a The first defendant would undertake to develop and complete the project with funds to be provided by the first plaintiff and other investors;
b The second defendant would manage the project;
c The first plaintiff would advance moneys for the project to the first defendant upon the second defendant's request and the amount lent would be repaid on completion of the project together with interest at 6 per cent per annum.
5 The plaintiffs allege that the agreement was breached in a variety of ways by the defendants. They also bring a claim for damages under s 82 of the Trade Practices Act 1974 (Cth) for misleading and deceptive conduct in breach of s 52 of that Act.
6 Of particular relevance to the present application, the plaintiffs plead in para 8(b) of the statement of claim that the second defendant gave a direction to the plaintiffs to pay an amount of $84,000 for 56,000 shares in the capital of the first defendant and "$317,520 by way of shareholders loan from the First Plaintiff to the First Defendant". Paragraph 9 pleads that the first plaintiff transferred those amounts to the first defendant's bank account. In response to those paragraphs, the defendants, in paragraph 8 of their defence, admit that the second defendant directed the second plaintiff to issue a cheque in the sum of $401,520 and say that that amount "comprised of $84,000 in share capital and $317,520 in shareholder loan". In paragraph 9, the defendants admit that the amount of $401,520 was transferred from the first defendant's bank account to the bank account of the first plaintiff. However, the defendants deny the agreement as pleaded by the plaintiffs. In para 5 of their defence they say that the terms of the agreement were set out "in a Shareholder to Private Company Loan Deed dated 18 July 2004" (the Deed) and, in para 6(f), they say that the "the shareholder loan made by the first defendant" was repayable on 18 February 2010 in accordance with clause 1.1 and Item 4 of the Schedule of the Deed. The Deed is expressed to be between the first plaintiff and first defendant, but it appears that it was only ever executed by the first defendant.
7 UCPR r 17.7 provides:
"(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."
8 There appears to be no decided case dealing with this rule. However, the predecessors to the rule are in substantially similar terms: see r 130 of the Consolidated Equity Rules of 1902, considered in Termijtelen v Van Arkel [1974] 1 NSWLR 525, and Pt 18 r 3 of the Supreme Court Rules 1970, considered in Kelly v Mawson [1981] 1 NSWLR 184. It is clear from those decisions that the power granted by UCPR r 17.7 is discretionary. In exercising that discretion, the court should take account of the nature and quality of the admission. In Termijtelen v Van Arkel, for example, the court refused the application where the admission was deemed to have been made in the absence of an appearance.
9 In exercising its discretion, the court must also now have regard to s 56 of the Civil Procedure Act 2005, which relevantly provides:
"(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(2) The court must seek to give effect to the overriding purpose when it exercises any overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court."
10 It is clear from the paragraphs of the pleadings that I have referred to that the plaintiffs allege that the first plaintiff lent the first defendant $317,520 and the defendants admit that happened. The defendants do not assert that that amount has been repaid. What they do assert (in para 20 of the defence) is that that amount was repayable on 18 February 2010 in accordance with the Deed.
11 Mr Smallbone, who appeared for the defendants, submitted that the admission made by the defendants in relation to the $317,520 was not sufficient to justify giving judgment or making an order in respect of that amount under UCPR r 17.7 because the agreement on which the plaintiffs sue and the agreement in respect of which the admission is made are different. The plaintiffs sue on a broad agreement which, on the way it is pleaded at the moment, is not evidenced at all by the Deed. Under the terms of that agreement, the plaintiffs say the debt owing to the first plaintiff was due on completion of the project. On the other hand, the admission made by the defendants is an admission that an amount of $317,520 fell due under the Deed on 18 February 2010. Mr Smallbone says that the plaintiffs must elect. They can maintain their claims under the agreement on which they sue. No admission is made in respect of any amount payable under that agreement. Consequently, they are not entitled to relief under UCPR r 17.7. Alternatively, they can amend their claim to sue on the deed and obtain the benefit of the admission. However, in those circumstances, they would need to abandon their other claims under the agreement on which they currently sue.
12 I do not accept Mr Smallbone's submission. In my opinion, it confuses the debt owed by the first defendant with the contract between the parties. As the High Court explained in Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567:
"The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebitatus assumpsit."