C.A.R.S Pty Ltd v Brent - [2015] TASSC 23

[2015] TASSC 23

COURT: SUPREME COURT OF TASMANIA

CITATION: C.A.R.S. Pty Ltd v Brent [2015] TASSC 23

PARTIES:  C.A.R.S Pty Ltd
  v
  BRENT, John Charles
  BRENT, Peter Leonard

FILE NO:  793/2013
DELIVERED ON:  4 June 2015
DELIVERED AT:  Hobart
HEARING DATES:  3, 4 November 2014
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Guarantee and Indemnity – Actions against surety – Generally – Other cases – Failure of co-guarantor to execute guarantee – Signature of co-guarantor forged – Express term that liability of each guarantor not contingent upon execution by any other guarantor.

Marston v Charles H Griffith & Co Pty Ltd (1982) 3 NSWLR 294; Keith Murphy Pty Ltd v Custom Credit Corporation Limited (1992) 6 WAR 332; Gattellaro v Westpac Banking Corporation (2004) 204 ALR 258, distinguished.
Vassos v State Bank of South Australia [1993] 2 VR 316, referred to.
Aust Dig Guarantee and Indemnity [35]

REPRESENTATION:

Counsel:
             Plaintiff:  S B McElwaine SC, E Judd
             Defendant:  G W Dietz
Solicitors:
             Plaintiff:  Rae & Partners
             Defendant:  S S Lawyers Pty Ltd

Judgment Number: [2015] TASSC 23
Number of paragraphs: 47

Serial No 23/2015
File No 793/2013

C.A.R.S. Pty Ltd v JOHN CHARLES BRENT and PETER LEONARD BRENT

REASONS FOR JUDGMENT BLOW CJ

4 June 2015

In this action, a creditor is suing two company directors, claiming that they are liable to pay substantial sums to it pursuant to a deed of guarantee and indemnity. The first defendant contends that he is not liable because his signature on the deed was forged. The second defendant admits signing the deed but contends that the other defendant's signature was forged, and that that must result in him not being liable.
The plaintiff company, C.A.R.S. Pty Ltd, has a well established business that involves growing, buying and selling vegetables. For many years one of its customers was a Queensland company named Bunjurgen Pty Ltd. The defendants, John Brent and Peter Brent, are the directors and shareholders of that company. The first defendant, John Brent, is involved in local government. He was the mayor of Boonah Shire from 1994 until 2008, and since then has been the mayor of Scenic Rim Regional Council. His daughter, Sally Brent, managed Bunjurgen's business from about 2004 or 2005 onwards. His son, Matthew Brent, was also involved in the management of Bunjurgen's business at all material times.
The directors and shareholders of the plaintiff company are a married couple named Glenn Moore and Dinah Moore. In late 2010, Bunjurgen had been slow to pay the plaintiff for substantial quantities of vegetables that had been sold and delivered to it. As a result, Mr Moore spoke to Sally Brent and told her that he required some security, preferably a first mortgage. She replied, "Well it ain't gunna happen." However she went on to offer a directors' guarantee. Mr Moore responded that he expected that that would be sufficient. On 14 December 2010 she sent an email attaching a draft deed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] TASSC 23
Decision Date: 4 June 2015

CaseChat Overview and Summary

In the case of C.A.R.S Pty Ltd v Brent, the respondent, Brent, was a party to a guarantee provided by him and others, which was intended to secure the performance of certain obligations by the principal debtor. The dispute arose when the principal debtor defaulted on the obligations, leading C.A.R.S Pty Ltd to pursue the guarantors for payment. The High Court was tasked with determining the enforceability of the guarantee against Brent, particularly in light of the fact that the signature of one co-guarantor had been forged.

The central legal issue before the court was whether the forged signature of one co-guarantor could invalidate Brent’s liability under the guarantee. Specifically, the court had to consider the impact of an express term in the guarantee that stated the liability of each guarantor was not contingent upon the execution of the guarantee by any other guarantor. The court was also required to assess whether this term effectively insulated Brent from any potential challenges to the validity of the guarantee.

The court held that the express term in the guarantee effectively insulated Brent from the infirmity of the forged signature. The term made it clear that each guarantor’s liability was independent of the actions of the other guarantors, including the execution of the guarantee. As such, the forged signature of one co-guarantor did not affect the enforceability of the guarantee against Brent. The court concluded that Brent's liability remained intact, and the guarantee was valid and enforceable against him.

In light of this determination, the court ruled in favour of C.A.R.S Pty Ltd, holding Brent liable under the guarantee. The court's decision underscores the importance of clear and explicit terms in guarantee agreements, particularly when multiple guarantors are involved, to ensure the enforceability of the guarantee despite any issues with the execution by other guarantors.

Orders