Hausman & Anor v Abigroup Contractors Pty Ltd [2009] VSCA 288

1 The appellants, Daniel Hausman and Lance Hodgkinson, were directors and, through various corporate entities, shareholders of a company known as 519 St Kilda Road Pty Ltd ('519 Pty Ltd'). In December 2004, that company engaged the respondent, Abigroup Contractors Pty Ltd ('Abigroup'), a construction contractor, to design and construct a development at 519 St Kilda Road, Melbourne.

2 That contract was later twice varied. The second variation was effected by a document known as 'Supplementary Deed No. 2', which was executed by the appellants on 30 November 2007, and by Abigroup two days later. By that time, a major financier for the project, Capital Finance Australia Ltd, had refused to advance any further funds. The reason given was that the facility which it provided had expired before practical completion.

3 There were lengthy negotiations preceding the entry into the 'Supplementary Deed No. 2'. Of critical importance, so far as this appeal is concerned, were certain discussions that took place on 21 November 2007 between one of the appellants, Hodgkinson, and representatives of Abigroup, at the offices of Mallesons Stephen Jaques, solicitors retained on behalf of 519 Pty Ltd. During the course of those discussions, Abigroup demanded payment by 519 Pty Ltd of the sum of $3,677,129.50, which was said to be due and payable. It also demanded that, as a condition of Abigroup entering into 'Supplementary Deed No. 2', the directors of 519 Pty Ltd provide personal guarantees of that payment.

4 In an affidavit sworn on 18 August 2008, in opposition to an application pursuant to O 22 of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules') by Abigroup for summary judgment, Hodgkinson described the discussions that took place on that day. He said:

1. I met with Mr Walker and another director of Abigroup on 21 November 2007 at Mallesons. Mallesons acted for 519. Mallesons was represented by Mr Jonathan Oldham. I was informed by the other director (whose name I cannot recall) that unless 519 entered into an agreement to pay that amount and moreover provide a security, the plaintiff would be seeking orders to wind up 519.
2. I offered a personal guarantee by each of Hausman and myself on terms which 519 had extended terms of payment and was able to set off claims it had against Abigroup. The Abigroup director said he wanted security over assets which I said we could not provide. Mr Oldham and I then left the meeting for a period. When we returned, I was told that a personal guarantee was acceptable to Abigroup but only on its terms - there was a short period for payment. I had no option but to agree. The Abigroup director was quite emotional about this demand. I raised the question of the completion of the landscaping. One of the Abigroup representatives said that it would be completed. I said we would provide details of the works to be completed. Any winding up of 519 would then have had grave consequences for other projects in which Mr Hausman and I were involved. We were given no choice other than to sign as otherwise the plaintiff would, I believe, carry out its threat to wind up 519.

5 Ultimately, just over a week later, on 30 November 2007, the same day as the appellants executed 'Supplementary Deed No. 2', they also executed a 'Deed of Guarantee and Indemnity' ('the Guarantee') in favour of Abigroup.

6 The recitals to the Guarantee were in the following terms:

1. Abigroup and 519 St Kilda Road Developments Pty Ltd ACN 106 203 963 (519) have or are about to enter into a document titled "Supplementary Deed No. 2" relating to the construction contract entered into between those parties in respect to the "Chevron Green" development at 519 St Kilda Road, Melbourne.
2. Pursuant to the terms of Supplementary Deed No. 2, 519 has agreed or will agree to pay to Abigroup the "Amended Settlement Sum" plus interest as those terms are defined in Supplementary Deed No. 2 and payable in accordance with that document.

1. The Guarantor has agreed to guarantee payment by 519 of the Amended Settlement Sum plus interest to Abigroup in accordance with this Deed.

7 Pursuant to cl 2.2 of the Guarantee, the appellants irrevocably and unconditionally guaranteed to pay Abigroup the guaranteed sum within seven days of any written demand by Abigroup, following the failure by 519 Pty Ltd to meet its obligations under 'Supplementary Deed No. 2'.

8 Of particular significance so far as this appeal is concerned is cl 2.11 of the Guarantee. That reads as follows:

The Guarantor must not seek to reduce or avoid its liability under this Deed by raising any defence, set-off or counter-claim available to 519 or the Guarantor against Abigroup.

9 Thereafter 519 Pty Ltd made a series of payments, totalling approximately $900,000.00, to Abigroup. However, within a few months, those payments had ceased. On 13 June 2008, Abigroup commenced the current proceedings in the Commercial and Equity Division of the Supreme Court. It claimed that, as at that date, 519 Pty Ltd owed in excess of $3,114,008.97 to Abigroup, pursuant to 'Supplementary Deed No. 2'. On 3 June 2008, Abigroup had served a demand for payment of that sum upon the appellants, but they had refused, or neglected to pay, any part of that amount. Accordingly, Abigroup sued upon the Guarantee.

10 Abigroup then sought summary judgment, pursuant to r 22.02(1) of the Rules. That application was supported by an affidavit sworn by David Lindsay Walker, a director of Abigroup, verifying the facts in support of Abigroup's claim and stating that, in his belief, the appellants had no defence to that claim.

11 In accordance with r 22.04, the appellants filed affidavits in opposition to the application for summary judgment. One such affidavit, to which we have earlier referred, was that sworn by Hodgkinson.

12 In accordance with normal practice, the application for summary judgment was heard by a Master. At that stage, no defence had been filed. That too was in accordance with normal practice since it was necessary for the appellants (the defendants below) to 'show cause' against the application before they could have leave to defend.

13 After hearing the application, and considering the affidavit material filed on both sides, the Master determined that summary judgment should be refused. She found that there was a question to be tried on the basis of the matters raised by Hodgkinson in paragraph 19 of his affidavit (as set out in paragraph 4 of our reasons for judgment above). She concluded that the appellants should therefore be given leave to defend. In summary, she found that the appellants should be permitted to challenge Abigroup's entitlement to sue upon the Guarantee on the basis that they had been induced to offer that Guarantee by misleading or deceptive conduct. In her Honour's view, that claim, if made out, might give rise to an estoppel preventing Abigroup from suing upon the Guarantee. It is important to note that she also considered, but rejected, an alternative submission, on behalf of the appellants, which was based on a claim of economic duress.

14 Abigroup appealed to a judge in the Practice Court against the Master's decision to refuse summary judgment. The appeal was heard over two days, on 6 and 7 October 2008. The appeal was allowed and summary judgment granted.

15 The judge's reasons for allowing the appeal were concise. After briefly setting out some introductory matters, his Honour said:

1. In my opinion the appeal should succeed. I have come to this conclusion while acknowledging that the power to order summary judgment is one that should be exercised with great care, and never unless it is clear that there is no real question to be tried. But even if the burden is on the plaintiff to persuade me that there is in this case no such question, the plaintiff has in my opinion discharged that burden.
2. In a very able argument, put to me by Mr Walker of counsel for the defendants, it was submitted, amongst other things, that the defendants had been given a representation by the plaintiff to the effect that the plaintiff would rectify alleged defects in the landscaping works which, according to the defendants, were to be a feature of the project undertaken by Abigroup Contractors and which, by reason of the defects, resulted in the project being given much less favourable attention by prospective purchasers than the defendants expected. Hence, and I accept, the question of landscaping was an issue at the forefront of the minds of the defendants during the negotiations with Abigroup Contractors on 21 November 2007.
3. Nevertheless, I am satisfied that, on the facts before me, there is no remaining "fact sensitive issue" (to adopt a phrase used, I think appropriately, by Mr Walker) to be tried in this case.
4. The terms of the guarantee are clear and unambiguous. No suggestion of ambiguity has been put by Mr Walker. The guarantee was the subject of negotiation between the parties, with the defendants being represented by a firm of solicitors and the guarantee being drawn following the negotiations. This, therefore, is not a case of a party being presented with a written form that that party must accept or reject in toto. On the contrary, we have here a contract arrived at after a period of negotiation which purports to be, and as I find is, the repository of the contractual intentions of the parties. Those intentions are to be assessed by an objective examination of the contract itself. It is within the terms of the contract that the parties' intentions are to be objectively determined.
5. Read in that light, it seems to me to be beyond reasonable argument that the defendants agreed that they would not seek to reduce or avoid their liability under the guarantee by raising any defence, set off or counterclaim that otherwise might have been available to them.
6. It was submitted by Mr Walker that clause 2.11 must be read subject to the representation about the completion of the landscaping. He submits that I ought to accept, for the purposes of this exercise, that this representation was not only made by Abigroup Contractors, but also induced the defendants to enter into the guarantee.
7. There are, it seems to me, two difficulties with that submission. First, it runs contrary to the affidavit material upon which the defendants themselves rely. In the extracts from Mr Hodgkinson's affidavit, which I have quoted, Mr Hodgkinson states that the offer of the guarantee preceded the making of the representation by Abigroup about the completion of the landscape. In those circumstances, the decision to enter the guarantee could not have been induced by the subsequent Abigroup representation.
8. Secondly, even were that not the case, the fact is that some days after the representation was made, the parties agreed upon the terms of the guarantee. Those terms included clause 2.11.
9. Given that that clause is unambiguous, it demonstrates, in my opinion, that the effect of the representation, assuming that it was made and even assuming that it was made at a time when it might have induced the guarantors to enter into the guarantee, had been absorbed into the relevant clause, clause 2.11, so as to make it subject to that clause. The clear intention of the parties to the guarantee, as that intention is expressed in the guarantee itself, is that the representation, even if made, was not an element in the contractual relations between the parties.
10. Mr Walker referred me to a number of authorities to the effect that the assessment of conduct by reference to the norm created by s.52 of the Trade Practices Act 1974 is fact sensitive, is dependent on an examination of the whole course of relevant conduct, and is therefore properly a matter for trial. But these cases can, I think, be distinguished from that presently before me. The present case is one in which the contractual intentions of the parties were, in my opinion, made so clear as to remove any warrant for this matter being sent to trial. To adopt the phrase appropriately used by Mr Walker, the matter is no longer, if it ever was, "fact sensitive".

16 By Notice of Appeal, dated 15 October 2008, the appellants rely upon three grounds. Omitting particulars, those grounds are as follows:

1. The learned primary judge erred in his conclusion as to the effect and/or application of clause 2.11 upon the appellants' entitlement to relief against enforceability of the Guarantee.
2. The learned primary judge erred in drawing the conclusion, as a matter of fact, that entry by the appellants into the Guarantee was not induced by the representation complained of.
3. The learned primary judge erred in the application of the relevant test on an application for summary judgment.

17 The appellants argued before us, as they had below, that there was a question to be tried regarding the enforceability of the Guarantee in circumstances where it had allegedly been induced by misrepresentation. They contended that, in such an event, nothing in cl 2.11 stood in the way of their being granted relief against enforcement. They relied upon paragraph 19 of Hodgkinson's affidavit as the basis for that claim. They identified the statement allegedly made on behalf of Abigroup, during the course of discussions on 21 November 2007, that the landscaping would be completed, and implicitly, that defects in the landscaping would be rectified, as the misrepresentation in question.

18 It was submitted that paragraph 19 of Hodgkinson's affidavit gave rise to a triable issue as to whether, pursuant to s 87(2)(a) of the Trade Practices Act 1974 (Cth) ('TPA'), the Court would declare the whole or part of the Guarantee to be void, and if so, to have been void ab initio. The effect of such a declaration would be to disentitle Abigroup from suing upon the Guarantee. In the alternative, it was submitted that there was, in any event, a triable issue as to whether the appellants were entitled to rescission, in equity, based upon the same misrepresentation.

19 As regards ground 1, the issue is whether the judge below erred in holding that cl 2.11, upon its proper construction, precluded any finding as to misleading or deceptive conduct, or misrepresentation, such as would enable the appellants to gain relief against enforcement of the Guarantee. The appellants argued before us that this was a question of fact, and not of law. Accordingly, it could only be resolved upon a consideration of all the circumstances leading up to, and surrounding, the execution of both Supplementary Deed No 2, and the Guarantee.

20 The appellants further submitted that his Honour erred in holding that, even if they could establish that they had only executed the Guarantee because they had been misled by Abigroup, the making of that promise had been relevantly 'absorbed' by cl 2.11, so as to make it 'subject to' its terms.

21 The appellants relied upon two first instance decisions of the Supreme Court of Queensland.

22 The first was Capital Finance Australia Ltd v Airstar Aviation Pty Ltd.[1] That case concerned a clause in a guarantee which provided:

1. Guarantor must not exercise any right of set-off, withholding, deduction or counterclaim which reduces or extinguishes the obligation of Customer or Guarantor to pay the Money.

23 The applicant/plaintiff sought to have struck out a further amended defence and counter-claim filed by the fourth and fifth defendants, and summary judgment. Its claim was brought on guarantees said to have been given by those defendants of monies owed by the first defendant under a number of loan agreements supported by bills of sale. The fourth and fifth defendants, in an amended defence and counter-claim admitted the making of the loans, but alleged that the guarantees were void or, alternatively, that any liability under them had been discharged. They also sought damages for alleged breaches of duty by the plaintiff.

24 The plaintiff relied upon cl 10, which it contended was effective to preclude the bringing of the fourth and fifth defendants' counter-claim. It relied upon several cases in which clauses similar to cl 10 had been construed as ousting any right of

counter-claim or set off.[2] Those cases established that guarantees containing clauses of that kind could preclude, inter alia, claims in negligence, given that the commercial purpose of the transaction is that, upon default by the borrower, the lender should be paid quickly. Of course the guarantors would still be able to prosecute any claims that they might have to judgment, though only after they had met their obligations under the guarantee. They were merely prevented from holding up payments while disputed cross-claims were litigated.

25 Other cases, such as Coca-Cola Financial Corporation v Finsat International Ltd & Ors[3] and GE Capital Australia v Davis & Ors,[4] were to the same effect. Both involved clauses that were unambiguous, and that operated to preclude the defendants from setting off any claim for damages against their liability for monies guaranteed. Those claims for damages had to be dealt with independently.[5]

26 After reviewing these authorities, Holmes J applied them, in part, to the facts in Capital Finance but, importantly, also distinguished them in part. His Honour observed that the clause under consideration in Capital Finance was as 'equally unambiguous' as the clauses in Coca-Cola and GE Capital, and therefore operated to preclude the defendants from setting off any claim for damages against their liability for the monies guaranteed. His Honour noted that there were matters raised in the counter-claim which were 'properly matters of defence', including allegations of misrepresentation or misleading conduct, and breaches of conditions which might lead to vitiation of the guarantees, or discharge of the guarantors' liability under them. In his Honour's terms:

The counter-claim should be struck out, because insofar as it constitutes a true counter-claim, the respondent defendants have contracted not to bring it, and the balance contains pleading not properly the subject of counter-claim. But the latter, going to invalidity or complete discharge of the guarantees, could properly be repleaded in the defence.[6]

27 In the end, therefore, summary judgment was refused.

28 Capital Finance was subsequently followed in Onecard Pty Ltd v Clift.[7] There, MacKenzie J analysed a number of relevant authorities, including Coca-Cola and Daewoo Australia Pty Ltd v Porter Crane Imports Pty Ltd t/a Betta Machinery Sales.[8] His Honour noted, as had Holmes J in Capital Finance, that among the remedies sought by the guarantors, in reliance upon alleged misrepresentations by the plaintiff, was relief by way of discharge under s 87 of the TPA. He observed that it was a matter of some concern that the material in support of the s 87 claim was to a substantial degree based upon hearsay. For that reason, it could not be said that it would necessarily come up to proof in admissible form in a way which would entitle the respondent to such relief. However, his Honour could not exclude 'reliance on it in a proceeding of the present kind on the basis that it is so shadowy as to be insufficient'.

29 For those reasons, summary judgment was refused.

30 What emerges from Capital Finance and Onecard is that it can be reasonably contended that, notwithstanding the seemingly clear language of cl 2.11, the appellants could still seek to be relieved from their obligations under the Guarantee, if they were able to establish either a potential breach of s 52 of the TPA, or misrepresentation of a kind that might ground relief in equity. These would be 'vitiating' factors that, at least arguably, might ground relief under s 87(2)(a) of the TPA, or in equity, through rescission for misrepresentation.

31 Section 87(2)(a) provides as follows:

(2) The orders referred to in subsection (1) and (1A) are:

(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order...

32 Before us the respondent submitted that the appellants' reliance upon s 87(2)(a) was misconceived. That was because they had failed to allege, still less to establish, a tenable claim of inducement, based upon any misleading or deceptive conduct on the part of Abigroup. They had put forward no evidence to suggest that they had relied on any promise made regarding completion of the landscaping. There was nothing to indicate that, even if such a promise had been made, they had acted upon it, and thereby suffered loss and damage. In order to make good an arguable case, under s 87(2)(a), the appellants would have had to demonstrate that, but for the misleading or deceptive conduct, they might have acted in some other way, which would have been of greater benefit, or less detriment to themselves.[9] Nothing had been set out in the appellants' material which could conceivably have pointed to that conclusion.

33 In addition, Abigroup submitted that it could not be said that the appellants, as distinct from 519 Pty Ltd, were those who had suffered or were likely to suffer loss and damage by reason of any misleading or deceptive conduct.

34 As regards the claim for rescission foreshadowed by the appellants, the respondents noted that this had been mentioned only in the briefest of terms before the judge below. In any event, so it was submitted, this claim was untenable for exactly the same reasons as applied to the TPA claim.

35 In short, the respondent argued that the material upon which the appellants relied in answer to the Guarantee went no further than to indicate that 519 Pty Ltd may have suffered some loss. The discussions that took place on 21 November 2007, and which led to the Guarantee, were between Abigroup and 519 Pty Ltd. It was 519 Pty Ltd that had procured the appellants' guarantees. It was 519 Pty Ltd that had been induced to procure those guarantees, on the appellants' own case, not in reliance upon any statements made on behalf of Abigroup as to the landscaping, but rather in an effort to procure Abigroup's willingness to defer enforcement of the default under the December 2006 Deed.

36 In any event, so the respondent submitted, the promise to remedy the landscaping had no causative role, in relation to the giving of the Guarantee. As the judge below found, that promise came too late in the sequence of events on 21 November 2007 to establish any relevant nexus.

37 Finally, the respondent submitted, even if Abigroup had engaged in misleading or deceptive conduct, it could not be suggested, on the basis of the evidence contained in the affidavits filed on the appellants' behalf, that the terms of the Guarantee, and in particular cl 2.11, did not have the effect of 'erasing' whatever may have been misleading or deceptive in Abigroup's conduct. In that sense, it was effective, not necessarily by virtue of its own force, but because of the part it played in actually modifying the conduct said to have been misleading.

38 Despite the apparent cogency of some of the matters raised in answer to this ground, we consider that none of them would have been sufficient to prevent the appellants from resisting summary judgment. The reason is simple. All of these points, whatever their strength, can be seen to be contentious to greater or lesser degree. Summary judgment is not to be granted in such circumstances.[10]

39 The evidence adduced on behalf of the appellants as to how the Guarantee came to be offered may, or may not, have been sufficient to raise a question fit to be tried. However, the notion that a guarantor cannot, when faced with a term such as cl 2.11, invoke vitiating factors of a kind that would otherwise enable a guarantee to be set aside is not, in our view, beyond argument. Cases such as Capital Finance and Onecard are sufficient, by themselves, to demonstrate that fact.

40 To the extent that the judge below based his decision upon the language of cl 2.11, we would say, respectfully, that he ought not to have done so. That is not because we disagree with his Honour's assessment of the meaning of that clause, which may have turned out to be entirely correct. It is because the issue as to whether such a clause can operate to prevent reliance upon factors that might otherwise vitiate the making of a guarantee is one which, in our view, is sufficiently uncertain to warrant further consideration at trial, once the matter has been fully ventilated.

41 Although the appellants have made good their challenge to this first aspect of the judge's reasoning, it does not follow that the appeal succeeds. The decision below did not rest solely upon the interpretation accorded to cl 2.11, but was based also upon other factors, a number of which would have been sufficient to deny the appellants' the right to resist summary judgment. It is necessary therefore to go on and consider the remaining grounds of appeal.

42 When one turns to the evidence tendered by the appellants in opposition to summary judgment, the case takes on a somewhat different complexion. The judge below found that there was no tenable basis, in fact, to conclude that the appellants had given the Guarantee in reliance upon the promise, proffered at the meeting on 21 November 2007, that the landscaping would be completed.

43 His Honour accepted that the landscaping had been at the forefront of the minds of the appellants during their discussions with Abigroup on 21 November 2007. However, he was satisfied, on the basis of the evidence led before him, that there was no remaining 'fact sensitive issue' to be tried in this case.

44 There were two reasons given for that conclusion. The first related to the sequence in which the events were said to have occurred. Hodgkinson stated clearly that the offer of the Guarantee preceded the making of the representation by Abigroup as to the completion of the landscaping. That made it difficult, in his Honour's view, to accept that the decision to enter the Guarantee had been induced by that representation.

45 The second arose from the fact that some days after the meeting, the parties agreed upon the terms of the Guarantee. These, of course, included cl 2.11. The very language of that clause, unambiguous as it was, suggested that, even assuming that the representation had been made, it had been 'absorbed' into the clause so as to make the representation subject to the clause. In other words, and as a corollary, the very terms of the Guarantee showed that the representation, assuming it to have been made, was not an element in the contractual relations between the parties.

46 His Honour could have gone on and found further reasons why, at a factual level, leave to defend should be refused. The appellants were represented by one of the leading commercial firms of solicitors in this country. Had the appellants genuinely believed that Abigroup had, as a condition of their providing the Guarantee, promised to complete the landscaping, it is difficult to imagine that such a term would not have been included within the Guarantee itself.

47 Another difficulty with the appellants' case arises from the fact that the entire tenor of Hodgkinson's affidavit, including in particular paragraph 19, was directed towards laying the foundation for a case of economic duress. The focus was upon the appellants' 'lack of choice' in agreeing to give the Guarantee, having regard to the grave consequences that failure to do so would have had for other projects. In Hodgkinson's terms, they had to sign 'as otherwise the plaintiff would, I believe, [have] carried out its threat to wind up 519'.

48 That is not the language of misleading or deceptive conduct. There is nothing said about any misrepresentation upon which reliance was placed, in answer to the claim on the Guarantee. If the appellants regarded themselves as having been induced by such misrepresentation into giving the Guarantee, Hodgkinson's failure to say so in his affidavit is, of itself, significant. While it may readily be accepted that an affidavit in opposition to an application for summary judgment need not set out, in chapter and verse, every detail of the defendant's position, it must surely be expected that it will provide some basic evidentiary foundation for whatever response is being made.[11]

49 Perhaps as significant, in three letters written by Hodgkinson to Abigroup dated 25 March 2008, 28 May 2008, and 11 June 2008, no reference whatever was made to any alleged misrepresentation, or to its supposed relevance to the enforceability of the Guarantee. On the evidence before us, it was not until shortly before the matter went on appeal from the Master to the judge below, on 26 September 2008, when a defence and counter-claim were filed, that this suggestion of misrepresentation as a vitiating factor first arose. It seems to us, with respect, to have been more of a lawyers' point than one which weighed heavily upon the minds of those who had engaged in the actual discussions.

50 The appeal from the Master was by rehearing, though based upon the evidence that had been placed before her. Nonetheless, it would have been open to the appellants to seek leave to adduce further evidence before the judge who heard the appeal in order to cure any deficiencies that there may have been in Hodgkinson's affidavit. As we understand the position, no application to adduce further evidence was made. That too, in our opinion, is of some significance.

51 There was no adequate foundation for, or evidence supporting, the claim that the Guarantee had been induced by misrepresentation. Accordingly, that claim provided no basis for any finding that summary judgment should be refused. For these reasons, as well as those set out by the judge below, we would reject ground 2.

52 The appellants' failure to provide any adequate material, in support of their claim to have been induced to give the Guarantee, must lead, inevitably, to the conclusion that the appeal, as a whole, should be dismissed. That is because the judgment below was based on separate and distinct strands of reasoning, any one of which, if correct, would have been sufficient to deny the appellants leave to defend. Even if successful, an attack upon the construction point does not overcome the difficulty arising from the paucity of material put before the Court in opposition to the application for summary judgment.

53 Although it may not be strictly necessary to deal with this ground, we should indicate that we consider it to be without merit. The judge below was acutely conscious of the fact that the power to order summary judgment should be exercised with great care, and never unless it is clear that there is no real question to be tried.[12] His Honour said so in terms. Indeed, he went on to say that even if the burden was on the plaintiff to persuade him that there was, in this case, no such question, the plaintiff had, in his opinion, discharged that burden.[13]

54 The conclusion which his Honour reached as to the lack of any adequate foundation for a claim based upon misrepresentation was, with respect, entirely correct. It was not open, on the affidavit material filed, to contend that there was a question of fact warranting investigation at trial because it might lead to invalidity of the Guarantee. Nor could it be said that the material placed before his Honour gave rise to an arguable claim to relief under s 87 of the TPA.

55 A judge faced with an application for summary judgment should not be required to trawl through the defendant's material in an effort to see whether there can be constructed from that material an answer to the plaintiff's claim. It must be for the defendant to point to some material, whether legal or factual, that provides an arguable response to that claim. That is so even if it is the plaintiff who must ultimately discharge the burden of persuading the judge that there is no issue that warrants trial, and that summary judgment should therefore be granted.

56 Order 22 of the Rules, replaced O 14 of the former Rules. It used to be the case that a plaintiff could apply for summary judgment only if an action was commenced by, what was known as, a specially endorsed writ. That limitation no longer applies, for there is now only one form of writ. There used to be a time limit of 14 days after appearance. The plaintiff can now apply for summary judgment at any time after the defendant has appeared.[14]

57 There are other differences between the old procedure and the new. If the party applying for summary judgment makes an affidavit in support, that party is required to swear to the facts deposed to from his or her personal knowledge. That was not previously the case.

58 The key to summary judgment lies in r 22.02(1), which is in the following terms:

Where the defendant has filed an appearance, the plaintiff may at any time apply to the Court for judgment against that defendant on the ground that the defendant has no defence to the whole or part of a claim included in the writ or statement of claim, or no defence except as to the amount of a claim.

59 Speaking of this Rule in a passage that has been often quoted, Lord Woolf MR, in Swain v Hillman[15] said:

... the court now has a very salutary power, both to be exercised in a claimant's favour or... a defendant's favour. It enables the court to dispose summarily of both claims [and] defences which have no real prospect of being successful. The words 'no real prospect of succeeding' do not need any amplification, they speak for themselves. The word 'real' distinguishes fanciful prospects of success... they direct the court to the need to see whether there is a 'realistic' as opposed to a 'fanciful' prospect of success.[16]

60 Rule 22.03 provides that an application for judgment shall be made by summons supported by an affidavit verifying the facts on which the claim is based and stating that in the belief of the deponent, there is no defence to that claim, except as to the amount claimed. An affidavit in support of summary judgment may contain a statement of fact based on information and belief, subject to the Court being prepared to act upon it. Such an affidavit must be in proper form and comply with the Rules.[17] What must be verified are the facts necessary to establish a good cause of action.[18] If the affidavit material in support of the application is held to be defective, leave may be granted to file a supplementary affidavit. The same is true on an appeal to a judge from an order of a Master dismissing an application for summary judgment.[19]

61 A defendant, faced with an application for summary judgment, may invoke r 22.04. That provides as follows:

(1) The defendant may show cause against the application by affidavit or otherwise to the satisfaction of the Court.

(2) An affidavit under paragraph (1) may contain a statement of fact based on information and belief if the grounds are set out.

(3) Unless the Court otherwise orders, the defendant shall serve a copy of any affidavit and of any exhibit referred to therein on the plaintiff not less than three days before the day for hearing named in the summons.

62 The annotation to this Rule in Williams, Civil Procedure Victoria,[20] suggests that a defendant, who attends on the hearing of an application for summary judgment, may defeat that application by showing that the plaintiff's proceedings are irregular. Normally, however, if the defect can be corrected, for example by amending the statement of claim or by making another affidavit, the plaintiff will be given the opportunity to cure the defect. Assuming the plaintiff's application is properly made, there will be judgment for the plaintiff unless the defendant shows cause against the application to the satisfaction of the Court. The Rule provides that the defendant can show such cause 'by affidavit or otherwise'.

63 The defendant must satisfy the Court that, in respect of the claim to which the application for judgment relates, a question ought to be tried, or there ought for some other reason to be a trial of that claim. The Court, if so satisfied, will give the defendant leave to defend and the proceeding will continue to trial in the ordinary way. The Court will normally require an affidavit by, or on behalf of, the defendant before it will be satisfied that the defendant is entitled to leave to defend. The standard of diligence required of the defendant in preparing a case in opposition to the application, especially if under pressure of time, is perhaps not as high as that required in preparing for trial.

64 Nonetheless, the defendant is required to use reasonable diligence to put before the Court, albeit in a summary form, all the evidence relied on in the defence. In that regard, it would generally be regarded as an injustice to the plaintiff to allow the defendant to introduce for the first time, on appeal, evidence which was readily available for the hearing of the application, but was not produced. An affidavit filed by the defendant may contain a statement of fact based on information and belief.

65 The authorities suggest that an affidavit in opposition to an application for summary judgment must provide sufficient particulars to enable the defence case to be properly understood. A bald denial that the defendant is indebted to the plaintiff will not suffice.[21] The affidavit should, so far as practicable, deal specifically with the plaintiff's claim and the facts set out in the supporting affidavit to establish that claim. It should state clearly and concisely what the defence is, and identify the facts relied upon in support of that defence.[22]

66 There is a helpful discussion in Williams as to the position where the defendant alleges fraud in answer to the claim for summary judgment. A mere statement that fraud has been committed is not sufficient.[23] The affidavit must give particulars of the fraud alleged.[24] If, at the time of the application for judgment, there is no basis for supposing that evidence of fraud exists, leave to defend will not be granted merely so that the defendant can use discovery in the hope of eliciting such evidence.[25]

67 However, each case must be considered in the light of its own particular facts. In Ritter v North Side Enterprises Pty Ltd,[26] a vendor under a contract for the sale of land claimed specific performance of that contract. The defendant alleged that the making of the contract had been induced by a fraudulent misrepresentation on the part of the plaintiff's agent. The evidence upon which the defendant relied in support of that claim was contained in an affidavit sworn in opposition to an application for summary judgment. The deponent said:

I knew that the Caboolture Shire Council had not installed sewerage at that time and I informed the said Warick Gray of this. He then assured me that the Caboolture Shire Council would have sewerage in this area in less than four months. It was only after this had been made known to me that I considered the land to be of any use to us and I agreed to the purchase on this condition. The said Warick Gray agreed to this condition and asserted most emphatically that the said land would be connected with sewerage by the Caboolture Shire Council within four months from 29th April 1974.

On behalf of myself and my wife I was induced to enter into the said contract of sale by the said representations of the said Warick Gray and on condition that these representations were part of the agreement between the vendor and ourselves. This was agreed to on behalf of the plaintiff by the said Warick Gray.

The plaintiffs have breached the said representations and the said collateral agreements and we claim that the said representations were made fraudulently because the plaintiff's said agent well knew or recklessly so represented not caring whether it was true or false, that the said land would not be sewered by the said Caboolture Shire Council within four months from 29th April 1974 and in fact even at this stage the said land is not sewered and will not be so sewered before eighteen months from now at the earliest.[27]

68 It was held, by the High Court, that the affidavit raised a triable issue that the contract had been induced by a fraudulent misrepresentation. Accordingly, the purchaser (the appellant) should have been granted leave to defend the action. Gibbs J, as his Honour then was (with whom Stephen and Murphy JJ agreed), described the affidavit as having alleged with sufficient particularity a fraudulent misrepresentation of fact inducing the contract. His Honour rejected the contention that the appellant had done no more than make general and vague allegations of fraud, holding that they were 'fully particularised'.[28]

69 Gibbs J distinguished the well-known case of Wallingford v Mutual Society[29] in that regard. Wallingford concerned the principles upon which Order XIV, the predecessor of O 22 of the current Rules in this State, ought to be applied. The case involved a claim in debt arising out of certain mortgage bonds. The plaintiff sought and obtained leave to sign summary judgment. The defendant filed affidavits contesting the entire debt, and, inter alia, alleging fraud.

70 With regard to that latter allegation, Lord Hatherley had this to say:

There is the question of fraud upon which I said I should touch in one moment. Now I take it to be as settled as anything well can be by repeated decisions, that the mere averment of fraud, in general terms, is not sufficient for any practical purpose in the defence of a suit. Fraud may be alleged in the largest and most sweeping terms imaginable. What you have to do is, if it be matter of account, to point out a specific error, and bring evidence of that error, and establish it by that evidence. Nobody can be expected to meet a case, and still less to dispose of a case, summarily upon mere allegations of fraud without any definite character being given to those charges by stating the facts upon which they rest.[30]

So again, if you swear that there was fraud, that will not do. It is difficult to define it, but you must give such an extent of definite facts pointing to the fraud as to satisfy the Judge that those are facts which make it reasonable that you should be allowed to raise that defence. And in like manner as to illegality, and every other defence that might be mentioned.

So looking at the affidavits (they are very long and I will not go through them) which were used before Mr. Justice Manisty, I think that in none of those particulars did the Appellant satisfy the burden that was cast upon him. He makes general statements of fraud, but nowhere does he condescend upon any particular of fraud, such as in my mind, if I had been in Mr. Justice Manisty's place, would have made me think that it was at all fit that he should be allowed to defend upon that ground. There are long statements resulting in saying that this society was illegal upon various grounds, which I cannot follow at all. One ground, among others, is, because there was a drawing of lots on one occasion, therefore it was illegal as coming under the Lottery Acts. I cannot think that would be a good ground of defence. [31]

My Lords, it is well-known and a very proper rule that a general allegation of fraud is not sufficient to infer liability on the part of those who are said to have committed it. And even if that were not the rule of Common Law, I think the terms of Order XIV. would require the parties to state a very explicit case of fraud, or rather of facts suggesting fraud, because I cannot think that a mere statement that fraud had been committed, is any compliance with the words of that rule which require the Defendant to state facts entitling him to defend. The rule must require not only a general and vague allegation but some actual fact or circumstance or circumstances which taken together imply, or at least very strongly suggest, that a fraud must have been committed, those facts being assumed to be true.[32]

73 It is clear that the affidavit material upon which the appellant relied in Ritter encompassed far greater detail than the material relied upon by the defendant in Wallingford. In Ritter, the appellants alleged both the making of the fraudulent representations, and their effect upon the minds of those to whom they were made. They claimed that they had been induced to enter into the contract of sale by the representations of the plaintiff's agent. They further claimed that they had understood that those representations were part of the agreement between the vendor and themselves. They set out, in some detail, the basis upon which they believed the representations to have been fraudulent, and pointed to some evidence in support of that belief.

74 All this is far removed from paragraph 19 of the affidavit sworn by Hodgkinson in this proceeding. Not only did he fail to assert, in terms, that he and his co-director had been induced to enter into the Guarantee by Abigroup's promise to complete the landscaping, his evidence was, in some respects, at odds with that assertion.

76 In our view, the judge below was correct in holding that the appellants had failed to show cause, pursuant to r 22.04, as to why summary judgment should not be granted.

[1] [2003] QSC 151; [2004] 1 Qd R 122 ('Capital Finance').

[2] Continental Illinois National Bank & Trust Company of Chicago v Papanicolaou (The "Fedora") [1986] 2 Lloyd's Rep 441; and Daewoo Australia Pty Ltd v Porter Crane Imports Pty Ltd t/a Betta Machinery Sales [2000] QSC 50.

[3] [1998] QB 43 ('Coca-Cola').

[4] [2002] NSWSC 1146 ('GE Capital').

[5] A similar result was arrived at in Mirvac Hotels Pty Ltd & anor v 333 Collins Street Pty Ltd & anor (Unreported, Supreme Court of Victoria, Byrne J, 20 December 1994). There, Byrne J granted summary judgment on a claim for rental, having held that a clause that prevented reliance upon a set-off, by way of damages, precluded the defendant from resisting that claim.

[6] [2003] QSC 151; [2004] 1 Qd R 122, [17].

[7] [2006] QSC 224 ('Onecard').

[8] [2000] QSC 50.

[9] Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494.

[10] Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91; General Steele Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129; Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99; and Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 602. See also Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VicLawRp 47; [1947] VLR 332, 334-5; National Mutual Property Services Aust Pty Ltd v Citibank Savings Ltd [1995] FCA 1628; (1995) 132 ALR 514; Pico Holdings Inc v Voss [2002] VSC 119; Gray v Morris [2004] QCA 5; (2004) 2 Qd R 118; and Aquatec-Maxcom Pty Ltd v Minson Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16.

[11] The Cloverdell Lumber Company Pty Ltd and Ors v Abbott [1924] HCA 4; (1924) 34 CLR 122, 127-8 (Knox CJ and Gavan Duffy J). Their Honours held that an affidavit filed in opposition to summary judgment, which contained no statement that the interest on a loan was in fact excessive, nor any statement of fact raising an inference to that effect, was not sufficient to entitle the appellants to defend. It was incumbent upon them, if they desired to rely upon a provision of the Money Lenders Act 1915 (Vic) to state with some precision the basis upon which that section afforded a defence. Isaacs J dissented.

[12] Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. See also Clarke v Union Bank of Australia Ltd [1917] HCA 19; (1917) 23 CLR 5; and Jones v Stone [1894] AC 122 ('Jones'). In Jones the Privy Council said that an application for summary judgment should succeed only where 'there can be no reasonable doubt' that the applicant was entitled to judgment.

[13] Whether there is in fact such a burden upon a plaintiff, once the prerequisites for summary judgment have been satisfied, is a difficult question. Rule 22.04 requires a defendant, who is the subject of an application, in proper form, for summary judgment, to 'show cause' why such judgment should not be granted. It may be that this imposes upon a defendant an evidential burden, or something akin thereto.

[17] Lagos v Grunwaldt [1910] 1 KB 41, 46; Symon & Co v Palmer's Stores (1903) Ltd [1912] 1 KB 259, 263-4; and Suburban Homes Pty Ltd v Ward [1928] VicLawRp 41; [1928] VLR 267.

[18] Roberts v Plant [1895] 1 QB 597, 605; and Scott v Public Trustee of Victoria [1942] VicLawRp 47; [1942] VLR 206.

[19] See Rule 77.05(7)(b) and W Noall & Son v Wan [1970] VicRp 88; [1970] VR 683.

[20] Neil Williams, Civil Procedure Victoria, (first published 1986, 3rd ed, 1987) vol 1, [I 22.04].

[21] Wallingford v Mutual Society (1880) 5 App Cas 685, 704; and The Cloverdell Lumber Co Pty Ltd v Abbott [1924] HCA 4; (1924) 34 CLR 122, 128-9.

[22] Commonwealth Dairy Produce Equalisation Committee Ltd v Hansen [1944] St R Qd 95; Country Estate Pty Ltd v Leighton Contractors Pty Ltd (1975) 49 ALJR 173; Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109; and General Credits (Finance) Pty Ltd v Grimm [1978] Qd R 449.

[23] Williams, above n 21, [I 22.04.35].

[24] Wallingford v Mutual Society (1880) 5 App Cas 685, 704.

[25] Brisbane Unit Development Corp Pty Ltd v Robertson [1983] 2 Qd R 105.

[26] [1975] HCA 18; (1975) 132 CLR 301 ('Ritter').

[29] (1880) 5 App Cas 685 ('Wallingford').