Reasoning
35Mr Burchett submitted that there was material before her Honour that should have made it apparent to her that the applicants' case did not rest solely on the contention that the 2007 Guarantee had been supplanted by the 2008 Guarantee. Mr Burchett relied on para 46 of the Second Further Amended Defence ("2nd FAD") filed on 27 June 2011 and paras 4 and 5 of the Statement of Issues prepared by the parties in advance of the hearing held on 29 November 2011. He contended that the matters identified in these paragraphs raised for consideration a defence by way of set off to NAB's claim under the 2007 Guarantee.
36Paragraph 46 of the 2nd FAD pleads that the applicants provided the 2008 Guarantee (not the 2007 Guarantee) in reliance on certain representations made by NAB in August 2008 in relation to a transaction referred to as the Camden Facility. Paragraph 46 further pleads that the applicants would not have entered into the 2008 Guarantee for a number of reasons, including the following:
"the effect of Lauderdale being a guarantor of the Camden Facility and Lauderdale's assets being mortgaged or, otherwise, being provided, as security for the Camden Facility was to encumber the assets of Lauderdale and frustrate or, otherwise, limit the ability of Lauderdale to service its own loans to the Plaintiff namely, the First [2007] Facility and the Second [2008] Facility".
37The Statement of Issues, under the heading "2008 Guarantee", identifies the following issues for determination:
"3. Whether the [applicants] are liable to [NAB] in the sum of $6,450,013.55 pursuant to the [2008] [G]uarantee ... together with interest on that sum from the date of 7 June 2011.
4. Whether [NAB] on or about 15 August 2008 made the following representations to [Michael Sanchez]:
a. it would be advantageous to [NAB] if all the funds pursuant to the Camden Facility were drawn down;
b. there were no restrictions as to how the Camden Facility Funds could be applied; and
c. [Michael Sanchez] could apply funds from the Camden Facility which had not been used in connection with the [Camden] development ... to service the loan monies owed by Lauderdale to [NAB] pursuant to the overdraft facility and the bill facility.
5. In the event that issue 4 is resolved in favour of the [applicants]:
a. whether by making such representations [NAB] on or about 15 August 2008 engaged in misleading, deceptive and, or alternatively, unconscionable conduct within the meaning of the Trade Practices Act 1974 (Cth); and, if so
b. whether the [applicants] are entitled to the relief claimed in the [2nd FAD], namely:
[NAB] is estopped from relying on the 2008 Guarantee;
damages pursuant to section 82 and, or in the alternative, section 87 of the Trade Practices Act 1974 (Cth);
set-off."
38It is difficult to understand, even assuming that the primary Judge was in some way bound to identify for herself the issues the applicants wished to raise on the summary judgment application, how she could have discerned from these paragraphs a defence relating to the validity of the 2007 Guarantee. On their face, the paragraphs were directed to denying the enforceability of the 2008 Guarantee. To that end, they relied on events post-dating the execution of the 2007 Guarantee. They simply do not plead or identify a defence to NAB's claim to enforce the 2007 Guarantee.
39In any event, the exchanges between the primary Judge and counsel, at the hearing on 29 November 2011, made it abundantly clear that the only defence the applicants wished to raise to the summary judgment application was that the 2007 Guarantee had been supplanted or discharged by the 2008 Guarantee. Mr Stoljar SC set out the position quite precisely. Then counsel for the applicants expressed his agreement that the issue should proceed on the basis that the question for determination was whether, as a matter of construction, the 2008 Guarantee was a complete substitute for and replaced the 2007 Guarantee.
40There can be no doubt that counsel for the applicants understood that the dealings in relation to the Camden Facility had nothing to do with NAB's summary judgment application, founded as it was on the 2007 Guarantee. This is demonstrated by counsel deciding not to read Michael Sanchez's affidavit insofar as it addressed the circumstances surrounding the Camden Facility.
41The primary Judge did not misapprehend the issues for determination on NAB's summary judgment application. Nor did her Honour misapprehend the applicants' defence to the summary judgment application.
42Nor, in my opinion, did the primary Judge fail to apply the correct standard for determining whether NAB had made out its application for summary judgment. Her Honour cited and clearly bore in mind the passages from Spencer v Commonwealth that set out the test to be applied.
43Mr Burchett relied on her Honour's observation that the monetary limit of the 2008 Guarantee, which comprehended the sums advanced under both facilities, was capable of providing some support for the applicants' construction of the 2008 Guarantee. That observation does not indicate that her Honour applied the wrong test. She formed the view that the overlap provided a "weak indicator" in the applicants' favour and could not detract from the clear words of cl 20 of the 2008 Guarantee. It is to be borne in mind that in General Steel, Barwick CJ stated (at 130) that that resolution of the legal issues on a summary judgment might involve extensive argument. All that the primary Judge was doing was to address the legal argument put to her.
44The real question on the present application is whether the applicants would suffer any injustice if leave to appeal were refused. That depends on whether they have any reasonable prospect of success on an appeal. In my opinion, they do not.
45The primary Judge was correct to reject the three arguments advanced by the applicants and which Mr Burchett repeated.
46The first argument was that the primary Judge was wrong to hold that the conversations preceding the execution of the 2008 Guarantee could not support for the applicants' construction of the 2008 Guarantee. As the primary Judge pointed out, the evidence went only to conversations between the directors of Lauderdale, or between the directors and a finance broker. Mr Burchett accepted that the broker was the agent of the applicants, not of NAB. He also accepted that there was no evidence of communications between the applicants or the broker and NAB.
47In these circumstances, the evidence, taken at its highest, amounted to no more than evidence of the subjective understanding of the applicants as to the effect of the 2008 Guarantee. It cannot assist in the construction of the 2008 Guarantee, a matter that is to be determined by reference to objective criteria: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165, at 177-178 [35]-[36], per curiam.
48Secondly, contrary to the submission of Mr Burchett, the judgment of Gibbs CJ in Mahoney v McManus [1981] HCA 54; 180 CLR 370, does not support the proposition that the 2008 Guarantee supplanted the 2007 Guarantee. Mahoney v McManus involved two guarantees executed, respectively, in August 1973 and May 1974. Gibbs J (with whom Murphy and Aitkin JJ agreed) said this (at 379):
"The guarantee of 16 May 1974 is expressed to be in respect of present as well as of future indebtedness. The parties to it guaranteed payment of the indebtedness which was the subject of the earlier guarantee, and of other indebtedness as well. If all the parties to both guarantees had been the same, it might have been easy to reach the conclusion that they intended, not that there should be two identical guarantees in respect of the same existing indebtedness, but that the latter guarantee was to be taken in substitution for, and to discharge, the former. But the position is different when the parties to the two guarantees are not the same. It is not inconsistent with the continued operation of a joint and several guarantee by A, B and C, that a joint and several guarantee should be taken from A, B and D in respect of the same indebtedness. There is no reason why the two guarantees should not both be effective, so that the creditor can avail himself of either or both, and so that any surety can obtain contribution against all the others. There was no expressed intention to discharge the appellant and Mundt from their joint and several liability under the guarantee of August 1973, and I can see no good reason for implying any such intention; on the contrary, there is every reason to assume that Chrysler would not have intended to discharge the appellant or Mundt, if the effect of so doing would have been to release the respondent from his liability. It is not unreasonable to assume that Chrysler wished to have the benefit of both guarantees. It was not in my opinion established that the guarantee of 16 May 1974 was accepted in substitution for that of 14 August 1973 or that it had the effect of discharging the appellant from his obligations under the earlier guarantee."
49In the present case, the parties to the 2008 Guarantee were not the same as the parties to the 2007 Guarantee. Christian Sanchez, who had executed the 2007 Guarantee, was not a party to the 2008 Guarantee, having resigned as a director of Lauderdale in the meantime. There is nothing in the terms of the 2008 Guarantee which suggests an intention to release the applicants, much less Christian Sanchez, from the 2007 Guarantee. On the contrary, the express terms of cl 20 of the 2008 Guarantee demonstrate a clear intention that the 2008 Guarantee was to be in addition to the 2007 Guarantee to which the applicants were parties. (There appears to have been no equivalent to cl 20 of the 2008 Guarantee in the May 1974 guarantee at issue in Mahoney v McManus: see at 379.)
50The fact that NAB initially relied on the 2008 Guarantee cannot assist the applicants. Quite apart from the difficulty that post-contractual conduct cannot be relied on in construction of the contract (Agricultural & Rural Finance Ltd v Gardiner [2008] HCA 57; 238 CLR 570, at [35], per Gummow, Hayne and Kiefel JJ, at [163], per Heydon J), reliance on the 2008 Guarantee did not constitute an admission that the 2007 Guarantee was not valid and enforceable.
51Mr Burchett argued rather faintly that cl 20 of the 2008 Guarantee did not have the effect attributed to it by the primary Judge. He submitted, as I understood him, that cl 20 was confined to the case where NAB "holds" an existing guarantee. Since the effect of the 2008 Guarantee (so he argued) was to extinguish the 2007 Guarantee, NAB did not "hold" an existing guarantee.
52This is a "bootstraps" argument. Whether NAB "holds" the 2007 Guarantee depends on the true construction of the 2008 Guarantee. That question of construction is not resolved by assuming the answer. The clear intention of cl 20 was the primary Judge held: to ensure that NAB remained entitled to enforce the 2007 Guarantee against the parties to it.
53I add one further point. If the applicants have a viable claim against NAB arising out of the circumstances in which the 2007 or 2008 Guarantee came to be executed or enforced, it may yet be open to them to pursue that claim. It is neither necessary nor appropriate to resolve that issue. But the grant of summary judgment to NAB in its claim against the applicants does not necessarily preclude the applicants from pursuing any claim for damages or other relief against NAB.