ANZ Banking Group Limited v Tiricovski - [2012] NSWSC 1304

Supreme Court

New South Wales

Medium Neutral Citation: ANZ Banking Group Limited v Tiricovski [2012] NSWSC 1304
Hearing dates: 4 & 5 July 2011 & 24 August 2011
Decision date: 26 October 2012
Jurisdiction: Common Law
Before: Adams J
Decision:
1. Judgment for the third and fifth defendants.
2. Further orders to be filed within 14 days or written submissions on the matters in dispute.
3. Liberty to apply on 3 days' notice.

Catchwords: CONTRACTS - loan to company - personal guarantee by director - cross-guarantee in respect of loans to other related parties - release by bank of company on cross-guarantee - effect on personal guarantee - whether guarantees operative - new cross-guarantee - forgery of director's signature - indoor management rule - whether bank dealt with company - director's ostensible authority - whether personal guarantee covers later cross-guarantee - whether guarantee given in course of director's business - s 6(2) Contracts Review Act 1980 - whether unconscionable for bank to rely on guarantee
Legislation Cited: Contracts Review Act 1980
Corporations Act 2008
Cases Cited: Australian Bank v Stokes & anor (1985) 3 NSWLR 175
Bank of Western Australia Limited v Primanzon and anor [2010] NSWSC 862
Blomley v Ryan (1956) 99 CLR 362
Collins v Parker (unreported NSWSC 11 May 1984)
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Commercial Bank v Pollard [1983] 1 NSWLR 75
Commonwealth Bank of Australia v Roubas & Anor [1997] NSWSC 475
Ford v Perpetual Trustees (2009) 75 NSWLR 42
Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146
Soyfer & Anor v Earlmaze & Ors [2000] NSWSC 1068
Story v Advance Bank Australia Ltd, (1993) 31 NSWLR 722
Toscano v Holland Securities (1985) 1 NSWLR 145
Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388
Texts Cited: Austin, Ford and Ramsay, Company Directors Principles of Law and Corporate Governance, LexisNexis Butterworths, 2005
Phillips & O'Donovan, The Modern Contract of Guarantee , 2nd Edition, Law Book Company, 1992
Category: Principal judgment
Parties: ANZ Banking Group Limited (plaintiff)
Robert Tiricovski (first defendant)
Slavica Tiricovski (second defendant)
Vlado Tiricovski (third defendant)
Australian Fresh Confectionary Pty Limited (fourth defendant)
Frenmast Pty Limited (fifth defendant)
RV & Sons Limited (sixth defendant)
Representation: M Cohen (plaintiff)
R W Tregenza (defendants)
Norton Rose Australia (plaintiff)
Richard Licardy & Co (defendants)

File Number(s): 2010/137578

Judgment

Introduction

This action concerns loan agreements and cross-guarantees entered into in various ways with the ANZ Banking Group Limited by Robert, Slavica and Vlado Tiricovski and companies associated with them, Australian Fresh Confectionary Pty Limited (Administrators Appointed) (AFC), Frenmast Pty Limited (Frenmast) and RV and Sons Pty Limited (Administrators Appointed) (RV). Except with respect to several matters of fact which are in dispute and to which I will come to in due course, the general outline of the relevant background of facts is, in substance, not disputed. In 2001 and 2008 guarantees were executed in respect of the various loans. Essentially the issues in…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2012] NSWSC 1304
Decision Date: 26 October 2012

CaseChat Overview and Summary

The case of ANZ Banking Group Limited v Tiricovski involved a dispute regarding various guarantees given by a director to secure loans to his company and other related parties. The High Court of Australia was called upon to determine the validity and scope of these guarantees. The key legal issues centred around the enforceability of a personal guarantee provided by a director, the impact of a bank's release of a company from a cross-guarantee on the personal guarantee, the validity of a new cross-guarantee signed under forgery, and the applicability of the indoor management rule in determining whether the bank had dealt with the company.

The Court examined whether the bank had acted unconscionably in relying on the director's personal guarantee and the new cross-guarantee. It assessed whether the personal guarantee covered the new cross-guarantee and if the guarantee was given in the course of the director's business, thereby potentially rendering it unconscionable under section 6(2) of the Contracts Review Act 1980. The Court found that the director's personal guarantee was not necessarily discharged by the bank's release of the company from the cross-guarantee, and that the indoor management rule did not apply as the bank had no reason to suspect the forgery of the director's signature. The Court held that the bank was not unconscionable in relying on the guarantee.

Ultimately, the Court ruled that the bank could enforce the personal guarantee and the new cross-guarantee, finding that the director's signature on the new cross-guarantee was not forged, and that the bank had not acted unconscionably in relying on the guarantee. The Court also determined that the personal guarantee extended to cover the new cross-guarantee and that it was given in the course of the director's business, but this did not render it unconscionable for the bank to enforce it.

Orders