Paccar Financial Pty Limited (Formerly Known As Paccar Acceptance Pty Limited) v John Henry Ford; Muriel Dorothy Hord; Donald Patrick Kirk; Dp Kirk Holdings Pty Limited and Tunfive Pty Limited [1989] ACTSC 3 (20 January 1989)

SUPREME COURT OF THE ACT

PACCAR FINANCIAL PTY. LIMITED (formerly known as Paccar Acceptance
Pty Limited) v. JOHN HENRY FORD; MURIEL DOROTHY HORD; DONALD PATRICK
KIRK; D.P. KIRK HOLDINGS PTY. LIMITED and TUNFIVE PTY. LIMITED
S.C. Nos. 1501 and 1502 of 1987
Application for Summary Judgment

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Application for Summary Judgment - No new question of principle.

Harry Smith Car Sales Pty Ltd v. Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21.

Theseus Exploration NL v. Foyster [1972] HCA 41; (1972) 126 CLR 507

Fancourt v. Mercantile Credits Limited [1983] HCA 25; (1983) 48 ALR 1

The Cloverdell Lumber Company Pty Ltd v. Abbott [1924] HCA 4; (1924) 34 CLR 122

Ray v. Barker (1879) 4 ExD 279

Argento v. Cooba Developments Pty Ltd (1987) 53 FCR 579

D.T.R. Nominees Pty Ltd v. Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423.

Commercial Banking Co. of Sydney Limited v. Pollard (1913) 1 NSWLR 74

Beaumont v. Helvetic Investment Corporation Pty Ltd (1982) ASC 55.194.

HEARING

CANBERRA
20:1:1989

Counsel for the Plaintiffs/ Mr P. Dodson
Applicants

Solicitors for the Plaintiffs/ Malleson Stephen Jaques

Applicants

Counsel for the 1st & 2nd Defendants/ Mr B. Hull

Respondents

Solicitors for the 1st & 2nd Defendants/ Blake Dawson Waldron

Respondents

Counsel for the 3rd & 4th Defendants/ Mr P. Refshauge

Respondents

Solicitors for the 3rd & 4th Defendants/ Macphillamy Cummins & Gibson

Respondents

ORDER

The application for summary judgment be dismissed.

The first, second, third and fourth defendants have leave to deliver such defence to the plaintiff's statement of claim as they may be advised, such defence to be filed and delivered by 4 p.m. on 3 February 1989.

The costs of the application be costs in the cause.

DECISION

In suit No. S.C. 1501 of 1987 (the first action) Paccar Financial Pty Limited (formerly known as Paccar Acceptance Pty Limited) (the first plaintiff) and in suit No. S.C. 1502 of 1987 (the second action) Paccar Australia Pty Limited (the second plaintiff) each sued John Henry Hord (the first defendant), Muriel Dorothy Hord (the second defendant), Donald Patrick Kirk (the third defendant) and D.P. Kirk Holdings Pty Limited (the fourth defendant). In both actions there was a fifth defendant sued but I am not presently concerned with the action against it.

2. The first plaintiff claimed against all defendants jointly and severally the sum of $92,275.44 and interest while the second plaintiff claimed that the defendants were jointly and severally liable to it in the sum of $24,509.10 and interest. All the defendants whom I have named entered appearances.

3. On the day the appearances were entered, each plaintiff took out summonses seeking leave to enter judgment against the four defendants named above.

4. In essence each plaintiff's claim is that, pursuant to an agreement entered into on or about 1 March 1984 it is entitled to recover the amount it claims from the defendants as guarantors of debts owed it by a company known as Trucks (Queanbeyan) Pty Limited, hereinafter called "Trucks".

5. Were it not for the matters raised by the several defendants there would be no doubt that the plaintiffs have done all that they are required to do to enable them to obtain summary judgment under O.15, r.1 of the rules of Court. Cf. Harry Smith Car Sales Pty Ltd v. Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21.

6. In Theseus Exploration NL v. Foyster [1972] HCA 41; (1972) 126 CLR 507 Barwick C.J. said at pp 513-4

"The ambit of O.18, r.1 of the Rules of the
Supreme Court, of Queensland (the equivalent
of O.15, r.1) in relation to the present
proceedings is not in doubt. The respondent,
on the appellant's application for summary
judgment was 'bound to shew' that he had
'some reasonable ground of defence to the
action' (Crump v. Cavendish (1880) 5 Ex D
211 at p 214, per Bramwell L.J.) and the
appellant was entitled to summary judgment if
there is 'no fairly arguable point' to be
brought forward (Anglo-Italian Bank v. Wells
(1878) 38 LT 197 at 201, per Jessel M.R.).
The jurisdiction to give summary judgment
should not be exercised 'where a difficult
question of law is raised' - see generally
the Supreme Court Practice (1970) vol. 1,
pp 126-130.
...
Although I have reached a clear conclusion as
to the lack of validity in the respondent's
submission that the appellant was unable to
recover the amount claimed, I would not be
prepared to hold that the judge erred in the
course he took. Equally, however, I would
not have thought him in error if he had
granted the appellant's application for
summary judgment. The case was one which, in
my opinion, could have been disposed of upon
legal argument upon the application. But it
was for the judge to be satisfied that there
was a matter to be tried. Whilst there were
no facts to be decided, it was open to the
judge, in my opinion, to take the view that
the extent and complexity of the matters of
law and of argument thereon warranted a
hearing."

At p 514-5 Gibbs J said,

"... I am of opinion that the learned primary
judge was completely justified in dismissing
the appellant's application for summary
judgment. Indeed, on one view of the law as
stated in Bundock Bros. v. Bergl and Co.
(1897) 8 QLJ 106, he was bound to dismiss
it. In that case Griffith C.J., speaking for
the Full Court of the Supreme Court of
Queensland in a case arising under an earlier
rule corresponding to O.18 of the Rules of
the Supreme Court (Q) said (at p 108):
'It is settled that when there is a serious
point of law raised by a defendant, the Judge
in Chambers ought not to decide it, but ought
to give unconditional leave to defend.'"

7. In Fancourt v. Mercantile Credits Limited [1983] HCA 25; (1983) 48 ALR 1 at p 10, the High Court said:-

"The power to order summary or final judgment
is one that should be exercised with great
care and should never be exercised unless it
is clear that there is no real question to be
tried: see Clark v. Union Bank of Australia
Ltd [1917] HCA 19; (1917) 23 CLR 5; Jones v. Stone (1894)
AC 122; Jacobs v. Booth's Distillery Co
(1901) 85 LT 262."

8. In The Cloverdell Lumber Company Pty Ltd v. Abbott [1924] HCA 4; (1924) 34 CLR 122, Isaacs J said, at p 133:-

"All the defendant has to do is to establish
a state of facts that displaces the prima
facie effect of the statement of the mere
belief of the deponent ... that there is no
defence in fact or law."

Later, again at p 133, he referred to the judgment of Brett LJ (as he then was) in Ray v. Barker (1879) 4 ExD 279 where, at p 283, his Lordship said:-

"In this case we have to consider what is the
true construction of Order XIV. When the
existence of the debt has been clearly
established upon the affidavits, the
plaintiff is entitled to an order empowering
him to sign judgment. The defendant,
however, is to have leave to defend, either
if he has a good defence upon the merits, or
if he discloses 'such facts as may be deemed
sufficient to entitle him to defend'. If
therefore the defendant shows such a state of
facts as leads to the inference that at the
trial of the action he may be able to
establish a defence to the plaintiff's claim,
he ought not to be debarred of all power to
defeat the demand made upon him: by the very
words of the Order the plaintiff is not to be
allowed to sign judgment merely because the
defendant's affidavit does not show a
complete defence."

Isaacs J also referred to the judgment of Cotton LJ who, in the same case, said, at p 284:-

"The affidavit may not make it clear that
there is a defence, but the defendant may be
able at the trial to establish a bona fide
defence. I am not satisfied that in the
present case a valid defence exists; but the
defendant may plausibly argue that he has a
good defence."

Detailed and exhaustive evidence is not required: Argento v. Cooba Developments Pty Ltd (1987) 53 FCR 579 at p 584 per Fisher J.

9. Counsel for the third and fourth defendants submitted that in the first action they had established or had at least sufficiently raised the following defences:-

(a) The guarantee given was mutually abandoned;
(b) alternatively, the guarantee was revoked by his
client defendants and the revocation had been
accepted by the plaintiff;
(c) the plaintiff was estopped from denying revocation
of the guarantee because, the other elements of
the alleged estoppel being present, the third and
fourth defendants had acted to their detriment in
reliance on the existence of the revocation of the
guarantee in that they took no action to
ameliorate their situation as they might have
done;
(d) the plaintiff had dealt with assets of Trucks
in such a way as wilfully or recklessly to
sacrifice the interests of the company;
(e) the amount claimed was wrong;
(f) the third and fourth defendants were entitled to
set off against the plaintiff's claim damages for
the negligent act or acts of the plaintiff's
committed by a servant or agent.

10. He claimed that in the second action all the defences raised in the first action other than that identified in (d) above were established or, at least, sufficiently raised as well.

11. So far as the first and second defendants were concerned, defences are sought to be raised under the Contracts Review Act 1980 of the State of New South Wales. As well, those two defendants seek to rely on the alleged revocation by Mr Kirk of his guarantee so far as may be applicable. They seek also to rely on the other defences raised by the third and fourth defendants.

12. It is necessary to make some reference to evidence led in the proceedings on behalf of the defendants. Any findings on that evidence are not intended to be definitive to any degree since in applications such as those I am considering it is inappropriate to reach any conclusions.

13. The agreements out of which the plaintiffs' claims arise were executed on 1 March 1984, by the first three defendants in Queanbeyan and by the fourth defendant in the Australian Capital Territory.

14. Clauses 9, 11 and 14 of the agreements were as follows:-

"9.A Certificate signed by the creditor or
any of the officers of the creditor or by
any person authorised by the creditor for
that purpose stating the amount owing by
the guarantor hereunder at the date or
dates stated therein or stating any other
act matter or thing relating thereto as
at any date or dates stated therein shall
(except as is otherwise expressly
provided herein) be prima facie evidence
of the facts stated therein.
11.The Guarantee and indemnity herein shall
be a continuing guarantee and indemnity
or indemnity and IN PARTICULAR in the
event that the guaranteed moneys are in
whole or in part repaid by the debtor to
the creditor in accordance with any
obligation of the debtor to do so and
which guaranteed moneys or any part
thereof are relent or readvanced by the
creditor to the debtor and also in the
event that the same be not be paid but
are with the consent written or oral of
the creditor retained by the debtor on
such terms and conditions as are then
agreed upon and whether or not such terms
and conditions shall comprise all or any
of those contained in the original
agreement giving rise to the existence of
the guaranteed moneys.
14. Notwithstanding anything herein
provided, the Guarantor may by notice in
writing to the Creditor notify the
Creditor that it will not be bound in
relation to any indebtedness of the
Debtor which may arise after a date
(hereinafter called 'Termination Date')
specified in the notice provided that the
Termination Date is a date at least six
months from the date of notice. In
respect of such indebtedness the
Guarantor shall be bound and liable to
the Creditor in respect of debts arising
before the Termination Date even though
default in payment by the Debtor may not
be made or occur until after the
Termination Date. The Guarantor shall
not be liable in respect of any claim
where notice of the claim is not given by
the Creditor prior to the expiration of
ninety days from the Termination Date."

15. Trucks was incorporated in December 1983 to acquire and take over a business then being carried on by the third and fourth defendants. The acquisition was financed partially by payment in cash and partially by a charge over the assets of the company in favour of the fourth defendant. Trucks ran into difficulty which it is not necessary to investigate further at this stage.

16. On Monday, 22 December 1986, there was a meeting which was attended by a number of persons who included the third defendant, acting on his own behalf and on behalf of the fourth defendant, the first defendant, Mr Neil Leslie Traegar, Managing Director of the first plaintiff, and Messrs Ian Patton and Henry Ernest Sampson representing the second plaintiff.

17. The third defendant deposed that during the course of a discussion which took place at the meeting he said words, directed to the representatives of both plaintiffs, to the effect of "I want from you confirmation that my and my company's (the fourth defendant) liability under the guarantee and indemnity cease and be limited to liabilities incurred up to today. I am not prepared to be responsible for any further advance." In a conversation which he had with Mr Patton next day, he asked why the plaintiffs had stopped Trucks' credit. Mr Patton replied, "No guarantees, no credit."

18. By notice dated 23 December 1986 the first plaintiff demanded immediate payment from the third defendant of the sum of $676,128 and this was paid shortly after receipt of the demand.

19. At no time after 22 December 1986, Mr Kirk deposed, did he seek or consent to the making by the plaintiff of any further advances to Trucks.

20. On or about 26 January 1987 the first plaintiff arranged for trucks worth $275,100 to be made available to Trucks under a floor plan but required a further deed of charge to be signed which Mr Kirk refused to do although it was signed by the other directors of Trucks. At the time Mr Kirk said to Mr Traegar, "You lend this company (Trucks) this money and you do it on your own" or words to that effect. Mr Traegar replied, "We'll see, Don, but it is probably the only way we'll get it back together" or words to that effect.

21. There was, said Mr Kirk, a further conversation with Mr Sampson. That conversation might have been construed as an acceptance of the revocation by the third and fourth defendants of the guarantee.

22. Mr Kirk also deposed that the money claimed by the first plaintiff related in large part to a short fall on moneys claimed by it in respect of the sale to Trucks of ten trucks which were subsequently repossessed pursuant to the provisions of the Deed of Charge referred to above to which Mr Kirk had refused to be a part. He deposed that eight of those trucks were purchased on 28 January 1987. On 1 April 1987 Mr Kirk offered to purchase those trucks for $125,000. He deposed that that amount was almost all the money due to the first plaintiff in respect of the purchase price of those trucks. However, according to particulars furnished, the trucks when disposed of yielded $148,000, $23,800 short of what was said to be the balance owing under a relevant floor plan. The balance of the amount of $92,275.44 claimed, $68,475.44, was particularised as follows:-

Cost of repairs - $1,100.13
Commissions on sale of vehicles - 3,800.00
Solicitors' costs - 8,251.92
Receiver's costs - 21,706.07
Appraisal costs - 485.80
Interest charges on floor plan 26,130.70
Floor plan charges April-September - 7,000.00

23. It should, however, be noted that no amount in respect of one truck in respect of which the floor plan balance is said to have been $28,800 is shown under the heading "Proceeds of disposal" and this indicates that the amount claimed may well be excessive.

24. Mr Kirk gave evidence that on 22 December 1986 Mr Sampson told him that he would not give any more credit, that the account would be closed and that money could be sent in advance for purchases for future requirements, the account then to be run on a credit balance. This account was apparently to be designated as a No.2 account since Mr Sampson on the next day, Mr Kirk said, told him that if money was sent down to open a No.2 account required spare parts would be forwarded.

25. Mr Kirk also gave evidence concerning a number of credits given to Trucks in respect of sales. He said that a Mr Brian Scudds and a Mr Brian Gillies, respectively the Chief Development Engineer and the Marketing Manager (of, it would appear, the second plaintiff), refused to give credit on the spare parts account but refused also to deliver trucks as they came out of the factories so that they might be delivered by Trucks to customers.

26. After Trucks was placed in receivership by the fourth defendant there was a further discussion between Mr Kirk and Mr Sampson when, Mr Kirk said, it was agreed that certain commissions would be payable on trucks sold. Mr Kirk was unable to find out precisely what the amount of those commissions were because he had been unable to inspect the relevant records.

27. Of particular interest is an amount of $45,500. Mr Kirk was asked whether that was part of a debt said to be owed under the dealer recourse agreement from Trucks to Paccar (whether the first or second plaintiff is not clear). He replied that he did not know whether it was a debt due under the dealer recourse agreement. He then said:- "I have been made aware of the reason for the $45,000 (sic) and I was made aware of that by Mr Traegar from Paccar when I phoned him at 4 o'clock on 19 February and I asked him the reason for it and he said that Keith Sims and I padded the account to get more from the liquidator." I then said, "Do your superiors know what has happened about that?" and he said "Yes, but that doesn't matter, there's no problem." Kirk then said, "I think you are a bigger fool than I ever took you for, Neil."

28. Mr Kirk gave evidence that in about September 1986 he was informed that breaches of the floor plan arrangement with the second plaintiff had taken place in that vehicles which were in fact already subject to floor plans with another company had been included as trucks which under the floor plan arrangement secured advances made by one or other of the plaintiffs. He took remedial action and then brought the matter to the attention of Mr Sampson and told him that the matter had been fixed up. He said that he then said to Mr Sampson that he (Mr Sampson) could keep an eye on the situation because Mr Sampson was supposed to do an audit under the floor plan arrangement. He said that Mr Sampson came to Queanbeyan later in October and after he had completed what Mr Kirk understood to be the audit of the trucks secured under the floor plan arrangement said to Mr Kirk that everything was fine or words to that effect. Mr Kirk said that he replied that if that were so he would arrange for further financing for Trucks.

29. Mr Kirk said that acting on Mr Sampson's advice he arranged for a further advance of $350,000 from a bank to Trucks. He subsequently found in October 1986 that there were five trucks listed under the floor plan which were not owned by Trucks and which were improperly listed as part of the floor plan arrangement. Mr Kirk claims, therefore, that the audit which Mr Sampson was supposed to carry out was negligently performed and as a result he contributed money to the operations of Trucks which he would not have done but for his belief in the efficacy of the audit.

30. An amount of approximately $18,000 is also claimed as a setoff in relation to an award said to be payable to Trucks as the monetary equivalent of a prize for its successful sales record in respect of the first plaintiff's trucks.

31. Counsel for the third and fourth defendants submitted in respect of the first action that because of the evidence referred to above (and I have dealt with it, of course, in a very abbreviated fashion) his clients had sufficiently raised the six defences referred to above.

32. In respect of the second action, he submitted that his clients had sufficiently raised the same defences, other than that identified as (d), and, in addition, an entitlement by his clients to setoff against the second plaintiff's claim the amounts of commission unpaid and the "Best Dealer" award.

33. I deal first with the third and fourth defendants' case in respect of the first action.

34. Despite the terms of clause 14 of the agreement, I do not think it necessarily to be the case that the guarantee in question could only be revoked in the manner provided for by that clause. Cf. D.T.R. Nominees Pty Ltd v. Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423. I think that the third and fourth defendants have raised an arguable case that they revoked the guarantee and that the revocation was accepted by the plaintiffs. Whether this means that, arguably, the guarantee was mutually abandoned does not, I think, matter.

35. I am not satisfied, as at present advised, that the first plaintiff is estopped from denying that the guarantee was revoked.

36. I am not presently satisfied on the evidence before me that the claim that the first plaintiff dealt with the trucks of Trucks in such a way as wilfully or recklessly to sacrifice the interests of Trucks is arguably raised.

37. I am satisfied that the defence that the amount claimed is wrong is arguably raised. Much of the third and fourth defendants' case is based on suspicion and that of itself would plainly not be enough but there is at least in respect of one truck referred to above reason to think that the amount claimed should be reduced by its value. I think the third and fourth defendants have established an entitlement to defend the action and in all the circumstances it seems to me to be proper that they should have leave to defend it generally.

38. I make the same comments in respect of the second action so far as the third and fourth defendants are concerned, bearing in mind, however, that the defence identified as (d) is not sought to be raised in that action. Additionally, I think that the defendants are entitled to raise the defence of setoff against the plaintiffs' claim in respect of the "Best Dealer" award.

39. Again I think the third and fourth defendants ought to have leave to defend the second action generally.

40. The first and second defendants claim to be entitled to defend the actions, not only on the grounds raised by the third and fourth defendants, but also on the ground that they have a good defence under the Contracts Review Act 1980 of the State of New South Wales (the Act). Since they entered into the contract of guarantee in New South Wales they are entitled to take advantage of that Act if it be applicable to their case. It is conceded that s.6(2) of the Act is not applicable in the circumstances and the question therefore is whether they have proved sufficient facts to enable them to raise a defence under s.9(2) of the Act. There is appropriate evidence from the second defendant as to a lack of experience in respect of business matters as well as evidence concerning the circumstances in which she came to enter into the agreement.

41. There is also evidence from the first defendant of the circumstances in which he entered into the agreement. His case in this regard seems to me to be much less strong than that of his wife but since the matter has been raised, fairly as I think, it seems to me to be one which ought not to be dealt with on an application for summary judgment but rather one where the defendants are entitled to have the matter dealt with as an ordinary hearing. See Commercial Banking Co. of Sydney Limited v. Pollard (1913) 1 NSWLR 74 at p 80 and Beaumont v. Helvetic Investment Corporation Pty Ltd (1982) ASC 55.194.

42. Again, without further comment on the possible validity of their other proposed defences, those raised by the third and fourth defendants, except in so far as what I have earlier said relates clearly to them, it seems to me that the first and second defendants should have leave to defend the actions generally.

43. The applications are dismissed. I think that the costs of the applications should be costs in the cause.