AMTEL Pty Ltd v AH Chee

[2015] WASC 341

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   AMTEL PTY LTD -v- AH CHEE [2015] WASC 341

CORAM:   PRITCHARD J

HEARD:   17 - 21 NOVEMBER 2014

DELIVERED          :   11 SEPTEMBER 2015

FILE NO/S:   CIV 2106 of 2009

BETWEEN:   AMTEL PTY LTD

Plaintiff

AND

MORENZA CHARLENE AH CHEE
Defendant

FILE NO/S              :CIV 2107 of 2009

BETWEEN              :STRAMIT CORPORATION PTY LTD

Plaintiff

AND

MORENZA CHARLENE AH CHEE
Defendant

Catchwords:

Equity - Garcia unconscionability - Whether wife signed the guarantee - Whether lenders were aware that the guarantor was the wife - Whether wife was a volunteer - Where wife received benefits through the company whose debts she has guaranteed - Where company the vehicle through which the husband and wife jointly pursued profit

Legislation:

Nil

Result:

Judgment for the plaintiff in each action

Category:    B

Representation:

CIV 2106 of 2009

Counsel:

Plaintiff:     Mr A P Hershowitz

Defendant:     Mr A P Skerritt

Solicitors:

Plaintiff:     Brand Partners

Defendant:     Hale Legal

CIV 2107 of 2009

Counsel:

Plaintiff:     Mr A P Hershowitz

Defendant:     Mr T W Preece

Solicitors:

Plaintiff:     Brand Partners

Defendant:     Hale Legal

Cases referred to in judgment:

Agripay Pty Ltd v Byrne [2011] QCA 85; [2011] 2 Qd R 501

ANZ Banking Group v Londish [2014] NSWSC 202

Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588

Bank of Western Australia Ltd v Abdul [2012] VSC 222

BNY Trust Co of Australia Ltd (formerly known as JP Morgan Trust Australia Ltd) v Glambedakis [2009] NSWSC 815

Bylander International Consortium (Australia) Pty Ltd v Multilink Investments Pty Ltd [2001] NSWCA 53

Commonwealth Bank of Australia v Starrs [2012] SASC 222

Corin v Patton [1990] HCA 12; (1990) 169 CLR 540

Cranfield Pty Ltd v Commonwealth Bank of Australia [1998] VSC 140

Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413

European Asian Bank of Australia v Kurland [1985] 8 NSWLR 192

Foreman v Great Western Railway Co (1878) 38 LT 851

Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395

Groves v Groves [2013] QSC 277

JNS Technologies (M) SDN BHD v JNS Electronic Industries (Vic) Pty Ltd [1999] VSC 246

L'Estrange v F Graucob Ltd [1934] 2 KB 394

National Australia Bank Ltd v Savage [2013] NSWSC 1718

National Australia Bank v Wehbeh [2014] VSC 431

Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197

Parker v South Eastern Railway Co (1877) 2 CPD 416

Permanent Mortgages Pty Ltd v Vandenburgh [2010] WASC 10; (2010) 41 WAR 353

Radin v Commonwealth Bank of Australia [1998] FCA 1361; (Unreported, FCA, 23 October 1998)

State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

Warburton v Whiteley (1989) 5 BPR 11,628

Wenczel v Commonwealth Bank of Australia [2006] VSC 324

Wilton v Farnworth (1948) 76 CLR 646

Yerkey v Jones (1938) SASR 201

Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649

Table of Contents

1.           Overview of the case advanced by Stramit and Amtel, and by Ms Ah Chee, and of the issues in dispute at the trial

The parties' pleaded cases

(i)      The claims made by Stramit and Amtel
(ii)      Ms Ah Chee's defence
(iii)    The replies filed by Stramit and Amtel

2.     Overview of the evidence and credibility findings in relation to the witnesses

(a)      The documentary evidence

(b)      The witnesses

(c)      Findings as to the credibility of the witnesses

3.     The factual issues for determination

(a)      The Guarantee and the Credit Agreement

(b)      Did Ms Ah Chee sign the Guarantee?

(c)      In what circumstances did Ms Ah Chee sign the Guarantee?

(i)          The requirement by Stramit and Amtel that further security be provided for the continued provision of goods to Shedco on credit

(ii)      Was Ms Ah Chee requested to sign a guarantee for Shedco's debt?
(iii)    Ms Ah Chee's concern about providing further security
(iv)    When were the documents delivered for Ms Ah Chee's signature?
(v)      When were the documents signed by Ms Ah Chee and in what circumstances?
(vi)    Did Ms Ah Chee know that the documents she signed included the Guarantee?

(d)      What was the extent of Ms Ah Chee's role and authority in Shedco?

(e)      What was Ms Ah Chee's knowledge of guarantees as at 25 November 2008?

(f)          Did Stramit and Amtel know that Ms Ah Chee was married to Mr Ah Chee at the time when they sought, and received, the Guarantee?

(g)          Evidence as to payments made by Shedco to Ms Ah Chee, or from which she benefitted

(h)          Did Stramit and Amtel explain the Guarantee to Ms Ah Chee or confirm that an independent party had explained it to her?

4.     The requirements for Garcia unconscionability

5.Would it be unconscionable for Stramit and Amtel to rely upon the Guarantee, having regard to the requirements for Garcia unconscionability?

(a)          Can Stramit and Amtel be taken to have understood that Ms Ah Chee may repose trust and confidence in Mr Ah Chee and therefore that he may not fully and accurately explain the purport and effect of the transaction to her?

(b)          Did Stramit and Amtel take steps to explain the transaction to Ms Ah Chee or find out that a stranger had explained it to her?

(c)      Can Ms Ah Chee be regarded as a volunteer in relation to the Guarantee?

(d)      Did Ms Ah Chee in fact understand the purport and effect of the transaction?

Would it be unconscionable for Stramit and Amtel to rely upon the Guarantee?

Conclusion

1. PRITCHARD J:  In these actions, Stramit Pty Ltd and Amtel Pty Ltd seek to enforce a Deed of Guarantee and Indemnity dated 25 November 2008 (the Guarantee) which they say was provided by Ms Ah Chee.  Stramit and Amtel each say that under the Guarantee, Ms Ah Chee guaranteed the payment of amounts owed to them by a company called Shedco Group Pty Ltd (Shedco) for goods which Stramit and Amtel supplied to Shedco on credit.

2. Ms Ah Chee denied any liability for Shedco's debts under the Guarantee.  Prior to the trial, she did not admit that she signed the Guarantee.  However, she said that even if she did sign it, it would be unconscionable for Stramit and Amtel to enforce the Guarantee against her.  Ms Ah Chee contended that the circumstances of her case met the requirements for unconscionability identified by the High Court in Garcia v National Australia Bank Ltd[1] (to which I will refer as 'Garcia unconscionability').

   [1] Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395; See also Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649, 662 (Dixon J).

3. The actions raised identical issues, and as the parties proposed to rely upon identical evidence in each action, the actions were tried together, on the basis that the evidence adduced in one action could be relied upon as evidence adduced in the other action.

4. For the reasons set out below, I find that Ms Ah Chee signed the Guarantee, and that it would not be unconscionable for Stramit and Amtel to enforce the Guarantee.

5. In these reasons for decision I deal with the following matters.

   1.Overview of the case advanced by Stramit and Amtel, and by Ms Ah Chee, and of the issues in dispute at the trial;

   2.Overview of the evidence and credibility findings in relation to the witnesses;

   3.The factual issues for determination:

   (a)The Guarantee and the Credit Agreement;

   (b)Did Ms Ah Chee sign the Guarantee?

   (c)In what circumstances did Ms Ah Chee sign the Guarantee?

   (d)What was the extent of Ms Ah Chee's role and authority in Shedco?

   (e)What was Ms Ah Chee's knowledge of guarantees as at 25 November 2008?

   (f)Did Stramit and Amtel know that Ms Ah Chee was married to Mr Ah Chee at the time when they sought, and received, the Guarantee?

   (g)Evidence as to payments made by Shedco to Ms Ah Chee, or from which she benefited;

   (h)Did Stramit and Amtel explain the Guarantee to Ms Ah Chee or confirm that an independent party had explained it to her?

   4.The requirements for Garcia unconscionability;

   5.Would it be unconscionable for Stramit and Amtel to rely upon the Guarantee, having regard to the requirements for Garcia unconscionability?

   (a)Can Stramit and Amtel be taken to have understood that Ms Ah Chee may repose trust and confidence in Mr Ah Chee and therefore that he may not have fully and accurately explained the purport and effect of the transaction to her?

   (b)Did Stramit and Amtel take steps to explain the transaction to Ms Ah Chee or find out that a stranger had explained it to her?

   (c)Can Ms Ah Chee be regarded as a volunteer in relation to the Guarantee?

   (d)Did Ms Ah Chee in fact understand the purport and effect of the transaction?

1. Overview of the case advanced by Stramit and Amtel, and by Ms Ah Chee, and of the issues in dispute at the trial

1. Stramit and Amtel manufacture and sell steel building products.  Amtel trades as Stramit Building Products in Western Australia, and Stramit trades under its corporate name throughout the remainder of Australia.  (For that reason, references to Stramit in the facts and evidence discussed in these reasons should be understood as references to both Stramit and Amtel.

2. Prior to April 2009 (when it went into liquidation) Shedco was in the business of making and selling steel sheds.  Stramit and Amtel sold steel building products to Shedco on credit.

3. At all relevant times, Mr David Ah Chee was the sole director and shareholder of Shedco.[2]  Ms Ah Chee was married to Mr Ah Chee.  They separated after Shedco went into liquidation.

   [2] Exhibit 1.3.

4. The present actions were commenced by Stramit and Amtel against both Mr Ah Chee and Ms Ah Chee.  In so far as Mr Ah Chee was concerned, Stramit and Amtel relied upon a guarantee Mr Ah Chee gave to them in March 2008 for the payment of amounts owed by Shedco.  However, Mr Ah Chee became bankrupt in 2010[3] and orders were subsequently made granting leave to Stramit and Amtel to discontinue each action as against Mr Ah Chee.

The parties' pleaded cases

1. The claims made by Stramit and Amtel

   [3] ts 169, 346.

1. The cases advanced by Stramit and Amtel were outlined in Further Amended Statements of Claim dated 12 May 2014 (SOC).  Each SOC was in identical terms save in so far as it referred to the amount said to be owed to each plaintiff by Shedco (and thus the amount said to be owing by Ms Ah Chee pursuant to the Guarantee) and in the contents of a Schedule attached to each SOC which referred to invoices issued to Shedco by each plaintiff which were said to be unpaid.

2. Stramit and Amtel alleged that on 14 March 2008, Mr Ah Chee, on behalf of Shedco, signed a Commercial Credit Account Application (the Credit Agreement).  Under the Credit Agreement, Shedco applied to 'Stramit' (which was defined to mean Amtel in Western Australia, and Stramit elsewhere) to purchase goods and services on credit.  Shedco authorised Stramit and Amtel to open a credit account in its name and to debit that account with the price of the goods and services supplied and all other amounts it owed to them, and agreed to pay all invoices for goods and services supplied, on a monthly basis, together with interest pursuant to the Penalty Interest Rates Act 1983 (Vic), and all legal costs and expenses incurred in the recovery or attempted recovery of any overdue amount.

3. Stramit and Amtel claimed that after Mr Ah Chee signed the Credit Agreement, each of them supplied goods to Shedco on credit.  (The position appears to have been that goods supplied to Shedco in Western Australia were generally supplied, and invoiced, by Amtel, while goods supplied to Shedco throughout the rest of Australia were generally supplied, and invoiced, by Stramit.)

4. Each plaintiff claimed that Shedco breached the Credit Agreement in that it did not pay all of the invoices issued by them for goods sold on credit, nor did it pay the interest accruing on those amounts, or legal costs and expenses incurred in the attempted recovery of those amounts.  Amtel claimed that Shedco was indebted to it in the sum of $2,502,486.99 plus interest and costs and expenses incurred in the recovery and attempted recovery of those amounts.  Stramit claimed that Shedco was indebted to it in the sum of $1,065,423.00 plus interest and costs and expenses incurred in the recovery and attempted recovery of those amounts.

5. Stramit and Amtel claimed that under the Guarantee Ms Ah Chee guaranteed the punctual payment of all present and future debts and all other monies which were payable by Shedco to each of them, including interest and costs, that she indemnified each of them against all costs incurred as a result of any default or failure by Shedco to pay the money guaranteed or to perform its obligations to them, and that she agreed to pay all legal costs on an indemnity basis, disbursements and expenses incurred by Stramit or Amtel arising from a breach of the Guarantee.  Stramit and Amtel claimed that the whole amount owed by Shedco to each of them was due and payable by Ms Ah Chee pursuant to the Guarantee, together with interest and legal costs and other expenses on an indemnity basis, that Ms Ah Chee failed to pay them those monies, and that she remained indebted to them for those amounts.

6. Stramit and Amtel claimed, in the alternative, that they suffered loss and damage by reason of Shedco's breach of the Credit Agreement.  Each of them claimed that as a result of Ms Ah Chee's failure to pay the amounts owing under the Guarantee, they suffered loss and damage in the sum of the amounts owed under the Guarantee.

1. Ms Ah Chee's defence

1. In the Further Re-Amended Defence she filed in each action, Ms Ah Chee did not admit the terms of the Credit Agreement, or that goods were supplied to Shedco on credit pursuant to that agreement, or that Shedco failed to pay the invoices issued for those goods, or the amounts said to be owing.

2. As for the claim that she signed the Guarantee, Ms Ah Chee contended that on 25 November 2008, she was presented with a bundle of documents (the bundle of documents) by Mr David Long (an employee of Stramit), that she signed that bundle of documents without reading or understanding the contents, and that the bundle of documents may or may not have contained the Guarantee.

3. Ms Ah Chee pleaded that at all material times she was Mr Ah Chee's wife, although they separated in 2009.

4. Ms Ah Chee claimed that she signed the bundle of documents on 25 November 2008 on Mr Ah Chee's direction and at his insistence.  Ms Ah Chee claimed that if she in fact signed the Guarantee, she did not have the knowledge or understanding that she was signing it, that she believed that the documents she was signing were limited to mortgages over certain properties being provided as security for debts owed by Shedco, that she did not receive independent legal advice in relation to her obligations or liability pursuant to any document contained in the bundle of documents, and that she received no financial benefit or gain from, or as a result of, signing the Guarantee.  Ms Ah Chee claimed that she was not a director or shareholder of Shedco at any material time.

5. Ms Ah Chee claimed that at all times Stramit and Amtel were aware that she was Mr Ah Chee's wife, that she had trust and confidence in Mr Ah Chee and was acting under his direction and influence, that she was acting as a 'volunteer' and did not stand to benefit from the transaction, that she had not received independent legal advice in relation to any of the documents, that she failed to understand the full legal ramifications and responsibilities arising from any and all of the documents, and that the content of the documents had not been explained to her by Mr Ah Chee.  As a consequence of these matters, Ms Ah Chee claimed that it would be unconscionable to enforce the Guarantee against her.

6. Consequently, Ms Ah Chee denied any liability for monies under the Guarantee and denied any liability for damages as alleged.

1. The replies filed by Stramit and Amtel

1. Stramit and Amtel each filed an Amended Reply[4] in identical terms in which they denied that it would be unconscionable to enforce the Guarantee.

   [4] Amended Reply dated 29 October 2014.

2. Stramit and Amtel denied Ms Ah Chee's claim that Mr David Long presented a bundle of documents to her on 25 November 2008.  They claimed that on 21 November 2008, Mr Paul Fawcett left a bundle of documents (including the Guarantee) with Mr Ah Chee, and that by email from Mr Fawcett to Ms Ah Chee on 26 November 2008, they advised Ms Ah Chee that they would provide her with documents including the Guarantee to enable her to review them, or to be reviewed by any advisor she wished.

3. Stramit and Amtel claimed that the Guarantee was signed by Ms Ah Chee.  They denied that Ms Ah Chee signed the bundle of documents without reading or understanding them, that she did so at Mr Ah Chee's direction or insistence or under his influence or that they were aware of such direction or influence, and they denied that Ms Ah Chee had no knowledge or understanding that she was signing the Guarantee, or that she was mistaken about its effect.  Stramit and Amtel also denied Ms Ah Chee's claim that she was a volunteer who stood to gain nothing by signing the Guarantee.  They alleged that while not a shareholder of Shedco, she was a director or de facto director of Shedco, and that she obtained a benefit from the Guarantee because she was actively involved in the management of the business of Shedco, and because she was the sole shareholder of Shedco Holdings Pty Ltd (Shedco Holdings), which was a debtor of Shedco.

4. Stramit and Amtel admitted that at all material times they knew Ms Ah Chee was the wife of Mr Ah Chee, but they did not admit any knowledge that that relationship had ended.  They admitted that as a wife, Ms Ah Chee may repose trust and confidence in Mr Ah Chee but denied that Ms Ah Chee did so in matters of business relating to Shedco and the Guarantee.

5. Stramit and Amtel did not admit Ms Ah Chee's claim that she had not received any legal advice in relation to her obligations or liability pursuant to the documents she signed, that Mr Ah Chee failed to explain the content of the documents to her, and her claim that she failed to understand the legal ramifications and responsibilities arising under the documents she signed.  They denied that Ms Ah Chee had no knowledge of the contents of the Guarantee.

The issues in dispute at the trial

1. Although Ms Ah Chee did not admit the terms of the Credit Agreement, or that goods were supplied to Shedco on credit, or that Shedco failed to pay the invoices issued for those goods, or the amounts said to be owing, those issues fell away at the trial.  In his written[5] and oral[6] submissions at the trial, counsel for Ms Ah Chee advised the Court that Ms Ah Chee did not dispute that Shedco was indebted to Amtel and to Stramit for the amounts claimed under the unpaid invoices, and for pre‑trial interest as alleged (subject to the confirmation of the calculation of the amount claimed for pre-trial interest), and the Credit Agreement was tendered in evidence without objection.

   [5] Second-named defendant's outline of submissions for trial [21].

   [6] ts 85 - 86.

2. The total amount claimed by Amtel against Ms Ah Chee up until the trial was in the sum of $2,502,486.99 and, including pre-trial interest, was to a total of $4,033,545.96.  The total amount claimed by Stramit against Ms Ah Chee up until the trial was in the sum of $1,065,423 and, including pre‑trial interest, was to a total of $1,724,645.34.  Following the trial, the Court was advised that there was no dispute as to the calculation of pre‑trial interest.

3. Having regard to the admissions in the pleadings, and to the fact that the amounts claimed by Amtel and by Stramit were not disputed, counsel for Ms Ah Chee confirmed that there remained only two issues in dispute at the trial.[7]  The first was whether Ms Ah Chee in fact signed the Guarantee.  The second was whether the Guarantee should not be enforced on the basis that to do so would be unconscionable.

   [7] Second-named defendant's written submissions for trial [22] - [60].

1. Before turning to the factual questions which must be resolved to determine the issues in dispute, it is convenient to provide an overview of the evidence and the witnesses.

1. Overview of the evidence and credibility findings in relation to the witnesses

(a)     The documentary evidence

1. A number of documents, including the Credit Agreement, and the Guarantee, were admitted into evidence. With the exception of one document (a Schedule of Payments made by Shedco, discussed at [222] ‑ [232] below) all of the documents were admitted by consent.

(b)     The witnesses

1. Counsel for Stramit and Amtel tendered witness statements as the evidence in chief of Mr Paul Fawcett,[8] Mr David Long,[9] Mr Steven Anderson,[10] Mr Darryl Squance,[11] and Mr Malcolm Baillie.[12]  Each of those witnesses was cross examined by counsel for Ms Ah Chee.

   [8] Exhibit 2.

   [9] Exhibit 3.

   [10] Exhibit 4.

   [11] Exhibit 5.

   [12] Exhibit 6.

2. Counsel for Ms Ah Chee tendered witness statements as the evidence in chief of Ms Ah Chee,[13] and Mr Adrian Turner,[14] each of whom was cross examined by counsel for Stramit and Amtel.

   [13] Exhibit 7.

   [14] Exhibit 17.

3. I also granted leave to permit counsel for Ms Ah Chee to tender a witness statement provided by Mr David Ah Chee, dated 14 November 2014.  I granted leave notwithstanding the failure by Ms Ah Chee to comply with the orders which had been made for the exchange of witness statements in advance of the trial.  Departure from such orders should not be permitted without good reason.  Compliance with orders for the exchange of witness statements in good time prior to trial is essential to avoid the prospect of trial by ambush, and with it the risk that hearing dates will need to be vacated to ensure a party has the opportunity to consider, and if necessary to respond to, the evidence of an unexpected witness.

4. I granted leave to permit Ms Ah Chee to tender Mr Ah Chee's witness statement for two reasons.  First, Mr Ah Chee's evidence was clearly highly relevant to the issues in dispute at the trial.  Secondly, counsel for Stramit and Amtel did not suggest that his clients would suffer any prejudice if Ms Ah Chee were permitted to tender this witness statement.  Nor was there any suggestion that the trial would need to be adjourned if Ms Ah Chee were permitted to rely on this evidence.  Counsel for Stramit and Amtel was able to cross examine Mr Ah Chee without any delay in the trial.

5. Notwithstanding the grant of leave to rely on Mr Ah Chee's witness statement, I should add that the explanations provided by Ms Ah Chee, by Mr Turner, and by Mr Ah Chee, about the reason why, and circumstances in which, Mr Ah Chee's evidence came to light so close to the trial date, were wholly unconvincing.  I explain that conclusion further below.

(c)     Findings as to the credibility of the witnesses

Mr Fawcett, Mr Anderson and Mr Long

1. Mr Fawcett, Mr Anderson and Mr Long were employed by Stramit at the time of the events in question.  None of them was employed by Stramit at the time they prepared their witness statements and gave evidence at the trial.  I accept that they gave truthful evidence.

2. Mr Fawcett gave evidence as to the circumstances in which Stramit and Amtel sought a guarantee from Ms Ah Chee for the monies owed by Shedco, and the circumstances in which a bundle of documents (which he said included the Guarantee) came to be provided to Mr and Ms Ah Chee for their signature, and collected from them, in November 2008.  Mr Fawcett had an independent recollection of his role in these events, although he relied upon the contemporaneous documents to confirm the dates on which those events occurred.  The evidence given by Mr Fawcett was consistent with the contemporary documentary evidence and I accept it as reliable.

3. Mr Anderson gave evidence as to the circumstances in which Stramit and Amtel sought a guarantee from Ms Ah Chee for the monies owed by Shedco.  His evidence was consistent with the contemporaneous documentary evidence and I accept it as reliable.

4. Mr Long's evidence was limited in its scope.  He had no independent recollection of the events in question, and he was not challenged about that.  I accept his evidence, such as it was.

Mr Squance and Mr Baillie

1. Mr Squance worked as an internal accountant for Shedco from 2007 to 2009.  He gave evidence as to his observations of Ms Ah Chee's role in the company.  He worked for Shedco, and with Ms Ah Chee, for some years.  Mr Baillie owned a shed construction franchise in Perth which was purchased by Mr and Ms Ah Chee in 2004 and subsequently became the Shedco outlet in Perth.  Mr Baillie worked for Shedco between 2004 and 2009.  Both Mr Squance and Mr Baillie gave evidence of their experience working with Ms Ah Chee, and their observations of her role within Shedco.  Each of them had a clear recollection of events.  I conclude that their evidence was truthful and reliable.

Ms Ah Chee

1. It is necessary to deal in more detail with my conclusions as to the credibility and reliability of the evidence given by Ms Ah Chee and the witnesses called in support of her case.

2. I approached Ms Ah Chee's evidence with caution for six reasons.  First, Ms Ah Chee had a lot to lose in these proceedings.  Failure to resist the enforcement of the Guarantee would result in a judgment against her of more than $5 million.  She had every reason to give self-serving evidence, and she left me with no doubt on occasion that that was what she did (for example, in her evidence as to her role within Shedco).

3. Secondly, in the course of her evidence, Ms Ah Chee admitted that some aspects of the defence filed on her behalf, some aspects of the evidence in her witness statement, and evidence she had given previously on affidavit, were incorrect.  By way of example, in her amended Defence Ms Ah Chee pleaded that she had separated from Mr Ah Chee in 2009.[15]  She accepted that she must have instructed her solicitors to that effect.[16]  However, in her witness statement, Ms Ah Chee said that she and Mr Ah Chee separated in about 2011.[17]  On the other hand, in an affidavit she swore on 18 November 2014 (in support of an application for leave to rely on Mr Ah Chee's witness statement) Ms Ah Chee said that although she separated from Mr Ah Chee in 2009, he continued to reside at the same property until October 2013.  In cross-examination, Ms Ah Chee said that the reference in that affidavit to their separation occurring in 2009 was wrong and that the separation took place in 2011.[18]  Although not a crucial piece of evidence, the timing of her separation from Mr Ah Chee was a matter peculiarly within her own knowledge, and was a fact relating to a significant event in her life, yet Ms Ah Chee apparently did not have a reliable recollection of when that event occurred.

   [15] Amended Defence [6.2].

   [16] ts 164.

   [17] Exhibit 7 [3].

   [18] ts 162.

4. Ms Ah Chee also accepted that evidence she gave in an affidavit sworn on 31 January 2014 in these proceedings was incorrect.  In that affidavit, Ms Ah Chee deposed that she was not, and had never been, an office bearer for Shedco or Shedco Holdings.[19]  In cross-examination, Ms Ah Chee accepted that that was false, although she claimed that she did not know that she was a director of Shedco Holdings.[20]

   [19] Exhibit 12 [18].

   [20] ts 247.

5. Thirdly, Ms Ah Chee's pleaded position at the trial, in relation to a key component of her case - whether she signed the Guarantee - was inconsistent with her pleading on that issue in the amended Defence filed on her behalf in each action in November 2012.  In her Further Re‑Amended Defences dated 4 and 5 September 2014 respectively, Ms Ah Chee did not admit that she signed the Guarantee, but acknowledged that it may or may not have been in the bundle of documents she signed, which she said was provided to her by Mr Long, on 25 November 2008.  In contrast, in the Amended Defences filed in November 2012, Ms Ah Chee pleaded that on 25 November 2008, Mr Ah Chee proffered the Guarantee and procured her signature to it.  That inconsistency suggests either a lack of concern for the accuracy of the pleading (at best) or (at worst) a desire to cast her case in as favourable a light as possible, without regard to the truth of the case advanced.

6. Fourthly, Ms Ah Chee's evidence in cross-examination was evasive on some issues.  By way of example, in her affidavit sworn 18 November 2014, Ms Ah Chee deposed that in the months leading up to the trial she told her solicitors that she did not know where Mr Ah Chee was.  However, Ms Ah Chee acknowledged that until a few months before the trial Mr Ah Chee was working in her son's business in Malaga.[21]  When it was put to Ms Ah Chee that although she did not know where Mr Ah Chee lived, she knew exactly where to contact him, she answered that she had his telephone number but had never rung it.[22]

   [21] ts 167.

   [22] ts 167 - 168.

7. Fifthly, I formed the view that Ms Ah Chee deliberately sought to down play her role in Shedco.  I explain the reasons for that conclusion further below, but in short, her evidence as to her own, limited role in Shedco stood in stark contrast to the evidence given by Mr Fawcett, Mr Anderson, Mr Baillie and Mr Squance.

8. Sixthly, on occasion, Ms Ah Chee clearly sought to tailor her evidence to assist her own case.  By way of example, in her witness statements, Ms Ah Chee suggested that not all of the pages of the Guarantee were included in the bundle of documents she signed on 25 November 2008.  Her evidence was that when she saw the Guarantee afterwards, 'there seemed to be quite a lot of documents'.[23]  (In fact the Guarantee comprised only six pages.[24])  Ms Ah Chee said that 'with the mortgage documents … quite a stack of documents that went with that and I thought well, maybe, that didn't all fit in.  I don't know.  I just assumed'.[25]  She denied that her assertion that pages of the Guarantee were missing was made just to 'gild the lily' and to make her case better than she thought it was[26] but I formed the clear impression that that is what she did.

   [23] ts 191.

   [24] Exhibit 1.2.

   [25] ts 191.

   [26] ts 192.

9. By way of further example, at one point in cross-examination, Ms Ah Chee sought to suggest that her husband had directed her just to sign the bundle of documents where the sticky flags indicated that her signature was required, but when pressed, she accepted that that had not happened.  The following exchange took place with counsel:

   So if he [Mr Long] wasn't [waiting] you would have sat, you say, [and] looked at each page? --- No, I would have still signed the yellow stickies, because that's what I was told to do.

   By whom? --- By my husband.  I was told to sign the yellow sticky labels and give it back.

   … That's something that you've now told us for the very first time isn't it? … --- I just signed where I needed to sign …

   In fact, Mr Ah Chee never said to you, 'Morenza … please just sign the sticky labels, the yellow labels'.  He never mentioned that, did he? ‑‑‑ Maybe he didn't, sorry.[27]

   [27] ts 236 - 237.

10. Ultimately, although I do not accept all of Ms Ah Chee's evidence as being truthful or reliable, I do not reject her evidence in its entirety either.  Parts of it - for example, her evidence that she did not read any of the documents contained in the bundle of documents she signed on 25 November 2008 - were credible.  Other aspects of her evidence were consistent with the evidence given by witnesses called by Stramit and Amtel.  I note that counsel for Stramit and Amtel did not go so far as to submit that all of Ms Ah Chee's evidence should be disregarded.[28]

    [28] ts 473, 500.

11. I will explain in more detail below the reasons why I accept or reject particular aspects of Ms Ah Chee's evidence but in summary, the approach I have taken to Ms Ah Chee's evidence is as follows.  To the extent that Ms Ah Chee's evidence was inconsistent with the evidence given by the witnesses called by Stramit and Amtel, or the documentary evidence - for example, in relation to her role and authority in Shedco - I prefer that other evidence.  Furthermore, I do not accept Ms Ah Chee's evidence that she was not aware that the Guarantee was in the bundle of documents that she signed on 25 November 2008.  Generally speaking, however, I accept the balance of her evidence.

Mr Turner

1. Mr Adrian Turner worked for Shedco from 2004 to 2009.  His evidence largely addressed two issues:  the circumstances in which the bundle of documents, which included the Guarantee, was signed on 25 November 2008, and Ms Ah Chee's role within Shedco.  I approached Mr Turner's evidence with caution for four reasons.

2. First, Mr Turner described himself as a friend of Ms Ah Chee.  He resides at the same property as Ms Ah Chee.  When he worked for Shedco, Mr Turner was also a close friend of Mr Ah Chee, and in more recent times Mr Turner appears to have been in contact with Mr Ah Chee, albeit sporadically.  The existence of these relationships, and Mr Turner's demeanour generally, left me with the impression that he was concerned to ensure that his evidence did not adversely impact on Ms Ah Chee's case.

3. Secondly, Mr Turner's evidence as to the circumstances in which Mr Ah Chee came to provide a witness statement shortly prior to the trial differed in a number of respects from the evidence given by Mr Ah Chee in relation to the same circumstances.  It was not possible, or necessary, to ascertain whose version of events should be preferred but the disparity in their versions of events caused me to be concerned about the reliability of their evidence.

4. Thirdly, Mr Turner's recollection of some of the events of 25 November 2008 was very vague indeed - for example, he had no recollection as to how he came to witness Mr Ah Chee's signature on some of the documents[29] - and yet he claimed to clearly recollect the circumstances in which Ms Ah Chee signed the documents on the same day.  That suggested that his evidence of what occurred may not be reliable.

   [29] ts 439 - 440.

5. Fourthly, Mr Turner admitted that while he worked for Shedco, he had signed a lease document for a photocopier, and indicated on that document that he was a director of Shedco.  That was not the case.  His evidence was that he stated that he was a director of Shedco for 'expediency',[30] which caused me to have some concern as to whether he would be willing to be less than completely truthful in his evidence if it suited him, or his interests, to do so.

   [30] ts 423.

6. Consequently, the approach I took to Mr Turner's evidence was that to the extent that his evidence was inconsistent with the evidence given by the witnesses called by Stramit and Amtel, or the documentary evidence ‑ for example, in relation to Ms Ah Chee's role within Shedco ‑ I preferred that other evidence.  I place no weight on Mr Turner's evidence as to the circumstances in which Ms Ah Chee came to sign the documents on 25 November 2008, other than in so far as Mr Turner's evidence was consistent with Ms Ah Chee's evidence as to what occurred, which I accept.

Mr Ah Chee

1. I did not find Mr Ah Chee to be a credible witness for four reasons.  First, Mr Ah Chee's demeanour while giving evidence suggested little respect for the Court or the trial process.  On the first day when he gave evidence, Mr Ah Chee sat in the witness box chewing gum until I asked him to dispose of it.  He did the same the following day.[31]  He did not present as a witness who was cognisant of the solemnity of the trial process, nor mindful of his obligation to give truthful evidence.

   [31] ts 343, 369.

2. Secondly, in his evidence, Mr Ah Chee displayed hostility and resentment towards Stramit and Amtel.  It was apparent that he thought that Stramit bore some (or perhaps complete) responsibility for the financial demise of Shedco, and for his own financial position.  However, that animosity towards Stramit and Amtel appeared to affect his answers to questions put to him in cross-examination by their counsel, and appeared to colour his evidence.  Mr Ah Chee became heated and argumentative during cross‑examination.[32]  For example, when asked about whether Ms Ah Chee had signed the Guarantee his evidence was 'I don't accept any of this, full stop'.[33]

   [32] See, eg, ts 384 - 385, 396, 401, 408.

   [33] ts 392.

3. Thirdly, Mr Ah Chee's evidence was internally inconsistent in a number of respects, which suggested that he was not always entirely honest or frank in his evidence as to what occurred.  I set out below at [104] ‑ [105] extracts from Mr Ah Chee's evidence in relation to whether Stramit's representatives requested that Ms Ah Chee provide a guarantee for Shedco's debts, and which shows how Mr Ah Chee's version of events changed during the course of his cross‑examination.  This suggested a tendency to try to portray the events which occurred in a way which reflected poorly on Stramit and Amtel.

4. Fourthly, as I have already observed in relation to Mr Turner's evidence, there were discrepancies between the evidence given by Mr Turner and Mr Ah Chee about the circumstances in which Mr Ah Chee came to provide a witness statement.  That disparity caused me to be concerned about the reliability of Mr Ah Chee's evidence also.

5. I approached Mr Ah Chee's evidence on the basis that I did not regard his evidence as reliable save where it was consistent with other evidence on which I was prepared to rely, or where it was evidence which was not advantageous to Ms Ah Chee's case (for example, evidence concerning payments made out of Shedco's bank accounts).

1. The factual issues for determination

(a)     The Guarantee and the Credit Agreement

1. A copy of the Guarantee was in evidence.[34]  It was dated 25 November 2008.  Its terms were not in dispute.  The Guarantee was a six‑page document bearing the title 'Deed of Guarantee and Indemnity'.

   [34] Exhibit 1.2.

2. The Guarantee, which was executed as a Deed, bears a signature above the name Morenza Charlene Ah Chee.  That signature was witnessed by a person whose signature appears above the name Adrian Turner.  I explain below the basis for my conclusion that the Guarantee was signed by Ms Ah Chee.

3. The Guarantee contained a number of terms, including that Ms Ah Chee provided the Guarantee in consideration of Stramit (which was defined to include Amtel) agreeing to supply and/or continuing to supply goods and services to Shedco from time to time.[35]

   [35] Exhibit 1.2, cl 2.

4. The Guarantee contained an 'all moneys' clause:  Ms Ah Chee covenanted that she unconditionally and irrevocably guaranteed to Stramit the due and punctual payment of all present and future debts and all other monies payable by Shedco to Stramit on any account whatsoever, including interest, expenses and costs on an indemnity basis.[36]  Under the Guarantee, Ms Ah Chee's obligations were said to be 'unlimited, continuing and not subject to the performance of any condition precedent'[37] and could not be discharged even by the payment by Shedco or by Ms Ah Chee of all the moneys due and payable to Stramit at any given point in time, or by the variation (including by extension) of Shedco's credit limit.[38]  Any rights of a surety inconsistent with the provisions of the Guarantee were waived.[39]

   [36] Exhibit 1.2, cl 2.1 - 2.2.

   [37] Exhibit 1.2, cl 4.

   [38] Exhibit 1.2, cl 5.

   [39] Exhibit 1.2, cl 6.

5. The Guarantee did not contain any statement or warning indicating the need for the guarantor to read the document carefully or to obtain independent advice before executing it.

6. The Credit Agreement was also in evidence.  Its terms were also not in dispute.  Under the Credit Agreement, Shedco applied to Stramit (which was defined to include Amtel in Western Australia) to purchase Goods and Services (defined to mean building products and services provided by Stramit, including delivery of those building products) on credit, subject to the Credit Terms set out in the Credit Agreement.[40]  Those terms included that Stramit (and thus Amtel) would open a Credit Account in Shedco's name, that the price of the Goods and Services supplied to Shedco and all other amounts owed by Shedco would be debited to that account, and Shedco would pay all invoices for Goods and Services sold on credit in full before the last day of the month following their delivery.[41]  Shedco applied for a credit limit of $1 million.  Under the Credit Terms, Stramit was entitled, in its sole discretion, to increase or decrease the Credit Limit, or stop providing further credit.[42]  In addition, Shedco agreed that it would execute a mortgage or other instrument of security to secure payment of the monies owed to Stramit, if required by Stramit to do so.[43]

   [40] Exhibit 1.1, pt 2, cl 1.

   [41] Exhibit 1.1, pt 2, cl 3, 7.

   [42] Exhibit 1.1, pt 2, cl 5.

   [43] Exhibit 1.1, pt 2, cl 11.

1. In consideration of Stramit agreeing to supply the Goods and Services to Shedco on credit, Mr Ah Chee (in his personal capacity) and Shedco Holdings guaranteed the payment of all monies owed by Shedco to Stramit at any time.[44]  Those guarantees appear to have been given on or about 14 March 2008 when Mr Ah Chee submitted the application on Shedco's behalf for the supply of Goods and Services on credit under the Credit Agreement.

(b)     Did Ms Ah Chee sign the Guarantee?

[44] Exhibit 1.1.

1. In her Amended Defence in each action, Ms Ah Chee did not admit that she signed the Guarantee.  She did not allege that her signature had been forged or that there was fraud in the creation of the document.  Instead, in opening, her counsel outlined her case as being that 'it could be her signature but she doesn't recall signing it'.[45]  Ms Ah Chee's evidence in chief on this question, as set out in her witness statement, was as follows:

   the only explanation for my apparent signature on the Deed of Guarantee and Indemnity, assuming it is my signature, is that I unknowingly signed it on or about 25 November 2008 when I was handed some documents which I was asked to sign.

   [45] ts 149.

2. Ms Ah Chee also stated:

   Upon reviewing the [Guarantee] it appears as though my signature is on the [Guarantee] but I have never read or seen that document until sometime after the Proceedings had been commenced by the Plaintiffs.[46]

   [46] Exhibit 7 [8], [26].

3. However, during her oral evidence in chief at the trial, Ms Ah Chee was taken to the Guarantee and accepted that the signature on the Guarantee was hers.[47]  She then confirmed that it was her signature, that she signed the Guarantee on 25 November 2008, and that Mr Turner witnessed her signature and put the date on the document.[48]

   [47] ts 157.

   [48] ts 181.

4. Ms Ah Chee explained that she did not actually recall signing the Guarantee on that date, but rather that she signed a bundle of documents where yellow sticky post-it notes indicated where she was to sign, and she saw Mr Turner signing the documents and dating them.[49]  She accepted that the only date on which she signed security documents for Stramit and Amtel was 25 November 2008.[50]

   [49] ts 182.

   [50] ts 182.

5. I find that Ms Ah Chee signed the Guarantee.

(c)     In what circumstances did Ms Ah Chee sign the Guarantee?

1. The evidence at the trial which pertained to the circumstances in which Ms Ah Chee signed the Guarantee can conveniently be dealt with under six headings:

   (i)The requirement by Stramit and Amtel that further security be provided for the continued provision of goods to Shedco on credit;

   (ii)Was Ms Ah Chee requested to sign a guarantee for Shedco's debt?

   (iii)Ms Ah Chee's concern about providing further security;

   (iv)When were the documents delivered for Ms Ah Chee's signature?

   (v)When were the documents signed by Ms Ah Chee and in what circumstances? and

   (vi)Did Ms Ah Chee know that the documents she signed included the Guarantee?

2. I turn to explain my factual findings arising from the evidence pertaining to each of these matters.

1. The requirement by Stramit and Amtel that further security be provided for the continued provision of goods to Shedco on credit

1. Following Mr Ah Chee's execution of the Credit Agreement, Stramit and Amtel provided goods to Shedco on credit.  Mr Fawcett's evidence[51] and the documents in evidence[52] indicated, and I find, that in the months prior to November 2008, representatives of Stramit and Amtel had become increasingly concerned about the quantum of Shedco's liability to Stramit and Amtel for goods purchased on credit (which despite the Credit Limit of $1 million under the Credit Agreement had exceeded $2 million at one point),[53] and about Shedco's failure to reduce that liability despite previous assurances that that would occur.

   [51] Exhibit 2 [40] ‑ [41].

   [52] Exhibits 1.4, 1.5, 1.9.

   [53] Exhibit 1.4.

2. Mr Fawcett's evidence, which I accept, was that in early November 2008, he met with Mr Ah Chee, and Mr Tim Richards (who was then the General Manager of Stramit) at a café in Kingsley.  Ms Ah Chee did not attend that meeting.[54]  The purpose of the meeting was 'to discuss the status of the Shedco account and actions that needed to be taken to bring Shedco's account back in order, as well as additional security'.[55]  According to Mr Fawcett, Mr Richards told Mr Ah Chee that 'if there was to be continued supply and credit to Shedco, it was necessary that additional security would need to be put in place.  David was open to providing further security'.[56]

   [54] ts 101; see also Exhibit 14 [22].

   [55] Exhibit 2 [53] - [54].

   [56] Exhibit 2 [54].

3. There was then discussion about properties owned by Mr and Ms Ah Chee which could be offered as security.  Mr Ah Chee told Mr Fawcett and Mr Richards that he and Ms Ah Chee would not offer the Lord Street property as security 'as that was Morenza's home'.[57]  (The reference to the Lord Street property was a reference to a property at Lot 608 Lord Street Henley Brook (the Lord Street property) where Mr and Ms Ah Chee lived.)  I accept that Mr Ah Chee sought to resist any requirement for the Lord Street property to be offered as security for Shedco's debt.

   [57] Exhibit 2 [53] - [54], Exhibit 14 [25].

4. After this meeting took place, Mr Anderson, who was Stramit's credit manager, spoke with Mr Richards and learned that Mr Ah Chee had agreed that additional security would be provided for Shedco's debt.  Mr Anderson's evidence, which I accept, was that he then spoke with Mr Ah Chee:

   I told him that Stramit would require a guarantee from Morenza.  David responded with words to the effect that 'Morenza signs nothing'.[58]

   [58] Exhibit 4 [34].

5. Mr Ah Chee had a similar recollection of that conversation.  He confirmed that Mr Anderson had indicated that a guarantee would be required from Ms Ah Chee, and that his response was to tell Mr Anderson that 'Morenza will not sign anything like that [-] it is my business and you already have a signed director's guarantee from me'.[59]

   [59] Exhibit 14 [32].

6. That appears to have been the first occasion on which a reference was made to the fact that Stramit (and Amtel) wanted Ms Ah Chee to provide a personal guarantee for Shedco's debts.  However, the requirement for the Guarantee was referred to in subsequent correspondence sent to Mr and Ms Ah Chee by Stramit's staff.

7. On 19 November 2008, Mr Richards sent an email to Mr Ah Chee (which was copied to Mr Fawcett).  Mr Richards purported to summarise the position reached in the discussions between him, Mr Fawcett and Mr Ah Chee, namely that Mr Ah Chee had

   requested extended terms due to cashflow issues … and Stramit will support the Shedco account on the following basis:

   -     sufficient security is provided; and

   -regular cash payments are made to maintain the account at an acceptable extended level.

   You requested support as per the limits below for 3 to 4 months.

   WA - $1,200,000

   …

   Total $2,350,000.

   …

   In respect of security you have offered ten (10) properties.

   …

   The properties above are owned by varying combinations of yourself, Morenza and Shedco Holdings.  To ensure appropriate security is in place we have prepared, together with the mortgage documentation, guarantee documents for Morenza to sign.  Paul Fawcett will have all documentation for signature this week.[60]

   [60] Exhibits 1.17, 2 [55].

8. I find that that email was sent to Mr Ah Chee, in those terms, including its reference to the requirement that Ms Ah Chee would be required to sign a guarantee.

9. Mr Fawcett's evidence was that on 20 November 2008 he sent an email to Mr Ah Chee and to Ms Ah Chee.  That email was in the following terms:

   David, Morenza

   Further to telephone conversation today with David, below is a summary of the actions for tomorrow.  I will confirm the timing for tomorrow once I have all the relevant paperwork:-

   1/Deliver following paperwork AM:-

   •[Mortgages for 9 properties]

   •Deed of guarantee and Indemnity for Morenza to sign.

   …

   We will leave these documents with you so that you are able to have them reviewed by yourselves and any advisor that you may wish to use.

   We will then look to collect these signed documents along with any title documents for the 1^st mortgages detailed above later on Friday.  Please note that some of the documents need to be signed by both you and Morenza and then witnessed.[61]

   [61] Exhibit 1.19.

10. I find that that email was sent to Mr and Ms Ah Chee on 20 November 2008.

11. In her witness statement, Ms Ah Chee said that she had only recently seen emails which Stramit's representatives sent to her in November in relation to the Guarantee.  Her evidence was that she did not recall seeing them or reading those emails at the time.[62]

    [62] Exhibit 7 [37].

12. In cross-examination, Ms Ah Chee acknowledged that she had an email address at Shedco where she used to receive emails.[63]  She agreed that she received various emails sent to her at that address from representatives of Stramit during October and November 2008.[64]  Ms Ah Chee denied the proposition that she invariably read emails when she received them.  She claimed that if the email was just addressed to Mr Ah Chee and she was just 'copied in' she would not necessarily read the email.[65]  She did, however, agree that it was her usual practice to read emails that came to her email address 'most of the time'.[66]

    [63] ts 205.

    [64] ts 205 - 206, 210; Exhibits 1.4, 1.5, 1.6, 1.8, 1.9, 1.15, 1.16.

    [65] ts 211.

    [66] ts 212.

13. In addition, Ms Ah Chee's evidence was that she could not recall receiving Mr Fawcett's email of 20 November 2008, but accepted that she 'must have' received it[67] and that it was likely that she had received it.[68]  However, Ms Ah Chee claimed that she had not seen the reference to the Guarantee in that email.[69]  I reject that evidence as improbable and self‑serving, in view of her acceptance that it was likely that she received the email.

    [67] ts 211.

    [68] ts 212.

    [69] ts 217.

14. I find that it is more likely than not that Ms Ah Chee received and read Mr Fawcett's email on or about 20 November 2008.

15. Mr Fawcett's evidence[70] was that he sent Mr Ah Chee and Ms Ah Chee an email on Saturday 22 November 2008,[71] the terms of which are set out at [123] below. I note that at the bottom of that email was a further copy of Mr Fawcett's email of 20 November 2008. Ms Ah Chee denied that she received that email.[72]  However, in view of Ms Ah Chee's acceptance that she received emails sent to her Shedco email address, I find that it is more likely than not that Ms Ah Chee received Mr Fawcett's email of 22 November 2008, which by virtue of its attachment to his email of 20 November 2008 also contained a reference to the fact that Ms Ah Chee would need to sign a personal guarantee for Shedco's debts.

    [70] Exhibit 2 [63].

    [71] Exhibit 1.26.

    [72] ts 211.

16. Mr Ah Chee and Mr Richards spoke again on 21 November 2008 in respect of the arrangements for Stramit's continued supply of goods on credit to Shedco.  Mr Ah Chee did not dispute that he had a discussion with Mr Richards on 21 November 2008 although he suggested that that discussion took place at a meeting.  His evidence was that he recalled saying words to the effect, '[u]nder no circumstance will Morenza sign a Deed of Guarantee and Indemnity nor will our family home be part of any arrangement'.[73]  Even if Mr Ah Chee conveyed that position to Mr Richards, there was clearly no change in Stramit's position that it required Ms Ah Chee to provide a guarantee.

    [73] Exhibit 14 [34].

17. Later on 21 November 2008, Mr Richards sent an email to Mr Ah Chee (which was copied to Mr Fawcett) in which Mr Richards sought to 'confirm our discussion today'.[74]  In that email, Mr Richards stated that Stramit would provide credit to an aggregate invoiced level of $3.5 million 'subject to Stramit receiving sufficient security'.  He then set out the 'securities and documentation required' which were said to be 'in line with discussions [and] communications with Paul' (that appears to be a reference to Mr Fawcett).  The email listed a number of first and second mortgages and caveats, and the Guarantee.

    [74] Exhibit 1.25.

18. Mr Ah Chee did not dispute that he read Mr Richards' email at the time.[75]  If that email did not contain an accurate record of the conversation between Mr Ah Chee and Mr Richards, and particularly if it was inaccurate in relation to the security required, I would have expected Mr Ah Chee to respond without delay to Mr Richards' email.  Yet there was no evidence that Mr Ah Chee replied to Mr Richards' email to tell him that Ms Ah Chee would not sign a guarantee for Shedco's debt to Stramit.

    [75] ts 399.

19. Mr Ah Chee claimed he did not dispute Stramit's requirement for a guarantee from Ms Ah Chee 'because I didn't realise what it actually meant'.[76]  I do not accept that that was the case, given the communications which had preceded Mr Richards' email and which had referred expressly to the requirement for a guarantee from Ms Ah Chee.

    [76] ts 399.

20. On about 21 November 2008, Mr and Ms Ah Chee discussed Stramit's requirement for additional security for Shedco's debt.  Ms Ah Chee's evidence was that Mr Ah Chee told her Stramit would secure Shedco's credit limit if they signed mortgages over some of the blocks of land they owned, to cover Shedco's debt.[77]  Mr Ah Chee's evidence was to the same effect.[78]  Ms Ah Chee acknowledged that in the course of that discussion Mr Ah Chee told her 'that someone from Stramit would be bringing the documents which I needed to sign within the next couple of days'.[79]

    [77] Exhibit 7 [21].

    [78] Exhibit 14 [28].

    [79] Exhibit 7 [22].

21. In the same conversation, Mr and Ms Ah Chee also discussed what security would be provided to Stramit (and Amtel).  Ms Ah Chee's evidence was:

    I recall that I specifically said to David that 'I am happy to use some of our blocks as security to increase Shedco's credit limit with Stramit but under no circumstances will I sign anything which will place our family home at risk.' David replied with words to the effect of 'I will make sure that is not the case'.[80]

    [80] Exhibit 7 [22].

22. Mr Ah Chee also recalled Ms Ah Chee telling him that under no circumstances would she agree to sign anything regarding their family home (that is, the Lord Street property).[81]  Mr Ah Chee's evidence was that he 'replied to Morenza with words to the effect of "I will make sure that doesn't happen"'.[82]

    [81] Exhibit 14 [29].

    [82] Exhibit 14 [30].

23. I find that Ms Ah Chee told Mr Ah Chee that she did not wish to provide the Lord Street property as security for Shedco's debt to Stramit, and that he assured her that that would not happen.

24. Mr Ah Chee then sought to have the Lord Street property excluded from the properties which Stramit required as security.  On 23 November 2008, Mr Ah Chee sent an email to Mr Richards in which he sought to clarify whether Stramit required a mortgage over the Lord Street property, having regard (amongst other things) to the value of other properties to be offered as security.[83]  He told Mr Richards that 'Morenza is not happy to sign that as it is our house'.[84]

    [83] Exhibit 14, Annexure 'DA-5'.

    [84] Exhibit 1.66.

25. That email did not refer to, or reject, Stramit's requirement that Ms Ah Chee provide a guarantee.  Mr Ah Chee's evidence was that the references in that email to the security involved reflected his understanding of the negotiations he was having with Stramit.[85]  In other words, the subject of those negotiations appears to have been confined to Stramit's insistence that a mortgage be given in respect of the Lord Street property.  (If the provision of the Guarantee was not in dispute there would, of course, have been no need for Mr Ah Chee to raise that in his email to Mr Richards.)

    [85] ts 415.

26. In his evidence, Mr Ah Chee initially indicated that at no time had Stramit's employees requested that Ms Ah Chee provide a guarantee.[86]  I reject Mr Ah Chee's evidence and find that Stramit's representatives had expressly required that Ms Ah Chee provide a personal guarantee for Shedco's debts, for the following reasons. 

    [86] ts 393.

27. First, in cross‑examination, Mr Ah Chee accepted that Stramit's staff had requested a guarantee from Ms Ah Chee in an email, but he proceeded to suggest that the guarantee requested pertained only to a particular property owned by Ms Ah Chee:

    Are you saying Stramit and Amtel never asked you to get a guarantee and indemnity from Mrs Ah Chee ---? --- No.

    ‑‑‑ or required one from her? --- No. They did not.

    At any point ---? --- The only thing they asked for was security over the Derby property.

    Okay.  Is that ---? --- That was it.

    You say they never told you that or asked you that in a meeting, and they never wrote to you about that either? --- No, they didn't.

    Never told you in a meeting? --- There was one email ---

    Yes? --- that had it listed at the bottom.

    Yes? ---Okay?  A deed of guarantee indemnity.

    …

    Thank you? --- That was never requested.[87] 

    [87] ts 393.

28. A little later in cross‑examination, Mr Ah Chee was again asked about whether Stramit and Amtel's representatives had requested a guarantee from Ms Ah Chee.  His evidence was as follows:

    Now, was there a discussion about a guarantee from Mrs Ah Chee? --- No. Not a guarantee at any stage, apart from the security on 67 Knowsley Street.

    What sort of security on Knowsley Street? --- To give second mortgage, or whatever they needed to take security over it, because there was already a first mortgage on the property.

    So why are you linking that to the question of a guarantee, if that was ‑‑‑? ‑‑‑ That's the only guarantee she was asked to give.[88]

    [88] ts 397.

29. He gave similar evidence a little later.[89]  He said that the 'guarantee, as far as I was concerned, only related to Knowsley Street'.[90]

    [89] ts 403.

    [90] ts 404.

30. Later in his evidence he again said that 'the only thing we agreed to sign ‑ Morenza was going to sign, was the security on the Knowsley Street property.  That was the only thing we agreed for her to sign a guarantee on'.[91]

    [91] ts 408.

31. Secondly, this aspect of Mr Ah Chee's evidence was inconsistent with the documentary evidence (especially Mr Fawcett's email of 20 November 2008 and Mr Richards' email of 21 November 2008), with the evidence given by Mr Fawcett and Mr Anderson, and with other parts of his own evidence.

32. I find that Mr Ah Chee had been advised orally by Mr Anderson, and in writing by email from Mr Fawcett, and Mr Richards, that Stramit required that Ms Ah Chee provide a personal guarantee for the payment of Shedco's debts.

1. Was Ms Ah Chee requested to sign a guarantee for Shedco's debt?

1. In her evidence, Ms Ah Chee stated that she was not told by anyone from Stramit or Amtel that she was required to sign the Guarantee.[92]

   [92] Exhibit 7 [37] - [38].

2. I accept that no one from Stramit or Amtel spoke to Ms Ah Chee in relation to the requirement that she provide a personal guarantee.  (There was no evidence to the contrary.)  I also accept Ms Ah Chee's evidence that no one from Stramit or Amtel wrote to her by letter in relation to that requirement.[93]

   [93] Exhibit 7 [37] - [38].

3. I find, however, that Ms Ah Chee was put on notice that she would be required to provide a guarantee for Shedco's debts as a result of the email Mr Fawcett sent to her on 20 November 2008, and which I have found Ms Ah Chee read on or about that date, and by virtue of her receipt of another copy of that email which was attached to Mr Fawcett's email of 22 November 2008.

1. Ms Ah Chee's concern about providing further security

1. I have already made reference to the evidence that Ms Ah Chee's response to Stramit's request for additional security was to indicate that she would not agree to the Lord Street property being offered as security for Shedco's debt.  Ms Ah Chee's evidence was that she would not have signed the documents in the bundle of documents provided to her on 25 November 2008 if she had been aware that they contained the Guarantee, because she thought that by providing a guarantee, she would put the Lord Street property at risk.[94]

   [94] Exhibit 7 [25].

1. The import of this evidence was far from clear.  It appeared to be raised to demonstrate that Ms Ah Chee did not know that the Guarantee was in the bundle of documents.  Bu the evidence was problematic as it was inconsistent with Ms Ah Chee's case that she was never told she would be required to sign a guarantee.

2. In any event, I reject Ms Ah Chee's evidence that she did not wish to sign the Guarantee because to do so would put the Lord Street property at risk, for three reasons.

3. First, the evidence very clearly established that Ms Ah Chee was not the registered proprietor of the Lord Street property as at November 2008.  At that time, the registered proprietor of the Lord Street property was Shedco Holdings.[95]  As Ms Ah Chee was not the registered proprietor of the Lord Street property, it was not clear how her provision of a personal guarantee to Stramit would have placed the Lord Street property at risk. 

   [95] Exhibit 1.127, Exhibit DWAC-3

4. Secondly, there was evidence that Shedco Holdings owned the Lord Street property in its capacity as the trustee for the DM Property Trust.[96]  (A copy of the trust deed for the DM Property Trust was also in evidence,[97] which showed that the primary beneficiaries of the trust were Mr Ah Chee, Ms Ah Chee and any children of theirs.  Mr Ah Chee was named in the trust deed as the first appointor of the trustee of that trust during his lifetime, and under the trust deed would be succeeded by Ms Ah Chee.)  More significantly Shedco Holdings had already provided a guarantee for Shedco's liability to Stramit under the Credit Agreement and one of the terms of that guarantee was to create a charge over Shedco Holdings' property, including the Lord Street property.  In Mr Richards' email to Mr Ah Chee of 21 November 2008, the Lord Street property was identified as a property in respect of which a caveat was to be lodged.[98]  There was evidence that Stramit lodged a caveat over the Lord Street property on 26 November 2008.[99]  A copy of that caveat was in evidence.  It indicated that Stramit sought to protect its equitable interest arising from the charge on the Lord Street property provided by Shedco Holdings under the Deed of Guarantee and Indemnity executed by Mr Ah Chee, on Shedco Holdings' behalf, on 14 March 2008, at the same time that he signed the Credit Agreement.[100]

   [96] In evidence was a copy of an affidavit sworn by Mr Ah Chee for the purpose of proceedings in the Federal Court in 2010.  In that affidavit, Mr Ah Chee deposed that Shedco Holdings was the trustee of the DM Property Trust and was the registered proprietor of a number of properties, including the Lord Street property, in its capacity as the trustee of the DM Property Trust:  see Exhibit 1.127 [4] - [5].

   [97] Exhibit 1.127.

   [98] Exhibit 1.25. 

   [99] Exhibit 1.29; see also Exhibit 1.127, Exhibit DWAC-3.

   [100] Exhibit 1.29; see also Exhibit 1.1.

5. Faced with this evidence, Ms Ah Chee was unable to explain how signing the Guarantee would have put the Lord Street property at risk.[101]

   [101] ts 213.

6. Thirdly, and most importantly, Ms Ah Chee accepted that while her evidence was that she would never have signed a guarantee which put the Lord Street property at risk, she knew in November 2008 that she was not the registered owner of that property.[102]  These flaws in Ms Ah Chee's claimed concern about the Lord Street property very significantly undermined her claim that she did not want to provide the Guarantee, and in turn, her claim that she did not know it was in the bundle of documents she signed.

1. When were the documents delivered for Ms Ah Chee's signature?

   [102] ts 199.

1. The email sent by Mr Fawcett to Mr Ah Chee and to Ms Ah Chee on 20 November 2008 indicated that he intended to deliver documents to them for their signature on 21 November 2008.

2. Mr Fawcett's evidence was that after sending that email, he collated the various security documents to which it referred (including the Guarantee), placed them in an envelope and 'satisfied [him]self that all of the documents listed in [his] email of 20 November 2008 were included in the envelope'.[103]  Mr Fawcett recalled that the documents contained stickers or markers indicating where they were to be signed.[104]  Mr Fawcett did not recollect including a covering letter with the documents, or any document, indicating that Mr and Ms Ah Chee should seek independent legal advice before signing the documents.[105]

   [103] Exhibit 2 [59].

   [104] Exhibit 2 [59].

   [105] ts 103.

3. Mr Fawcett's evidence was that he delivered the documents to Mr Ah Chee.  He acknowledged that he did not have an independent recollection of the date on which he delivered the documents.[106]  However, he did recall meeting with Mr Ah Chee and leaving the documents with him.[107]  His evidence was:

   I recall that David said to me words to the effect that I should wait and he would sign the documents now.  I replied with words to the effect that I was not prepared to witness the documents.  I left the documents with David for signing.[108]

   [106] ts 92. 

   [107] ts 92.

   [108] Exhibit 2 [61].

4. Mr Fawcett's evidence was that he sent Mr Ah Chee and Ms Ah Chee an email on Saturday 22 November 2008, which was in the following terms:

   David,

   Further to our meeting yesterday:-

   •Patrick Pilot will contact Morenza on Monday and arrange to collect the signed paperwork along with the relevant titles as discussed.

   …

   •You were going to contact Tim over the weekend to discuss Lord Street.

   •Please note that you are unable to witness Morenza's signature and Morenza is unable to witness yours.  Patrick or any Stramit employee will also not witness them.

   •Once we have the completed paperwork … please note that there is also the mortgagor acknowledgments to be signed, these are the individual sheets attached to the front, we will lodge them.

   As you are aware, I will be over East next week, but please do not hesitate to contact me if you have any questions.[109]

   [109] Exhibit 2 [63].

5. The content of that email provides further support for the conclusion that Mr Fawcett delivered the documents to Mr Ah Chee on Friday 21 November 2008.

6. Finally, during the evening of 25 November 2008, Mr Fawcett sent an email to Mr Ah Chee and Ms Ah Chee, in which he confirmed that Stramit had received the signed paperwork 'that I left with David on Friday'.[110]  That email also provides support for a finding that Mr Fawcett left the bundle of documents (containing the Guarantee) with Mr Ah Chee on Friday 21 November 2008.

   [110] Exhibit 1.27.

7. In cross-examination, Mr Fawcett was not challenged as to the accuracy of his recollection that he delivered the documents to Mr Ah Chee.

8. Mr Ah Chee's evidence was that he did not recall Mr Fawcett personally handing the documents to him at all.[111]  Mr Ah Chee's evidence was that Mr Long arrived on 25 November 2008 with a bundle of documents and that that was the first time those documents had been provided.[112]  However, it was apparent that Mr Ah Chee had no independent recollection of Mr Long's delivery of the documents.  His evidence was that he knew that 'from my emails'.[113]

   [111] ts 405.

   [112] ts 405.

   [113] ts 405.

9. I do not accept Mr Ah Chee's evidence that the first time on which he was presented with documents from Stramit for his signature was when Mr Long arrived with a bundle of documents on 25 November 2008.  He did not deny that Mr Fawcett delivered the documents several days before.  Rather, he simply had no recollection of that occurring.  Furthermore, Mr Ah Chee's evidence that the documents were delivered on 25 November 2008 is inconsistent with the content of Mr Fawcett's emails of 20 and 22 November 2008.  Those emails were prepared contemporaneously with the events in question and I prefer that evidence to Mr Ah Chee's evidence on this issue.

10. Ms Ah Chee's evidence was that Mr Long delivered an envelope containing security documents to Shedco's premises on 25 November 2008.[114]  She said that she saw Mr Long arrive with the documents and give them to Mr Turner,[115] that Mr Long waited while Mr Turner gave the documents to her to sign, and that he then took the documents away with him.[116]

    [114] ts 188.

    [115] ts 189 - 190.

    [116] ts 189.

11. Ms Ah Chee's evidence does not exclude the possibility that Mr Fawcett delivered a bundle of documents to Mr Ah Chee on 21 November 2008.

12. Accordingly, I find that Mr Fawcett delivered a bundle of documents to Mr Ah Chee on 21 November 2008, and that that bundle of documents included the Guarantee.

13. As I explain below, the evidence suggested very clearly that neither Mr Ah Chee nor Ms Ah Chee signed the documents until 25 November 2008.  There was no evidence as to what Mr Ah Chee did with the bundle of documents between 21 November 2008 and 25 November 2008.  The documentary evidence suggested that during the intervening period Mr Ah Chee sought to negotiate (unsuccessfully) with Mr Richards about the security which Stramit insisted Shedco provide.[117]  The most likely possibility appears to be that Mr Ah Chee kept the documents and only signed them (and had Mr Turner give them to Ms Ah Chee to sign) once Mr Long arrived to collect them.  That would explain why Mr and Ms Ah Chee did not sign the documents until 25 November 2008.  However, that possibility was not explored in the evidence, and it is unnecessary to make any finding in relation to it.

1. When were the documents signed by Ms Ah Chee and in what circumstances?

   [117] Exhibit 2, Annexure DA-5.

1. The evidence very clearly established that Ms Ah Chee signed the Guarantee on 25 November 2008.

2. The Guarantee was signed by Ms Ah Chee, witnessed by Mr Turner, and dated 25 November 2008.[118]

   [118] Exhibit 1.2.

3. Ms Ah Chee's evidence was that the bundle of documents was delivered to Shedco's premises by Mr David Long on 25 November 2008.  She telephoned Mr Ah Chee to find out why Mr Long knew what was in the documents.  She then signed those documents in Mr Turner's presence, and he witnessed her signature.  She said that she did not read the documents when she signed them:

   as David had only a few days ago assured me that the [Lord Street property] would not be part of his arrangements with Stramit.

   … I did not read them and just flicked to where the sticky tabs were and signed.[119]

   [119] Exhibit 7 [34] - [35].

4. Mr Turner's evidence was that on 25 November 2008, Mr Long approached him at work, and gave him an A4 sized envelope which he said contained documents for Mr and Ms Ah Chee to sign.  Mr Long indicated he would wait while the documents were signed.  Mr Turner said that Mr Long also requested that Mr and Ms Ah Chee clarify 'the street number or lot number of one of the blocks and the certificates of title for some properties'.[120]

   [120] Exhibit 17 [24] - [37].

5. Mr Turner said that he then telephoned Mr Ah Chee, who told him that '[i]t's just some mortgages we need to sign to extend the business credit limit.  Just take them to Morenza for her to sign'.[121]

   [121] Exhibit 17 [27].

6. Mr Turner's evidence was that after this conversation he opened the envelope, took the documents to Ms Ah Chee, and told her that Mr Long was waiting for her to sign the documents.  He said:

   Morenza said to me words to the effect 'what are they?' and I replied with words to the effect of 'David said it was just mortgage documents for you to sign to extend the credit limit for the business'.  Also, that 'Longey wanted to know something about a lot number or street number on one of the blocks and something about some certificates of title'.[122]

   [122] Exhibit 17 [28] - [29].

7. Mr Turner said that Ms Ah Chee then telephoned Mr Ah Chee and at one point in their conversation he heard her ask how Mr Long knew what was in the envelope.[123]

   [123] Exhibit 17 [30].

8. Mr Turner's evidence was that the documents in the bundle had sticky tabs on them to indicate where to sign, and that Ms Ah Chee then proceeded to sign the documents.  He then witnessed her signature and took the documents back to Mr Long.[124]

   [124] Exhibit 17 [24] - [37].

9. Mr Ah Chee's evidence as to what happened on 25 November 2008 was broadly consistent with the evidence given by Mr Turner.  His evidence was that on 25 November 2008, Mr Turner telephoned him and told him that Mr Long had documents for him and Ms Ah Chee to sign.  Mr Ah Chee said:

   I replied with words to the effect of 'Can you bring them to me and then take them to Morenza and witness her signature' or 'Can you get Morenza to sign them and witness her signature'.  I cannot recall if I signed the documents before Morenza or if Morenza signed them first.  I think Adrian brought them to me first.[125]

   [125] Exhibit 14 [39].

10. Mr Ah Chee was 'fairly sure' that he signed the bundle of documents first, and that Mr Turner waited while he signed them, and then Mr Turner then took them, and gave them to Ms Ah Chee.[126]

    [126] ts 410.

11. I note that Mr Long had no recollection of delivering documents or an envelope to Ms Ah Chee, or of waiting to collect those documents or the envelope.[127]

    [127] Exhibit 3 [15].

12. I do not accept the evidence of Ms Ah Chee and Mr Turner that on 25 November 2008, Mr Long brought a bundle of documents for their signature.  That evidence is inconsistent with the evidence of Mr Fawcett, and with the documentary evidence, which I prefer, for the reasons outlined above.

13. Mr Fawcett's evidence was that 'to the best of my recollection, the signed Security Documents were collected from Shedco by [Mr David] Long on Tuesday 25 November 2008'.[128]  On 25 November 2008, Mr Fawcett received an email from Mr Steve Anderson (Stramit's credit manager) who confirmed that he had

    the mortgage documents and deed of guarantee and indemnity back from Shedco.  They appear to have been signed correctly. … I can … lodge caveats as we now have Morenza's signature on the deed of guarantee.[129]

    [128] Exhibit 2 [64].

    [129] Exhibits 1.28, 4 [37].

14. Further, in the evening of 25 November 2008, Mr Fawcett sent an email to Mr Ah Chee and Ms Ah Chee, in which he confirmed receipt of the 'signed paperwork, that I left with David on Friday'.[130]

    [130] Exhibit 1.27.

15. However, I find that Ms Ah Chee signed the documents, including the Guarantee, on 25 November 2008, in the presence of Mr Turner, who witnessed her signature, and that those documents were then given to Mr Long (who had come to collect them).  The evidence of Ms Ah Chee and Mr Turner in that respect is not inconsistent with the evidence of Mr Fawcett, and the documentary evidence. 

16. The next question is whether Ms Ah Chee read the documents she signed before she signed them, or while she was signing them.  I accept Ms Ah Chee's evidence that she did not read the documents before she signed them, nor did she review them while she was signing them.  My reasons for making that finding are as follows.

17. First, Ms Ah Chee was clear in her evidence that she did not read or review the documents when she signed them.  In cross-examination, Ms Ah Chee maintained that she did not read any of the documents in the bundle of documents she signed on 25 November 2008.[131]  Ms Ah Chee's evidence was also consistent with the evidence she gave in an affidavit she swore in these proceedings on 31 January 2014, where she deposed that she only signed the 'pages where sticky notes instructed, as Mr David Long was in a hurry'.[132]

    [131] ts 188.

    [132] Exhibit 11 [33].

18. Secondly, the evidence given by Ms Ah Chee, and Mr Turner, as to what occurred on 25 November 2008 was consistent, in so far as it concerned the manner in which Ms Ah Chee signed the documents, and the fact that she did not read them.

19. Thirdly, for the reasons given above I am not persuaded that the evidence of Ms Ah Chee should be disregarded in its entirety.  Furthermore, some aspects of Ms Ah Chee's evidence (and of Mr Turner's evidence, and Mr Ah Chee's evidence) as to what occurred on 25 November 2008 was consistent with the evidence of Mr Fawcett, and the documentary evidence.  By way of example, the emails to which I have already referred confirmed that the signed documents were given to Mr Long.  In addition, Ms Ah Chee's evidence that she was concerned about Mr Long's knowledge of the contents of the envelope, and her conversation with Mr Ah Chee about that concern, is consistent with evidence that both Mr and Ms Ah Chee raised their concerns about that matter with Mr Fawcett later on 25 November 2008.[133]

    [133] Exhibit 2, Annexure 'PF-22'; Exhibit 14, Annexure 'DA-7'.

20. I do not overlook the fact that there were some differences in the evidence of Ms Ah Chee, Mr Ah Chee and Mr Turner, as to what occurred on 25 November 2008.  By way of example, they differed in their evidence as to whether Mr Ah Chee was at Shedco's premises at the time the documents were signed.[134]  In addition, Ms Ah Chee recollected that it took 10 minutes to sign the documents,[135] whereas Mr Turner thought it was more like two or three minutes[136] and not 10 minutes.[137]  Such discrepancies were not surprising given the passage of time since the events of that day.

    [134] ts 409; cf ts 437.

    [135] ts 235.

    [136] ts 442.

    [137] ts 442.

21. Fourthly, Ms Ah Chee's evidence that she did not read the documents is not improbable.  It is a common occurrence that people - even experienced business people - frequently do not read legal or contractual documents before they sign them.  It is also not surprising that Ms Ah Chee did not read the documents in this instance: she acknowledged that she was expecting the delivery of the security documents for her signature, and in her telephone conversation with Mr Ah Chee on 25 November 2008 he told her that the bundle of documents contained the security documents which Stramit required them to sign.[138]

    [138] Exhibit 7 [27] - [30].

22. For completeness, I note that Ms Ah Chee accepted that among the documents in the bundle she signed on 25 November 2008 was a Mortgagor's Acknowledgment.[139]  The Mortgagor's Acknowledgment bears the signature of Mr Ah Chee and Ms Ah Chee, and was witnessed in each case by Mr Turner.[140]  The Mortgagor's Acknowledgment stated that its signatories (that is, Mr Ah Chee and Ms Ah Chee) had received copies of the Security Documents (which included the Guarantee and the Credit Agreement and guarantee signed by Mr Ah Chee), had read the Security Documents before signing them, understood the general nature and purport of the Security Documents and their obligations under those documents, and understood that Stramit was entitled to rely on the Mortgagor's Acknowledgment.  The existence of the signed Mortgagor's Acknowledgment does not cast doubt on Ms Ah Chee's claim that she did not read the bundle of documents which she signed, including the Guarantee.  Ms Ah Chee's evidence was that she did not read this document either, but rather just signed it where the yellow sticky notes indicated.[141]

    [139] ts 184.

    [140] Exhibit 1.67.

    [141] ts 185.

23. Finally, I note that counsel for Stramit and Amtel accepted that it was open to the Court to find that Ms Ah Chee signed the documents, including the Guarantee, in the way she described in her evidence.[142]

1. Did Ms Ah Chee know that the documents she signed included the Guarantee?

   [142] ts 501.

1. I turn to consider the evidence as to whether Ms Ah Chee knew that the documents she signed on 25 November 2008 included the Guarantee.

2. As I have already noted, Ms Ah Chee's case was that she had not been told that she needed to provide a guarantee for Shedco's debts to Stramit and Amtel, and that she did not read the documents in the bundle she signed on 25 November 2008, and so was unaware that she had signed the Guarantee.

3. Ms Ah Chee said that if she had known that the Guarantee was in the bundle of documents she would not have signed it.  Her explanation for that view was twofold.  First, Ms Ah Chee said that 'if at any point in time I had been made aware that I needed to sign a Deed of Guarantee and Indemnity which would place the [Lord Street property] at risk I never would have signed that document'.[143]  Ms Ah Chee also said she did not want to lose the family home and 'I wouldn't sign a personal guarantee'.[144] I have set out my reasons for rejecting that explanation at [113] ‑ [119] above.

   [143] Exhibit 7 [25].

   [144] ts 217.

1. I turn to consider whether Stramit and Amtel met that onus.  It is convenient to deal, first, the question whether Ms Ah Chee was a volunteer in respect of the transaction secured by the Guarantee.

(c)     Can Ms Ah Chee be regarded as a volunteer in relation to the Guarantee?

1. The principles in relation to the requirement that the guarantor (wife) be a volunteer were summarised by Einstein J in State Bank of New South Wales v Chia as follows:

   The second requirement is that the wife is a volunteer.  It is not sufficient that the wife has received consideration as would be recognised in the law of contract … .  The consideration for the guarantee must be of 'real benefit' to the wife:  Garcia.  Incidental benefit which accrues generally to the family of which the wife is a member is not sufficient benefit to render a transaction which does not otherwise contain a 'real benefit', non-voluntary:  Armstrong v Commonwealth Bank of Australia; Cranfield Pty Ltd v Commonwealth Bank of Australia.  Where the wife expects to reap direct profit from the transaction, the transaction cannot be said to be voluntary:  State Bank of New South Wales Ltd v Vecchio.  Neither can it be said to be voluntary where the moneys secured by the guarantee are used to purchase an asset in which the wife is equally interested with her husband:  Commonwealth Bank of Australia v Khouri.  However, where the interest of the wife is a shareholding in the company through which her husband conducted his business and in which she has no real involvement, then a guarantee given by the wife over that company's debts will be voluntary:  Commonwealth Bank of Australia v Khouri.  But where the wife has an active and substantial interest in the conduct of, and the fortunes of, the business run by her husband, she will not be a volunteer in relation to any guarantee over the debts of that business:  Radin v Commonwealth Bank of Australia.[283](citations omitted)

   [283] State Bank of New South Wales v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 601 [169] (Einstein J).

2. Whether the guarantor (wife) is a volunteer will be decided as a matter of substance and not according to form, or to strict legal rights and obligations.[284] 

   [284] Bylander International Consortium (Australia) Pty Ltd v Multilink Investments Pty Ltd [2001] NSWCA 53 [15] (Handley JA, Giles & Heydon JJA agreeing); ANZ Banking Group v Londish [2014] NSWSC 202 [141] (Adamson J); see also Corin v Patton [1990] HCA 12; (1990) 169 CLR 540, 577 (Deane J).

3. I am persuaded that Stramit and Amtel have met the onus of establishing that Ms Ah Chee should not be regarded as a volunteer in the circumstances of this case.  I have reached that view for the following reasons.

4. First, in every case it is necessary to start by considering the nature of the transaction for which the guarantee or surety was given.  In this case, the transaction for which the Guarantee was given as security was the extension of Shedco's credit limit under the Credit Agreement, and the continued provision of goods on credit to Shedco pursuant to the terms of that Agreement.  Prima facie, Shedco, and not Ms Ah Chee, was the beneficiary of that transaction. 

5. Ms Ah Chee was not a director of, or a shareholder in, Shedco.  In their pleadings, Stramit and Amtel claimed that Ms Ah Chee was a de facto director[285] of Shedco.  However, that particular claim was not explored in any detail, and in the circumstances it is neither necessary nor appropriate to make a finding on it, for the reason that whether Ms Ah Chee was a volunteer does not turn solely on the issue of whether the guarantor (wife) was an officer of the company whose debts she guaranteed.[286] 

   [285] As that term is defined in the Corporations Act 2000 (Cth) s 9.

   [286] There have been cases where Garcia unconscionability has been held not to apply in circumstances where the guarantor (wife) was an equal shareholder in a company whose debts she guaranteed (eg European Asian Bank of Australia v Kurland [1985] 8 NSWLR 192) but so too have there been cases in which a wife who was a shareholder in a company whose debts she guaranteed was held to be a volunteer (eg Bank of Western Australia Ltd v Abdul [2012] VSC 222; and cf also Cranfield Pty Ltd v Commonwealth Bank of Australia [1998] VSC 140).

6. In this case, I have found that Ms Ah Chee exercised a significant degree of control in Shedco's management and financial affairs (see [205] ‑ [207] above).  Shedco was, in effect, the corporate vehicle used by Mr and Ms Ah Chee for their joint pursuit of the shed fabrication business.  For that reason, although the transaction secured by the Guarantee was, as a matter of strict legal rights and obligations, a transaction for the benefit of Shedco, it was in substance a transaction for the benefit of Mr and Ms Ah Chee.

7. On that basis alone, I am satisfied that Stramit and Amtel have established that Ms Ah Chee cannot properly be regarded as a volunteer in relation to her provision of the Guarantee.

8. In addition, I am also satisfied that Ms Ah Chee derived a significant, direct and immediate benefit from the transaction secured by the Guarantee.  This was not a case where money which was secured by the Guarantee was used to buy an asset owned by Ms Ah Chee[287] or was applied to a purpose which resulted in a direct or immediate benefit for her.[288]  However, in my view, the evidence permits the inference that the transaction secured by the Guarantee permitted Shedco to continue trading as it had prior to that date, and that Ms Ah Chee derived a significant, direct and immediate benefit from its continued trading.

   [287] Cf eg Groves v Groves [2013] QSC 277 [260] - [262] (Martin J).

   [288] Cf eg ANZ Banking Group v Londish [2014] NSWSC 202 [146] (Adamson J); see also JNS Technologies (M) SDN BHD v JNS Electronic Industries (Vic) Pty Ltd [1999] VSC 246 [30] (Balmford J).

9. As I found at [78], in the months prior to the execution of the Guarantee, Shedco had exceeded the credit limit under the Credit Agreement by a very considerable margin.  Representatives of Stramit and Amtel had advised Mr Ah Chee that the companies would not continue to supply goods on credit to Shedco unless further security, including a Guarantee from Ms Ah Chee, was provided.[289]  There was nothing to suggest that Mr Ah Chee sought alternative suppliers at that point, no doubt because Stramit and Amtel were Shedco's biggest suppliers of shed fabrication equipment.[290]  There was no evidence as to whether Shedco's financial viability depended on the continued supply of goods by Stramit and Amtel.  But in my view, the evidence supports, at the least, the inference that without the continued provision of goods on credit under the Credit Agreement, which was secured by the Guarantee given in November 2008, Shedco's business could not have continued to trade as it had prior to that point in time. 

   [289] See [81] above.

   [290] See [179] above.

10. The evidence also established that Ms Ah Chee had derived significant financial benefits from Shedco.  As I found at [222] - [232], prior to November 2008, very significant payments were made by Shedco to cover the repayments of the home loan in respect of the Lord Street property (which was owned by the DM Property Trust, of which Ms Ah Chee was a beneficiary), for a personal loan in Ms Ah Chee's name, for other loans in the name of Mr and Ms Ah Chee, and for the provision of goods and services to the Lord Street property.  In addition, Ms Ah Chee drew a salary of $1000 a week from Shedco. 

11. This evidence had its limitations.  Some of the payments relied upon by Stramit and Amtel were clearly irrelevant as they predated Shedco's entry into the Credit Agreement and so could have no possible link with that transaction, much less its continuation.  However, there was evidence that at least some payments of the kind to which Stramit and Amtel referred (for example, mortgage repayments) continued to be made after November 2008 when the Guarantee was provided. 

12. A further difficulty about those payments is that there was no direct evidence of a link between Shedco's ability to make those payments, on the one hand, and the transaction for which the Guarantee was given (that is, the extension and continuation of the Credit Agreement), on the other hand.  That is not surprising:  the transaction secured by the Guarantee in this case was not for a loan, but rather for the provision of a credit facility.  However, by November 2008, that credit facility was, as I have found, an integral part of Shedco's ability to trade.  Given that Stramit and Amtel were Shedco's biggest suppliers, it can be inferred that Shedco's sales (and thus its cash flow) depended heavily on the provision to it of goods on credit from Stramit and Amtel.  Without the sales that that permitted, and the cash flow that that generated, no payments could be made by Shedco for the various purposes to which Stramit and Amtel pointed as benefitting Ms Ah Chee. 

13. Finally, in my view, the payments made by Shedco for the benefit of Ms Ah Chee cannot properly be characterised as merely incidental benefits that accrued generally to the Ah Chee family.  In my view, they are more aptly seen as the fruits of the joint pursuit of profit undertaken by Mr and Ms Ah Chee through Shedco.

14. Although all cases of this kind must be determined on their individual combination of facts, in my view, Ms Ah Chee's active participation, and the significant degree of control exercised by Ms Ah Chee, in Shedco's management and financial affairs, means that this case can be distinguished from cases such as Garcia,[291] Armstrong,[292] Bylander,[293] Wenczel[294] and Abdul[295] in which the guarantors were held to be volunteers in respect of guarantees they provided for loans to companies wholly controlled by their husbands, or in which the guarantors played a minimal role.[296]  The facts of this case are more analogous to Radin v Commonwealth Bank of Australia,[297] to BNY Trust Co of Australia Ltd (formerly known as JP Morgan Trust Australia Ltd) v Glambedakis,[298] to Commonwealth Bank of Australia v Starrs[299] and to Groves v Groves.[300]  In those cases, guarantees were provided by one spouse for loans in furtherance of business ventures jointly pursued by both spouses, for their joint, and individual, benefit, and in which the guarantors were held not to be volunteers.

    [291] Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395.

    [292] Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588 [33] (Hamilton J).

    [293] Bylander International Consortium (Australia) Pty Ltd v Multilink Investments Pty Ltd [2001] NSWCA 53 [20] (Handley JA, Giles JA agreeing at [25] and Heydon JA agreeing with both Handley JA & Giles JA at [28]).

    [294] Wenczel v Commonwealth Bank of Australia [2006] VSC 324 [122] (Habersberger J).

    [295] Bank of Western Australia Ltd v Abdul [2012] VSC 222 [61] (Croft J).

    [296] Cf National Australia Bank Ltd v Wehbeh [2014] VSC 431 [57] - [58] (Macaulay J).

    [297] Radin v Commonwealth Bank of Australia [1998] FCA 1361; (Unreported, FCA, 23 October 1998) 210 (Lindgren J).

    [298] BNY Trust Co of Australia Ltd (formerly known as JP Morgan Trust Australia Ltd) v Glambedakis [2009] NSWSC 815 [72], [75] (Johnson J).

    [299] Commonwealth Bank of Australia v Starrs [2012] SASC 222 [221], [224], [228] - [229] (Peek J).

    [300] Groves v Groves [2013] QSC 277 [260] - [262] (Martin J).

15. In my view, Stramit and Amtel have established that Ms Ah Chee derived a benefit from the transaction, and that is sufficient to warrant the conclusion that it would not be unconscionable to enforce the Guarantee.  The fact that they have done so means that one of the circumstances required to be established for Garcia unconscionability was not present in this case. 

16. Strictly speaking, it is therefore unnecessary to determine the question whether Stramit and Amtel met the onus of establishing that Ms Ah Chee in fact understood the purport and effect of the transaction.  Nevertheless, for the sake of completeness, I will set out my views in relation to that issue.

(d)     Did Ms Ah Chee in fact understand the purport and effect of the transaction?

1. The question whether the guarantor (wife) understood the 'purport and effect' of the transaction includes, at least, an understanding of the fact of liability, the general extent of liability and the possible consequences of default.[301]  It is not to the point that the wife misunderstood or failed to appreciate the degree of risk associated in the transaction, or the improvidence or unwisdom of the uses to which the money so secured would be put.[302]

   [301] Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649, 686 (Dixon J).

   [302] Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649, 686 (Dixon J).

2. In the present case, I have found that Ms Ah Chee did not read the Guarantee before she signed it.  Counsel for Ms Ah Chee submitted that if the Court accepted that Ms Ah Chee thought she was signing mortgages and simply signed the documents in the bundle without reading them, then the conclusion would follow that Ms Ah Chee did not understand the purport and effect of the transaction.[303]  But that was not what occurred here.  I have found that Ms Ah Chee knew that it was likely that the Guarantee was in the bundle of documents she signed on 25 November 2008.

   [303] ts 464.

3. Counsel for Stramit and Amtel submitted that that knowledge was significant.  He submitted that whether Ms Ah Chee read the Guarantee at the time she signed it was not to the point, because she knew that a guarantee was going to be in the bundle of documents she signed, and she knew what was the purport and effect of a guarantee.[304]

   [304] ts 502.

4. I have to confess to some considerable difficulty in the proposition that it is possible to make a finding that a person understood the purport and effect of a document that they did not read, in the absence of evidence that an explanation was provided to them, and where they merely knew that they would be asked to sign a document of that kind.

5. In support of his contention, counsel for Stramit and Amtel pointed first to the fact that Ms Ah Chee knew that the bundle of documents was likely to contain a guarantee.  I have found that that was so.  It can also be inferred that Ms Ah Chee knew that the Guarantee was being sought as security for the continued supply of goods on credit by Stramit and Amtel, and for the extension of its existing credit limit.  That finding can be made having regard to the content of Mr Fawcett's email of 20 November 2008.  That email referred to a range of mortgage documents, as well as the Guarantee, which needed to be signed, and which indicated that Stramit would lodge mortgages, and caveats, on various properties owned by Mr and Ms Ah Chee.  Those documents were clearly sought as security for the credit provided to Shedco, the amount of which was referred to in the email.  In addition, Ms Ah Chee was responsible for the Stramit and Amtel account.  She was aware that Stramit and Amtel claimed a considerable outstanding debt was owed by Shedco, and she had been dealing with requests for payment of that account.  There is thus a compelling inference that Ms Ah Chee knew that the Guarantee she was being asked to provide was an additional form of security for the continuation and extension of Shedco's existing credit arrangements.

6. In addition, I have found that Ms Ah Chee knew what a guarantee was, at least in the sense that a guarantor guarantees the payment to party A of monies owed by party B.  Ms Ah Chee had also given guarantees before, on six occasions.  Four of those were guarantees for the repayment of loans made by banks, and in three of those instances, I have found that Ms Ah Chee had an interview with an officer of the bank in question, in which information about the guarantee in question was provided to her, before she signed it. 

7. I have also found that Ms Ah Chee knew that the Guarantee was security for the amount owed by Shedco for the provision of goods to it on credit.  Furthermore, as a result of her responsibility for the Stramit account, and her responsibility for determining whether Stramit and Amtel's invoices should be paid, it can be inferred that Ms Ah Chee knew the amount owed by Shedco (or which Stramit and Amtel claimed to be owed by Shedco) from time to time.  Consequently, the extent of Shedco's liability to Stramit and Amtel, was known to her.

8. I am also satisfied that it can be inferred from the evidence that Ms Ah Chee's knowledge of guarantees extended to knowledge that the extent of the guarantor's liability may be limited to a fixed sum, or that it may be unlimited, as in the case of an 'all moneys' guarantee.  That inference can be drawn because Ms Ah Chee had given both guarantees for the repayment of particular loaned sums, and in the case of the Lantog guarantee, (see [217] above) an 'all moneys' guarantee.  (That guarantee was given in consideration for the provision of goods on credit to Shedco by Lantog.)

9. The question which then arises is whether the evidence permits the conclusion that Ms Ah Chee understood the purport and effect of this particular Guarantee, especially as it was an 'all moneys' guarantee.  I am not persuaded that that conclusion can be drawn, for two reasons. 

10. First, there was no evidence at all that it had been drawn to Ms Ah Chee's attention that the Guarantee she would be asked to sign contained an 'all moneys' clause.

11. Secondly, I am not persuaded that simply because Ms Ah Chee was told that she would be required to sign a guarantee, it can be inferred that she understood that that guarantee would contain an all moneys clause.  Counsel for Stramit and Amtel submitted that the Guarantee was a 'typical' or 'garden variety-type' guarantee, and that it was 'not an extraordinary guarantee that goes beyond anything that one would expect when you get a guarantee'.[305]  If there is such a thing as a 'garden variety' guarantee, I would venture to suggest that it is more likely to be understood by members of the community as a guarantee for the repayment of an identified or fixed sum of money by another person, such as is common in the case of guarantees for the repayment of a home loan or car loan.  The Guarantee was not a guarantee of that kind.

    [305] ts 490.

12. While 'all moneys' guarantees may not be uncommon in the commercial context, and while the terms of the Guarantee do not appear to be particularly unusual, nevertheless the Guarantee differed from a guarantee subject to a fixed limit, in a very significant respect, namely that Ms Ah Chee's liability under the Guarantee was not subject to any maximum limit.  In my view, that was an essential aspect of the purport and effect of the transaction[306] which Stramit and Amtel bore the onus of proving was understood by Ms Ah Chee.

    [306] Cf Agripay Pty Ltd v Byrne [2011] QCA 85; [2011] 2 Qd R 501 [21] (McMurdo P), [99] (McMeekin J).

13. For completeness, I should add that the fact that Ms Ah Chee signed the Mortgagor's Acknowledgment does not alter that conclusion.  Ms Ah Chee did not read the Mortgagor's Acknowledgment when she signed it.  Accordingly, the statement in it - that she had read the documents in the bundle (which included the Guarantee) and understood their general nature and purport - cannot be given any weight.  A similar conclusion was reached in Bank of Western Australia v Abdul.[307]In that case, the Bank sought to rely on a statutory declaration signed by Mrs Abdul, in which she stated that the guarantees she provided were given 'freely and voluntarily'.  The evidence was that the statutory declaration was included in a bundle of documents which Mrs Abdul signed without reading.  Justice Croft held that

    as a matter of policy, Bankwest should not be able to defeat the equity in favour of [Mrs Abdul] by adding an additional document to the pile to sign, that effectively purports to waive her rights.  It was submitted that the equity could be routinely defeated, without offering any protection to the people it is designed to protect, if banks were able to escape it by simply adding a waiver to be signed.[308] 

    [307] Bank of Western Australia Ltd v Abdul [2012] VSC 222.

    [308] Bank of Western Australia Ltd v Abdul [2012] VSC 222 [80] (Croft J).

1. I respectfully agree with the tenor of those observations. 

2. In my view, Stramit and Amtel did not establish that Ms Ah Chee in fact understood the purport and effect of the Guarantee.

Would it be unconscionable for Stramit and Amtel to rely upon the Guarantee?

1. In my view, the requirements for Garcia unconscionability have not been established.  Although the transaction for which the Guarantee was provided as security was on its face for the benefit of Shedco, in reality Shedco was the corporate vehicle for Mr and Ms Ah Chee's pursuit of profit through the shed fabrication business.  The transaction was, in that sense, for the benefit of Mr and Ms Ah Chee, and Ms Ah Chee cannot properly be characterised as a volunteer in relation to it.  In addition, Ms Ah Chee derived direct and immediate benefits from the transaction and for that reason also cannot be regarded as a volunteer.

2. Furthermore, I am not persuaded that Ms Ah Chee simply signed the bundle of documents (including the Guarantee) at Mr Ah Chee's direction or insistence.  Rather, Ms Ah Chee was willing to provide security for the transaction, including by providing the Guarantee, but only on terms acceptable to her (namely that that security not place the Lord Street property at risk).

3. The fact that Ms Ah Chee did not read the Guarantee before she signed it, does not, without more, justify equitable intervention.

4. In all of the circumstances, I am not persuaded that it would be unconscionable to enforce the Guarantee.

Conclusion

1. Judgment should be entered for Amtel Pty Ltd in CIV 2106 of 2009 and for Stramit Corporation Pty Ltd in CIV 2107 of 2009.

2. The parties should confer in relation to the orders which should be made to give effect to these reasons.