SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2011 0055 | |
| THOMAS BEERENS | Appellant |
| v | |
| BLUESCOPE DISTRIBUTION PTY LTD (ACN 096 380 068) | Respondent |
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| JUDGES | NETTLE, REDLICH and TATE JJA | |
| WHERE HELD | MELBOURNE | |
| DATE OF HEARING | 1 June 2012 | |
| DATE OF JUDGMENT | 5 September 2012 | |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 209 | |
| JUDGMENT APPEALED FROM | BlueScope Distribution Pty Ltd v Beerens [2010] VCC 1802 (Judge Ginnane) | |
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CONTRACT – Personal guarantee and indemnity by director for debts and monetary liabilities of company – Whether guarantee and indemnity was obtained under illegitimate pressure amounting to economic duress – Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 – Unconscionable conduct – Whether exercise of contractual rights was in contravention of implied obligation of good faith – Whether pressure analogous to knowing assistance in a breach of a fiduciary duty – Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 – Meaning of ‘debts and monetary liabilities which are or may become payable’ – Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 – Whether price payable calculated at time of delivery or time of order – Whether debtor failed to mitigate loss – Appeal dismissed.
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| Appearances: | Counsel | Solicitors |
| For the Appellant | Mr A T Strahan | Foster Nicholson Jones Lawyers |
| For the Respondent | Mr T R Messer with Mr K J Naish | Turks Legal |
NETTLE JA:
This is an appeal from a judgment given in the County Court in favour of the respondent (‘BlueScope’) for sums totalling $272,209.92 pursuant to an instrument of guarantee and indemnity dated 30 October 2007 (‘the Guarantee’).
The judgment below
As the judge below identified in his reasons, ultimately there were five issues for determination at trial.
The first was whether it was a term of the agreement between BlueScope and Griffiths & Beerens Pty Ltd (‘Griffiths & Beerens’) that the price for steel delivered to Griffiths & Beerens would be the price at the time at which an order was placed or at the time of delivery. The judge held that, in the absence of a written quotation, the price was the price according to the prevailing price list at the time of delivery.
The second issue was whether it was a term of the agreement between BlueScope and Griffiths & Beerens that Griffiths & Beerens was obliged to pay for goods ordered but not delivered. The judge found that, when the receiver was appointed, he caused Griffiths & Beerens to cease to trade and refused to pay for steel products which had been ordered but not yet delivered. His Honour further found that, although the winding up of the company as such did not entitle BlueScope to treat the contract as repudiated, the combination of clause 6.6 of the Conditions of Sale and the receiver’s and liquidator’s refusal to take delivery of ordered goods entitled BlueScope to terminate the contracts for the supply of those goods and sue to recover damages for the loss suffered by reason…
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- Case
- [2012] VSCA 209
- Decision Date
CaseChat Overview and Summary
The court was tasked with determining several key legal issues. These included whether the pressure exerted to obtain the guarantee and indemnity was illegitimate and amounted to economic duress, and whether the exercise of contractual rights contravened the implied obligation of good faith. Additionally, the court had to interpret the phrase "debts and monetary liabilities which are or may become payable," and determine whether the price payable was calculated at the time of delivery or time of order. The court also considered whether the debtor failed to mitigate his loss.
The court held that the pressure exerted to obtain the guarantee and indemnity was not illegitimate and did not amount to economic duress. The court found that the exercise of contractual rights did not contravene the implied obligation of good faith, as there was no knowing assistance in a breach of a fiduciary duty. The court interpreted "debts and monetary liabilities which are or may become payable" to include liabilities that are incurred after the guarantee was given. The court further held that the price payable was calculated at the time of delivery, and that the plaintiff had not demonstrated any failure to mitigate his loss. Consequently, the appeal was dismissed.
In conclusion, the court upheld the enforceability of the personal guarantee and indemnity, and rejected the plaintiff's claims of economic duress and contravention of the implied obligation of good faith. The court's interpretation of the phrase "debts and monetary liabilities which are or may become payable" and the calculation of the price payable were also significant factors in its decision. The plaintiff's appeal was dismissed, and the guarantee and indemnity remained enforceable.
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