ADX Building Systems P/L v Macleod - [2014] SADC 212

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ADX BUILDING SYSTEMS P/L v MACLEOD & ORS
[2014] SADC 212
Judgment of His Honour Judge Chivell
19 December 2014
GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - PARTIES AND CAPACITY
Claim by plaintiff for moneys owed by third defendant for supply of building materials - first and second defendants signed an application to the plaintiff for credit - deed of guarantee within the application partly filled out but not executed - third defendant in liquidation so action stayed against the company - whether first and second defendants gave guarantees of third defendant's debt notwithstanding non-execution of deed.
Held: No valid guarantee given by first and second defendants. Judgment for first and second defendants.
Law of Property Act 1936 (SA) s 41, referred to.
Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd & Ors (1985) 9 ACLR 909; Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160; Ariadne Steamship Co Ltd v James McKelvie & Co [1922] 1 KB 518; Rawcliffe v Bianco Hiring Service Pty Ltd [2002] SASC 430; Burrell & Family Pty Ltd v Harris [2010] SASC 184; Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549; Erect Safe Scaffolding (Aust) Pty Ltd v Sutton (2008) 72 NSWLR 1; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; Andrew Knox Holdings Pty Ltd v ANZ Banking Group Ltd (1996) 188 LSJS 385; Savoy Investments (Qld) Pty Ltd v Global Nominees Pty Ltd [2008] QCA 282; Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424, considered.

ADX BUILDING SYSTEMS P/L v MACLEOD & ORS
[2014] SADC 212
Introduction

The plaintiff is a company which supplies building materials, including materials for the installation of ceilings, to the building trade. I will refer to it as ‘ADX’. The claim is made against Mr and Mrs Macleod (‘the Macleods’) and against the company of which they were the directors and shareholders, Macleod Ceilings Pty Ltd (‘Macleod Ceilings’). Claims against a fourth defendant (Badge Constructions (SA) Pty Ltd) and a fifth defendant (Fabcot Pty Ltd) were discontinued (FDN 17).
Macleod Ceilings is now in liquidation. The claim against the company is therefore stayed (Corporations Act 2001 (Cth), s 440D).
The claim is for the sum of $383,532.31 for the supply of building materials to the defendants, which sum ADX says is due and payable and remains unpaid. The plaintiff says that the building materials were supplied to Macleod Ceilings on credit.
As the Statement of Claim was originally cast, the plaintiff asserted that Mr and Mrs Macleod were liable as principals to pay for these materials. Paragraph 8.1 of the Statement of Claim alleges:
8. In accordance with the terms of the Credit Account ADX:
8.1supplied building materials to the Macleods and/or Macleod Ceilings (the Supply);
Paragraphs 13 and 14 allege:
13. The Macleods and/or Macleod Ceilings are indebted to…

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.

Continue reading ADX Building Systems P/L v Macleod

Details

AGLC: ADX Building Systems P/L v Macleod [2014] SADC 212
Case: [2014] SADC 212
Decision Date: 19 December 2014

CaseChat Overview and Summary

The case of ADX Building Systems P/L v Macleod involved a claim by ADX Building Systems P/L against Macleod for monies owed by a third party, who was in liquidation. The primary dispute centred around the validity of guarantees executed by the first and second defendants in relation to the third defendant's debt. The application to the plaintiff for credit was partly filled out but the deed of guarantee was not executed. The court had to determine whether the first and second defendants had validly provided guarantees for the debt, despite the incomplete execution of the deed.

The legal issues before the court were whether the incomplete deed of guarantee constituted a valid guarantee and if the first and second defendants could be held liable for the third defendant's debt. The court considered the principles of contract law, specifically the requirements for a valid guarantee and the intention of the parties involved. The primary concern was whether the incomplete document could be construed as a binding agreement, even though it was not formally executed.

The court concluded that the incomplete deed of guarantee did not meet the necessary legal requirements to be considered a valid guarantee. The court found that the intention to provide a guarantee was evident, but the failure to execute the deed properly meant that it did not constitute a binding contract. As a result, the first and second defendants were not liable for the third defendant's debt. The court also noted that the action against the third defendant's company was stayed due to its liquidation.

Consequently, the court dismissed the plaintiff's claim against the first and second defendants, finding that they were not liable for the debt owed by the third defendant. The court ordered that the action against the third defendant's company be stayed due to its liquidation.

Orders