Reported Decision: (1999) NSW ConvR 55-897
New South Wales
Court of Appeal
CITATION: BIG RIVER TIMBERS PTY LTD v STEWART [1999] NSWCA 34 revised - 11/03/99 FILE NUMBER(S): CA 40391/98 HEARING DATE(S): 12 February 1999 JUDGMENT DATE:
4 March 1999PARTIES :
BIG RIVER TIMBERS PTY LIMITED v STEWART & ANORJUDGMENT OF: Mason P at 1; Handley JA at 28; Giles JA at 29
LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S) : Eq D 2243/98 LOWER COURT JUDICIAL OFFICER: Young J
COUNSEL: F G Lever (Appellant)
P B Walsh (Respondent)SOLICITORS: Toomey Pegg Drevikovsky (Appellant)
Lockhart Quinn & Co (Respondent)CATCHWORDS: Corporations Law; guarantee by company directors; construction of terms of guarantee ; joint and several guarantee ; scope of charge in guarantee; Real Property; charge to secure payment of monies; joint tenancy ACTS CITED: Real Property Act 1900 DECISION: Appeal Allowed
THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40391/98
ED 2243/98
MASON P
HANDLEY JA
GILES JAThursday 4 March 1999
BIG RIVER TIMBERS PTY LTD
v IAN MALCOLM STEWART & ANOR
Corporations Law - guarantee by company directors - construction of terms of guarantee - joint and several guarantee - scope of charge in guaranteeReal Property - caveat - charge to secure payment of monies - priority - joint tenancy
The claimant is a timber supplier. A construction company called Multiform Pty Limited was granted a credit account on 15 April 1994. Credit was given subject to the execution of a Guarantee by the company’s two directors Douglas Crane and Ian Stewart. The issue was whether the charge given in the Guarantee (which was a joint and several Guarantee) extended to the interest of Mr Stewart as joint tenant with his wife.
HELD, allowing the appeal:
That the charge extended to the guarantor’s interest in the jointly owned property.
Nature of a joint and several guarantee discussed.
ORDERS
1. Grant leave to appeal.
2. Appeal allowed.
3. Set aside orders made by Young J on 22 May 1998.
4. Declare that the Guarantee dated 11 April 1994, made between the claimant, the first opponent and Douglas Crane created a charge over the first opponent’s interest in the property described in folio identifier 386/755233 (“the property”) in favour of the claimant.
5. Declare that the Guarantee created a caveatable interest in the property in favour of the claimant.
6. Second opponent to pay the claimant’s costs of the appeal (including the application for leave) and of the proceedings below, but to have a certificate under the Suitors’ Fund Act with respect to the costs of the appeal.
7. Proceedings remitted to Equity Division for further hearing if necessary.
___________________
1 MASON P: The Court heard full argument in this leave application, thereby enabling the appeal to be disposed of, subject to the grant of leave.
2 The claimant is a timber supplier. A construction company called Multiform Pty Limited (“Multiform”) was granted a credit account on 15 April…
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- Case
- [1999] NSWCA 34
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the Court of Appeal were whether the guarantee document created a valid charge over the first opponent's interest in the jointly owned property, and consequently, whether it gave the claimant a caveatable interest in that property. The court was required to interpret the terms of the guarantee to ascertain the scope of the security intended to be provided by the first opponent.
The Court of Appeal reasoned that the guarantee, by its express terms, created a charge over the first opponent's interest in the specified property to secure the repayment of monies owed. The joint and several nature of the guarantee, coupled with the specific wording relating to the property, led the court to conclude that it was intended to operate as a security interest. This interpretation meant that the claimant was entitled to register a caveat against the title to the property to protect its secured interest.
The Court of Appeal allowed the appeal, setting aside the orders made by Young J. It declared that the Guarantee dated 11 April 1994 created a charge over the first opponent’s interest in the property and that this Guarantee created a caveatable interest in the property in favour of the claimant. The second opponent was ordered to pay the claimant’s costs of the appeal and the proceedings below, with a certificate under the Suitors’ Fund Act for the costs of the appeal. The proceedings were remitted to the Equity Division for further hearing if necessary.
Orders
Orders of the court
1. Grant leave to appeal.
2. Appeal allowed.
3. Set aside orders made by Young J on 22 May 1998.
4. Declare that the Guarantee dated 11 April 1994, made between the claimant, the first opponent and Douglas Crane created a charge over the first opponent’s interest in the property described in folio identifier 386/755233 (“the property”) in favour of the claimant.
5. Declare that the Guarantee created a caveatable interest in the property in favour of the claimant.
6. Second opponent to pay the claimant’s costs of the appeal (including the application for leave) and of the proceedings below, but to have a certificate under the Suitors’ Fund Act with respect to the costs of the appeal.
7. Proceedings remitted to Equity Division for further hearing if necessary.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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