District Court New South Wales Medium Neutral Citation: Metro Finance Pty Limited v Harrison [2022] NSWDC 303 Hearing dates: 13 July 2022 Date of orders: 1 August 2022 Decision date: 01 August 2022 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraph 71 Catchwords: GUARANTEE AND INDEMNITY – applications for summary dismissal or strike out of defence of guarantor – whether arguable defence of set-off based on allegedly wrongful possession of borrower's equipment – whether arguable defence based on creditor's agent's alleged promise not to sue Legislation Cited: Civil Procedure Act 2005 (NSW) ss, 56(3), 61(3) Uniform Civil Procedure Rules 2005 (NSW) rr 12.7, 13.1, 13.4, 14.28, 14.3 Cases Cited: Bank of Western Australia v Hoy [2012] NSWSC 518 Chalak v G & G Mikhael Pty Ltd [2022] NSWCA 116 Hobbs v ASIC [2013] NSWCA 432 Smith v Skinner [2018] NSWDC 197 State Bank of NSW v Chia [2000] NSWSC 552 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Category: Principal judgment Parties: Metro Finance Pty Limited (plaintiff) Ms J Harrison (second defendant) Representation: Counsel: Mr Collins for the plaintiff Mr Green for the second defendant Solicitors: Hilton Bradley for the plaintiff JML Rose for the second defendant File Number(s): 2020/00277503 Publication restriction: Nil Judgment Background 1. This proceeding commenced on 24 August 2020. It started as a straightforward action by the plaintiff against two guarantors (the first and second defendants) for default in the obligations to be performed by the corporate borrower under a secured loan agreement which the plaintiff alleged was entered into on 25 October 2018. After various iterations of the pleading, on 16 August 2021, the corporate borrower was joined to the proceeding as a third defendant. Before then, the plaintiff obtained a default judgment against the second defendant on 17 November 2020, only for that to be set aside (by consent) on 27 May 2021. 2. On 6 September 2021, all three defendants filed a Defence. Partly piggy-backing on the facts contained within the Defences, on the same day, one of the guarantors (the first defendant) and the borrower (the third defendant) cross-claimed against the lender seeking damages for breach of contract. 3. On 8 November 2021, the plaintiff amended its pleading again (the Third Further Amended Statement of Claim (the 'TFASC')) after it had exercised a power to sell goods as security. On 7 December 2021, the defendants were directed to file amended defences by 15 December 2021. That order was not complied with. 4. On 8 February 2022, the plaintiff served its evidence. 5. A show cause hearing, for why the defendants' Defences and cross-claim should not be struck out, occurred on 8 March 2022 and the defendants were directed to serve any amended cross-claim and evidence by 1 April 2022. The defendants did not comply with that direction. 6. On 29 April 2022, the plaintiff filed a motion applying for summary judgment for the sum of $73,577.12 and the striking out or dismissal of the defences. By that date, the defendants had still not served any defences, and amended cross-claim or evidence supportive of the cross-claim. 7. That motion was somewhat overtaken by events. On 10 May 2022, the cross-claimants purported to assign to Mr Ross Harrison, who is the son of the first and second defendants, the cross-claim. This occurred on the same day that the third defendant was wound up by court order and a day before a sequestration order was made against the first defendant. 8. The first defendant is now bankrupt and the third defendant is now in liquidation. Amongst other things, the plaintiff now moves on its motion of 29 April 2022 but, in addition, it sought leave to discontinue its claims against the furst and third defendants in its most recently amended pleading. It also sought the dismissal of the cross-claim. 9. On 13 July 2022, when sitting as List Judge, after giving short reasons in respect to both applications, I acceded to the plaintiff/cross-defendant's applications to discontinue the claims against the first and third defendants and the dismissal of the cross-claim. 10. This left the plaintiff's applications against the second defendant, being for summary judgment, or alternatively, for the striking out of the second defendant's defence. The parties' legal representatives agreed I should consider the summary judgment application first; although, at least in terms of any discretionary considerations, there is some overlap between the two. Relevant principles for applications against the second defendant Summary dismissal 1. The plaintiff applies for summary judgment against the second defendant, relying upon various sources of power: rr 13.4 or 14.28 of the Uniform Civil Procedure Rules 2005 (NSW). 2. The principles applicable to applications for summary judgment (and summary disposal) were recently re-stated by Basten AJA (Ward P and Simpson AJA agreeing) in Chalak v G & G Mikhael Pty Ltd [2022] NSWCA 116 at [15]-[18], which statement I respectfully seek to apply. Strike out 1. The power to strike out a party's defence appears in r 12.7 of the UCPR. 2. As to r 12.7 of the UCPR, the plaintiff cited the decision of Barrett JA in Hobbs v ASIC [2013] NSWCA 432 where, at [52], his Honour observed: "…when there has been no hearing on the merits, a court should be reluctant to make such an order unless there has been intentional and contumelious default on the part of the moving party or inordinate or inexcusable delay giving rise to a substantial risk that a fair trial would not be possible: Birkett v James [1978] AC 297 at 318. But, as Basten JA pointed out in State of New South Wales v Plaintiff A [2012] NSWCA 248 at [17], the stringency of that principle has been diminished by the enactment of ss 56 to 60 of the Civil Procedure Act 2005. It is therefore necessary to have regard to the "overriding purpose" referred to in s 56, being "to facilitate the just, quick and cheap resolution of the real issues in the proceedings." The need to pay particular attention to that overriding purpose is pronounced in a case such as the present where the essence of the application before the court is delay as such". Section 61(3) of the Civil Procedure Act 2005 (NSW) 1. A substantial consideration underlying the summary judgment and strike out applications, in terms of discretionary considerations, concerns the second defendant's alleged non-compliance with Court orders and directions. A further sanction where a party fails to comply with Court directions lies in s 61(3) of the Civil Procedure Act. Amongst other things, s 61(3)(c) contemplates the striking out of a defence with judgment to be given to the plaintiff. The issues arising from the pleadings 1. The latest iteration of the plaintiff's pleading is the TFASC, filed 8 November 2021. The second defendant is in default of her obligation (under r 14.3 of the UCPR) to file a defence to the document, potentially exposing her to an application for default judgment, under r 6.16 of the UCPR. 2. However, it appears that the plaintiff had already been down that procedural path, and a default judgment it obtained against the second defendant was set aside. An important (although not exclusive) criterion upon a judgment debtor's application to set aside a judgment is proof that it has a reasonably arguable defence. 3. Whether the second defendant has a reasonably arguable defence may be gauged by a document which is now stale, superseded by the plaintiff's subsequent pleading, being her Defence filed on 6 September 2021. Nevertheless, it is the only formal document (verified by her solicitor) which articulates any defence. In making reference to it now, I note that there was no differentiation in that Defence between the individual positions of the first, second and third defendants. 4. In paraphrase, the issues raised from this old pleading were reproduced in the second defendant's Counsel's arguments in his written submissions set out in MFI 1, so I propose to defer further reference to them until I address those arguments. The evidence to sustain the plaintiff's summary judgment application The status of Harrison Civil Pty Ltd 1. The applicant relied upon an ASIC company search which established that Harrison Civil Pty Ltd was deregistered on 14 November 201. Before then, and relevantly, a liquidator had been appointed on 27 May 2020. The standard conditions to the Commercial Finance Agreement 1. The Schedule to the Commercial Finance Agreement indicated that a secured loan was provided by the applicant to the borrower upon terms and conditions which included standard conditions with ID D221. Among other things, the Schedule also identified the name of the borrower, the amount repayable, the commencement dated (1 November 2018) and the names and addresses of three guarantors. Two of them were the first and second defendants. The other was Harrison Civil Pty Ltd. The guarantors executed the agreement. 2. Counsel for the applicant highlighted the following standard conditions: 1. Cl 10.1(a), which set out the basic obligation of the borrower to make payments of Repayment Instalments at each Payment interval; 2. Cl 11(1)(b), referred to as an 'anti-set off clause' which was, materially that "The Borrower may not withhold part of all of any payment under the agreement for any reason including because the Borrower claims to have a set-off"; 3. Cl 13.1, which provided that the borrower indemnified the applicant against liability for costs, charges and expenses on a solicitor and client basis, which were reasonably incurred in connection with the exercise of its rights under the agreement; 4. Cl 17 (read with cl 23.1(b)) cast a fundamental obligation on the borrower to ensure that neither itself, nor any of its guarantors became "insolvent". That word is defined in Part N of the schedule as including relevantly 'in liquidation'. It is common ground that the borrower breached this obligation, in that Harrison Civil Pty Ltd went into liquidation and was, accordingly insolvent; 5. Cl 23 set out the consequences of default. Relevantly, by cl 23.1, if the borrower did not comply with its obligation to ensure that none of its guarantors became insolvent, the borrower "must immediately on demand by (the applicant) pay (the applicant) the 'Discharge Value for the Goods' (cl 23.2(c)) and all arrears of repayment instalments (cl 23.2 (d)). To interpolate, the applicant acknowledges that there was a dispute whether a demand was issued at an earlier point, but it is not disputed that a demand was issued against the borrower in August 2021; 6. Cl 25 provided that if the borrower did not pay the amounts as and when required by cl 23.2, the applicant may repossess the Goods; 7. Cl 30 is the guarantee clause; 8. Cl 34 entitled the applicant to give to the borrower a certificate regarding any matter concerning the agreement, including any amount payable by the borrower to it. Cl 34.2 provided that "The certificate is sufficient evidence of the accuracy of its contents unless it is proved to be false." The 'Dobbs' certificates [1] 1. These were in Exhibit 5 in the application; but the one that the applicant principally relied upon was dated 6 July 2022, which provided a detailed breakdown. The certificate relevantly identified the outstanding amount, following the sale of the equipment, and taking into account 'further fees and other amounts owing' (including legal fees, comprising Counsel's fees and disbursements') as $79,919.91. This was the amount for which the applicant sought judgment. The belief in no defence 1. Mr Kripal, the applicant's 'Head of Servicing', deposed in his affidavit of 7 July 2022 his belief that the second defendant had no defence to the plaintiff's claim. This evidence was relied upon to satisfy r 13.1 of the UCPR. Evidence relating to discretionary considerations (applicable also to the strike out application) 1. Mr Collins, Counsel for the plaintiff relied upon the second defendant's failure to prosecute her defence. This was despite orders made on 7 December 2021 for her to serve evidence (by 19 January 2022) and the further opportunities granted by the Court in directions made at the notice to show cause hearing on 21 February 2022. On 8 March 2022, the second defendant had also been directed to serve evidence (by 1 April 2022) but had similarly failed to comply with that order. 2. Mr Collins observed that the second defendant did not, at the hearing of this application, explain her defaults in these respects. The evidence in opposition to the summary judgment application 1. The legal representative for the second defendant adverted to provisions in the standard conditions and also correspondence already contained in the applicant's evidence. 2. In addition, he relied upon an affidavit from Darren Lee Harrison sworn on 21 April 2021 (Exhibit C). Darren Harrison is the first defendant, a director of the borrower and one of the guarantors. Submissions The applicant's submissions in chief 1. The applicant submitted, with reference to r 13(1) of the UCPR, that its claim is one of indebtedness, that there was no real question to be tried raised by the second defendant's - the respondent's - defence. 2. Relying upon the evidence identified, Counsel for the applicant submits that there was an admitted default by the borrower: one of the guarantors (Harrison Civil Pty Ltd) was in liquidation as of May 2020. A demand was made of the borrower in August 2021 (subsequent to the issue of the proceeding) for the full amount, and the borrower did not comply with it. This made both the borrower and the first and second defendants liable. The amount claimed against the respondent was proven in a 'Dobbs certificate'. 3. The applicant also submitted, with reference to r 14.28 of the UCPR, that under General Steel principles, the respondent's defence could be struck out. The respondent's submissions 1. The respondent submitted, with reference to an application for strike out under r 12.7(2) that there has been no conduct giving rise to a finding that she had not conducted her defence with due despatch. Further, the dictates of justice suggest that she be permitted to run her defence, which is adequately pleaded and arguable. 2. The respondent submitted, with reference to the application for summary judgment, that the requirement in r 13.1 was not satisfied. In none of the affidavits relied upon by the plaintiff (applicant), with the exception of the plaintiff's solicitor, do the deponents depose to a belief that the second defendant has no defence to the plaintiff's claim. The plaintiff's solicitor, however, is not a 'responsible person', so his belief is irrelevant. The second defendant sought to distinguish this case from the decision of Smith v Skinner [2018] NSWDC 197 (per Russell SC DCJ) at [19]-[22], a case where this Court did treat the solicitor as being a 'responsible person' on the basis that that case turned on questions of law. It was said that this case has a combination of questions of law and fact. 3. In written submissions prepared by her legal representative (MFI 2) the respondent argued that her defence has arguable merit, which should proceed to trial. She submitted that the relevant contract had to be read in accordance with its terms and not the plaintiff's paraphrase of the terms (paragraph 10.1). She argued that the majority of payments claimed had in fact been paid (paragraph 10.2). She argued that a condition precedent to the institution of the proceeding was the making of a demand against the borrower, but that this had not been satisfied and the applicant's non-compliance with the condition meant that it had repudiated the agreement (paragraph 10.3). Similarly, she argued that before she incurred any liability, the applicant had to make demand of the third defendant, the borrower (paragraph 10.4). She argued that the agreement had to be terminated before she became liable, and that this had not occurred (even though, on the basis of her earlier argument, the plaintiff had repudiated the agreement) (paragraph 10.5). She argued, further, that as at the date the proceeding commenced, there were no outstanding amounts owing to the plaintiff (paragraph 10.6). She argued that the institution of a proceeding did not satisfy the requirement for a demand being made (paragraph 10.7). Finally, she argued the plaintiff's breach of the agreement, by repossessing the equipment, caused loss and damage to all of the defendants (paragraph 10.7). 4. Most of these arguments appear, or, in substance are reflected in the respondent's Defence filed on 6 September 2021 in relation to an earlier iteration of the plaintiff's pleading. 5. In his oral submissions, the legal representative for the respondent, Mr Green, emphasised the last of these points (paragraph 10.7), regarding the effect or consequence of the repossession of the equipment, as being (in his opinion) his client's strongest point. There were two steps to his argument. 6. First, Mr Green argued that the evidence indicated that a demand had been made on 3 August 2021, but the repossession of the equipment had occurred before then, on 19 March 2021. He pointed to the terms of cl 23.2 and argued that this required the respondent to make demand upon the borrower if it was in default. He then argued, as I understood him to say, that the entitlement to repossession of goods, under cl 25, was conditional upon demand being made on the borrower under cl 23. Since a demand had not been made of the borrower (to pay), cl 23 did not oblige the borrower to pay and in the absence of such obligation, the entitlement to repossess under cl 25 was not enlivened. In short, since the repossession preceded the demand, the repossession was invalid. 7. Secondly, Mr Green then argued that, properly construed, cl 11.1 did not preclude the guarantor's capacity to run a defence of set-off, in legal proceeding against it. It only operated to restrict the right of the borrower to withhold part of or all payments due under the agreement. 8. Mr Green then made further points, with a view to establishing a triable defence, or issue. 9. The first was that the respondent adduced no evidence to prove the quantum of legal costs claimed, on a solicitor and client basis, under the Finance Agreement. 10. Secondly, Mr Green argued that sub-paragraphs 3(b)-(d) of the first defendant's affidavit (Exhibit C) proved that the proceeding had been commenced prematurely. Mr Harrison's evidence was said to have established that he had taken steps to ensure that the borrower had not fallen into arrears. Accordingly, the premature commencement of the proceeding meant that costs were improperly incurred. Mr Green reiterated that the proceeding against the second defendant was not preceded by a valid demand on the borrower. Costs that the applicant incurred before a valid demand was served on the borrower should not be sheeted home to the second defendant. An associated point is that the Dobbs certificate relied upon by the applicant did not constitute proof of quantum of such costs. 11. Thirdly, he argued that the first defendant's affidavit evidence (paragraph 7) proved that a representation had been made by an agent to the respondent to the effect that so long as the borrowers continued to make payments under the agreement, the applicant would take no further steps. That might be taken to amount to an undertaking not to take enforcement action. 12. As to the alternative application for strike out, Mr Green argued that the respondent should, in effect, be given another chance. Acknowledging that she had been in default (and had not explained the reasons for her default), he submitted that it was appropriate that a guillotine order be made if she did not comply with a new direction for the service of her evidence. Applicant's submissions in reply 1. Mr Collins, Counsel for the applicant, addressed the points arising from the respondent's written submissions in his oral submissions in chief. 2. Cross-referencing to the relevant paragraphs in the respondent's written submissions (MFI 2), Mr Collins submitted: 1. In response to paragraph 10.1, the respondent's interpretation of the terms of the finance agreement were irrelevant; 2. In response to paragraph 10.2, any payment by the respondent (or the other defendants) did not preclude the applicant from issuing a notice of default in circumstances where, as here, there was an admitted event of default (i.e. the insolvency of Harrison Civil Pty Ltd); 3. In response to paragraph 10.3, in circumstances where demand was made of the borrower prior to the joinder of the borrower, it was immaterial that demand had not been made against the borrower prior to the institution of the proceeding; 4. In response to paragraph 10.4, any omission to issue a demand before the proceeding was commenced against the respondent did not relieve her of her obligation to pay as the subsequent issue of the demand prior to the joinder of the borrower cured any earlier defect about the service of a demand; 5. In response to paragraph 10.5, the plaintiff does not make a claim for damages, but is claiming in debt. Otherwise the applicant relied upon its answer to paragraph 10.4; 6. In response to paragraph 10.6, the applicant was entitled to rely upon its demand issued in August 2021 regardless of any omission to serve a demand prior to the commencement of the proceeding; 7. In response to paragraph 10.7, for the same reasons, it does not matter whether the Statement of Claim against the second defendant did not constitute a demand against her; 8. In response to paragraph 10.8, the set-off clause in cl 11 was valid and effective. 1. In his oral submissions in reply at the hearing, Mr Collins addressed points that Mr Green had raised in his oral argument. 2. As to Mr Green's point about an arguable defence of set-off, Mr Collins acknowledged that a set-off had been commonly relied upon by all three defendants in their defence filed in September 2021. However, by their pleading, they admitted that the equipment which was repossessed was owned by the corporate borrower, the third defendant. If the applicant's enforcement of its security interest caused financial loss to anyone at all, it could only have been to the borrower; not the guarantors. 3. Mr Collins argued that, on the premise that the borrower suffered financial loss in this way, the respondent could not take advantage of this. He emphasised that by its terms (cl 11.1(b)), the defence of set-off was only available to the borrower; not the guarantors. He referred me to a decision of the Supreme Court of New South Wales (Adamson J) in Bank of Western Australia v Hoy [2012] NSWSC 518 where, at [16]-[17], the Court confirmed the efficacy, as a matter of public policy, of 'anti-set off' clauses (in that case precluding a guarantor from raising defence, the relevant being clause 11(a) set out in [9]). 4. Moreover, for the same, or substantially the same, reasons that the Court dismissed the cross-claim, the liquidator to the borrower had not (yet) positively indicated an intention to pursue such claim. Before then, although the respondent had the opportunity to particularise any loss in the borrower and serve evidence, she had done neither of those things. Even on the assumption, favourable to her, that she had any standing to take advantage of any set-off in the borrower, there was nothing more than a bare allegation or assertion. 5. As to Mr Green's point about an absence of proof on the quantum of the solicitor-client costs, Mr Collins referred me to another decision of the Supreme Court of New South Wales (Einstein J) in State Bank of NSW v Chia [2000] NSWSC 552 where, at [243]-[249], the Court considered the efficacy of a 'Dobbs clause'. Mr Collins argued that cl 34 in the finance agreement was broadly expressed. The respondent did not serve any evidence, for example, to prove manifest error in the calculations. But Mr Collins argued that if the Court was concerned about cl 34, the Court could take an alternative course. With reference to the certificate that was before the Court (Exhibit 5, p 10 on the applications), the Court could order that judgment be entered for the sum of $14,958.09 with the respondent to pay costs on an indemnity basis, as agreed or assessed. 6. In response to Mr Green's point about a representation made by or on behalf of the applicant to the respondent about the applicant's intention not to commence a proceeding (as was set out in paragraph 7 of the first defendant's affidavit), Mr Collins observed that the same point had been advanced by or on her behalf at the time that she was applying to set aside a default judgment against her made on 17 November 2020 (which default judgment was later set aside by consent). But without explanation for its omission, the respondent did not plead this 'representation' case in any iteration of her defence, on 9 July 2021 or on 6 September 2021, and, further, the respondent had not served any evidence (generally or in this particular respect). From this, it was argued, that the Court could infer that the respondent, having turned her mind to the potential applicability of this defence when agitating her application to set aside a default judgment, had subsequently changed her mind and decided not to run it in this proceeding. 7. This last matter dovetailed with a general submission by the applicant in response to the respondent's argument relating to a strike out application, that she be given another chance. Mr Collins argued that the difficulty with that proposed solution was that, in circumstances where she had not explained her earlier defaults, the Court could not have any confidence that she would comply with any new orders. Mr Collins also argued that if the Court was minded to strike out the defence, then procedurally, the applicant could apply for default judgment. But that was a tortuous course and the most expedient course, consistent with case management objectives, was simply to strike out the defence. Consideration 1. The applicant relied upon both rr 13.1 and 13.4 of the UCPR as bases for the order for summary judgment. I am satisfied that the requirement in r 13.1(1)(a) is satisfied. I am also satisfied that there is evidence from a responsible person (Mr Kripal, an employee of the applicant) of belief that the respondent has no defence to the claim against her to satisfy the requirement in r 13.1(1)(b). 2. The question then becomes whether the evidence is sufficient so as to make it appear inevitable that the claim against the respondent will succeed. In effect, this question is also applicable to the basis for summary judgment under r 13.4. That is, it goes without saying, a high bar. In determining that question, I am to have regard to the respondent's pleading (even though it technically may be stale), but am not confined to that. Where there have been multiple pleadings by the respondent which do not raise a reasonably arguable defence, I am entitled to infer that further opportunities to replead the defence would be inutile. 3. It appeared to me that arguments were advanced on the respondent's behalf at the hearing of the application which had not been reflected by earlier iterations of her Defence. This poses something of a conundrum since, the principles I identified earlier indicated that I am not precluded from taking those arguments into account; but, having said that, there is a concern that if further opportunity (indeed an indulgence) was given to the respondent to replead, it would not be availed of to invoke the arguments assuming that they were reasonably arguable. 4. Having found that the requirements in r 13.1(1)(a) and (b) are satisfied, the appropriate practical course is to first determine whether the existing defence (6 September 2021), in conjunction with the arguments raised on her behalf give rise to triable issues. If I am satisfied that the existing defence does not, but that there is still something of arguable merit in the additional arguments raised by Mr Green, then I would need to consider whether, in the Court's discretion, the application should be refused on the basis that the respondent have another opportunity to plead her defence and to serve evidence in support of it. 5. With a qualification, concerning the significance of the repossession of equipment (paragraph 10.8), Mr Green appeared to only faintly press the arguments in those written submissions after Mr Collins had addressed them in the latter's oral submissions in chief. He did not dispute, for example, Mr Collins' point that the issue of a later demand of the borrower, prior to the filing of an amended pleading in August 2021, cured any perceived defect in the institution of the proceeding prior to service of a demand at an earlier time. He did not press any point that in its reliance upon the later demand in August 2021, the applicant had effectively admitted that it had repudiated the finance agreement when it commenced the proceeding. At any rate, save for his point in paragraph 10.8, I regarded Mr Collins' submissions in response as fully answering the points the respondent made in her written submissions, they were not answered and were, I find, unanswerable. In particular, since the borrower was in default for failing to ensure that none of its guarantors became insolvent, the respondent was liable under the guarantee (and indemnity) for the borrower's failure to perform this obligation, irrespective of whether the borrower was in arrears for the amount claimed by the applicant when it commenced the proceeding or failed to demand the correct sum from the borrower at that date. 6. I now propose to address the substance of the points which Mr Green raised in his oral argument. 7. His first argument, which really combined multiple steps, is that (1) the repossession of the equipment was invalidated by the failure of the applicant to have served a prior demand on the borrower; (2) this caused loss and damage; (3) the respondent was entitled to plead a set-off; and (4) she was not precluded from doing so by cl 11.1(b). 8. There are, as I say, multiple steps to this argument, all of which, in my view would need to be established to sustain a reasonably arguable defence. Step (1) raises an issue of construction which is unnecessary and probably inappropriate to determine at an interlocutory level, given the high bar alluded to. Step (4) also raises a question of construction which, again, should not readily be made at an interlocutory level, notwithstanding the authority of Bank of WA which the applicant cited; although as to the last case, I would observe that the lender's position in that case appeared stronger than the applicant's position in this case as the 'anti-set off' clause in the Bank of WA decision was expressed as applicable to both borrower and guarantor whereas, in this case, by its terms it only refers to the position of the borrower. 9. The respondent's difficulties lie in steps (2) and (3). I accept the applicant's submission that for a set-off to run, the respondent would need to demonstrate some violation of her rights and interests. The matter she relies upon however, concerns the rights and interest of the borrower. Only the borrower had the standing to assert a claim in relation to the repossession of the equipment. Further, the only evidence of loss which the respondent pointed to was a bare assertion, or estimate, given by the first defendant, in his affidavit of 21 April 2021, in paragraph 4 (last sentence). The first defendant appeared to equate, or assimilate, his financial interests with the that of the borrower (the third defendant) – a dubious proposition. At any rate, neither the trustee for the first defendant nor the liquidator for the third defendant have made claim for any loss or damage arising from the repossession of the equipment. 10. Accordingly, I reject the first argument Mr Green suggested afforded a reasonably arguable defence, or 'triable' issue. 11. The second defendant's second argument concerns what is said to be a representation, recorded in the first defendant's affidavit filed on 22 April 2021. 12. An immediate difficulty, as the applicant pointed out, was the omission to refer to such representation in either of the respondent's defences, filed subsequent to this evidence. Further, it was not without significance that the only evidentiary reference to a representation was from the first defendant; not the respondent herself. 13. More fundamentally, however, the bare reference to a representation or promise, not to sue, does not take the respondent anywhere. There is no suggestion of how, if at all, any promise or representation gave rise to any detrimental reliance in the respondent (Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 per Brennan J at 428-9). 14. It could not be a 'detriment' incurred by the guarantor that the borrower would continue to make payments under the facility. I find that any defence based on this bare promise is not reasonably arguable. 15. The respondent's third argument concerned the propriety of the proceeding being commenced when it was. In my opinion, if there was merit in the point, it would be relevant only to the extent to which the applicant should receive entitlement to its costs of the proceeding. It provides no basis of opposition to liability for judgment. It is a common place in civil litigation that claimants originally commence a proceeding on the basis of pleaded causes of action which ultimately fail, but during the course of litigation, through amendment, another or other actions succeed and costs orders can be adjusted accordingly. 16. In this case, however, it was unnecessary for the Court to adjudicate the correctness of the second respondent's point of construction about the service of a demand on the borrower being a condition of liability in the respondent (under the guarantee or indemnity) as the applicant was able to successfully invoke a different – and incontrovertible – basis for the borrower's default: the insolvency of one of the (other) guarantors. This particular event of default was distinct from another suggested basis of default – the borrower's failure to pay arrears – since it was undisputed that it had existed before the date that the proceeding commenced. The applicant's decision to commence the proceeding when it did was not obviously improper simply because it was able to find another, simpler, path to judgment. 17. As to the quantum of costs, aside from the point of principle that the respondent raised concerning the putative prematurity in the commencement of the proceeding, the respondent did not seek to establish any inaccuracy in the methodology underlying the Dobbs certificate in Exhibit 5 (p.10) or the calculations themselves. In circumstances where public policy legitimises contractual clauses providing for such certificates, in my opinion there is no reason why the certificate should not be given effect to; so that the underlying content of the certificate is accepted. 18. I note, however, that the certificate calculated legal fees in a way excluding costs of court attendance at the hearing. Neither party made a submission about this, even though the amount is likely to be relatively modest. Nevertheless, fairness – to the respondent in particular – suggests that the parties be given an opportunity to submit any contrary order, failing which the order I propose will be self-executing. ORDERS 1. For the above reasons: 1. pursuant to r 13.1 of the UCPR, summary judgment is ordered in favour of the plaintiff against the second defendant for the sum of $79, 919.91. 2. subject to order 3, the second defendant is to pay the plaintiff's costs of attendance at the hearing on 13 July 2022 on an indemnity basis. 3. the parties have seven days to apply for variation of order 2, failing which that order will take effect. ********** Endnote 1. Dobbs v The National Bank of Australia Ltd (1935) 53 CLR 643 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 August 2022