first and second defendants. That proceeding was resolved by a Notice of Discontinuance of the whole of that claim, filed by consent of those parties on 29 July 2015; and secondly, a Mortgage of property by the third defendant (“the Mortgage”).

Objections to the plaintiff’s material

6. [6]
   Mr Meredith made two objections about the plaintiff’s material: firstly, that the Loan Agreement is not stamped; and secondly that in the first affidavit of the plaintiff, filed on 14 September, 2016 (Court document 7), contained a purported summary of a document that was an exhibit in Mr Rebetzke’s earlier affidavit and was hearsay.

7. [7]
   That summary is in paragraphs 7 and 8 of the affidavit. The plaintiff deposed:

7 …“the Deed was signed by me so to compromise and resolve the dispute in the Supreme Court proceeding”;

and

8 …“the compromise was as follows: upon execution of the Deed together with the Loan Agreement and Mortgage (as defined and referred to in paragraphs 3 and 4 of my first Affidavit), and registration of the Mortgage, I instructed my solicitors to prepare, sign and file a Notice of Discontinuance of the Supreme Court Proceeding.”

8. [8]
   The objections are misconceived. With respect to the first objection, the affidavit of Mr Rebetzke is not one for trial purposes. The existence of the Loan Agreement per se is not in dispute and the non-stamping of it is a matter that can be remedied by the plaintiff without difficulty if and when the document is sought to be admitted on any trial in the proceeding. It is not a necessary requirement on an application of this nature.

9. [9]
   With respect to the second objection, rule 295 Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), relevantly provides:

“r 295(2)An affidavit may contain statements of information and belief if the person making the affidavit states the sources of the information and the reasons for the belief.”

10. [10]
    The rule reflects the content of the previous Order 18 Rule 2(2) and 3(3) of the Supreme Court Rules. In Alirezai v ANZ Banking Group Ltd [1997] QCA 443, decided under the Supreme Court Rules, the admissibility of affidavit material in a summary judgment application in a bank representation and inducement case was challenged by the defendant on the ground of hearsay. The affidavit of the plaintiff included reference to conversations in which he was given information by another person. The Court considered that the conversations were evidence of “a relevant fact” in the application. The information in the affidavit was ruled admissible.

11. [11]
    Rule 295 (2) has been complied with in this case. See: McPhee v Zarb [2002] QSC 004; and Hanson Construction Materials Pty Ltd v Davey [2010] QCA 246 at [31], per Chesterman JA. In my view, the content of paragraph 8 of the affidavit of Mr Rebetzke is admissible.

12. [12]
    I had reserved my Ruling on the objections, to be resolved in this Judgment. The objections are overruled.

The Deed of Release and Settlement

13. [13]
    In Mr Rebetzke’s affidavit filed on 31 August, 2016 (document 6), reference is made to the Deed of Release and Settlement (“the Deed”), which resolved the dispute between the plaintiff and the first and second defendants “in their own capacity and as trustees for the Fenech Family Trust” by an agreement to compromise their claims against each other. The “dispute” means “the litigation between the parties in the Supreme Court of Queensland, being SUP63 of 2014 in the Mackay civil registry”. The “parties” in the dispute were the plaintiff and the first and second defendants.

14. [14]
    The terms of the dispute so resolved by the agreement to compromise were:

• Payment by the first and second defendants to the plaintiff of the “Settlement Sum” ($650,000.00).

• A mortgage in favour of the plaintiff over a specified real property.

• Re-financing of the existing “first mortgage” by the existing lender or a new lender for the same secured amount ($460,000.00) with a new lender to have priority up to that secured amount only.

• Payment by the first and second defendants to the plaintiff of $210,000.00 of the settlement sum by 15 December 2015 and the balance by 02 March 2018 with best endeavours to pay $100,000.00 on 30 November 2016 and a further $100,000.00 on 30 November 2017 “if sales, the first mortgagee and cash flow allow”.

• Upon registration of the mortgage and security interest:

• The parties prepare a Notice of Discontinuance of the dispute (the plaintiff’s claim and the first and second defendant’s counter-claim discontinued and each party to bear their own costs), and

• The return by the plaintiff of livestock to the first and second defendants and release of the plaintiff’s charge over the livestock.

The alleged breaches of the Loan Agreement

15. [15]
    In the Loan Agreement the critical expression is defined:

“13. Events of Default

13.1.Any one or more of the following events will be an Event of Default:

(q)there is in the opinion of the Lender a Material Adverse Effect on the Borrower, a Security Provider or Security Property, or there occurs any other event or there arises any circumstances which, although not specifically referred to in this clause, in the opinion of the Lender prejudices the ability of the Borrower or Security Provider to meet any 1 or more of its obligations under this agreement or a Collateral Security” [underlining added];

and

“(f)without the prior consent in writing of the lender, the borrower or a security provider creates or is party to or purports or attempts to create or be a party to an encumbrance which might by any means rank or be made to rank prior to or equally with any Collateral Security [that is, the plaintiff’s mortgage].”

16. [16]
    “Material Adverse Effect” on a person means a material adverse effect:

“(a) on its financial condition or business; or

(b)on its ability to perform and comply with  its relevant obligations under this agreement or any Collateral Security.”

17. [17]
    A number of further expressions are defined:

“money owing” means “on any day the aggregate of all money owing or payable actually or contingently by the Borrower to the Lender under this Agreement”;

“event of default” means “any of the events specified or referred to in clause 13;”

“encumbrance” means “a mortgage, charge, pledge, lien, assignment…”.

18. [18]
    Two further clauses provide:

13.2“The Money Owing will be deemed to be immediately due and payable upon the occurrence of an Event of Default.”

13.3“The Lender may at any time after the occurrence of any Event of Default, without needing to give any demand or notice to the Borrower or a Security Provider:

(a)enforce this agreement;

(b)enforce any Collateral Security

(c)exercise or enforce all or any of the lender’s rights, powers or remedies;

(i)conferred by law;

(ii)under or arising in connection with this

agreement or any Collateral Security;

(iii)arising in any other way whatsoever, or

any combination of the above.

19. [19]
    In the Statement of Claim the “Event of Default” by the first, second or third defendants is the refinancing by them. The plaintiff alleges this prejudiced their ability to meet one or more of their obligations under the Loan Agreement, plaintiff’s mortgage or General Security Agreement; and that he did not consent to the refinance which he opined ranked in priority to his mortgage.

20. [20]
    The plaintiff asserts that the defendants are in breach of clauses 13.1(q) and 13.1(f) of the Loan Agreement. The plaintiff submits that either or both of the alleged breaches have the automatic consequence that the loan amount becomes immediately payable to the plaintiff. Those are the bases of the application for summary judgment. There is no issue that the balance of the loan amount ($440,000.00) has not been paid.

21. [21]
    Paragraph 15 of the Statement of Claim pleads as follows:

“15.On or around 24 May 2016 the first, second and third defendants, without the consent of the plaintiff, completed and were a party to a refinance of their financial facilities from Stacks to FMMI, and such refinance included: -

15.1The advance from FMMI to the first, second and third defendants of: -

15.1.1.the amount of $575,639.88; or

15.1.2in the alternative an amount of money that exceeded the total sum of $460,000.00; or

15.1.3.in the alternative, an amount of money that was between $575,639.88 and $1,330,000.00”.

22. [22]
    Paragraph 19 of the Statement of Claim pleads as follows:

“19.The Refinance by the first, second and third defendants creates the following breaches of the following terms of the Loan Agreement by the first, second and third defendants: -

19.3.the term referred to in paragraph 8.8.4. above because  the first, second and third defendants were parties to the refinance, without the prior consent of the plaintiff, which created an encumbrance in favour of FMMI that ranked prior to the plaintiff’s mortgage.

19.5.the term referred to in paragraph 8.8.6 above because, in the opinion of the plaintiff , the Refinance had a material adverse effect on and has prejudiced the first, second and third defendants’ ability to meet its obligations under the Plaintiff’s Mortgage, the Loan Agreement and the General Security Agreement due to:-

19.5.1.the significant increase in the first, second and third defendants’ indebtedness as referred to in paragraph 15.1.1 to 15.1.3 above;

and

19.5.2.the first, second and third defendants’ failure to provide the information referred to in paragraph 13 above to prove that the first, second and third defendants could meet one or more of their obligations contained in the Loan Agreement, Plaintiff’s Mortgage or General Security Agreement.

(Together the “First, Second and Third Defendants’ Breaches of Loan Agreement”).”

23. [23]
    The defendants so far as relevant plead in their defence:

“6As to the allegations in paragraph 8 of the statement of claim, the defendants:

(b)deny as untrue in fact the allegations in paragraphs 8.3 – 8.12 (inclusive)

(c)say further to sub-paragraph (b) herein that:

(i)the plaintiff’s allegations in paragraphs 8.3 – 8.12 (inclusive) do not accurately state the terms of the Loan Agreement; and

(ii)the defendants will rely on the Loan Agreement at trial as to its terms, meaning and effect.”

“17.As to the allegations in paragraph 19 of the statement of

claim, the defendants deny, as untrue and contrary to fact:

…

(c)the allegations in sub paragraph 19.3 and say further  that the plaintiff’s consent was not required for the Refinance to occur”

and

(e)the allegations in sub-paragraph 19.5 and say that the refinance has not had any material adverse effect upon the defendants’ ability to meet the obligations imposed on them under the Loan Agreement.”

24. [24]
    In his Affidavit (court document 6), Mr Rebetzke deposes:

“15.On 30 May 2016, after I had spoken with my solicitors, Taylors Solicitors, and had been advised that the results of the title search [over the material property] … I formed the opinion that the refinance by the First, Second and Third Defendants of their facilities with Stacks to FMMI had a material adverse effect on the First, Second and Third Defendants which prejudiced the First, Second and Third Defendants’ ability to meet any one or more of their obligations under the Loan Agreements and the Mortgage. The reasons I formed this opinion include:-

(a)the First, Second and Third defendants were approximately six (6) weeks late in making the only payment to me in accordance with the Loan Agreement that had been required to be made before 19 May 2016, and payment was made by the First, Second and Third Defendants after I commenced legal proceedings to recover the sum owing.

(b)Based on the contents contained in the Deed [of Release and Settlement] I was of the belief that the First, Second and Third Defendants were indebted to Stacks for $460,000.00 in March 2015. In the letter [from Merthyr Law on behalf of the defendants to Taylors Solicitors dated 19 May 2016] the First, Second and Third Defendants advised that they were intending to borrow $1,330,000.00 from FMMI to refinance their existing facilities with Stacks, this is in excess of three (3) times the amount of debt that I believed the First, Second and Third defendants had with Stacks.

(c)Despite my solicitors requesting the information that was requested in the email in [the email from Taylors Solicitors in response to the previous letter]… no response from the First, Second and Third Defendants or their solicitor has been received by me or my solicitor as at the date of swearing this Affidavit.”

Submissions

25. [25]
    Counsel dealt with issues separately. What follows is a composite summary of each of their submissions.

Defendant

26. [26]
    Mr Meredith submitted that inherent in his objection to paragraph 8 in the affidavit of Mr Rebetzke (which I have already ruled as admissible on this application) was an allegation that the Loan Agreement had been made without consideration. He referred to a number of clauses in the Loan Agreement in support of that submission:

“2.1.The lender and borrower acknowledge and agree that the lender has previously provided the borrower with financial accommodation for the sum of $650,000.

2.2 The lender may from time to time at its discretion make further advances to the borrower on the terms and conditions of this agreement.”

27. [27]
    He submitted that there had been no further advances made.

28. [28]
    He also referred to the draw-down Clause 5.1 – that the borrower has provided the $650,000.00); and repayment Clause 8 – that $210,000.00 be paid by a specified date [as it was paid in fact] and the balance owing from time to time using best endeavours to pay in two $100,000.00 instalments.

29. [29]
    Mr Meredith said that the clauses clearly contemplated that the financial accommodation was an event that had occurred in the past and that there was no evidence that any further consideration had been given under the Loan Agreement. He submitted that the defendants were required to enter into the Agreement by the plaintiff.

30. [30]
    Further, he submitted that clause 21 provided that the Agreement contained all the terms and conditions of the agreement between the parties and superseded any prior document and/or prior negotiations and communications and that the Loan Agreement and other documents were stand-alone documents.

31. [31]
    He submitted that the purpose of Loan Agreement was stated at clause 3.1, namely that: “the purpose of the facility is to provide financial assistance to the borrower for business and commercial purposes.” In the absence of any further financial assistance he submitted it could only refer to the monies previously advanced, which he characterised as being “past consideration”. He submitted that this ground was in effect the end of the matter because the Loan Agreement was thereby unenforceable.

32. [32]
    Mr Meredith submitted that a written notice of the defendant’s intention to refinance, in the terms of clause 4.2 of the Loan Agreement, was given to the plaintiff in a letter from their lawyers dated 19 May 2016. So far as is relevant, that letter stated the following:

“Our client is currently refinancing its loan arrangements and the first mortgagee for our clients will be changing from Stacks finance to FMMI finance.

In accordance with clause 4.2 of the Loan Agreement, we advise as follows:

1.the incoming lender is FMMI Finance;

2.the amount to be secured to FMMI is $1,330,000. Security is to be taken in the form of a first mortgage over the security property as defined in the Loan Agreement… [and also other property];

3.the income lender requires priority over your client’s mortgage.

and

Please confirm your client will provide its consent to the incoming mortgagee taking priority over your client’s mortgage …”

33. [33]
    Mr Meredith conceded that the plaintiff did not give the consent sought. However he submitted that there had been a transfer of an existing mortgage rather than the creation of one and then referred to the process as being an “assignment” and that it was not an event covered by the definition of “encumbrance” in the Loan Agreement. [I observe that this submission was clearly misconceived, because a transfer and an assignment are included in the definition of encumbrance].

34. [34]
    Mr Meredith submitted that there was inadequate particularisation of the matters in clause 13.1 of the Loan Agreement and that the Statement of Claim simply referred to a number of those particular provisions without particularising which one or more of them was relied on. He also submitted that the notice of breach did not state any particular breach relied on.

35. [35]
    He conceded that so far as the plaintiff’s subjective formation of a view that a material adverse effect had occurred had not been pleaded in the defence on the basis of whether it was reasonable or not.

Plaintiff

36. [36]
    Mr de Waard submitted that there had been a compromise of proceedings that were on foot and therefore there was an exception to the rule that a contract must be supported by consideration. The Supreme Court proceedings had been discontinued by both parties agreeing to not continue their Claim and Counter-Claim respectively. The consideration for that agreement was that the plaintiff was prepared to accept a debt of less value and that the Loan Agreement included a new party (the third defendant) which provided a security (the Mortgage) which had not been part of any previous agreement or arrangement. The plaintiff agreed to allow the defendants to refinance with a new financier subject to particular considerations. The repayment provisions were recalculated on the reduced sum of money. This was all part of the compromise which the plaintiff has pleaded.

37. [37]
    Further, the Loan Agreement contemplated other documents being entered into to give effect to it and to give effect to the compromise. Mr de Waard referred to clauses 4.3 and 4.4, one of the contemplated documents being the Mortgage. In the Mortgage, item 6 refers to the sums of money referred to in item 5 (in the context of repayment/payment to the mortgagee (the plaintiff)) and item 5 states that the “secured monies” as defined in the schedule refers to “… all monies that you owe the lender under the Loan Agreement between the parties dated 15 April 2015.” In other words, he submitted, the Loan Agreement.

38. [38]
    Mr de Waard also referred to the defence (at paragraph 6(a), 7(a), 9(a), 10(a) and 15(a)) in the Supreme Court proceeding and that the defendants had in fact denied the loan previously made, although they now admitted that money was provided.

39. [39]
    He referred to the correspondence (to the defendants’ previous solicitors) from the plaintiff’s solicitors dated 08 June 2016. The penultimate paragraph is: “we are instructed that our client hereby demands payment of the sum of $440,000 to our client within seven (7) days from the date of this letter”. The reply to that letter from the first and second defendants denies a breach of the Loan Agreement, rather than denying its existence or the enforceability of it. Further, the letter from the defendants’ former solicitors refers to the Loan Agreement in the following terms:

“I refer to our telephone conversation on 18 May 2016 and the Loan Agreement between our clients dated 15 April 2015.

Our client is currently refinancing its Loan Agreements and the first mortgagee for our clients will be changing from Stacks Finance to FMMI Finance.

In accordance with clause 4.2 of the Loan Agreement, we advise as: [there follow details of the new lender, the amount of the loan and the form of security and the fact of the new loan having priority over the loan provided by the plaintiff]”.

40. [40]
    Mr de Waard submitted that the stated intention to refinance was inconsistent with there being no enforceable Loan Agreement, as was the request that the plaintiff provide its consent to the refinancing. With respect to the purpose of the loan in the Loan Agreement, it refers to “commercial purposes”, he submitted that the compromise of a debt owing in a different proceeding must be a “commercial purpose”.

41. [41]
    Mr de Waard submitted that the combination of all of the matters arising from the terms of the Loan Agreement were sufficient to give rise to an entitlement to an order for Summary Judgment in favour of the plaintiff because there could not be any defence to the event as described and he submitted that the opinion of the plaintiff in respect of a “material adverse effect” does not in terms of the Loan Agreement need to be reasonable and that in any event, the defendants’ pleadings do not assert that requirement.

Defendant in reply

42. [42]
    Mr Meredith in reply referred further to the issue of past consideration and specifically referred to clause 7 in the Loan Agreement which refers to there being no ongoing obligations except in accordance with the Deed, in the context of the entire agreement clause 21.

The proposed amendment to the defence

43. [43]
    The issue of consideration for the Loan Agreement is the subject of an amendment to the defence foreshadowed at the hearing, which pleads:

“3.As to the allegations in paragraph 5 of the statement of claim [which alleges that the defendants entered into the Loan Agreement], the defendants:

(ca) as a consequence of the consideration having been passed [sic], the Loan Agreement is not a binding contract and as such is unenforceable.”

44. [44]
    However, in paragraph 6(a) of the defence the defendants admit the allegations in sub-paragraphs 8.1 and 8.2 of the Statement of Claim. Those allegations are:

“8.1.that the sum owed by the first, second and third defendants to the plaintiff was $650,000 (“Loan Amount”); and

8.2. that the first, second and third defendants were and are jointly and severally liable to the plaintiff for all of their obligations pursuant to the loan agreement including the payment of the loan amount or any part thereof.”

45. [45]
    Mr de Waard submitted that the proposed amendment to the defence conflicted with other paragraphs of the defence which were plainly inconsistent with the new allegation. Such of those paragraphs that contained admissions could only be withdrawn with leave of the Court. Further, he submitted that one of the amounts referred to in the Loan Agreement had been paid (the $210,000.00) and was the subject of an admission in the defence.

Discussion

Was there consideration for the making of the Loan Agreement?

46. [46]
    In this case there is a mutual exchange of promises such as is required in contracts to provide consideration. “Past consideration” is a as a rule insufficient but, of course, there are some specific exceptions. The Loan Agreement was part of the tranche of documents, including the Mortgage and the General Security Agreement, that was the foundation of the compromise of the Supreme Court proceedings and the discontinuance of them. The Loan Agreement is not a standalone document. All of the documents to which I have referred are part of the one transaction.

47. [47]
    The promises exchanged in the compromise and discontinuing of the Supreme Court proceeding constitute consideration for the Loan Agreement which deals specifically with the loans of money made by the plaintiff to the defendants. The Mortgage and the General Security Agreement deal with specific matters in regard to the whole of the transaction. In my view there is plainly consideration in the Loan Agreement and I do not accept the submission of Mr Meredith where he submitted to the contrary. If it was thought otherwise, the compromise and discontinuing of the Supreme Court proceeding would be an exception to the past consideration rule.

48. [48]
    Whether there is consideration for the Loan Agreement is a simple matter of construction of the Loan Agreement and does not require recourse to the dealings between the parties or any extraneous documents or information, beyond the documents and correspondence relating to the compromise of the Supreme Court proceeding.

Why a Loan Agreement was required

49. [49]
    The second defendant in her affidavit (document 8) acknowledged in paragraph 5 that a draft Loan Agreement, Mortgage and General Security Agreement were provided to the defendant’s lawyers by the plaintiff’s lawyers. They were executed after some amendments were made. The second defendant deposed that “no explanation was provided as to why a Loan Agreement was required”.

50. [50]
    I do not know what she meant to convey by that statement. The Loan Agreement is plainly the document which deals with the changes in the financial arrangements as between the parties. Further, the documents were all executed by each of the defendants after amendment. The defendants had lawyers acting for them through that process.

51. [51]
    In any event, no allegation of duress, fraud or unconscionable conduct is made in the defence and none was alleged in the foreshadowed amendment of the defence.

52. [52]
    The existence of the Loan Agreement is admitted in the defence. An instalment payment has been made (albeit made late) pursuant to the Loan Agreement.

53. [53]
    There is nothing in the material that suggests that the Loan Agreement is other than regularly made and executed by all the parties.

Does the plaintiff’s opinion about a “material adverse effect” need to be reasonable?

54. [54]
    The defendants have foreshadowed an amendment to the defence that now raises this matter, despite it not being the subject of any pleading or otherwise challenged on affidavit material and the plaintiff having deposed in affidavits the view he formed and the reasons for it, seeking to import into the relevant clauses of the Loan Agreement (particularly clauses 13.1(q) and (f)) a requirement for reasonableness in the formation of the opinion.

55. [55]
    Was the plaintiff required to form his view or opinion that the Refinancing Agreement had a “material adverse effect” on the capacity of the first, second and third defendants to meet their obligations under the Loan Agreement or Mortgage or otherwise, on reasonable grounds?

56. [56]
    “Reasonableness” has not been pleaded by the defendants and the view or opinion of the plaintiff, having been deposed in affidavits as to how he formed the opinion and the reasons for it, has not been challenged in any affidavit material by the defendants.

57. [57]
    This is not a matter that calls for any “Wednesbury unreasonableness” consideration: Associated Picture Theatre Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. The concept of reasonableness in the context in which it has been raised here is a matter of construction (rather than the formation) per se of the Loan Agreement. The Loan Agreement does not explicitly deal with the matter of reasonableness of a view or opinion about a material adverse effect. Rather, this issue is addressed in several parts of the Loan Agreement all of which are linked or inter-related, it seems to me, in a deliberate and comprehensive way and there really is no basis to suggest that one or other or all of the parties did not appreciate the full meaning of such a significant matter and the fact that it gave to the plaintiff the task of forming a view about “material adverse effect”. It seems to me that it is a matter of construing the purpose of this provision, not in isolation but in the context of all of the matters which relate to it so as to ascertain its meaning. The premise is that the parties knew at the time of making the Loan Agreement that these provisions were a critical part of it.

58. [58]
    Accordingly, it seems to me that on a proper construction of clause 13.1 of the Loan Agreement the words used are clear in the context of the other provisions linked to it and ought to be construed to have their plain and ordinary meaning. There is nothing in the words used that would suggest that there is some requirement for the view or opinion formed by the Lender to be assessed against some arbitrary yardstick (‘reasonableness’) or other consideration which is not made explicit in the wording of the clause.

59. [59]
    In those premises it seems to me that there is no requirement for the formation of the view or opinion to be “reasonable”. The view or opinion falls to be assessed on the factual circumstances that in this case involve the Refinancing Agreement, in the context of the Deed of Release and Settlement, the compromise and the Loan Agreement in their entirety, including the level of additional debt incurred by the defendants. Such a construction gives effect to the mutual intention of the parties when the Loan Agreement was made.

60. [60]
    I do not consider this issue to be one which would be a trialable issue because it is one that can be resolved upon simple principles of construction on this application and is a matter for a Judge not for the opinion of one or other or any of the parties.

The ‘Whole of Agreement’ clause

61. [61]
    What does the “whole of the agreement” clause in the Loan Agreement mean, upon a proper construction of the document? Such clauses are not necessarily “conclusive”: it depends on the construction of an agreement as to the intended effect of such a clause.

Whilst Mr Meredith referred to the clause in the Loan Agreement in his objection to the plaintiff’s affidavit (dealt with, supra) and in the context of his submission about consideration, I have found that the Loan Agreement was made on proper (or alternatively, past) consideration: that is, the compromise involving the discontinued Supreme court proceeding, the addition of the third defendant, the provision by the defendants of a mortgage and the changes to the amounts described as loans. Hence all of those matters are incorporated (or as sometimes described, integrated) into the Loan Agreement. That is what is meant by “the whole of the agreement” clause here.

Are the defendants in breach?

62. [62]
    The effect of the refinance agreement was a transfer (or assignment) of an existing mortgage from one entity to another. The transfer or assignment in fact involved a greater amount of money than that secured by the original Mortgage. An event of default has thereby occurred because the refinance agreement created an encumbrance as defined, that created a priority in that greater sum, in the definition clause in the Loan Agreement and constituted a default as defined in the Loan Agreement.

63. [63]
    With respect to the submission that there was inadequate particularisation, that is as to whether any particulars were sought before the defence was filed, Mr Meredith did not have any instructions about that matter. However, it appears that none were sought. As to the submission that there was no particularisation of a breach, the defence clearly responded to the relevant clauses by specifically referring to the sub-clause numbers. There is no requirement to give notice of breach. At clause 13.2 (to which I have referred previously) there was a deeming provision that in the event of a default the debt was immediately due and payable. The notice was a simple matter of advising that a breach had occurred, as that was conveyed by the plaintiff’s lawyers to their defendants’ lawyers in correspondence.

64. [64]
    Further, in paragraph 13 of the Affidavit of the second defendant filed in this application, a letter from the plaintiff’s solicitors, dated 22 June 2016, is exhibited that refers to a breach and to the debt consequently becoming due and owing. That further correspondence clearly identified the breach.

Summary Judgment for Plaintiff

65. [65]
    Rule 5 of the UCPR informs the philosophy of the Rules:

“Philosophy – overriding obligations of parties and Court:

5 (1)The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.

(2)Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.

(3)In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way.

(4)The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.”

66. [66]
    The facilitation of a fair and just resolution of matters in dispute involves the application of the words found in the particular rule. Of course, summary judgment is not ordered as a matter of course and in determining an application for summary judgment the court is essentially required to determine whether the respondent (that is, the defendant) to the application has established some real prospect of succeeding at a trial and, if that is established, then the proceeding must go to trial.

67. [67]
    Rule 292 UCPR provides as follows:

“r 292 (1) A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.

(2)If the court is satisfied that —

(a)the defendant has no real prospect of successfully  defending all or a part of the plaintiff's claim; and

(b)there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff's claim and may make any other order the court considers appropriate.”

68. [68]
    In Deputy Commissioner of Taxation v Salcedo [2005] QCA 227, Atkinson J wrote with respect to an application for summary judgment by the plaintiff that:

[44] … the court must consider if it is satisfied that:

(a)the defendant has no real prospect of defending all or a part of the plaintiff’s  claim;

(b)there is no need for a trial of the claim or the part of the claim.

If the court is satisfied of those circumstances then it has a discretion to give judgment for the plaintiff and make any other order that it considers appropriate. ...

[45]These rules have been adopted to give effect to the overriding purpose of the UCPR set out in r 5(1), “to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.” The goal of expeditious resolution, at a minimum of expense, is pursued by the ability of the court to give summary judgment in the circumstances set out in r 292 and r 293. The goal of just resolution of the real issues is protected by the necessity to satisfy the requirements of both paragraphs (2)(a) and (b) and the residual discretion the court has to refuse summary judgment even when the requirements of paragraphs (2)(a) and (b) are satisfied.”

69. [69]
    In General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ wrote:

“130… once it appears that there is a real question to be determined whether a fact or law and that the rights of the parties depend upon it, then it I not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process. Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings … in my opinion great care must be exercised to ensure that, under the guise of achieving expeditious finality, a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary or demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”

70. [70]
    In Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd (2009) QCA 135, the expression “no real prospect of success” was the subject of analysis. Chesterman JA wrote:

“[24]In practical terms I suspect the rule means that summary judgment should not be given where the facts upon which the parties’ respective rights depend are disputed, or where the respondent to the application for summary judgment adduces evidence as to the existence of facts which, if proved, would establish a defence or a right to relief. In other words, it is only where all the facts are known and/or are established beyond controversy that the court should embark upon determining whether to give summary judgment. Where relevant facts are controverted, or where it appears that facts may exist which would affect a right of action or defence, there should be a trial to determine the facts.”

71. [71]
    It has been said that “the more appropriate enquiry [in respect of r 292] is in terms of the rule itself: that is, whether there exists a real, as opposed to a fanciful, prospect for success.”: Queensland University of Technology V Project Constructions (Aust) Pty Ltd (In Liq) [2003] 1 Qd R 259 per Holmes J (as her Honour then was) at 265.

72. [72]
    The facilitation of a fair and just resolution of matters in dispute involves the application of the words found in the particular rule. Of course, summary judgment is not ordered as a matter of course and in determining an application for summary judgment the court is essentially required to determine whether the respondent to the application has established some real prospect of succeeding at a trial and, if that is established, then the proceeding must go to trial.

73. [73]
    Holmes JA (as her Honour then was) wrote of the “finer shades of meaning” in discussing the difference of view from his Honour that she held about the test and wrote:

“[1]a claim (or defence) which has “no real prospect of succeeding” … implies, to me at least, a conclusion reached after a hard-headed assessment, rejecting spurious arguments…”

Resolution

74. [74]
    The construction that I have applied really focuses on the specific words in the Loan Agreement and the logical chain of connection that I have referred to in my analysis of the contractual terms to identify the basis of a breach and the consequences thereof. Further, I consider that all the material facts are known and are not controversial.

75. [75]
    The Loan Agreement is specific as to the consequence of a breach. The refinancing does amount to a breach. The defendants have incurred greater debt. They were delayed in the earlier payment of $210,000.00. It was open to the plaintiff to form the opinion that he did. The Loan Agreement provides that the loan amount becomes immediately payable upon an event of default occurring: that is, a specified breach. It has not been paid in full. The defendants have not articulated any defence, open on a proper construction of the Loan Agreement, to the allegations in the statement of claim. The defendants have no reasonable prospect of succeeding in defending the claim. There is no need for a trial of the claim or part of it.

76. [76]
    In the premises the application should be granted and the plaintiff should have an order for summary judgment against the defendants.

Striking out the defence

77. [77]
    Having granted summary judgment, I do not need to consider the second part of the application. However, but for the Order I have made, I would have granted the second part of the application. The defence is internally inconsistent, at odds with the simple construction of the Loan Agreement and is further inconsistent as the foreshadowed amendment requires admissions being withdrawn, currently without leave. Whilst a Court may give leave to amend a pleading, the defendant’s have not sought leave here; the foreshadowed amendment is specific to one issue and cannot be made without leave; and on the construction of the relevant clauses of the Loan Agreement and my findings on other matters, there is no amendment that in my view could be made to articulate a defence.

Costs

78. [78]
    The plaintiff should have his costs. Whether that be costs of the application or of the application and the proceeding is a matter that I will resolve if the parties wish me to so. Similarly, I will resolve any issue as to whether costs are standard or indemnity costs. In either or both respects, I will hear further submissions from the parties as may be necessary. However, for the present I will simply order that the defendants pay the plaintiff’s costs.

Orders

1.Application granted.

2.Order for Summary Judgment for the plaintiff against the first, second and third defendants.

3.The first, second and third defendants to pay the plaintiff’s costs.