Abigroup Contractors Pty Ltd v Hausman & Anor - [2008] VSC 441

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 6657 of 2008

ABIGROUP CONTRACTORS PTY LTD (ACN 000 201 516)	Plaintiff
v
DANIEL HAUSMAN & ANOR	Defendants

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	6 & 7 OCTOBER 2008
DATE OF JUDGMENT:	7 OCTOBER 2008
CASE MAY BE CITED AS:	ABIGROUP CONTRACTORS v DANIEL HAUSMAN & ANOR
MEDIUM NEUTRAL CITATION:	[2008] VSC 441

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PRACTICE AND PROCEDURE – Appeal from a Master – Application for summary judgment - Personal guarantees given by directors of a company – Whether an issue to be tried – Terms of guarantee clear and unambiguous and arrived at following negotiation – Evidence adduced by the defendants inconsistent with claim that they were induced to enter the guarantee by representation – Appeal allowed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J.R. Dixon SC with Ms C. Gobbo	Maddocks
For the Defendants	Mr T.J. Walker	DLA Phillips Fox

HIS HONOUR:

Abigroup Contractors Pty Ltd is a construction contractor. In December 2004, it entered into a building contract with a company called 519 St Kilda Road Pty Ltd, (“519 P/L)”, for “the design and construction of the development at 519 St Kilda Road, Melbourne”. (That quotation is from the statement of claim paragraph 2 - an allegation which is admitted in the defence.)

The agreement was later twice varied. The second variation was effected by a document known as “Supplementary Deed No. 2”. It is dated 3 December 2007.

By this time (according to an affidavit sworn in this proceeding on 18 August 2008 by Lance Vincent Hodgkinson, a director of 519 P/L) one of the financiers for the project, Capital Finance Australia Limited, had refused to advance funds because the facility provided by Capital had expired before practical completion.

The negotiations, or some of them, that preceded the entry into Supplementary Deed No. 2 took place, according to Mr Hodgkinson, on 22 November 2007. Abigroup Contractors then demanded payment by 519 P/L of the sum of $3,677,129.50. It also demanded that the directors of that company provide personal guarantees of that payment.

Mr Hodgkinson describes the negotiations in paragraphs 18 to 19 of his affidavit:

I met with Mr Walker [a director of Abigroup Contractors] and another director of Abigroup on 21 November 2007 at Mallesons. Mallesons acted for 519 P/L. Mallesons was represented by Mr Jonathan Oldham. I was informed by the other director (whose name I cannot recall) that unless 519 P/L entered into an agreement to pay that amount and, moreover, provide a security, the plaintiff would be seeking orders to wind up 519 P/L.
I offered a personal guarantee by each of Hausman and myself on terms which 519 P/L had extended terms of payment and was able to set off claims it had against Abigroup. The Abigroup director said he wanted security over assets which I said we could not provide. Mr Oldham and I then left the meeting for a period. When we…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] VSC 441
Decision Date: 7 October 2008

CaseChat Overview and Summary

Abigroup Contractors Pty Ltd sought to recover monies owed by Hausman and another party, who had provided personal guarantees for the debts of a company. The dispute reached the court as an appeal from a Master's decision on an application for summary judgment. The central issue before the court was whether there were any genuine issues to be tried regarding the enforceability of the personal guarantees provided by the directors. The case required the court to determine whether the terms of the guarantee were clear and unambiguous and whether the defendants had been induced to enter into the guarantee by representations that were not substantiated by the evidence.

The court found that the terms of the guarantee were clear and unambiguous, and that the guarantee was the result of negotiation. The defendants had provided evidence that was inconsistent with their claim that they were induced to enter the guarantee by representations. The court concluded that there was no evidence to support the defendants' contention that they had been induced by any misrepresentation or that they had any basis to dispute the enforceability of the guarantee. Given the clarity of the terms and the lack of any evidence supporting an inducement argument, the court found that there were no genuine issues to be tried and that the plaintiffs were entitled to summary judgment.

The appeal was allowed, and the court remitted the matter to the Registrar for entry of judgment in favour of Abigroup Contractors Pty Ltd. The court's decision emphasised the importance of the clarity of contractual terms and the necessity for defendants to provide evidence that substantiates their claims of inducement or misrepresentation. The final orders of the court reflected its determination that the plaintiffs were entitled to recover the outstanding debts, as the guarantees were valid and enforceable.

Orders