| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : AUSTRALIAN LIQUOR MARKETERS (WA) PTY LTD -v- ARTHUR & ANOR [2002] WADC 70 CORAM : DEPUTY REGISTRAR HARMAN HEARD : 18 MARCH 2002 DELIVERED : 10 APRIL 2002 FILE NO/S : CIV 3072 of 2001 BETWEEN : AUSTRALIAN LIQUOR MARKETERS (WA) PTY LTD (ACN 009 196 614) Plaintiff
AND
MICHAEL HENRY ARTHUR
MICHAEL LAURANCE WILLIAMS
Defendants
Catchwords: Practice and procedure - Western Australia - Practice under the Rules of the Supreme Court of Western Australia - Application for summary judgment - Claim that the second defendant was a guarantor - Terms on its facts
Legislation: Nil
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Result:
Application dismissed Representation:
Counsel:
Plaintiff : Mr B de Lestang
Defendants : Mr K J Morgan
Solicitors:
Plaintiff : Benjamin & de Lestang
Defendants : Murfett & Co
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
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1 DEPUTY REGISTRAR HARMAN: The plaintiff seeks summary judgment against the defendants on the basis of a guarantee by them of the debt of a corporation of which they were members and directors. For present purposes the plaintiff seeks judgment against the second defendant only.
2 In an application for summary judgment the court must be satisfied that it is appropriate to exercise jurisdiction in favour of the applicant. The onus is on the applicant. 3 The plaintiff pleads as follows: "3. In consideration of and pursuant to two written guarantees, one undated but stamped on the 24th December 1998 and signed by the First Named Defendant and the other undated but forwarded to the Plaintiff by facsimile on or about the 14th July 1998 and signed by the Second Named Defendant ("the Guarantees") the Plaintiff established a Commercial Credit account in the name of Swanridge Holdings Pty Ltd ("the Company") trading as Desert Inn Hotel in accordance with which the Plaintiff has sold and delivered the goods to the company from time to time. 4. The terms applicable to the trading account were in writing and in accordance with such terms the Company was liable to pay the Plaintiff interest at the rate of 3.5% per month on overdue payments to be calculated from the due date of payment. 5. By the guarantees the Defendants guaranteed to the Plaintiff the due and punctual payment by the Company of all monies owing by the Company to the Plaintiff." 4 The plaintiff relies upon the evidence of Mary Baird as follows: "4. The credit account was subject to personal guarantees to be provided by the Defendants. The Plaintiff initially received from the Defendants a guarantee which was signed only by the first named Defendant but subsequently received by facsimile a further copy of the guarantee which was signed also by the second named Defendant. A copy of the guarantee which was signed by the second named Defendant is not a good copy and is difficult to read but I believe that it is simply a copy of the first original
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guarantee to which had been added the signature of the second named Defendant. 5. Annexed hereto and marked with the letters "A" and "B" respectively are copies of the original guarantee signed by the first named Defendant and a facsimile copy of that original guarantee which had been signed by the first and second named Defendant." 5 As that evidence suggests Annexure "B" is indeed difficult to read. I suspect that to make any meaning of it would require the reader to first attempt to reconstitute it. 6 The relevant evidence of the second defendant is as follows: "12. In about early July 1998, shortly after I became a director of Swanridge, the first named defendant faxed to me at my home at 68 Epsom Avenue, Redcliffe, a single page document signed by himself. It was illegible when I received it ("the Document"). 13. A few days later, Mr Arthur telephoned me from the Hotel, and requested that I sign the Document and fax it back to him at the Hotel. 14. I asked Mr Arthur what the Document was, as I could not read it. 15. Mr Arthur informed me and I verily believe that the Document was not important and that it was in order for me to sign it, whether I could read it or not. 16. I trusted what Mr Arthur said and I signed the Document. My signature was witnessed by Raquel Mills. I then faxed the Document back to Mr Arthur at the Hotel. 17. I discarded the Document shortly after I faxed it to Mr Arthur. I did not keep a copy of it or believe that I was required to do so. … 19. I could not read the contents of the Document, nor were they ever explained to me by the plaintiff or Mr Arthur."
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7 I might conclude that Exhibit "B" to the affidavit of Baird is the document to which the defendant refers. I might also accept that if that document was corrupted during the course of transmission such corruption occurred prior to the defendant's execution of it. I accept that in all probability the innocent explanation given for the destruction of the original signed by him is accurate. As to whether he knowingly signed a document which he could not read I have some reservations. The defendant describes himself as a horse trainer and an investor in a hotel. He is or was the director of a corporation which is the trustee of a trading trust. There is no reason for me to believe that he considered that his interests coincided with those of the first defendant who indicated "that it was in order for me to sign it, whether I could read it or not". Furthermore again although there may be an innocent explanation, the defendant's solicitors evidently wrote to the plaintiff's solicitors on 3 September 2001 in the following terms:
"Our client instructs us that he cannot remember signing the guarantee and indemnity." 8 In par 4 of the defendant's defence he asserts as follows: "If (which is not admitted) the second-named defendant gave a guarantee in favour of the plaintiff, such guarantee is void because: 4.1 The terms of the guarantee were uncertain as:
(a) The guarantee document was illegible; and (b) The second-named defendant did not receive any information as to the terms of the commercial credit account which the guarantee was to cover.
4.2 The guarantee was not evidenced in writing as required by s.4 of the Statute of Frauds 1677 as the guarantee document was illegible. 4.3 The plaintiff did not explain or ensure that the guarantee document and its terms were explained to and understood by the second-named defendant, in circumstances in which the illegibility of the guarantee document was known or should have been known to the plaintiff."
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9 I accept that the pleading is put forward on the basis that the execution of the guarantee is not admitted however it is evident that the alternative case which the defendant thereby raises recognises the prospect that it may be found that he did sign the guarantee.
10 In evaluating the cases of each of the parties it is appropriate to reflect upon the case which the plaintiff seeks to establish. As I have indicated, the guarantee signed by the second defendant is illegible. I can discern that the document which the plaintiff claims bears the second defendant's signature is entitled "Unlimited Guarantee And Indemnity". It also refers to "Swanridge Holdings Pty Ltd" and "Desert Inn Hotel Laverton WA". It also names each of the defendants and their residential addresses. It appears to have provision for a date and the signatures of four parties and their witnesses. There is no provision for a corporate seal. The plaintiff's witness gives evidence that she believes that the document is "simply a copy of the first original guarantee to which had been added the signature of the second named defendant". The plaintiff seeks to rely upon the evidence of its witness in order to determine the content of the document. 11 In my opinion that evidence alone is not a sufficient basis to found judgment. 12 Despite the reservations that I have expressed in relation to the defendant's case I accept that at the time the defendant signed the document he was unable to decipher its content. In signing the document he would have been aware of the provisions to which I have referred and the odd word here and there. He was also aware that the document had been signed by the other defendant, the co-director of the corporation named in the document. The issue raised by my acceptance of the defendant’s evidence is whether the defendant ought be bound by his signature on a document which he signed despite it being illegible. I am satisfied that in signing the document the defendant would have been aware that he was committing either himself or the corporation to some state of affairs which may have created an obligation on behalf of either himself or the corporation. There is sufficient doubt in my mind as to whether he appreciated that he was binding himself so as to preclude judgment being entered against him. 13 A further issue that is raised in relation to the plaintiff's entitlement to judgment is the fact that the guarantee upon which the plaintiff relies is not stamped but in all probability is dutiable.
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