Kintsu v Peninsular Group [1999] NSWSC 221

New South Wales Supreme Court CITATION : Kintsu v Peninsular Group [1999] NSWSC 221 CURRENT JURISDICTION : Commercial FILE NUMBER(S) : 50146/98 HEARING DATE(S) : 19/03/99 JUDGMENT DATE : 24 March 1999

Kintsu Co Limited - Plaintiff The Peninsular Group Limited - First Defendant Peninsular Group Australia Pty Limited - Second Defendant PARTIES : Australian MacFarms Pty Limited - Third Defendant Hutt Rental Holdings Pty Limited - Fourth Defendant Eastern Link Pty Limited - Fifth Defendant Brian John Finlay - Sixth Defendant Winson Manchiu Woo - Seventh Defendant JUDGMENT OF : Rolfe J

COUNSEL : Mr I.M. Wales SC - Plaintiff Mr J.T. Johnson - First, Second, Fourth, Fifth, Sixth and Seventh Defendants SOLICITORS : Truman Hoyle - Plaintiff Sally Nash & Co - First, Second, Fourth, Fifth, Sixth and Seventh Defendants CATCHWORDS : Application for Summary Judgment based on the construction of a one-off agreement. DECISION : Application granted

16

I N D E X

Page

Introduction 1

The Present Proceedings 6

The Terms Of The Contract 8

The Course Of The Proceedings On 5 March 1999 11

The Proceedings On 19 March 1999 12

Orders 16

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

ROLFE J

WEDNESDAY, 24 MARCH 1999

50146/1998 - KINTSU CO LIMITED v THE PENINSULAR GROUP LIMITED & ORS

JUDGMENT

HIS HONOUR:

Introduction

1 By a Summons issued on 3 December 1998 the plaintiff, for which Mr I.M. Wales of Senior Counsel appeared, sought orders that judgment be entered against all the defendants, for which and whom, save for the third defendant, Mr J.T. Johnson of Counsel appeared, in the sum of $150,000 together with interest from 16 October 1998 to the date of judgment at the rate specified by the Supreme Court Rules, and that judgment be entered against all the defendants, save the third defendant, in the sum of $750,000 together with interest from the same date and at the same rate. The Summons alleged and, at least ultimately, so much was not in issue, that on 22 September 1998 the plaintiff and the defendants entered into a Deed of Settlement and Release, which is referred to in the pleadings as "the Contract", pursuant to clause 3.1.1 of which the first defendant, at the request of the other defendants, acknowledged that it was indebted to the plaintiff in the sum of $150,000 for "the TPG Commissions", and pursuant to clause 3.1.2 of which the second defendant, at the request of the other defendants, save for the third defendant, agreed to pay to the plaintiff $750,000 in consideration for which the plaintiff agreed to transfer to the second defendant all its right title and interest in shares held by the plaintiff in the third defendant, which was referred to as "the Equity Sum". 2 It was pleaded that pursuant to clause 3.2.1 of the Contract, the first defendant agreed to pay to the plaintiff the TPG Commissions by three equal monthly instalments of $50,000, the first being payable on 15 October 1998; and that pursuant to clauses 3.3.1. and 3.3.2, the second defendant agreed to pay to the plaintiff the Equity Sum either in full on 15 October 1998, or by seven monthly instalments of $100,000 and one instalment of $50,000, the first instalment of $100,000 being payable on 15 October 1998. 3 It was further pleaded that pursuant to clause 3.5.1 if either the first or second defendant failed to pay the moneys due pursuant to clauses 3.2.1 or 3.3.2 on or before 15 October 1998 the plaintiff was entitled to issue a Default Notice requiring payment within twenty one days of that Notice and making time of the essence, and that pursuant to clause 3.5.2 if the first and/or second defendants failed to comply with that Notice all moneys due by them pursuant to the Contract "would become immediately due and payable with interest …". 4 In paragraph 10 it was pleaded that neither defendant paid the moneys due on 15 October 1998 and, in paragraph 11, that on 16 October 1998 the plaintiff served upon the first and second defendants a Default Notice requiring payment of the initial instalments on or before 7 November 1998 and making time of the essence. In paragraph 12 it was pleaded that the moneys demanded and payable on 7 November 1998 were not paid "and consequently all monies due and payable by the first and second defendants pursuant to the Contract have fallen due for payment". 5 All the matters to which I have referred were admitted in paragraph 3 of the Notice of Grounds of Defence filed on 18 February 1998 "subject to paragraph 2 above". Paragraph 2 of that document, whilst admitting that the defendants executed the Contract, did not admit that the plaintiff validly executed it "on that date or at any date thereafter prior to the date of the commencement of these proceedings". That basis of defence was expressly abandoned by Mr Johnson on 5 March 1999. 6 The Summons continued that pursuant to clause 3.9 of the Contract the second to seventh defendants, and the first and fourth to seventh defendants respectively guaranteed the obligations of the first and second defendants under the Contract. In paragraph 13, where secondly appearing, it was asserted that the plaintiff was entitled to judgment against all defendants "forthwith". 7 The Notice of Grounds of Defence pleaded:- "In answer to paragraph 13, subject to paragraph 2 above and the fact that the defendants say that the plaintiff has not made any demand upon the defendants in their capacity as guarantors as required by clause 3.9.3(b), the respective defendants admit the matters set forth therein." 8 This raised one issue, namely whether there was a contractual obligation on the plaintiff, before it could recover against the defendants in their capacity as guarantors, to make a demand on the defendants, which it had not done. 9 On 24 February 1999 the plaintiff filed a Notice of Motion seeking summary judgment against all, save the third, defendants, pursuant to Part 13 rule 2. That Notice of Motion was supported by the affidavits of Mr Warwick David Abadee and Mr Timothy Fulton Edwards, both sworn on 23 February 1999. Both affidavits were read and relied upon. 10 The Notice of Motion came before me on 5 March 1999. Mr Johnson, in addition to abandoning the defence raised in paragraph 2 of the Notice of Grounds of Defence, agreed that the only matter in issue was whether, on a proper construction of the Contract, the plaintiff was entitled to succeed in circumstances where it had not given a notice. This defence, it was conceded, only availed the defendants in their capacity as guarantors and Mr Johnson conceded that the first and second defendants had no defence in respect of their obligations under clause 3.5.2 of the Contract. In these circumstances he consented to judgment for the plaintiff against the first defendant for $155,465.60, and against the second defendant for $777,239.40, each of such amounts including an interest component to 5 March 1999. He also consented to an order that those defendants pay the plaintiff's costs of the proceedings to date, and it was noted that the judgment sums were in respect only of the first and second defendants' obligations under paragraph 3.5.2 "and not in respect of their obligations as guarantors or persons bound to indemnify the plaintiff under the said Deed". 11 Although Mr Wales submitted that it was not necessary to give notice either at all or pursuant to clause 3.9.3(b) he decided, for an abundance of caution, to do so and in those circumstances, and without opposition from Mr Johnson, I granted the plaintiff leave to file and serve an Amended Summons by 12 noon on Thursday, 11 March 1999 and I stood the Notice of Motion for Summary Judgment over until Friday, 19 March 1999. I gave certain further directions and made the orders to which I have referred.