ATTT Investments Pty Ltd v Hamzah - [1999] WASC 247

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ATTT INVESTMENTS PTY LTD -v- HAMZAH [1999] WASC 247

CORAM: WHEELER J

HEARD: 15 SEPTEMBER & 23 NOVEMBER 1999

DELIVERED : 7 DECEMBER 1999

FILE NO/S: CIV 1697 of 1996

BETWEEN: ATTT INVESTMENTS PTY LTD
Plaintiff
AND
DATO' ABDUL RAHMAN HAMZAH
Defendant

Catchwords:

Guarantee - Personal guarantee - Executed pursuant to power of attorney - Terms of the guarantee - Turns on own facts

Legislation:

Nil

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff: Mr M H Zilko
Defendant: In person

Solicitors:

Plaintiff: Williams & Hughes
Defendant: In person

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Rhodes Pty Ltd v Galati [1961] WAR 180

WHEELER J: The plaintiff claims the principal and interest under a guarantee apparently given by the defendant in favour of the plaintiff on 30 August 1995. The guarantee was signed by the defendant's agent, Vincent Morley, ("Morley") pursuant to a power of attorney executed by the defendant in favour of Morley. The defendant denies any liability for the amount claimed and the reasons for the denial are particularised in par 5 and par 6 of the defence. The only issue which appears to be live between the parties was whether Morley was expressly or impliedly authorised to execute the document.
Paragraph 6 of the defence I think sets out the issues adequately. It reads:
"6Save to admit the execution of a document described as a power of attorney in favour of Morley ('the power of attorney') and to admit further that Morley executed the guarantee the Defendant denies each allegation in paragraph 10 of the statement of claim and pleads further as follows:
a.The power of attorney did not confer any authorisation whatsoever on Morley to execute the said guarantee behalf of the Defendant nor any enter into any transaction in the style of the said guarantee.
b.The power of attorney empowered Morley to 'do any act, matter or thing and to execute and deliver each of the documents (whether as an agreement, deed or otherwise)' referred in a Schedule thereto.
c.The power of attorney did not incorporate any Schedule thereto.
d.In the premises, the power of attorney is devoid of meaning and legal effect and in any event did not authorise Morley to execute the said guarantee on the Defendant's behalf.
e.The Defendant did not otherwise authorise Morley to execute the said guarantee nor hold him out as being possessed of such authority.
f.The Defendant has not ratified nor adopted the said guarantee and its terms were not otherwise agreed nor adopted by him at any time.
g.The Plaintiff had express knowledge notwithstanding the power of attorney that Morley was not authorised to execute the guarantee."
Broadly, it is not in issue that whatever documents were executed were executed by Morley during the course of a meeting which took place in Sydney from approximately 4.00 pm Sydney time until some hours later. Present at that meeting was Morley, who was managing director of a company known as "Pacific Capital" and Mr McDowall ("McDowall") and Mr Law ("Law") from the plaintiff, which was then known as CIFC Investment Pty Ltd, their solicitor Mr Thomas ("Thomas") from the law firm Abbott Tout, and some others.
During the course of the meeting Morley communicated by telephone on a number of occasions with the defendant, who was at the office of Pacific Capital in Perth. At some stage during the meeting, the execution page of a power of attorney was sent by facsimile from the offices of Pacific Capital in Perth to the meeting in Sydney. This document had been executed by the defendant. It read, relevantly:
"POWER OF ATTORNEY
BY THIS POWER OF ATTORNEY the person named in the Schedule ('Grantor')
APPOINTS each of the persons named in the Schedule ('Attorney') severally to be the Grantor's Attorney;
To do any act, matter or thing and to execute and deliver each of the documents (whether as an agreement, deed or otherwise) referred to in the Schedule with such additions, alterations, deletions and amendments as the Attorney thinks fit;
DECLARES that, for all purposes, everything executed or delivered or done by the Attorney under this Power is as effective as if executed or delivered or done by the Grantor personally;
RATIFIES AND CONFIRMS (and agrees to ratify and confirm when requested by the Attorney) everything the Attorney executes or delivers or does under this Power; …"
It seems to be common ground that only the execution page was sent by facsimile to Sydney. It was not, I think, disputed that the original document when drawn up consisted of not only an execution page, but also of a cover sheet and of a schedule. The schedule read as follows:
"SCHEDULE
DATE OF THIS DEED: The       day of                 1995
GRANTOR:DATO' ABDUL RAHMAN HAMZAH of 267B Mill Point Road, South Perth WA 6151.
ATTORNEY:     VINCENT CECIL MORLEY of Level 22, Royal Exchange Building, 56 Pitt Street, Sydney NSW 2000.
DOCUMENTS:   1.   • Guarantee between the Grantor and CIFC Investment Pty Limited in respect of the obligations of Pacific Capital Limited.
•Any incidental documentation which the Attorney thinks fit, necessary or desirable to give effect to the transactions envisaged above.
ACTS2.   • Obtain or give all consents, warranties and undertakings on behalf of the Grantor and endorse cheques as the Attorney or any of them thinks fit, necessary or desirable to give effect to the transactions envisaged in Section 1 of this Schedule.
•Any other incidental acts, matters or things as the Attorney or any of them thinks fit, necessary or desirable to give effect to the transactions envisaged in Section 1 of this Schedule."
The only question for my determination is whether the defendant had available to him at the time of execution of the power of attorney, the schedule to that document.
The defendant's evidence was broadly as follows. He said that in 1992 he was a director of Pacific Capital and represented several major shareholders based in Malaysia, both corporate and individual. At some time, which is not entirely clear, he became aware that Pacific Capital was in urgent need of working capital of at least $3M, $550,000 of which was required immediately. Morley told him in June 1995 that the plaintiff would advance the sum of $550,000 primarily on the security of an assignment of debt of $7M, real property in Victoria and share mortgages of Pacific Capital shareholders. The plaintiff also agreed to underwrite $15M of Pacific Capital's proposed rights issue shares at 20 cents per share to raise an amount of $3M, subject to certain conditions precedent. The defendant regarded the two transactions as linked.
The defendant discussed the possibility of the share mortgages with Malaysian shareholders who agreed to mortgage their shareholdings. He said that the question of a personal guarantee from him was raised as a security requirement. However, he regarded it as very much a subsidiary requirement, regarding the primary security as the share mortgages. He was reluctant to give a guarantee, because if the underwriting did not proceed he was of the view that Pacific Capital would not be able to meet its debts. He therefore said both to Morley and to representatives of the plaintiff, that he would not give an unlimited guarantee, but would give a guarantee conditional upon the underwriting proceeding, so that if that agreement came to an end so would his guarantee.
The defendant said that on 30 August, Morley spoke to him from the meeting in Sydney and requested him to execute a power of attorney as the representative of the two Malaysian shareholders from whom he held powers of attorney, so that Morley could execute the share mortgage documents. A variety of documents were faxed to the defendant from the Sydney office in which the meeting was taking place, among them the execution page of a power of attorney, without the schedule, and a copy of the relevant share mortgage documents.
Having obtained authority from the Malaysian shareholders, he executed the power of attorney thinking he was doing so on their behalf. He said that no question of any guarantee from him was discussed at that time and there was no suggestion that Morley would be executing any guarantee on his behalf. Further, he said that no guarantee of any description was ever sent to Perth for his consideration.
According to the defendant, the only discussion of a guarantee arose when, during the course of the telephone conversation, he inquired when the balance of the advance would be made available to Pacific Capital, as only a portion was to be drawn down at first. McDowall, on behalf of the plaintiff, said that that would take place, inter alia, when a personal guarantee was received from the defendant. The defendant objected to giving such a guarantee and agreed that he would give one, but limited as I have indicated. McDowall and the defendant agreed that it was too late for the solicitors to draft such a document by the time they reached agreement in principle about it, but a draft certificate of witness in relation to such a document was nevertheless faxed to the offices of Pacific Capital on 31 August 1995. The defendant assumed that it was intended to refer to the limited guarantee which was yet to be drafted. He therefore altered the certificate by deleting the word "signed" in the document and replacing it with the word "approved" in order to indicate that he had not signed a document but that he did approve of a guarantee of the sort discussed. He also struck out from the description of the document in the certificate of witness, the word "unlimited" in the expression "unlimited guarantee" in order to indicate that he agreed only to a conditional guarantee.
In due course, the defendant said, he visited Sydney in September and was advised that the balance of the advance would be made available to Pacific Capital. No mention of a guarantee was made to him and he did not inquire further about it, because he did not wish to sign a guarantee and was reluctant to remind the plaintiff of it.
It is common ground that the underwriting did not proceed. Pacific Capital defaulted upon the facility agreement and the plaintiff terminated it and demanded repayment of a sum amounting to $582,279.18 (being the $550,000, together with a discount fee forming part of the agreement). Pacific Capital did not pay that sum to the plaintiff. In due course the plaintiff demanded the sum from the defendant under the terms of the guarantee.
The defendant said that he received the notice of demand based on the alleged guarantee in May 1996 and was shocked and surprised. He also said, somewhat incongruously, that he was not aware of the existence of an all moneys personal guarantee until he searched a court file in December 1996.
The defendant received only partial support from the two witnesses called by him. Before turning to their evidence, I should note that a number of documents were tendered by consent. They include a covering letter from Abbott Tout to Morley of Pacific Capital, predating the August 30 meeting, which purported to enclose a draft copy of the commercial bill facility agreement, together with a number of powers of attorney, including that of the defendant. There is also in the same bundle of documents, a facsimile transmission report which appears to show that the covering letter and other documents amounting to 41 pages were sent by facsimile to Pacific Capital. The bill facility agreement, together with the full copies of the powers of attorney and the covering letter would total 41 pages. There was also tendered by consent a single execution page of a power of attorney of the defendant, which bears a facsimile transmission imprint showing it as coming from Pacific Capital to a Sydney number at 4.47 pm on 30 August 1995, together with copies of a complete power of attorney of the defendant, including the disputed schedule, and a number of other documents which appear to relate to the transaction in question, which bear facsimile imprints showing that they were transmitted from the offices of "Global Teleworks Ltd" (which the evidence established was the office in which the meeting was taking place) on 30 August 1995, for a number of minutes commencing at 4.30 pm.
Ms Fia Rigo was the then company secretary of Pacific Capital, who resigned in December 1995. She was in Pacific Capital's Perth offices on 30 August 1995 and overheard part of the negotiations from a speakerphone in the office. She did not hear all of what went on as she was in and out of the room collecting documents from the facsimile and taking them to the defendant.
In cross-examination, she said, and I accept, that if a document appeared to be for the attention of the defendant, or required to be dealt with by him, she would have taken it to him and to no other person. She also said that Pacific Capital's facsimile machine was occasionally used by other tenants of the building when they had large documents to send, as it was a superior machine, but otherwise was exclusively used by Pacific Capital. This was somewhat at odds with the evidence of the defendant, which I think was intended to give the impression that the machine was usually shared with other tenants and that Ms Rigo would not necessarily have brought to his attention documents which appeared to be intended for him (as the schedule to the power of attorney, bearing his name, obviously was).
Ms Rigo did not recall hearing any guarantee being discussed during the telephone conference, although she conceded that she might have been out of the room at a time at which it was discussed. She recalls a copy of the power of attorney being received from Sydney, but her impression was that it was only one page which was faxed back to Sydney immediately thereafter. However, she candidly concedes that she is, in that case, unable to explain the document which appears to contain only the imprint showing it being faxed from Pacific Capital but no imprint showing that the document had earlier been faxed from Sydney. She was certain that no schedule accompanied the power of attorney faxed to Sydney, but that is not in dispute. Her view was that she had not, prior to the commencement of these proceedings, seen any schedule to the power of attorney and that it was probable that the document which was faxed from Sydney consisted of only one page. She did not recall ever seeing a guarantee with the defendant as guarantor faxed from Sydney.
However, in cross-examination, she conceded that her recollection in her witness statement may have been influenced by the documents which were put in front of her at the time at which she prepared it. It is not known precisely what those documents were. She was taken through the documents which appeared to have been sent by facsimile from the Global Teleworks office, and indicated that she did not remember most of them, but that she "vaguely" remembered page 64 which is the coversheet of the power of attorney. She agreed that it was possible that a schedule had been sent with the power of attorney. She elaborated by saying that when she received the documents, she did not read every page before she gave them to the defendant; rather, she perused the front cover and perhaps the next sheet and realising that they were for him, took them to him.
Finally, she agreed that she put together a bundle of documents which was later sent for the attention of Thomas, the covering letter of which indicates that she was on behalf of the company providing original documents, including the original power of attorney of the defendant. The significance of that is that Thomas' evidence was that the letter he received included the full power of attorney of the defendant bearing the facsimile imprint of Global Teleworks.
Ms Rigo's evidence did support that of the defendant to the extent that she said that the defendant explained to her in relation to the certificate of witness, that it related to a guarantee which he was prepared to execute in the future and that the guarantee which he was prepared to execute was conditional upon the plaintiff underwriting the obligations of Pacific Capital.
Morley gave evidence that he was aware that the defendant was reluctant to give a personal guarantee in respect of the transaction, but that he regarded the issue of the guarantee as one essentially to be sorted out between the defendant and Thomas directly. He confirmed that the meeting in Sydney on 30 August 1995 took place. He emphasised that much of the discussion at the meeting concerned the very substantial underwriting agreement, rather than the smaller $550,000 facility. He recalled a conference call to Perth being made at some point, and he recalled many calls on his mobile telephone to the defendant. He could not recall any discussion of a personal guarantee during the course of that meeting, although he did recall it being discussed on earlier occasions. He did not recall signing any particular document. Rather, he said that there were very large numbers of documents to sign - he was unable to say whether they were presented to him as single sheets or as complete documents - and that he signed where it was indicated to him by Thomas that he should sign. He did recall receiving the execution page of the power of attorney from Perth, because Thomas would not allow him to sign anything until the power of attorney had been received. His recollection was that he was authorised to sign all of the documentation which was put in front of him, but of course that recollection is qualified by his fairly limited perusal, it seems, of the documents in question. He thought that the documents that he was signing had been vetted by the defendant and Ms Rigo in Perth.
Morley had much earlier sworn affidavits in which he had asserted that he was not given authority to sign the deed of guarantee on behalf of the defendant and that he did not recall seeing a schedule to the relevant power of attorney. However, he explained those affidavits by saying that what he meant was that he was not given authority to his knowledge to sign an unlimited guarantee in that the defendant had earlier indicated to him that he would only give a guarantee of a limited nature. The nature of the limitation had not been discussed and that was a matter which he left for Thomas and the defendant to sort out. Another affidavit to similar effect - that is, to the effect that the defendant did not appoint him as attorney to execute the deed of guarantee - he explained by saying that prior to swearing the affidavit he had had numerous discussions with the defendant and the defendant's solicitor, which had led him to form that belief and that he, in effect, relied upon the solicitor and upon the defendant in forming the views reached in the affidavit.
Finally, Morley gave some evidence which supported the plaintiff. He described the plaintiff's witness, Thomas, as a very honest man. He agreed that Thomas had asked to be provided with all the original documentation as soon as possible, which is consistent with Thomas' evidence. A portion of his evidence reflected badly upon the defendant's credibility, in that he described the defendant as effectively the controlling shareholder of Pacific Capital while the defendant's evidence was in my view clearly contrived to give the impression that, although he was a director, he did not control any substantial number of shares (it being common ground that he did not personally own any shares).
As to the defendant himself, I have already noted points at which his evidence conflicts with the evidence of his own witnesses. In relation to such matters as whether he would have been given documents by Ms Rigo, and the use of Pacific Capital's facsimile machine, his evidence was not inherently credible in any event. His evidence about what he did and did not concede had occurred had an evasive flavour to it. For example, when asked whether he admitted that a number of documents were sent to him whilst he was in the office in Perth, his answer was, "There were a number of documents. I was not concentrating on those documents, you know the discussion. There were other directors, you know in the room as well. There was another director." This evidence appears even less credible in the light of Morley's evidence that the defendant was effectively the controlling shareholder and had the final say in respect of the company's affairs.

It is also noteworthy that the defendant criticised witnesses for the plaintiff for having been insufficiently careful, particularly in not ensuring that every page of relevant documents was signed or at least initialled, and he described himself as generally a careful person, but he nevertheless asked the court to accept that he signed a power of attorney without ever examining the schedule containing the attorney's powers.
By contrast, the evidence of the plaintiff's witnesses was inherently credible and credibly given, and was unaffected by cross-examination. I accept the evidence of those witnesses, and in particular the evidence of Thomas. Although a solicitor in a firm which has on a number of occasions acted for the plaintiff, he is not, and has never been, an officer of the plaintiff.
His evidence was that he attended the meeting on 30 August 1995 and that during the meeting a telephone call was made to the defendant in which a speakerphone was used at the Sydney end. During the conversation he recalled the defendant saying something about the use of the word "unlimited" in respect of the guarantee (apparently to the effect that he was unhappy with it). Thomas replied to the effect that he had changed the name of the guarantee so that it was not referred to as an unlimited guarantee, but that the substance remained the same in that there was no limit as to the amount which could be recovered from the defendant in respect of moneys owing by Pacific Capital to the plaintiff. He said words to the effect of, "I can't see why you insist on the name being changed because the substance remains the same but it has". He noted that Morley made a number of telephone calls to the defendant and Ms Rigo from his mobile phone, most outside the meeting room, apparently seeking instructions. He recalled insisting to Morley that he produce evidence that the power of attorney had been signed, and at some point during the meeting the facsimile copy of the execution page was produced to him by Morley. He asked Morley to produce the complete original and Morley said words to the effect that he would arrange to courier the complete original from Perth as soon as possible.
So far as the certificate of witness was concerned, Thomas could not recall well what was said, except that he did recall that certain changes had to be made because it was assumed that the witness would be a solicitor, whilst Ms Rigo was not, and that some of the wording would be amended. On 14 September 1995, after he had reminded Morley that he required the original documents, he received the original power of attorney (that is, the whole of the document bearing the Global Teleworks imprint) under cover of a letter from Pacific Capital dated 14 September 1995 and signed by Ms Rigo.
From the evidence which I accept, it appears to me that the only inference open is that the whole of the power of attorney, including the schedule, was sent from Sydney to Perth by facsimile on 30 August 1995. Accepting as I do the evidence of Ms Rigo, the probabilities strongly favour the hypothesis that it was then immediately taken to the defendant. Accepting the evidence of Thomas, it is clear that the conversation he had with the defendant showed an understanding on the defendant's part that he was to give a personal guarantee. It follows that the defendant executed and sent to Sydney the execution page of the power of attorney, having before him the schedule which indicated the scope of the authority conferred on Morley. That authority, by the terms of the power of attorney, included authority to execute the personal guarantee on the defendant's behalf.
For completeness, I should note that the defendant apparently denies receiving the plaintiff's demand dated 16 April 1996. I say "apparently" because there is an inconsistency, probably stemming from a typographical error, in the defence in the amended papers for the judge. However, the notice of demand, a copy of which is in evidence, was addressed to the address provided in the guarantee agreement and apparently transmitted by facsimile as that agreement provides. There is no evidence of any other address having been substituted, as the agreement provides it may be.
It follows that the plaintiff is entitled to the sum of $537,597.75 (allowing credit for a sum received pursuant to a security collateral to the agreement in 1998) plus interest. The total amount claimed by the plaintiff, in calculations which have been provided to me and not disputed by the defendant is $902,085.55, and there will be judgment for the plaintiff in that amount.