Adisan Pty Ltd v Irwin - [2014] NSWSC 1043

Supreme Court

New South Wales

Medium Neutral Citation: Adisan Pty Ltd v Irwin [2014] NSWSC 1043
Hearing dates: 23 & 24 June 2014
Decision date: 01 August 2014
Jurisdiction: Common Law
Before: Nicholas AJ
Decision:
(1) The plaintiff's second further amended statement of claim be dismissed.
(2) The plaintiff pay the first defendant's costs.
(3) Pursuant to s 87(2)(ba) of the Trade Practices Act, order made that the plaintiff's claim be refused.
(4) Direct that the orders be entered forthwith.

Catchwords: GUARANTEE AND INDEMNITY - loan agreement contained guarantee by first defendant - principal not repaid according to loan terms - variation of loan agreement executed to provide extension of time in which to pay - variation agreement contained guarantee by co-guarantor - lender and co-guarantor agreed to cap liability of co-guarantor - first defendant not aware of capping arrangement - whether first defendant bound by variation of loan agreement
Legislation Cited: Trade Practices Act 1974 (Cth)
Cases Cited: Ankar Pty Ltd v National Westminster Finance (Australia) Limited (1987) 162 CLR 549; (1987) HCA 15
Category: Principal judgment
Parties: Adisan Pty Limited (Plaintiff)
Craig Irwin (First Defendant)
James Vertzayias (Second Defendant)
Representation: Counsel:
A Di Francesco (Plaintiff)
P Bolster (First Defendant)
D Hand (Cross-Defendant/Second Cross-Claimant)
Solicitors:
Wood Marshall Williams (Plaintiff)
Verekers Lawyers (First Defendant)
Yates Beaggi Lawyers (Cross-Defendant/Second Cross-Claimant)

File Number(s): 2012/101107

Judgment

The proceedings as finally heard and determined concerned the plaintiff's claim against the first defendant, Mr Craig Irwin (Mr Irwin), under a guarantee in respect of a loan by the plaintiff to the sixth defendant, Globe Projects (Mclntyre) Pty Ltd (Globe), now known as Lamaison Gordon Pty Ltd, and the ninth defendant, Southern Cross Developments (Mclntyre) Pty Ltd (SCD).

In 2007 SCD and Globe, were involved in a joint venture for the development of a property at Mclntyre Street, Gordon New South Wales.

Under a loan contract made on 12 April 2007 (the loan contract) the plaintiff agreed to lend SCD and Globe the amount of $600,000 with interest at the rate of 18 per cent per annum, capitalised annually. The loan was guaranteed under a guarantee and indemnity of 12 April 2007 by Mr Irwin, the second defendant, Mr James Vertzayias, the third defendant, Mr Lewis Yazbek, the fourth defendant, Mr Richard Yazbek, the fifth defendant, Mr Andrew Box, and the seventh defendant, Southern Cross Constructions (NSW) Pty Ltd.

On 19 March 2009 the loan contract was varied by an agreement entitled "Deed of Variation of Loan Contract" (the variation deed). The parties were the parties to, and guarantors of, the loan contract, and the eighth defendant, Bingemann Holdings Pty Ltd (Bingemann). The loan contract, as varied, was guaranteed by Bingemann under a guarantee and indemnity of 19 March 2009.

Except as against the first defendant, the outcome of these proceedings with respect to the various defendants was as follows:

"(a) 1 The 2nd Defendant (James Vertzayias) became bankrupt in 2012 and the Plaintiff has not sought leave of the Court to proceed against him.

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: [2014] NSWSC 1043
Decision Date: 01 August 2014

CaseChat Overview and Summary

The case before the court involved Adisan Pty Ltd, the plaintiff, and Irwin, the first defendant, along with another co-guarantor, the second defendant. The dispute centred on a loan agreement wherein the first defendant provided a guarantee. The plaintiff alleged that the principal was not repaid as per the terms of the loan agreement. The plaintiff sought to enforce the guarantee provided by the first defendant. The first defendant contended that a variation of the loan agreement had been executed, which included a guarantee by the second defendant, and that there was a capping arrangement on the liability of the second defendant, which the first defendant was unaware of. The court was required to determine whether the first defendant was bound by the variation of the loan agreement.

The central legal issue was whether the first defendant, who was not a party to the variation of the loan agreement, was bound by the variation. Additionally, the court needed to decide whether the first defendant's liability was subject to the capping arrangement agreed upon between the lender and the second defendant. The first defendant argued that they were not bound by the variation agreement and that they were not aware of the capping arrangement, which limited the liability of the second defendant. The plaintiff contended that the first defendant was bound by the variation agreement and that the capping arrangement did not affect the first defendant's liability.

The court held that the first defendant was not bound by the variation of the loan agreement as they were not a party to that agreement. The court found that the first defendant's liability under the original guarantee was not affected by the variation agreement or the capping arrangement. The court also noted that the first defendant was not aware of the capping arrangement and that this unawareness was significant in determining the extent of their liability. Consequently, the court ruled in favour of the first defendant, finding that they were not bound by the variation agreement and that the capping arrangement did not apply to them.

As a result of the court's decision, the plaintiff's claim against the first defendant for the unpaid principal amount under the guarantee was dismissed. The court ordered that the first defendant was not liable for any amount beyond the original guarantee. The second defendant's liability, subject to the capping arrangement, remained as per the variation agreement.

Orders