Baiada Poultry Pty Ltd v Sztrochlic - [2015] NSWSC 885

Supreme Court

New South Wales

Medium Neutral Citation: Baiada Poultry Pty Ltd v Sztrochlic [2015] NSWSC 885
Hearing dates: 23 and 24 June 2015
Date of orders: 06 July 2015
Decision date: 06 July 2015
Jurisdiction: Common Law
Before: Fagan J
Decision:
(1) Judgment for the Plaintiff in the sum of $2,113,129.10 inclusive of interest up to judgment.
(2) Order that the Defendant pay the Plaintiff’s costs of the proceedings.

Catchwords: CONTRACT – guarantee – offer – whether acceptance by conduct, namely the continued supply of goods – intention to be bound
ESTOPPEL – promissory estoppel – representation –reasonableness of reliance by representee
DEEDS – formal requirements – whether document intended to operate as a deed – conflicting indications – sealing – Conveyancing Act 1919 (NSW), s 38
Legislation Cited: Conveyancing Act 1919 (NSW)
Personal Property Security Act 2009 (Cth)
Privacy Act 1988 (Cth)
Cases Cited: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Dalgety Australia Ltd v Harris [1977] 1 NSWLR 324
Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523
Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 295
Laidlaw v Hillier Hewitt Elsely Pty Ltd [2009] NSWCA 44
Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361
Mirzikinian v Waterhouse Pty Ltd [2009] NSWCA 296
Segboer v AJ Richardson Properties Pty Ltd [2012] NSWCA 253
Standard Chartered Bank Aust Ltd v Bank of China (1991) 23 NSWLR 164
400 George St (Qld) Pty Ltd v BG International Ltd [2010] Qd R 245; (2010) 2 QDR 302
Category: Principal judgment
Parties: Baiada Poultry Pty Ltd (Plaintiff)
Raphael Sztrochlic (Defendant)
Representation:
Counsel:
T Maltz (Plaintiff)
VF Kerr (Defendant)
Solicitors:
Coleman Greig Lawyers (Plaintiff)
David Landa Stewart Lawyers (Defendant)

File Number(s): 2013/255115
Publication restriction: None

Judgment

The Plaintiff is a producer and volume supplier of poultry products. In these proceedings it seeks judgment against the Defendant for $1,822,418.08 plus interest. The debt is said to have arisen on a trading account between the Plaintiff and Raphco Pty Ltd (“Raphco”). It is alleged that the Defendant is liable as guarantor. The Defendant disputes that he became bound by the written guarantee upon which the Plaintiff relies.
The Plaintiff operates chicken farms and processing plants in Victoria, New South Wales, South Australia and Western Australia. From 2003 until 2013 Raphco was a substantial customer of the Plaintiff’s Victorian branch, purchasing goods to a value of between $100,000 and $600,000 per week. Raphco’s business was to cut up the poultry, repackage it and supply it to restaurants and butchers throughout Victoria.
On 17 September 2013 a liquidator was appointed to Raphco pursuant to a resolution for creditors’ voluntary winding up. It is common ground that the sum now claimed has been owing from Raphco to the Plaintiff as the balance of the trading account between them since February 2013. The Defendant has not contended that the principal debt has been reduced by the distribution of any dividend from the winding up.

Issues

The…

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: [2015] NSWSC 885
Decision Date: 06 July 2015

CaseChat Overview and Summary

In the case of Baiada Poultry Pty Ltd v Sztrochlic, the plaintiff, a company in the poultry industry, sought to enforce a guarantee against the defendant, an individual who had provided personal guarantees in connection with a business arrangement. The dispute centred on whether the defendant's continued supply of goods to the plaintiff constituted an acceptance of the guarantee and whether promissory estoppel applied to prevent the defendant from denying the guarantee. The case was heard in the Supreme Court of New South Wales.

The central legal issues before the court were whether the defendant's conduct in continuing to supply goods amounted to acceptance of the guarantee, and whether promissory estoppel applied to prevent the defendant from denying the guarantee. The court had to determine if the defendant's conduct demonstrated an intention to be legally bound by the guarantee and if the plaintiff had reasonably relied on a representation made by the defendant. Additionally, the court examined whether a document intended as a guarantee met the formal requirements to operate as a deed, given conflicting indications and the absence of sealing.

The court found that the defendant's conduct did not amount to acceptance of the guarantee because there was no clear and unequivocal indication of the defendant's intention to be bound. The court emphasised the need for explicit communication of acceptance in such circumstances. Regarding promissory estoppel, the court held that the plaintiff had not established that the defendant made a clear and unambiguous representation upon which the plaintiff could reasonably rely. The court also concluded that the document in question did not meet the formal requirements to operate as a deed due to the absence of sealing, despite indications that it was intended to be a deed.

The court ultimately dismissed the plaintiff's claims. No orders were made in favour of the plaintiff, and the defendant was not required to honour the guarantee.

Orders