Bailey v Kuek - [2019] SADC 82

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
BAILEY v KUEK
[2019] SADC 82
Judgment of Her Honour Judge Deuter
24 June 2019
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - JUDICIAL REVIEW
Application for minor civil review of a decision of Magistrate Milazzo SM - whether an agreement entered into between the parties was a loan agreement between the plaintiff and defendant personally or between the plaintiff and a company of which the defendant was the sole director and shareholder.
Held:
1. Agreement was described as 'Lenders Agreement';
2. Given the wording of the agreement and the evidence provided to the court, there was never an intention on behalf of the plaintiff to invest in the company;
3. The plaintiff intended to provide funds as a loan to the defendant that would be repaid within three years.
4. Decision of the learned magistrate affirmed and the application for review dismissed.
Magistrates Court Act 1991 s 38, referred to.
Wilczynski & Anor v District Court of South Australia & Ors [2016] SASC 51; Harris v Burrell and Family Pty Ltd [2010] SASCFC 12; Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909; Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160; Toll Pty Ltd v Alphapharm Pty Ltd & Others (2004) 219 CLR 165; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, discussed.
Pacific Carriers Ltd v BNP Paribas (2004) 208 ALR 213, considered.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - PARTIES - GENERAL PRINCIPLES

BAILEY v KUEK
[2019] SADC 82
Introduction

This is an application to review a decision of Mr Milazzo SM delivered ex tempore on 31 January 2019 where he entered judgment for the plaintiff in the sum of $12,000, in addition to costs fixed in the sum of $602.50. The application for review is brought by the defendant and for ease of reference I will refer to the parties by the designations applied to them at the trial.
The plaintiff, by bank transfer of 18 December 2014, provided the sum of $10,000 to the defendant and her then business partner Mr Peter Finch, pursuant to an agreement identified as a “Lender’s Agreement”. The terms of that agreement were that the borrower would repay the full loan within three years of the date of transfer, and that the borrower would pay interest at a rate of 10% per annum on any outstanding amounts on an annual basis until the debt was fully repaid.
The issue in dispute at trial was whether the provision of the sum of $10,000 was a loan personally to the directors and partners of a company known as Venue 63 Pty Ltd (“Venue 63”) or was a loan to, or investment in, the company.
The pleadings
By his Particulars of Claim filed in the Magistrates Court on 19 November 2018, the plaintiff sought judgment against the defendant on the basis that the loan of $10,000 was of a personal nature as per the Lender’s Agreement, and that the defendant had failed to re-pay that loan, nor any interest.
By her Defence dated 17 August 2018, the defendant pleaded that the plaintiff had loaned money to the company known as Venue 63, of which she was one of the directors. She further pleaded that the company had entered into liquidation in December 2017; that the plaintiff had lodged a claim in that liquidation; and that there were no funds available from the company to repay its debts.
The defendant stated that the plaintiff knew that the funds were lent to the company. That plea was not particularised.
Evidence at trial
The plaintiff at trial, by his evidence, stated that he had made a personal loan to the defendant of $10,000 by way of a transfer from his own house loan. Tendered to the Court by Exhibit P1 was a copy of the Lender’s Agreement dated 18 December 2014 and a statement from the Commonwealth Bank noting the transfer of funds from the plaintiff’s home loan account.
Upon tender of the Lender’s Agreement (Exhibit P1), the defendant gave evidence that this was not a copy of the original of the agreement. The original agreement had been in the care and control of the defendant and had been lost by her and/or her business partner at the time, Mr Peter Finch. However, the defendant confirmed at trial that Exhibit P1 was a true copy of the original, except that the original had been signed by both directors/partners of Venue 63, namely herself and Mr Finch.
The plaintiff gave evidence that he understood that the loan was to be used by the defendant to assist in starting a business venture, being a nightclub venue for use by the LBGTI community. In agreeing to lend the money to the defendant, the plaintiff believed he was helping a friend and the LBGTI community generally.
The defendant’s evidence was that there were other persons who had lent money to her and her co-director Mr Finch, and that the two of them had drafted a standard form letter of agreement for each of those persons to sign. However, she admitted that the plaintiff had modified the version of the agreement that he had signed. Her evidence was that upon review, she “was happy with the re-wording” at the time it was signed.[1]
[1] T4.31-35 (Adelaide Magistrates Court 31.01.2019).
The plaintiff in his evidence denied that the loan was provided by him for the specific use of setting up Venue 63 and gave evidence that the plaintiff told him that she had other dreams for business opportunities.[2] He also gave evidence that he was never aware of the business set up of Venue 63 and it was never his intention to enter into a business arrangement with that company.[3] In relation to any application to the liquidators, he denied that he ever signed a form for the loan monies to go into the list of creditors.
[2] T5.10-14 (Adelaide Magistrates Court 31.01.2019).
[3] T5.19-22 (Adelaide Magistrates Court 31.01.2019).
The defendant’s position at trial was that she and Mr Finch, as the directors of Venue 63, were always acting on behalf of the company.[4] She also noted that by the loan agreement, the loan monies were to be placed into the business account for Venue 63.[5]
[4] T7.7-8 (Adelaide Magistrates Court 31.01.2019).
[5] T7.34-36 (Adelaide Magistrates Court 31.01.2019).
Finally, the defendant relied upon a clause in the agreement that the loan “excludes the lenders any share or interest in the business known to the lender as Venue 63 Pty Ltd”.[6]
[6] T7.28-32 (Adelaide Magistrates Court 31.01.2019).
In relation to the Lender’s Agreement tendered at trial the plaintiff gave evidence that, although it was not the original signed copy, he had retained an electronic copy of the original unsigned agreement on his computer and that the wording was exactly the same as the previous agreement.[7] The defendant in her evidence confirmed that the wording was the same.[8]
[7] T8.30-33 (Adelaide Magistrates Court 31.01.2019).
[8] T8.34-35 (Adelaide Magistrates Court 31.01.2019).
At trial, the defendant argued that the fact that the loan monies were paid into the company account, and not into her personal account, confirmed the loan was to the company and was not a personal loan.
The Magistrate’s decision
In finding for the plaintiff, the Magistrate noted that the defendant:
…did say that she genuinely believed that the agreement was an agreement between Mr Kuek and her company but I reject that evidence. Her belief is not relevant to my construction of the contract in any event. I find Ms Bailey did ask for money to start the business and that Mr Kuek agreed to lend her money on that basis.[9]
[9] Ex tempore judgment of Magistrate Millazo at [6].
The Magistrate found that the Lenders Agreement clearly identified the borrowers as natural persons, describing them by their title, namely that of director/partner of a company. It was the parties personally who entered into the agreement.
The Magistrate found in favour of the plaintiff.
The application for review
The defendant applied to review the Magistrate’s decision pursuant to the provisions of s 38 of the Magistrates Court Act 1991, which sets out the powers of the District Court on such an application.
The hearing of a review is governed by s 38(7) of the Magistrates Court Act. Justice Doyle in Wilczynski & Anor v District Court of South Australia & Ors[10] noted that during a hearing under s 38(7)
… the court may inform itself as it thinks fit and in doing so is not bound by the rules of evidence. The court may rehear evidence taken before the Magistrates Court. The court may affirm the judgment or rescind it and substitute the judgment the court considers appropriate. In hearing and determining the review, the court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
[10] [2016] SASC 51 at [45].
Although both plaintiff and defendant made oral submissions to me during the hearing of the review, I am obliged to accept the advantage which was enjoyed by the Magistrate regarding his impression as to the credibility of witnesses giving their evidence on oath.
The grounds of review
The defendant filed an application for review on 13 February 2019 listing two grounds for appeal. The first ground was later abandoned. The ground relied upon at the hearing before me was that the learned Magistrate erred in finding that the defendant was personally liable in circumstances where the written agreement:
1does not contain the defendant’s personal name;
2contains the registered address (within the meaning of the Corporations Act 2001 (Cth)) of Venue 63;
3records explicitly that the plaintiff in his capacity of a lender would be excluded from any share or interest in Venue 63;
4required that the funds be transferred to Venue 63’s account;
5recorded signatures from both directors of Venue 63;
6fails to expressly record any clause relating to personal guarantee of Venue 63’s directors; and
7was made on purely commercial grounds.
The hearing
Prior to the hearing, the defendant provided a detailed affidavit sworn on 20 May 2019 setting out her evidence for the hearing, to be tendered pursuant to ss 38(7)(c) and 38(7)(e) of the Magistrates Court Act 1991. By this affidavit, the defendant set out the background of her business venture with Mr Peter Finch in relation to the creation of an entertainment venue for the LGBTI community, which culminated in the leasing of a venue at 63 Light Square Adelaide and the setting up of a company registered as Venue 63 Pty Ltd on 9 October 2014. The defendant and Mr Finch were to be equal partners in the business venture, with Mr Finch maintaining the financial side of the business and the defendant running the venue.
Between paragraphs 20 and 43 of the defendant’s affidavit, she sets out discussions with a number of people regarding the business venture and what she describes as their willingness to provide “capital to the company for the purpose of progressing the business venture”.[11]
[11] Affidavit of Barbara Bailey at para 22.
In relation to these conversations, the defendant says that she specifically discussed with Mr Finch (also known as Kristyana) the nature of the investment and states at paragraph 25 of her affidavit that “we both agreed that as long as the investments were limited to the company, and that any investment meant that the investor had no interest in the company, and therefore no say on how the venue was to be run, we would be happy to accept investors”.[12]
[12] Affidavit of Barbara Bailey at para 25.
Following those discussions, the defendant and Kristyana drafted a template agreement which the defendant says was to be used for anyone who was interested in investing in the company.
At paragraph 27 of her affidavit, the defendant attests to the fact that she can no longer locate the soft copy of that agreement and is unable to recover it from a computer.
Attached to the defendant’s affidavit at BB-02 and BB-03 are true copies of agreements that she attests were signed by what she describes as other investors namely Ron Shepard (document BB-02) and Teresa Megson (document BB-03).
Those agreements are the same and contain the following terms and descriptions:
1It is described as a “Lender’s Agreement”;
2It is to be between a named person (the lender), “and the company known as Venue 63 ABN 69 602 239 994”;
3It is an agreement to lend a sum of money “to Venue 63 for the purpose of setting up the venue located at 63 Light Square, Adelaide, 5000”;
4The monies were to be “repaid at a time of Venue 63’s discretion”;
5Venue 63 would pay interest at 10% per annum on outstanding amounts every year until the debt was fully repaid;
6The loan period would not be more than three years;
7If the debt was repaid in less than 12 months, Venue 63 would pay one full year’s interest, with Venue 63 reserving the right to repay the principal and interest as soon as practical;
8“This lend in no way gives the lender any share or interest in the business known as Venue 63”.
The defendant acknowledges in her affidavit that this is not the agreement that was signed by the plaintiff. She outlines the discussions between herself, Mr Finch, the plaintiff and his partner. She describes an agreement to invest in the company, which the plaintiff denies.
In relation to the signing of the agreement, the defendant sets out in paragraphs 51-57 of her affidavit how that agreement came about and the nature of that agreement. Although the defendant acknowledged that she does not recall specifically what was said, she attested to the fact that she and Kristyana discussed with the plaintiff the standard terms of the agreement regarding the interest and repayment terms and, in particular, that there would be no interest in the company and no say on how the venue would be run. At paragraph 54 of the affidavit, the defendant acknowledges that the plaintiff went away from the table and returned some time later with two copies of a new agreement and that he said words to the effect that he had made some amendments.
At paragraph 55 of her affidavit, the defendant notes that she and Kristyana discussed the amended agreement with each other and agreed that the new agreement reflected the same terms as the standard agreement, as there was no personal liability clause and that the lender would not have any interest in the company. The agreement was then signed by the parties.
The defendant continues in her affidavit to set out the difficulties Venue 63 encountered and the fact that she had no choice but to place the company in administration.[13] She specifically states that she spoke to all investors about the liquidation, including the plaintiff, and advised them to put claims in with the liquidator.[14] She attests to the fact that, in January 2018, the plaintiff approached her and asked whether she had a copy of the agreement so that he could make a claim with the liquidators. As she did not have a copy of the original agreement (it having been lost), the plaintiff approached her with a new lender’s agreement and asked her to sign and backdate the new agreement so that he could claim in the liquidation.[15]
[13] Affidavit of Barbara Bailey at para 64.
[14] Affidavit of Barbara Bailey at para 66.
[15] Affidavit of Barbara Bailey at para 69.
At paragraph 70 of her affidavit, the defendant states that she quickly read the terms of the new agreement and, although she cannot specifically recall whether any amendments were made from the original agreement, she considered that it appeared to reflect the effect of the agreement. This is a different version of events to the evidence that the defendant gave at trial.
In her affidavit, the defendant states that in order to assist the plaintiff with his claim in liquidation, she signed and backdated the new copy of the original agreement.
At paragraphs 80-86 of her affidavit, the defendant reconsiders the evidence that she gave in the Magistrates Court. At paragraph 82 she notes that she has had time to reflect on the new agreement signed with the plaintiff and to also put it in context with the agreements signed by Mr Shepard and Ms Megson. She states as follows:
[83] I cannot now recall the exact terms of the Kuek agreement and whether they are reflected in the new agreement. However, I believe that the terms generally reflect the effect of the terms of the Kuek agreement.
[84] However, what is marginally different between the new agreement and the Kuek agreement is the signing clause.
[85] The original Kuek agreement did not have “Signed Lender … Date” and “Signed Borrower….Date”. These appear to have been added.
[86] The original Kuek agreement had both my signature and Kristyana’s. I also believe that we also wrote the Company’s name and the Company’s bank details on the Kuek agreement in the same fashion as the agreement with Roger so that Peter and Kuek would have the Company’s bank details.
The plaintiff filed an affidavit sworn by him on 24 May 2019. By this affidavit, the plaintiff disputes the historical accounts put forward by the defendant regarding the agreement he entered into with her. The plaintiff expressly states that he did not invest in the company Venue 63, and relies on the term in the Lender’s Agreement expressly excluding him from any investment or involvement in the company.
In relation to the two agreements with other lenders annexed to the defendant’s affidavit as BB-02 and BB-03, the plaintiff submits that these two agreements are not the same as the agreement that he had with the defendant. The first two agreements attempt to create a commercial agreement. He submits that the agreement he signed was a personal agreement. On page 3 of his affidavit he states that, “I would not invest in any business without some sort of security offered by a company or a personal guarantee”.
At page 4 of his affidavit, the plaintiff notes that he had never “expressed an interest to invest in the company. I did offer a personal loan”.
At pages 4 and 5 of his affidavit, the plaintiff disputes the version of events regarding the liquidation of the company, Venue 63. He confirms his evidence at trial that he had no knowledge of that liquidation. He states that he approached the defendant in January 2018, as the term of the personal loan had run its course and the principal and interest were overdue. He offered to negotiate further terms of repayment, but this was rejected by the defendant. He then approached the defendant a week later and presented her with a copy of the original unsigned Lenders Agreement which he had held on his home computer in a PDF file. The defendant confirmed that she no longer had a copy of the original signed agreement. The plaintiff denies making any alternation to the copy he held on his computer, and confirms that the defendant was prepared to sign the copy of the Lenders Agreement, and did so.
At the hearing before me on 24 May 2019, both the plaintiff and the defendant relied upon their affidavits. The defendant (as applicant) confirmed to me that when the plaintiff signed the loan agreement, it was a different agreement to the one that had been signed by other lenders. Her evidence before me in relation to the plaintiff was ‘he actually took our agreement and then re-wrote it’.[16] The defendant agreed that the copy of the Lenders Agreement tendered at the trial before the Magistrate was the one that had been signed by the plaintiff.
[16] T5.12-13 (Adelaide Magistrates Court 31.01.2019).

Unlike her case before the Magistrate, before me the defendant stated that she could not now be sure if the signed copy of the Agreement was an exact copy of the original one, although she agreed that it was similar. The defendant stated that she could not remember what the wording of the original agreement was, although she admitted that the plaintiff did change the wording from the original agreement that was presented to him when they went to formalise the agreement.[17]
[17] T6.5-10 (Adelaide Magistrates Court 31.01.2019).
Although the agreement was different from the original one, the defendant stated to me that both she and Kristyana (previously Mr Finch) had read the amended agreement and believed that it reflected the same terms as the standard agreement. However, she further stated that she did not really understand why the plaintiff had changed it and so they signed it. The defendant said there was no discussion about her being personally liable, and if there had been, they never would have accepted an investment from the plaintiff under those terms. Her case was that she and Kristyana had started a company up and incorporated it to protect them from that sort of thing.[18]
[18] T7.6-18 (Adelaide Magistrates Court 31.01.2019).
The defendant accepted, for the purposes of the review, that the copy of the Lenders Agreement that was tendered to the Magistrates Court and attached to her affidavit, was the same as the original one, except that both directors had signed it and that as it was after the event, and also that there was confirmation on the new agreement that the funds had been transferred from the plaintiff to the account of Venue 63.[19]
[19] T8.21-31 (Adelaide Magistrates Court 31.01.2019).
In relation to the clause in the Lenders Agreement excluding the plaintiff from any share or interest in Venue 63, the defendant stated that clause was included so that all lenders understood that they did not own any interest in the company. The defendant indicated that the investors were to get paid interest on their loan and that was the nature of their investment, rather than them having shares or any formal interest in the company. She noted that they did not want the lenders/investors to think that they had a right to tell them how to run the company.[20]
[20] T9.15-35 (Adelaide Magistrates Court 31.01.2019).
In his submissions to me, the plaintiff was clear that he never intended to lend money to a company, and if he had done so he would have required some form of personal guarantee from the directors. It was for that reason that he changed the standard agreement which had been produced to him by the defendant. He ensured that the directors/partners of the company were specifically stated to be the borrowers.[21]
[21] T10.31-38 (Adelaide Magistrates Court 31.01.2019).
The plaintiff stated that he particularly was not setting up a business or commercial loan and would not have done so in a business where he had no say in how it was performing.[22]
[22] T11.8-15 (Adelaide Magistrates Court 31.01.2019).
The plaintiff confirmed that he had never had any interest in the liquidation of the company. He told me that he was not aware of the circumstances of the company until he approached the defendant for repayment of the loan in January 2018, after the term of the loan had expired. He also stated that he had discussions with the defendant at times during the three year term of the loan when he saw the defendant on a social basis. The plaintiff was very clear in his evidence that he had nothing to do with the liquidation and had never formally applied to be a creditor of the company. He does not know how that occurred, but he assumes it was by steps taken by the defendant.[23]
[23] T14.4-21 (Adelaide Magistrates Court 31.01.2019).
Decision
The issue on the application for review is whether the written Loan Agreement between the plaintiff and defendant established personal liability on the part of the defendant.
In detailed written submissions filed on 20 May 2019, the defendant relied upon the legal principles in relation to the construction and interpretation of contracts as summarised by Doyle CJ (with whom Bleby and Sulan JJ agreed) in Harris v Burrell and Family Pty Ltd[24] following the approach taken by McHugh JA in the New South Wales Supreme Court case of Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd[25] where he said at [923] – [924]:
This appeal raises the question whether a person whose signature purports to be made on behalf of an incorporated company is nevertheless personally liable…
The formation of a contract does not depend upon the actual intention of the parties. A contract exists because the law attaches rights and obligations to the external conduct of the parties, one at least of whom has expressly or impliedly made a promise … The meaning which a party intends that his words or conduct should have is irrelevant. Words and conduct are interpreted according to what was said and not according to what was meant…
The present case, therefore, depends on what the parties did and not on what they intended to do when they signed the Indemnity and the Agency Agreement. And what they did depends on the construction to be placed on the documents which they signed. A commercial document, however, must be construed in its commercial setting - in accordance with the surrounding circumstances known to the parties … This is so whether the issue concerns construction in the strict sense or whether, as here, the issue concerns the capacity in which a person signs a document. … In some cases the contents of a document may indicate that the signatory is bound even though a qualification attaches to his signature.
[24] [2010] SASCFC 12 at [16]-[20].
[25] (1985) 9 ACLR 909.
In relying upon the Harris v Burrell and Family Pty Ltd decision, the defendant noted that the Court relied upon the approach taken by Giles J in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd[26] Giles J said at [174]:
[174] In the result, I conclude that the proper approach is to inquire whether there is to be found an intention that the signatory be personally bound to the contract evidenced in the document, meaning thereby not a subjective intention but an intention to be found objectively, notwithstanding a qualification attached to the signature. That intention, or lack thereof, is to be found upon the construction of the document, including but not being limited to the qualification attached to the signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible. The inquiry is not limited to consideration of the signature and its qualification in order to determine whether or not the signature indicates an assent to be personally bound.
[26] (1989) 21 NSWLR 160.
I have reviewed these authorities. I do not believe that they assist the defendant. I have also considered the decision of the High Court in Toll Pty Ltd v Alphapharm Pty Ltd & Others,[27] where they adopted the comments of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW:[28]
We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
[27] (2004) 219 CLR 165.
[28] (1982) 149 CLR 337 at 348.
In finding that the words of a contract were clear, the Court noted that the respondent had signed a contract which invited him to read the terms and conditions on the reverse before signing. He was not rushed or tricked into signing the document, and the appellant did not set out to conceal from him the terms and conditions on the document, or to encourage him not to read them. At paragraph 40 they noted:
This court, in Pacific Carriers Ltd v BNP Paribas[29] has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
[29] (2004) 208 ALR 213.
It is clear from the authorities that in interpreting a contract the actual language used is the first consideration. Where these are in dispute, the circumstances of the entering into the contract must be considered. In this case, that is somewhat difficult to do as there are two completely different versions of events and, although there were witnesses to the signing of the agreement, those witnesses where not called to give evidence.
The arrangement between the plaintiff and the defendant was informal. Neither party obtained legal advice and the initial agreement was prepared by the defendant and then changed by the plaintiff before it was signed by both parties.
The defendant’s submission is that her intention was that the plaintiff, and others who provided money, were doing so to enable the business venture known as Venue 63 to be started. They were investing in that business, with the return being the interest payable on the loans. However, despite that intention, the agreement both with the plaintiff and others who provided funds was clearly stated to be a Lenders Agreement. The language of all of the agreements was in the terms of a loan, including the agreements with Mr Shepard and Ms Megson.
In those two agreements, it is expressly stated that Shepherd and Megson were to ‘lend’ money to Venue 63 and that ‘the loan’ was for a period of three years. At the bottom of the agreements it is stated that ‘the lend in no way gives the lender any share or interest in the business known as Venue 63’. The plaintiff’s contract with the defendant uses the same terms, with the money going to ‘the borrower’ and not to Venue 63.
I find, given the wording of the three agreements that have been tendered, and the evidence of the plaintiff, that there was never an intention on behalf of the plaintiff to invest in any specific business venture conducted by the defendant, and not to Venue 63. The language and terminology is very clear. I find that the plaintiff intended to provide funds as a loan that would be repaid over three years.
Both the plaintiff and defendant have given evidence and have made submissions before me that the standard form agreement that had been prepared by the defendant and her then business partner Peter Finch was not the loan agreement that was signed by the plaintiff. It is also the evidence of both parties that, before the plaintiff signed his loan agreement, he amended the agreement and presented a different agreement for the defendant to sign.
I find that the agreement signed by the plaintiff was different to the standard loan agreement drafted by the defendant, and fundamentally different to the agreements signed by Mr Shepard and Ms Megson.
In evidence before the Magistrate, the defendant stated that the agreement tendered at trial was a true copy of the agreement between her and the plaintiff except that the agreement had been signed by both her and Mr Finch. At the hearing before me she attempted to rescind from that evidence. I do not accept her changed position, and find that the terms of the agreement are as set out in the agreement tendered as evidence at the trial of this matter.
In making that finding, I accept that the defendant may not have understood the changes that were put to her. She advised me that she did not seek legal advice prior to the signing of the agreement, and was of the view that the changes made by the plaintiff were of no consequence. Her case is that, without a formal, personal liability clause in the loan agreement she was not personally liable. That is not correct.
In a matter where there are different views of what was intended by the terms of a contract, the words and conduct of the parties will determine the meaning, as noted above in the authorities.
In this matter it is significant that the loan agreement signed by the plaintiff was fundamentally different to the agreement signed by the defendant with the other two lenders. In relation to the agreements I find:
1.   That all agreements are described as a ‘Lenders Agreement’.
2.   The agreement between the plaintiff is stated to be between him and the “business directors/partners of Venue 63 Pty Ltd”, defined as “the borrower”. The other agreements, are specifically stated to be between the lender and the company Venue 63, with the company’s ABN added.
3.   That the agreement signed by the plaintiff was for him as “the lender” to loan the sum of $10,000 to the borrower. The agreement with the other two lenders was for the sums be lent to Venue 63 “for the purpose of setting up the venue located at 63 Light Square, Adelaide 5000”.
4.   Those additional words setting out the purpose of the loan, are not included in the agreement with the plaintiff.
5.   That the manner of repayment of the monies was different. In the agreement signed by the plaintiff, the “borrower” was to repay the full loan in a period of no greater than three years from the date of transfer of $10,000. In the agreement with the other two lenders, the monies were to be repaid at a time of ‘Venue 63’s discretion’, with Venue 63 to pay interest of 10 % per annum on any outstanding monies every year, until the debt was finally paid.
6.   That in all sections of the agreement between the plaintiff and defendant the words ‘the borrower’ are used, whereas in the other two agreements the words ‘Venue 63’ are used to define the entity receiving the funds.
I find that there was a clear intention on the part of the defendant that the plaintiff have no interest in the running of a commercial enterprise. In all the agreements, it is specifically stated that the loan excludes the lender from any share or interest “in the business known to the lender as Venue 63 Pty Ltd”. The defendant says that this was to exclude any investors from having any say in the running of the business.
In relation to the loan agreement that the plaintiff entered into with the defendant, the evidence is that the plaintiff changed the draft agreement provided to re-define the borrower. There is a clear difference between the agreement put to the defendant by the plaintiff and the one that the plaintiff agreed to sign, and did sign. By her affidavit, the defendant stated that she took the time to read and consider the terms of the amended agreement, and at paragraph 54 she concedes that the plaintiff informed her that he had made changes.
The plaintiff also told me that, in relation to the agreement, “we discussed earlier on before I signed the form, I said we would not have signed it this way, you know, we want to change it to the borrower, as to the directors”.[30]
[30] T10.35-38 (Adelaide Magistrates Court 31.01.2019).
There may have been a misunderstanding on the defendant’s part as to what she was signing, however she agreed to sign the loan agreement, amended by the plaintiff, without obtaining advice as to what the changes meant. She could have abstained from signing and have sought that advice. The fact that the plaintiff left the room and amended the computer-generated agreement should have alerted the defendant to the fact that this agreement was no longer the same as the original draft. The changes had to have some meaning, and I find that they did.
I find that in all of the circumstances of this matter, including the evidence before the Magistrate and the submissions made before me, there is no basis upon which to change the order made by the Magistrate.
I find that a reasonable person in the defendant’s position would have understood that there was a fundamental change in the nature of the agreement that they were signing, given the number of differences between the original draft and the agreement presented by the plaintiff. It was clear that the name of the borrower had changed to the personal directors/partners of the commercial entity, Venue 63, and that the agreement was no longer with a company. I find that the plaintiff did not try to hide this from the defendant.
In these circumstances, the judgment given in the court below is affirmed and the application for review is dismissed accordingly. Since both parties were unrepresented, there will be no order for costs of the review.[31]
[31] Magistrates Court Act 1991 (SA) s 38(5).