Aravanis v Millar[2017] QDC 235

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   In this proceeding, the plaintiffs, the Trustees in Bankruptcy of Ian Desmond Millar (the Trustees) seek summary judgment in respect of an alleged entitlement to contribution from the defendant (Mr Millar) in respect of a loan guaranteed by Mr Millar and his father, the bankrupt (Mr Millar Senior).
2. [2]
   Mr Millar defends on the basis that he has made various payments in respect of another loan guaranteed by him and his father which give rise to an entitlement to contribution from Mr Millar Senior as co-surety of that loan which can be set off against any amounts owed by him to the Trustees under s. 86(1) Bankruptcy Act 1966 (Qld).

Background

The First Deed of Loan

3. [3]
   First Mortgage Capital Pty Ltd (FMC) agreed by written Deed of Loan to lend to Ralliman Holdings Pty Ltd (Ralliman) and Sharshee Pty Ltd (Sharshee) the amount of $143,904.00 for a period of three months (the First Deed of Loan). Ralliman appears to have been a company under the control of Mr Millar and Sharshee a company under the control of Mr Millar Senior.
4. [4]
   The loan was made (the First Loan). The date of the First Deed of Loan is admitted on the pleadings as being 2 February 2015, and the due date for repayment is at least impliedly accepted as being 2 May 2015.
5. [5]
   The First Deed of Loan provided for the loan to be made on the terms of Queensland Registered Memorandum 712917758 (the Registered Memorandum). Those terms were not before the Court. However the schedule to the First Loan Agreement provided, inter alia, for a “Lower Rate” of 18% p.a. and a “Higher Rate” of 30% p.a. The terms in the First Deed of Loan to the extent they were before the Court do not explain what the significance of the two rates might be, though one might guess.
6. [6]
   On 7 and 6 November 2014 respectively, Mr Millar and his father also executed a written Deed of Guarantee (the First Guarantee). The Trustees plead (adopting the defined terms used in this judgment) that by the First Guarantee, Mr Millar and Mr Millar Senior, in consideration of FMC entering into the First Deed of Loan, agreed to guarantee the due and punctual and complete performance of Ralliman and Sharshee’s obligations under that deed. That allegation is admitted by the defendant.
7. [7]
   Notwithstanding that admission, the terms of the First Guarantee tendered in these proceedings are incomplete. The document at exhibit D to Mr Roy’s affidavit is very brief. While it includes a schedule which identifies the loan provided for by the First Deed of Loan, it does not contain any other terms. In particular, it contains no term by which the obligations under the First Deed of Loan are guaranteed. Rather it incorporates the terms contained in the Registered Memorandum. I do not know if that document contains terms which are apt to create a guarantee of the First Deed of Loan but, as I have said, the matter is admitted in the pleadings.
8. [8]
   It is, however, somewhat troubling that direct evidence of the written term creating the guarantee is not before the Court. One might have cause to doubt that the Registered Memorandum would have such a term, bearing in mind that it also is said to contain the terms of the First Deed of Loan, and one would not ordinarily expect to find a clause creating an obligations as guarantor in terms for a loan to a principal debtor.
9. [9]
   Mr Millar Senior also gave a registered mortgage to FMC over certain property owned by him and located in NSW (the Land). The plaintiff alleges in this respect, that Mr Millar mortgaged all his estate and interest in the Land “as security” (the Mortgage), though security for what is not identified. I assume the intention is to allege that the Mortgage is security for the obligations under the First Guarantee, though the pleading does not say as much. This allegation is also admitted in the Amended Defence.
10. [10]
    The instrument of mortgage incorporates an Annexure A which appears to refer to the loan provided under the First Deed of Loan. It also incorporates certain standard terms (which were also not put before me). It is not clear from the evidence before me that the Land was mortgaged to secure Mr Millar Senior’s guarantee of the First Loan Agreement, or at least to secure only that guarantee. That also is somewhat troubling, given the allegations of a second loan guaranteed by both Mr Millar and Mr Millar Senior as discussed next.

The Second Deed of Loan

11. [11]
    Mr Millar alleges by his Amended Defence that there was a further loan and guarantee. He alleges, relevantly, that:

    1. (a)
       The loan (the Second Loan) was made by FMC to Sharshee, Ralliman and Tiffany Holding Pty Ltd (Tiffany) in the amount of $223,304.00 for a period of three months from 6 March 2015 in accordance with the terms of a written Deed of Loan signed by the borrowers (the Second Deed of Loan);
    2. (b)
       That a further sum of $50,000 was advanced on 16 March 2015;
    3. (c)
       That the obligations under the Second Deed of Loan were also guaranteed by Mr Millar and his father in writing (the Second Guarantee); and
    4. (d)
       That the “Lower Rate” was 60% p.a. and the “Higher Rate” a remarkable 120% p.a. (Again, the terms in the Second Deed of Loan do not explain what the significance of the two rates might be.)
12. [12]
    The Trustees do not admit these allegations, but there was evidence before me to sustain them in the form of a Deed of Loan and Guarantee consistent with the terms alleged and signed by Mr Millar Senior. Further, Mr Roy’s affidavit exhibited the “Combined Default Notice and Demand” dated 20 August 2015 given by FMC (the Demand). The Trustees rely on the Demand. It is drafted on the basis that both the loans and both guarantees were entered into. Once again, however, key terms of both documents are said to be recorded in the Registered Memorandum, which is not before me.
13. [13]
    I proceed in this application for summary judgment on the basis the defendant might make out at trial that the Second Deed of Loan and Second Guarantee were entered into as alleged and that the sum identified in the Second Deed of Loan was advanced.

The Default 

14. [14]
    The Trustees allege, and it is admitted, that the First Loan was not repaid. The defendant alleges that the Second Loan was not repaid. Given the terms of the Demand, I will assume that for the purposes of this application.
15. [15]
    As noted above, the Demand was made dated 20 August 2015. The character of the Demand is disputed on the pleadings. The plaintiffs allege that the Demand was a demand on the First Deed of Loan and First Guarantee. The Amended Defence alleges it was a demand to repay of $449,397.55, being the total amount due on both loans. The plaintiffs deny that allegation but rely only on certain terms of the Demand in doing so.
16. [16]
    The Demand was in evidence. It relevantly provides:

COMBINED NOTICE OF DEFAULT AND DEMAND (“the Notice”)

Pursuant to s 84 of the Property Law Act 1974 (QLD) and s 78 of the Land Title Act 1994 (QLD)

To:The Borrower/s, Guarantors/s and mortgagor/s named above (“the Obligors”)

TAKE NOTE

1. To secure the obligations of the Borrower to the Lender under the Facility you provided the Security pursuant to the Security Documents.
2. An Event of Default has occurred under the Facility.

THE DEFAULT

3. The Borrower has breached of clause 216 p) of the Security Documents and the Facility by failing to repay the Principal by the Loan Repayment Date.
4. As a consequence of the Default, the Secured Monies is immediately due and payable by the Obligors to the Lender together with interest and costs.

SECURED MONIES

The Secured Monies as at Thursday, August 20, 2015 is as follows:

Principal: $494,997.55

Outstanding costs: $4,400.00

--------------------

Total: $499,397.55

THE REMEDY

5. You have one month to pay the Secured Monies to the Lender.

CONSEQUENCES OF NON REMEDY

6. If you do not pay the Secured Monies to the Lender within one month after service of this notice upon you, without further notice to you, the Lender proposes to exercise any or all of its rights pursuant to the Facility and at law including but not limited to take possession of the Security and exercise power of sale.
7. Repossession and sale of the Security may not extinguish the Obligor’s debt to the Lender.
8. An updated payout figure should be sought from the Lender prior to paying the Secured Monies.
9. Any amount paid which is less than the Secured Monies will be accepted without prejudice to the lender’s rights under the Facility.

17. [17]
    It can be seen that the Demand was for a single sum, the “Secured Monies”, though it identified that sum as made up of the two principal sums advanced under the First and Second Loan plus interest and costs. It is reasonably arguable (at least) that the Demand could not be characterised on its face in my view as a demand on the principal debtors and guarantors to pay only the First Loan and interest.
18. [18]
    The Demand also appears to have been inaccurate (based on the evidence in this application at least) because on its face it identified all three companies as the Borrowers on both loans. Further, for reasons which are not obvious it seems to have failed to identify the Land as “Security”. That seems to be correct because the Land is property located in NSW and appears to be property located on Mona Vale Road, in the north of Sydney. The Security identified in the Demand is property in Queensland.
19. [19]
    The Demand also failed to identify Mr Millar Senior as a “Mortgagor”. As a Notice of Exercise of Power of Sale under s. 84 Property Law Act 1974 (Qld) in respect of the Mortgage which dealt with obligations guaranteed under the First Guarantee alone the  Demand appears to have left much to be desired: see Clarke v Japan Machines (Aust) Pty Ltd (No 2).^[1]It might be, however, that another notice was given in respect of the Mortgage, bearing in mind that the Land was located in NSW and a different notice might have been required and given.
20. [20]
    In any event, FMC proceeded to exercise power of sale over the Land pursuant to the terms of the Mortgage and sold the property to THIK Investments Pty Ltd for $265,000. (The sale price seems low given that the evidence discloses that Mr Millar Senior purchased the Land in 2006 for $352,000. That matter was not explored before me.).
21. [21]
    After adjustments, the sum of $248,197.38 was paid to FMC’s solicitors. To the extent these allegations are not admitted, I am satisfied they are established on the material before the Court. They were not actively disputed by Mr Millar (who appeared for himself) on the hearing of the application.
22. [22]
    The Trustees therefore claim contribution from Mr Millar as co-surety of $124,098.69 plus interest.

Applications for summary judgment

23. [23]
    The Trustees seek summary judgment under Rule 292 UCPR, which provides:

(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.

24. [24]
    The legal burden of proof is on the plaintiff to satisfy the court of the matters set out in Rule 292(2). It is only when evidence discharging that burden has been led such that an evidentiary onus shifts to the defendant.^[2]The overall burden of proof remains on the plaintiff.^[3]Both limbs of the rule must be satisfied by the plaintiff in order to enliven the discretion vested in the court to grant summary judgment.

25. [25]
    As to the meaning of “no real prospect”, the word “real” distinguishes fanciful prospects of success. It directs the court to assess whether there is a “realistic,” as opposed to a “fanciful” prospect of success.^[4]

26. [26]
    The need to be satisfied that there is no need for a trial of the claim or part of the claim and, in any event, the proper judicial exercise of the discretion to grant or deny summary judgment, are matters which invoke the necessity for the court to proceed with appropriate caution, having regard to the seriousness of a decision to summarily terminate a proceeding by effectively denying the defendant the opportunity to present its case at a trial in the ordinary way, and after taking advantage of the usual interlocutory processes.^[5]

The right to contribution 

27. [27]
    The right to contribution between sureties arises at law and in equity. The right at law arises on payment of more than a fair share of the guaranteed liability by a surety. The right in equity can arise prior to actual payment. The foundation of the right was summarised by the High Court recently in Lavin v Toppi^[6]as follows:

“The rationale of the right to contribution, both at law and in equity, was described by Kitto J in Albion Insurance Co Ltd v Government Insurance Office (NSW)“ as one of natural justice” which ensures “that persons who are under co-ordinate liabilities to make good the one loss (eg sureties liable to make good a failure to pay the one debt) must share the burden pro rata.” In cases of suretyship, the concern is to ensure that the common burden of suretyship is borne equally as between co-sureties, so that the exercise by a creditor of its contractual right under its guarantee to recover the guaranteed debt in full from one of several co-sureties does not leave that surety to bear a disproportionate share of the burden of suretyship.

The appellants and respondents each agreed to pay the full amount of the guaranteed debt. Each of them became liable to pay that debt upon demand by the Bank under cl 6.2 of the guarantee.

In Mahoney v McManus, Gibbs CJ (with whom Murphy and Aickin JJ agreed) said that: “the doctrine of contribution is based on the principle of natural justice that if several persons have a common obligation they should as between themselves contribute proportionately in satisfaction of that obligation. The operation of such a principle should not be defeated by too technical an approach”.”^[7](footnotes omitted)

28. [28]
    The right to contribution is restricted to sureties who have co-ordinate liability. That requires them to have a common obligation to make good the one loss, where the liabilities are of the same nature and to the same extent. That requirement will be met where the co-sureties are liable in respect of the same principal debt to the same obligee.^[8] 
29. [29]
    Where guarantors are jointly and severally liable in respect of the same principal debt, the just share will be an equal contribution to discharge of that liability.^[9]The right arises at law whether the guarantor has made a payment in discharge of the common obligation or a payment has been made by a third party on behalf of the guarantor in circumstances where the guarantor is liable to reimburse that party.^[10]A fortiori where a payment by a third party discharges a liability of the third party to the guarantor.
30. [30]
    The entitlement to contribution at common law arises on payment by the surety of more than their just share. It is not available where the guarantor claiming contribution has paid the creditor less than that share, even if the creditor has not pursued claims against the other guarantors and does not intend to do so.^[11]Nor is there any entitlement in respect of amounts overpaid.^[12]

Have the Trustees made out an entitlement to contribution in the amount claimed?

31. [31]
    Despite the lack of direct evidence of all the terms of the First Guarantee, the Amended Defence admits that each of Mr Millar Senior and Mr Millar guaranteed payment of the First Loan. That admission does not go so far as to concede that they were jointly and severally liable in respect of the First Loan but in my view, that is sufficiently plain from the terms of the First Guarantee which are in evidence (which define the Guarantor as comprising Mr Millar Senior and Mr Millar) that they were both liable to the same extent under the First Guarantee.
32. [32]
    It can be accepted, therefore, that Mr Millar Senior had a potential right to payment of money in discharge of a right to contribution against Mr Millar in the event that Mr Millar Senior paid more than half of the guaranteed liability in respect of the First Loan.
33. [33]
    The difficult which arises is that the plaintiff has not demonstrated to the level of certainty required on this application that Mr Millar Senior is entitled to contribution of any certain sum from Mr Millar. There are two problems.
34. [34]
    The first relates to the Mortgage. The payment relied upon by the Trustees is the sale proceeds obtained by FMC on realization of the Land pursuant to the Mortgage. Such a payment can give rise to a right to contribution in the surety whose property has been realised to pay a guaranteed debt. However, it must also be demonstrated that the funds paid to FMC as a result of the exercise of the power of sale under the Mortgage were paid in respect of the obligations under the First Guarantee and the First Guarantee alone.
35. [35]
    The Amended Defence does not admit that the Land was mortgaged to secure the obligations under the First Guarantee, and accordingly this had to be proved by the plaintiffs in sufficiently clear terms as to allow me to conclude that the defendant had no real prospect at trial to demonstrating to the contrary.
36. [36]
    A difficulty arises in this respect. Neither the Statement of Claim, nor the First Guarantee nor the Mortgage expressly state that the Mortgage was given as security for the obligations of Mr Millar Seniorunder the First Guarantee. Even if one were willing to infer that, I could not conclude that the Mortgage was given as security for only those obligations. As noted above, none of the terms and conditions apparently incorporated by reference into the Mortgage (or indeed the guarantees) were before the Court.
37. [37]
    I recognise that the evidence before the Court makes it very likely, that the terms of the Mortgage demonstrate that the Land was given as security for the obligations under the First Guarantee. I note for example that schedule A to the Mortgage refers to particulars which identify the First Loan. However, it is possible that the Mortgage is, for example, an all monies mortgage. If that were the case, it might be that the Mortgage secured the obligations of the Mr Millar Senior in respect of both guarantees.
38. [38]
    If that were correct, it would have the consequence that the proceeds of sale might not have been applied entirely to the obligations under the First Guarantee and might have been applied in part, or even in whole, to the obligations under the Second Guarantee. That in turn would affect whether the Trustees could demonstrate that Mr Millar had paid more than his fair share in respect of the First Loan (as they presently plead).
39. [39]
    I add that if the amount was applied pro rata to both Loans, it would seem possible that Mr Millar Senior had not paid more (or materially more) than his fair share, at least on the basis of the Demand: it claims some $499,000 and some $248,000 was received by FMC from the sale.
40. [40]
    For this reason, in my view the Trustees have not established that they are entitled to summary judgment on the claim for contribution.
41. [41]
    The second difficulty arises in respect of establishing that the Trustees are entitled to contribution in the amount claimed, even if it is assumed that the Mortgage secured only the obligations under the First Guarantee.
42. [42]
    The Trustees allege that the sum of $248,197.38 out of the proceeds of sale was paid to FMC. This allegation is admitted. However, the Statement of Claim does not allege that this payment was payment out in full of the guaranteed obligations in respect of the First Loan, nor does it allege the amount of the guaranteed liability under that loan.
43. [43]
    This is not a mere technicality. The First Loan was for $143,904. Interest was due at a rate of 1.5% per month for three months to 2 May 2015. The payment of the sale proceeds occurred on 15 January 2016, some 8 months later. Accordingly, interest accrued on the loan at 1.5% for some 11 months (I am not willing to assume the Higher Rate in the absence of some evidence about when it applied). Even assuming the interest compounded monthly and that no interest payments were made, it is difficult to see how the sums due under the First Loan could have been $248,197.38 by 15 January 2016.
44. [44]
    Further, there was no evidence as to whether interest was paid in part or in whole over the period between making of the First Loan and receipt of the Sale Proceeds. If interest payments were made (as Mr Millar alleged in his Amended Defence), the amount of the guaranteed liability in relation to the First Loan would be even less.
45. [45]
    Accordingly, there is not sufficient evidence to establish that the amount of $248,197.38 represented the guaranteed liability under the First Guarantee as at 2 January 2015. Rather, it appears possible that $248,197.38 was an overpayment, perhaps a substantial overpayment, of the obligations under the First Guarantee. As noted above, a surety cannot obtain contribution for overpayments.
46. [46]
    It might be thought that summary judgment could be given on the basis that the full amount of the First Loan was at least $143,904. If that was assumed, then Mr Millar Senior would have paid the full amount of the First Loan and would be entitled to contribution to the extent of half that sum. However, I do not intend to take that course for two distinct reasons:

    1. (a)
       First, because it does not address the difficulty noted above that the Trustees have not established that the Mortgage secured just the First Guarantee; and
    2. (b)
       Second, because as I conclude below, this matter is one which in any event requires a trial of the claim.

Mr Millar’s positive defence

47. [47]
    Mr Millar alleges he is entitled to contribution from Mr Millar Senior in respect of certain payments which he made on account of the guaranteed liabilities. He claims to be entitled to set off this entitlement against the Trustees’ claim under s. 86 Bankruptcy Act 1966 (Qld).
48. [48]
    Mr Millar’s Amended Defence relies on three categories of alleged payments:

    1. (a)
       First, five payments of interest made between 13 April 2015 and 14 October 2015 by a third party on behalf of Mr Millar totalling some $46,500;
    2. (b)
       Second, two payments made by a third party on behalf of Mr Millar on 31 August 2015 and 13 October 2015 of $70,000 and $68,000 respectively; and
    3. (c)
       Third, a single payment of $225,000 made by a third party on behalf of Mr Millar on 25 January 2016.
49. [49]
    There was some ambiguity in the hearing as to whether Mr Millar was contending that the payments alleged were made in respect of the First Loan or the Second Loan.
50. [50]
    The first category of payments were expressly pleaded to be payments of interest in respect of the “Loan Amount”, that being defined in the Amended Defence as the amount advanced under the Second Loan. Those payments therefore seem to relate to the Second Loan.
51. [51]
    The second category and third category payments are more ambiguously dealt with in the Amended Defence. Paragraph 5(j) provides:

In discharge of the obligations owed by the Defendant and IDM under the Guarantee the Defendant caused payments to be made by the third party for and on behalf of the Defendant to FMC in discharge of the amount claimed under the Notice as follows:

i.$70,000.00 on 31 August 2015;

ii.…

iii.$68,000.00 on 13 October 2015;

iv.$225,000.00 on 25 January 2016.

52. [52]
    The “Guarantee” is defined in paragraph 5 of the Amended Defence as being the Second Guarantee. However the payments are alleged to be in discharge of the amount claimed in the “Notice”, which is the Demand. As noted above, the Demand does not distinguish between the First and Second Loans when identifying the amount due. A payment in discharge of the amount claimed under the Demand is apt to apply to both loans.
53. [53]
    Despite this ambiguity, the Amended Defence seems to favour the conclusion that Mr Millar alleges the second two categories of payments relate to the Second Guarantee. It might be doubted however that that is necessarily the true position given the rolled up claim in the Demand.

The alleged interest payments 

54. [54]
    Four of the five interest payments alleged were made prior to the Demand being issued. Mr Yam for the Trustees contended that those payments could not give rise to any entitlement to contribution because they were made prior to that Demand. He relied upon Lavin v Toppi^[13]for that proposition.
55. [55]
    Lavin v Toppi does not support that proposition. In that case, the appellants and respondents were co-guarantors of a loan. The principal debtor defaulted. The appellants brought proceedings seeking the setting aside of their guarantee on various grounds. Those proceedings were settled, inter alia, by the creditor Bank entering into a covenant not to sue the appellants on their guarantee. As part of the settlement, the appellants also paid some $1.7m of the principal debt to the Bank.
56. [56]
    After the settlement, the Bank called on the respondents to meet the shortfall under their guarantee. They paid some $2.9m to fully discharge the guaranteed obligations. The respondents sought contribution from their co-sureties, the appellants, for the amount they had paid exceeding half the guaranteed obligations, some $700,000.
57. [57]
    The appellants relied, inter alia, upon the timing of the payment by the respondents to contend that no right to contribution arose. They contended that no right to contribution arose because the appellants and respondents did not share co-ordinate liability at the time the payment was made by the respondents because the effect of the covenant not to sue was to discharge the appellants from their guarantee. It was this contention which was being considered by the High Court. The Court rejected the submission on two grounds.
58. [58]
    The first was that the covenant to sue did not, as a matter of law, discharge the liability of the appellants under the guarantee.
59. [59]
    Second, the Court held that although a right to contribution did not arise at common law until after a surety had paid more than a fair share, a right to contribution in equity arose once a creditor calls upon co-sureties to pay the guaranteed debt, and it is not within the power of a creditor to exclude that equity by dealing with one surety preferentially. It was in that context that the Court made the following observations:

“At the heart of the appellants' argument is an invitation to accept that it is in “the power of the creditor to select his own victim; and, upon motives of mere caprice or favouritism, to make a common burden a most gross personal oppression.” That invitation cannot be accepted. In the present case, the Bank's covenant not to sue the appellants is the very kind of preferential treatment of a co-surety by a creditor that the "principle of Equity" referred to by Lord Eldon LC serves to prevent.

The appellants’ argument, in focusing upon the timing of the respondents' payment of the guaranteed debt after the giving of the covenant not to sue, was premised on the notion that the respondents’ right to contribution arose only upon payment by the respondents of more than their fair share of the guaranteed debt. This premise reflects the approach of the common law to the pleading and proof of the elements of a cause of action for the payment of money; but it does not reflect the approach of equity. In particular, it takes an unduly narrow view of the extent to which a court of equity will recognise, protect and enforce the equity to seek contribution.

It may be accepted that, in an action at common law, payment of a disproportionate amount is an essential element of the payer's cause of action against a co-surety for payment of money by way of contribution; but equity recognises and protects the co-surety's equity to contribution in a more flexible and comprehensive way.

In McLean v Discount and Finance Ltd, Starke J said: “At common law, no doubt, a surety could not maintain an action for contribution or money paid until he had actually paid more than his just proportion of the principal debt. But the authorities support the view that in equity the right to contribution can be declared before actual payment is made or loss sustained provided that such payment or loss is imminent.””^[14](footnotes omitted)

60. [60]
    It is to be noted that that passage does not require a demand under the guarantees as a condition of a right to contribution to arise in equity. It merely requires that apprehended overpayment appears imminent. This reasoning underpins the decision in Moulton v Roberts.^[15]In that case, Williams J (as his Honour then was) concluded that a right to contribution arose notwithstanding that a demand had not been made under a guarantee which required a demand as a condition of calling upon the guarantee.
61. [61]
    I therefore do not accept the Trustees’ proposition that no payment made before the Demand could give rise to a right to contribution.
62. [62]
    O'Donovan opines that a guarantor can pay and seek contribution once the principal debt becomes due.^[16]If that is correct, all but the first payment can be taken into account in determining whether Mr Millar has paid more than his fair share in respect of the Second Guarantee.
63. [63]
    However, even if something more is required to fulfill the requirement that a call on the guarantee is sufficiently imminent, it is open on the evidence in my view to infer that it is arguable such a call was sufficiently imminent following expiry of the Second Loan, given the nature of the loan (as very short term, with very high interest loans) and the fact that the First Loan was in default at the time of the Second Loan falling due. Mr Millar said from the bar table that demands had in fact been made orally prior to the issue of the Demand. I do not need to rely on that indication to conclude that the alleged interest payments, if made, were arguably made at a time when a call on the Second Guarantee was imminent.
64. [64]
    There is another difficulty for Mr Millar, however, in respect of this part of his case. Mr Millar did not put before the Court any evidence as to the making of the alleged interest payments or the basis upon which the third party alleged in his Amended Defence made those payments on his behalf.
65. [65]
    Strictly speaking, therefore, on the evidence before the Court, there was no basis to conclude that he had a real prospect of defending the claim on the basis of the alleged interest payments. However, Mr Millar was self-represented. This was a complex application, both legally and factually. While I accept that the Court must do justice to both sides, whether represented or not, I would be reluctant to disregard entirely the possibility that evidence might be led to establish the alleged payments in disposing of the application, particularly as Mr Yam did not contend that those payments were not made. This circumstance is relevant to my conclusion below that I am not satisfied that there is no need for a trial of the claim.

The two alleged repayments by Tiffany

66. [66]
    Mr Millar alleges that two repayments were made by a third party on his behalf in discharge of the obligations under the Second Guarantee:

    1. (a)
       $70,000 paid on 31 August 2015; and
    2. (b)
       $68,000 paid on 13 October 2015.
67. [67]
    There was evidence before the Court which shows that these payments were made to FMC by Tiffany, a principal debtor for the Second Loan, but not the First Loan. Mr Yam for the Trustees invited me to conclude from this that the payments were made by Tiffany as principal debtor, not by Mr Millar as surety.
68. [68]
    However, Mr Millar swore that those payments were made on his behalf by Tiffany in discharge of a substantial debt due to him by Tiffany. There is no proper basis to reject this evidence on this application. A guarantor may make a payment on the guarantee which gives rise to a right to contribution through the agency of the principal debtor.^[17]It might be that at trial, Mr Millar fails to establish that these two payments were made in discharge of his obligations. However, I cannot conclude that Mr Millar has no real prospect of establishing that these two payments were made in respect of his liability as guarantor of debts due to FMC.
69. [69]
    There remains the question as to whether those payments were made pursuant to the First Guarantee or the Second Guarantee. It seems more likely than not that they were made in respect of the Second Guarantee, but it is far from clear on the evidence, such as it is, particularly bearing in mind the approach taken in the Demand. Further, the Amended Defence is (as I have outlined) a little ambiguous on this point.

The one-off payment of $225,000

70. [70]
    The character of this payment is very unclear. Mr Millar’s particulars identify that the payment was made by Roysaku International Pty Ltd and Private Money Pty Limited pursuant to a Deed of Assignment between FMC and those companies and a Zhijun Ren.
71. [71]
    Mr Millar has produced an unsigned copy of this document. He has sworn to his unsuccessful attempts so far to obtain an executed copy. It was made an exhibit in the application. Mr Millar swore in respect of this transaction that:

14.The money owed to FMC…was discharged when the loan agreements referred to in paragraph 5(b) of my defence were assigned as pleaded in paragraph 5(m) of my amended further and better particulars.

15.The money was transferred directly between the assignor and the assignee evidence of that transfer of funds is not in my possession or under my control.

72. [72]
    The Deed of Assignment continues the approach contained in the Demand of not drawing a clear distinction between the two loans and the two guarantees. It purports to assign the whole of the benefit of both Deeds of Loan and both Guarantees to the assignees for $225,000. It also contemplates provision of notice under s. 199 Property Law Act (1974) (Qld) to each of the debtors and both guarantors.
73. [73]
    The difficulty for Mr Millar with this document is that it records no payment by him of the guaranteed obligations under either guarantee. It simply records an assignment for consideration of the outstanding liabilities under the Deeds of Loan and the benefit of the guarantees.
74. [74]
    However, let it be assumed that the money paid to FMC was sourced from the assignees and that Mr Millar undertook liabilities to the assignees. The difficulty is that I cannot see how those payments have discharged the guaranteed obligations under either guarantee. The effect of the assignment appears to have been to replace the creditor, not to discharge the obligations under the guarantees.   
75. [75]
    The problem with reaching any final conclusion on this part of the Amended Defence is that Mr Millar swears that he does not have access to a signed copy of the Deed of Assignment and foreshadows issuing Notices of Non-Party Disclosure to obtain further documents. It is also evident that he does not fully understand the transactions behind the Deed of Assignment. It is therefore possible that Notices of Non-Party Disclosure might produce documents which cast light on that matter as well.
76. [76]
    Further, there is Mr Millar’s evidence that the payment discharged the liability to FMC. If that occurred, albeit by the Deed of Assignment along with other documents, it could well have had the effect of discharging Mr Millar Senior’s obligations under the Second Guarantee (or indeed both guarantees) and replacing them with a new obligation owed by Mr Millar, though the Deed of Assignment alone does not seem to provide for this result.
77. [77]
    Before moving from this part of Mr Millar’s case, I will deal with Mr Lam’s submission about it. As I understood it, Mr Lam’s contention was that the effect of the assignment was that there was no longer any co-ordinate liability between Mr Millar and Mr Millar Senior in respect of the guarantee (or guarantees) because there was a different creditor. Given the terms of the document, I cannot see how that is so. The principal debtors remain the same, and the debts remain the same and the guarantors continue to have joint and several liability for those debts. I do not understand why assignment of the benefit of the Deeds of Loan and Guarantees by the creditor would have any effect on the rights to contribution between the guarantors inter se.
78. [78]
    Mr Yam referred to Willis v Teparyl Pty Ltd.^[18]However, that case dealt with a completely different situation. There, a landlord had permitted assignment of a lease by the original tenant and, after some years, signed a Deed of Release of obligations of the tenant. The case involved issues of contribution between the guarantor of the assignee and the guarantor of the original tenant. It has nothing to do with the effect of assignment of a principal debt on the obligations of guarantors of that debt. Both before and after the assignment, Mr Millar and his father still had a common liability for a common debt (or debts).

Conclusion on issues raised in the Amended Defence

79. [79]
    The better view of the Amended Defence is that Mr Millar contends he is entitled to contribution from Mr Millar Senior in respect of his payments on the Second Guarantee. Like the Trustees, however, the defendant’s case has not been formulated or demonstrated in a manner which permits identification of what the fair share of the liability under the Second Guarantee would be in money terms.
80. [80]
    Further, while it is arguable that he has paid $138,000 on account of his liabilities as guarantor, it is unclear whether that money was paid on account of the First Guarantee or the Second Guarantee. And there is no evidence of alleged the interest payments and only very limited evidence as to the $225,000 payment.
81. [81]
    On the current evidence, therefore, I am not persuaded that Mr Millar has a real prospect of the defending the claim on the basis that he is entitled to contribution from Mr Millar Senior on the basis that he has paid more than his fair share of the sums due under the Second Guarantee.

Need for a trial

82. [82]
    That however is not the end of the matter. 
83. [83]
    As I have concluded above, I am not satisfied that the defendant has no real prospect of successfully defending the claim or part of the claim because I am not satisfied that the Trustees have established that the Mr Millar Senior has paid more than his fair share of the obligations under the First Guarantee as explained in paragraphs [40] and [46] above.
84. [84]
    Further, in my view, looked at as a whole, the circumstances of this case are such that I am not satisfied that there is no need for a trial of the claim or part of the claim: Rule 292(2)(b). I take that view for the following reasons:

    1. (a)
       First, it is unclear on the evidence as a whole what payments were made in respect of which guaranteed obligation from time to time;
    2. (b)
       Second, it is unclear on the evidence as a whole what the guaranteed liabilities were in respect of each loan at the various relevant times. This matter needs to be resolved to identify whether either party has paid more than his fair share;
    3. (c)
       Third, it seems possible that the precise particulars of the payments alleged by Mr Millar (particularly the $225,000 payments) might demonstrate that he has already paid his fair share (or a significant part of it) in respect of one or both of the loans. I do not think it appropriate to ignore that prospect in the absence of him having a proper opportunity to obtain documents and possibly some assistance in understanding those transactions;
    4. (d)
       Fourth, both parties should have an opportunity to seek documents and information from FMC (and perhaps others) on the matters arising in these proceedings;
    5. (e)
       Fifth, I am concerned that many of the operative terms of the key documents in this matter are not before the Court. Notwithstanding some of the admissions made, the absence of these terms puts a question mark over key issues in the proceedings (many of which are referred to above); and
    6. (f)
       Finally, depending on what is ultimately shown to have occurred, the resolution of this matter might involve the application of sophisticated principles of the law of guarantees. That is not the sort of matter which, at least in this case, should be dealt with without more opportunity for reflection and consideration by the parties and the Court than is available on an application for summary judgment.
85. [85]
    Accordingly, I dismiss the application for summary judgment.
86. [86]
    There was also before me an application for judgment for failure by Mr Millar to comply with orders relating to disclosure made by Judge Dick. Mr Yam did not press that application.
87. [87]
    As to costs, Mr Yam submitted that, in the event that the Trustees failed on the application for summary judgment, Mr Millar should in any event be paid by Mr Millar. He relied upon the late amendment of the defence and the failure of Mr Millar to comply with the disclosure orders in a timely fashion.
88. [88]
    However, Mr Millar has succeeded in his resistance to the summary judgment application, for reasons including the failure of the Trustees to make out the entitlement they allege on the material filed. On the other hand, Mr Millar should have responded in a more timely way to the orders of Judge Dick. In the circumstances, the proper order is that there be no order as to costs.