Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

O'Keefe v Zeaiter Holdings Pty Ltd[2022] QSC 86

O'Keefe v Zeaiter Holdings Pty Ltd[2022] QSC 86

SUPREME COURT OF QUEENSLAND

CITATION:

O'Keefe & Ors v Zeaiter Holdings Pty Ltd & Ors [2022] QSC 86

PARTIES:

TABITHA O'KEEFE

(first plaintiff)

AND

REECE MEREDITH

(second plaintiff)

AND

TRUCK HUB PTY LTD (ACN 165 856 191)

(third plaintiff)

AND

MEREDITH TRANSPORT PTY LTD (ACN 083 393 766)

(fourth plaintiff)

v

ZEAITER HOLDINGS PTY LTD (ACN 163 455 221)

(first defendant)

AND

HUSSEIN ZEAITER

(second defendant)

AND

SAMY ZEAITER

(third defendant)

AND

YOSEF ZEAITER

(fourth defendant)

AND

HANIE ZEAITER

(fifth defendant)

AND

MIRIAM ZAETER

(sixth defendant)

AND

DAVID DALE KUHLMAN

(seventh defendant)

AND

ROUND MOUNTAIN TRANSPORT PTY LTD (IN LIQUIDATION) ACN 162 173 211

(eighth defendant)

AND

ZEAITER HOLDINGS PTY LTD ACN 163 455 211 IN ITS OWN CAPACITY AS TRUSTEE FOR THE ZEAITER INVESTMENT TRUST NO.3

(ninth defendant)

AND

WESTPAC BANKING CORPORATION ACN 007 467 143

(tenth defendant)

AND

RETFLEET PTY LTD ACN 130 822 883

(eleventh defendant)

AND

PORTER FINANCE AUSTRALIA PTY LTD ACN 163 633 056

(twelfth defendant)

AND

MEREDITH TRANSPORT PTY LTD ACN 083 393 766 (IN LIQUITDATION)

(thirteenth defendant)

AND

DALE KENNETH MEREDITH

(fourteenth defendant)

AND

MARIE HELEN MEREDITH

(fifteenth defendant)

FILE NO:

8136 of 2017

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

13 May 2022

DELIVERED AT:

Brisbane

HEARING DATE:

14 and 15 March 2022

JUDGE:

Jackson J

ORDER:

The order of the court is that:

  1. 1.Within 14 days, the parties are directed to provide a joint submission or separate submissions in not more than 5 pages as to the orders to be made in light of these reasons.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – where a loan agreement was entered into – where the plaintiffs were assignees of the debt owed by the principal debtor to the original creditor – where the defendants provided security for that debt by registered mortgage over their land to the original creditor – where the mortgage was transferred to the third plaintiff at the time of the assignment of the debt – where the principal debtor is in liquidation – where the principal debtor and a related company of the plaintiffs conducted a running account – whether the plaintiff directed the principal debtor to make payments to the related company in satisfaction of the debt due to the plaintiffs – whether payments made to the related company by the principal debtor or its creditors were in satisfaction of the debt owed by the principal debtor to the plaintiffs

PROCEDURE – PLEADINGS – DEPARTURE – where the parties agreed to a list of issues for determination – where the list of issues question included a statement as to the consequence of deciding the question one way or the other based on assumptions of the drafters as to the possible conclusions – where the trial judge found that those conclusions were not available on the evidence – whether the trial judge is constrained by the terms of the question notwithstanding the conclusions that otherwise would have been reached

MORTGAGES – MORTGAGOR’S REMEDIES – REDEMPTION – PROCEEDINGS FOR – JUDGMENT OR DECREE – where the defendants offered to redeem a mortgage over their land granted to the original creditor of a loan agreement – where the original creditor assigned the benefit of the mortgage to the plaintiffs under a deed of assignment and the principal debtor became indebted to the plaintiffs – where the plaintiffs agreed to forbear from recovery action in respect of that debt under a deed of forbearance – where the principal debtor acknowledged the amount due at the date of the deed of forbearance was $250,000 – where the principal debtor is in liquidation – whether money is owing on the mortgage due to non-payment of the amount due under the deed of forbearance

Air Services Australia v Ferrier (1996) 185 CLR 483, cited

Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 396 ALR 27, cited

Anderson v Liddell & Ors (1968) 117 CLR 36, cited

Australia and New Zealand Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662, cited

Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 279, cited

Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356, cited

Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1984) 153 CLR 491, cited

Devaynes v Noble (1816) 1 Mer 572; 35 ER 781, cited

Haller v Ayre [2005] 2 Qd R 410, applied

Ogilvie v Adams [1981] VR 1041, cited

Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125, cited

Pantorno v The Queen (1989) 166 CLR 466, applied

Prysmian Cavi E Sistemi SRL v Australian Competition and Consumer Commission [2018] FCAFC 30, cited

Quint v Robertson (1985) 3 NSWLR 398, cited

Rowe v National Australia Bank Ltd (2019) 56 WAR 1, cited

Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664, cited

Bankruptcy Act 1966 (Cth) s 122

Civil Procedure Act 2010 (Vic) s 50, s 50A

Civil Procedure Rules 1998 (Eng) r 29.7(a)

Civil Proceedings Act 2011 (Qld) s 7

Federal Court Rules 1979 (Cth)

Federal Court Rules 2011 (Cth) pt 16

Judicature Act 1873 (Eng)

Judicature Act 1875 (Eng)

Judicature Act 1876 (Qld)

Land Court Rules 2022 (Qld) r 39

Land Title Act 1994 (Qld) s 74

Property Law Act 1974 (Qld) s 199, s 200

Rules of the Supreme Court 1883 (Eng)

Rules of the Supreme Court 1900 (Qld) O 22, O 24, O 25, O 27

Supreme Court Act 1991 (Qld) s 17, s 58, s 85

Uniform Civil Procedure Rules 1999 (Qld) r 9, r 10, r 11, r 14, r 166, r 211, r 224, r 367, r 428, r 480

Uniform Civil Procedure Rules 2020 (SA) r 316.7

Coulson, Peter et al, “The White Book Service 2022: Civil Procedure” (Sweet & Maxwell, 2022)

Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996)

Toy-Cronin, Bridgette, “Lessons from a Failed Court Reform: The Cautionary Tale of the 2009 New Zealand District Court Rules” (2022) 31 Journal of Judicial Administration 138

Zuckerman, Adrian, et al, Zuckerman on Australian Civil Procedure (Lexis Nexis, 1st ed, 2018)

COUNSEL:

L Copley for the plaintiffs

G Dietz for the first, third, fourth, sixth and seventh defendants

SOLICITORS:

Celtic Legal for the plaintiffs

Sciacca & Associates for the first, third, fourth, sixth and seventh defendants

JACKSON J:

  1. [1]
    The claim by the plaintiffs in this proceeding is as assignees of a debt and is made against the guarantors of the principal debtor for the sum of $250,000 plus interest. The debt was secured by a registered mortgage granted by the sixth and seventh defendants as guarantors over their land to the original creditor.  The mortgage was transferred to the third plaintiff at the time of the assignment of the debt to the plaintiffs.  The sixth and seventh defendants’ counterclaim against the third plaintiff is for redemption of the mortgage by a declaration that nothing is owing and secured under it and an order that the third plaintiff execute a release of the mortgage.
  2. [2]
    The central question on the claim is whether the amount claimed as owing by the principal debtor, or any of it, is payable.  If it is, there is a second question whether interest is payable and whether that interest should be calculated under the contractual documents or pursuant to s 58 of the Civil Proceedings Act 2011 (Qld).  Last, if the plaintiffs are successful, there is a question whether, under the contractual documents, costs should be ordered to be assessed on the indemnity basis.

Relevant parties

  1. [3]
    The claim and counterclaim stem from the contractual relations of three trading companies and one asset holding company, which must be briefly described.
  2. [4]
    Round Mountain Transport Pty Ltd (in liquidation) (“Round Mountain”) carried on business supplying goods and services to customers.  They included cleaning chicken sheds and supplying sawdust to chicken “farms”, strawberry farms, ginger farms and various other customers.  Round Mountain had trucks, trailers, grinders, loaders and other pieces of equipment to carry on its business. 
  3. [5]
    Round Mountain went into liquidation in insolvency on 5 September 2016.
  4. [6]
    The second and fifth defendants were the directors of Round Mountain.  They were made bankrupt on 4 July 2019.  They are the parents of the sixth defendant (“Miriam”) who is married to the seventh defendant (“David”).
  5. [7]
    At all material times, Miriam was the office manager, and kept the books, for Round Mountain.  David was also involved in the management of the Round Mountain business.
  6. [8]
    The first defendant (“Zeaiter Holdings”) was trustee of the Zeaiter Investment Trust No. 3.  The business of the trust is not in evidence.
  7. [9]
    Miriam and David are directors of Zeaiter Holdings.
  8. [10]
    The thirteenth defendant by counterclaim, Meredith Transport Pty Ltd (in liquidation) (“Meredith Transport”), carried on business carting raw materials, including sands aggregates and asphalt.  It provided its trucks and drivers by way of “dry hire” to customers to carry the customers’ materials.  It owned and operated a fleet of approximately 60 trucks, including rigid trucks and prime movers and trailers.  It went into liquidation on 24 August 2018.
  9. [11]
    The fourteenth defendant by counterclaim (“Dale”) and the fifteenth defendant by counterclaim (“Marie”) were Meredith Transport’s directors. No claim against them is made in the issues that remain to be decided in the proceeding.  Dale and Marie are the parents of the first plaintiff (“Tabitha”).
  10. [12]
    The third plaintiff (“Truck Hub”) carried on business providing maintenance and repairs to Meredith Transport’s fleet.  It supplied heavy vehicle parts and mechanical services for heavy vehicles.  Tabitha and the second plaintiff are its directors.  They are siblings.
  11. [13]
    At material times, Tabitha was the general manager of the business of both Meredith Transport and Truck Hub.  Dale was also involved in the management of at least Meredith Transport.

BN65 Pty Ltd securities

  1. [14]
    On 23 March 2015, BN65 Pty Ltd (“BN65”) as lender and Round Mountain and Zeaiter Holdings as borrowers (“Borrowers”) entered into a loan agreement in writing (“Loan Agreement”) for the advance of $200,000 as the principal sum together with such further or other advances or accommodation that the lender may make thereafter to the Borrowers.  The repayment date was 6 months from the date of the advance.  The interest rate was 33 percent capitalised monthly to be paid by monthly instalments.
  2. [15]
    Also on 23 March 2015, each of Miriam and David, as sureties, entered into deeds of guarantee and indemnity with BN65 as creditor and Round Mountain and Zeaiter Holdings as principal debtor guaranteeing the money owing by the principal debtor to the creditor and indemnifying the creditor against all loss or damage that the creditor may suffer owing to any default on the part of the principal debtor.  It was provided that the creditor should be entitled to payment under the guarantee if default was made by the principal debtor and a demand was given by the creditor.
  3. [16]
    Also by 23 March 2015, Miriam and David as mortgagors (“Mortgagors”) mortgaged their land to BN65 as mortgagee (“Mortgagee”) on terms that included the loan described in the Loan Agreement and any further moneys advanced by the mortgagee to the Borrowers under the Loan Agreement in the moneys secured.  The mortgage provided that the Mortgagors would pay the moneys secured to the Mortgagee upon demand and that the Mortgagors would pay the Mortgagee interest on the moneys secured at the rate specified in the Loan Agreement.

Initial dealings between Meredith Transport and Round Mountain

  1. [17]
    After August 2015, there were dealings between Meredith Transport and Round Mountain.  The dealings were that Meredith Transport would provide “dry hire” trucks and drivers to Round Mountain to carry sawdust to Round Mountain’s customers, but with the added element that Meredith Transport would pay Round Mountain’s sawdust supplier for the load of sawdust to be carried.
  2. [18]
    On an occasion not identified precisely in time, but which I infer was late 2015, David and Miriam spoke to Dale and Tabitha about Round Mountain’s financial difficulties because of lack of work.  David and Dale made an agreement orally.  The exact parties were not identified in the evidence.  However, I infer it was intended that Meredith Transport would obtain funding to buy Round Mountain’s hired or leased trucks and equipment from their owner and continue to provide them to Round Mountain for the running of its business. 
  3. [19]
    On a date in December 2015, these proposed arrangements were reduced to writing by Tabitha and Miriam.  At that stage, the purpose was to provide the basis for Meredith Transport to obtain funding from its financiers.  The intended finance was to pay out the BN65 Loan Agreement debt and the debt owing to Round Mountain’s truck and equipment financier, the eleventh defendant by counterclaim (“Rentfleet”). 
  4. [20]
    The proposed arrangements included that David and Miriam (presumably on behalf of Round Mountain) were willing to surrender all the business contracts and agreements they had with current customers to let Dale and Tabitha (presumably on behalf of Meredith Transport) take 51 percent ownership of the (Round Mountain) business in a new company.  In return, Dale and Tabitha were to arrange finance for the Round Mountain debts to Rentfleet and BN65.  David and Miriam agreed to pay 1 per cent higher than the rate that Dale and Tabitha obtained from their finance company.  That debt was to be David and Miriam’s personal debt and to have no bearing on the new company going forward and to be paid from David and Miriam’s drawdowns from the business.  Once the initial debt was sorted the new company was to be started with shares indicating ownership as agreed with fleet valuation for Round Mountain’s assets.
  5. [21]
    The proposed arrangements were conducted between the parties at this stage, being Meredith Transport and Round Mountain, by conducting a monthly running account kept by Tabitha as between Meredith Transport and Round Mountain (“Meredith Transport Round Mountain running account”).  Each month debits were made into the account for the trucks and drivers supplied and sawdust purchases by Meredith Transport, as well as miscellaneous matters.  Credits were made for payments made to Meredith Transport by direct payments from Round Mountain’s customers of the invoice amounts owing by them to Round Mountain.  Interest was calculated at 13.59 percent on amounts owing over the month.  At month’s end, the net amount including interest was ascertained as the closing balance for the month and transferred as the opening balance for the succeeding month.
  6. [22]
    Monthly spreadsheet statements of account on the Meredith Transport Round Mountain running account were prepared, for December 2015 and January and February 2016, showing the amount of the debt to Meredith Transport at each month’s end (“Meredith Transport debt”).
  7. [23]
    Eventually, although the timing was not identified in evidence, Meredith Transport debt financed the acquisition of Round Mountain’s equipment from Rentfleet, for a reduced amount of about $450,000.  How that affected the December 2015 proposed arrangements was not the subject of evidence.

Plaintiffs’ securities

  1. [24]
    On 11 February 2016, against this background, the plaintiffs and the first to seventh defendants entered into two written agreements relating to the BN65 Loan Agreement debt and the Meredith Transport debt as at that date.  Also on that date, BN65 transferred the Mortgage to Truck Hub.
  2. [25]
    First, BN65 as assignor, the plaintiffs as assignee, Round Mountain and Zeaiter Holdings as principal debtors, and the second, third, fourth, fifth, sixth and seventh defendants as guarantors entered into a deed of assignment of the Loan Agreement and the guarantees and transfer of the mortgage (“Deed of Assignment”).  By the Deed of Assignment it was agreed that the plaintiffs would pay the sum of $143,168, defined as the “Settlement Sum”, to BN65 provided that: the plaintiffs had received the executed deed of assignment; a duly executed transfer of the mortgage to Truck Hub; and other not presently relevant registrable finance charge statements; and also provided that the plaintiffs and Round Mountain entered into the proposed contemporaneous deed of forbearance (“Deed of Forbearance”).
  3. [26]
    The Deed of Assignment provided that upon payment of the Settlement Sum the plaintiffs became entitled to be subrogated to the position of BN65 and consequently entitled to the same securities and priority of payment from Round Mountain and Zeaiter Holdings as BN65 had been entitled to.
  4. [27]
    Further, it was provided that in consideration of payment of the Settlement Sum, payment of what was described as the “Further Advance” and entry into the Deed of Assignment and the Deed of Forbearance, Round Mountain and Zeaiter Holdings and the guarantors acknowledged that a benefit would flow to Round Mountain and Zeaiter Holdings directly and to the guarantors indirectly, and they agreed to enter into the Deed of Assignment in exchange for that benefit.
  5. [28]
    The Further Advance was defined to mean “the amounts in addition to the Settlement Sum that have been advanced to the Company by the Assignee which, as at the Settlement Date, total between $90,000 and $100,000”.
  6. [29]
    The reference to the “Company” should be construed as a reference to either Round Mountain or Zeaiter Holdings or both.[1]  However, none of the plaintiffs who constituted the “Assignee”, as defined, had at the “Settlement Date”, which was defined as 11 February 2016, advanced any money to Round Mountain or Zeaiter Holdings. Tabitha in evidence made clear that apart from the Settlement Sum of $143,168 that was paid by Truck Hub to BN65 there was no money that actually had been transferred to Round Mountain or Zeaiter Holdings by her company Truck Hub. She confirmed that it never occurred.  And there was no evidence that either Tabitha or the second plaintiff did so personally.
  7. [30]
    As previously mentioned, entry into the Deed of Assignment was also conditional upon entry into the Deed of Forbearance.  The Deed of Forbearance was prepared and entered into contemporaneously with the Deed of Assignment.  The parties to the Deed of Forbearance were the plaintiffs as creditor and Round Mountain as debtor.  It is clear from the circumstances of their preparation and execution and their terms that each of the Deed of Assignment and the Deed of Forbearance is relevant as context for the construction of the other.  The recitals to the Deed of Forbearance refer to the Loan Agreement and the Deed of Assignment under which Round Mountain became indebted to the plaintiffs.  They also refer to the amount due under the Loan Agreement and Deed of Assignment as including advances made to Round Mountain prior to the Deed of Assignment as well as the Settlement Sum payable under the deed of assignment.  That appears to be a reference to the “Further Advance”.
  8. [31]
    The operative provisions of the Deed of Forbearance provided that Round Mountain acknowledged the “Amount Due” as $250,000. Next, the plaintiffs in consideration for Round Mountain’s obligations in the Deed of Forbearance agreed to forbear from recovery action against Round Mountain in respect of interest so long as Round Mountain did everything required of it under the deed.
  9. [32]
    By clause 3(a) of the Deed of Forbearance Round Mountain promised to assign “any contracts creating revenue” that the plaintiffs desired to a company to be incorporated with ordinary shares held 51 per cent by the plaintiffs or their nominated entity and 49 per cent by Round Mountain or their nominated entity and voting rights held 75 per cent by the plaintiffs and 25 per cent by Round Mountain or their respective nominated entities.  Prior to the new company being incorporated, which in fact never occurred, by clause 3(b), Round Mountain promised to allow the plaintiffs to handle the management of any contracts Round Mountain held, as nominated by the plaintiffs from time to time, until an assignment of contracts occurred to the new company.
  10. [33]
    Clause 4 of the Deed of Forbearance provided:

“In the event that [Round Mountain] fails to comply with any of its Obligations in the manner specified herein and to [the plaintiff’s] satisfaction, the plaintiff may:

  1. (a)
    retrospectively apply interest for the period from the date of this Deed pursuant to the Loan Agreement; and
  2. (b)
    the Amount Due under the Loan Agreement will be payable in full and continue to accrue interest until such time as the total owing under the Loan Agreement is paid.”
  1. [34]
    Curiously perhaps, the Deed of Forbearance also provided that it represented the entire agreement and understanding between the parties to it in relation to the subject matter of that deed.

Management of Round Mountain’s debtors

  1. [35]
    Accordingly, the operative part of the Deed of Forbearance expressly referred to management by the plaintiffs of “contracts” that Round Mountain held.  But prior to 11 February 2016, when the Deed of Forbearance was executed, Meredith Transport had been collecting payments of Round Mountain’s invoices to customers on such contracts.
  2. [36]
    On 10 February 2016 at 9.07 am, Miriam sent an email to Dale attaching a Round Mountain customer’s invoice for sawdust for a customer, Magic Millions.  The text of the email to that customer informed its representative that the invoice for sawdust delivered was enclosed, that Miriam was going on maternity leave and that she had a friend who was going to look after all her invoices and payments whilst on leave.  The friend was identified as Tabitha and her contact details were given. The email concluded:

“Could you please make all payments to the account on the bottom of the invoice and send the remittance advice to her email address.”

  1. [37]
    This email was sent by Miriam to Dale as a pro forma for invoices to be sent to other customers of Round Mountain, explaining the arrangements for payments to be made into Meredith Transport’s account.
  2. [38]
    On 10 February 2016 at 9.11 am, Dale forwarded Miriam’s draft text to Tabitha and said that he had just got off the phone with Miriam and David.  Dale asked Tabitha to look at the email as an example of what Miriam and David were thinking about putting on the invoices to Round Mountain’s customers to pay back the money owing to Meredith Transport through the invoice factoring that they suggested in a meeting on an earlier day.  Dale said he thought the draft needed to be changed to add Meredith Transport’s account details. He asked Tabitha to copy what Miriam had sent and to add Meredith Transport’s correct bank details so he could forward it back to Miriam.
  3. [39]
    On 10 February 2016 at 9.50 am, Tabitha replied to Dale with a revised draft email for Round Mountain’s customers, adding the requested additional account details and making other changes to the proposed text. One of the changes was: “we have appointed an account manager to handle all of the debtors and creditors”.  Another was: “could you also please ensure all payments are from this point until further notice paid into the new account details listed on the bottom of the invoice and also here: Meredith Transport Pty Ltd BSB: 014-524 Account: 901970899”.
  4. [40]
    On 10 February 2016 at 9.59 am, Dale forwarded the chain of emails up to that point, including Tabitha’s revised draft text, back to Miriam.

The pleaded issues and the agreed list of issues

  1. [41]
    The statement of claim alleges that pursuant to the Deed of Assignment the amount due to the plaintiffs by Round Mountain at the signing of the Deed of Forbearance was $250,000.  It then alleges that none of the first seven defendants paid the plaintiffs the monies owing under the Deed of Assignment and that as at the date of the claim the plaintiffs were owed $250,000 by the first to seventh defendants under the Deed of Forbearance.  The last allegation is erroneous as the first to seventh defendants were not parties to the Deed of Forbearance.  Round Mountain was the counterparty to that deed and it was Round Mountain that acknowledged that the Amount Due at the date of the Deed of Forbearance was $250,000.
  2. [42]
    Zeaiter Holdings was a borrower under the Loan Agreement and, as one of the “Companies” as defined in the Deed of Assignment, agreed to enter into the Deed of Assignment in exchange for the benefit of, inter alia, payment of the Further Advance, as defined.   But it was not a party to the Deed of Forbearance.
  3. [43]
    In response to the allegation that they had not repaid the plaintiffs the monies owing under the Deed of Assignment, the first, third, fourth and sixth and seventh defendants admitted they had not made payment of any of the Amount Due as defined in the Deed of Forbearance but alleged that in performance of clause 3(b) of the Deed of Forbearance, and at the direction of Tabitha, Round Mountain caused payments due to Round Mountain by third parties under contracts creating revenue to be paid to Meredith Transport in reduction of the Amount Due. That allegation was particularised as being made in writing in the email chain of 10 February 2016 set out above in contemplation of the execution of the Deed of Forbearance.
  4. [44]
    As to the payments alleged to have been so made, Annexure A to the defence identified payments made between 11 February 2016 and 24 August 2016.  However, only those alleged to have been made until 31 March 2016 were proved in the evidence, by tender of the monthly spreadsheets prepared by Tabitha for the Meredith Transport Round Mountain running account for February 2016 and March 2016.
  5. [45]
    It is not necessary to identify all of the relevant transactions.  Putting the payment of the Settlement Sum of $143,168 by Truck Hub to BN65 to one side, the balance of the Amount Due as defined in the Deed of Forbearance was $106,832.  No evidence directly established how that amount was arrived at.  It may be that it was intended to reflect what was the balance of the Meredith Transport Round Mountain running account as at 11 February 2016 rounded up or down to total $250,000 as the Amount Due when added to the Settlement Sum.  However that may be, according to Tabitha’s evidence, no money beyond the Settlement Sum of $143,168 was in fact advanced to or for the benefit of Round Mountain by any of the plaintiffs.
  6. [46]
    If the amount of $106,832 is treated as the balance owing on the Meredith Transport Round Mountain running account as at 11 February 2016 and by the agreements contained in the Deed of Assignment and Deed of Forbearance, that amount was agreed between Round Mountain and the plaintiffs to be owing to the plaintiffs, two observations follow.
  7. [47]
    First, if that amount was intended to be treated as a joint debt owing to both the plaintiffs and Meredith Transport, payment by agreement by Round Mountain to Meredith Transport would have operated as a discharge of the joint debt unless Meredith Transport was not authorised by the plaintiffs to receive it.  Second, if that amount was not intended to be a joint debt, commercial common sense suggests that it was an amount intended to be assigned by Meredith Transport to the plaintiffs, so that the plaintiffs would not be severally liable for the same amount twice.
  8. [48]
    However, no evidence, documentary or otherwise, established that the Meredith Transport debt at 11 February 2016, or $106,832 of that amount, was assigned by Meredith Transport to the plaintiffs,[2] and Meredith Transport was not a party to either the Deed of Assignment or the Deed of Forbearance.  On the contrary, the February 2016 and March 2016 spreadsheet statements for the Meredith Transport Round Mountain running account clearly showed that the 31 January 2016 balance was payable as the opening balance on the February 2016 spreadsheet statement and that after taking into account the debits and credits for February 2016, the balance on the account as at 29 February 2016 formed the opening balance on 1 March 2016. There was no credit in either February 2016 or March 2016 which might have reflected an agreement to assign or assignment of $106,832 of the Meredith Transport debt to the plaintiffs.
  9. [49]
    Notwithstanding those facts, the plaintiffs submitted that the email chain of 10 February 2016 did not amount to an agreement for the purpose of clause 3(b) of the Deed of Forbearance so that the payments made by Round Mountain on the Meredith Transport Round Mountain running account could be treated as having been made against the amount of $106,832 as part of the Amount Due.  The plaintiffs submitted that conclusion followed from two facts.  First, that the payment arrangement under the email chain of 10 February 2016 was made on the day before the Deed of Assignment and Deed of Forbearance were executed and carried into effect and accordingly were not nominated by the plaintiffs after the Deed of Forbearance was entered into.  Second, they submitted that the email chain of 10 February 2016 evidenced arrangements for the payment of the Meredith Transport Round Mountain running account debt, not the debt owing by Round Mountain to the plaintiffs in respect of the Amount Due.
  10. [50]
    Except for Miriam’s evidence about a conversation between Miriam and Tabitha on 10 February 2016, and an earlier conversation between them about the treatment of payments, there was no evidence that the parties expressly dealt with the basis on which the amount of the Further Advance under the Deed of Assignment or the amount of $106,832 included in the Amount Due under the Deed of Forbearance would be paid.
  11. [51]
    Miriam said in evidence that after she received the email sent by Dale to Miriam on 10 February 2016 at 9.59 am she telephoned Tabitha and asked why payments were going into Meredith Transport not Truck Hub because the mortgage was (to be) with Truck Hub.  She also said that there was an earlier in person meeting at Truck Hub’s premises, where Miriam handed Tabitha (Round Mountain) invoices to show the monies that were being generated by the (Round Mountain) business to be paid down on the mortgage loan.  Miriam said that Tabitha said the mortgage would be paid because she was handling the funds.
  12. [52]
    Tabitha rejected in evidence that she had a conversation with Miriam that payments on the running account made by collecting Round Mountain’s customer’s invoices would be credited against the mortgage.
  13. [53]
    If accepted, Miriam’s evidence might directly relate the payments on the Meredith Transport Round Mountain running account to a reduction of the amount of $106,832 of the Amount Due under the Deed of Forbearance and Deed of Assignment as secured by the mortgage.  However, there is a substantial difficulty in the way of accepting Miriam’s evidence on that point.  Miriam and David’s second further amended defence was filed on 2 March 2022, less than two weeks before the trial, but it contained no reference to the alleged conversations between Miriam and Tabitha about the relationship between payments to Meredith Transport and the debt owing to Truck Hub under the mortgage (and by inference under the Deed of Assignment and Deed of Forbearance).
  14. [54]
    An added difficulty is created by the agreed list of issues for determination made by the parties in the day or so before the first day of the trial. Question 1 of the agreed issues is:

“Did the first plaintiff direct Round Mountain Transport Pty Ltd to make payments to the plaintiffs (being the sum of $250,000) to Meredith Transport Pty Ltd in reduction of the amount due and owing to the plaintiffs by the defendants?”

  1. [55]
    The parties also purported to agree that if the answer to that question is “yes” the plaintiffs’ claim is to be dismissed but if the answer is “no” the debt owing by the first, third, fourth, sixth and seventh defendants is $250,000 plus interest and costs. However, the parties did not otherwise amend the pleadings.  It will be necessary to return to this question, but it is appropriate to begin with the facts disclosed and those that should be found upon the evidence.
  2. [56]
    Leaving Miriam’s evidence as to the oral conversations about the payment arrangement with Tabitha aside, the evidence does not conform to the assumed bases that underly question 1.
  3. [57]
    Starting with the arrangements made for December 2015, January 2016 and the first part of February 2016, the relationship as between Meredith Transport and Round Mountain, as continued between those parties for the balance of February 2016 and March 2016, was as between traders on a running account. As the joint judgment of the High Court in Australia and New Zealand Banking Group Limited v Westpac Banking Corporation[3] explains, the ordinary rule of appropriation of debits against credits and vice versa in a single running account between a banker and customer was described by Sir William Grant MR in Devaynes v Noble (Clayton’s Case):[4]

“It is the first item on the debit side of the account that is discharged or reduced by the first item on the credit side. The appropriation is made by the very act of setting the two items against each other. Upon that principle, all accounts current are settled, and particularly cash accounts.”

  1. [58]
    As explained by the majority of the High Court in Air Services Australia v Ferrier[5] the term “running account” has achieved an almost talismanic significance in determining whether the ultimate rather than the immediate and isolated effect of a payment is to be examined for the purposes of a determination under s 122 of the Bankruptcy Act 1966 (Cth). Their Honours continued:

“However the significance of a running account lies in the inferences that can be drawn from the facts that answer the description of a ‘running account’ rather than the label itself. A running account between traders is merely another name for an active account running from day to day as opposed to an account where further debits are not contemplated. The essential feature of a running account is that it predicates a continuing relationship of debtor and creditor with an expectation that further debits and credits will be recorded. Ordinarily, a payment, although often matching an earlier debit, is credited against the balance owing in the account. Thus, a running account is contrasted with an account where the expectation is that the next entry will be a credit entry that will close the account by recording the payment               of the debt or by transferring the debt to the bad or doubtful debt account.”[6]

  1. [59]
    If the payments made by Round Mountain to the Meredith Transport Round Mountain running account are treated as credits as against the balance owing and restricting the relevant payments to those made after 11 February 2016, it is clear that, from 11 February 2016, more than $106,832 of credited payments was made by Round Mountain by the end of March at the very latest.  To that extent, the debt owing by Round Mountain to Meredith Transport was paid and the credits are recognised, in effect, in the spreadsheet statement for Meredith Transport Round Mountain running account prepared at 31 March 2016.  Yet, the plaintiffs claim is predicated on the amount of $106,832 remaining as owing by Round Mountain to the plaintiffs as part of the Amount Due.
  2. [60]
    The unlikelihood of the plaintiffs’ claim in respect of $106,832 of the Amount Due stated in the Deed of Forbearance thus emerges. That is to say, by inclusion in the Amount Due under the Deed of Forbearance, the amount of $106,832 is to be paid twice.
  3. [61]
    In my view, the evidence disclosed a mistaken assumption as to the facts and, accordingly, as to the operation of the Deed of Assignment and Deed of Forbearance. The mistake was the false assumption in the Deed of Assignment that the plaintiffs in fact had made any “Further Advance” to Round Mountain.  It was Meredith Transport, not the plaintiffs, that provided accommodation to Round Mountain in the form of the arrangements described above up to 10 February 2016.
  4. [62]
    Unless precluded by an estoppel, the defendants would have been entitled to defend the claim against them as sureties for the Amount Due to the extent of the Further Advances under the Deed of Assignment and $106,832 of the Amount Due under the Deed of Forbearance (if the latter bound them at all) on the footing that no such amount was advanced to Round Mountain by the plaintiffs.  However, they did not raise this as a ground of defence.
  5. [63]
    Another point that emerged from the evidence, still leaving to one side Miriam’s evidence, is that nothing in the 10 February 2016 email exchange suggested that the Round Mountain payments on the Meredith Transport Round Mountain running account would be credited against the plaintiffs’ payment of the Settlement Sum to BN65 that was made in consideration of the assignment of the BN65 debt from BN65 to the plaintiffs. In the absence of an express agreement of that kind, it seems commercially unlikely that either Meredith Transport or the plaintiffs would have agreed to such an outcome. Nothing supports the conclusion that it should be treated as a matter of implied agreement.
  6. [64]
    Under the Deed of Assignment and (for Truck Hub) under the transferred mortgage, the plaintiffs were substituted to the position previously enjoyed by BN65 as a secured creditor for the amount of the Settlement Sum. Under the arrangements made on the Meredith Transport Round Mountain running account, Meredith Transport was, in effect, making further advances to Round Mountain while receiving sums from Round Mountain’s customers that were credited to the account.
  7. [65]
    In those circumstances, as at 11 February 2016, it seems commercially unlikely that either the plaintiffs or Meredith Transport would have agreed that payments made by Round Mountain on the running account would be credited against the Settlement Sum owing to the plaintiffs under the Deed of Assignment and Deed of Forbearance, thereby increasing the amount of Round Mountain’s unsecured liability to Meredith Transport as a creditor.
  8. [66]
    In those circumstances, and because the defendants only raised the allegation that Miriam and Tabitha orally agreed that payments on the running account would be credited against the mortgage at the last moment, without any explanation for doing so, I reject Miriam’s evidence to that effect. 

Status of question 1 of the agreed list of issues

  1. [67]
    I return to the effect of question 1 of the agreed list of issues upon the judgment or order that should be made.
  2. [68]
    The agreed list of issues was handed up by the parties at the beginning of the trial.  Nothing was specifically said to have been agreed about its status in relation to the pleadings and the issues raised by the pleadings.  But below question 1 it was stated that if the if the answer to question 1 is “yes” the plaintiffs’ claim is to be dismissed but if the answer is “no” the debt owing by the first, third, fourth, sixth and seventh defendants is $250,000 plus interest and costs.  That statement demonstrated that questions 1 was intended to limit the scope of the issues required for determination at the trial in order to quell the controversy raised by the claim between the parties that otherwise would be decided by reference to the issues raised by the pleadings on the claim.
  3. [69]
    Because of the conclusions I have reached otherwise as to the liability of Round Mountain to the plaintiffs upon the subject of the claim, and the effect that would have on the defendants’ liabilities, it is necessary to consider the effect of question 1 of the agreed list of issues upon the judgment that would otherwise have been decided at the trial upon the pleadings.  As far as I am aware, it has not been necessary for this court to deal with a similar question before.[7]

Pleadings and their statutory context

  1. [70]
    The role of the pleadings in defining the issues for determination at the trial of a claim upon a cause of action at common law for damages for breach of contract or in debt is now provided for by the rules of court contained in the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”).[8] 
  2. [71]
    Broadly speaking, but with some innovative developments,[9] those rules followed the model established for a single court exercising the jurisdiction of the prior courts of common law and equity enacted originally in this jurisdiction under the Judicature Act 1876 (Qld) and continued by later legislation to the same effect,[10] following the model of the rules of court established for the courts of England and Wales under the Judicature Acts of 1873 and 1875, as substantially amended in England and Wales by the Rules of the Supreme Court 1883 (Eng) that came to be expressed in the Rules of the Supreme Court 1900 (Qld).[11]
  3. [72]
    It is not necessary or useful here to essay the history or effect of those pleading rules in detail.  A statement of authority as to their operation will do.  In 2010,[12] the Full Court of the Federal Court of Australia said of the comparator rules in the then Federal Court Rules 1979 (Cth):[13]
  1. “[50]
    Pleadings provide a structure for a proceeding for the purpose of the attainment of justice. The pleadings identify the material facts upon which the parties rely and the issues the parties seek to have determined. Because the pleadings require the parties to identify all material facts and issues, the pleadings provide the benchmark for discovery before trial and the admissibility of evidence at trial. Parties are required to plead the material facts upon which the party relies and the issues which that party seeks to have resolved for the further purpose of giving the opposing party fair notice of the case to be met at trial thereby minimising any risk of injustice by taking the opposing party by surprise. Pleadings incidentally are the record of the proceeding for the purpose of any subsequent arguments relating to res judicata or issue estoppel or any like issue.
  2. [51]
    At trial a party is entitled to have the opposing party confined to that party's pleadings because the first party is entitled to come to trial to meet only the issues raised on the pleadings. However, if the first party does not seek to so confine the opposing party but allows the other party to raise other material facts and issues for the determination of the Court, then in our opinion the Court is permitted and possibly obliged to decide the proceeding on the further material facts and issues raised and addressed at trial: Banque Commerciale at 296-297; Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 at 517. If it were otherwise, the party who has failed to plead all of the material facts or issues upon which the party's case relies, but has brought those material facts or issues to the attention of his or her opponent at trial, would be denied natural justice if at the end of the trial the Court decided the proceeding on the pleadings without notice to that party. The first party in those circumstances would have been denied the opportunity to apply to amend those pleadings so as to formalise what was in fact addressed at the trial.
  3. [52]
    Pleadings are a means to an end and not an end in themselves (Banque Commerciale per Dawson J at 292-3). As early as 1916 Isaacs and Rich JJ said, in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 (at 517):

Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest.”

  1. [73]
    The UCPR make no provision for a “list of agreed issues”.  However, they do provide that a trial of a claim may proceed other than on pleadings, as follows:

480  No pleadings

  1. (1)
    If the court considers a proceeding can be decided without pleadings, or without pleadings after the statement of claim, the court may, on the application of a party, order the proceeding to be decided in this way.
  2. (2)
    If the court makes an order under subrule (1), the court may direct the parties to prepare a statement of facts and issues or, if the parties do not agree on a statement of facts and issues, the court may settle the statement itself.”
  1. [74]
    As well, it should be noted that r 367 of the UCPR provides that:

“367 Directions

  1. (1)
    The court may make any order or direction about the conduct of a proceeding it considers appropriate, even though the order or direction may be inconsistent with another provision of these rules.
  2. (2)
    In deciding whether to make an order or direction, the interests of justice are paramount.”
  1. [75]
    There was no order of the court under r 480 or direction under r 367 in this case.
  2. [76]
    The Chief Justice may make practice directions for the Supreme Court.[14]  Practice Direction 18 of 2018 provides, in part, that:
  1. “18.As early as reasonably possible, or as directed by the court, the parties should confer for the purpose of resolving or narrowing the issues in dispute, identifying the real issues that remain in dispute and agreeing steps for the just and expeditious resolution of those issues at a minimum of expense.
  2. 19.The legal practitioners with the conduct of the trial of the proceeding, and each party or a representative of each party who is familiar with the issues in dispute, should attend the conference, unless excused from doing so by the court.
  3. 20.Such conference may be in person, by video-conference or by telephone conference.
  4. 21.Prior to the conference, the parties are expected to agree a short agenda.
  5. 22.Part or all of the conference may be held “without prejudice” by express agreement of the parties.
  6. 23.The parties may agree to the appointment of an independent person to facilitate the conference.

  1. 27.The pleadings remain the basis upon which the issues to be tried are formally identified. However, given the complexity of many pleadings and as an aid to efficient court management of cases, the parties should prepare a list of the real issues in dispute. The list should be concise, and in a form that is most useful to the Court. It may contain cross references to pleadings.
  2. 28.If the parties agree that certain matters have become ‘non-issues’, then the issues that are not to be tried should be identified and the resolution of those issues recorded in a suitable form (either in a formal amendment to pleadings or some other clear form).”
  1. [77]
    In this jurisdiction, under the UCPR, a proceeding at first instance must be started by claim[15] unless the rules require or permit it to be started by originating application.[16]   An originating application under the UCPR proceeds without pleadings unless directed to proceed as if started by claim[17] or an equivalent order is made under r 367 for pleadings by way of points of claim and defence.
  2. [78]
    On an originating application without pleadings, no question will arise of a possible conflict between the issues defined by the pleadings and those on a list of issues for hearing.  But at a trial of a claim or an application directed to proceed as if stated by claim where there are pleadings, the problems addressed by paragraphs 27 and 28 of Practice Direction 18 of 2018 may arise.
  3. [79]
    It should be observed that the agreed list of issues process provided for by Practice Direction 18 of 2018 does not involve the court in settling the agreed list of issues, as contemplated by r 480(2) where an order is made under r 480(1) and the parties do not agree.  This is explained by the circumstance that although many cases are in fact managed in particular lists in this court,[18] the UCPR do not provide for the case management by the court of all civil proceedings.  This may be contrasted with courts where case management is embedded to a degree where the court will settle or be involved in the finalisation of the list of issues.[19]
  4. [80]
    Apart from a list of issues for a final hearing, a list of issues may serve different interlocutory purposes, such as a list of issues upon which disclosure is required, as part of the process of limiting disclosure to what is necessary and proportional, by an order relieving a party otherwise from the general duty of disclosure.[20]  Another example is a list of issues or matters for consideration by expert witnesses at an experts’ conference.[21]
  5. [81]
    Documents described as a “list of issues” or “list of agreed issues” have become frequent features of the pre-trial and hearing processes of civil proceedings in this and other jurisdictions.  They first started to appear in the 1990s in some English cases and became more frequent in use both in that jurisdiction and in this country by the time of the procedural reforms that came into effect in this country following the Woolf Final Report[22] and the introduction of the Civil Procedure Rules 1998 (Eng) in England and Wales. 
  6. [82]
    In a similar vein, from May 2007, the Federal Court of Australia introduced its “fast track” procedures in Melbourne, that did away with ordinary pleadings in favour of a “concise statement”, now able to be applied more widely in that court.[23]  These developments are championed by the opponents of pleadings who foredoom their future.[24]  But their adoption has not worked everywhere.[25]
  7. [83]
    In some jurisdictions, the statutes or rules of court now expressly recognise the development of a list of issues.[26]
  8. [84]
    In the present case, however, the question is the effect of question 1 of the agreed list of issues on the conclusions the court would otherwise reach on the pleaded cases and the evidence at the trial.  That inquiry starts from the statutory context in this jurisdiction set out above.
  9. [85]
    Next, as the passage extracted from Betfair shows, parties can depart from the pleaded issues (or even the agreed issues) by conduct at a trial.  It is frequently done by a party not pressing or abandoning an issue.  The analyses in statements of high authority explain the legal characterisation of the practices familiar to practitioners.[27]  Most discussion in the cases occurs in an appellate context where the question becomes whether a party in the court below either expanded the issues raised on the pleadings or narrowed the issues raised on the pleadings by their conduct at the trial.[28]
  10. [86]
    The question is whether, notwithstanding the conclusions I would otherwise reach, the parties should be held to the strict terms of question 1 in the decision to be made. I observe that question 1 is not simply cast in language that requires the determination of a relevant issue.  It includes a statement as to the consequence of deciding the issue one way or the other.  The assumption of the drafters was that if question 1 is answered “yes” as a matter of law the defendant must succeed as to the whole of the principal amount claimed to be due and that if question 1 is answered “no” as a matter of law the plaintiff must succeed as to the principal amount claimed to be due.  As these reasons show, I would not agree with either assumption, unless constrained by the terms of the agreed question 1 to do so.
  11. [87]
    Whilst a party is free to admit an allegation of fact for the purposes of a proceeding, even if not true, or not to raise a cause of action or a defence that would be successful if raised, the parties cannot foreclose the answer to a question of law in the same way.  The position was summarised in the High Court as follows:

When the parties to an adversarial proceeding agree on a proposition of law and conduct their cases on that basis, their agreement does not bind the trial judge. If the judge determines the law to be different, he may apply the law as he determines it to be, but he must inform the parties of the view he has formed when that is necessary to give them an opportunity to address new issues arising from the judge’s departure from the proposition of law on which the case was conducted.”[29]

When any debt was payable

  1. [88]
    On 12 April 2016, Truck Hub (by their solicitors’ letter) made demand upon Miriam and David for payment of the money due under the mortgage before the expiration of 30 days.
  2. [89]
    There was no evidence of any demand upon the first third or fourth defendants before the proceeding was started.
  3. [90]
    The date for repayment of the Principal Sum under the Loan Agreement expired before it was assigned to the plaintiffs.  Neither the Deed of Assignment nor the Deed of Forbearance provided a new date for repayment of the sums payable or to become payable under them. 
  4. [91]
    Where money is lent without an agreement as to the date of repayment or provision that the amount is payable on demand, the amount lent is a debt due from the date of the advance without demand.[30]
  5. [92]
    In the present case, therefore, it is not necessary to further consider the date on which the Amount Due under the Deed of Forbearance or part of it became repayable by Round Mountain or Zeaiter Holdings.
  6. [93]
    However, clause 4 of the guarantees of Miriam and David provided that the moneys payable under the guarantee shall become payable upon a “Payment Demand” given to the guarantor in the manner thereinafter provided.  When a sum is repayable on demand, the debtor fails to comply with the demand only after the expiration of the usually short “reasonable time” that the debtor has to get the money and comply with the demand after it is made.[31]
  7. [94]
    It was not a ground of defence that no Payment Demand within the meaning of the guarantee was not given to the third or fourth defendant or Miriam or David.
  8. [95]
    In any event, the date at which the debt became payable is only relevant to the plaintiffs’ claim for interest.

Interest

  1. [96]
    Clause 5 of the Loan Agreement provided:

“The Borrowers will pay to the Lender interest on the Principal Sum, or on so much thereof as shall from time to time be owing and remain unpaid, at the Applicable Interest Rate from the date of the Advance of the Principal Sum and being calculated on daily balances on the amount of the Advance as shall from time to time be owing and remain unpaid and shall be paid by monthly instalments until the Repayment Date.”

  1. [97]
    The “Applicable Interest Rate” was 33 per cent. The plaintiffs claim interest on the whole of the Amount Due as constituting the “Principal Sum” for the purposes of clause 5 of the Loan Agreement.  The plaintiffs treat the day that is 30 days after the date of their demand upon Miriam and David for the money due and owing under the mortgage, being 12 May 2016, as the date from which interest should be calculated.  The claim for interest, in addition to the claim for the Amount Due of $250,000, is $1,598,379.27.
  2. [98]
    It is unnecessary to consider the operation of clause 5 in detail.  As previously stated, clause 3 of the Deed of Forbearance contained promises by Round Mountain as the debtor.  Clause 4 of the Deed of Forbearance then provided:

“In the event that [Round Mountain] fails to comply with any of its Obligations in the manner specified herein and to the [plaintiff’s] satisfaction, the [plaintiff] may:

  1. (a)
    retrospectively apply interest to the period from the date of this Deed pursuant to the Loan Agreement; and
  2. (b)
    the amount due under the Loan Agreement will be payable in full and continue to accrue interest until such time until the total owing under the Loan Agreement is paid.”
  1. [99]
    In addition, recital C of the Deed of Forbearance provided that the plaintiff had agreed to accept Round Mountains compliance with the conditions of the Deed of Forbearance in forbearance of its right to accrue further interest under the Loan Agreement from the date of the deed.
  2. [100]
    In my view, the operation of clause 4 of the Deed of Forbearance conditioned or qualified the entitlement of the plaintiffs as assignees and substituted lenders under the Loan Agreement by qualifying the right to interest under clause 5 of the Loan Agreement in accordance with the provisions of clause 4 of the Deed of Forbearance.  However, the plaintiffs did not allege or prove that Round Mountain failed to comply with any of its obligations in the manner specified in the deed of forbearance or to the plaintiffs’ satisfaction.  Accordingly, in my view, the condition on the entitlement to interest on the Amount Due under the Loan Agreement was not proved to have been satisfied and no interest under clause 5 of the Loan Agreement was proved to be payable.
  3. [101]
    It follows, that the plaintiffs’ entitlement to interest is to an award of interest under s 58 of the Civil Liability Act 2011 (Qld) calculated in accordance with the rates applicable from time to time on the amount that was and is due from 12 May 2016.

Costs

  1. [102]
    Clause 8.1(b) of the Loan Agreement provides that the borrowers shall pay to the lender on demand the amount of the costs of any enforcement of the Loan Agreement including by clause 8.1(f) the plaintiffs’ legal costs and expenses on a full indemnity basis or solicitor and own client basis, whichever is higher.
  2. [103]
    The plaintiffs submitted that, accordingly, the defendants should be ordered to pay the plaintiffs’ costs of the proceeding to be assessed on the indemnity basis.

Counterclaim

  1. [104]
    The defendants’ counterclaim for redemption of the mortgage.
  2. [105]
    Under a Torrens system of title, such as the Land Title Act 1994 (Qld), a mortgage takes effect only as a charge and not as a conveyance of the legal estate of the mortgagor.[32]  The mortgagor’s interest in the land continues to be a legal interest, not an equitable interest.[33]  Accordingly, the principles applicable to an action for a redemption only apply by analogy to a Torrens System mortgage.
  3. [106]
    In Rowe v National Australia Bank Ltd,[34] the Court of Appeal of the Supreme Court of Western Australia considered the nature of an action for redemption for a Torrens System mortgage.  In particular, it was observed of the mortgagor’s interest:

“It has the right to redeem only in the sense of a right to have the mortgagee ordered (notwithstanding that the contractual date for payment has passed) to receive what should be found upon a taking of accounts to be owing under the mortgage and thereupon to execute a discharge of the mortgage.”[35]

  1. [107]
    It remains important that in redemption proceedings, the mortgagor’s statement of claim or the evidence in support must expressly or by implication contain an offer to redeem[36] and that the mortgagor’s entitlement to an account whilst the mortgage subsists is ancillary to the principal relief of redemption.[37]
  2. [108]
    In the present case, Miriam and David offer to redeem the mortgage and apply for a declaration that no monies are owed under the mortgage and for an order that Truck Hub execute a release. In the circumstances, if any money is owing under the mortgage on account of the Amount Due under the Deed of Forbearance and any interest payable by Miriam and David as guarantors that is secured by the mortgage, it is appropriate to declare that amount and order that upon payment of that amount Truck Hub execute a release.

Conclusion

  1. [109]
    In the light of the findings set out above, it may not be appropriate to decide the claim by reference to question 1 of the agreed list of issues only.  A question also arises as to the order that should be made on the counterclaim.  However, although the question of whether question 1 was inapt was raised in oral argument, the parties were not given a full opportunity to address the effect of the actual findings made above or the applicable law in the light of those findings.  In accordance with principle and authority, they should be given the opportunity to do so.
  2. [110]
    Therefore, it is appropriate to publish these reasons and invite the parties, having considered them, to provide a joint submission or separate submissions as to the appropriate judgment or orders to be made.

Footnotes

[1]  Round Mountain and Zeaiter Holdings were defined in the Deed of Assignment as “the Companies”, although the singular noun was used throughout that deed.

[2]  See, for example, Property Law Act 1974 (Qld), ss 199 and 200.

[3] Australia and New Zealand Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662.

[4] Devaynes v Noble (1816) 1 Mer 572, 608-609; 35 ER 781, 793.

[5] Air Services Australia v Ferrier (1996) 185 CLR 483.

[6] Air Services Australia v Ferrier (1996) 185 CLR 483, 504-505.

[7]  The question has arisen in other Australian courts: Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664 [321]-[325]; Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 396 ALR 27 [181], [185], [191]-[194] and [414].

[8] Uniform Civil Procedure Rules 1999 (Qld) ch 6.

[9] Uniform Civil Procedure Rules 1999 (Qld) r 166.

[10]  Now see Civil Proceedings Act 2011 (Qld) s 7; Supreme Court Act 1991 (Qld) s 85.

[11] Rules of the Supreme Court 1900 (Qld) O 22, O 24, O 25 and O 27.

[12] Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356, 373-374 [50]-[52].  See also Prysmian Cavi E Sistemi SRL v Australian Competition and Consumer Commission [2018] FCAFC 30 [69].

[13]  Replaced from 20 July 2011 by the Federal Court Rules 2011 (Cth) – now see Part 16.

[14] Supreme Court Act 1991 (Qld) s 17.

[15] Uniform Civil Procedure Rules 1999 (Qld) r 9

[16] Uniform Civil Procedure Rules 1999 (Qld) rr 10 and 11.

[17] Uniform Civil procedure Rules 1999 (Qld) r 14.

[18] Supreme Court Act 1991 (Qld) s 58; at present the court maintains the Commercial List, the Supervised Case List, the Estates List and the Case Flow List.

[19]  For example, a pre-trial review under the Civil Procedure Rules 1998 (Eng) r 29.7(a). See Lord Justice Peter Coulson et al, “The White Book Service 2022: Civil Procedure” (Sweet & Maxwell, 2022).

[20] Uniform Civil Procedure Rules 1999 (Qld) rr 224 and 211.

[21] Uniform Civil Procedure Rules 1999 (Qld) r 428(2).

[22]  Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996).

[23] Federal Court of Australia, Commercial and Corporations Practice Note (C&C-1).

[24]  Adrian Zuckerman et al, Zuckerman on Australian Civil Procedure (Lexis Nexis, 1st ed, 2018) [7.86]-[7.89].

[25]  Bridgette Toy-Cronin, “Lessons from a Failed Court Reform: The Cautionary Tale of the 2009 New Zealand District Court Rules” (2022) 31 Journal of Judicial Administration 138.

[26] Civil Procedure Act 2010 (Vic) ss 50 and 50A; Practice Note SC Eq 3 (NSW) [25], Uniform Civil Procedure Rules 2020 (SA) r 316.7; Land Court Rules 2022 (Qld) r 39.

[27] Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 279, 283-284.

[28]  For example, Gattelaro v Westpac Banking Corporation (2004) 204 ALR 258, 267 [45]; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388, 401 [35]; Water Board v Moustakas (1988) 180 CLR 491, 497; University of Wollongong v Metwally (No 2) (1985) 60 ALR 68, 71; Mummery v Irvings Pty Ltd (1956) 96 CLR 99, 112.

[29] Pantorno v The Queen (1989) 166 CLR 466, 473.

[30] Haller v Ayre [2005] 2 Qd R 410, 418-423; Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125 [10]-[12]; Ogilvie v Adams [1981] VR 1041, 1043.

[31] Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1984) 153 CLR 491, 502-503.

[32] Land Title Act 1994 (Qld) s 74.

[33] Anderson v Liddell & Ors (1968) 117 CLR 36, 48; Quint v Robertson (1985) 3 NSWLR 398, 400-401.

[34] Rowe v National Australia Bank Ltd (2019) 56 WAR 1 [110]-[112].

[35] Rowe v National Australia Bank Ltd (2019) 56 WAR 1 [111].

[36] Rowe v National Australia Bank Ltd (2019) 56 WAR 1 [114].

[37] Rowe v National Australia Bank Ltd (2019) 56 WAR 1 [119].

Close

Editorial Notes

  • Published Case Name:

    O'Keefe & Ors v Zeaiter Holdings Pty Ltd & Ors

  • Shortened Case Name:

    O'Keefe v Zeaiter Holdings Pty Ltd

  • MNC:

    [2022] QSC 86

  • Court:

    QSC

  • Judge(s):

    Jackson J

  • Date:

    13 May 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.