Bates v Shen

Background

1. The background to the present application, as gleaned from the pleadings, is that the parties had been friends for some time (see [3] of the amended statement of claim; [1] of the amended defence); the defendant was a registered and licensed real estate agent and property developer; the plaintiff is a retiree (see [4]-[5] of the amended statement of claim; [1] of the amended defence); and the parties entered into a number of agreements, pursuant to which the plaintiff advanced to the defendant, in total, the sum of $1,050,000.
2. In particular, it is alleged by the plaintiff that there were a number of successive agreements in relation to advances to be made to the defendant.
3. First, that the parties entered into the First Loan Agreement whereby the plaintiff agreed to lend the sum of $200,000 (the First Principal) to the defendant, on which interest was to be charged as particularised at [9] of the amended statement of claim (the First Interest). The allegations as to the First Loan Agreement appear at [7]-[11] of the amended statement of claim as follows: 7. On or about 8 August 2017, the plaintiff and the defendant entered into an agreement whereby the plaintiff agreed to lend a sum of money to the defendant on terms (the "First Loan Agreement"). Particulars 1. The First Loan Agreement and its terms are partly written and partly oral. To the extent that they are in writing, they are contained in a document entitled Deed of Agreement dated 8 August 2017 and signed by the parties. 2. To the extent that they are oral, they included a series of conversations between the plaintiff and the defendant in which the defendant specified that the monies used would be applied solely to the development of a property in Strathfield owned by Lourel Holdings Pty Ltd, a company wholly owned by the defendant, and that the plaintiff would be entitled to repayment from the profits of the sale of units in that development. 8. Upon its proper construction, it was a term of the First Loan Agreement that the plaintiff would advance to the defendant the sum of $200,000 (the "First Principal"). 9. Upon its proper construction, it was a term of the First Loan Agreement that in consideration for the advance of the First Principal, interest was to be charged on the First Principal (the "First Interest"). Particulars on First Interest 1. Clause C of the Deed of the First Loan Agreement govern[s] the rate and manner in which Interest accrued on the First Principal. 2. Interest would be paid at the end of each month on the amount outstanding at that time. 3. The interest rate would be 15% per annum. 4. The first payment of interest would be due on 5 September 2017[.] 10. Upon its proper construction, it was a term of the Agreement that the defendant would repay the First Principal on or before 8 February 2018. 11. Pursuant to the First Loan Agreement, the plaintiff advanced the First Principal to the defendant on or about 8 August 2017.
4. The defendant, relevantly, admits that the parties entered into the First Loan Agreement ([3] of the amended defence) but says that it was a term of the First Loan Agreement that the plaintiff would only be entitled to repayment of funds advanced pursuant to the First Loan Agreement from the sale of units in the development at Strathfield being carried out by Lourel Holdings Pty Ltd (Lourel) and not at any time prior to the sale of those units being completed. The defendant admits [8], [9] and [11] of the amended statement of claim ([4], [5] and [7] of the amended defence) but denies that the principal was repayable as alleged ([6] of the amended defence).
5. Second, the plaintiff alleges that, on or about 4 September 2017, the parties entered into a partly written, partly implied and partly oral agreement which provided for an advance of the sum of $600,000 (the Second Principal) with interest at 15% per annum payable every four weeks on the amount then outstanding (the Second Loan Agreement) and that the Second Principal and any Second Interest was repayable on demand (see [12]-[15] of the amended statement of claim). It is alleged in the alternative to [12]-[15] that there was a variation to the terms of the First Loan Agreement (in effect to increase the amount of the money to be advanced under that agreement by the amount of the Second Principal) (see [16] of the amended statement of claim); and it is alleged, in the alternative to [12]-[15] that there was a novation of the First Loan Agreement to similar effect (see [17]-[19] of the amended statement of claim).
6. The defendant admits that she entered into an agreement to borrow the Second Principal and that it was a term of the Second Loan Agreement that that sum would be advanced but otherwise denies the allegations at [12], [14]-[19] of the amended statement of claim ([8]-[11] of the amended defence). The defendant also admits receipt of the sum of $600,000 ([12] of the amended defence). The defendant says that it was a term of the Second Loan Agreement in relation to the Second Principal that the plaintiff would only be entitled to repayment of funds advanced pursuant to the Second Loan Agreement from the sale of units in the development being carried on in Strathfield by Lourel.
7. Third, the plaintiff pleads a third loan agreement (see [21]ff of the amended statement of claim) (the Third Loan Agreement) or, in the alternative, variations of the First Loan Agreement or Novated First Loan Agreement; in effect by entry into an oral agreement on 15 March 2018 which provided for the advance of a sum of $110,000. The defendant's response to those allegations mirrors its response in relation to the similar allegations regarding the Second Loan Agreement.
8. Finally, the plaintiff pleads a fourth loan agreement, being an oral agreement entered into on 20 March 2018 whereby the plaintiff agreed to lend a sum of $140,000 (the Fourth Loan Agreement) or, in the alternative, further variations of the First Loan Agreement or Novated First Loan Agreement in that regard (see [28]ff of the amended statement of claim). Again, the defendant's response thereto accords with that which is pleaded as to the Second Loan Agreement.
9. Accordingly, there is no denial by the defendant of receipt of the total funds claimed to have been advanced by the plaintiff (i.e., $1,050,000). However, it is only in relation to the sum advanced pursuant to the First Loan Agreement that the defendant admits she is liable to pay interest. Thus, the (admitted) First Loan Agreement is the only agreement relevant to the present application.
10. At [35] of the amended statement of claim, the plaintiff pleads that the defendant has made repayments (totalling $66,000) on various dates and (at [36]) has pleaded the interest said to have accrued on the outstanding principal (as at 30 November 2018, the total interest accrued being calculated at $186,578.02). The plaintiff then claims a failure to repay the principal sums and the net interest (see [38]-[41]). Apart from admissions that the amounts advanced have not been repaid (and the denial that there is any liability to do so), these allegations are broadly denied (see [21]-[24] of the amended defence).
11. Those matters give rise to the allegation (at [42] of the amended statement of claim) (denied at [25] of the amended defence) that: 42. As a result of the matters pleaded at paragraphs 7 to 41, the plaintiff has suffered loss and damage. Particulars of Damage and Loss 1. First Principal, Second Principal, Third Principal, Fourth Principal owing in the sum of $1,050,000. 2. Net Interest accrued and outstanding in the sum of $120,578.02 as at 30 November and further accruing at the rate of 15% per annum, payable every four weeks. 3. Costs of enforcing the plaintiff's rights under the Agreement.
12. Causes of action for moneys had and received (see [43]-[46] of the amended statement of claim) and promissory estoppel (see [47]-[64] of the amended statement of claim) are then made (and broadly denied by the defendant - see [26]-[29] of the amended defence).
13. By cross-claim filed 14 June 2016, the defendant/cross-claimant seeks rectification of the First Loan Agreement in effect such that cl A be rectified to read: … the Borrower agrees to repay the Principal Sum from the proceeds of the sale of units in the development in Strathfield being carried out by Lourel Holdings Pty Limited and not at any time prior to the sale of those units being completed and cl B be rectified to read: … the Borrower has the right to make repayment at a time prior to the completion of the sale of the units in the Development being carried out by Lourel Holdings Pty Limited.
14. The plaintiff has filed a defence to the cross-claim, pleading (among other things) the futility of rectification on the basis, in effect, that the default in relation to interest payments entitles the plaintiff to terminate the agreement.
15. By consent orders made on 26 February 2019, judgment was entered against the defendant in the sum of $45,000 in relation to matters pleaded in the plaintiff's statement of claim, namely the amounts then owing for simple interest under the First Loan Agreement (see [9], [36], [37], [42] and [68(b)] of the amended statement of claim).
16. On 11 March 2019, the defendant paid the plaintiff the sum of $50,000. The defendant in the submissions on the present application has said that this payment was made by way of good faith but contends that it should be taken into account when determining, for summary judgment purposes, the amount that is owing.
17. A Notice to Admit Facts was issued on the defendant on or about 18 April 2019, seeking admissions that: 2. On or about 8 August 2017, the plaintiff executed the document annexed hereto this Notice and marked "A" [the Loan Agreement]. 3. The document marked "A" is the written part of the First Loan Agreement as set out in paragraphs 7 to 10 of the Amended Statement of Claim.
18. The Notice Disputing Facts does not dispute any matter relating to cl C of the First Loan Agreement, or the authenticity of the document, nor is it disputed that the defendant signed it.

Application for summary judgment in relation to the interest instalments that have accrued under the First Loan Agreement

Plaintiff's submissions

1. The plaintiff has prepared a schedule (Schedule A) setting out the dates on which she maintains that simple interest accrued under the arrangements (admittedly) entered into between the parties. It is said that, as at the date of the entry into the consent orders (26 February 2019), $45,000 in simple interest was outstanding (the plaintiff here noting that there is no provision for payment of interest in advance).
2. The plaintiff says that, as at the time of the payment of $50,000, on the defendant's own admission, the defendant owed the plaintiff: interest in excess of at least $120,000 and principal of $1,050,000. The defendant, as noted above, denies that the principal sum is repayable and disputes that interest is payable other than in respect of the First Principal.
3. It is submitted by the plaintiff that the $5,000 difference in payment (as between the $45,000 consent judgment and the $50,000 actually paid) would ordinarily be allocated to the other amounts owed by the defendant but that, as the payment was made on 11 March 2019, $2,500 of the sum paid should be allocated to the payment due on 5 March 2019, with the balance allocated to the amounts then owed by the defendant. As a result, the plaintiff contends that the sum of $7,500 is payable by way of interest, comprised of interest of $2,500 for each of the periods April 2019 to June 2019 (due on 5 April, 5 May and 5 June 2019, respectively).
4. The plaintiff says that, as the Instalments for the March to June period have not been paid, judgment pursuant to r 13.1 of UCPR should be made in favour of the plaintiff against the defendant in the sum of $7,500 ("updating" this to the current date).

Defendant's submissions

1. As to the application for summary judgment, the defendant's position is that summary judgment should be entered against her in the sum of $2,500 but that otherwise the notice of motion should be dismissed.
2. The opposition to an order for summary judgment in a greater amount relates to the payment of $50,000 which was made to the plaintiff, $5,000 more than the orders made on 26 February 2019 provided for (being $45,000). It is said that that payment was made "as a sign of good faith" to the plaintiff and that the defendant should have credit for the additional $5,000 paid, which reduces the outstanding interest from $7,500 to $2,500. However, the defendant accepted that the 5 June 2019 Instalment had not been paid (hence, increasing the amount for summary judgment to $5,000, and, as noted earlier, another Instalment has since fallen due - on 5 July 2019 - and it can be inferred, on the defendant's own evidence as to her financial position, that it will not have been paid; as the plaintiff's solicitors have advised).

Plaintiff's submissions

1. As to the order sought under s 82 of the Civil Procedure Act, the plaintiff submits that the discretion under s 82 has been enlivened and should now be exercised. Section 82 ('Court may order interim payments') provides: (1) In any proceedings for the recovery of damages, the court may order a defendant in the proceedings to make one or more payments to the plaintiff of part of the damages sought to be recovered in the proceedings. (2) The court may make such an order against a defendant on the application of the plaintiff at any stage of the proceedings. (3) The court may not make such an order unless: (a) the defendant has admitted liability, or (b) the plaintiff has obtained judgment against the defendant for damages to be assessed, or (c) the court is satisfied that, if the proceedings went to trial, the plaintiff would obtain judgment for substantial damages against the defendant. (4) The court may not make such an order if the defendant satisfies the court that: (a) the defendant is not insured in respect of the risk giving rise to the plaintiff's claim for the recovery of damages, and (b) the defendant is not a public authority, and (c) the defendant would, having regard to the defendant's means and resources, suffer undue hardship if such a payment were to be made. (5) The court may order a defendant to make one or more payments of such amounts as it thinks just, but not exceeding a reasonable proportion of the damages that, in the court's opinion, are likely to be recovered by the plaintiff. (6) In estimating those damages, the court is to take into account any relevant contributory negligence, and any cross-claims, on which the defendant may be entitled to rely. (7) The court may make an order under this section in proceedings for the recovery of damages to which Part 4 of the Motor Accident Injuries Act 2017 applies, but only an order for one or more payments to be made to the plaintiff of part of the damages for economic loss sought to be recovered in the proceedings and only if the court is satisfied that the plaintiff would suffer financial hardship if such a payment were not made.
2. It is relevant here also to note the provisions of s 84 ('Adjustments on final judgment etc') (since the plaintiff also refers to this in her submissions): (1) This section applies to proceedings in which a defendant makes one or more interim payments. (2) The court may make such orders with respect to the interim payments as may be just and, in particular, may order one or more of the following: (a) the variation or discontinuance of interim payments, (b) the repayment by the plaintiff of all or part of any interim payment, with or without interest, (c) the payment by another party of all or part of any interim payment that the defendant is entitled to recover from that other party. (3) The court may make an order under this section: (a) when making a final judgment or order, or (b) when granting the plaintiff leave to discontinue proceedings or to withdraw a claim, or (c) on the application of any party, at any other stage of the proceedings.
3. The plaintiff submits that an order pursuant to s 82, as sought, should be made for the following reasons.
4. First, that given the pleadings, and pursuant to s 82(3)(c), the amount of the Instalments, by the time of the hearing, would very likely be the subject of a judgment by the plaintiff against the defendant whatever the outcome of the defendant's rectification claim.
5. Second, that there is evidence that the defendant has more assets and income than she has put before the Court. It is submitted that, as a result, the Court cannot be satisfied that she would suffer undue hardship if an order were to be made, whether under s 82(4)(c) of the Civil Procedure Act or otherwise.
6. Third, that there is nothing in the statute that prohibits the making of more than one Instalment order and it is submitted that, in the circumstances, it is appropriate for the Court to make the order in the form sought by the plaintiff rather than a single "lump sum" payment.
7. Fourth, that there are no off-setting claims brought by the defendant.
8. Fifth, that the defendant admits liability to the plaintiff for the principal sum of over $1,000,000 and interest, the only dispute being as to the timing of the repayment obligation.
9. Sixth, that the overall circumstances justify the order to be made under the statute.
10. As a matter of practicality, it is submitted that if the Court does not make an interim payment order, then the plaintiff has the right, every month, to bring another summary judgment application for the amount owing and that this would be undesirable.
11. It is submitted that, on the pleadings (and having regard to the admitted facts and the making of the earlier consent orders), it is clear that it is agreed between the parties that: interest is payable on the relevant principal ($200,000); interest is payable at 15% simple interest, compounded monthly on the 5th of every month; interest is payable until the principal is repaid (whether the principal on the plaintiff's construction of the agreement or the defendant's construction). It is noted that no part of the cross-claim seeks rectification or denies the nature or the terms of the Instalments; or seeks amendment to the term governing Instalments.
12. The plaintiff points out that the claim in the amended statement of claim in respect of the Instalments is pleaded as a claim for damages for breach of the provisions of the First Loan Agreement. It is submitted that the claim for damages in respect of payments of interest due under a term of a contract of loan (here, the First Loan Agreement) is a claim for damages for which s 82 would apply if the payment of interest is not made in time, thus bringing the matter within the ambit of s 82(1) of the Civil Procedure Act and enlivening the power to award an interim payment.
13. It is next submitted that s 82(3)(c) of the Civil Procedure Act is satisfied. It is noted that in Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495; [2010] NSWCA 106 (Forster), Macfarlan JA sets out the relevant test under s 82(3)(c), noting at [23]: Likewise, in the present context, it is not in my view of assistance to attempt to refine the description of the standard of proof beyond saying that the word "satisfied" in s 82(3)(c) requires the court to reach its conclusion on the balance of probabilities and in doing so to have regard to the gravity of any allegations made and to the seriousness of the consequences that may flow from the making of a particular finding or order. The need to have regard to such matters was authoritatively stated by Dixon J in the seminal decision in Briginshaw v Briginshaw (1938) 60 CLR 336, especially at 362.
14. At [25], his Honour said, of the words "would obtain judgment": ... Taken together, the words do not require a plaintiff to do more than show that it is more probable than not that he or she will succeed at the trial in obtaining judgment for substantial damages ...
15. As to what is meant by "substantial damages", in Matouk v Hungry Jacks [2009] NSWSC 1176 (Matouk) (at [40]) Mathews AJ said that: I think it inappropriate to try to ascribe any universal or definitive meaning to the phrase "judgment for substantial damages" as it appears in s 82(3) [sic]. The answer might well depend on the circumstances of each case. In particular, it might depend upon the nature and identity of the parties, the amount sought in the proceedings, and, to a lesser extent, the reason why the plaintiff is seeking an interim payment under the section.
16. The plaintiff points out that in later cases (Munsie v Munsie [2012] NSWSC 479 and Forster) it has been emphasised that a plaintiff is not required to provide a reason why they need an interim payment, nor for what purposes such a payment will be applied; but says that in any event here, there is evidence that the plaintiff is in a position of some hardship (being reliant on a pension) in circumstances where she has lent her savings to the defendant and has not received interest payments.
17. The plaintiff has been unable to find any consideration in the cases as to whether a claim for an interim payment being "substantial damages" applies to the claim as a whole, or encompasses only a part of a claim; but submits that the section does extend to the latter situation.
18. The plaintiff submits that the requisite state of satisfaction under s 82(3)(c) is reached on the basis that the parties have, through their pleadings, effectively agreed that each Instalment falls due on the day it falls due. In the submission of the plaintiff, it is highly likely ("if not inevitable") that an amount will be awarded in the final judgment for those amounts of the Instalments that have not been paid by the time of hearing.
19. It is accepted that the amounts that would be awarded under any interim payment will be smaller than the principal amount claimed ($1,050,000) but it is said that they are not insignificant "and would be an appreciable sum of money to any person". That said, the plaintiff accepts that the precise quantum of damages (referable to the principal damages claim) is as yet unknown but the plaintiff's position is that, assuming that the matter will not be determined for another year, the amount of interest Instalments (in respect of which liability is conceded) would be in the order of $30,000. It is submitted that this is not an insubstantial amount, particularly to a natural person.
20. The plaintiff points also to the operation of s 82(4) (which I have extracted above). The plaintiff submits that the state of "satisfaction" required for the purpose of this section is the same as that for s 82(3); and that the onus is on the defendant to prove that she would suffer undue hardship (there being no obligation on the plaintiff to show that she would suffer undue hardship if the order were not to be made or to what purpose she would put the payment(s) if ordered).
21. The plaintiff submits that, on the evidence before the Court, the defendant: has not set out her full financial circumstances; has deposed to only having property in one State, when in fact she has several properties; has, by her solicitors, provided material that purports to show that a company, Lourel, in which she is sole shareholder and director, is receiving funds on the purchase of the properties; has deposed to having no income other than welfare benefits, but is the proprietor of a property on which rent appears to be paid (namely, evidence of property listings that record the property as being leased); and is a shareholder and/or director in several corporations which own land and property.
22. It is submitted that the defendant has therefore not established to the requisite level of satisfaction that she would suffer undue hardship if an order of the kind sought were to be made.
23. Finally, it is submitted that there is no prohibition upon an order of the kind sought, which is for multiple or recurring payments (expressed until further order), though the plaintiff has been unable to find any case where recurring payments have been ordered until further order. Reference is made to the wording of s 82(1), which speaks of "one or more payments". Further, it is noted that s 84 of the Civil Procedure Act gives the Court the power to vary any recurring interim order at any stage of the proceedings.
24. In summary, the plaintiff submits that the following matters are relevant matters to be taken into account on the present application: that the payment sought is in relation to an interest component that is agreed between the parties and thus not the subject of any dispute on the pleadings; that the payment sought is in respect of a claim for damages within the meaning of ss 82(1) and 82(3) of the Civil Procedure Act; that the defendant has not satisfactorily proven that she would be placed in undue hardship by paying the amount; that, while unnecessary to consider, the plaintiff's own financial situation is "not ideal"; the amounts sought are proportionate to the amount claimed; if the order is not made, the plaintiff is entitled at law to claim for summary judgment every month that an Instalment is not paid; and there is said to be no prohibition on the Court making a recurrent order for payment, and s 84 envisages that any order may be varied at any time.
25. As a final matter, it is submitted that in circumstances where the defendant/cross-claimant is seeking rectification of the First Loan Agreement (an equitable remedy) but is at the same time refusing to comply with the terms of the contract which she seeks to amend, the maxim that he (or she) who seeks equity must do equity here applies.
26. The plaintiff seeks her costs on the motion. It is said that there has been ample opportunity for the defendant to reach agreement with the plaintiff on arranging interest payments and/or setting up an instalment regime, which the defendant/cross-claimant has so far refused to entertain. It is said that the plaintiff should not be put into further costs to enforce interest due to her under the First Loan Agreement.

Defendant's submissions

1. As to the application for an order pursuant to s 82 of the Civil Procedure Act, the defendant submits that this should be dismissed for the following reasons.
2. First, that the defendant has not "admitted liability" for the purposes of s 82(3)(a) of the Civil Procedure Act in relation to the claims made by the plaintiff. It is submitted that an admission of an interest rate payable on one of four loan agreements here sued upon by the plaintiff, where the due date for repayment of the principal sum is disputed, does not constitute an admission of liability in relation to the plaintiff's claims.
3. The defendant submits that the proper meaning of the phrase "admitted liability" for the purposes of s 82 of the Civil Procedure Act is in relation to the claim made by a plaintiff as a whole; and therefore that the plaintiff is required to satisfy the Court (on the balance of probabilities) that, if the matter proceeded to trial, she would obtain "substantial damages" (see s 82(3)(c)); i.e., that it is more probable than not that she will succeed at the trial in obtaining judgment for substantial damages (Forster at [25]).
4. It is accepted that the primary dispute between the parties in relation to the First Loan Agreement is in relation to the date of repayment. It is said that the plaintiff has not adduced any evidence on this application going to the merits of that claim, such that the Court could not be satisfied that the plaintiff will obtain substantial damages at any trial. It is submitted, in particular, that the Court would not be satisfied that obtaining a judgment for interest in the sum of $2,500 per month (of which, as at the date of these submissions, only $2,500 is outstanding) would constitute substantial damages having regard to the principal amount sought, which is $1,050,000.It is further submitted that, even had the plaintiff adduced such evidence, given that the determination of whether the relief sought in the cross-claim should be granted will turn on credit, there cannot (and should not) be any such finding on an application of the present kind.
5. Second, and in the alternative to the first, it is said that the defendant has established by her evidence that she would suffer undue hardship (for the purposes of s 82(4)) if an order is made as sought, noting the defendant's evidence that: she had a stroke on 4 April 2018; she has lost her working capacity as a result of that stroke, and has been bedridden for significant periods of time since then; her husband has been required to care for her, and has resigned from his former job; she and her husband are in default of their residential mortgage in the amount of $76,601.42; she is a director of Lourel, which is carrying on a development in Strathfield which has been delayed by more than two years, and of which the defendant is optimistic can be completed by the end of this year; and she has no income or other source of funds to pay the $2,500 per month to the plaintiff. It is submitted that it is unlikely that, if the plaintiff had available funds, she would deliberately allow the mortgage on her residential home "to slip into significant default" (as has been the case).
6. Third, and further in the alternative, that the relief sought should be declined on discretionary grounds, having regard to the matters to which the defendant has deposed, because: this matter is likely to be resolved within a year, meaning that the amount payable pursuant to the orders sought would be $30,000; no evidence has been adduced that the plaintiff has a need to be paid $2,500 per month; the defendant has adduced evidence that she will suffer hardship if such an order is made; and the amount sought, in the context of the claims made, is de minimis. It is submitted that applications of this kind should not be encouraged.
7. Thus, other than the concession made by the defendant in relation to the summary judgment application, it is said that the plaintiff's notice of motion should be dismissed and that the plaintiff should be ordered to pay the defendant's costs of the notice of motion.

Determination

1. As to the claim for summary judgment, on the evidence before me I am satisfied that, as at the date of the hearing, the outstanding interest was only $5,000 (albeit that a further interest payment was to fall due on 5 July 2019). As noted, confirmation was sought of the parties as to whether that amount has since been paid - the likelihood, having regard to the evidence on the defendant's case on this application as to her financial circumstances, being that it has not (something that has since been confirmed by the plaintiff's Counsel without correction by the defendant).
2. As to the payment of $50,000 in March 2019, while it is ordinarily open to a creditor (if payment is made by a debtor without appropriating the payment to any particular debt) to appropriate the payment to whichever debt the creditor might choose (so, for example, to treat it as payment of a debt that might otherwise be statute-barred) (see the discussion in Mita Copiers Australia Pty Ltd v Condor OA Pty Ltd (Supreme Court (NSW), Hunter J, 10 October 1994, unrep) at 5, his Honour there citing Marryatts v White (1817) 171 ER 586 at 586-587 per Lord Ellenborough as to the proposition that "[w]here there is nothing to show the animus solventis the payment may certainly be applied by the party who receives the money"), this will depend on what arrangements have been made (and whether it should be inferred that in all the circumstances the payment was made for a particular purpose).
3. The position of the defendant appears to have been that the additional $5,000 paid (over and above the amount of the consent judgment) was made as a "sign of good faith" (see the defendant's submissions in that regard). Nevertheless, I do not consider that the plaintiff (having accepted the additional $5,000) can now be taken not to have accepted that amount in discharge of the debts for which liability has been admitted (since the debts she admits are only the interest payments that have accrued in relation to the first sum advanced; there being a live dispute as to the balance of the amounts claimed). There is no sensible basis to suggest that the moneys were to be paid as against a disputed liability and if the defendant did indeed proffer that sum as a "good faith" payment but now seeks to have that "good faith" amount appropriated to discharge the interest arrears it is difficult to see how the plaintiff can resist this.
4. The situation seems to me not dissimilar to the position where a security bond or deposit is called upon, in circumstances where (for example) the entitlement to do so has arisen due to rental arrears or some other default sounding in a claim for monetary compensation. The amount so received should then ordinarily be treated as discharging the liability in respect of which the bond or deposit was called upon (i.e., say, as discharging the rental arrears in question) (as I considered to be the case in Gupta v Fordham Laboratories Pty Ltd [2018] NSWSC 551), since otherwise there would be no entitlement to retain the money. I consider the additional $5,000 paid by the defendant in March 2019 should thus be treated as being on account of future interest instalments and accordingly should be applied to the following two months' instalments.
5. The plaintiff also put forward an argument, in essence, that although the date for payment of interest is the 5th of each month, the payment due on 5 July 2019 in fact accrued during June 2019 since interest accrues in arrears. I cannot accept that proposition. In particular, insofar as the agreement was for interest to be payable at the end of each month (on the 5th of the month), and the plaintiff accepts that interest was not payable in advance, the payment due on 5 July 2019 was not outstanding when the motion for summary judgment was heard and could not then have been sued for as a debt due and payable; nor could any claim for damages have accrued at that stage for breach of contract since there was no at that time no failure to pay an amount that was not in fact payable until 5 July 2019.
6. However, that begs the question as to what should be the position now if, as on the balance of probabilities it can be inferred is the case, there was no payment made on 5 July 2019. The defendant accepts that she is liable to pay the sum of $2,500 each month, that sum being due on the 5th of each month. The defendant accepts that she has not paid the amounts due on 5 May and 5 June 2019. She does not dispute the assertion by the plaintiff that, since judgment was reserved, a further instalment has gone unpaid. Accordingly, summary judgment should be entered on the assumption that the payment of the $2,500 that was due on 5 July 2019 was not in fact made (as is the available inference from the defendant's own evidence as to her inability to pay those amounts). (If, contrary to what I have been informed, payment of $2,500 was in fact made on or about 5 July 2019, then application can be made to vary the summary judgment pursuant to the liberty to apply that I propose to grant.)
7. The more difficult question is as to whether an order should be made pursuant to s 82 as sought by the plaintiff.
8. I accept that the plaintiff's claim in the amended statement of claim is framed as a claim for damages for breach of a contract, the breach being the failure to pay interest (and other amounts); and I accept that the plaintiff has admitted liability in respect of an obligation to pay interest at least on the First Principal advanced on the terms of the First Loan Agreement.
9. However, the difficulty I have is that what seems to be required by s 82 is a consideration of the overall case, not component parts of the case; and that s 82(3) is mandatory in its terms. Even if s 82 does encompass the making of an interim payment in respect of damages for a component part of the overall damages claim (as to which I have some doubt), I would need to be satisfied that, if the proceedings go to trial, it is likely that the plaintiff will obtain judgment for substantial damages against the defendant.
10. The assertion that the plaintiff is likely to succeed and to obtain judgment for substantial damages is to be made on the ordinary standard of the balance of probabilities but what that requires in any particular case will depend upon the individual circumstances, including the inherent "uncertainties of litigation" (see Forster at [13]). The use of the language of satisfaction in s 82, and in particular the satisfaction requirement in s 82(3)(c), has been understood as one of "comfortable" or "sufficient" satisfaction of the applicant's probability of success (see Matouk at [10]-[11]). There is no requirement for need to be established on the part of the applicant (although evidence of the applicant's need, once the discretion has been enlivened, is a relevant consideration).
11. In Forster, Macfarlan JA (McColl JA and Sackville AJA agreeing) explained (at [25]) that the phrase "would obtain judgment" in s 82(3)(c) did not "introduce a requirement of certainty, or near certainty, of success at trial into the test to be applied". Macfarlan JA continued (at [25]): The word "satisfied" attracts the balance of probabilities test. The words that follow identify the future occurrence that the Court must be "satisfied" will occur. Taken together, the words do not require a plaintiff to do more than show that it is more probable than not that he or she will succeed at the trial in obtaining judgment for substantial damages.
12. If limited to the interest component of the plaintiff's claim, that would entail forming a view as to the likelihood of continuing default in the payment of interest. I accept that the defendant's own evidence suggests that there is likely to be an ongoing default on a month by month basis. The defendant, in her affidavit sworn 12 June 2019, has deposed (at [13]) that apart from additional loans taken out from family and friends to finish the project she has no income or available funds to make the payments of $2,500 per month. Therefore, I would conclude that on the balance of probabilities it is likely that the plaintiff will succeed at the final hearing in obtaining judgment at least in the sum of around $30,000.
13. However, that does not assist in determining that on the balance of probabilities the plaintiff will succeed in obtaining substantial damages on the substantive claim (i.e., that the damages she is likely to obtain will be substantial in the overall context of the proceedings). There is an alternative possibility thrown up by the cross-claim, namely that there is not as yet any amount repayable in respect of the total amount advanced by the defendant (and no interest component in respect of anything other than the first amount advanced); and, if the plaintiff does not succeed on her principal claim then there must be a possibility of adverse costs orders and a set-off in respect of the admitted liability for interest. I therefore cannot be satisfied, without consideration of the merits of the cross-claim, that the claim as presently framed is likely, on the balance of probabilities, to result in the plaintiff obtaining "judgment for substantial damages against the defendant" (notwithstanding that it is clear that the amounts advanced were not intended to be a gift and thus must have been intended to be repayable at some stage).
14. In those circumstances, it is not open to me to make an order for interim payments of the kind sought (even if I were otherwise to be of the view that it was sufficient for the purposes of the section that there be admitted liability for this one (relatively small) component of the overall damages claim).
15. That is sufficient to dispose of the application for interim payments. Insofar as the plaintiff invokes the maxim that he (or she) who seeks equity must do equity, in Langman v Handover (1929) 43 CLR 334 at 351-352; [1929] HCA 42, Rich and Dixon JJ made clear that the maxim that he who seeks equity must do equity "does not substitute moral for legal standards in the determination of the conditions of relief"; rather, that those who ask for the assistance of a court of equity must be willing to do justice by accepting terms which flow from the legal or equitable rights of the defendant to the suit. (See also the explanation and application of the maxim that "he who seeks equity must do equity" in Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 at [67] (Bofinger); Gibson v Goldsmid (1854) 5 De GM & G 757 at 765; 43 ER 1064 per Turner LJ.) In Mercanti v Mercanti [2015] WASC 297 Le Miere J said (at [186]): The maxim "he who seeks equity must do equity" means that equity looks to the conscience of the applicant in determining whether to grant relief. It means that no plaintiff can get an equitable remedy unless that plaintiff fulfils his or her own legal and equitable obligations arising out of the subject matter of the dispute. Meagher, Gummow and Lehane caution that the limits of the maxim must be remembered, the maxim does not empower a court of equity to impose on a plaintiff as a condition of relief any term merely because it considers it reasonable.
16. In my opinion, resort to the maxim does not here assist the plaintiff. The obligation to pay interest payments on the First Principal is admitted (albeit that it has been breached for the past few months). The failure to pay (admittedly due) interest payments does not impact upon the issue as to whether there is a liability presently to repay the whole of the amounts advanced.
17. Moreover, this does not address the difficulty that, unless the requisite state of satisfaction is reached (as to the likelihood of substantial damages being awarded), the legislation itself mandates that an interim payment order must not be made. It seems to me that, in large part, the difficulty for the plaintiff on the present application for an interim payment order is in seeking to fit provisions clearly envisaged to deal with interim payments in personal injuries matters (and in circumstances where liability is not in issue but there is a dispute as to quantum of damages) to the present scenario of a commercial dispute (albeit one between former friends).
18. The defendant adverted to the possibility that the plaintiff might have sought a judgment on admissions on the pleadings (T 24.27). Rule 17.7 of the UCPR provides that: (1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions. (2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined.
19. Admissions may be made expressly in the pleadings or may be implied (see Ritchie's Uniform Civil Procedure NSW, vol 1 at [17.7.20]). However, they must be clear if they are to found a judgment (see Ellis v Allen [1914] 1 Ch 904 at 909; [1911-13] All ER Rep 906; Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 at 503; [1936] 2 All ER 1496).
20. The plaintiff's position in this regard, however, was that such a judgment might give rise to uncertainty (see T 28.16ff); and the plaintiff did not press for relief on such a basis.
21. The possibility of declaratory relief similarly was also considered by the plaintiff of little assistance in terms of enforcement (and I would add that an order compelling the payment of interest on a monthly basis framed as an obligation to comply with the First Loan Agreement takes the matter little or no further in circumstances where the plaintiff is already contractually liable to do so and has conceded as much).
22. After some debate, the possibility was canvassed of an order, based on the admissions in relation to the interest payments, that the plaintiff be entitled to enter judgment on a monthly basis not before the 5th day of each month in the sum of $2,500 unless by the 5th day of that month the defendant has paid to the plaintiff the sum of $2,500 (see T 28). What concerns me in relation to this proposition is to avoid unnecessary costs being incurred on a regular basis, where both parties appear to have financial difficulties and the monthly amounts in question are disproportionate to the costs of contested interlocutory hearings on a regular basis. The defendant's proposal in this regard was that the plaintiff be required to move for an expedited hearing. In the circumstances that will not be necessary as I am proposing actively to case-manage the matter in the applications list. I have also referred the parties to mediation.
23. My final observation is that it is not in the interests of the just, quick and cheap resolution of the real issues in dispute for ongoing interlocutory applications in such small amounts to be encouraged. Ordinarily, a claim for a debt of $2,500 (or, for that matter, $7,500) would not be in this Court. It is not an efficient use of Court time and judicial resources (nor can it be cost-effective for the parties) to entertain such applications (and particularly not on a regular basis). Questions of proportionality must arise. If it is inevitable that there will be continuing defaults by the defendant in payment of amounts admittedly due, and the plaintiff is not prepared (or able financially) to allow further time for compliance by the defendant with her interest obligations, there would seem to be an obvious answer - namely that the plaintiff might seek to enforce the court orders obtained to date. The practical downside of such a course would obviously be the risk of the consequences that any such course may have on the completion of the development (which itself might have an adverse impact on the plaintiff's prospects of recovering in a reasonable timeframe the much larger amounts advanced by her whether or not her construction of the relevant loan agreements is correct); but that ultimately calls for an assessment to be made by the plaintiff, not the Court.
24. As the plaintiff has succeeded on her summary judgment application but not on the s 82 application, I consider the appropriate costs order to be that the defendant pay 50% of the plaintiff's costs of the notice of motion. The defendant admits she is in default in relation to the payment of interest and the application for summary judgment was, I accept, brought in circumstances where the plaintiff is herself suffering hardship arising from the non-payment of moneys admittedly due to her (leaving aside the non-payment of moneys which the defendant denies are presently repayable).
25. For the above reasons, I make the following orders: 1. Enter summary judgment against the defendant in the sum of $7,500. 2. Otherwise dismiss the plaintiff's notice of motion. 3. Order the defendant to pay 50% of the plaintiff's costs of the notice of motion and otherwise order that there be no order as to the costs of the notice of motion. 4. Liberty to apply on reasonable notice if issues arise in relation to the implementation of these orders or if there is an application to vary the orders.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2019