Franks v Equitiloan Securities Pty Ltd [2010] NSWSC 693

New South Wales Supreme Court

CITATION : Franks v Equitiloan Securities Pty Ltd [2010] NSWSC 693

HEARING DATE(S) : 24/06/10 JURISDICTION : Equity

JUDGMENT OF : Pembroke J

EX TEMPORE JUDGMENT DATE : 24 June 2010

DECISION : See judgment paragraph 24

CATCHWORDS : CONSTRUCTION - undertaking to court - context and surrounding circumstances

LEGISLATION CITED : Civil Procedure Act 2005

CATEGORY : Principal judgment

Bryant & Anor v Keith Harris & Co Ltd & Ors (1980) 33 ALR 437 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 CASES CITED : Franks v Equitiloan Securities Pty Ltd (No 2) [2008] NSWSC 456 Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Reardon Smith Line Ltd v Hansen-Tangen (1976) 1 WLR 989

Phillip Maurice Franks - Plaintiff PARTIES : Equitiloan Securities Pty Ltd - First Defendant Equitiloan Limited - Second Defendant

FILE NUMBER(S) : SC 2000/00037510

COUNSEL : M W Sneddon with C Alexander for the plaintiff J Hogan-Doran with B Kaplan for the defendant

SOLICITORS : DTA Lawyers - Plaintiff Tucker & Cowen - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

PEMBROKE J

THURSDAY 24 JUNE 2010

00/27510 - PHILLIP MAURICE FRANKS v EQUITILOAN SECURITIES PTY LIMITED

EX TEMPORE JUDGMENT - On amended notice of motion and costs

1 HIS HONOUR: This is an application brought pursuant to an amended notice of motion dated 18 June 2010. I will grant leave to amend the original notice of motion. That leave is neither opposed nor consented to by the respondent. 2 The applicant on the notice of motion is the plaintiff in the proceedings. The original notice of motion sought orders that the second defendant be found guilty of contempt for failure to comply with an undertaking given on 13 November 2000. The underlying dispute between the parties relates to the meaning and the content of that undertaking. 3 The amended notice of motion was not brought into existence until 18 June 2010. The original notice of motion was filed on 27 April 2010. I am prepared to make an order granting leave to file the amended notice of motion on the basis that, arguably, an issue as to the proper construction and meaning of an undertaking given to the Court comes within s 73(1)(a) of the Civil Procedure Act. I regard the argument as weak, but it is necessary for me in any event to consider the substance of the applicant's submissions. 4 The terms of the undertaking given on 13 November 2000 were as follows: 1. Defendant pay Plaintiff's costs up to and including 25 October 2000 and Plaintiff to pay costs thereafter. 2. Equitiloan Limited be joined as Second Defendant to the proceedings. 3. Note the undertaking given to the Court by the Second Defendant that, upon tender by the Plaintiff to the Defendants of the amount due under mortgage 5353835W and Floating Charge number 666712 (together "the Mortgage") it will join with the First Defendant in doing all such things and executing all such documents as are necessary to cause the Mortgage to be discharged. 4. Note the undertaking given to the Court by the Second Defendant that it will pay to the Plaintiff any amount which is found by a Court to have been paid by the Plaintiff to the Defendants (or either of them) in excess of the amount found to be due by the Court in respect of the Mortgage. 5. Order that the oral application for relief by reference to para. 7C of the Amended Summons is dismissed. 5 It is obvious that there are several discrete elements in the language of the undertaking set out in paragraph 4. The first is that it is directed only to any amount which is found by a Court to have been paid by the plaintiff to the defendants or either of them. The second discrete element is that any such amount so found must have been an amount in excess of the amount found to be due by that Court under the mortgage. 6 To my mind it is immediately apparent that on the proper construction of the undertaking, having regard to its language and syntax, and the structure that the parties have chosen, and taking into account the discrete elements that it contains, it cannot be made to apply so as to cover the costs of the proceedings incurred by the plaintiff. 7 It is well accepted that the construction of an undertaking given to a Court will inevitably involve consideration of the surrounding circumstances, including the context in which the undertaking was given, and will require reference to the issues in the underlying proceedings and the competing allegations of the parties. The parties did not disagree about the applicable principles: Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 at 569 per Allsop J; Bryant & Anor v Keith Harris & Co Ltd & Ors (1980) 33 ALR 437 at 449-450 per Lockhart J. 8 There is no separate principle that requires any additional leniency or generosity in construing an undertaking compared to that which would apply in the construction of a contract. The question is, what do the words mean, and if there is any ambiguity about the words, or even perhaps if there is no patent ambiguity, what was the context in which those words were made, so as to elucidate their meaning - conformably with the language chosen by the parties in the circumstances which prevailed at the time: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462. See also Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 350; Reardon Smith Line Ltd v Hansen-Tangen (1976) 1 WLR 989 at 995-996 per Lord Wilberforce.