Ryan Wealth Holdings Pty Ltd v L & V Tomkins Pty Ltd - [2015] NSWSC 533 - NSWSC 2015 case summary — Zoe

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Ryan Wealth Holdings Pty Ltd v L & V Tomkins Pty Ltd

[2015] NSWSC 533

Supreme Court of NSW|2015-04-10|Before: Slattery J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2015-04-10

Before

Slattery J

Source

Original judgment source is linked above.

Judgment (8 paragraphs)

[1]

EX TEMPORE Judgment

In the Equity Division Applications list on 10 April 2015, the first, second, third and fourth defendants brought motions under the Uniform Civil Procedure Rules 2005 ("UCPR"), to strike out the plaintiff's Statement of Claim. The first and second defendants were represented by Mr Walsh of counsel. The third and fourth defendants, were represented by Mr Ogborne of counsel. In the alternative the third and fourth defendants seek the separate determination of a preliminary question, pursuant to UCPR, r 28.2, namely whether the plaintiff's claims are statute barred. Mr Carolan of counsel for the plaintiff resists these applications.

[2]

Background

Some short factual background is required. The appropriate starting point is the pleadings. The plaintiff's Statement of Claim is set out below: "1. The plaintiff is and was at all material times a company duly incorporated and able to sue in and by its corporate name and style. 2. The plaintiff was at all material times the trustee of the Ryan Holdings Retirement Fund. 3. On or about 12 May 2006, the plaintiff entered into a loan facility agreement (the 'First Agreement') with the following parties as borrowers: (a) Leonard John Tomkins; (b) L & V Tomkins Pty Ltd (the first defendant); (c) Andrew Bruce Tomkins (the third defendant); (d) Deborah Tomkins (the fourth defendant). 4. It was a term of the First Agreement that the plaintiff would advance to the borrowers up to $616,795, to be paid at the direction of the borrowers. 5. It was a term of the First Agreement that any advance would be repaid one year from the date of the initial Drawdown Notice or, alternatively, on demand. 6. It was a term of the First Agreement that interest would be paid on any amount outstanding at the rate of 15% per annum on a daily basis and capitalised. 7. It was a further term of the First Agreement that the borrowers would provide second registered real property mortgages over the property known as lot 55 in Deposited Plan 838068 and 3 Marshall Terrace, Clarence Town, NSW, being the land in Lot 193 Deposited Plan 752497. 8. On or about 12 May 2006, the plaintiff paid the sum of $400,000 into a bank account in the name of 'Cardiff Gas', being an account operated by a company related to the defendants. 9. On or about 9 August 2006, the plaintiff paid the sum of $216,795 at the direction of the defendants to the Australian Taxation Office in satisfaction of a tax liability of the borrowers. 10. On or about 30 June 2008 the plaintiff entered into a further loan agreement (the 'Second Agreement') with the following parties as borrowers: (a) L & V Tomkins Pty Ltd (first defendant); (b) Leonard John Tomkins. (c) Valerie Gladys Tomkins (second defendant) whereby the plaintiff agreed to advance the sum of $787,324 to the named borrowers, which amount comprised the advance under the First Agreement, together with capitalised interest. 11. The Second Agreement contained the following terms: (a) interest was payable at the rate of 15% per annum, calculated on a daily basis and to be capitalised; (b) The borrowers would provide to the plaintiff second registered mortgages over lot 55 in Deposited Plan 838068 and lot 7 in Strata Plan 67807; 12. The balance outstanding pursuant to the second Agreement was repayable on demand. 13. The plaintiff has demanded repayment of the amount due under the First and Second Agreements, which demand has not been met. Particulars Letter from Bilbie Dan, solicitors, dated 6 December 2013 14. Pursuant to the First and Second Agreements the First Defendant executed a mortgage over the property described as Lot 55 in Deposited Plan 838068, but has refused to produce the Certificate of Title to that land in order to enable registration of the Mortgage. 15. On 17 December 2013 the plaintiff obtained repayment of the sum of $216,795 from the Australian Taxation Office as a refund of an amount paid to satisfy a third party tax liability, namely that of the first defendant. 16. On 6 March 2013 a sequestration order was made in respect of the estate of Leonard John Tomkins. 17. The defendants are liable to repay the plaintiff the sum of $400,000, together with interest calculated in accordance with the First and Second Agreements."

[3]

Applicable Legal Principles

The applicable legal principles may be shortly stated. Only in "plain and obvious" cases, where the plaintiff's case is "so clearly untenable that it cannot possibly succeed" should the Court exercise its power to strike out pleadings or dismiss proceedings without a substantive hearing: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 ("General Steel") at 129-130 per Barwick CJ. The Court cannot dismiss an action "once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it": Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 177 CLR 598 per Dixon J (as his Honour then was).
For the purpose of testing whether or not the plaintiff's case is arguable, the Court will assume to be established allegations of fact contained in the pleadings and relevant to the causes of action. Where "the ultimate outcome of the case turns upon the resolution of some disputed issue or issues of fact", the Court ought to take great caution before exercising the power to terminate an action summarily: Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 at 603 per Mason CJ, Deane and Dawson JJ.
The Court may hear argument "even of an extensive kind" in determining whether or not the plaintiff's case is untenable: General Steel at 130 per Barwick CJ.
In Spencer v The Commonwealth (2010) 241 CLR 118 at 131 [24] French CJ and Gummow J said: "The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said: 'The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried'." [Citations omitted]
The Court will not necessarily dismiss all claims filed outside the relevant limitation period. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 [31] Mason CJ, Dawson, Gaudron and McHugh JJ said that it was "undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. However, if the limitation period has obviously expired and the plaintiff knew the relevant facts at the time the cause of action accrued but made no claim for an extension of the limitation period, it is entirely appropriate to summarily dismiss a claim: see for example Gillies v Eastlake [2014] NSWSC 611 at [110] - [117] per Garling J.
It is convenient to deal with the arguments in the order that they were put, that is firstly by Mr Ogborne for the third and fourth defendants and then by Mr Walsh who adopted Mr Ogborne's arguments and added some of his own for the first and second defendants.

[4]

Submissions and Consideration - the May 2006 Loan Agreement

Mr Ogborne advances a number of arguments about the May 2006 loan agreement. His first is a limitation argument, put in quite similar terms to that which Mr Walsh advanced. They argue in substance that there must have been a cl 5.1 Drawdown Notice issued under the first agreement on or about 12 May 2006, at the time that the available evidence shows that there was an advance of $400,000, because the May 2006 loan agreement required it. That being so, they argue that the Repayment Date is therefore one year later, on 12 May 2007. The Statement of Claim in these proceedings was filed in June 2014. They argue that the claim was therefore brought seven years after the Repayment Date beyond the limitation period: Limitation Act, s 14(1)(a).
Alternatively the defendants submit that, if one assumes that no Drawdown Notice was issued, the appropriate way to construe the first agreement is that it is one without a repayment date. The limitation period would therefore, in accordance with cases such as Ogilvie v Adams [1981] VR 1041, run from the date of the agreement itself. If that view is correct then the filing of the statement of claim is also out of time.
Mr Ogborne submitted that the whole contract is contained in the documents that are, in substance, set out in these reasons. Mr Walsh put a similar submission. Mr Carolan disputed that submission. When one looks at these two documents, the conclusion is almost inevitable that other part of the agreement must have been made outside them. If one seeks to infer, on Mr Ogborne's argument, that the Drawdown Notice issued before the drawn down on 12 May 2006, there must have been some agreement to shorten or waive the notice period between the Drawdown Notice and the actual draw down.
No Drawdown Notice has been found in relation to the first loan. It is not clear that there was a Drawdown Notice. But if there was, it is not clear that it even preceded the first payment, or whether it came subsequent to the first payment. What is clear is that its issue is not wholly accounted for by the written agreements some transactions beyond those described in the first agreement will account for its issuing, if it can ultimately be found.
That, in my view, has important consequences. This is not a case where the Court can be confident that what is now before the Court is the sum total of what might be available at trial. The authorities indicate that, in clear cases the Court is justified in striking out pleadings on limitation grounds, as Austin J did in Hillebrand v Penrith Council [2000] NSWSC 1058. But for a number of reasons I do not think this is such a clear case.

[5]

The May 2006 Loan Agreement - The Evidence

The evidentiary background is important in an assessment of the exercise of the Court's discretion in this case.
When one looks at the structure of the allegation about the May 2006 loan agreement, the plaintiff is currently in the position where the evidence suggests that its financial adviser may have deceived it. Mr Moylan, the person who dealt with the plaintiff in a fiduciary capacity, is now bankrupt. There was a lending between the plaintiff and these defendants, other clients of this financial adviser.
There is no immediate way for the plaintiff to find out for itself all the information that it might ordinarily have available to it were it the party that took direct part personally in organising all these transactions. Ordinarily the plaintiff or a person in its position would not have the opportunity of issuing subpoenas or having trial discovery until the parties have served their evidence: Practice Note No. SC Eq 11. But exceptional circumstances can require early disclosure. Here the plaintiff does not have ready access to the information that might otherwise found its pleading. Its financial advisor is bankrupt and possibly uncooperative. One can expect that getting what information the plaintiff wants may be difficult. This case may fall into the "exceptional circumstances" category within the Practice Note.
Indeed, absent limitation period concerns, had the plaintiff been in a position where its pre-trial consideration of its pleadings had been less pressured and had it not been forced to commence proceedings to stop a caveat lapsing, provisions such as UCPR, r 5.3 in relation to pre-trial discovery may possibly have been deployable at the plaintiff's option.
The plaintiff has not had an opportunity to investigate any of those things. Such gaps as there are in the evidence at this point are gaps for which the Court will give the plaintiff the benefit of the doubt in assessing whether or not its pleading and evidence disclose a reasonable cause of action. These gaps may be important at trial. Exactly when the Drawdown Notice and the first agreement were issued, for example, may be of significance.
And it is at least arguable that on the face of this agreement when all the circumstances are known it may be that it operated as a deed and Limitation Act, s 16 applies confer a 12 year limitation period rather than s 14's 6 year period. All that can be said is that this is an argument deployable at final hearing, once all the facts are known. That is another reason, in my view, why the Court would be reluctant to strike this claim out. A combination of that longer limitation period plus a later notice may well mean that this matter was brought within time. One does not yet know.

[6]

The June 2008 Loan Agreement

The second loan agreement in June 2008 contains a number of curiosities. First it contains no express contractual repayment date. There is simply a number of dots in the definition of repayment date. The other important feature of the second agreement is that in cl 5.2 it sets out that Leonard John and Valerie Gladys Tomkins are respectively the registered proprietors of the properties, Lots 55 and Lot 7.
As to the first and second of those matters, Mr Walsh's argument for Valerie is that there are no express personal guarantees in the second agreement. Mr Walsh is right about that. There are none. But cl 5.2 on its face may be a sufficient basis together with surrounding events to infer that there was an agreement to give a third party mortgage from family members to secure a primary obligation which owed by L & V Tomkins to Ryan Wealth Holdings.
Mr Walsh also submits there is no basis to infer, that the case as pleaded meant there was any consideration given for Ryan Wealth Holdings to covenant to forebear, or not to sue, or indeed that there was any dispute between the parties at the time the June 2008 agreement was made. Mr Walsh is right as to this. There is no express declaration that such consideration was provided for any promise by Valerie to give security.
But there may be a number of potential answers to this at trial. One is that, like the situation with the first agreement, a curiosity of the June 2008 loan agreement is that, if it is a genuine document at all, it bears some of the features of a deed and it may be that the limitation period is accordingly longer than had been at first assumed. But leaving that aside, this seems to me a case where the plaintiff should really be required to re-plead to identify such consideration as it relies on as clearly as possible.
And it may be that the evidence at trial makes clear, when all the interest calculations are done, that the agreement was well supported by identifiable consideration. The parties were speculating in the course of submissions about how the difference was calculated between the amount advanced under the first agreement in May 2006 and the amount acknowledged as loaned under the second agreement, but without reference to the first agreement: Recital B. The difference may well be interest under the first agreement on sums outstanding until the time of the second agreement. It is rather difficult to tell, but it may be, as often happens when parties get to trial, that interest calculations clarify that the figure in the second agreement shows that there has been some consideration for the additional promises to give security in the second agreement.
Mr Walsh also put that it has not been demonstrated that Valerie Tomkins, the second defendant, owns any property. The evidence suggests L & V Tomkins Pty Ltd owns Lot 55. But no real investigation has yet been done to show that Valerie Tomkins does not own Lot 7 in Strata Plan 67807, such that any reliance upon the giving of such a security is in any sense hopeless. A further difficulty, it seems to me, for Mr Walsh's argument on behalf of Valerie, is the form of the definition of Repayment Date in the agreement. The blank after "Repayment Date" invites the conclusion that the parties may have agreed upon a repayment date outside the agreement.
The difficulty for this plaintiff at the present time, before discovery, is that it is not in a position to readily to find out from the bankrupt Mr Moylan who apparently signed this June 2008 loan agreement, under a power of attorney on the plaintiff's behalf just what else was agreed, if anything. This too seems to me to be a matter for trial.