Willaire Pty Ltd v Equititrust Ltd [2012] QSC 3



Willaire Pty Ltd v Equititrust Ltd [2012] QSC 3

(a)What relief was the Applicant seeking in this matter?

Willaire executed a mortgage in favour of Equititrust to secure a third party's loan - Equititrust forwarded a mortgage document for execution - Willaire returned that document with an addition page limiting its liability under the mortgage - held: Equititrust did not agree to limit Willaire's liability under the mortgage - Equititrust completed the transaction under unilateral mistake induced by Willaire's conduct - rectification available for unilateral mistake where mistake induced by fraud of the non-mistaken party - rectification ordered - Willaire ordered to be wound up.

(b)Why was Applicant successful / unsuccessful?

The original application leading to the costs order against Willaire in favour of Equitirust was brought by Willaire to try to prevent Equitirust appointing receivers over Willaire and to set aside a statutory demand for $3,000,000. Willaire was unsuccessful in those applications before Applegarth J. That was in Equititrust Ltd v Gamp Development Pty Ltd where the costs order was made by his Honour on 17 September 2010.

The statutory demand was, however, set aside in the Court of Appeal in an appeal in a separate action, on the basis that the debt on which the statutory demand was based may have arisen out of a “limited recourse” form of security where the claimed debt was only able to be satisfied out of the net proceeds of sale of particular secured property. Willaire received an order for costs in its favour on that appeal. It had also received a costs order in its favour from Applegarth J in September 2010 in respect of a separate application for indemnity costs.

It has been difficult for Willaire to estimate its costs reliably or to have them assessed as the relevant files are held by its former solicitors. It is in dispute with those solicitors and it appears that the file is being held in the exercise of a lien for those solicitors' costs.

The issue whether the obligation said to bind Willaire is a limited recourse security is to be litigated at a trial where, I understand, rectification is also to be sought in respect of the relevant security documents and the action is being heard at the same time as an application to wind up Willaire. The argument for Willaire is that, to force it to pay the costs order outstanding against it, will “stymie” its ability to prosecute that further litigation. There is no evidence, however, of what Willaire's assets are otherwise or of how the enforcement of the costs order will prevent it from defending itself against the winding up application.

(c)What is a statutory demand?

In Australia, trust law is under the jurisdiction of state governments, and the legislation often interacts with Corporations law and Family tax law. Equity still regulates trust law to a significant extent, and Australian law has often followed English developments. A quick glance at the court lists of either the ...