Brown v Elite Nominees Pty Ltd
[2022] WADC 77
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: BROWN -v- ELITE NOMINEES PTY LTD [2022] WADC 77
CORAM: BOWDEN DCJ
HEARD: 22 JULY 2022
DELIVERED : 19 AUGUST 2022
FILE NO/S: APP 68 of 2021
BETWEEN: CHRISTINE MARGARET BROWN
Appellant
AND
ELITE NOMINEES PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: MAGISTRATE T DARGE
File Number : PER/GCLM/8162/2015
Catchwords:
Appeal from Magistrates Court - Terms of remit - Credit application/guarantee - Interpretation of guarantee
Legislation:
Magistrates Court (Civil Proceedings) Act 2004 (WA)
Result:
Appeal dismissed
Representation:
Counsel:
| Appellant | : | Mr R Nash |
| Respondent | : | Mr F A Robertson |
Solicitors:
| Appellant | : | Mossensons |
| Respondent | : | Mettam Legal |
Case(s) referred to in decision(s):
Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Brown v Elite Nominees Pty Ltd [2020] WADC 156
Defendi v Szigligeti [2019] WASCA 115
Re An Application under the Magistrates Court Act 2004; Ex Parte Snook [No 2] [2007] WASC 255
Westgyp Pty Ltd v Northline Ceilings Pty Ltd [No 2] [2019] WASCA 145
BOWDEN DCJ:
The respondent is a fuel supplier trading as Gnowangerup Fuel Supplies.
The appellant and her former partner, John Brown, were directors and shareholders of CJWFAMB Pty Ltd which company (the company) operates the Shell Roadhouse Williams.
In November 2011 the appellant completed and signed an account/credit application (ACA) which included a guarantee and faxed it to the respondent. Subsequently between September 2014 and October 2014 the respondent supplied products totalling $27,292.73 on credit to the Shell Roadhouse. The company did not pay for that product and the respondent proceeded against the appellant in the Magistrates Court pursuant to the guarantee contained within the ACA.
On 23 July 2020 (the magistrate's original decision) the learned magistrate found that the appellant was liable to the respondent under the ACA in her capacity as a guarantor for the debt of $27,292.73.
The appellant appealed that decision.
The original appeal
The appellant's original appeal was based on four grounds.
Ground 1 was that the learned magistrate made an error of law in finding that by signing the credit application dated 10 November 2011 (credit application) the appellant had, on a proper construction of the document guaranteed the obligations of the company.
I found that the learned magistrate's conclusion that based on the text and form of the ACA, viewed objectively, the applicant intended to be bound by the guarantee and the learned magistrate had not been shown to be in error of law or in fact and dismissed ground 1.
Ground 2 of the original appeal was that as the credit application required execution by both the appellant and John Brown as joint and several guarantors as a matter of law the obligations under the guarantee were conditional and dependent on it being executed by both named guarantors.
Ground 3 of the original appeal was that the magistrate erred in finding that the appellant's entitlement in equity to be relieved of liability under the guarantee on the basis of the presumption that she signed it on the understanding that John Brown would also be a party with joint and several liability had been rebutted.
I found it was not a condition precedent to the guarantee becoming effectual that John Brown also signed it and in relation to the equity ground, I found that the respondent had discharged any onus on them, therefore there was no error in law or fact in the magistrate's conclusions and dismissed grounds 2 and 3.
Ground 4 related to the proper construction of the credit application and the terms of trade (TOT).
The appellant's argument was in essence that as no written notice of the granting of credit facilities stating the terms and conditions of those facilities had been given the goods were not supplied pursuant to the credit facility and therefore the guarantee did not apply.
I did not determine that ground as I found that the respondent had been prejudiced as the learned magistrate found no notice was given in circumstances where the respondent had advised the court they wished to either further cross‑examine or further discover on this point and by not providing reasons as to why such further discovery or cross‑examination had not been allowed the respondent had been deprived of the opportunity of appealing that decision and was therefore denied procedural fairness. I therefore allowed the original appeal on ground 4 and made the following order:
… I remit the matter to the magistrate to determine whether or not he will allow the respondent further discovery and cross‑examination as the respondent effectively requested in their reply, and then having determined that issue, determine whether or not notice was given and the effect on the guarantee of that finding.
The remitted matter
Pursuant to those orders the matter was remitted to the learned magistrate and at a directions hearing on 15 March 2021 the learned magistrate made orders that:
1.There be a trial of the issue of the TOT defence (remaining issue).
2.By 31 March 2021, the parties shall give discovery of all documents that are or have been in their possession, custody or power that are relevant to the remaining issue.
3.By 14 April 2021 the claimant (respondent) shall provide in accordance with form 32A any statements of intended evidence of witnesses that the claimant (respondent) intends to call in relation to the remaining issue.
4.By 28 April 2021 the defendant (appellant) shall provide in accordance with form 32A any statements of intended evidence of witnesses that the claimant (respondent) intends to call in relation to the remaining issue.
In accordance with those orders both parties gave discovery of the remaining issue. The respondent filed a statement of Ronald Sydney Beeck of 5 May 2021. The appellant did not file any witness statements.
The trial on the remaining issue
The trial of the remaining issue occurred on 14 May 2021.
By consent the parties agreed:
1.That the statement of Ronald Sydney Beeck of 5 May 2021, with par 3 deleted, be tendered as exhibit 1.
2.An invoice issued by the respondent to the Shell Roadhouse, Williams dated 3 September 2014 be exhibit 2.
3.The evidence already adduced in the statement of Christine Margaret Brown dated 29 January 2020 was evidence before the court that it could have regard to.
The learned magistrate's decision on the remaining issue
The learned magistrate published reasons for his decision on the remaining issue on the 13 August 2021.
In essence the learned magistrate affirmed his original decision that the appellant was liable to the respondent in respect of the claim and held that the appellant should not be permitted to raise the notice issue the subject of ground 4 of the original appeal and the remitter.
The learned magistrate pointed out that this was a 2015 claim and proceedings were initially lodged in 2017. The parties had agreed to have the matter determined on the papers. The learned magistrate found the appellant in effect was trying to amend their statement of defence five years into the litigation to add an argument that the credit agreement was of no effect due to the failure of the respondent to give notice under the TOT. The learned magistrate said this issue was raised only in the written submission and not the pleadings.
The learned magistrate pointed out that the document the subject of the dispute was known to both parties from 2011 onwards. The learned magistrate considered that it was unfair for the respondent to have to respond to the allegation two years after a defence had been filed in circumstances where the defence failed to mention the argument now sought to be advanced. The learned magistrate considered that if an amendment was allowed the respondent may need to amend their pleadings and provide further discovery relating to documents almost 10 years old and that amendments to witness statements may be required, all of which would result in an alteration of the agreed method of trial, which was that there would be a trial on the papers.
The learned magistrate's view was that if an application to amend was raised at the original trial he would have refused it and a just resolution was to refuse to allow it in the rehearing.
In case he was wrong in his decision not to allow the appellant to amend their pleadings and therefore raise the notice issue the learned magistrate went on to consider the merits of the appellant's arguments on that issue, and for reasons referred to later in this judgment, rejected the appellant's submissions.
The appellant appeals from this decision.
The grounds of appeal
The appellant pursues four grounds of appeal:
Ground 1 - in circumstances where -
(a)his Honour, Judge Bowden remitted the matter to the learned magistrate to:
(i)determine whether or not he will allow the respondent/claimant further discovery and cross‑examination as the respondent/claimant effectively requested in their reply (Issue 1), and then having determined that issue;
(ii)determine whether or not notice was given (Issue 2); and
(iii)the effect on the guarantee of that finding (Issue 3)
(the Terms of Remittal), and
(b)the learned magistrate found -
(i)that the appellant/defendant needed to amend her defence to raise Issue 2 and Issue 3; and
(ii)that the defendant was not permitted to amend her defence to raise Issue 2 and Issue 3, (Findings)
the learned magistrate erred in law as
1.1the Findings were beyond the scope of the Terms of the Remittal.
1.2having ordered, in accordance with the Terms of Remittal, further discovery and witness statements, and in circumstances where the respondent/claimant ultimately elected not to cross‑examine, the learned magistrate failed to confine himself to determining Issue 2 and Issue 3;
2.the learned magistrate having ordered on 15 March 2021 that there be a trial of the TOT defence, made an error of law by denying the appellant/defendant procedural fairness in that he failed to reasonably identify that the appellant/defendant would need to address at trial the matter that were the subject of the Findings, and thereby failed to give reasonable notice of critical issues for determination.
Ground 3 of the appeal was abandoned
4.The learned magistrate erred in law in failing to make any finding as to whether written notice was given to the customer that credit facilities had been given and specifying the terms of credit, despite the Terms of Remittal.
5.The learned magistrate made an error of mixed law and fact, in finding that the sum being claimed by the respondent was a liability that, on a proper construction of the Credit Application and the respondent's TOT (Contract Documents), had been guaranteed by the appellant.
Particulars
A.On a proper construction of the Contract Documents:
a.the guarantee was given in respect of the obligation to pay for goods that the respondent agreed to supply to the customer on credit under the respondent's TOT; and
b.by clauses IV and V of the TOT, until the customer received written notice that credit facilities had been given and specifying the terms of credit, any grant to the customer of time to pay for goods supplied was not to be construed or taken as a grant of credit facilities by the respondent under the TOT.
B.There was no evidence that the customer had ever received a written notice that the respondent had granted it credit facilities under the TOT.
The appeal
The appeal is made pursuant to the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA). The appeal must be decided on the material and evidence before the Magistrates Court.
The appeal is by way of a 'reconsideration of the evidence before the Magistrates Court'.
The appeal court is not to retry a case or substitute its own view of the facts for that of the magistrate. An appeal is by way of a rehearing. The appellant must demonstrate that there has been an error of law or fact: MCCPA s 40(3), s 40(4) and s 40(5); District Court Rules2005 (WA) (DCR) r 50(1).
The appeal court may confirm, vary or set aside all or in part of the lower court's judgment or order a new hearing or trial before the Magistrates Court: MCCPA s 43(7).
The law
The principals of law applicable are that the construction of terms in commercial contracts is determined by what a reasonable business person would understand those terms to mean viewed objectively by reference to the contract's text, context and purpose: Westgyp Pty Ltd v Northline Ceilings Pty Ltd[No 2] [2019] WASCA 145 [8] - [9]. The subjective intention of the parties is not relevant: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168.
A commercial contract should be construed as to avoid making commercial nonsense or giving rise to commercial inconvenience: Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219.
The construction of a guarantee is governed by the settle principle that a doubt as to the construction of the provision in such a contract should be resolved in favour of the surety or indemnifier, which in this case, is the appellant: Westgyp Pty Ltd v Northline Ceilings Pty Ltd [No 2] [11]; Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549.
Such a doubt may arise not only from the uncertain meaning for a particular expression but from its apparent width of possible operation: Ankar Pty Ltd v National Westminster Finance (Australia) Ltd.
The principal transaction to which the guarantee relates, and the amount of the guarantor's liability must be properly identified: O'Donovan and Phillips, The Modern Contract of Guarantee (3rd ed, 1996) 62.
The contract
The contract central to this dispute is constituted by two documents being the TOT and the ACA.
The relevant terms of the TOT are as follows:
Terms of Trading Agreement
I.The Customer hereby warrants that the information comprised in the First Schedule hereto is true, accurate and correct and is supplied for the purpose of obtaining credit.
II.The Customer warrants that the persons' signature appearing on this Agreement are dully [sic] authorised by the Customer to apply for credit and execute this Agreement.
III.The Customer agrees to adhere to the terms and conditions of this Agreement.
IV.The Customer agrees that they are [not] entitled to any credit facilities until it receives notice in writing from the Supplier stating that credit facilities have been given and specifying the terms and conditions upon which such credit facilities are given. Until the Customer receives such notice in writing from the supplier any goods that are supplied by the Supplier to the Customer shall be on the basis of cash upon delivery.
V.The parties agree that in the event of the Supplier, prior to approving credit, grant to the Customer time to pay for any goods supplied than such supply shall not amount to a waiver by the Supplier of any of the terms of this Agreement nor be construed or be taken either directly or by implication as a granting by the Supplier of the credit facilities to the Customer and no credit facilities shall be granted unless stated in the notice.
VI.In the event of the supplier granting credit facilities to the Customer then the following terms shall apply:
i.Cash Terms - Cash on Delivery to seven days
ii.Account Terms - 21 days from date of purchase
iii.Pumpmate Accounts will have seven days from end of month (cards will be stopped if not paid)
iv.Should the Customer default in the payment of any monies due under this Agreement then all monies due to the Supplier shall immediately become due and payable and shall be paid by the Customer within seven days of the date of demand and the Supplier shall be entitled to charge interest at the rate of 1.5% per centum per month on all overdue accounts from the due date until the date of actual payment.
v.Any expenses, costs or disbursement incurred by the Supplier in recovering any outstanding monies including debt collection agency fees and solicitor's costs shall be paid by the Customer, providing that those fees do not exceed the scale charges as charged by that debt collection/agency/solicitor and in any event the commission is not to exceed 18% of the debt value, plus out of pocket expenses.
vi.The Supplier shall be entitled without notice to terminate any credit arrangement with the Customer in the event of the Customer defaulting in any of the terms and conditions herein contained.
vii.The Supplier shall be entitled at any stage during the continuances of this Agreement to request such security or additional security shall be obtained.
VII.The Customer hereby acknowledges that the goods supplied by the Supplier shall remain the property of the Supplier until the Supplier receives payment for same. The Supplier hereby agrees to allow the Customer to seal, sell or trade with goods in the normal course of business and for the Customer to retain the sale proceeds of such sale or dealing provided that the Customer adheres to the terms and conditions of this Agreement including the payment of any monies due under this Agreement. In the event of the Customer defaulting in any of the terms of this agreement, then the Supplier shall have the right (without giving notice) to retake possession of the goods supplied to the Customer by the Supplier and the Customer hereby authorises and allows the Supplier or its representative, servant, agent, or employee to enter the premises upon which the goods are housed or stored for the purpose of retaking possession of same and the Supplier shall not be liable for any costs, losses, damages, expenses or any other monies or losses suffered by the Customer as a result of the Supplier retaking possession of the goods.
VIII.The Supplier may grant to the Customer such variations in credit accommodation or other indulgences as it sees fit from time to time without affecting its rights or liability under this Agreement.
The ACA is in the following format:
Account Application Details
Full Trading Name [completed in handwriting] Phone [completed in handwriting]
Surname [completed in handwriting] Mobile [completed in handwriting]
Christian [completed in handwriting] Fax [completed in handwriting]
Address (Postal) [completed in handwriting] Email [completed in handwriting]
Address (Delivery) [completed in handwriting] ABN [completed in handwriting]
Has either the business or any of its directors ever had, or are there now, any legal judgments or proceedings filed against them or ever been registered under any part of the Bankruptcy Act?
Yes/No If yes please provide details and attach to the application
TRADE REFERENCES
(Name, Address and Telephone or 3 Trade References)
Name ……………………
[completed in handwriting]
Address ………………….….
[completed in handwriting]
Ph ……………………
[completed in handwriting]
Name ……………………
[completed in handwriting]
Address …………………..…
[completed in handwriting]
Ph ……………………
[completed in handwriting]
Name ……………………
[completed in handwriting]
Address ……………………..
[completed in handwriting]
Ph ……………………
[completed in handwriting]
Personal/Directors Guarantee
• I/We in consideration of Gnowangerup Fuel Supplies agreeing to supply
• (Applicant).……….………………with goods on credit, hereby jointly and severally guarantee that we will abide by the Terms of Trade and hereby guarantee to Gnowangerup Fuel Supplies the payment of any monies advanced by way of credit.
• We agree to pay 1.5% per month on overdue accounts and all legal costs and other costs incurred by Gnowangerup Fuel Supplies in collecting any monies owing
Signed [Signed C M Brown in handwriting]
Printed Name [Christine Brown in handwriting]
Signed ………………………………….
Printed Name [John Brown in handwriting]
• Gnowangerup Fuel Supplies shall be entitled without notice to terminate any credit arrangements in the event of the applicant defaulting in any of the Term.
• We agree to Gnowangerup Fuel Supplies obtaining from a credit report agency(s) a credit report containing personal credit information about me/us in relation to commercial credit by Gnowangerup Fuel Supplies.
• I/We agree that all accounts will be paid as ordering over the phone is considered approval of purchase from Gnowangerup Fuel Supplies.
Date [10-11-11 in handwriting]
Date [10-11-11 in handwriting]
It is not disputed that Ms Brown signed the form above where she had handwritten her name and faxed it to the respondent.
It is not disputed that John Brown's name was also handwritten on the form however he did not sign the document although the date appears in handwriting opposite his handwritten name.
Ground 1
The order made in relation to ground 4 in Brown v Elite Nominees Pty Ltd [2020] WADC 156 [129] was:
… I remit the matter to the magistrate to determine whether or not he will allow the respondent further discovery and cross-examination as the respondent effectively requested in their reply, and then having determined that issue, determine whether or not notice was given and the effect on the guarantee of that finding.
The appellant says that the terms of the remitter means that it was not open to the learned magistrate to not consider that issue of whether notice was given, and the learned magistrate was required to determine:
(a)whether or not notice was given; and
(b)the effect on the guarantee of that finding.
The respondent submits that [129] of the original judgment needs to be considered in the context of the judgement as a whole and in particular, [110] - [129] where findings were made that the appellant had not squarely raised the argument that written notice was a pre‑requisite liability under the guarantee in the defence, the issue having been first raised in written submissions before the magistrate and the respondent had taken issue with that fact. The respondent says the wording of the remitter leaves it to the magistrate to determine whether he would allow that issue to be raised in light of the pleadings and the agreement by the party for the matter to be dealt with on the papers.
The learned magistrate did determine whether to allow the respondent further discovery and cross-examination as the respondent effectively requested in their reply. The respondent was allowed further discovery and permitted to produce further evidence and the appellant exercised their right not to cross‑examine.
I agree with the respondent's submissions that the remitter was to be considered in light of all of the pleadings and submissions and the agreement between the parties that the trial was to proceed on the papers.
The remittal was made as the successful ground of appeal was that the appellant had been denied procedural fairness. The remitter required the magistrate to provide procedural fairness to the appellant. Having done so it was for the magistrate then to determine the remaining issues of the remittal. The learned magistrate determined that the remaining issue of the remitter could only be determined if the appellant amended their pleadings and he was not prepared to allow that amendment. The learned magistrate in my view acted within the terms of the remitter.
While the appellant submits that the learned magistrate failed to confine himself to Issue 2 and Issue 3, it is not correct to say that the learned magistrate did not determine Issues 2 and 3 because the learned magistrate did determine those as his alternate position, albeit determine them in a manner that was averse to the appellant.
In my view there is simply no merit to ground 1.
Ground 2
By this ground the appellant contends that the learned magistrate failed to accord the appellant procedural fairness at the trial on 14 May 2021 by failing to adequately identify, if at all, the need for the appellant to make an application for leave to amend the defence to plead what effectively is the notice issue.
The appellant says that at the learned magistrate's directions made on 15 March 2021 specifically directed that there be a trial on the TOT defence and by the learned magistrate's failure to 'spell it out' to the respondent that they needed to consider an amendment to the defence before he would consider the notice issue.
Considerable confusion occurred at the trial as is evident from the trial transcripts produced in the appeal books.
A court is obliged to afford the parties procedural fairness Defendi v Szigligeti [2019] WASCA 115. That concept encompasses giving a party a reasonable opportunity to seek to meet that case against them. Re: An Application under the Magistrates Court Act 2004;Ex Parte Snook [No 2] [2007] WASC 255.
The appellant says the order made by the magistrate at the directions hearing on 15 March 2021 when he said there will be a 'trial on the terms of trade defence' and the terms of the remitter left them with the impression that the notice issue was going to be dealt with without the need to amend the defence.
As previously indicated the notice issue was determined by the magistrate, as his alternate position, albeit determined adversely to the appellant.
In relation to the submission that the appellant did not receive procedural fairness the transcript reveals that at the directions hearing on 15 March 2021 the respondent and the appellant handed competing minutes to the learned magistrate.
The respondent's minute indicated that there were three issues to be dealt with:
1.whether the TOT defence (referred to in this judgment as the notice issue) as identified on the appeal was sufficiently articulated on the statement of defence to enable the defendant to properly raise it at the trial;
2.if not should leave be granted to amend the defence to include the TOT defence; and
3.if the answer to either of the two preliminary questions was yes, a trial over the TOT defence was required.
The appellant's minute of proposed orders referred to [129] of the original appeal judgment that is, the remission of the matter to the magistrate to determine whether or not he would allow the respondent further discovery and cross‑examination as the respondent effectively requested in their reply and then having to determine that issue as to whether or not notice was given and the effect on the guarantee.
At the directions hearing on 15 March 2021 it was clearly raised by Mr Robertson for the respondent that a preliminary issue was whether the need for notice was properly or sufficiently articulated in the current defence or whether there should be leave for the appellant to amend their defence (AB 3) stating that the preliminary question and the amendment question were still live issues for the trial. The learned magistrate said that he understood that they were live issues at the trial, and it was a question of whether there should be a separate preliminary hearing and indicated his preference that they should be heard together all on the one day (AB 6 ‑ AB 7). The learned magistrate's reference to dealing with the issue all on the one day could only be a reference to dealing with the preliminary and amendment issue with the terms of the remitter on the one day. This all took place in the presence of the appellant's counsel. The learned magistrate indicated to counsel for the appellant that he understood that the appellant wanted a trial of the issue over whether written notice was issued in accordance with the terms of trade agreement, and he proposed to deal with those questions at the same time, again a reference to the preliminary issues.
Indeed, the order framed by the magistrate specifically refers to '1. There be a trial of the issue of the terms of terms of trade defence (remaining issue)'. Reference to the remaining issue can only be in light of the matters raised on 15 March 2021 a reference to both the TOT argument and the preliminary and amendment issues raised by counsel for the respondent.
The learned magistrate stated to both parties that he understood that the respondent wanted to deal with the preliminary issues, and he proposed to deal with those questions at the same time as the substantive issue. The learned magistrate ironically stated that he did not want to couple together some Frankenstein order that did not achieve the purpose (AB 2, AB 7, AB 10, AB 11).
Subsequently at the hearing on 14 May 2021 counsel for the respondent stated the first question was whether the appellant could raise the issue of the lack of notice because of their pleadings and specifically referred to the appellant needing leave to amend their defence (AD 25, AD 26).
Counsel for the appellant indicated that his understanding was different and his understanding since 15 March 2021 was that there will be a trial on the TOT defence (AD 27). The learned magistrate stated that there was no amended pleading put forward (AD 28). Counsel for the appellant indicated that original appeal ground 4 was really 'what we are litigating'. The learned magistrate discussed the position relating to amendments (AD 31). The appellant's counsel again indicated that there was no amended defence because that was not his apprehension of the 15 March 2021 orders and stated, 'we can draft an amendment' (AD 31). He conveyed that the amendment would be precisely what they pleaded in ground 4 of the original grounds of appeal stating that he would 'leave it at that'. The learned magistrate then discussed with counsel for the respondent any prejudice that would result from any amendment. The learned magistrate indicated the amendments would be to the effect of the particulars in ground 4 of the original appeal (AD 33). The parties then discussed the manner in which the trial would proceed and presented their submissions.
In view of what was said on 15 March 2021 and 14 May 2021 the appellant cannot maintain that they were not aware that the issue of whether the pleadings encompassed the TOT defence or whether they needed to amend their defence was not a live issue. On the contrary, counsel for the appellant was happy to indicate that the amendment if one was required was pleaded in ground 4 of the original appeal.
The proceedings were somewhat unusual in that there was no formal application to amend although counsel for the appellant had indicated the manner in which he would make the amendment and notwithstanding there was no formal application to amend. The learned magistrate then went on to deal with the question of whether he would grant leave to amend. Peculiar though the proceedings were, in my view, the learned magistrate was clearly dealing with the issues that the parties had identified.
The appellant's counsel had ample time if he wished to amend any pleadings. He was aware that there were some differences in view as to the effect of the orders of 15 March 2021. He said that there was no need (to amend) because ground 4 of the original appeal encompassed what the amendment would be.
The appellant cannot say he was deprived of natural justice in circumstances where amendments were discussed on 15 March 2021 and 14 May 2021. No application to amend was made, however the amendment that would have been made was identified by the appellant's counsel and the learned magistrate dealt with the case as if there had been an application to amend and gave reasons for refusing to allow the amendment. It cannot, in my view, be said that the appellant has been deprived of natural justice.
There is no merit in that ground 2.
Ground 3
This ground was abandoned.
Ground 4
By this ground the appellant contends that the learned magistrate erred in law in failing to make a finding as to whether written notice was given to the customer that credit facilities had been given and specifying the terms of credit despite the terms of the remittal.
The learned magistrate's primary decisions were that on the pleadings the issue had not been raised and he was not prepared to allow any amendment to raise that issue.
In case the learned magistrate was wrong in his conclusion that the no notice argument could not now be raised alternative, and in deference no doubt to the arguments raised, the learned magistrate considered the no notice argument.
The learned magistrate stated (AB 86 - AB 89):
45In my original decision I stated that no notice was given under the trade agreement. This was careless phrasing. I had meant to convey that to the extent some formal document comprising a notice existed that this was not sent to the company. I had not intended to suggest that there was no notification of credit being provided.
…
54In my view, notwithstanding the lack of a formal notice, the Claimant, by continuing to supply credit to the company on terms that were consistent with the credit agreement, had met its obligations and an agreement has been reached.
55There was no ambiguity in their relationship with each other. The Claimant was to supply goods and the Defendant was to pay for them on credit. The only real question was whether the Defendant was liable under the guarantee - a question which was determined in the original trial.
…
58In the circumstances, I consider that the reasonable bystander would conclude that the Defendant requested that the Claimant supply the company with goods on credit by completing an application.
59Subsequently, and for the next year or two, goods were supplied on credit. This was acknowledged by the Defendant in her witness statement and in the pleadings.
…
61For the reasons given I do not accept the Defendant's argument that the lack of a formal notice in some way invalidates the agreement and the guarantee it contains.
In relation to the additional evidence from Mr Beeck, the learned magistrate stated:
… this did not add or take away from the claimant's argument. The fact that the items in there included freight rather than supply of goods did not invalidate the claimant's argument.
The issue of whether written notice was given was not specifically dealt with by the learned magistrate. The learned magistrate's references to 'formal notice' (rather than written notice) somewhat confuses the issue and the explanation as to what was meant by that phrase in his original decision does not assist as the learned magistrate's clarification of what was meant referred to 'no notification of credit', whereas the relevant issue is not whether there is notification of credit but whether there was notification in writing that credit facilities have been given and specifying the terms and conditions upon which such credit facilities are given.
It, with respect, is not clear whether the learned magistrate was saying:
(a)no written notice was given or required due to the appellant's acts in completing the credit application containing the TOT and the course of conduct over the next two years constituted by the respondent supplying goods on credit and the company receiving the goods; or
(b)that written notice was required but was given as a result of the TOT being specified in the credit application and the course of conduct over the next two years constituted by the respondent supplying goods on credit and the company receiving the goods resulting in those TOT being incorporated into the parties' business arrangement thereby constituting notification in writing that credit facilities have been given and specifying the terms and conditions upon which such credit facilities are given.
The appellant has established that the learned magistrate did not specifically determine the question of whether written notice was given however it does not assist the respondent as I have found that there is no error on the learned magistrate's part in determining that issue need not be resolved as to do so required an amendment of the pleadings and the learned magistrate was not in error in refusing to allow the amendment. In any event in view of my findings in respect of ground 5 the question of whether written notice was given is not the critical issue.
The appellant is wrong to say that on a proper construction of the ACA and TOT, I had considered that the requirement for notice was a precondition to the operation of the guarantee [125].
At [125] of my original reasons, I summarised submissions being made by the appellant. At [126] I stated that there was merit in the argument being put by the appellant on the no notice provisions. That is not a decision that on the proper construction of the documents there was a requirement for a notice as a precondition to the operation of the guarantee.
However, in my view the arguments relating to these issues is best dealt with when considering ground 5.
Ground 5
Ground 5 of the current appeal essentially incorporates ground 4 of the original appeal. The appellant says this ground encompasses the amendment to the pleading that they would have made if they realised an amendment was required.
Although in light of my findings that the magistrate was not in error in refusing to consider the no notice issue an answer to ground 5 is not required, I will deal with ground 5.
The appellant says the learned magistrate did not undertake any enquiry or draw any material distinction for the purposes of liability under the guarantee between the situation where goods were supplied on credit following the signing of the ACA and where the goods were supplied on credit pursuant to credit facilities granted to the customer pursuant to the TOT.
The appellant's argument is that the guarantee refer to the respondent agreeing to supply goods on credit and the appellant jointly and severally guarantees that she will abide by the TOT.
The reference to the TOT the appellant says must be a reference to the TOT which accompanied the credit application when it was made and cl IV of the TOT provides that 'the customer agrees that they are not entitled to any credit facilities until it receives notice in writing from the supplier stating that credit facilities have been given and specifying the terms and conditions upon which the credit facilities are given' and as no such notice in writing was given the guarantee does not apply to the goods which were supplied on credit.
The appellant says that cl VIII of the TOT including the reference to credit accommodation is a reference to variations in an already granted credit facility.
The respondent's submission is that the guarantee refers to payment of any monies advanced by way of credit which includes money advanced by way of ad hoc credit or pursuant to a credit facility as there is nothing in the guarantee that confines the operation of the guarantee to credit provided where written notice of the terms of credit have been provided. Their fallback or alternative position is that if notice is required then notice was given as the customer had the TOT when they applied for credit, and their application for credit must be considered in light of the TOT so that when they subsequentially received goods on credit and the invoices refer to 21 days (or 7 days) net (the time periods referred to in cl V1 of the TOT) the invoices taken together with the TOT means that the only reasonable conclusion is that the credit was granted pursuant to credit facilities under cl VI of the TOT.
In relation to the respondent's fallback or alternative position the invoice appearing at AB 17 was before the credit agreement and makes no reference to when payment is due. The invoice at AB 18 is the same date as the credit agreement and makes no reference to the date the payment is due. The invoices AB 19 and AB 20 are after the credit agreement and make no reference to the date payment is due. The invoice at page AB 21 provides for payment within seven days which on the applicant's argument is not consistent with TOT as 21 days' credit is envisaged in the TOT and on the respondent's argument is consistent with TOT as both seven days and 21 days are referred to in cl IV of the TOT. The invoice AB 22 has no reference to a payment date, the invoice at AB 23 and AB 23A relating to the same transaction refer to net 21 days. In my view the invoices form no basis to establish that written notice as required under cl IV of the TOT has been given and I reject the respondent's argument to the contrary.
I do not accept with the appellant's submission that it is only in respect of credit provided pursuant to credit facilities of which written notice was given to the customer that liability under the guarantee attaches.
The TOT envisages that there can be credit facilities which require the written notice that the appellant alleges. Clause VI of the TOT sets out the terms that shall apply if credit facilities are granted.
The TOT envisages that credit can be provided other than pursuant to a credit facility by the granting of time to pay which I refer to as credit supplied on an ad hoc basis. Clause V of the TOT provides that the supplier prior to approving credit can grant the customer time to pay and that any such supply of goods is not to be taken as a granting of credit facilities. Clause VIII of the TOT states 'the supplier may grant to the customer such variations in credit accommodation or other indulgences as it sees fit from time to time without affecting its rights or liabilities under this agreement'. The reference in that clause is to a variation of 'credit accommodation' not credit facilities and varying credit accommodation I find encompasses both credit supplied on an ad hoc basis and pursuant to a credit facility.
The issue is whether the guarantee picks up both the supply of credit pursuant to the credit facilities and the supply of credit on an ad hoc basis. This is the issue which, with respect, the magistrate did not directly address.
The terms of the guarantee provide that the guarantor will 'abide by the terms of trade and hereby guaranteed Gnowangerup Fuel Supplies a payment of any monies advanced by way of credit'. The clear text of the guarantee encompasses all credit provided which I find can be credits provided pursuant to credit facilities and credit provided on an ad hoc basis.
The context and commercial purpose of the contract was to facilitate the supply of goods on credit subject to that credit being guaranteed.
Given its text and natural meaning the guarantee relates to any monies advanced by way of credit not just monies advanced pursuant to credit facilities.
I accept that the credit provided in this case was not provided pursuant to credit facilities because there was no notice in writing provided. Credit was however undoubtably provided. Credit was provided on an ad hoc basis and in my view the guarantee applies to credit supplied on an ad hoc basis.
Even accepting that the terms of a guarantee are construed strictly, and any ambiguity raised is determined in favour of the guarantor I find the guarantee applies to any monies advanced by way of credit not just monies advanced pursuant to credit facilities.
On that basis even if the amendment that the appellant wishes to make was allowed the learned magistrate was right to find in favour of the respondent, although I would have found in favour of the respondent on different grounds the result remains the same.
I therefore dismiss the appeal.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
KH
Associate
19 AUGUST 2022
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