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- Neilsens Concrete Pty Ltd v Heath & Ors[2013] QDC 164
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Neilsens Concrete Pty Ltd v Heath & Ors[2013] QDC 164
Neilsens Concrete Pty Ltd v Heath & Ors[2013] QDC 164
DISTRICT COURT OF QUEENSLAND
CITATION: | Neilsens Concrete Pty Ltd v Heath & Ors [2013] QDC 164 |
PARTIES: | NEILSENS CONCRETE PTY LTD and GEOFFREY HEATH (First Defendant) and TIMOTHY JOHN HARDERS (Second Defendant) and CHRISTOPHER SIMON HARDERS (Third defendant) |
FILE NO/S: | 4645/12 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | Brisbane |
DELIVERED ON: | 19 July 2013 |
DELIVERED AT: | Rockhampton |
HEARING DATE: | 11 July 2013 |
JUDGE: | Smith DCJ |
ORDER: |
|
CATCHWORDS: | PRACTICE AND PROCEDURE- Summary Judgment- whether issues to be tried CONTRACT- GUARANTEE- whether a guarantor- whether acceptance of the contract Competition and Consumer Act 2010 (Cth) Evidence Act 1977 (Q) s 59 Property Law Act 1974 (Q) s 56 Uniform Civil Procedure Rules 1999 (Q) R. 292, 293 ACCC v C.G. Berbatis Holdings Pty Ltd (2003) 214 CLR 51 Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549 Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan and Co Ltd (1919) 26 CLR 410 Clark Equipment Credit of Australia v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160 Crane Distribution Ltd v Brown [2011] QSC 90 Crescendo Management Pty Ltd v Westpac (1988) 19 NSWLR 40 CSR Ltd v Casaron Pty Ltd and Ors. [2002] QSC 21 D and D Property Holdings Pty Ltd v Davidovic [2012] NSWDC 162 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Kakavas v Crown Melbourne Ltd [2013] HCA 25 Linddales Pty Ltd v Macri Constructions Pty Ltd and Anor [2005] QSC 136 Paradise Constructors Pty Ltd v Lofts Quarries Pty Ltd [2003] VSC 370.
Spencer v The Commonwealth [2010] HCA 28 Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604 Carter et al “Contract Law in Australia” 5th ed. 2007 O'Donovan and Phillips “The Modern Contract of guarantee” 3rd ed.1996 Rowlatt on Principal and Surety 4th ed. Marks and Moss 1982 |
COUNSEL: | Mr. B. Porter for the Plaintiff Mr. P. Hackett for the Defendant |
SOLICITORS: | Johnson Winter and Slattery for the Plaintiff No appearance for the First and Second Defendants Rose Litigation lawyers for the Third Defendant |
Introduction
- [1]This is an application by the Plaintiff for summary judgment in the sum of $445,127.30 plus interest and costs against the Defendants pursuant to UCPR r292 based on guarantee purportedly entered into by them.
- [2]There is a cross-application by the Third Defendant for judgment in his favour under UCPR 293 alleging that he did not enter into the guarantee.
Principles
- [3]French CJ and Gummow J in Spencer v The Commonwealth [2010] HCA 28 said at [24]:
“The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said:
‘The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.’
More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following:
‘Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.’”
- [4]I bear these principles in mind in deciding these applications. I also bear in mind that each party has the onus of proving its application. Ultimately of course the Plaintiff must prove its case on the balance of probabilities.
- [5]I also note that in some circumstances a court can consider an application is an inappropriate disposition of a matter without an oral hearing (see r491 discussed by Fryberg J in Crane Distribution Ltd v Brown [2011] QSC 90).
The pleadings
- [6]In the Statement of Claim it is alleged that the Plaintiff carried on the business of supplying concrete products.
- [7]It is alleged that the Defendants were directors of Insite Concreters Pty Ltd (“Insite”). It is alleged between 3 July 2012 and 25 October 2012 the Plaintiff supplied concrete to Insite on terms that Insite would pay within 30 days of the supply.
- [8]In para 3 it is alleged that on 18 October 2012 pursuant to a guarantee and indemnity and in consideration of the Plaintiff agreeing to continue to supply Insite with goods and services, the Defendants jointly and severally agreed to guarantee to the Plaintiff the due payment for all goods and services which the Plaintiff may have previously supplied to Insite or which they might supply to Insite into the future.
- [9]The Defendants were originally represented by Cronin Litigation Lawyers. A defence was filed on 26 February 2013. In that defence the Defendants denied para3 of the statement of claim and alleged that the guarantee and indemnity was unenforceable because it was signed by the First Defendant and the Second Defendant as a result of the Plaintiff exerting undue influence and duress over them which details are particularised.
- [10]It is further alleged the Plaintiff’s conduct engaged in misleading and deceptive conduct and/or unconscionable conduct pursuant to the Competition and Consumer Act 2010 (Cth). The Third Defendant denied he was a guarantor and alleged he had no liability.
- [11]A reply was delivered by the Plaintiff denying allegations of undue influence and alleging that the Third Defendant did sign the guarantee and indemnity.
- [12]In an amended defence of the Third Defendant filed 9 July 2013 it was alleged that the Third Defendant was not liable to the Plaintiff as:
- (a)It was expressly agreed in the credit application there would be a credit limit of $20,000;
- (b)There was no consideration given for the guarantee; and
- (c)The Third Defendant was not identified as a guarantor.
- [13]At the time this application was heard, Rose Litigation Lawyers were only acting on behalf of the Third Defendant.
- [14]Mr. Powell deposes to the fact that on 18 June 2013 he forwarded to the solicitors for the defendants a copy of the application filed 14 June 2013 (the application for summary judgment) and a copy of the affidavit of Mr. Williams in support.
- [15]The email (JDP2) is to Rose Litigation lawyers. At that point in time Rose Litigation lawyers acted for all three defendants (see Notice of Change of Solicitors filed 19 April 2013).
- [16]I am satisfied that service has been effected under the rules (Rule 112).
- [17]I am satisfied based on the information given to me that the First and Second Defendants are aware of this application (see T1-4.35-5.5).
Submissions by counsel
- [18]I have had regard to the written and oral submissions made by counsel.
- [19]Counsel for the Third Defendant submitted that summary judgment should not be granted in favour of the Plaintiff against his client and indeed submitted that summary judgment should be given in favour of the Third Defendant. The Third Defendant made the following submissions:
- (a)There was no acceptance by the Plaintiff of the second credit application;
- (b)The second credit application was merely an offer on the part of Insite;
- (c)The Third Defendant is not a named guarantor on either the First and Second guarantee;
- (d)It could not be proved that the Third Defendant had in fact signed the guarantee.
- (e)There was a credit limit of $20,000.
- (f)There was no consideration.
- [20]In response the Plaintiff’s counsel submitted:
- (a)There was a circumstantial case that the Third Defendant had signed the guarantee;
- (b)There was acceptance at least by conduct of the terms of the second guarantee;
- (c)A proper reading of the material would lead one to the conclusion that the Third Defendant was a guarantor;
- (d)There was proper consideration for the second guarantee.
- (e)There was no credit limit.
The facts
- [21]Mr Steven Williams, the chief financial officer of the Plaintiff has sworn three affidavits, the first dated 13 June 2013, the second dated 5 July 2013 and the final dated 10 July 2013.
- [22]Mr Williams exhibits as SW1 a copy of a credit application signed by Insite on 29September 2011. That document shows that Geoffrey Heath (the First Defendant) and Timothy Harders (the Second Defendant) applied for a 30 day credit account on or about 29 September 2011. The credit limit required was said to be $20,000. The guarantee and indemnity is at page four of that document.
- [23]The guarantors were said to be Geoffrey Heath and Timothy John Harders.
- [24]It seems clear that from March 2012 until October 2012 concrete and concrete products were supplied by the Plaintiff to Insite.
- [25]It also seems clear that Insite started to have financial difficulties.
- [26]On 5 July 2012 the First Defendant called Mr Williams to advise that payment due to Insite from its clients had been delayed. With respect to $250,000 owed by Insite to the Plaintiff he proposed paying $100,000 on 15 July 2012 and $200,000 by 29 July 2012 (see [6] First affidavit of Mr. Williams).
- [27]Mr Williams says that $100,000 was received on 15 July 2012 but on 16 July 2012 he received an email from the First Defendant stating:
“We will pay a minimum of $200,000 at the end of July. I will make contact with you at that time regarding the balance.” (SW4).
- [28]On 1 August 2012 Mr Williams advised Insite that $190,000 remained owing (SW5).
- [29]The First Defendant Geoff Heath by email dated 2 August 2012 (SW6) advised that it was intended that a minimum of $175,000 would be paid by the end of August with the balance by the end of September.
- [30]SW7 is an email from MrWilliams dated 27 August 2012 asking for confirmation of the amount and dates the funds would be deposited.
- [31]On 29 August 2012 the Third Defendant wrote concerning difficulties Insite had with not being paid (SW8).
- [32]On 29 August 2012 Mr Williams replied (SW9) advising the Third Defendant the amounts due were:
- (a)June $165,851.48 due 31 July
- (b)$199,960.75 for July due 31 August
- (c)August so far is $78,000 due 30 September
- [33]He wanted to talk to someone regarding obtaining security on the Insite account.
- [34]MrWilliams deposes that on 3 September 2012 there was a meeting at Neilsens’ office at Johnstone Road, Brendale at which the CEO of Neilsens (Mr. Pannucio), Mr Williams, the First Defendant Geoff Heath and the Third Defendant Christopher Harders were present (see [13] first affidavit of Mr. Williams).
- [35]The directors of Insite gave reasons why cash flow was an issue for them; the main reason being that payments were being delayed by Matrix at a Ferny Grove job.
- [36]Mr Panuccio said he wished to continue the relationship into the future and would like to work through the cash flow issue.
- [37]The Insite directors indicated that payments of $170,000 would be made in the following two days and the balance of the accounts outstanding would be paid by the end of the month.
- [38]Mr Panuccio agreed with this as long as Insite provided details of the jobs “won” and quoted register and financial reports. He also required a new credit application supported by personal guarantees.
- [39]The directors indicated that personal guarantees would not be necessary but MrPannucio indicated that additional security would be needed.
- [40]At 3.12 p.m. on 3 September 2012 the Third Defendant by email to Mr Williams confirmed a schedule of repayments and attached a balance sheet and profit and loss statment. It was said:
“Once again thank you for your understanding of this cash flow hiccup.” (SW10).
- [41]On 4 September 2012 Mr Williams (SW11) acknowledged receipt of the email noting that Insite was going to supply the aged trial balances for debtors and creditors together with evidence of future contracts won.
- [42]On 2 October 2012 the First Defendant by email (SW12) noted that at the previous meeting they declined to offer personal guarantees but as they had not received payments associated with the Ferny Grove Train Station they wanted to give some surety in regards to outstanding money.
- [43]On 9 October 2012 Mr Williams by email (SW13) attached a credit application addressed to all three defendants asking for it to be returned as soon as possible asking for an update with regard to their present cash flow situation.
- [44]The Third Defendant on 17 October 2012 received an email from Melissa Ford, the credit manager noting that they had not yet received the credit application. The Third Defendant replied later that day stating that he would get it completed and would return it as soon as possible. He said it was the first he had seen of it (SW14). This tends to indicate that he had not seen the earlier email from MrWilliams (SW13).
- [45]SW15 is the application for credit account. The following is to be noted in the document:
- (a)All three Defendants were noted as directors on p1. (p.61 Mr. Williams first affidavit)
- (b)It was noted (“all applicants must sign the personal guarantee”).
- (c)There was no credit limit.
- (d)The document (at p2) was signed for and on behalf of the applicant by the Third Defendant and dated 18 October 2012.
- (e)There is no written acceptance by the Plaintiff.
- (f)Page 4 contains the guarantee and indemnity.
- (g)Crucially it provided: “in consideration of Neilsen’s Quality Gravels Pty Ltd and Neilsen’s Concrete Pty Ltd at my/our request having agreed to supply and/or continue to supply Insite Concreters Pty Ltd (the applicant described on page 1 hereinafter called ‘the Debtor’) with goods or services or both goods and services from time to time and extending credit to the Debtor in connection with payment therefore and in consideration of Neilsen’s Quality Gravels Pty Ltd and/or Neilsen’s Concrete Pty Ltd in compliance with a further request which I/we hereby make to Neilsen’s Quality Gravels Pty Ltd and Neilsen’s Concrete Pty Ltd forbearing immediately to sue the Debtor for any money now due owing or remaining unpaid by the Debtor to Neilsen’s Quality Gravels Pty Ltd and/or Neilsen’s Concrete Pty Ltd (if any) I/we the parties described below as the Guarantor (‘the Guarantor’) hereby jointly and severally agree with Neilsen’s Quality Gravels Pty Ltd and Neilsen’s Concrete Pty Ltd as follows:
‘1 To be answerable and responsible for and to guarantee to Neilsen’s Quality Gravels Pty Ltd and/or Neilsen’s Concrete Pty Ltd the due payment by the Debtor for all such goods and services as Neilsen’s Quality Gravels Pty Ltd and/or Neilsen’s Concrete Pty Ltd may heretofore have supplied or which Neilsen’s Quality Gravels Pty Ltd and/or Neilsen’s Concrete Pty Ltd may hereafter time to from time (sic) at the Debtor’s request supply to the Debtor according to the terms and conditions agreed on between Neilsen’s Quality Gravels Pty Ltd and Neilsen’s Concrete Pty Ltd and the Debtor from time to time notwithstanding the Guarantor shall not have notice of any neglect or omission on the Debtor’s part to pay for such goods and services or both and notwithstanding the Guarantor shall not have notice of any change to such terms and conditions.
2 That this Guarantee and Indemnity shall constitute a continuing obligation to Neilsen’s Quality Gravels Pty Ltd and Neilsen’s Concrete Pty Ltd for the whole debt which shall be contracted by the Debtor with Neilsen’s Quality Gravels Pty Ltd and Neilsen’s Concrete Pty Ltd in respect of goods or services or both supplied or to be supplied to the Debtor as aforesaid.’”
- [46]Then later in the body of the document there is a heading called “the Guarantor” with only the First Defendant’s name and the Second Defendant’s name.
- [47]There are three signatures along the line “signed by the said Guarantor in the presence of (Stephen Farrington)”.
- [48]The signature at the far right may be consistent with the signature of the Third Defendant. The other two signatures are certainly consistent with being signed by the First Defendant and the Second Defendant.
Issues concerning the Third Defendant
Can the signature be proved?
- [49]The Third Defendant has not filed any material proving that the signature is not his. He is not obliged to.
- [50]There is no material from a witness who was present when the signature was made.
- [51]The court is left to determine whether the Plaintiff can establish it is the Third Defendant’s signature circumstantially.
- [52]It seems to me that the signature underneath the “guarantor” is consistent with the signature of the Third Defendant on other documents (see p62 of MrWilliams’ affidavit and p65). He also appears to have been a witness to the first guarantee (p2 and p4).
- [53]I infer in light of the email traffic between the Plaintiff and the Third Defendant an inference can be drawn that on the balance of probabilities the signature on the line underneath “the guarantor” is that of the Third Defendant.
- [54]I have inspected the signatures and find that the signature on the guarantee is sufficiently similar to the other signatures of the Third Defendant (see section 59(2) of the Evidence Act 1977 (Q)).
Did the Third Defendant enter into the guarantee?
- [55]In my respectful opinion there is a triable issue on this point.
- [56]Primarily this is a matter of construction of the document, although it well may be that parol evidence is admissible at trial.
- [57]Turning to the issue of construction I note that the first paragraph of the guarantee and indemnity refers to “the parties described below as the guarantor (the guarantor)”.
- [58]The only two guarantors are the First Defendant and the Second Defendant.
- [59]It is true that the Third Defendant’s signature appears to be on the line next to the signatures of the First Defendant and the Second Defendant but the fact be he is not named as guarantor.
- [60]On the other hand it may be considered that the document is ambiguous i.e. was the Third Defendant a guarantor or not? In such circumstances extrinsic evidence may be admitted (see for example Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan and Co Ltd (1919) 26 CLR 410 and Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604).
- [61]I also note that Giles J in Clark Equipment Credit of Australia v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160 at 174 accepted that evidence of the surrounding circumstances concerning the affixing of the signature is permissible in some circumstances.
- [62]There may be a legal debate about the extent of this (see also D and D Property Holdings Pty Ltd v Davidovic [2012] NSWDC 162 at [38]-[53])
- [63]I accept the Third Defendant’s submission that the usual rule is that ambiguous contractual provisions should be strictly construed in favour of the surety (see Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549 at 561) but that is a principle which can be applied at trial.
- [64]In those circumstances there is a real question to be tried as to whether he was a guarantor and further whether s 56 of the Property Law Act 1974 (Q) has been complied with insofar as the Third Defendant is concerned.
Acceptance
- [65]As noted above it appears that the guarantee was not accepted in writing by the Plaintiff.
- [66]Mr Williams does not depose specifically as to acceptance.
- [67]Now the guarantee at the top has a fax date and stamp as 22 October 2012 10.23a.m.
- [68]Mr Williams deposes that this was received by the Plaintiff on 22 October 2012.
- [69]The evidence discloses that there were two more deliveries after 22 October 2012, namely 24 October 2012 and 25 October 2012 (see page 38 Mr. Williams’ affidavit).
- [70]In a further affidavit Mr. Williams deposes that there were also a number of deliveries on 22 October 2012 after 10.23 a.m.
- [71]A guarantee is not binding until the creditor acts on it and performs the consideration (see Rowlatt on Principal and Surety 4th ed. Marks and Moss at p68).
- [72]It has been previously held that there may be acceptance by conduct (see Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523).
- [73]In my view there is evidence of acceptance by conduct by the Plaintiff of this guarantee.
No consideration
- [74]In my opinion there is sufficient consideration to support this guarantee. At the time it was entered into Insite owed in excess of $400,000 to the Plaintiff.
- [75]There had been detailed discussions as to security for this debt.
- [76]The consideration was expressed to be “forbearing immediately to sue”
- [77]I note in O'Donovan and Phillips “The Modern Contract of guarantee” 3rd ed.1996 at pp 55- 56 it was said that the agreement of a creditor to forbear from suing the principal for a past debt will constitute good consideration. (also see Carter et al “Contract Law in Australia” 5th ed. 2007).
Past consideration
- [78]It is my opinion that a construction of the guarantee is such that it covered past debts.
- [79]Mr Hackett correctly conceded so much in his submissions.
The credit limit defence
- [80]An issue has been raised that the guarantee is limited to the sum of $20,000.
- [81]The Third Defendant relies on Paradise Constructors Pty Ltd v Lofts Quarries Pty Ltd [2003] VSC 370 by way of a consideration of a contrary guarantee.
- [82]Mr. Hackett submits that the second guarantee is limited to the credit limit contained in the first guarantee.
- [83]With respect I do not agree.
- [84]By the time the second guarantee was executed in excess of $400,000 was owed by Insite.
- [85]On the evidence it appears the second guarantee does not contain any such limit.
- [86]The terms of the guarantee cover “…the due payment by the Debtor for all such goods and services… as may heretofore have supplied.” (also see clause 2 where the whole debt is covered.)
- [87]In my opinion “The terms and conditions agreed on” is not limited to the credit limit.
- [88]It is clear that Insite agreed to pay for all goods and services it received even if in excess of $20,000.
- [89]I accept the Plaintiff’s submissions as to the construction of the guarantee (see [45]-[46] of the Plaintiff’s submissions).
- [90]I apply what Chesterman J stated in Linddales Pty Ltd v Macri Constructions Pty Ltd and Anor [2005] QSC 136 at [8] and [9] and consider that the second guarantee is not so limited.
Conclusion as to the Third Defendant
- [91]In those circumstances I consider that there is a triable issue here concerning the claim against the Third Defendant.
- [92]However I do not consider this is a case in which summary judgment should be entered in favour of the Third Defendant.
- [93]As I have indicated there may be issues of intention and admissible extrinsic evidence relevant to whether the Third Defendant was a guarantor.
- [94]In those circumstances I am not prepared to enter summary judgment either in favour of the Plaintiff or in favour of the Third Defendant.
First and Second Defendants
- [95]The defence of the First and Second Defendant pleads undue influence, duress and breaches of the Competition and Consumer Act 2010 (Cth).
- [96]The First and Second Defendants have not sworn to these matters in response to this summary judgment application. This is a relevant consideration (see CSR Ltd v Casaron Pty Ltd [2002] QSC 21 at [16].)
- [97]Having read the sworn evidence of Mr. Williams I am satisfied the second guarantee was entered into regularly in the course of a usual business transaction.
- [98]I note it is clear from ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at [14] that unconscionable conduct is not to be confused with the taking advantage of a superior bargaining position.
- [99]The mere seeking of a security for an existing debt in order to continue to provide concrete supplies in the present circumstances does not involve illegitimate pressure (see Crescendo Management Pty Ltd v Westpac (1988) 19 NSWLR 40 at 45-46.)
- [100]I am not satisfied on the evidence that there was victimisation of the defendants (see Kakavas v Crown Melbourne Ltd [2013] HCA 25 at [18]).
Conclusions
- [101]I am satisfied on the balance of probabilities on the material there are no triable issues insofar as the First and Second Defendants are concerned.
- [102]In the circumstances I propose to enter judgment against the First and Second Defendants in favour of the Plaintiff in the sum of $445,127.30 plus interest in the sum of $25, 731.45 plus costs on an indemnity basis as agreed or assessed.
- [103]I dismiss the application by the Plaintiff against the Third Defendant and dismiss the Third Defendant’s application against the Plaintiff.
- [104]I will hear the Plaintiff and the Third Defendant on the issue of costs.