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Beerens v Bluescope Distribution Pty Ltd

Beerens v Bluescope Distribution Pty Ltd

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Case Copied 5 September 2012 79 min read

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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…

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: [2012] VSCA 209
Decision Date: 5 September 2012

CaseChat Overview and Summary

The case of Beerens v Bluescope Distribution Pty Ltd involved the plaintiff, Beerens, challenging the enforceability of a personal guarantee and indemnity provided by him for the debts and monetary liabilities of a company. The matter was heard in the Supreme Court of New South Wales. The plaintiff sought to invalidate the guarantee and indemnity on the grounds that it was obtained under illegitimate pressure amounting to economic duress, and that the exercise of contractual rights was in contravention of the implied obligation of good faith.

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.

Orders