Supreme Court New South Wales Medium Neutral Citation: Capital Finance Australia Limited v Amargianitakis [2011] NSWSC 719 Hearing dates: 11/07/2011 Decision date: 11 July 2011 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Judgment for plaintiff with costs. Judgment for cross-defendant with costs. Catchwords: GUARANTEE AND INDEMNITY - enforcement of guarantee - no question of principle. Legislation Cited: Civil Procedure Act 2005 (NSW) Category: Principal judgment Parties: Capital Finance Australia Limited ACN 069 663 136 (Plaintiff) Dimitri Amargianitakis (First Defendant) Elizabeth Anita Amargianitakis (Second Defendant) Representation: Counsel: P J Dowdy (Plaintiff) Dimitri Amargianitakis (In person) Elizabeth Anita Amargianitakis (In person) Solicitors: Henry Davis York (Plaintiff) Dimitri Amargianitakis (In person) Elizabeth Anita Amargianitakis (In person) File Number(s): 2011/54392 Judgment - ex tempore 1HIS HONOUR: The plaintiff sues the defendants as guarantors of two loans made by the plaintiff. One loan was made to a company known as Vista Capital Pty Ltd. The other was made to a company known as Vista Capital Developments Pty Ltd. Each of the loans was made to enable the borrower to undertake some property development. Each of the borrowers mortgaged to the plaintiff the relevant property. In addition, the defendants gave written guarantees to the plaintiff of the relevant borrower's obligations under the relevant loan facility agreement. The plaintiff has appointed receivers and managers to each of the borrowers. 2The allegations made in the commercial list statement in support of the plaintiff's case have, in large part, been admitted. In particular, the making of the various agreements to which I have referred has been admitted, as have the terms of those agreements on which the plaintiff relies. Although there is a non-admission of the making of advances to the borrowers pursuant to the respective facility agreements, the evidence (including by way of a Dobbs certificate) satisfies me that the advances have been made. 3The allegations, in the commercial list statement, that the borrowers have made default have been either not admitted or denied. However, again, the Dobbs certificate to which I have referred overcomes that problem because in terms it certifies the amount of the indebtedness of each of the defendants to the plaintiff. 4The making of demands under the guarantees has been admitted. Although the calculation of the amount of the debt is not disputed, the defendants deny that they are liable for the amount of the debt. 5In truth, such issues as there might have been arise not by way of contest of the elements of the plaintiff's causes of action in respect of each of the loans, but, rather, by way of assertion that the plaintiff owed, and breached, various duties: for example, to sell the mortgaged properties at some earlier time, thereby reducing the liability (if any) that would ultimately fall upon the defendants as guarantors. Those defences are reinforced by way of a cross-claim. 6There are three real difficulties with the nature of the defences. The first is that they assert duties, which in general, do not form part of the general legal relationship of principal and surety. The second is that in many ways they are flatly inconsistent with the terms of the guarantee documents, and it is clear that guarantors may, if they wish, bargain away rights that otherwise they might have by virtue of their position as guarantors. In this case, the guarantee documents have precisely that effect. 7The third, and fundamental, difficulty is that there is simply no evidence to support the allegations of fact which necessarily underpin these elements of the defences. In other words, even if in some way the foregoing problems could be made good (and I do not mean to suggest that they might be capable of being made good), nonetheless there is no evidence that would support the hypothetical defences theoretically available in those circumstances. That situation has arisen because, after I ruled against the defendants in respect of a notice to produce (see my reasons on that given earlier this morning) Mr Amargianitakis, who spoke for both defendants, stated that the defendants would not go into evidence and would reserve their rights for the Court of Appeal. 8The consequence is that I am satisfied, on the basis of the evidence to which I have referred (which includes not only the Dobbs certificate but also the various facility documents and the guarantees), that the plaintiff has made good its case in chief against the defendants. I am satisfied that the matters asserted by way of defence (whether in the commercial list response or as I summarised them in my reasons given on the notice to produce) are not made out. It follows inevitably that the plaintiff is entitled to judgment in the amount certified by the Dobbs certificate. 9The plaintiff also claims costs on the indemnity basis. The guarantee documents entitle the plaintiff to costs on the solicitor and client basis. It may be there is no practical difference between the solicitor and client basis and the indemnity basis, but where what is sought is a right arising under a contract, it seems to me to be safer to use the language of the contract unless there is some good reason for doing otherwise. 10Accordingly I make the following orders: (1) I direct entry of judgment for the plaintiff against each of the defendants in the sum of $30,585,452.17. (2) I direct that interest accrue on the said judgment debt in accordance with s 101 of the Civil Procedure Act 2005 (NSW). (3) I order the defendants to pay the plaintiff's costs of the proceedings (including the cross-claim) on the solicitor and client basis. (4) I direct entry of judgment for the cross-defendant against the cross-claimants on the cross-claim. (5) I order that the costs of the cross-claim be payable as part of the costs of these proceedings. (6) I direct that the exhibits be retained for 28 days and thereafter be dealt with in accordance with the rules. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 July 2011