Kingsway Group Ltd v Looknear Pty Ltd [2009] NSWSC 1316

New South Wales Supreme Court

CITATION : Kingsway Group Ltd v Looknear Pty Ltd [2009] NSWSC 1316

HEARING DATE(S) : 27 November 2009

JUDGMENT DATE : 27 November 2009

JUDGMENT OF : Harrison J

EX TEMPORE JUDGMENT DATE : 27 November 2009

DECISION : 1. The Notice of Motion filed by the second and third defendants on 16 October 2009 is dismissed. 2. I order the second and third defendants to pay the plaintiff's costs of the motion.

CATCHWORDS : PRACTICE AND PROCEDURE –– application to set aside summary judgment pursuant to UCPR 36.16(2)(b) –application for adjournment – where defendants contest liability as guarantors - where delay in bringing application to set aside judgment – where failure to appear in response to application for summary judgment – where no defence on the merits - application dismissed

LEGISLATION CITED : Contracts Review Act 1980 Uniform Civil Procedure Rules

Kingsway Group Ltd (Plaintiff) PARTIES : Looknear Pty Ltd (First Defendant) Matthew Howard Paul Daniel (Second Defendant) Rusty Moran (Third Defendant)

FILE NUMBER(S) : SC 10174/2009

COUNSEL : H Altan (Plaintiff) R Freeman (Second and Third Defendants)

SOLICITORS : Willis & Bowring (Plaintiff)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HARRISON J

27 November 2009

10174 / 2009 Kingsway Group Ltd v Looknear Pty Ltd, Matthew Howard Paul Daniel and Rusty Moran

JUDGMENT – EX TEMPORE 1 HIS HONOUR: These proceedings come before me today pursuant to a motion filed by the second and third defendants on 16 October 2009, by which they seek orders that include an order that summary judgment entered against them on 28 July 2009 be set aside. Mr Freeman appears for the second and third defendants on that application but, as he has clearly indicated, with instructions that are presently limited to an application for an adjournment until at least a date next week by which time, among other things, senior counsel will have had an opportunity to come into the matter. Mr Altan, who appears for the plaintiff, opposes the relief sought in the notice of motion but in advance of the ultimate disposition of the motion, he also opposes even the second and third defendants' application for the short adjournment that they seek. Some background to this dispute is necessary. 2 The proceedings were originally commenced by statement of claim filed on 15 January 2009. The statement of claim goes into some considerable but commendable detail in the way that it pleads the plaintiff's case. For present purposes it is sufficient to note that the plaintiff advanced money to Looknear Pty Ltd, the first defendant, for a development project that it proposed to conduct on certain land at Barden Ridge in New South Wales. The statement of claim pleads that on or about 9 February 2007 the plaintiff offered to advance the first defendant $265,000 and that on or about 9 May 2007 that offer was accepted. A loan agreement dated 10 May 2007 was ultimately executed and associated security documentation came into effect. I will refer to this documentation in more detail shortly. 3 The statement of claim goes on to allege that a further advance in December 2007 of some $484,000 was made and that security documentation in relevantly identical terms was executed. The plaintiff contended that the second and third defendants guaranteed the first defendant's obligations in respect of the loan to it both on the first occasion and on the second occasion. By the time the proceedings commenced the plaintiff alleged that it had advanced to the first defendant a total sum of almost $745,000. 4 All three defendants filed a defence in this Court on 1 June 2009. I am informed that that document was prepared without the benefit of legal advice to any of the defendants. It is largely in the form of a general denial of liability either by the first defendant for repayment of the loan, or by the second and third defendants as guarantors of the first defendant's obligations. Paragraph 36 of the defence is in the following terms: "The defendants deny that the plaintiff is entitled to any of the claims that it makes in that the first defendant did not contract with the plaintiff, did not at any time borrow moneys from the plaintiff and is not obliged to repay any monies to the plaintiff. The second and third defendants did not at any time guarantee or indemnify the plaintiff with respect to any obligations that the plaintiff alleges that the first defendant owed or owes to it." 5 The second and third defendants swore the usual affidavits deposing to the truth of the defence on behalf of themselves, and the second defendant swore a similar affidavit on behalf of the first defendant in his expressed capacity as its director. In due course the plaintiff made an application for summary judgment, which came before the Chief Judge at Common Law on 27 July 2009. There was no appearance on behalf of the defendants at that time. A transcript of proceedings on that day adequately recalls what occurred. His Honour was satisfied on the basis of the evidence filed by the plaintiff that the plaintiff had "made good its claim and there is no apparent defence to that claim". 6 That judgment is the subject matter of the second and third defendants' application before me. That application proceeds, so I am informed, for relief pursuant to UCPR 36.16(2)(b). That rule provides that the Court may set aside or vary the judgment or order after it has been entered if it has been so made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order. It is at the heart of the second and third defendants' application for an adjournment of this motion today that it can first explain the delay in bringing the present application since the date of the entry of summary judgment and the filing of their motion of 16 October 2009. Secondly, that they can explain, if explanation be required, for present purposes why they failed to appear in response to the plaintiff's application for summary judgment. Thirdly, and perhaps most significantly, that they can establish that they have a defence on the merits. 7 The second and third defendants have each sworn affidavits, although the affidavit of Matthew Howard Paul Daniel sworn 16 October 2009 contains the relevant documentation to which my attention has been drawn. Mr Rusty Moran, the second defendant, has sworn an affidavit in which, for relevant purposes, he adopts the material deposed to by Mr Daniel. Two letters of offer are relevant. The first is dated 9 February 2007 and it is the letter of offer by which the plaintiff set out the terms and conditions upon which it indicated it was prepared to advance $265,000 to the plaintiff. Clause 8 of that letter is headed "Security and Other Documents". It is in the following terms: "Security is to be in the form acceptable to the Lender and its solicitors and is to include, but is not limited to, the following: