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Canon Australia Pty Ltd v Patton

Canon Australia Pty Ltd v Patton

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Case Copied 14 September 2007 35 min read

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Reported Decision: (2007) ATPR 42-183

New South Wales

Court of Appeal

CITATION: CANON AUSTRALIA PTY LTD v PATTON [2007] NSWCA 246
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 3 August 2007

JUDGMENT DATE:
14 September 2007

JUDGMENT OF: Basten JA at 1; Campbell JA at 9; Harrison J at 70

DECISION: (1) Appeal allowed.
(2) Set aside the orders made in the court below.
(3) In lieu thereof, order that judgment be entered for the Appellant against the First and Second Respondents in the sum of $175,869.48.
(4) Order that interest be paid on that amount at the rate prescribed from time to time by Schedule 5 Uniform Civil Procedure Rules 2005 from 8 December 2006.
(5) First and Second Respondents to pay the costs of the appeal.
(6) First and Second Respondents to pay the costs of the Appellant of the trial.

CATCHWORDS: TRADE PRACTICES – unconscionable conduct of creditor towards guarantor – failure to supply goods to trading company when debts outstanding – whether guarantor suffered

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth), s 12CC
Contracts Review Act 1980 (NSW), s 9
Credit Act 1984 (NSW), s 147
Trade Practices Act 1974 (Cth), ss 6, 51AA, 51AB, 51AC
Uniform Civil Procedure Rules 2005, Schedule 5

CASES CITED:
Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557
Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149
Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485
Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226; (2005) 56 ACSR 131
Begley v Attorney General (NSW) (1910) 11 CLR 432
Ben Shipping Co v An Bord Bainne [1986] 2 All ER 177, 187
Bruns v Colocotronis (“The Vasso”) [1979] 2 Lloyds Rep 412
Compania Sudamericana De Fletes SA v African Continental Bank Ltd (“The Rosarino”) [1973] 1 Lloyds Rep 2
Equiticorp Finance Ltd (In liq) v Bank of New Zealand (1993) 32 NSWLR 50
Gracechurch Holdings Pty Ltd v Breeze & Anor (1992) 7 WAR 518, 524
Hurley v McDonald’s Australia Ltd (2000) ATPR 41-741
Interchase Corp Ltd (in liq) v FAI General Insurance Co Ltd [2000] 2 Qd 301
Pettman v Keble (1850) 137 ER 1067
Re Kitchin; Ex parte Young (1881) 17 Ch D 668
Sabemo Pty Ltd v de Groot (1991) 8 BCL 132
State Bank of NSW v Stenhouse (1997) Aust Torts Rep 81-423
Spencer Bower, Turner and Handley, The Doctrine of Res Judicata, (3rd ed by Handley, 1996) at [224]

PARTIES: Canon Australia Pty Limited – Appellant
Roger James Patton – First Respondent
Glynda Colleen Patton – Second Respondent

FILE NUMBER(S): CA 40858/06

COUNSEL: S. Bell – Appellant
Dr S. Churches - Respondents

SOLICITORS: Simon Ravdens, Lawyers – Appellant
Self-Represented - Respondents

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 4147/05

LOWER COURT JUDICIAL OFFICER: Curtis…

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: [2007] NSWCA 246
Decision Date: 14 September 2007

CaseChat Overview and Summary

Canon Australia Pty Ltd appealed to the New South Wales Court of Appeal against a decision of the primary judge which had dismissed its claim against Mr and Mrs Patton for moneys owing under a guarantee. The dispute concerned whether Canon had engaged in unconscionable conduct in its dealings with the Pattons, thereby vitiating the guarantee.

The Court of Appeal was required to determine whether Canon's conduct in failing to supply goods to the trading company, of which Mr and Mrs Patton were directors and guarantors, when the company had outstanding debts, constituted unconscionable conduct under the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act 2010 (Cth)). Specifically, the court considered whether this failure to supply, in the context of the company's financial difficulties and the Pattons' personal guarantees, amounted to conduct that was against good conscience.

The Court of Appeal found that the primary judge had erred in concluding that Canon's conduct was unconscionable. The court reasoned that the failure to supply goods was a commercial decision made by Canon in response to the company's existing indebtedness and was not indicative of unconscionable conduct. The court applied principles of commercial dealings, noting that a creditor is generally entitled to protect its interests when a debtor is in default. The court held that the Pattons had voluntarily entered into the guarantee and that Canon's actions did not amount to exploitation of any special disadvantage.

Consequently, the Court of Appeal allowed the appeal, set aside the orders of the primary judge, and entered judgment for Canon Australia Pty Ltd against the First and Second Respondents (Mr and Mrs Patton) for the sum of $175,869.48, plus interest. The Pattons were also ordered to pay Canon's costs of both the appeal and the trial.

Orders

Orders of the court

(1) Appeal allowed. (2) Set aside the orders made in the court below. (3) In lieu thereof, order that judgment be entered for the Appellant against the First and Second Respondents in the sum of $175,869.48. (4) Order that interest be paid on that amount at the rate prescribed from time to time by Schedule 5 Uniform Civil Procedure Rules 2005 from 8 December 2006. (5) First and Second Respondents to pay the costs of the appeal. (6) First and Second Respondents to pay the costs of the Appellant of the trial.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	CANON AUSTRALIA PTY LTD v PATTON [2007] NSWCA 246 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	3 August 2007
JUDGMENT DATE:	14 September 2007
JUDGMENT OF:	Basten JA at 1; Campbell JA at 9; Harrison J at 70
DECISION:	(1) Appeal allowed. (2) Set aside the orders made in the court below. (3) In lieu thereof, order that judgment be entered for the Appellant against the First and Second Respondents in the sum of $175,869.48. (4) Order that interest be paid on that amount at the rate prescribed from time to time by Schedule 5 Uniform Civil Procedure Rules 2005 from 8 December 2006. (5) First and Second Respondents to pay the costs of the appeal. (6) First and Second Respondents to pay the costs of the Appellant of the trial.
CATCHWORDS:	TRADE PRACTICES – unconscionable conduct of creditor towards guarantor – failure to supply goods to trading company when debts outstanding – whether guarantor suffered
LEGISLATION CITED:	Australian Securities and Investments Commission Act 2001 (Cth), s 12CC Contracts Review Act 1980 (NSW), s 9 Credit Act 1984 (NSW), s 147 Trade Practices Act 1974 (Cth), ss 6, 51AA, 51AB, 51AC Uniform Civil Procedure Rules 2005, Schedule 5
CASES CITED:	Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149 Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226; (2005) 56 ACSR 131 Begley v Attorney General (NSW) (1910) 11 CLR 432 Ben Shipping Co v An Bord Bainne [1986] 2 All ER 177, 187 Bruns v Colocotronis (“The Vasso”) [1979] 2 Lloyds Rep 412 Compania Sudamericana De Fletes SA v African Continental Bank Ltd (“The Rosarino”) [1973] 1 Lloyds Rep 2 Equiticorp Finance Ltd (In liq) v Bank of New Zealand (1993) 32 NSWLR 50 Gracechurch Holdings Pty Ltd v Breeze & Anor (1992) 7 WAR 518, 524 Hurley v McDonald’s Australia Ltd (2000) ATPR 41-741 Interchase Corp Ltd (in liq) v FAI General Insurance Co Ltd [2000] 2 Qd 301 Pettman v Keble (1850) 137 ER 1067 Re Kitchin; Ex parte Young (1881) 17 Ch D 668 Sabemo Pty Ltd v de Groot (1991) 8 BCL 132 State Bank of NSW v Stenhouse (1997) Aust Torts Rep 81-423 Spencer Bower, Turner and Handley, The Doctrine of Res Judicata, (3rd ed by Handley, 1996) at [224]
PARTIES:	Canon Australia Pty Limited – Appellant Roger James Patton – First Respondent Glynda Colleen Patton – Second Respondent
FILE NUMBER(S):	CA 40858/06
COUNSEL:	S. Bell – Appellant Dr S. Churches - Respondents
SOLICITORS:	Simon Ravdens, Lawyers – Appellant Self-Represented - Respondents

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 4147/05
LOWER COURT JUDICIAL OFFICER:	Curtis…