Indian Pacific Interiors Pty Ltd v Nichols [2008] NSWSC 911

New South Wales Supreme Court

CITATION : Indian Pacific Interiors Pty Ltd v Nichols [2008] NSWSC 911

HEARING DATE(S) : 27 August 2008

JUDGMENT DATE : 27 August 2008

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 27 August 2008

DECISION : Summons dismissed.

CATCHWORDS : GUARANTEE – SUBROGATION – Whether guarantors discharged debt by paying creditors or lent money to debtors to pay debt – whether right of subrogation arose over creditors' security – whether one guarantor was entitled to appoint receiver.

CATEGORY : Principal judgment

PARTIES : Indian Pacific Interiors Pty Ltd (Admin app) (R&M app) (Plaintiff) Steven Nichols (Defendant)

FILE NUMBER(S) : SC 3988/08

COUNSEL : S.M. Golledge (Plaintiff) J.T. Johnson (Defendant)

SOLICITORS : Stacks/William Oates (Plaintiff) Yates Beaggi (Defendant)

3988/08 Indian Pacific Interiors Pty Ltd (Admin App)(R&M App) v. Nichols

JUDGMENT – Ex tempore

27 August, 2008

1 The Plaintiff, Indian Pacific Interiors Pty Ltd ("the Company") was placed in voluntary administration. The Defendant is the Receiver of the Company appointed by Mrs S.G. Mathews under an equitable charge. The Administrator, in the name of the Company, seeks a declaration that the appointment of the Receiver is invalid. 2 The facts are not in dispute and may be briefly stated. Mrs Mathews was married to Mr Craig Mathews in 1996. Mr Mathews was at all material times the sole director of the Company, which carried on a joinery business. 3 Mrs Mathews had acquired a property at 4 Bayview Avenue, Hyams Beach, in her own name before she was married. In 1997, Mrs Mathews' grandmother agreed to transfer to Mr and Mrs Mathews as joint tenants her property at 24 Bayview Avenue, Hyams Beach in consideration of a promise that they would provide accommodation for her at their property. Mr and Mrs Mathews acquired other properties as joint tenants during their marriage. 4 In June 2005 Mr and Mrs Mathews each executed a separate Deed of Guarantee in favour of the Commonwealth Bank of Australia in consideration of the Bank advancing $500,000 to the Company. In support of those guarantees Mr and Mrs Mathews gave mortgages to the Bank over various properties held by them as joint tenants, including the property at 24 Bayview Avenue, Hyams Beach. 5 On 17 July 2005 the Company executed an all monies equitable mortgage and a floating charge in favour of the Bank as further security for the loan of $500,000. 6 Mr and Mrs Mathews were divorced in March 2006. There was no formal property settlement between them. Mrs Mathews gave the following unchallenged evidence as to what was agreed between herself and Mr Mathews at the time of their divorce: "Craig and I have not entered into any formal property settlement arrangement with respect to division of our assets. During the course of the divorce proceedings, I recall having a conversation with Craig to the following effect: