Boral Resources (WA) Ltd v Silkbeam Holdings Pty Ltd as Trustee for PHVV Unit Trust - [2019] WADC 119

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   BORAL RESOURCES (WA) LTD -v- SILKBEAM HOLDINGS PTY LTD as Trustee for PHVV UNIT TRUST [2019] WADC 119
CORAM:   DEPUTY REGISTRAR HEWITT
HEARD:   15 MARCH, 2 JUNE & 19 JULY 2019
DELIVERED          :   22 AUGUST 2019
FILE NO/S:   CIV 4787 of 2018
BETWEEN:   BORAL RESOURCES (WA) LTD
Plaintiff
AND
SILKBEAM HOLDINGS PTY LTD as Trustee for PHVV UNIT TRUST
First Defendant
ALLSTATE WATER CARTAGE PTY LTD as Trustee for TARZIA FAMILY TRUST
Second Defendant

Catchwords:

Practice and procedure - Summary judgment application - Whether the credit arrangement between the principal and the plaintiff was subject to a limit - Turns on its own facts

Legislation:

Evidence Act 1908 (WA), s 73A

Result:

Application dismissed

Representation:

Counsel:

Plaintiff	:	Mr C C K Ko
First Defendant	:	Mr J P Cook
Second Defendant	:	Mr J P Cook

Solicitors:

Plaintiff	:	Trinix Lawyers
First Defendant	:	Mendelawitz Morton
Second Defendant	:	Mendelawitz Morton

Case(s) referred to in decision(s):

Ankar Proprietary Limited v National Westminster Finance (Australia) Ltd (1986) 162 CLR 549
R v Falzon (2018) 92 ALJR 701
Relwood Pty Ltd v Manning Homes Pty Ltd [1990] 1 Qd R 48

DEPUTY REGISTRAR HEWITT:

By a writ of summons lodged 20 December 2018 the plaintiff to this action sought payment from the defendants of a sum of in excess of $321,000 being the price of goods sold and delivered by the plaintiff to a company called All Earth Group Pty Ltd together with interest thereon. The defendants were sued under the terms of a guarantee which was executed by them and, which the plaintiff contends makes the defendants liable to pay any monies due from All Earth Group Pty Ltd.
On 16 April 2019 the plaintiff brought an application for summary judgment against the defendants in the proceedings. That application was lodged out of time but that aspect of the matter does not seemed to have troubled the parties and, the matters have been argued before me on the merits.
The matter has come before the court on a number of occasions and there are approximately six sets of submissions which have been filed in regard to the issues relevant to the determination of the summary judgment application. The issues which have emerged during this process are as follows:
1.Whether the documentation produced in the form of scanned copies of documents, the originals of which have been destroyed and which in parts are not legible, should be accepted in the course of the proceedings and relied upon in the determination of the application.
2.Whether certain original proforma documents produced to explain portions of the original documents which are not decipherable should be accepted into evidence.
3.Whether the contract guaranteed by the guarantors had a credit limit which has been exceeded and thus entitling the defendants to a defence.
I shall start with the first of the matters. The evidence adduced by the plaintiff contained in the affidavit of Mr D S Hensman sworn 24 June 2019 indicates that the policy of the plaintiff, is to scan and save digital copies of credit agreement applications and guarantees and destroy the originals. It is the evidence of Mr Hensman that the plaintiff does not possess any original documents relating to these matters and those documents which have been produced are reprints of the digital record created scanning the originals.
In my view, there is no question that reproductions are admissible under the provisions of s 73A of the Evidence Act 1908. The controversy arises in regard to the attempt by the plaintiff to shed light on those portions of the documents which are unreadable. The documents are clearly proforma documents, that is, printed documents with spaces to be filled by the relevant parties. The plaintiff has attempted to explain what is written in the portions which are not legible, by producing what is said to be clean copies, of the proforma document upon which the relevant information has been entered.
There are two obstacles to that process. The first obstacle is that the plaintiff has made two made attempts to produce to the court original incompleted forms which were used in the relevant transaction. The first occasion in which such documents were produced was in the affidavit of Ms S T Humberstone sworn 16 April 2019. That affidavit exhibited at page 60 and following an uncompleted version of what the deponent said, was the document which was completed by All Earth Group Pty Ltd. That affidavit does not do any favours to the plaintiff's argument because a perusal of it makes it clear that it is not the same document as that which was completed by All Earth Group Pty Ltd in its credit application.
The affidavit of the D S Hensman sworn 5 July 2019 exhibited to it a clearer copy of the completed credit application and guarantee and, a further example of the proforma document upon which the credit application was based. This second attempt at least had the virtue of not being obviously a different document.
There is, however, a further obstacle to the receipt of these documents into evidence. It is the evidence of the plaintiff that the original documents were destroyed. They were executed approximately six years ago. Neither Mr Hensman nor Ms Humberstone have viewed the original documents. It is therefore unclear the precise basis upon which they are able to say that the form which they produced was in fact the same form as that which was completed by All Earth Group Pty Ltd and the guarantors and scanned into the plaintiff's records. The document looks the same but whether it is the same is a matter of conjecture and that is something upon which neither of the deponents can usefully testify, neither having seen the original, or at least failing to depose that they have seen the originals prior to their destruction.
For those reasons, I uphold the objection by the defendant to the admissibility of the so called clean copies of the scanned documents and instead intend to rely, to the extent that I am able to do so, on what I can discern of the originals.
The next issue requiring consideration is whether or not the credit application made by All Earth Group Pty Ltd had a credit limit. To the extent that it is possible to read the document there is a section which is headed 'Credit Limit Required' and there are a number of different categories in which monetary amounts have been entered. In each completed portion of the form a figure of $30,000 has been written and its format is such that there appears to be a $30,000 limit required for each of asphalt, bricks, cement and concrete.
On the face of it, the form simply requires the application to indicate the extent to which it anticipates that it will require credit. There follows close typed pages which set out the terms upon which supplies to Earth Group will be made. In essence, those terms govern the contractual arrangements between the parties in regard to any supply which is made by the plaintiff to the All Earth Group Pty Ltd.
There is nothing that I can discern within these terms which do more than inform the plaintiff of the extent to which the All Earth Group Pty Ltd might require credit to be given. I struggle to see at the completion of s 2 of the form, completed as it is, imposes upon the plaintiff any obligation to refrain from granting credit to All Earth Group Pty Ltd beyond the limits which are described in s 2 of the form.
It is argued by the defendants that the credit application form and the guarantees upon which the plaintiff rely are part of the one document. That is undoubtedly correct. There are also cross references between the guarantee portion of the document and that part which is perhaps better described as a credit application form. In particular, in par 11 of the guarantee it is provided:
The definitions in the credit account terms and conditions shall apply in this guarantee, except 'real property' shall mean all real property owned by the guarantors now or in the future, solely or jointly. Also, singular words include the plural and vice versa and reference to any party in the guarantee, include that party's executors, administrators, substitute successors, or permitted assigns.
The submission of the defendants therefore is that the documents are linked is clearly made out.
The next issue to resolve is what the consequence of that linking is.
The primary argument advanced by the defendants is that since some portions of the credit application form are indecipherable and, since relevant words apply to s 2 of the form, which is 'credit limit required' following which no further words can be read although, it is obvious there are some, it would be unsafe to reach a decision in the face of this difficulty at a summary judgment level, particular in view of the fact that I have ruled that the clean copies are not admissible as evidence.
In answer to that proposition the plaintiff relies on the words of the guarantee:
I/We guarantee payment to the supplier of the whole price charged by the supplier for goods or services supplied to the customer from time to time, without any deduction or set-off whatsoever. I/We also guarantee payment of any other monies now or in the future owing by the customer to the supplier. I/We also guarantee the performance of the obligations of the customer pursuant to the guarantee given by the customer to Boral Shared Business Services in the credit account terms and conditions.
In that clause the customer is All Earth Group Pty Ltd and the credit account terms and conditions are those which are set out in s 4 of the credit application form.
The plaintiff also relies on the provisions par 3 of the guarantee agreement which is in the following terms:
My/Our guarantee and indemnity under this guarantee is a continuing guarantee and will not be affected:
(a)if the supplier or Boral Shared Business grants an extension of time or other indulgence to the customer or varies the terms of the customer's account (even if this increases my/our liability under this guarantee);
(b)by the release of any of the guarantors or if the guarantee is or becomes unenforceable against one or more of the guarantors;
(c)any payment by the customer being later avoided by law, whether or not I/We have been given notice of those matters.
One of the primary planks upon which the defendants might rely is the principle contained in Ankar Proprietary Limited v National Westminster Finance (Australia) Ltd (1986) 162 CLR 549. That case is authority for the proposition that a breach by the plaintiff of its contractual obligations with the principal debtor, in this case exceeding the credit limit, will have the effect of discharging the guarantor from liability.
In truth, the defendants' argument is somewhat different to that which I have just expressed, the proposition being that properly construed, the guarantee is only for the performance of the contract entered into by All Earth Group Pty Ltd to the extent of the contractual terms between them, such that if the plaintiff were to exceed the credit limit the guarantee would be effective only to that limit and not beyond.
That argument is in direct contradiction to the terms of the guarantee which I have quoted. It is also not altogether consistent with the terms of the credit application form which, merely nominates the credit limit sought by All Earth Group Pty Ltd but is silent on whether or not that limit can be exceeded at the discretion of the plaintiff.
Reliance is placed on the decision of the Queensland Court of Appeal in the case of Relwood Pty Ltd v Manning Homes Pty Ltd[1990] 1 Qd R 48. In that case Relwood completed a document which gave detailed particulars of the company, its directorship, business references and the like and was clearly an application for credit, because of the inclusion of a section of the form 'credit limit required'. Appearing opposite those words was a section with a dollar sign, but no amount was entered and instead 'to be agreed' was entered.
A guarantee was provided by the directors of the company of Relwood Pty Ltd under the terms of which they:
Do hereby guarantee the payment/repayment in full to you of all debts incurred by the said company to you.
This guarantee shall be a continuing guarantee and shall not be affected by time or other indulgence that may be given to you by the said company nor the winding up of the said company.
Prefabricated steel in kit form was supplied to Relwood Pty Ltd which was used in the manufacture of homes.
Although the case had some complications and idiosyncrasies of its own it was held by the court:
As a matter of construction, the guarantee was agreed to be limited in amount to a credit limit to be agreed not only between the appellant and Relwood but also involving the respondents. As there was no such agreement the guarantee did not come into operation. Justice Leigh at [489].
The similarities between that case and this are striking. In the present case there is a section also called 'Credit Limit Required'. Admittedly, there are some further words in the form relied upon by these plaintiffs that cannot be read. I think it a clear result of the reasoning of the Queensland Supreme Court that, in circumstances such as this, where a credit limit has been nominated that limit attaches to and defines the liability of the guarantors.
Various cases have been cited by the plaintiff which emanate from the Supreme Court in Victoria but they are all decisions of a single judge.
The High Court has recently affirmed that decisions of the Courts of Appeal in the States and Territories should be accepted and followed save in instances where they are clearly wrong:
Australian intermediate appellate courts are bound to follow the decisions of other Australian intermediate appellate courts in matters of statutory interpretation and common law unless persuaded that those decisions are plainly wrong; R v Falzon (2018) 92 ALJR 701. (Headnote).
Whether or not the decision is plainly wrong is not a ruling that should fall on the shoulders of a deputy registrar deciding a summary judgment application. It appears to me that the parallels between the Queensland case and the present case are significant. Plainly wrong is not a description which I would be inclined to attach to the Relwood Pty Ltd v Manning Homes Pty Ltdcase. It remains to be seen whether the position as it appears to have developed in Victoria would be preferred to that which was adopted by the Supreme Court in Queensland, but the Relwood Pty Ltd decision appears to be binding on this court.
As matters stand it seems to me that there is a serious issue to be decided, that being which of the lines of authority should be preferred, and for that reason I am of the view that the plaintiff's application for summary judgment should be dismissed and that the defendant should have leave to defend the action.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
TS
Court Officer
22 AUGUST 2019