Beri Distributors Pty Ltd v Capital Works Construction Pty Ltd
[2015] WADC 124
•26 OCTOBER 2015
BERI DISTRIBUTORS PTY LTD -v- CAPITAL WORKS CONSTRUCTION PTY LTD [2015] WADC 124
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 124 | |
| Case No: | CIV:1266/2015 | 20 OCTOBER 2015 | |
| Coram: | DEPUTY REGISTRAR HEWITT | 26/10/15 | |
| PERTH | |||
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Judgment against second defendant for part of the claim Leave to both defendants to defend the remainder | ||
| PDF Version |
| Parties: | BERI DISTRIBUTORS PTY LTD CAPITAL WORKS CONSTRUCTION PTY LTD JOSHUA BRIAN COFFEY FRANK RICCI |
Catchwords: | Practice and procedure Summary judgment Guarantee Indemnity Variation of contractual terms |
Legislation: | Personal Property Securities (Commonwealth Laws) Act 2011 Personal Property Securities Act 2009 (Cth) |
Case References: | Buckeridge v Mercantile Credits Ltd (1981) 37 ALR 543 Caltex Australia Petroleum Pty Ltd v Troost [2015] NSWCA 64 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
CAPITAL WORKS CONSTRUCTION PTY LTD
First Defendant
JOSHUA BRIAN COFFEY
Second Defendant
FRANK RICCI
Third Defendant
Catchwords:
Practice and procedure - Summary judgment - Guarantee - Indemnity - Variation of contractual terms
Legislation:
Personal Property Securities (Commonwealth Laws) Act 2011
Personal Property Securities Act 2009 (Cth)
Result:
Judgment against second defendant for part of the claim
Leave to both defendants to defend the remainder
Representation:
Counsel:
Plaintiff : Mr C C K Ko
First Defendant : No appearance
Second Defendant : Mr B W Duckham
Third Defendant : Mr M Curwood
Solicitors:
Plaintiff : Trinix Lawyers
First Defendant : Not applicable
Second Defendant : B W Duckham & Co
Third Defendant : Main Legal Studio
Case(s) referred to in judgment(s):
Buckeridge v Mercantile Credits Ltd (1981) 37 ALR 543
Caltex Australia Petroleum Pty Ltd v Troost [2015] NSWCA 64
1 DEPUTY REGISTRAR HEWITT: In this matter the plaintiff issued a writ on 15 April 2015 and by chamber summons dated 17 July 2015 it applied for a summary judgment.
2 Programming orders have been made and whilst those orders have not been strictly complied with in my view nothing arises by virtue of that fact. The plaintiff's case is a fairly straight forward one. The plaintiff alleges that it entered a trading agreement with the first defendant under the terms of which it supplied the first defendant with building materials. As part of the agreement to supply the materials, the plaintiff required the directors of the first defendant, namely the second defendant and the third defendant to execute guarantees to secure the price of the goods supplied pursuant to the agreement. It is alleged by the plaintiff that a sum of $118,829.08 together with some other peripheral amounts remain due and unpaid and it seeks a judgment for those sums. The plaintiff has advanced its case by way of a primary affidavit by one Antonio Di Paola dated 17 July 2015 and a supplementary affidavit also by the same deponent dated 14 October 2015. Those affidavits in my view establish the existence of the relevant guarantee, the supply of the relevant materials and a prima facie entitlement to judgment in the amount claimed. I therefore turn to the materials which have been filed by the defendants to ascertain whether or not there are any issues which would lead me to the conclusion that a triable issue has been raised.
3 Of the arguments presented to me on the hearing of this matter the more comprehensive was that advanced by the third defendant and that is the argument with which I first deal.
4 The first issue raised by the third defendant concerns the authenticity of his signature to the guarantee upon which the plaintiff relies.
5 An affidavit has been filed by one Danielle Dumpleton who was a witness to the signature of the second defendant but who states that she was not a witness to this signature of the third defendant and that a series of ditto marks appearing on the face of the document were not there when she signed.
6 The existence of a witness's signature is not critical to liability on a guarantee. What is required to satisfy the requirements of the statute of frauds is a sufficient document signed by the relevant party acknowledging the guarantee. As to whether or not the document was executed by the third defendant the third defendant has said in par 6 of his affidavit sworn 9 August as follows:
After viewing the original agreement I:
(a) identified that the handwritten name Frank Ricci was not in my own handwriting;
(b) noticed the absence of a witness signature; and
(c) could not positively identify the signature under the handwritten name Frank Ricci as my own.
7 I find such a statement in an affidavit rather less than convincing. The deponent does not specifically deny that he signed the guarantee he merely says that he cannot positively identify the signature as his own. Insofar as this evidence is an attempt to persuade me that there is a triable issue as to whether or not he signed the guarantee it fails in my view.
8 The third defendant in his affidavit has deposed to the fact that he was not involved in the day-to-day running of the first defendant. That task apparently reposed in the second defendant. The third defendant raised as an issue of the fact that the terms of trading which were set out in the credit agreement and guarantee agreement appear not to have been adhered to. There is no evidence of which I am aware which would suggest that the third defendant acquiesced in any variation of the terms of trading, such acquiescence would of course deprive the third defendant of the defence advanced: Caltex Australia Petroleum Pty Ltd v Troost [2015] NSWCA 64. It is apparent from the materials filed by the plaintiff that the requirement for payment within 30 days of the date of invoice was simply ignored by the plaintiff, and presumably the first defendant such that a very considerable debt was accumulated with very little in the way of repayments. It is well known law that a creditor who alters the terms of trade between itself and a debtor is not entitled to rely upon a guarantee executed to secure the due performance by the debtor. Arguably there has been a considerable departure from the terms of trade which were envisaged when the third defendant executed the guarantee. Since the uncontradicted evidence of the third defendant is that he was not involved in the day-to-day running of the first defendant's business it cannot be inferred that he acquiesced in such an arrangement. If that analysis is correct it seems to me that the third defendant has an arguable defence to liability under the terms of the guarantee.
9 There is also an issue raised by the third defendant with concerns a repayment proposal advanced by the first defendant to the plaintiff. The suggestion which is advanced by the third defendant is that the arrangement constituted an agreement entered between the plaintiff and the first defendant such that he is discharged from liability to the plaintiff. In my view there is no substance to this argument. The second defendant on behalf of the first defendant made a proposal to repay the then outstanding balance by instalments of $5,000 per week. There is no evidence whatever that the plaintiff made any concession in return for that promise. On the materials before me it was simply unilateral proposition advanced by the second defendant on behalf of the first defendant. It did not require the plaintiff to suspend its rights or in any way modify its entitlement to proceed to recover the monies due.
10 Another issue raised by the third defendant is that the agreement between the plaintiff and the first defendant contained a retainer of title clause such that until the relevant goods were paid for the title remained in the plaintiff. The existence of that clause was not protected by registration under the Personal Property Securities (Commonwealth Laws) Act 2011adopting Personal Property Securities Act 2009 (Cth) and it is argued that impacts on the capacity of the plaintiff to recover the monies it seeks. The difficulty I have with the proposition is there is no evidence advanced by the third defendant or indeed any of the defendants to show that there was some detriment suffered by the second defendant or third defendant by virtue of that fact (Buckeridge v Mercantile Credits Ltd (1981) 37 ALR 543).
11 Authorities have been cited which show that to the extent that a detriment flows from a failure to properly protect a security the amount of a creditor's claim can be reduced. The onus to provide such evidence rests on the party advancing the proposition. In the present case there is no evidence whatsoever that any such detriment was suffered or could have been avoided by appropriate registration.
12 I also note in passing that the goods supplied by the plaintiff to the first defendant were building materials and I find difficult to concede that such materials, incorporated into the fabric of a building, would then be available for collection and resale.
13 Finally the third defendant raises an issue of misleading conduct. It is suggested that the extension of the credit limit from an initial limit of $10,000 to an amount for which the plaintiff now sues constitutes misleading and deceptive conduct for the purposes of the Australian Consumer Law. How that could be the case is not explained but it is notable that the terms of the supply agreement entered between the plaintiff and the first defendant contained in cl 7 a right to increase, decrease or withdraw the facility as the plaintiff saw fit. Given the existence of such a contractual term I am unable to see how it can be argued that to exercise a contractual right contained within the contract between the parties could constitute misleading conduct.
14 In summary therefore, my conclusion is that there is an arguable defence in favour of the third defendant which is based on the proposition that the plaintiff did not require the first defendant to adhere to the terms of the trade which had been agreed, allowed the debt owing by the first defendant to escalate considerably, and the circumstances of the third defendant were such that he could not be said that to have acquiesced in that arrangement.
15 I now turn to the propositions which are advanced by the second defendant.
16 The principal argument advanced by the second defendant in his defence relates to the failure of the plaintiff to register under the Personal Property Securities Act the title retention clause which has been earlier mentioned. The difficulty I have with that argument is that there is no evidence whatsoever advanced by the second defendant, or indeed any defendant, as to the impact of that failure on his liability. In the absence of any evidence, or indeed any credible argument, that the second defendant has been adversely affected by the failure I am unable to perceive that any defence is raised by the point.
17 The next issue raised by the second defendant is that the granting of credit up to a figure of $118,000 is unconscionable conduct in breach of the Australian Consumer Law.
18 This is an issue with which I have dealt when discussing the defence advanced by the third defendant. What the plaintiff has done is exercise a contractual right to increase the credit limit. That was part of the contract between the parties and the plaintiff is perfectly entitled to exercise that right. There is no unconscionable conduct.
19 The next point argued relies on the denial by the third defendant that he signed the guarantee. In fact the proposition advanced by the third defendant falls well short of that proposition and it is of no use to the second defendant.
20 Finally the evidence establishes that the second defendant was the party actively involved in the running of the business of the first defendant. In those circumstances it seems to me that the second defendant must be taken to acquiesce in the arrangements between the first defendant and the plaintiff which led to a considerable increase in the credit limit made available to the first defendant.
21 It is contended by the second defendant that the failure of the third defendant, if there was one, to sign the guarantee has the effect of discharging all the parties to the guarantee from their liability. Paragraph 20 of the terms and conditions states:
This Deed shall be binding upon each party that has executed it notwithstanding the failure of any other party named as a party to execute it or the avoidance or unenforceability of any part of this Deed.
22 Such clauses were introduced to avoid the outcome upon which the second defendant now relies. Such clauses are effective to defeat such an outcome.
23 There is a final issue which relates to the claim generally. It has been pointed out that the accounts presented by the plaintiff are not internally consistent such that balances said to be due on certain dates do not match up. Such differences have been explained as being due to some change in the accounting system. I do note however that there has been no suggestion that the amounts in any invoice differ nor that the grand total has varied. The differences relate to running balances not to the amounts of the invoices or the total of the invoices. In my view the objection is not one of substance and I find no triable issue on that score.
24 Finally the plaintiff relies on what is said to be an indemnity within the documentation. That clause is expressed as follows:
As a separate and independent agreement the Guarantors agree to indemnify and keep harmless the Company against any losses, costs (including but not limited to costs on a solicitor/client basis) or damages of whatsoever nature incurred by the Company as a result of the Applicant failing to pay the Company the Price of Other Monies or as a result of the failure or default of the Applicant in the performance of their covenants and obligations contained within this agreement or under any other agreement between the Company and the Applicant.
25 Whether the term 'Losses' is co-extensive with the invoiced price of goods, is not clear to me. Losses arising from failing to pay the price of goods are not to my mind the same thing as the price itself and I find a level of ambiguity in the clause.
26 A claim has been made for some debt collection expenses which are unquantified and for the expense of registering caveats over certain properties owned by the defendants. As to the first claim it is unquantified and the legal basis of any obligation to pay collection fees is unexplained. As to the second claim although the stimulus to register caveats may have arisen from the default of the first defendant, default is not a pre-condition of the right to register. Further, the figure claimed appears to be a composite of various changes some of which, in my view might be properly characterised as the legal costs in the present action.
27 I therefore grant each of the second and third defendants leave to defend those aspects of the action.
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