Smits v Cugola & Ors [2022] QCA 262

SUPREME COURT OF QUEENSLAND

CITATION: Smits v Cugola & Ors [2022] QCA 262

PARTIES: LEONARDUS GERARDUS SMITS / (applicant) / v / DAVID WILLIAM CUGOLA / (first respondent) / SUZANNE MARGARET CUGOLA / (second respondent) / ANDRE WERNER DE WIT / (third respondent) / KAREN JOHANNA ELIZABETH DE WIT / (fourth respondent)

FILE NO/S: Appeal No 8265 of 2021 / SC No 9469 of 2020

DIVISION: Court of Appeal

PROCEEDING: Application for Extension of Time / Application for Reopening (Civil)

ORIGINATING COURT: Supreme Court at Brisbane – [2021] QSC 161; [2021] QSC 164 (Jackson J)

DELIVERED ON: 16 December 2022

DELIVERED AT: Brisbane

HEARING DATES: 8 November 2021 / 3 March 2022

JUDGES: Mullins and Bond JJA and Henry J

ORDERS: As to the application filed 17 January 2022: Leave granted to amend the application by the deletion of proposed orders 2, 4 and 5.The application as amended is refused.The applicant must pay the respondents’ costs of the application, to be assessed.As to the application filed 20 July 2021:The application is refused.The applicant must pay the respondents’ costs of the application, to be assessed.

CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – TIME, EXTENSION AND ABRIDGMENT – where the applicant commenced proceedings in the Trial Division against the four respondents in this Court for various claims over a property development project – where the primary judge dismissed the applicant’s applications for summary judgment against the respondents – where the primary judge ordered the removal of caveats the applicant had lodged over the respondents’ homes – where the primary judge ordered summary judgment in favour of the third and fourth respondents – where the primary judge ordered summary judgment in favour of the second respondent – where the primary judge ordered summary judgment in favour of the first respondent in some respects but allowed other claims to continue to trial – where the applicant brought an application for extension of time to appeal and appeal against the orders made by the primary judge – whether the applicant had a right of subrogation against any of the respondents – whether a deed of settlement was operative and effective – whether the applicant’s claims for equitable contribution were barred by operation of the Limitation of Actions Act 1974 (Qld) – whether the applicant had an arguable estoppel case based on the pleadings – whether the applicant had arguable conspiracy to injure, fraud and unconscionable conduct cases based on the pleadings – whether the applicant should be granted an extension of time to appeal the orders made by the primary judge / PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – GENERALLY – where oral argument was heard on the applicant’s application for extension of time to appeal and appeal – where judgment was reserved – where the applicant applied to reopen the proceedings pursuant to the Uniform Civil Procedure Rules 1999 (Qld) – where the applicant sought leave to reopen the hearing of the appeal – where the applicant sought leave to adduce further evidence – where the applicant relied on affidavit material as the basis for the application – where the respondents to the application filed objections – where there was no merit in the application to reopen the appeal / Limitation of Actions Act 1974 (Qld), s 10, s 35(3) / Mercantile Act 1867 (Qld), s 4 / Property Law Act 1974 (Qld), s 45, s 55, s 84 / Uniform Civil Procedure Rules 1999 (Qld), r 149, r 292, r 293, r 658, r 766 / Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40, cited / Austin v Royal (1999) 47 NSWLR 27; [1999] NSWCA 222, cited / Barber v De Prima (2018) 97 NSWLR 932; [2018] NSWSC 601, discussed / Belan v Casey (2003) 57 NSWLR 670; [2003] NSWSC 159, cited / Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44, cited / Eng Mee Yong v Letchumanan [1980] AC 331; [1979] UKPC 13, cited / Lang v Le Boursicot (1993) 5 BPR 11,782, discussed / Netglory Pty Ltd v Caratti [2013] WASC 364, cited / Nguyen v Sage Consultant Group Pty Ltd (2021) 20 BPR 41,989; [2021] NSWSC 753, discussed / Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562; [1985] UKPC 31, cited / Signature Living Hotel Limited v Sulyok [2020] EWHC 257 (Ch), cited / Wichmann v Dormway Pty Ltd [2019] 3 Qd R 323; [2019] QCA 31, discussed

COUNSEL: The applicant appeared on his own behalf / S W Couper KC, with A L Low, for the first and second respondents / S B Whitten for the third and fourth respondents

SOLICITORS: On 8 November 2021 Leonardus Smits Lawyer for the applicant / On 3 March 2022 Murray Laws for the applicant / Australian Property Lawyers for the first and second respondents / Russells acting as Town Agent for WGC Lawyers for the third and fourth respondents

THE COURT:

Introduction

On 2 September 2020, the appellant (Mr Smits) commenced a proceeding by claim against the first and second respondents (Mr and Mrs Cugola, respectively). On 19 February 2021, Mr Smits obtained an order joining third and fourth respondents (Mr and Mrs de Wit, respectively) as defendants.¹
In the proceeding, Mr Smits advanced various claims against each of Mr and Mrs Cugola and Mr and Mrs de Wit in connection with a failed property development project in Yeppoon. Most of the relevant events took place between 2007 and 2014. The question whether causes of action were statute barred by operation of the the Limitation of Actions Act 1974 (Qld) was a relevant consideration in the proceeding.
On 10 June 2021, the primary judge heard and determined a number of applications made in the proceeding. At the time he did so, pleadings had closed, but disclosure had not yet occurred. The primary judge determined the applications in the following manner:(a)Mr Smits had brought an application for summary judgment against Mr and Mrs Cugola. The primary judge dismissed that application.(b)Mr Smits had brought an application for summary judgment against Mr and Mrs de Wit. The primary judge dismissed that application.(c)Mr and Mrs Cugola had brought an application to remove a caveat which Mr Smits had lodged over their home. That application succeeded and the primary judge ordered the caveat to be removed.(d)Mr and Mrs Cugola had also brought an application for summary judgment on the whole of Mr Smits’ claim against them. Insofar as the application was brought on behalf of Mrs Cugola, it completely succeeded. The primary judge dismissed Mr Smits’ claim against Mrs Cugola. Insofar as the application was brought on behalf of Mr Cugola, it partially succeeded, in that the primary judge dismissed specific claims by Mr Smits against Mr Cugola but allowed other claims to continue to trial.(e)Mr and Mrs de Wit were given leave to bring an application to remove a caveat which Mr Smits had lodged over their home. That application succeeded and the primary judge ordered the caveat to be removed.(f)Mr and Mrs de Wit had also brought an application for summary judgment on the whole of Mr Smits’ claim against them. That application succeeded and the primary judge dismissed Mr Smits’ claim against them.
The result was that the proceeding only continued against Mr Cugola, and only in respect of the claims which the primary judge had not dismissed.
On 25 June 2021, the primary judge made costs orders as follows:(a)He ordered Mr Smits to pay Mr and Mrs de Wit’s costs of the proceeding (including the costs of the applications he determined) on an indemnity basis.(b)He ordered Mr Smits to pay Mrs Cugola’s costs of the proceeding (including the costs of the applications he determined).(c)He ordered Mr Smits to pay:Mr Cugola’s costs of Mr Smits’ application for summary judgment against Mr Cugola;75% of Mr Cugola’s costs of Mr Cugola’s application for summary judgment against Mr Smits; andMr Cugola’s costs of the application by Mr and Mrs Cugola to remove the caveat.(d)Otherwise, the costs of the applications determined by him were costs in the proceeding.

Preliminary remarks

First, the primary judge properly identified the principles to be applied in assessing applications for summary judgment (including where the operation of limitation provisions are in issue) in these terms:²

“Both [Mr Smits’] applications for summary judgment under r 292 of the [Uniform Civil Procedure Rules 1999 (Qld) (UCPR)] and [the respondents’] applications for summary judgment under r 293 raise for consideration whether the opposite parties or party has a real prospect of succeeding on the defence or claim or part thereof. The principles as to the correct approach on such applications are not contentious and are stated, for example, in Coldham-Fussell v Commissioner of Taxation (2011) 82 ACSR 439 at 465-468, [97]-[102].

I bear also in mind that there are a number of arguments in the present case that engage the operation of relevant limitation provisions and whether a claim for a cause of action or equitable right has been brought after expiry of the relevant limitation period. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533, it was said that it is undesirable that limitation questions of the kind under consideration in that case should be decided in interlocutory proceedings in advance of the hearing of the action except in the clearest of cases. However, that statement does not negate the statutory provision in r 293 of the UCPR, or the principle that in considering a summary judgment application “[a]rgument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff or defendant is so clearly untenable that it cannot possibly succeed”, as stated in General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125 at 130.”

Second, Mr Smits’ pleadings, affidavit material and submissions were unsatisfactory in many respects.
As to the pleadings, these observations made by the primary judge were plainly right:³

“The amended claim and amended statement of claim are inadequate. They do not articulate the claims or causes of action of [Mr Smits] against [the respondents] with precision. [Mr Smits] appears for himself. Although he is a lawyer, he has not been able to plead in compliance with r 149(1)(b) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) so as to allege all of the material facts and not the evidence. Worse still, the replies to [the respondents] are non-compliant with the rules of pleading and are prolix. They contain some extravagant and, in some respects, scandalous allegations.”

Similar flaws characterised most of Mr Smits’ written material before the primary judge. Both Mr Smits’ affidavit evidence and his submissions were replete with imprecise statements and hyperbole. The six separate affidavits on which he relied were filled with argumentative rather than evidentiary statements and with statements of opinion and conclusion, including on legal matters. They too contained extravagant, and, in some respects, scandalous allegations. It is important to appreciate that in performing his task, the primary judge was not “bound to accept uncritically … every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be”.⁴ A fortiori, in relation to statements in an affidavit which express argument, inadmissible opinions and conclusions, and extravagant and scandalous allegations.
And in this Court, problematic material continued. Mr Smits’ draft notice of appeal failed to state briefly and specifically the grounds of appeal. It too was prolix and argumentative. It specified eight grounds the elaboration of which extended over eight pages, and all without condescending to identify error by reference to any specific parts of the primary judge’s reasons. Matters were not much improved by Mr Smits’ written submissions in this Court.
Third, Mr Smits’ written argument treated this appeal by way of rehearing as though it was an opportunity to make a second attempt at advancing arguments which had failed below. Of course, that was not the correct approach. As a first step, it was necessary for Mr Smits to satisfy this Court that the primary judge made some legal, factual or discretionary error when he formed the requisite evaluative judgments adverse to Mr Smits’ claims.⁵ And, especially given the flaws in his material, if Mr Smits was to persuade this Court that the primary judge made a factual error, it was for him to identify for this Court evidence justifying that proposition which the primary judge was bound to take into account, and to articulate the basis for the contention that reviewable error existed by reference to that evidence. It was not for this Court to conduct an enquiry into Mr Smits’ affidavits to see whether any such material might be discerned amidst the flawed material.

The background facts

We turn to identify the relevant uncontroversial background facts, so far as may be identified from the pleadings, the affidavit material and the submissions in the appeal record. Insofar as there is controversy connected with the facts which we identify, we will state as much.
In June 2007, Zonebar (Yeppoon) Ltd was registered proprietor of property in Yeppoon described as Lot 200 on Survey Plan 199666, County of Livingstone, Parish of Hewittville, Title Reference 50650144 (the Land).⁶
Mr Smits had some, unspecified, involvement with Zonebar (Yeppoon) Ltd. He and Mr Cugola came to know each other when Mr Cugola (who was a civil design engineer) was working with the engineering firm Cardno Qld Pty Ltd in connection with a proposed subdivision development of the Land. At some time in 2007, there were discussions between the two of them concerning the possible sale of the Land.
Blue Chip Properties Qld Pty Ltd (ACN 126 839 567) (BCP) was registered as a company on 1 August 2007. Mr Cugola and Mr de Wit were the initial directors and remained so until 14 February 2012 from which time Mr Cugola was the sole director. At the time of registration, 48.75% of the shares were held by Mr and Mrs Cugola; 48.75% of shares were held by Mr and Mrs de Wit; and 2.5% of the shares were held by another individual.
In November or December 2007, BCP entered into a contract to purchase the Land for a contract price of $6,000,000. That may have been a contract with Zonebar (Yeppoon) Ltd dated 29 November 2007, or it may have been a contract with a mortgagee in possession exercising a power of sale.⁷ The detail does not matter because BCP did become registered proprietor of the Land on 10 January 2008.⁸
By a document dated 5 December 2007, Mr Smits and BCP entered into an agreement pursuant to which Mr Smits agreed to lend monies to BCP by providing to it a loan facility with a $600,000 limit on certain terms (the Smits Loan Facility Agreement).⁹ That instrument was apparently entered into in connection with BCP’s desire to acquire the Land. The instrument was not a deed. It may be observed that:(a)BCP agreed to repay to Mr Smits “the Principal Sum together with interest thereon and all other moneys payable to [Mr Smits] under the terms of this Agreement on the Final Repayment Date”.¹⁰ It was intended that the latter term be defined in item 5 of the schedule to the agreement. But, as will appear, the item in the schedule did not specify a date with certainty.(b)Amongst other things, the conditions of the agreement provided:

“13. FURTHER ADVANCE

Subject otherwise in all respects to the terms and conditions of this Agreement, [Mr Smits] shall advance to [BCP], if requested by [BCP] an amount equivalent to any GST paid to the Vendor of [the Land] upon completion of that sale to [BCP] until the earlier of any date upon which that Vendor or [Mr Smits] notifies [BCP] in writing that that Vendor is required to pay such GST to the Australian Taxation Office and the Final Repayment Date (referred to in Item 5 in the Schedule to this Agreement).

SPECIAL CONDITIONS

In consideration of [Mr Smits] agreeing to execute these presents (upon execution of a Deed of Priority as negotiated between the parties) and to procure the sale of [the Land] to [BCP], [BCP] undertakes to pay to [Mr Smits] or his nominee a sum equivalent to 10% of the auditable net profit arising out of or in relation to the acquisition, subdivision, re-sale and / or development (of any part or parts) of [the Land] … and such liability shall be secured by the Mortgage and Guarantees issued to [Mr Smits] pursuant to this Agreement.

The parties acknowledge that:

[Mr Smits] has provided a "Lock Box" security deposit and personal guarantee to the Bank of Queensland who is to be the first registered mortgagee for the Land upon the Commen[e]cment Date as security for the purchase of the Land from the Vendor by [BCP];

the Bank of Queensland has verbally agreed to release $1.5M to $2M in a reasonable time after Council issuing a material change of use for the proposed Lot 62 for the Land;

the Bank of Queensland has verbally agreed to release the balance of the security as soon as possible;

the security taken by the Bank of Queensland will be secured by second registered mortgage in favour of [Mr Smits] and registered against the Land.

[BCP] and the Guarantors acknowledge that they are liable to pay [Mr Smits] the difference between the amount paid by the Bank of Queensland to [Mr Smits] under the Lock Box deposit and the interest payable from time to time to Suncorp-Metway under a commercial loan facility for the Lock Box deposit amount.”

(c)Mr Cugola and Mr de Wit were identified as joint and several guarantors of BCP’s liabilities to Mr Smits under the agreement, and each separately executed the document as guarantor.¹² Their spouses were not parties. As to the guarantees:Insofar as the agreement expressed guarantees, it was poorly drawn. Most notably was that so because it contained a very widely drawn term “Guaranteed Money” but did not use that term in any operative term in the instrument, let alone the term by which the guarantors’ obligation was expressed:

““Guaranteed Money” means all amounts, damages, interest, costs and compensation which at any time for any reason or circumstance are payable, are owing but are not currently payable, are contingently owing or remain unpaid (or which are reasonably foreseeable as likely, after that time, to fall within any of those categories) by [BCP] to [Mr Smits] in connection with this Agreement or any transaction contemplated by it, whether at law, in equity under statute or otherwise”.

(ii)Instead, the operative terms of the guarantee were expressed in cl 17.2 by which the guarantors “unconditionally and irrevocably guarantee[d] to [Mr Smits] the due and punctual performance and observance by [BCP] of [its] obligations under the Agreement” (emphasis added). We interpolate that Mr Smits ignored that problem and, wrongly, treated the guarantees as if they guaranteed payment of the “Guaranteed Money”.

(iii)Clause 17.3 expressed an indemnity in these terms (emphasis added):

“[They] unconditionally and irrevocably indemnifie[d] [Mr Smits] against any loss [he] might suffer due to: -

(a)the non-fulfilment on the part of [BCP] of the obligations contained in the Agreement;

(b)any other circumstances whatsoever including, without limitation, any transaction or arrangement with third parties or otherwise relating to the Agreement and any associated arrangements being void, voidable or unenforceable and whether or not [Mr Smits] knew or should have known anything about that transaction.”

(d)The schedule to the agreement provided:

“Item 4 (Facility Limit):

a) $600,000 plus interest (see clause 13)

b) amount due pursuant to clause 14 of this Agreement

c) amount due pursuant to clause 16 of this Agreement

Item 5 (Financial Repayment Date):

Item 4a) Facility limit – payable in accordance with clause 13 of this agreement

Item 4c) Facility Limit – payable on day on which the Bank of Queensland “Locked Box” security to the Lender.”

(e)The amount of the “Lock Box” security deposit was $3,000,000. The Smits Loan Facility Agreement did not itself contain any promise by BCP to pay that amount to Mr Smits, if Bank of Queensland (BOQ) ever acted on its security and took the $3,000,000. If there was no promise by BCP “under the Agreement”, the terms of cl 17.3(a) of the guarantee given by Mr Cugola and Mr Smits would not render them personally liable for payment of the $3,000,000 if taken. Nor would the terms of subclause (a) of the indemnity attach. It will, however, shortly appear that the promise in cl 15(d) arguably meant that BCP had covenanted by the terms of the second registered mortgage to repay that money, if taken, because it was to be regarded as falling within the defined term “secured moneys” for the purpose of that mortgage. If that were to be the proper construction of the second registered mortgage, then a question might arise whether, if BCP failed to pay the secured moneys and that led to Mr Smits suffering loss, the terms of the broadly drafted subclause (b) of the indemnity might cover that loss. It is unnecessary to express a concluded view on this point.

As contemplated by the terms of the Smits Loan Facility Agreement, on 5 December 2007 BCP executed a mortgage over the Land in favour of Mr Smits as mortgagee and secured amounts due and owing by BCP to Mr Smits pursuant to the Smits Loan Facility Agreement.¹³ This mortgage was not registered until 7 October 2008.¹⁴ The mortgage also recorded that BCP covenanted with Mr Smits in terms of a registered standard terms mortgage document.¹⁵ The registered standard terms document contained BCP’s covenant to pay Mr Smits “the secured moneys”,¹⁶ which term was defined as:¹⁷

“• all moneys that you owe [Mr Smits] under any agreement or loan with [him]; and

all moneys that become owing by you to [Mr Smits] under any agreement or loan with [him]: and

all moneys that you owe [Mr Smits] for any reason whatsoever; and

all moneys that you have guaranteed to [Mr Smits] will be paid; and

all moneys that any agreement says are secured moneys; and

interest on those moneys.”

As foreshadowed at [22](e) above, it was arguable that cl 15(d) of the Smits Loan Facility Agreement should be regarded as expressing an agreement that repayment of the $3,000,000 security deposit, if ever taken, should be regarded as encompassed by the second last dot point of the definition of secured moneys. If that were the proper construction of the second registered mortgage, then it would be construed as containing a personal covenant on behalf of BCP to repay the $3,000,000 if taken by BOQ.
On 21 December 2007, BOQ and BCP entered into a commercial loan facility agreement (the BOQ Facility)¹⁸ pursuant to which BOQ provided to BCP a loan facility in the total amount of $7,240,000 for the purpose of assisting BCP to acquire the Land. The following observations may be made as to the terms of the BOQ Facility:(a)BOQ provided an overdraft facility to BCP in the amount of $600,000 for the stated purpose of assisting with the payment of GST in respect of the acquisition of the Land. The amount was repayable on demand, subject to annual review.(b)BOQ provided a commercial rate loan facility in the amount of $6,640,000, of which $290,000 was required to be used for prepayment of interest. The purpose of the facility was partially for the payment of interest and otherwise the same as the purpose for the overdraft facility. The facility amount was repayable on demand, and the maximum term of the facility was six months from the “facility establishment date”, which was a term defined as the date BOQ opened BCP’s facility account.(c)The following security was recorded as security which was to be or had been taken by BOQ:BCP was to provide a first registered mortgage over the Land.BCP was to provide a fixed and floating company charge over its present and future rights, property and undertakings.Each of Mr and Mrs Cugola and Mr and Mrs de Wit were to provide a guarantee and indemnity in the amount of $7,240,000.Mr Smits was to give a guarantee and indemnity limited to $3,000,000.Mr Smits was to provide a “Letter of Set-off” over a term deposit account with BOQ in the amount of $3,000,000.
As contemplated by the BOQ Facility:(a)BCP provided a first registered mortgage over the Land which secured payment of all monies due, owing or payable by BCP under the BOQ Facility.¹⁹ It gave similar security over another block of land.²⁰(b)BCP provided a fixed and floating charge over all of its assets both present and future including capital and book debts, which secured payment of all monies due, owing or payable by BCP under the BOQ Facility.²¹(c)Mr Smits signed the letter of set-off dated 20 December 2007; made the $3,000,000 deposit with BOQ on 21 December 2007; and executed a guarantee and indemnity dated 21 December 2007 in favour of BOQ limited to $3,000,000 by which he guaranteed that BCP would pay the amounts payable under the BOQ Facility.(d)At least Mr Cugola and Mrs Cugola executed guarantees and indemnity dated 21 December 2007 in favour of BOQ by which they each separately guaranteed that BCP would pay the amounts payable under the BOQ Facility up to a maximum amount of $7,240,000 plus interest fees and charges.

“… my recollection is that the said Deed of Variation was executed at my insistence by the parties thereto and made on 22 October 2008, shortly before which time I demanded immediate repayment of my advances of $3.6M plus accrued interest (“minimum liability”) from BCP, the Cugolas and the de Wits and that I returned to Mullumbimby in NSW with a duly signed counterpart of the said Deed of Variation”.

As to the latter, Mr Smits pleaded and Mr and Mrs Cugola and Mr and Mrs de Wit disputed²⁹ that on about 22 October 2008, the parties to the Smits Loan Facility Agreement executed a “Deed of Variation of Loan Agreement” (the 2008 Deed of Variation) whereby changes were made to the schedule to that agreement, including:(a)the amount of the profit share referred to in item 4(b) (which cross-referred to cl 14) was fixed in the amount of $400,000;(b)item 4(c) was changed to read: “$3,000,000.00 due and payable by the Borrower (BCP) and Guarantors (DW Cugola and AW De Wit) to the Lender since 15 October 2008 in respect of the matters referred to in Clauses 15 and 16”;(c)in item 5 the “Final Repayment Date” was fixed as being the earlier of 60 days from the date of the deed or any other date determined in accordance with the Smits Loan Facility Agreement or agreed in writing by the parties or nominated by Mr Smits due to any refinance;(d)in item 7 the Higher Rate of Interest was fixed at 4% for each 33-day period;(e)in item 7 the Lower Rate of Interest was fixed at 3% for each 30-day month;(f)in item 10, the “Current Security” was intended to include a second registered mortgage debenture over the assets and undertakings of BCP; and(g)in item 14 the “Maximum Term” of the Smits Loan Facility Agreement was fixed at 60 days after the date of the deed.
No version of a 2008 Deed of Variation executed by the parties and having the effect pleaded was placed before the Court. Mr Smits had exhibited an unexecuted copy of a “Deed of Variation of Loan Agreement” which would, had it been executed, have had the effect pleaded.³⁰ He deposed that it “was taken home by me … after it was executed by the relevant parties in the Brisbane offices of the Solicitors acting for the parties.” It is not clear whether he was deposing to having seen an executed copy of it. There were other parts of his affidavit evidence which seemed to be consistent with the proposition that a copy of that document must have been executed, but no explicit evidence from Mr Smits deposing to having seen a copy of the document executed by all the parties to it. Each of the alleged other parties to the deed denied they entered into it.
In his attempt to demonstrate that the Smits Loan Facility Agreement must have been amended by the Deed of Variation, as alleged, Mr Smits placed particular reliance on a “Deed of Covenant” dated 27 August 2009.³¹ As to that document, we make the following observations:(a)The deed was between BCP, Mr Smits, a Mr Taylor, Mr Cugola and Mr de Wit, the latter two “in their personal capacities and as agents for their respective Family Trusts to the extent of any interest in BCP or the Project”. It was executed on behalf of all five parties.(b)The evident purpose of the deed was to transfer a specified profit share in a particular real estate development to Mr Taylor in return for his paying $403,000.(c)The recitals to the deed were in this form:

“A. [Mr Smits] holds a second registered Mortgage from BCP over Lot 202 on SP199666 at Yeppoon which secures the payment of $3.6M plus accrued interest and costs due and payable plus an agreed entitlement to an 85 % share in the profits arising from the development and realisation of that land (“the Project”).

B. BCP is entitled to a net profit share of the other 15 % in the Project and has offered one third of that to [Mr Taylor] in return for his execution of this deed.”

(d)It must be observed that the real property description of the Land is not lot 202 on SP199666, but lot 200 on that plan. But even if that discrepancy is overlooked, the recital does not say anything about an amendment to the Smits Loan Facility Agreement by the alleged Deed of Variation. Nor does it say anything about Mr Cugola and Mr de Wit being personally liable for those monies. At best for Mr Smits it records the agreement of BCP and of Mr Cugola and Mr de Wit that the mortgage given by BCP (to which reference is made at [23] above), should be regarded as extending to securing both the $3,000,000 taken by BOQ and the $600,000 lent under the Smits Loan Facility Agreement, and therefore containing a personal covenant by BCP that those monies be repaid. We have already explained that there was a construction of that second mortgage which would justify that conclusion without the necessity for the Deed of Variation. It follows that the recital cannot be regarded as an acknowledgement of the existence and due execution of the alleged Deed of Variation of the Smits Loan Facility Agreement.

The primary judge, correctly, determined that the question of whether the Smits Loan Facility Agreement was in fact varied by deed as alleged could not finally be determined on the applications before him.³²
Although BOQ had obtained a part payment of $3,000,000 by acting on Mr Smits’ guarantee and letter of set-off, it had not been paid in full. It is necessary now to turn to various events which took place in the relationship between BOQ, BCP and the various natural parties.
On 21 July 2011, BOQ appointed receivers and managers to BCP’s undertaking.³³
In October 2011, BOQ, BCP, Mr Smits, Mr and Mrs Cugola, Mr and Mrs de Wit and others executed a Deed of Settlement and Assignment, which the primary judge referred to as the “2011 BOQ Deed of Settlement”.³⁴ As to this:(a)The primary judge found, correctly, that one purpose of that deed was to settle finally all of the claims and rights of BOQ, BCP and the parties to this proceeding arising out of the various BOQ loan facilities.(b)BOQ was to give releases to all parties. Critically, however, the promise to give releases was conditional upon receipt of payment of $2,250,000 (defined as the “Settlement Sum”) on or before 2 November 2011 (defined as the “Settlement Date”), and releases from all other parties.(c)The Settlement Sum was not paid by 2 November 2011. On 9 November 2011, BOQ terminated the 2011 BOQ Deed of Settlement for failure to pay the Settlement Sum.³⁵ Because the deed was not carried into effect BCP remained in default.(d)Mr Smits had deposed that he paid $2,537,633.29 to BOQ pursuant to that deed, without saying when that occurred.³⁶ However, his pleadings and submissions made clear that any such payment of that quantum which he might have made was not made until March 2013. Such a payment could not have been made under the 2011 BOQ Deed of Settlement because it had been terminated. The primary judge found, correctly, that Mr Smits’ statement was not correct. He made no error in so finding.(e)Mr Smits sought to rely on the 2011 BOQ Deed of Settlement as containing an acknowledgment by Mr and Mrs Cugola and Mr and Mrs de Wit of liabilities to him, apparently for the purpose of establishing an acknowledgment for the purposes of s 35(3) of the Limitation of Actions Act 1974. As to this:Section 35(3) provides (emphasis added) “[w]here a right of action has accrued to recover a debt or other liquidated pecuniary claim, … and …, the right shall be deemed to have accrued on and not before the date of the acknowledgment.”Clause 2.1 did express an acknowledgment by them as guarantors, but it was an acknowledgment of liabilities owed by them to BOQ as guarantors, and was not referable to any liabilities which they might have owed to Mr Smits as guarantors or otherwise. The primary judge correctly so found and concluded that the deed was irrelevant for the purposes of s 35(3) of the .

“The de Wits have requested Smits to release them from liability in respect of [BCP], the advance, the project and the Deed of Guarantee and Smits is willing to do so subject to the execution of this deed.”

(ii)By cl 1.1 the parties recorded that Mr Smits “absolutely and irrevocably releases and forever discharges the de Wits from all claims, as defined in clause 1.3”. By cl 1.2 the parties recorded that Mr and Mrs de Wits “absolutely and irrevocably releases and forever discharges Smits from all claims, as defined in clause 1.3”. Clause 1.3 expressed a very wide definition of claims as:

““claims” means all actions, complaints, suits, proceedings, claims, demands and causes of action (whether at law, under statute, in equity or otherwise), and the costs thereof, including claims for damages, contribution, interest and costs, or any legal, administrative, governmental, arbitral or other proceedings or investigations, arising in or from or in connection with [BCP, the monies Mr Smits advanced to BCP, the development project for the Land, or their personal guarantees.]”

(iii)The executed deed recorded that Mr and Mrs de Wits had resigned from all offices and capacities held by them in relation to BCP and that they had transferred all shares in relation to BCP to Mr Smits and they had done so by the date of execution of the deed.

(iv)Quite apart from the deed recording that those events had occurred at the time of its execution, there was evidence that Mr and Mrs de Wit had sent the relevant documents to Mr Smits for the purpose of the resignation and share transfers contemplated by the deed on 14 February 2012 and again on 7 March 2012.⁴¹ There was some suggestion that the shares did not get transferred before the deed was executed, but, as the primary judge found, Mr de Wit had done everything that he could do to bring about the contemplated outcome. And even if there had been executory obligations still to be performed, as the primary judge found, the deed expressly reserved the parties’ rights to enforce the performance of each other’s obligations.

(v)Unlike the deed of settlement entered into in the previous October, the releases and discharges expressed in the 2012 Smits-de Wit Deed of Settlement were not conditional on performance of any executory obligations by Mr and Mrs de Wit. The deed contemplated that the mutual releases and discharges would immediately come into force and might be pleaded as a complete bar or defence to matters which were the subject of the release and/or discharges which it expressed.

(d)Unsurprisingly, Mr and Mrs de Wit pleaded the release contained in the 2012 Smits-de Wit Deed of Settlement as a complete answer to Mr Smits’ claims against them. The primary judge found that Mr Smits arguments did not provide any reason not to regard the release as effective.

We return to the recitation of the relevant steps in the relationship between BOQ, BCP and the various natural parties.
By solicitors’ letter dated 30 May 2012 to BCP (receivers and managers appointed), BOQ gave BCP notice that BCP was in default under various loan facilities and securities and also notice under s 84 of the Property Law Act 1974 (Qld) that it intended to exercise its power of sale in respect of, amongst other things, the Land.⁴² The notice asserted that the total amount owing under the facilities was $9,143,678.98 and sought immediate payment of that amount.
It was common ground between Mr Smits and Mr and Mrs Cugola that in about late 2012, BOQ, Mr Smits and the receivers of BCP entered into a deed of settlement, referred to by the primary judge as the “2012 BOQ-Smits Deed of Settlement”.⁴³ As to that deed of settlement:(a)Mr Smits says it was executed on 11 December 2012.⁴⁴ It was under that deed that he purchased the Land.(b)The deed recited the BOQ Facilities; that the (unstated) amount of the loan by BOQ to BCP was unpaid and accruing interest and other fees and charges; that BCP was still in default; that the loan was secured by BCP’s mortgage over the Land and the guarantees given by Mr Smits; and that BCP had appropriated Mr Smits’ $3,000,000 deposit.(c)It recited that Mr Smits and the receivers to BCP had entered into a contract to purchase another property (called the Darling Heights property) and that that contract had not completed and had been terminated.(d)It recited that Mr Smits and the receivers to BCP had entered into a contract to purchase the Land (referred to as the Lammermoor Property) and that Mr Smits had defaulted on that purchase. (Other evidence had demonstrated that that contract had been dated 9 January 2012 and that the contract price had been $1,850,000.⁴⁵) The deed recited that BOQ reserved its rights in relation to that default, and that in order to complete that purchase Mr Smits required certain assistance from BOQ.(e)The deed obliged Mr Smits to enter into a new contract for the purchase of the Land (called the “New Lammermoor Contract”), in the form identified as Annexure B to the deed. That annexure named the vendor of the Land as BOQ as mortgagee exercising power of sale. The total amount payable under the purchase contract was defined in cl 37 of the special conditions of that contract and amounted to $2,408,983.12 plus various on-costs not yet calculated. Mr Smits agreed to pay the “Total Amount Owing” to BOQ, defined to mean any advances to be made to him under that deed, and the amount of the purchase price payable by him to buy the Land (and some other costs). The deed also obliged Mr Smits to release BOQ and the receivers from all claims whatsoever in consideration of BOQ entering into the deed.(f)The evident contemplation of the deed was that the subdivision development of the Land was not yet complete. BOQ would provide Mr Smits with assistance to bring about the completion of the subdivision and on-sale of the subdivided lots and Mr Smits would pay BOQ the amounts owing for the purchase of the Land from the settlement proceeds of the sale of those lots. BOQ would also release Mr Smits from all further claims.

“… the writing-off of a debt in a creditor’s books does not amount, in the absence of anything else, to a release or forgiveness of the debt and that a debt released or forgiven cannot be written-off because it no longer exists. These elementary propositions are stated, for example, in Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50 at [118].”

Consideration

In his oral argument, Mr Smits refined the issues which he wanted to advance on the appeal. He said that there were two principal issues. The first issue, which he identified as an issue affecting all four respondents, was whether he was subrogated to the loan securities previously held by BOQ. The second issue, which he identified as an issue affecting only Mr and Mrs de Wit, was whether the 2012 Smits-de Wit Deed of Settlement was operative and effective. He also contended that there were a series of subsidiary or ancillary issues on which errors were made.
We will address each of these arguments in turn.

Did Mr Smits have a right of subrogation against any of the respondents?

There was no dispute that BCP’s debt to BOQ had been secured in various ways, including by Mr Smits, Mr and Mrs Cugola and Mr and Mrs de Wit. Nor was there any dispute that Mr Smits had in effect paid monies to BOQ which had operated in partial discharge of BCP’s debt to BOQ. At the least, that must have been so, consequent upon BOQ having acted to apply Mr Smits’ $3,000,000 term deposit in partial discharge of BCP’s indebtedness.
Mr Smits had argued before the primary judge that under s 4(2) of the Mercantile Act 1867 (Qld) he was entitled to stand in the shoes of BOQ and exercise the rights which BOQ had against Mr and Mrs Cugola and Mr and Mrs de Wit. That section provides:

“A surety who discharges the liability to be entitled to assignment of all securities held by the creditor

(1)Every person who being a surety for the debt or duty of another or being liable with another for any debt or duty shall pay such debt or perform such duty shall be entitled to have assigned to the person or to a trustee for the person every judgment specialty or other security which shall be held by the creditor in respect of such debt or duty whether such judgment specialty or other security shall or shall not be deemed at law to have been satisfied by the payment of the debt or performance of the duty.

(2)And such person shall be entitled to stand in the place of the creditor and to use all the remedies and if need be and upon a proper indemnity to use the name of the creditor in any action or other proceeding at law or in equity in order to obtain from the principal debtor or any co-surety co-contractor or co-debtor as the case may be indemnification for the advances made and loss sustained by the person who shall have so paid such debt or performed such duty and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceeding by him or her.

(3)However, no co-surety co-contractor or co-debtor shall be entitled to recover from any other co-surety co-contractor or co-debtor by the means aforesaid more than the just proportion to which as between those parties themselves such last mentioned person shall be justly liable.”

The primary judge analysed that section in this way:(a)Both s 4(1) and s 4(2) operate when a surety has paid the debt owing to the creditor by “another person”, being a principal debtor, or a person “liable with” the surety, being a co-surety. (In this context, Mr Smits says he is the surety; the creditor is BOQ; the principal debtor is BCP; and the co-sureties are Mr and Mrs Cugola and Mr and Mrs de Wit.)(b)The paying surety’s entitlement to an assignment under s 4(1) of the creditor’s rights against the other person (i.e., the judgment specialty or other security) would be in respect of the debt discharged by the paying surety’s payment, but the section, like the right of equitable subrogation in support of a right of indemnity or a right to contribution to which it relates, operates upon the creditor’s judgment or specialty or other security as it was before discharge. That is because it engages upon an underlying right to indemnity or contribution in general law.(c)Mr Smits suggested he had rights to stand in the place of BOQ as creditor under s 4(2). The primary judge made three points:First, a surety’s entitlement under s 4(2) is not independent of the rights between the creditor and the other person. The surety who seeks to maintain a claim against the other person by standing in the place of the creditor for the creditor’s rights at law against the other person, will be subject to the same defences that would have operated in the other person’s favour upon a claim brought by the creditor against the other person.Second, on the ordinary meaning of the words used in s 4(2), the entitlement under s 4(2) is given to a surety who pays the debt of the principal debtor or pays the debt for which he or she is liable with a co-surety, and that does not mean part of the debt.Third, the entitlement under s 4(2) of a surety who has paid a debt for which the surety is liable with another as co-surety is limited by s 4(3), which makes it clear that the stand-in rights against the co-surety are no more extensive than would be the rights upon a claim for equitable contribution. The paying surety is not entitled to recover more than the just proportion to which the other person is justly liable, as between those parties as co-sureties.
The primary judge found that Mr Smits had no viable claim under s 4(2) because he had not paid the whole of the debt to BOQ. Obviously, that rested on the validity of the second of the three points just summarised. In reaching that construction of s 4(2), his Honour had found support in three cases.
First, the Privy Council in Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562 held, at 575-576, that an equivalent section “does not give a right of subrogation to a surety when no right to indemnity or contribution exists” otherwise.
Second, in Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 279 [4], the High Court restated the rule as to equitable subrogation of a surety as follows (emphasis omitted):

“The right operates so as to confer on the surety who has paid the debt in full the rights against the debtor formerly enjoyed by the creditor or by imposing on the creditor the obligation to account to the surety for any recovery in excess of the full amount of his debt.”

Finally, the New South Wales Court of Appeal in Austin v Royal (1999) 47 NSWLR 27 at 32-33, where the equivalent to s 4 in New South Wales was relied on and the Court said that:

“It is only when the total obligations or debts of the debtor have been paid to the creditor … that the creditor … is obliged to transfer the securities to the guarantor pursuant to the guarantor’s rights of subrogation.”

Mr Smits had no answer to those authorities. In our view the primary judge properly construed the section and properly relied on the authorities to which he referred. As the primary judge found, his analysis was fatal to Mr Smits’ claims pursuant to s 4 of the Mercantile Act 1867. The authorities to which his Honour referred were also fatal to Mr Smits’ claims by subrogation in equity.
It remains necessary, however, to address a miscellany of further submissions advanced by Mr Smits.
Mr Smits sought to rely on observations made by Robb J in Nguyen v Sage Consultant Group Pty Ltd [2021] NSWSC 753 at [261] to [269], which accept as settled principle that no right of subrogation can be exercised by any party who pays some or all of the secured debt until the whole of the debt has been repaid, but which suggests that there is no requirement that the whole debt had to be paid by the party seeking to exercise of the right of subrogation.
Mr Smits sought to advance an argument that some of the dealings made by BOQ subsequent to $7,240,000 falling due in mid-2008 should be regarded as giving rise to the outcome that the whole of BCP’s debt to BOQ was repaid. He said it must have occurred by the rollover of the debt into a new facility with different parties. That argument was incoherent. It suggested that BCP’s debt must be regarded as having been discharged partially by the $3,000,000 paid by Mr Smits and partially by regarding some subsequent facility entered into by BOQ with BCP and others as BOQ having accepted that new obligation as a full discharge of BCP’s previously existing obligation. He did not take the Court to the terms of any particular facility which achieved that outcome, nor did he identify how the entry into that facility or the agreement to those terms could have resulted in the outcome that BCP’s debt should be regarded to have been repaid.
He also sought to suggest that somehow the 2011 BOQ Deed of Settlement or the 2012 BOQ-Smits Deed of Settlement gave rise to a conclusion that BCP’s debt to BOQ had been discharged. That argument too was incoherent. As we have previously explained, under the former instrument any release by BOQ was conditional upon a payment being received within a specified time. That did not happen and BOQ terminated the deed. BCP’s debt to BOQ was not discharged. And the latter instrument did not purport to affect the discharge of the debt which BCP owed to BOQ. Mr Smits submitted that the payment which he made under that instrument by which he acquired the Land, also operated to discharge the entirety of BCP’s debt to the BOQ. The submission was nonsense and no term of the instrument even arguably supported it.
Mr Smits reliance on Nguyen v Sage Consultant Group does not help him because:(a)the whole of BCP’s debt to BOQ has never been repaid whether by him or anyone else; and(b)it had certainly not been repaid before BOQ gave releases to each of Mr and Mrs Cugola and Mr and Mrs de Wit,

and, accordingly, his alleged subrogation right has never arisen, and, in any event, all of BOQ’s rights against Mr and Mrs Cugola and Mr and Mrs de Wit have been released.

Mr Smits suggested that, somehow, s 55 of the Property Law Act 1974 would assist him against the respondents. That argument too was incoherent. It would not, in any event, be permitted to be advanced for the first time during oral argument on the appeal.
Mr Smits’ next submission, contrary to the authorities discussed thus far, was that a right of subrogation could arise even if BOQ had not been paid in full. He was not able to take this Court to a single authority which supported that proposition. He submitted that he must have been taken to have some form of contingent right against BOQ, which would exist against it pending it obtaining full payment of its debt, but that proposition would not avail him in establishing a right against the present respondents when that debt had not been repaid.
Mr Smits then submitted that there was evidence that he had discharged the BCP debt. It transpired that the “evidence” on which he relied was his own expression of opinion in one of his affidavits that that was what had been achieved by the 2012 BOQ-Smits Deed of Settlement. The submission cannot be accepted. The submission was characteristic of the problems concerning his material to which we have earlier adverted.
Mr Smits then submitted that the terms of the settlements which were struck between BOQ and Mr and Mrs Cugola and Mr and Mrs de Wit operated to acknowledge that BCP’s debt to BOQ had been completely paid. But that submission could not be accepted because there was no such acknowledgement and the two deeds only operated as releases of BOQ’s claims against those individuals. They said nothing about BOQ’s claim as against BCP.
Mr Smits’ argument fails in relation to what he characterised as the first principal issue.

Was the 2012 Smits-de Wit Deed of Settlement operative and effective?

The second principal issue concerned whether the 2012 Smits-de Wit Deed of Settlement was operative and effective. This is the document discussed at [39] above.
In his oral submissions, Mr Smits advanced a new argument. He argued that the instrument could not be regarded as operative because it was not executed in compliance with the requisite mandatory formalities stated in the Property Law Act 1974, as it stood in February 2012. Counsel for Mr and Mrs de Wit were able to deal with the argument and it did not become necessary to consider whether Mr Smits should be permitted to advance this sort of argument for the first time during his oral submissions on appeal.
In order to consider the point, it is necessary to examine the circumstances in which the instrument was executed in a little further detail. Those circumstances are discernible from emails exhibited to an affidavit by Mr de Wit.⁵¹
On Tuesday 7 February 2012, Mr de Wit emailed Mr Smits asking whether he was happy with the content of the “Release and Discharge Deed” and indicated that if all was good he would sign and mail it to Mr Smits together with the resignations and share transfer. He requested Mr Smits to sign his copy and email it to them as well. This suggested that the intention might have been to strike the deal by the exchange of executed counterparts. As will appear that intention changed.
On the same day, Mr Smits emailed a response agreeing to the proposal, saying “take it as done”. He advised that his printer “was busted” and if it was ok he would sign and send it the following Monday (which was 13 February 2012).
On 13 February 2012, Mr de Wit emailed Mr Smits saying that he and his wife would sign all documents and express post them through to him. They advised that they would prefer not to keep any shares so that the documents would show all their shares going to Mr Smits. This was a reference to a previously communicated intention by Mr Smits that Mr de Wit would retain one share in BCP.
On 14 February 2012, Mr de Wit emailed Mr Smits attaching “all documentation as required signed by myself and Karen”. The email requested Mr Smits to sign and witness the back page and initial every page of the deed of release and email back to him.
On 14 February 2012, Mr Smits emailed Mr de Wit advising he was still having printer problems.
On 2 March 2012, Mr de Wit emailed Mr Smits in these terms:

“I hope you are well. I assumed you still experiencing printer / scanning trouble. I have printed two copies of the issued Deed of Release and Discharge documents for you, if you will be kind enough to initial at the bottom of the pages and signed and witnessed the back page as shown. I have also included a return mail envelop if you can take it to the post office and drop it off. The other hard copy is for your records.”

On 7 March 2012, Mr Smits emailed Mr de Wit advising him that he had received the deed of release that day, but had not received the “resignations, share transfers etc”. (Obviously, what he had received was the hard copy executed by Mr and Mrs de Wit which had been posted to him with a return mail envelope.) He asked Mr de Wit how they would deal with those.
On 7 March 2012, Mr de Wit emailed a response advising that the “resignations, share transfers etc” had been emailed to Mr Smits before but that he would forward the email again, so that Mr Smits could print copies when needed or when the printer had been fixed. He advised that if Mr Smits wanted he could mail hard copies to him, but that he had thought that having the electronic copies will do. He repeated his earlier request that Mr Smits sign the deed of release and drop it off at the post office, advising that he had already paid for the envelope.
On 7 March 2012, Mr Smits’ email response was that he trusted Mr de Wit to do so and requested him to email and send the hard copies. He thanked Mr de Wit for the pre-paid envelope and would send “it” back that day. In context that was obviously a reference to the deed of release which he had previously received, and which had been executed by Mr and Mrs de Wit. In argument before this Court, Mr Smits accepted that he executed the document and sent it back on that day. Obviously, Mr Smits accepted the terms in the deed which he executed and was communicating his acceptance. That acceptance extended to Mr and Mrs de Wit not retaining any shares in BCP.
On 12 March 2012, Mr de Wit emailed Mr Smits advising that he had “received the signed Release and Discharge document” and would “print the other documents out and mail them down to you”. Again, the obvious inference is that Mr de Wit had received the hard copy signed release and discharge document now executed by Mr Smits.
On 12 March 2012, Mr Smits’ email response plainly communicated his satisfaction that the deal had been done:

“Thank you for your message. I hope that your lives will only get better. May be it will also restore some faith in humanity. For my part, i always took exception to false allegations made by others about my nature and intentions. Take care”.

The version of the document received by Mr de Wit from Mr Smits:(a)had a coversheet identifying it as a “Deed of Release and Discharge” between on the one hand, Mr and Mrs de Wits, and on the other hand, Mr Smits;(b)contained recitals and operative clauses which internally referred to the document as a deed;(c)was initialled on each page except the last by each of the three parties to the deed; and(d)was executed on the last page of the document by each party and a witness, next to words which stated that the party “signed, sealed and delivered” the document.
Mr Smits pointed out, correctly, that Mr and Mrs de Wit had each signed as witness for each other’s execution of the document. He contended that represented a failure to comply with s 45 of the Property Law Act 1974, as it then stood, relying on the reasoning of Edelman J in relation to analogous provisions of legislation in Western Australia and recorded in Netglory Pty Ltd v Caratti [2013] WASC 364. Section 45 provided:

“(2) An instrument expressed—

(a)to be an indenture or a deed; or

(b)to be sealed;

shall, if it is signed and attested by at least 1 witness not being a party to the instrument, be deemed to be sealed and, subject to section 47, to have been duly executed.

(3)No particular form of words shall be requisite for the attestation.”

Counsel for Mr and Mrs de Wit conceded that the document could not take effect as a deed. Accordingly, it is not necessary to examine the extent to which the Netglory analysis applies in Queensland. However, he contended that, if the instrument did not take effect as a deed, it plainly could take effect as an agreement under hand. We agree. Where an executed document cannot take effect as a deed for want of compliance with statutory formalities, it may still be enforced as a contract so long as it satisfies the elements of a contract (offer, acceptance, consideration, intention to be legally bound, and certainty).⁵² Obviously, it might be different if there was some reason to think that it was a condition of the instrument’s validity that it could only be effective if it took effect as a deed, but in the present case, there was no such suggestion.
All of the requisite elements for a binding contract were satisfied. The document was executed by each of the parties and they plainly intended to be bound by so doing. There is no challenge to its certainty. The mutual exchange of releases expressed in the document provided sufficient consideration for the agreement to be binding. But further, on Mr Smits’ case, Mr and Mrs de Wit should be taken to have promised, but not yet performed, relevant resignations and transfers. That alone would be sufficient consideration.
Mr Smits’ affidavit evidence recorded expressions of his opinion or his conclusion that the agreement with Mr and Mrs de Wit was that the executed document would be held in escrow pending performance of the resignations and share transfers. There was no evidence, however, of any such agreement. Despite assertions to the contrary made by Mr Smits, the terms of the agreement were not consistent with the releases being conditioned upon actual performance of the resignations and share transfers to which the agreement had referred. And, as we have already explained, even if there had been executory obligations still to be performed, as the primary judge found, the deed expressly reserved the parties’ rights to enforce the performance of each other’s obligations. Finally, we are talking about the operation of the releases in the instrument, not whether there has been some failure to perform executory obligations satisfactorily. If there had, Mr Smits’ ability to sue for damages for breach of such executory obligations was obviously statute barred.
As the instrument takes effect as a contract, the releases which it expressed were operative. Mr Smits argued that the release ought to be read down by reference to the principles discussed in Wichmann v Dormway Pty Ltd [2019] 3 Qd R 323. But in our view, the language of this clause was very wide and its objective intention plain. The language used in the releases operated as a complete answer to all the claims which Mr Smits advanced against Mr and Mrs de Wit. Mr Smits submitted that it could not be construed to apply to the claims he had made for conspiracies, breaches of fiduciary duties, and unconscionable conduct. Quite apart from the breadth of the language used in the release, the problem for Mr Smits was that such claims were within the observations made by the primary judge about the inadequacy of Mr Smits’ pleading, and Mr Smits did not identify evidentiary support for them. As we have previously observed, affidavit statements which merely expressed argument, inadmissible opinions and conclusions, and extravagant and scandalous allegations, did not amount to such evidence.

Ancillary issues

The limitation period in relation to Mr Smits’ claims for equitable contribution

Mr Smits sought to deal with Limitation of Actions Act issues insofar as they applied to his claims for equitable contribution.
Having regard to the $3,000,000 which Mr Smits paid to BOQ under his guarantee and the letter of set-off, the primary judge accepted the theoretical basis of a claim to equitable contribution against those of the respondents who could be regarded as having liabilities which were coordinate with those of Mr Smits, in the sense of reciprocity of obligation.
However, the primary judge found that:⁵³

“In the present case, [Mr Smits] paid more than his proportion of the coordinate liability of the co-sureties for $3 million when BOQ appropriated his $3 million on deposit on 16 October 2008. Any cause of action at common law of contribution and his right to equitable contribution arose then, and the period of limitation expired on 17 October 2014.”

His Honour’s logic in arriving at the conclusion that a six-year limitation period applied was expressed in these terms:⁵⁴

“A claim to contribution at law is a cause of action in quasi-contract to which s 10(1)(a) of the LAA applies. A claim for equitable contribution is not a cause of action under s 10 of the LAA, except under s 10(6)(b) that provides that s 10 does not apply to a claim for equitable relief save so far as any provision thereof may be applied by the court by analogy in the same manner as the corresponding enactment repealed by this Act as heretofore applied.

The enactment repealed by the LAA was the Limitation Act 1960 (Qld). Unhelpfully, perhaps, s 9(7) of that Act contained a similar provision to s 10(6)(b) of the LAA. The relevant limitation Act prior to the 1960 Act was the Statute of Frauds and Limitations 1867 (Qld). No express provision of that Act dealt with equitable application of limitations by analogy. However, s 16 provided that all actions upon the case of debt grounded upon any lending shall be commenced within six years after the cause of action arose.

The question is whether there is a limitation period that applied by analogy to a claim for equitable contribution made by a surety against a co-surety. In Belan v Casey (2003) 57 NSWLR 670 at 711, it was held that insofar as an action for contribution was based on an assumpsit it was an action based in quasi-contract and so had a six year limitation period. That was so under the repealed limitation Acts in Queensland. It follows that under the LAA, framing a proceeding as a claim for equitable contribution by a surety against a co-surety applies the same period by analogy in equity, and the period to be applied under the LAA is that for a cause of action founded on quasi-contract.

Section 10(1)(a) provides that a period of six years from when the cause of action arose applies to an action founded on quasi-contract. The equitable right to contribution in a money sum arises when the plaintiff has actually paid more than his or her proportion. See Belan v Casey at page 711 and the cases referred to there.”

Mr Smits suggested that his Honour erred in law, however he was unable to explain why that was so. He submitted that case law supported the conclusion of a 12-year limitation period in respect of his claims for contribution. As to that submission:(a)He relied on Barber v De Prima (2018) 97 NSWLR 932 per Robb J at [186] to [198]. In that case, Robb J concluded that the proper limitation period for a claim for equitable subrogation was 12 years. The case does not stand for that conclusion in relation to the claims for equitable contribution and does not assist Mr Smits. In particular, Robb J referred to Belan v Casey and distinguished it on the basis that he was dealing with subrogation not contribution.(b)Next, he relied on Lang v Le Boursicot (1993) 5 BPR 11,782, but again, his reliance on that case was misplaced and failed to make the distinction, in fact made by McLelland J, that there is a distinction between claims for equitable contribution and claims by way of subrogation. As to the former, McLelland J followed a logic very similar to that used by the primary judge to conclude that the limitation period which would apply to a claim for an action based on quasi-contract was applicable to a claim for equitable contribution by way of analogy. Lang v Le Boursicot supports the approach taken by the primary judge.
Mr Smits failed to identify error by the primary judge in relation to the application of the Limitation of Actions Act to his claims for equitable contribution. The primary judge had correctly concluded they were statute barred.

The proper construction of the indemnity contained in cl 17.3 of the Smits Loan Facility Agreement

Mr Smits had advanced debt claims ultimately founded on the Smits Loan Facility Agreement. He argued that cl 17.3 should be construed as a promise by the guarantors of payment of the $3,600,000 which Mr Smits had contributed.
His argument was irrelevant in relation to Mr and Mrs de Wit and Mrs Cugola because:(a)So far as Mr and Mrs de Wit were concerned, even if the clause ought to have been so construed and rendered Mr de Wit liable, claims against them had been released.(b)So far as Mrs Cugola was concerned, the primary judge correctly found that the debt claims against Mrs Cugola failed because she was not a party to the Smits Loan Facility Agreement, nor had she guaranteed BCP’s obligations under it. The primary judge identified that Mr Smits had sought to contend Mrs Cugola was bound by her husband’s execution of the document because he was her agent. But the primary judge rejected this notion on the basis that there was neither fact pleaded nor admissible evidence supporting the allegations of agency. Mr Smits has not identified any basis for concluding that the primary judge erred in reaching the conclusion that Mrs Cugola was not a party to the Smits Loan Facility Agreement or that, somehow, despite their being not the slightest indication in the terms of the Smits Loan Facility Agreement itself that Mrs Cugola was intended to be bound as guarantor, or that the guarantee obligations which Mr Cugola had personally accepted should be regarded as binding on Mrs Cugola personally.
The primary judge correctly concluded that there was no real prospect that Mr Smits’ claims under the Smits Loan Facility Agreement against Mr and Mrs de Wit and Mrs Cugola would succeed.
So far as Mr Cugola was concerned, the following observations may be made.
First, the primary judge found that any debt claims against Mr Cugola under the Smits Loan Facility Agreement failed because they were statute barred under s 10(1)(a) the Limitation of Actions Act. The debt claims accrued consequent upon demand being made and Mr Smits’ case was that demand was made between 16 and 22 October 2008 and before the 2008 Deed of Variation. And if Mr Cugola’s indemnity as expressed in the Smits Loan Facility Agreement responded, the cause of action would have accrued when Mr Smits suffered the loss. On any view, Mr Smits’ commencement of this proceeding on 2 September 2020 was well outside the six-year limitation period.
Second, Mr Smits sought to avail himself of s 35(3) of the Limitation of Actions Act which provides for a fresh accrual of a debt claim in the event that the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof. As to this:(a)The primary judge correctly rejected an argument that the 2009 deed discussed at [34] above could be regarded as acknowledgments of personal debts owed to Mr Smits by either of Mr Cugola or Mr de Wit for the purposes of s 35(3). The relevant recital did not address those debts.(b)His Honour also correctly concluded that the 2011 BOQ Deed of Settlement could operate in a similar way. The debts acknowledged in that instrument were debts Mr Cugola owed to BOQ, not debts he owed to Mr Smits.

Estoppel claims

Mr Smits complained that his pleaded replies contained multiple allegations of estoppel and there was not one mention of the word “estoppel” in the primary judge’s reasons. Two things should be observed. First, a litigant does not establish an arguable estoppel simply by using the word in a pleading. We have already recorded the primary judge’s criticism of Mr Smits’ pleading. Second, error in this regard would only be relevant if it demonstrated a basis for reaching the conclusion that the primary judge erred in giving summary judgment in respect of Mr Smits’ claims. Mr Smits failed to develop any argument that any one of his claims was founded upon any identifiable estoppel.

Conspiracy to injure, fraud and unconscionable conduct

Mr Smits’ pleading advanced allegations of conspiracy to injure, fraud, and unconscionable conduct. But again, a litigant does not establish arguable cases for those causes of action simply by using those words in a pleading. We repeat the observations made in relation to such claims at [88] above. Mr Smits failed to demonstrate that the primary judge made any legal, factual or discretionary error in this regard.

Fiduciary duties

Assertions by Mr Smits of the existence of fiduciary duties may be similarly disposed of. The primary judge found that although Mr Smits had made some pleading references to the respondents or some of them owing him fiduciary duties, his Honour concluded that there was neither pleading of the material facts nor any admissible evidence to support the existence of a fiduciary relationship between Mr Smits and any of the respondents. Mr Smits failed to demonstrate that the primary judge made any legal, factual or discretionary error in this regard.

Conclusion

Mr Smits’ arguments having failed, any appeal would be dismissed. As the appeal lacks merit, the application for an extension of time to appeal should be refused. Mr Smits must pay the respondents’ costs of the application, to be assessed.

Mr Smits’ application to the Court of Appeal filed 17 January 2022

By application filed 17 January 2022 supported by an affidavit of Mr Smits sworn on 17 January 2022, Mr Smits brought an application in these terms:

“1. Pursuant to rule 658 of the Uniform Procedure Rules 1999 ("UCPR") and original, incidental or inherent jurisdiction, the Hearing in 8 November 2021, Reserved Judgment and the proceedings herein be reopened.

Pursuant to rule 658 of the UCPR and original, incidental or inherent jurisdiction, the Hearing, Judgments and Orders of 10 and 25 June 2021 and the proceedings in the Court below be re-opened.

Pursuant to rule 766 of the UCPR, the Court of Appeal grant special leave to the Appellant to adduce further evidence referred to by the Appellant in his Affidavit of 17 January 2022 and as it otherwise deems fit or necessary.

That the respondents provide full and certified discovery and inspection in respect of all documents within their custody, control or possession with respect to the subject matter of these proceedings within 21 days after these orders.

In the event of non compliance with the last said Order, that the Appellant report the nature and extent of the non compliance to the Court within 21 days therafter, so as to enable the Court, if it deems fit, to make Anton Piller or Search Orders in such form as the Court determines to be fit or necessary.”

On 31 January 2022, the Court issued the following directions to the parties:

“1. The respondents may file any affidavits in response to the application, including any notice of objections to the appellant’s affidavit filed on 17 January 2022, on or before 14 days before the hearing date.

The appellant may file any affidavits in reply to the respondents’ affidavits on or before seven days before the hearing date.

The appellant’s written submissions must be lodged with the Registry and served on the respondents two days before the hearing date.

The respondents’ written submissions must be lodged with the Registry and served on the appellant one day before the hearing date.”

The respondents did not file any affidavits in response to the application. On 17 and 18 February 2022 they filed objections. On 1 March 2022, Mr Smits lodged written submissions and a further affidavit of Mr Smits sworn on 28 February 2022. In their written submissions the respondents flagged objections to the reception of Mr Smits’ further affidavit. Further, Mr and Mrs Cugola’s submissions also pointed out that Mr Smits’ written submissions advanced a claim for relief not actually sought by his application, namely:(a)leave to adduce evidence in the form of the affidavit filed 28 January 2022 and to rely on it in the appeal; and(b)this Court should set aside the judgment below on the basis that it was obtained by fraud,

and took objection to the Court entertaining any such application.

The Court heard argument on the application on 3 March 2022. At the commencement of argument, after the presiding judge had intimated that the relief the subject of proposed orders 2, 4 and 5 was more properly pursued in the Trial Division and not in the Court of Appeal, Mr Smits abandoned the pursuit of those remedies in this Court. The respondents did not oppose that course. Accordingly, we will treat Mr Smits as having made and been granted an application for leave to amend his application by the deletion of proposed orders 2, 4 and 5. The hearing then proceeded in respect of the respondents’ flagged objections to Mr Smits’ affidavit filed 17 January 2022; the respondents’ flagged objections to the reception of Mr Smits’ affidavit filed 28 January 2022; and the merits of Mr Smits’ pursuit of proposed orders 1 and 3. There was brief cross-examination of Mr Smits addressed to the parts of his first affidavit which might be thought to address the question whether the evidence sought to be tendered could not have been obtained with reasonable diligence for use at the hearing before the primary judge.
The Court reserved its decision.
The abandonment of the pursuit before this Court of proposed orders 2, 4 and 5 considerably narrowed the issues raised by Mr Smits’ application. It resolved into an attempt to reopen the appeal to permit the reception of evidence and argument as to what he contended was fresh evidence concerning the execution of the 2008 Deed of Variation, discussed at [32] to [33] above.
The narrowing of the application rendered otiose dealing with the objections to admissibility which had been made. Had it been necessary to rule, we would have upheld the objections to the first affidavit on the ground advanced by the respondents (essentially on the basis that the relevant paragraphs constituted submission, speculation, argument or the mere assertion of scandalous allegations), leaving only paragraphs 1 to 8 (which contained the explanation – such as it was – for the attempt to adduce further evidence of documents recently found) and that part of paragraph 10 which exhibited the documents said to have been recently found. We would have upheld the objection to reception of the second affidavit on two grounds. First, it was outside the ambit of the directions which had been made. As no affidavits were relied on by the respondents, there was no occasion for any reply affidavits. Second, and in any event, there was no relevant admissible evidentiary material in the affidavit. It either constituted argument (paragraphs 2, 3, 4, 5, 6, 8 (first sentence) and 9), evidence which was new but not fresh and without any explanation as to why it should be received (paragraphs 5 and 10 exhibits 5 to 8), or fresh evidence in the form of things which had occurred since the appeal was argued, but which was irrelevant (paragraphs 8 (second sentence) and 10 exhibits 9 to 24).
For the following reasons, there was no merit in Mr Smits’ application to permit the reopening of the appeal for the purposes identified by him.

“Inadvertently, late on 11 January 2022, I entered my names in the email address in reverse order into a computer. Unexpectedly, that opened a gateway into a disused email address for which I was able to change the password that was unknown to me. I managed thereby to gain access to large numbers of emails that had been received, sent and saved or backed up by me, many of which were relevantly lost, unknown or inaccessible since 2008.

On 12 January 2022, I began a review of the discovered emails, proper review and investigation of which will be a substantial undertaking, that is likely to lead, if allowed, to series of interlocutory disclosure steps.

Consequently, for present purpose, I have confined my attention to one critically important email that was sent to me on 24 October 2008 by Melanie Jensen, a Secretary to Joel Hunter Pitman (“Mr Pitman”), the Principal of Morgan Conley Solicitors (“MCS”), in order to demonstrate the relevance and previous unavailability of the new evidence. In 2008, MCS acted for all the parties to these proceedings.”

(b)The email address concerned was that of a gmail account. Mr Smits did not depose to having made any attempts prior to the hearing before the primary judge to identify email addresses which he used during the relevant period and to obtain access to them. If he had, he would have had to address the fact that it was obvious enough that he had operated the email address concerned. As Senior Counsel for Mr and Mrs Cugola submitted, the address to which Mr Smits was referring appeared in a number of emails and other documents exhibited to three of Mr Smits’ affidavits before the primary judge; three of Mr de Wit’s affidavits before the primary judge; and one of Mr Cugola’s affidavits before the primary judge. Further, Mr Smits knew well that MCS had acted for him and had denied him access to files. He would have had to explain why he had not sought to subpoena email records from MCS at any time before the hearing.

(c)In cross-examination, Mr Smits accepted that he had accessed the gmail account as recently as July 2017. He could not give any explanation as to why, given that he had done so, he had not accessed the account and obtained the relevant material before the hearing.

(d)In our view Mr Smits has not demonstrated that the evidence could not have been obtained with reasonable diligence for the hearing before the primary judge, or even for the hearing of the appeal in 2021.

Third, and, accordingly, the interests of justice were not served by acceding to the application.
The result is that the application to reopen should be refused. Mr Smits should pay the costs of Mr and Mrs Cugola and of Mr and Mrs de Wit of the application to reopen (including the costs of the hearing on 3 March 2022), to be assessed.

Conclusion

The orders which should be made are as follows:

As to the application filed 17 January 2022: Leave granted to amend the application by the deletion of proposed orders 2, 4 and 5.The application as amended is refused.The applicant must pay the respondents’ costs of the application, to be assessed.

As to the application filed 20 July 2021: The application is refused.The applicant must pay the respondents’ costs of the application, to be assessed.

Footnotes

Appeal Record Book (ARB) 4 at 1884. ↩
Smits v Cugola [2021] QSC 164 (Primary judgment) at [89]-[90]: ARB 1 at 69. ↩
Primary judgment at [3]: ARB 1 at 57. ↩
The quoted terms were observations made by Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC 331 at 341 in relation to the consideration of an application to the court for the removal of a caveat in which the caveator had to satisfy the court that there was a serious issue to be tried. They are relevant to consideration of affidavits for the purpose of rr 292 or 293 of the UCPR. ↩
Allesch v Maunz (2000) 203 CLR 172 at 180-181 [23] per Gaudron, McHugh, Gummow and Hayne JJ. ↩
Title search: ARB 3 at 1066-1069. ↩
ARB 3 at 1038 [27] suggests the former, but the appellant exhibited a settlement statement which suggested that BCP might ultimately have purchased from a mortgagee in possession exercising a power of sale: see ARB 2 at 610. ↩
Title search: ARB 3 at 1066. ↩
ARB 3 at 1070-1092. ↩
Smits Loan Facility Agreement cl 5.1: ARB 3 at 1075. ↩
Smits Loan Facility Agreement cll 13-16: ARB 3 at 1086-1087.

At a glance

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