SST Consulting Services Pty Limited v Riesen & anor [2001] NSWSC 804

SST Consulting Services Pty Limited v Riesen & anor [2001] NSWSC 804

The alleged third line forcing provisions in the Heads of Agreement incorporated into the Deed of Guarantee were severable from the ordinary and lawful loan repayment and guarantee obligations. SST was not suing to enforce the unlawful exclusive dealing provisions, but on defaults unrelated to those provisions. Removing the unlawful portions did not fundamentally change the contract, leaving a coherent commercial loan and guarantee. Accordingly, the impugned defence and cross-claim disclosed no reasonable defence or claim and were struck out.

Jurisdiction
Australia
Judgment Date
13 September 2001
Procedural Posture
Common Law Division Proceedings on a Statement of Liquidated Claim Against Guarantors, With Interlocutory Notices of Motion Concerning Strike Out, Amendment, Cross Claim and Transfer / Interlocutory Hearing of Notices of Motion
Outcome
SST's strike-out application succeeded; the defendants' transfer motion was dismissed; costs orders were made.
Legal Topics
['guarantee' 'loan Agreement' 'exclusive Dealing' 'third Line Forcing' 'illegality' 'severability' 'strike Out of Pleadings' 'cross Vesting']
['contract Law' 'trade Practices' 'civil Procedure'] ['guarantee' 'loan Agreement' 'exclusive Dealing' 'third Line Forcing' 'illegality' 'severability' 'strike Out of Pleadings' 'cross Vesting']

Case Brief

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Procedural Posture

Common Law Division Proceedings on a Statement of Liquidated Claim Against Guarantors, With Interlocutory Notices of Motion Concerning Strike Out, Amendment, Cross Claim and Transfer / Interlocutory Hearing of Notices of Motion

Legal Issues

  1. 1 ["Whether paragraphs 5, 6, 7 and 8 of the Further Amended Defence and the defendants' cross-claim disclosed a reasonable defence or claim based on alleged third line forcing under the Trade Practices Act 1974 (C'th)." 'Whether the allegedly unlawful exclusive dealing provisions incorporated into the Deed of Guarantee were severable from the remaining obligations under the guarantee.' "Whether the defendants could rely on the alleged contravention of section 47 of the Trade Practices Act as a complete answer to SST's claim on the guarantee." 'Whether the proceedings should be transferred to the Federal Court of Australia if the Trade Practices Act issues were available to the defendants.']

Ratio Decidendi

The alleged third line forcing provisions in the Heads of Agreement incorporated into the Deed of Guarantee were severable from the ordinary and lawful loan repayment and guarantee obligations. SST was not suing to enforce the unlawful exclusive dealing provisions, but on defaults unrelated to those provisions. Removing the unlawful portions did not fundamentally change the contract, leaving a coherent commercial loan and guarantee. Accordingly, the impugned defence and cross-claim disclosed no reasonable defence or claim and were struck out.

Court Disposition

SST's strike-out application succeeded; the defendants' transfer motion was dismissed; costs orders were made.

Orders

  • ["That paragraphs 5, 6, 7 and 8 of the Further Amended Defence and the whole of the defendants' cross-claim be struck out." "That the defendants pay the plaintiff's costs of the plaintiff's Notice of Motion filed on 24 August 2001 as amended on 4 September 2001." 'That the Notice of Motion of the defendants filed on...