Browne v Onsite Rental Group Operations Pty Ltd
[2015] WASCA 153
•11 AUGUST 2015
BROWNE -v- ONSITE RENTAL GROUP OPERATIONS PTY LTD [2015] WASCA 153
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASCA 153 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:74/2014 | 16 JUNE 2015 | |
| Coram: | McLURE P BUSS JA MITCHELL J | 11/08/15 | |
| 26 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | GREGORY BRIAN BROWNE ONSITE RENTAL GROUP OPERATIONS PTY LTD ON SITE INDUSTRIAL RENTALS AUSTRALIA PTY LTD ON SITE RENTALS PTY LTD |
Catchwords: | Contract Corporate group structure Identity of contracting parties Whether guarantee revoked Costs Discretion to award costs in favour of non-party |
Legislation: | Rules of the Supreme Court 1971 (WA), O 66 r 1 |
Case References: | Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30; (2012) 247 CLR 205 Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 Onsite Rental Group Operations Pty Ltd v Browne [2014] WADC 73 The State of Western Australia v Collard [2015] WASCA 86 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : BROWNE -v- ONSITE RENTAL GROUP OPERATIONS PTY LTD [2015] WASCA 153 CORAM : McLURE P
- BUSS JA
MITCHELL J
- Appellant
AND
ONSITE RENTAL GROUP OPERATIONS PTY LTD
First Respondent
ON SITE INDUSTRIAL RENTALS AUSTRALIA PTY LTD
Second Respondent
ON SITE RENTALS PTY LTD
Third Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram : GOETZE DCJ
Citation : ONSITE RENTAL GROUP OPERATIONS PTY LTD -v- BROWNE [2014] WADC 73
File No : CIV 2412 of 2012
Catchwords:
Contract - Corporate group structure - Identity of contracting parties - Whether guarantee revoked
Costs - Discretion to award costs in favour of non-party
Legislation:
Rules of the Supreme Court 1971 (WA), O 66 r 1
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant : Mr A P Rumsley
First Respondent : Mr J M Healy
Second Respondent : Mr J M Healy
Third Respondent : Mr J M Healy
Solicitors:
Appellant : Alan Rumsley
First Respondent : Culshaw Miller Lawyers
Second Respondent : Culshaw Miller Lawyers
Third Respondent : Culshaw Miller Lawyers
Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30; (2012) 247 CLR 205
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516
Onsite Rental Group Operations Pty Ltd v Browne [2014] WADC 73
The State of Western Australia v Collard [2015] WASCA 86
1 McLURE P: The appellant (the defendant below) appeals against a District Court judgment ordering him to pay moneys under a personal guarantee (the guarantee) of the obligations of his company, Field Camp Services Pty Ltd (Field Camp), under a trade credit facility agreement (the credit facility agreement).
2 There are three grounds of appeal. I agree with Mitchell J's reasons for dismissing grounds 2 and 3. I propose to state my own reasons on ground 1, which concerns the identity of the company or companies to whom the appellant is liable under the guarantee.
3 The credit facility related to Field Camp's obligations under future equipment hire contracts with one or more of three companies in the Onsite group who were parties to the credit facility agreement. Both the credit facility agreement and the guarantee are in writing and were entered into on or about 22 October 2009. The credit facility agreement comprised a signed credit application and 'Standard Contract Terms' annexed thereto (the Standard Terms). The guarantee is in a schedule to the Standard Terms and is in consideration of the provision of ongoing trade credit.
4 Under the credit facility agreement, Field Camp agreed to be bound by the Standard Terms when hiring 'equipment' from the 'owner' under any 'hire contract'. 'Equipment' is defined to include buildings, ablutions, toilets, equipment and associated accessories; 'owner' is defined to mean 'the owner of the Equipment being On Site Rentals Pty. Limited … or On Site Industrial Rentals Australia Pty Ltd'; and 'hire contract' is defined to mean a contract entered into between the owner and the customer for the hire of specific equipment. Special conditions apply according to whether the owner is On Site Industrial Rentals Australia Pty Ltd (On Site Industrial) (cl 3) or On Site Rentals Pty Ltd (On Site Rentals) (cl 4). It is apparent from cl 4.1 that On Site Rentals' equipment includes buildings, ablutions, toilets and associated equipment. Field Camp was in the business of supplying portable buildings and associated equipment for mine campsites in remote areas of Western Australia.
5 The credit application is addressed to the 'On Site Group', particularised as On Site Rentals & Access Holdings Pty Ltd (which later changed its name to Onsite Rental Group Operations Pty Ltd (Onsite Operations)) and 'Trading entities', On Site Industrial and On Site Rentals.
6 The guarantee is stated to be in consideration of 'the Onsite Group (hereinafter jointly and severally referred to as "the Company")' granting the ongoing credit facility. The guarantor's obligations are owed to the 'Company', that is, the Onsite Group, being the three companies to whom the credit application is addressed. It is not suggested, as a matter of construction, that Onsite Operations can sue under the guarantee to enforce obligations owed by Field Camp to On Site Rentals or On Site Industrial under hire contracts to which the Standard Terms apply. It is also not suggested that the guarantee applies to all companies in the Onsite group from time to time. The issue in this case is a question of fact; that is, whether any party to the credit facility agreement and guarantee is a party to the relevant hire contracts with Field Camp. It is not a question of contractual construction.
7 The action proceeded in the District Court on an erroneous understanding as to the identity of the proper plaintiff until the first day of trial on 24 February 2014. Until then, it was common cause in the pleadings, in a statement of agreed facts dated 30 August 2013 (the agreed facts) and in the proposed evidence-in-chief of all relevant witnesses, to be adduced in the form of sworn affidavits, that On Site Rental Group Operations (WA) Pty Ltd (On Site Operations WA) was a party to the credit facility agreement and guarantee and was the entity to whom Field Camp was indebted under the Standard Terms which are incorporated into the hire contracts. The relevant evidence is in the affidavits of Rodney Baxter, sworn on 19 November 2013, Roderick McWade, sworn on 15 November 2013, Frank Van Zon, sworn on 18 November 2013 and the defendant, sworn on 18 February 2014. These affidavits were filed and served prior to trial. The affidavits of Messrs Baxter, McWade and Van Zon were prepared by the solicitors for the plaintiff.
8 However, it had escaped the attention of all involved that On Site Operations WA was not incorporated until 15 October 2010, just under a year after the credit facility agreement and guarantee were entered into.
9 On the first day of trial, counsel for the defendant sought to withdraw the admission in the defence that On Site Operations WA was a party to the credit facility agreement. Following argument, the trial judge gave the plaintiff leave to amend its writ and statement of claim. The writ was amended to remove On Site Operations WA as plaintiff and to substitute three plaintiffs, Onsite Operations, On Site Industrial and On Site Rentals.
10 The statement of claim endorsed on the writ was also amended to plead in par 5:
Field Camp hired the Plaintiffs' Products from the Plaintiffs in accordance with the [credit facility agreement] between October 2009 and May 2012[.]
11 The plaintiffs also pleaded that Onsite Operations, as agent for On Site Industrial and On Site Rentals, 'rendered invoices to Field Camp between 30 June 2011 and 31 May 2012 totalling $269,770.12' (par 6).
12 It is apparent from the unpaid invoices in evidence at trial that the plaintiffs' claim related to equipment hired by Field Camp as and from 26 October 2010, when On Site Operations WA was in existence.
13 An amended defence was provided to the plaintiffs and the trial judge prior to the plaintiffs' opening at the commencement of the second day of trial on 25 February 2014. The defendant now admitted that one of the plaintiffs, On Site Rentals, had entered into the credit facility agreement but maintained his previous position that Field Camp hired the goods the subject of the invoices from On Site Operations WA (par 5). The intention and effect of this plea is that Field Camp had entered into the relevant hire contracts with On Site Operations WA, which was not a party to the credit facility agreement and thus Field Camp's obligations thereunder were outside the scope of the guarantee. This issue was foreshadowed by defence counsel on the first day of trial (ts 12).
14 However, notwithstanding the amended pleadings, counsel for the plaintiffs continued to rely, without amendment, on the agreed facts and the affidavits of Messrs Baxter and McWade, all of which reflected the original pleaded claim that On Site Operations WA had entered into the credit facility agreement and guarantee and was owed the money the subject of the action for equipment it had hired to Field Camp. The significance of the amendments to the defence must have been lost on the plaintiffs' counsel. I infer that is why defence counsel did not give an opening address.
15 Further, neither the plaintiffs nor the defendant adduced in evidence at trial the hire contracts for the equipment the subject of the unpaid invoices. An analysis of all the invoices (of which there are 42) reveals that:
• they relate to five hire contracts which are numbered 1027334 (seven invoices), 1027338 (seven invoices), 1027339 (six invoices), 1042102 (12 invoices) and 1724113 (10 invoices);
• with limited exceptions, the invoices are for the hire of specified equipment for a period of four weeks;
• Onsite Operations issued the invoices;
• Onsite Operations is noted as acting as agent for (inter alia) On Site Rentals, On Site Operations WA and On Site Industrial;
• with one exception, the invoices are not the first issued under the hire contracts;
• the exception is the first unpaid invoice for hire contract 1724113, which does not identify a previous invoice number and has endorsed on it 'This continues on from contract 1042105';
• an invoice dated 29 August 2011 for hire contract 1724113 is for a four-week period commencing on 26 October 2010;
• Onsite Operations performs the administrative and accounts aspects of the hire contracts entered into by the trading entities in the Onsite group, thus the invoices do not directly assist in the identification of the party to the hire contracts.
16 There was no evidence at trial about the purpose, or business activities, of On Site Operations WA. However, I infer from its name that it was intended to operate in WA and from the invoices that it was a trading entity like the others for whom Onsite Operations acted as agent for invoicing purposes.
17 The plaintiffs did not call Mr Baxter (who was out of contact on a cruise) but tendered his affidavit without objection from the defendant (ts 63 - 65). Mr Baxter's evidence was as follows. On Site Operations WA entered into the credit facility agreement (par 6); between October 2009 and May 2012 Field Camp hired On Site Operations WA's equipment (par 11); in about July 2011 Field Camp stopped paying for the equipment it had hired (par 30); and at some unspecified time no new portable buildings were hired to Field Camp but Field Camp retained the buildings already on hire on the basis that Field Camp would continue to pay the hire charges (par 31). The documents annexed to Mr Baxter's affidavit reveal that by 30 September 2010 Onsite Operations was pursuing Field Camp for payment of its July and August 2010 invoices. By December 2010, Onsite Operations was requesting payment of the October 2010 invoices 'to avoid any legal action'.
18 The only witness called by the plaintiffs was Mr McWade. He describes himself in his affidavit as being employed as the credit manager of the 'Onsite Rental group of companies', including On Site Operations WA (par 1). He commenced with 'Onsite' in March 2008 (par 2). He was cross-examined as follows:
Now, in your affidavit you speak to your role as being a credit manager and in particular in relation to an Onsite entity called Onsite Rental Groups; Rental Group Operations WA Pty Ltd?---Correct.
Okay. So that's a company that you are involved in working with as a credit manager, that's correct?---Yes, correct.
And in the context of this matter that’s a company that you were dealing with Mr Browne or Field Camp Services in relation to?---It's - it's a parent company over here. We've had a company change of names during the course of our trading and - - -
…
There have been a number of changes of names, Mr McWade, but just specifically you - you were dealing with that company that - - - ?---Yes. We - we own that company and - and I represent that company, that’s correct. Yes (ts 69 - 70).
19 Mr McWade confirmed he was not the person that handled the hire of the equipment the subject of the outstanding invoices (ts 70).
20 Also tendered in evidence at the trial by the defendant was the affidavit of Mr Van Zon, the former production manager of a company that stored, repaired, cleaned and delivered to site portable buildings on behalf of another entity identified as Rakkan. Mr Van Zon swore that Rakkan cross-hired to other companies, including On Site Operations WA, which then on-hired the portable buildings to third parties.
21 Mr Browne, the sole director of Field Camp, swore that he 'dealt with [On Site Operations WA] in relation to buildings hired from it by [Field Camp] up until the appointment of John Carroll … in about June 2010' (par 26). That is clearly wrong. The defendant did not seek to prove through Mr Browne or otherwise the identity of the hirer of the equipment the subject of the unpaid invoices. The defendant relied on the evidence adduced by or prepared for the plaintiffs.
22 There is no doubt that On Site Rentals was a party to the credit facility agreement and that the obligations owed by Field Camp to On Site Rentals under hire contracts fall within the terms of the guarantee. It is also accepted that the credit facility agreement and the guarantee do not apply if the unpaid invoices relate to hire contracts between On Site Operations WA and Field Camp.
23 The unchallenged finding of the trial judge was that from entry into the credit facility agreement in October 2009 until at least just prior to the incorporation of On Site Operations WA in October 2010, On Site Rentals hired equipment to Field Camp. That finding is supported by three documents annexed to Mr Baxter's affidavit, being a quotation dated 28 May 2010, a Field Camp purchase order dated 9 June 2010 and an email of 27 July 2010 from another company associated with the appellant, Remote Camps Australia Pty Ltd, to 'Onsite Rentals' (part of annexure RB6).
24 The quotation is on On Site Rentals' stationery, refers to the Karratha branch and identifies Mr Baxter as the operations manager of On Site Rentals. The stationery has the graphic 'Onsite', in white letters on a black background at the top and the full name of On Site Rentals at the base. The quotation refers to a six-month hire term.
25 Field Camp's purchase order is addressed to 'On Site Rentals Karratha'. The email in July 2010 is also addressed to On Site Rentals. Thereafter, there is no other correspondence to or from On Site Rentals by name. The balance of the correspondence features the 'Onsite' graphic until May 2011 when the graphic changes to include in small type under 'Onsite' the words 'Rental Group'. The new graphic features on all the invoices. There is no document in evidence from, or to, or (save for the invoices) that refers to On Site Operations WA.
26 The evidence of all the plaintiffs' witnesses at trial (consistent with the agreed facts) was that, under the Standard Terms, the owner of the equipment hired to Field Camp the subject of the outstanding invoices was On Site Operations WA. The trial judge positively rejected this evidence and found that the owner was On Site Rentals. He did so on the following grounds.
27 First, the evidence of the plaintiffs' witnesses was infected by the acknowledged error in identifying On Site Operations WA as a party to the credit facility agreement [61] - [63]. Second, he characterised the evidence of Messrs Baxter, McWade and Van Zon as suggesting, individually and collectively, one continuous period of hiring, invoicing and accounting from October 2009 to May 2012. He also inferred from Mr Baxter's affidavit that, whichever company from the Onsite group hired mining equipment to Field Camp, it was the same Onsite company from October 2009 to May 2012 [74]. Third, there was no evidence that at any time between October 2009 and May 2012 the course of hiring from On Site Rentals changed to any other Onsite company [77]. Fourth, if there had been a change, it might reasonably have been expected that a fresh guarantee and indemnity would have been required from Mr Browne [79].
28 That is a very slim evidentiary base on which to both positively reject the evidence of the plaintiffs' witnesses that On Site Operations WA hired the equipment in question to Field Camp and make a finding on the balance of probabilities that the hirer was On Site Rentals. Having regard to the absence of direct evidence on the critical issue of the party or parties to the hire contracts with Field Camp, the fact that Onsite's lawyers had prepared affidavits deposing to the fact that On Site Operations WA was the party to the hire contracts, that it was a trading company established seemingly for WA, which was in the middle of a mining boom, and the frequent, ambiguous use of the corporate group trading name, I would remain to be persuaded that the trial judge's finding was open.
29 However, there is other evidence to support the trial judge's finding. In an email from Mr Baxter to the appellant on 24 May 2011, Mr Baxter requests information concerning 'the location of all site facilities that you currently have on hire from Onsite Rentals'. Further, in cross-examination on the 9 June 2010 purchase order the appellant described the six-month term as a guestimate and said that he had the equipment for two years (ts 94). That is consistent with my analysis of the invoices. For example, the equipment the subject of hire contract 1042102 appears to correspond with one item (a kitchen diner) the subject of the June 2010 purchase order. There also appears to be a correspondence between the ablution block the subject of contracts 1042105 and 1724113 and the June 2010 purchase order. That suggests hire contract continuity. It is also significant that from late September 2010 Field Camp was being pursued for payment of its July and August 2010 invoices, making a change in supplier less likely. Finally, the appellant in cross-examination refers to dealings with On Site Rentals in mid-2010 (ts 93) and 2011 (ts 110). In particular, at the time of the negotiation of the settlement deed, he refers to the 'On Site Rental buildings'.
30 Having regard to all the evidence it was open to the trial judge to find that On Site Rentals was the contractual party to whom Field Camp was indebted under the hire contracts the subject of the unpaid invoices.
31 Accordingly, I would dismiss the appeal.
32 BUSS JA: The appeal should be dismissed. I agree with the reasons of McLure P in relation to ground 1 and with the reasons of Mitchell J in relation to grounds 2 and 3.
MITCHELL J:
Summary
33 On 23 May 2014, the primary judge determined that the appellant was liable to pay the respondents $279,659 pursuant to a guarantee which the appellant had given on 22 October 2009. The primary judge entered judgment for the respondents in that amount and ordered that the appellant pay the costs of the action on a solicitor and own client basis. The costs award was made in favour of the respondents and a related company, for which the respondents had been substituted as plaintiffs at the commencement of the trial.
34 The appellant now appeals against that decision, contending that the primary judge erred in finding that the relevant primary debt was owed to one of the respondents and in finding that the guarantee had not been revoked before the relevant primary liability had been incurred. The appellant also contends that the primary judge erred in requiring the appellant to pay the costs of the former plaintiff.
35 In my view the primary judge correctly concluded that the guarantee applied and had not been revoked, and did not err in principle when exercising his discretion to award costs to the former plaintiff. My reasons for reaching these conclusions are set out below.
Onsite Rental Group
36 It is convenient to begin by identifying the relevant companies of the 'Onsite' group which participated in the litigation. The Onsite group of companies were involved in the rental of industrial equipment. The group included:
1. Onsite Rental Group Operations (WA) Pty Ltd (Onsite WA), which was the original plaintiff in the proceedings;
2. Onsite Rental Group Operations Pty Ltd (formerly called On Site Rentals and Access Holdings Pty Ltd: see Onsite Rental Group Operations Pty Ltd v Browne [2014] WADC 73 [40]) (Onsite Operations);
3. On Site Industrial Rentals Australia Pty Ltd (On Site Industrial); and
4. On Site Rentals Pty Ltd (On Site Rentals), which the primary judge found was the company to which the guaranteed primary obligation was owed.
37 Onsite Operations, On Site Industrial and On Site Rentals are jointly the respondents to this appeal. Onsite WA has not been joined as a respondent, although the appellant seeks to set aside the costs order made in its favour. As I have found that the costs ground does not succeed, it is unnecessary to consider whether that company ought to have been joined as a party to the appeal.
The Agreement
38 At trial it was pleaded and admitted that the appellant had been a director of Field Camp Services Pty Ltd (Field Camp): par 2 of the Amended Statement of Claim and par 2 of the Amended Defence.
39 It was also pleaded that, on or about 22 October 2009, the respondents entered into an agreement in writing with Field Camp to supply products to Field Camp on credit subject to certain terms and conditions (Agreement): par 3 of the Amended Statement of Claim. The appellant admitted that On Site Rentals entered into that agreement, but otherwise denied the allegation: par 3 of the Amended Defence.
40 The Agreement was tendered in evidence. It comprised a form entitled 'Commercial Credit Application', which had been completed and signed by the appellant as the Manager/Director of Field Camp, a set of 'Standard Contract Terms' and the form of guarantee referred to below: cl 1.1 of the Agreement.
41 The Commercial Credit Application form was headed 'Onsite' and 'On Site Group', under which was printed the former name of Onsite Operations and the names of On Site Industrial and On Site Rentals. The form had been completed with details of Field Camp and the appellant, and signed by the appellant. The completed form indicated that the estimated amount of the credit facility required (monthly) was $5,000. Under the heading 'Credit Application' the form set out the following:
• I/We declare that the information provided in this application is true and correct.
• You may stop providing further credit at any time;
• I/We acknowledge that failure to comply with your Standard Contract Terms will cause the withdrawal of credit facilities and lead to subsequent legal action;
• I/We have read and understand the attachment of Standard Terms & Conditions, and agree to abide by same by signing below; and
• I/We understand that you may give credit for a different amount than is asked for in this application.
42 Clause 2 of the Standard Contract Terms provided that:
The Owner agrees to hire to the Customer the Equipment specified in each signed Hire Contract for the Hire Period and at the Hire Rates.
43 The 'Owner' was defined in cl 1.11 of the Standard Contract Terms to mean the owner of the Equipment being On Site Rentals or On Site Industrial severally as the context requires and as set out in the Hire Contract. No point is taken by the appellant in relation to evidence that 'Onsite' was not the owner of the hired equipment, but rather leased it from Rakkan Pty Ltd: cf affidavit of Rodney Baxter sworn 19 November 2013, par 19.
44 The 'Customer' was defined in cl 1.2 of the Standard Contract Terms to mean the person named in the attached commercial credit application. In the present case the customer was Field Camp.
45 The 'Equipment' was defined in cl 1.3 of the Standard Contract Terms to include:
plant, buildings, ablutions, toilets, containers, equipment, vehicles and machinery and all tools, accessories and spare parts supplied with these, which the Owner agrees to hire to the Customer.
46 'Hire Contract' was defined in cl 1.5 of the Standard Contract Terms to mean:
a contract entered into between the Owner and the Customer for the hire of specific Equipment.
47 It can be seen from these provisions that the Agreement created a trade credit facility and provided for the terms and conditions to which future hire contracts would be subject. However, the operation of the Agreement depended on entry into future contracts between Field Camp and either On Site Rentals or On Site Industrial in which the equipment hired was to be identified. Those future contracts, operating together with the Agreement, created the relevant liability of Field Camp to either On Site Rentals or On Site Industrial. The Agreement did not itself provide for the hire of specific equipment from a specified company.
The Guarantee
48 Attached to, and forming part of, the Agreement was a Guarantee and Indemnity (Guarantee) signed by the appellant. The Guarantee was expressed to be given in consideration of 'the Onsite Group' granting Field Camp an ongoing trade credit facility. The term 'Onsite Group' was not defined but, given that the respondents were identified in the Commercial Credit Application, it clearly included each of those companies. The 'Onsite Group' was said to be 'hereinafter jointly and severally referred to as "the Company"' and was also referred to by the words 'you' and 'your'.
49 The Guarantee was for:
[the] payment to you of all monies and performance of all obligations including any past, present and future indebtedness or obligation by [Field Camp] or [the appellant] arising from any past, present or future dealing with you.
50 The Guarantee also provided for the appellant to indemnify 'you' against all loss or damage resulting from any past, present or future dealing with Field Camp or the appellant.
51 It can be seen that the Guarantee operated in respect of obligations owed by Field Camp to the respondents.
52 The Guarantee contained a number of ancillary provisions, including the following provision for termination:
That this Guarantee may only be revoked as to future trading with the Applicant and any notice of revocation may only be given by pre-paid registered mail delivered [to an address in New South Wales] and shall not become effective until the expiration of 14 days from the date of posting.
Hire contracts
53 On 28 May 2010, an email was sent from Rodney Baxter, described in the email as 'Operations Manager' for 'Onsite', to the appellant. The email attached a quote for the hire of portable buildings and ablution blocks. The header of the quote identified 'Onsite' and the footer of the quote identified On Site Rentals. The quote indicated that it was sent by Mr Baxter as 'Operations Manager' of 'Onsite Rentals'.
54 After asking a number of questions and receiving answers, on 9 June 2010, the appellant sent Mr Baxter an email attaching a purchase order and asking when he could pick up the equipment. The purchase order attached to that email was issued by Field Camp to 'Onsite Rentals Karratha', and requested the provision of three bunk houses, a kitchen/diner and an ablution block. The rental period was specified as six months.
55 On 27 July 2010, John Carroll, described in the email as 'Accountant, Remote Camps Australia Pty Ltd', sent an email to Mr Baxter headed 'Purchase Order #GB1007221'. The text of the email indicated that it was directed to 'Onsite Rentals'. The email requested the provision of one kitchen/diner for six months. The appellant's evidence was that Mr Carroll had been appointed by Field Camp to manage the accounts and business: affidavit of the appellant sworn 18 February 2014, pars 26 - 28.
56 In his evidence at trial, Mr Baxter identified a number of invoices issued to Field Camp between 30 June 2011 and 30 May 2012. The invoices were headed 'Onsite Rental Group' and in the printed header referred to Onsite Operations acting as agent for On Site Rentals, Onsite WA, On Site Industrial and another company.
57 The invoices were expressed to be issued in respect of a number of specified hire contract numbers. The hire contracts to which the invoices issued between 30 June 2011 and 30 May 2012 related were not tendered in evidence before the primary judge.
58 It was common ground at trial that the amount of the outstanding invoices issued to Field Camp was $249,989.22. With pre-judgment interest, the amount found to be owing was $279,659.17.
Emails of April - July 2011
59 On 18 April 2011 and 20 May 2011, Rod McWade, described in the emails as Credit Manager for Onsite Rental Group, sent emails to the appellant, which identified a number of amounts said to be outstanding. The claims were by Wasp Diesel Powerhire Pty Ltd (Wasp), Redstar Equipment Pty Ltd (Redstar) and Statewide Equipment Hire Pty Ltd (Statewide). Those companies had been brought within the 'Onsite' group: affidavit of Rod McWade sworn 15 November 2013, pages 19 - 20, 32 - 33.
60 On 29 June 2011, Mr McWade sent an email to the appellant putting a proposal which he felt 'needs your agreement'. The proposal was for a credit of $3,000 to be given by Redstar and applied to a judgment in favour of Wasp (which was reduced to $58,944) and for Field Camp to pay $64,000 to Statewide and continue to settle outstanding hire amounts each month with 'Onsite'. A payment plan for amounts owing to Wasp and Statewide was proposed. Mr McWade said:
After you consider the above, email me your feedback so a deed can be drafted and signed by both parties.
- (affidavit of the appellant sworn 18 February 2014, page 18).
61 On 13 July 2011, the appellant responded to that email. He proposed some alterations to the proposal. Later that day, Mr McWade responded:
Hi Greg,
I am in agreement with your revised proposal.
As for a Deed, I will draft same for your signing etc.
Given the size of your combined debts, and time frame to repay, we normally seek security by way of Personal Guarantee or Bank Guarantee.
I need your answer to above before drafting Deed.
Also would you agree to giving a personal guarantee in lieu of Bank Guarantee?
- (affidavit of the appellant sworn 18 February 2014, page 17).
62 Mr McWade went on to note that amounts were still owed to 'Onsite' for April and May invoices.
63 Later on 13 July 2011, the appellant responded by email indicating that he would 'add May to the payment on the 20th', and said:
In respect to a Bank Guarantee or Personal Guarantee, neither can be agreed. The bank will only guarantee if there was cash to cover it and if I had the cash I wouldn't need to have a repayment agreement. I cannot guarantee corporate debt, whilst I am a Director, I don't own the company and in any case I have no personal assets, so it would be a worthless guarantee and would only be a lever for you to cause me to go bankrupt, to which obviously I will not agree.
- (affidavit of the appellant sworn 18 February 2014, page 17).
Identity of the Onsite company to which obligations were owed
65 Until trial, Onsite WA was the plaintiff in the primary proceedings. It was pleaded and admitted that Onsite WA was the company from which equipment was hired by Field Camp, and to which the Guarantee was given by the appellant. A statement of agreed facts was signed by the solicitors for the appellant and Onsite WA and filed in the District Court. That statement indicated that the Agreement was between the appellant and Onsite WA, that the Guarantee was in favour of Onsite WA and that the hire of equipment was by Field Camp from Onsite WA. Affidavits filed in the proceedings indicated the relevant dealings to be with Onsite WA.
66 One of the annexures to an affidavit of Mr Baxter was a company extract from the Australian Securities and Investments Commission. The extract indicated that Onsite WA was incorporated on 15 October 2010. This was after entry into the Agreement and Guarantee and after the issue of the purchase orders that were in evidence.
67 On the day prior to the trial of the primary action, the appellant's solicitor pointed out the date of incorporation of Onsite WA to Onsite WA's solicitors. The appellant's solicitors argued that, as Onsite WA was not incorporated on the date the Guarantee was executed, it could not succeed in the action. The issue was also raised with the primary judge on the first day of trial. The primary judge made an order allowing for the amendment of the writ of summons to substitute the respondents for Onsite WA as plaintiff.
68 The statement of claim endorsed on the writ was amended to plead that:
1. the Agreement was with the respondents;
2. the Guarantee was executed in favour of the respondents;
3. the equipment was hired from the respondents; and
4. the invoices were issued by Onsite Operations as agent for On Site Industrial and On Site Rentals.
69 The appellant also amended his defence at trial. In his amended defence the appellant admitted that On Site Rentals entered into the Agreement with Field Camp. He pleaded that the Guarantee was in respect of Field Camp's obligations under the Agreement. He pleaded that Field Camp hired goods from Onsite WA.
70 At trial, the respondents relied on an affidavit of Mr Baxter, two affidavits of Charles Clifton (who was employed by the respondents' solicitors) and an affidavit of Rod McWade (who described himself as the credit manager of the 'Onsite Rental group of companies'). Only Mr McWade was cross-examined on his affidavit.
71 The appellant's affidavit was read, and he was cross-examined by counsel for the respondents. The appellant also relied on an affidavit of Mr Van Zon.
72 At trial, despite having appreciated that Onsite WA was not incorporated until 15 October 2010, both parties tendered affidavits, prepared before the error was appreciated, which identified Onsite WA as the company which engaged in conduct relevant to the proceedings.
Appellant's defences at trial
73 At trial, the appellant resisted the respondents' claim under the Guarantee on three bases:
1. The equipment was hired from Onsite WA and the appellant did not provide his Guarantee to that company.
2. The guarantee had been revoked by the second email sent by the appellant to Mr McWade on 13 July 2011.
3. Alleged variations of the Agreement meant that the appellant was not liable under the Guarantee.
The primary judge's decision
74 (References to paragraph numbers in these reasons are references to paragraph numbers in the primary judge's reasons.)
75 The primary judge rejected each of these defences and gave judgment for the respondents.
76 The primary judge's conclusion as to the last ground of defence, concerning the alleged variations to the agreement, is not challenged in this appeal. It is, therefore, unnecessary to say anything more about the primary judge's conclusion in relation to that matter.
Contracting party
77 The primary judge rejected affidavit evidence as to the identity of the Onsite company which entered into the hire contract. He did so essentially on the ground that the mistake as to the identity of Onsite WA as the contracting party infected the affidavits filed prior to the mistake being discovered [45] - [71]. In the course of doing so, the primary judge noted that a number of references to Onsite WA could not have been correct [49], [54], [58]. He also noted that the witnesses swore their affidavits without specifying any reason why they each believed Onsite WA to be the relevant company [65]. He said that the issue as to the identity of the company hiring the equipment to Field Camp became apparent only after the evidence had closed [69].
78 The primary judge said that none of the hire contracts were tendered into evidence [27].
79 The primary judge observed that there was nothing in the affidavits to suggest any change in the 'conduct' of hiring and invoicing from On Site Rentals after 15 October 2010. He noted that the witnesses' evidence, individually and collectively, referred to one continuous period of commercial hiring, invoicing and accounting dealings from October 2009 to May 2012. The respondent's witnesses had each been employed in their respective roles prior to 2009. The primary judge inferred from Mr Baxter's affidavit that, whichever company from the Onsite Group hired mining equipment to Field Camp, it was the same Onsite company from October 2009 to May 2012 [74] - [80]. He observed that the appellant did not give evidence of any variation in the hirer of the equipment. He said that, aside from the unacceptable evidence as to corporate identity, the affidavit evidence as to the facts of hiring, invoicing and non-payment was received without challenge [75].
80 The primary judge held that invoices in evidence were also consistent with Onsite Operations sending invoices as agent for On Site Rentals in respect of the hiring to Field Camp throughout the period from June 2011 to May 2012. He said that there was no evidence that, at any time between October 2009 and May 2012, the course of hiring from On Site Rentals to Field Camp changed to any other Onsite company. He said that, if there had been a change in hiring from On Site Rentals to Onsite WA, then it might reasonably have been expected that a fresh guarantee and indemnity would have been required from the appellant [76] - [79].
81 The primary judge concluded that, in the absence of any, or any acceptable, evidence to the contrary, the only reasonable inference was that the original course of conduct from October 2009 continued from beginning to end, such that all hiring from June 2011 to May 2012 was from On Site Rentals to Field Camp [80].
Alleged revocation of Guarantee
82 The primary judge observed that no revocation notice was given by pre-paid registered mail to the specified address, as required by the terms of the Guarantee. The primary judge said that this was enough to defeat the defence [125] - [126].
83 The primary judge also referred to the context in which the appellant sent the email of 13 July 2011. He construed that email as a refusal to provide proposed security to Wasp, Redstar and Statewide respecting an amount owing to those companies [127] - [139]. He noted that the Deed which was subsequently prepared and executed related only to the amounts owing to those companies [142].
84 The primary judge concluded that, in those circumstances, the Guarantee was not revoked by the email dated 13 July 2011 [144].
Costs
85 After the primary judge's decision had been delivered, the matter was adjourned for an argument as to costs. Argument took place on 20 June 2014. The appellant contended that costs should be awarded to the respondents only from the date on which they became plaintiffs. The appellant argued that no costs should be awarded to Onsite WA.
86 After hearing submissions and referring to the nature of the proceedings, the primary judge observed:
Unfortunately the wrong plaintiff company was named as plaintiff. This was an oversight, as Mr Rumsley put it, on the first day of the trial on the part of both parties. It wasn't detected until the last working day before trial.
It didn't change the plaintiff's case in any way, but it was necessary to change the name of the plaintiff to the true beneficiary of the guarantee. And once that was done, then I've proceeded to find judgment in favour that correct beneficiary and the correct plaintiff (ts 241 - 242).
87 The primary judge referred to O 66 r 1 of the Rules of the Supreme Court1971 (WA) (Rules) and the decision of this court in Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 [39] - [42]. Naidoo held that a judge of the Supreme Court has jurisdiction to award costs against a party in favour of a non-party, although that jurisdiction will be exercised only in exceptional cases and with considerable caution. The primary judge continued:
Now the same power arises to judges of the District Court and it seems to me that, bearing in mind the requirement for an exceptional case and the need for considerable caution, I have regard to the fact that there was this error in identity. It was an oversight on both sides until the last working day before trial.
The plaintiff's case did not change in any way by reason of the correction of the name of the plaintiff company. The debt was owed in any event and the party to whom I'm proposing to award costs was [formerly] a plaintiff which incurred costs in respect of that debt which was truly owed and the plaintiff's case didn't change. And those costs would have been incurred in any event had the correct name been in the writ to start off with.
So on that basis, I'm going to order the defendant to pay the [plaintiffs'] costs in the action including those of the original named plaintiff which is [Onsite WA] (ts 242 - 243).
88 Following some debate before the primary judge, and conferral between the parties, it was agreed that costs should be taxed on a solicitor and own client basis.
Orders subject to appeal
89 On 20 June 2014, the primary judge made orders that the appellant pay the respondents $279,659. He also ordered that the appellant pay the respondents' costs of the action, including the costs of Onsite WA, on a solicitor and own client basis, subject to a reduction for the appellant's costs thrown away by the amendment to the defence.
Grounds of appeal
90 The appellant appeals against the judgment on the following grounds:
1. The Learned Judge erred in law in finding that 'Any indebtedness by [Field Camp] is to [On Site Rentals], in circumstances where:
(a) The only evidence before the Court was that [Onsite WA] invoiced [Field Camp] from 2011 for the amounts claimed in the proceedings from 2011; and
(b) The only evidence before the Court was that the buildings hired to [Field Camp] were on hire by [Onsite WA].
2. The Learned Judge erred in law in finding that 'In all the circumstances, the subject guarantee to [On Site Rentals] was not revoked by the email dated 13 July 2011', in circumstances where the evidence before the Court was that:
(a) The guarantee expressly provided it may be revoked as to future trading;
(b) By email date 13 July 2011, the Credit Manager of the Respondents and [Onsite WA] requested a personal guarantee from the Appellant in relation to liabilities of [Field Camp]; and
(c) By email dated 13 July 2011 the Appellant materially stated 'I cannot guarantee corporate debt'.
3. The Learned Judge erred in law, or alternatively in fact, in finding that he could make an order requiring the plaintiff to pay the costs of [Onsite WA], when it was not a party to the proceedings, without establishing there was good reason to depart from Order 66 Rule 1 of the Rules of the Supreme Court, or that such an order was not unjust to the Defendant, in circumstances where:
(a) The learned Judge found that [Onsite WA's] claim could not succeed; and
(b) [Onsite WA] was not a plaintiff.
(original emphasis) (footnotes omitted)
91 The first particular to ground 1 is inaccurate. Onsite WA did not issue the invoices produced in evidence. Rather, those invoices were issued by Onsite Operations as agent for a number of companies in the Onsite group of companies, including both On Site Rentals and Onsite WA. The invoices were consistent with the hire being from On Site Rentals and the invoices being issued on its behalf by Onsite Operations. Of course, if the hire was by Onsite WA then the invoices would also be consistent with Onsite Operations sending the invoices as agent for Onsite WA.
92 To establish their case, the respondents had to prove, on the balance of probabilities, that one or more of them had hired to Field Camp the equipment to which the invoices specified in the statement of claim related. The resulting liability of Field Camp to that respondent or those respondents would then attract the Guarantee.
93 The obvious means of proving the identity of the relevant party would be to tender the documents constituting the hire contracts to which the invoices issued after 30 June 2011 related. This was not done.
94 There was, however, evidence (to which I have referred at [53] - [56] above) which indicates that, in May to July 2010, On Site Rentals hired equipment to Field Camp. The identity of On Site Rentals as the company from which the equipment was being hired was established by the quote it delivered and the fact that the purchase orders at that time were directed to On Site Rentals. There is no evidence that the identity of the Onsite company changed on or after October 2010.
95 The affidavits relied on by the respondents contained a number of references to Onsite WA hiring out the relevant equipment. However, they also contained references to activities being undertaken by Onsite WA which could not be correct, as those references predated the incorporation of Onsite WA.
96 For example, Mr Baxter's affidavit indicated that he had been employed by Onsite WA since October 2007 and that Onsite entered into the Agreement in October 2009. He also referred to Field Camp hiring Onsite WA's equipment between October 2009 and May 2012: affidavit of Rodney Baxter sworn 19 November 2013, pars 3, 6 - 8, 11.
97 Mr McWade's affidavit indicated that he commenced employment with Onsite WA in March 2008: affidavit of Rod McWade sworn 15 November 2013, par 2.
98 I agree with the primary judge that no weight could be attached to the references to Onsite WA in any of the affidavits. It was unsatisfactory that, after discovery of the error as to the identity of Onsite WA as a contracting party, evidence was tendered which continued to refer to that company in a manner that was clearly erroneous.
99 It is clear that some statements, in affidavits prepared prior to the discovery of the error, attributing conduct to Onsite WA were in error. The affidavits attributed conduct to Onsite WA prior to its incorporation. In my view, the primary judge was correct to reject those aspects of the evidence, when the witnesses' evidence was contrary to the established facts. The clearly incorrect references to pre-incorporation conduct gave the primary judge reason to regard all references to 'Onsite' in the affidavits as unreliable, and to reject that part of the evidence.
100 Therefore, the references in affidavits to Onsite WA as the party hiring the equipment in 2011 and 2012 did not preclude the primary judge from concluding that Onsite WA was not the contracting party. It was open to the primary judge to reject that part of the evidence as unreliable. This approach to the evidence was appropriate in the circumstances.
101 The primary judge correctly concluded that Mr McWade's oral evidence as to corporate identity was equivocal and vague [53]. Mr McWade was asked about 'Onsite Rental Groups; Rental Group Operations WA Pty Ltd' (ts 69 - 70). The first words could refer to the Onsite group of companies. Further, Mr McWade's answers referred to a 'parent company over here' and change of company names. Mr McWade's oral evidence was not apt to produce confidence in the primary judge that he properly understood the corporate structure of the Onsite group of companies.
102 Having rejected the evidence attributing the hiring to Onsite WA, it remained necessary for the primary judge to be satisfied that one of the respondents was the company that hired the equipment to which invoices issued after 30 June 2011 related. He correctly concluded that the most probable course of events was that the process of Field Camp hiring equipment from On Site Rentals, which was established in mid-2010, continued thereafter. The evidence did not suggest any change in the arrangements. The affidavit of Mr Baxter described a continuing arrangement for hiring equipment. It would be expected that a change in the 'Onsite' company would have been accompanied by some variation to, or novation of, the Agreement. There was no evidence of On Site Rentals changing its business operations. The appropriate inference to be drawn in these circumstances is that the original approach of hire by On Site Rentals continued to the time to which the relevant invoices related. There was no error in the primary judge's approach.
Ground 2: alleged revocation
103 Ground 2 should be understood as predicated on ground 1 failing, so that the relevant hiring party to which the Guarantee applied was at all material times On Site Rentals. To any extent that the appellant's argument relies on Onsite WA becoming the hiring entity, it should be rejected for the reasons given in relation to ground 1.
104 The email of 13 July 2011 does not constitute a revocation of the Guarantee. In the context in which it was made, it is clear that the statement 'I cannot guarantee corporate debt' was a refusal to provide a new guarantee, and not a revocation of an existing guarantee. The email of 13 July 2011 did not refer to the Guarantee, and was not sent in the manner provided for by the Guarantee. It was sent in the course of negotiating payment arrangements for existing debts owed to companies other than On Site Rentals.
105 The appellant submits that the obligation to send notice of revocation by registered mail to a specified address 'can be caught by the doctrine of penalties and relief granted notwithstanding a failure to comply with the express requirement'.
106 The nature of a penalty, to which the doctrine identified with relief against penalty obligations applies, was described in the following general terms by the High Court in Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30; (2012) 247 CLR 205 [10]:
In general terms, a stipulation prima facie imposes a penalty on a party ('the first party') if, as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and this collateral stipulation, upon the failure of the primary stipulation, imposes upon the first party an additional detriment, the penalty, to the benefit of the second party. In that sense, the collateral or accessory stipulation is described as being in the nature of a security for and in terrorem of the satisfaction of the primary stipulation. If compensation can be made to the second party for the prejudice suffered by failure of the primary stipulation, the collateral stipulation and the penalty are enforced only to the extent of that compensation. The first party is relieved to that degree from liability to satisfy the collateral stipulation. (footnotes omitted)
107 In the present case, the appellant does not identify a relevant primary or secondary stipulation which imposes an additional detriment to the benefit of On Site Rentals. There is simply a capacity to terminate the guarantee by a particular means. The doctrine referred to in Andrews has no application in these circumstances.
108 Counsel for the appellant also relies on the decision in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549, 561 as authority for the traditional view that ambiguous provisions in a contract of guarantee should be construed in favour of a surety. Reference to Ankar does not assist the appellant. In this case there is no relevant ambiguity in the Guarantee. Rather, the question is whether the Guarantee has been revoked. The text of the email of 13 July 2011, and the context in which that email was sent, make it plain that the Guarantee was not revoked by the email.
Ground 3: costs
109 This ground proceeds on a false premise so far as it relies on the proposition that Onsite WA was not a party to the proceedings. Onsite WA was a party at the inception of the proceedings. That it ceased to be a party does not stop the court making an order in respect of costs incurred at the time when Onsite WA was a party to the proceedings.
110 Further, the reasons of the primary judge, referred to above, indicate that he did not proceed on the basis asserted in ground 3. He did not find that he could make a costs order in favour of Onsite WA without establishing that there were good reasons to depart from the general order contemplated by O 66 r 1 of the Rules, or that such an order was not unjust to the appellant. Rather, the primary judge expressly recognised that costs should only be awarded to a non-party with considerable caution in an exceptional case. He considered the question of injustice to the appellant. He concluded that the plaintiff's case did not change in any way by reason of the substitution of the respondents for Onsite WA as plaintiff. The primary judge concluded that the costs he was awarding would have been incurred in any event had proceedings been commenced in the correct name. There was no error of principle in the approach adopted by the primary judge.
111 Moreover, it was open to the primary judge to conclude that it was in the interests of justice that Onsite WA receive the costs it had incurred while a party to the proceedings.
112 Section 64(1) of the District Court of Western Australia Act 1969 (WA) relevantly provides that the costs of any action in that court shall be paid by the parties in such manner as the District Court judge directs. Section 64(3) provides that, subject to that Act, a District Court judge has the same power in relation to the payment of costs as a judge of the Supreme Court. As in the case of a judge of this court, a District Court judge has a broad discretion as to costs, to be exercised judicially: The State of Western Australia v Collard [2015] WASCA 86 [25].
113 The appellant was not a successful party in the proceedings in the District Court. Onsite WA had incurred the costs of bringing a successful case to trial, although that success was enjoyed by other related corporations. Further, the relevant corporations formed part of the same group of companies and had common representation throughout the proceedings. The cost burden on the appellant was not increased by Onsite WA's participation in the proceedings, other than by the amendment to the pleadings that was accounted for in the costs order the primary judge made. The appellant contributed to costs being incurred by Onsite WA when it admitted that Onsite WA was the contracting party and maintained that position (including in an agreed statement of facts) until the eve of trial. In these unusual circumstances, it was open to the primary judge to exercise his discretion in the manner that he did.
Orders
114 For the above reasons, in my view the appeal should be dismissed.
6
1