AG-Exports & Anor v EFIC [2002] NSWSC 467

New South Wales Supreme Court

CITATION : AG-Exports & Anor v EFIC [2002] NSWSC 467 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 20702/2000 HEARING DATE(S) : 6 May 2002 JUDGMENT DATE : 30 May 2002

AG-Exports (Australia) Pty Ltd (First Plaintiff)

PARTIES : Brian John Lawn (Second Plaintiff)

Export Finance and Insurance Corporation (EFIC) (Defendant) JUDGMENT OF : Master Harrison

Mr A T McInnes QC (Plaintiffs) COUNSEL : Mr M Einfeld QC with Mr DL Williams (Defendant) John McEncroe & Co (Plaintiffs) SOLICITORS : Abbott Tout (Defendant) CATCHWORDS : Summary judgment - standing, breach of contract, deceit LEGISLATION CITED : Supreme Court Rules - Part 13 r 5; Part 15 r 26 CASES CITED : Piwinski v Corporation Trustees of the Diocese of Armidale [1977] 1 NSWLR 266 Gould & Anor v Vaggelas & Ors [1985] 157 CLR 215 DECISION : (1) The plaintiffs' FASC is dismissed; (2) The plaintiffs are to pay the defendant's costs.

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IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MASTER HARRISON

THURSDAY, 30 MAY 2002

20702/2000 - AG-EXPORTS (AUSTRALIA) PTY LTD & ANOR v EXPORT FINANCE AND INSURANCE COPRPORATION (EFIC)

JUDGMENT (Summary judgment; standing, breach of contract, deceit) 1 MASTER: By notice of motion filed 21 January 2002 the defendant seeks firstly, an order that the further amended statement of claim (FASC) filed 21 December 2001 be struck out pursuant to Part 15 r 26 and/or Part 13 r 5 of the Supreme Court Rules (SCR), or alternatively, the further FASC be dismissed or permanently stayed pursuant to Part 13 r 5 SCR; secondly, an order that the plaintiffs provide further and better particulars of the FASC; thirdly, that the plaintiffs provide further security for the defendant's costs in such sum and in such form as the court deems fit and in the event that the plaintiffs fail to provide further security the proceedings be dismissed or permanently stayed. By amended notice of motion filed 3 May 2002, the plaintiffs seek firstly an order that the defence be struck out or alternately an order that the notice of motion filed 21 January 2002 be struck out; secondly, an order that the defendant file the affidavits ordered by Deputy Registrar Robinson; thirdly, supply the particulars requested by the plaintiffs within seven days; and fourthly, an order that the defendant answer the notice to answer interrogatories served on 18 April 2002 within seven (7) days. The defendant relied on three affidavits of Nicholas John Matkovish sworn 22 January 2002, 25 February 2002 and 22 March 2002. All but the defendant's strike out application pursuant to Part 15 r 26 have been stood over pending this decision. 2 On 4 June 2001 I delivered judgment in relation to a summary judgment application. The defendant's notice of motion was dismissed. The plaintiffs were ordered to file and serve an amended statement of claim within 28 days and were also ordered to provide security for costs in the sum of $48,000.00 in acceptable form. 3 In July 2001 an amended statement of claim was filed. On 21 December 2001 a further amended statement of claim (FASC) was filed. In the previous judgment I've referred to the law on summary judgment and of the facts pleaded in this case. I refer to that judgment but for convenience repeat a brief outline of the facts. The statement of claim alleges that in 1991 the first plaintiff was the exporter of goods to overseas countries mainly in Asia. The second plaintiff was the managing director and principal shareholder in the first plaintiff. The defendant was a credit insurer of goods exported by Australian companies. 4 In 1991 the first plaintiff had a comprehensive shipments policy (the policy) being No 210171/01/83 which insured the first plaintiff against the risk of overseas customers being unable to pay for goods supplied by the first plaintiff. The policy was assigned to the Hong Kong Bank of Australia Limited (HKB) which advanced to the first plaintiff 95% of the value of goods exported as each shipment was made. The second plaintiff guaranteed the first plaintiff's indebtedness to the HKB. It was a term and condition of the policy that the first plaintiff would notify the defendant by posting or delivering by hand a declaration within seven days of the dispatch of a shipment of goods overseas. Clause 10 of the contract contains a provision requiring the plaintiff to notify the defendant of the gross value of goods within seven days of the date of export. 5 In May and June 1991 the first plaintiff was in arrears with the payment of some premiums due under the policy and the defendant, as it was entitled to do, provided that it first gave notice to the first plaintiff, suspended the policy on about 14 June 1991. The defendant, in breach of the policy, did not notify the first defendant that it intended to suspend the policy. Had the defendant notified the plaintiffs that it intended to suspend the policy the first plaintiff would have paid all premiums due. Apparently the policy remained suspended until on or about 23 September 1991. 6 Between 14 June 1991 and 23 September 1991 the first plaintiff alleges it made numerous declarations to the defendant of the dispatch of goods overseas, within seven days of their dispatch, it being unaware that the policy had been suspended. Included in the declarations were a number of shipments to Yoshikawa Chemicals Singapore (Pte) Limited (Yoshikawa) in Singapore. Yoshikawa defaulted in payment in the sum of $565,535. 7 On 27 November 1991 the first plaintiff notified the defendant that Yoshikawa may default in payments on amounts due to it and on 28 January 1992 the first plaintiff made a claim on the defendant in the sum of $565,535, lost to it as a result of the default by Yoshikawa. The defendant paid to the first plaintiff the sum of $41,431.35. The balance of the amount of Yoshikawa's default is claimed. Further damages alleged are that as a result of these actions the first plaintiff was unable to pay its loans and a receiver was appointed. The second plaintiff was called upon as guarantee and was unable to pay and was declared bankrupt. 8 The defendant has confined itself to two arguments, firstly, that neither of the plaintiffs have standing; secondly, the claims for breach of contract and deceit cannot be maintained. The standing arguments were not raised during the previous hearing for summary judgment. The breach of contract and deceit claims have been raised previously and are now revisited in the light of the FASC. As a summary judgment application is considered an interlocutory one, I will consider these arguments.