Capital Finance Australia Ltd v Melbourne South Pty Ltd
[2013] VCC 1252
•18 October 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-12-01816
| CAPITAL FINANCE AUSTRALIA LTD | Plaintiff |
| v | |
| MELBOURNE SOUTH PTY LTD | First Defendant |
| and | |
| KATHLEEN LINDA DEVON | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16-18 September 2013 | |
DATE OF JUDGMENT: | 18 October 2013 | |
CASE MAY BE CITED AS: | Capital Finance Australia Ltd v Melbourne South Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1252 | |
REASONS FOR JUDGMENT
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Subject: CONTRACT; PROCEDURE
Catchwords: Guarantee – incorporation of further oral term into agreement – re-opening case during closing submissions
Legislation Cited:
Cases Cited:Gange v Sullivan (1966) 116 CLR 418 at 430, 443; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Spotlight Pty Ltd v NCON Australia Ltd [2012] VSCA 232; Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22; Urban Transport Authority of NSW v NWEISER (1992) 28 NSWLR 471; Yerkey v Jones (1939) 63 CLR 649; Garcia v National Australia Bank Ltd (1998) 194 CLR 395
Judgment: Judgement for the Plaintiff against the Second Defendant.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Schlicht | Koroneos Lawyers |
| For the Defendants | Mr Q Nguyen |
HIS HONOUR:
Nature of Proceeding
1 This case concerns a claim by Capital Finance Australia Ltd (“Capital”) to enforce a guarantee against the second defendant, Kathleen Devon (“Devon”). The primary debtor is the first defendant, Melbourne South Pty Ltd (“Melbourne South”) which went into liquidation on about 19 October 2012. Devon was a director of Melbourne South between 7 June 2007 and 1 July 2008 and then again between 10 January 2011 and 30 June 2011. She was also a secretary of the company between 7 June 2008 and 1 July 2008 and again between 10 January 2011 and 30 June 2011. Capital made no application for leave to proceed against Melbourne South. Accordingly, the trial was conducted on the basis that Devon was the sole defendant.
Background
2 Capital conducts a business of financing equipment for use in business, primarily motor vehicles but also computer equipment and other substantive assets. Mr Hugh Devon, the husband of the second defendant, had previously financed the hire purchase of a BMW motor vehicle through Capital.
3 Melbourne South was a company which conducted a business including the running of a rewards program. This was said to require up-to-date computer equipment and special software. Melbourne South arranged to obtain the necessary computer hardware from Akyman Investments Pty Ltd (“Akyman”).
4 Capital alleged that Melbourne South entered into a hire purchase agreement (the “Agreement”) in respect of certain computer hardware. Pursuant to the Agreement, Melbourne South agreed to hire the computer hardware from Capital and have an option to purchase in accordance with the terms and conditions set out in the Agreement. The total amount financed, together with charges, was $109,710.36. This was said to be payable by 36 monthly instalments of $3,047.51.
5 Capital alleged that Devon signed a guarantee and indemnity (“the Guarantee”) in favour of Capital in relation to the obligations of Melbourne South under the Agreement. There were terms of the Guarantee as follows:
“(a)You[1] unconditionally and irrevocably guarantee to us the punctual payment to us of the Money and the due and prompt observance and performance of all covenants, obligations, terms and conditions (monetary or non-monetary, present or future, actual or contingent) on the part of each customer to be performed or observed under or in connection with:
[1]“You” means the guarantor(s) named in the Capital Schedule above and, where the context permits, includes each guarantor.
(i)Agreement; and
(ii)any other agreement, deed, document or arrangement entered into at any time between us and a customer or customers (and, where applicable, any other person or persons).
(b)If a customer does not pay any of the Money when due, you must pay the whole of that money to us (or as we direct) immediately upon demand by us.
(c)You unconditionally and irrevocably indemnify us against all liabilities, losses and expenses which may be incurred (directly or indirectly) by us if the money:
(a)is not recoverable by us from any customer or from you as surety for any reason; or
(b)is not paid to us on the due date for any reason.
This indemnity is a separate obligation and is not to be restrictively interpreted by reason of the guarantee in clause 3. Your liability under this clause is that of principal debtor. You must pay any amount due to us under this clause immediately upon demand by us.
(d)This guarantee is a continuing guarantee and indemnity for the whole of the Money and is not limited to any transaction or arrangement.
(e)Your obligation to pay the money is a primary obligation. We are not obliged to enforce any right against any person or property or demand payment from any customer or any other person before demanding payment by you of the money.
(f)You must not exercise any right of setoff, withholding, deduction or counterclaim which reduces or extinguishes the obligation of a customer or you to pay the money.
(g)You must pay interest on any amount which is due for payment under this guarantee but which is not paid. Interest will accrue on daily balances at the rate which we determine to be the cost to us from time-to-time of funding the unpaid amount and is payable on demand.
(h)You must pay to us on demand our costs and expenses (including full recoupment of any goods and services tax, including any adjustment payable by us (relating to the enforcement of, and the preservation of our right under this Guarantee) including legal costs and expenses on a full indemnity basis).
(i)A certificate signed by any officer or manager of ours containing statements as to an amount due by a customer or by you, the occurrence of any event or the existence of any fact will be sufficient evidence of same unless you prove them to be false.”
6 Devon’s initial defence, dated 6 June 2012, was short and uninformative. Hugh Devon drafted the document. Later Devon filed a Notice of Amended Defence dated 18 April 2013 (“the second defence”), again prepared by Mr Devon. This version made a host of general allegations without material facts or details. Ultimately, Devon relied upon a Notice of Further Amended Defence dated 2 May 2013 (“the third defence”). In this document, Devon purported to make allegations of wrongdoing against the plaintiff. However, notwithstanding that the third defence was better prepared, apparently by Sackville Wilks Lawyers, it made no counterclaim against the plaintiff, nor did the pleading contain any prayer for relief seeking orders for damages, declarations or remedial orders under the Australian Consumer Law.
7 Capital’s solicitors served a Notice to Admit Facts and Documents dated 30 April 2013. Devon did not respond to the Notice. Accordingly, for the purposes of the proceedings, there was no dispute (and indeed Devon admitted) that:
· Melbourne South executed the Agreement;
· Melbourne South failed to pay any instalments to Capital under the Agreement after 11 March 2011;
· Capital terminated the Agreement by written notice to Melbourne South dated 8 March 2012;
· as at 8 March 2012 Melbourne South owed the plaintiff $101,747.71 under the Agreement;
· Melbourne South received from the plaintiff the letter dated 8 March 2012 which gave notice of termination of the Agreement and demanded payment of $101,747.71;
· Devon executed the Guarantee;
· as at 8 March 2012, Devon owed the plaintiff $101,747.71 under the Guarantee;
· Devon received from the plaintiff the letter dated 8 March 2011 which gave notice of termination of the Agreement and demanded payment of the sum of $101,747.71.
8 Capital tendered in the trial, and Devon accepted the validity of, the certificate of Phil Duxbury, dated 16 September 2013, which stated that as at 8 March 2012, the amount due and owing by:
(a) Melbourne South under the Agreement was $101,747.71; and
(b) Devon under the Guarantee was $101,747.71.
9 This certificate was tendered pursuant to clause 14.4 of the Agreement and clause 26 of the Guarantee.
The third defence
10 In the circumstances set out in paragraphs 6 to 9, the plaintiff has proved its case and is entitled to judgment.
11 Having regard to the third defence, and the way in which Devon conducted her case, I shall also set out my views regarding the issues raised by Devon in the third defence.
12 Before dealing with the matters pleaded in the third defence, I note the detailed exchange of emails which took place in relation to the Agreement between about 3 March and 16 March 2011. This correspondence is relevant to some of my findings.
The chain of emails
13 Melbourne South and Devon signed the Agreement and Guarantee respectively on 3 March 2011. In the period from 3 March to 11 March, when Capital paid Akyman for their computer equipment, there was a flurry of email correspondence passing between both Capital and Hugh Devon and within Capital.
14 By covering letter, dated 2 March 2011[2], Capital forwarded to Devon the Agreement, Guarantee and direct debit request form. Capital also sought documents including a legible copy of a form of photographic identification, rates notice for the 2010/11 financial year in the name of the borrower/guarantor, and a certified copy of the Trust Deed or a pro forma letter from the Trust’s accountant providing certain information.
[2]Court Book (“CB”) 188-9
15 By email on 9 March 2011 at 10.03pm, Hugh Devon advised Morcos that the three items required had been sent under express bag to her attention.[3]
[3]CB 73
16 By email on 10 March 2011 at 9.26am, Morcos advised Hugh Devon that she had received the documents.[4]
[4]CB 73
17 By email on 10 March 2011 at 11.01am, Waqas Ahmed of Capital asked the commercial settlements section of the company to proceed to settlement on the transaction.[5]
[5]CB 75
18 On 10 March at 4.10pm, Lauren Daniels of Capital emailed Waqas Ahmed advising that several things were still required for the deal: the supplier invoice needed to state the equipment was “new”; confirmation was required as to the signatory on the direct debit form as it was not the same signature as on the guarantee; confirmation was required that the software component of the transaction did not exceed 30 per cent of the total financed.[6]
[6]CB 75
19 On 10 March 2011 at 10.06pm, Hugh Devon emailed Morcos to ask when he would be able to collect the equipment.[7]
[7]CB 197
20 On 11 March 2011 at 8.17am, Morcos emailed Ahmed asking him to check if the transaction had been settled.[8]
[8]CB 197
21 On 11 March 2011 at 10.50am, Morcos emailed Ahmed again asking him to follow the matter up that morning because the customer was wondering why the deal had not yet settled.[9]
[9]CB 74-5
22 By email on 11 March 2011 at 11.26am, Ahmed advised Hugh Devon that the signatures on the contract and Guarantee were different from the one on the direct debit form and asked him to confirm who signed the direct debit form. He advised Mr Devon that an amendment was required to the supplier invoice and that he had spoken to Akyman about that. He said that once those matters were satisfied, Capital could move to settlement.[10]
[10]CB 196
23 By email on 11 March 2011 at 12.38pm, Hugh Devon asked Morcos to advise when funding would occur.[11]
[11]CB 73
24 By email on 11 March 2011 at 2.43pm, Morcos wrote to Hugh Devon stating that Ahmed had sent an email requesting confirmation on the direct debit signature, and advising that as soon as that response was received Capital could pay the supplier.[12]
[12]CB 80
25 By email on 11 March 2011 at 3.44pm, Ahmed advised Daniels that the invoice had been amended to refer to new equipment and that the direct debit form was signed by Hugh Devon who was an authorised signatory. He advised that Devon would send an email confirming this. He also stated that there was no software included in the invoice.[13]
[13]CB 74
26 At about 3.50pm on 11 March 2011, Capital transferred $93,301.45 to Akyman’s account in respect of the computer hardware.[14]
[14]CB 137
27 On 11 March 2011 at 4.48pm, Ahmed advised Hugh Devon that the transaction had settled and sent him a copy of the settlement advice.[15]
[15]CB 199-200, 78
28 On 15 March 2011 at 8.07am, Devon emailed Morcos to confirm that the signature on the direct debit form in favour of Capital was that of her husband, Hugh Devon.[16]
[16]CB 138
29 On 16 March 2011 at 2.46pm, Hugh Devon emailed Morcos asking her for proof that the funds were sent.[17]
[17]CB 79
30 On 16 March 2011 at 2.48pm, Morcos emailed Ahmed asking him to email Hugh Devon proof of payment.[18]
[18]CB 79
31 On 16 March 2011 at 3.12pm, Ahmed emailed Hugh Devon proof of the settlement which took place on 11 March.[19]
[19]CB 78-9
32 As a result of this detailed email exchange, I infer that:
(a)at the time in March 2011, Hugh Devon was very keen for the transaction to settle. He sought to achieve this as soon as possible;
(b)Hugh Devon was well familiar with the use of email and had the capability and skill to use it;
(c)email was the preferred method of communication between the parties and Mr Devon, both because it was immediately transmitted and because it registered permanently in the email inbox of the recipient. Accordingly, if the recipient were not present before the computer at the time it was sent, the person would subsequently see the email after returning to the screen or opening the email folder.
33 In his oral evidence, Hugh Devon said that he had contractual obligations with a third party as a result of which he required the computer equipment to be supplied “by the latest prior to 15 March 2011”.[20] He acknowledged that, given 14 March was a public holiday in Melbourne, the latest date for delivery of the computer equipment before 15 March was Friday 11 March.[21] Hugh Devon also said more than once in evidence that he wanted the transaction to settle as soon as possible in March, a view he communicated both to Capital and Akyman.[22] Hence, it was by no means surprising that Morcos said (and I accept) that Capital rushed the settlement through on 11 March 2011 in order to try and assist Mr Devon.[23]
[20]CB 85
[21]Transcript (“T”) 176-7
[22]T 176-7
[23]T 26, 99
34 Although the submissions regarding Devon’s defence were extremely unclear, Devon arguably raised the following issues in the third defence:
(a)breach of the Agreement by Capital;
(b)misleading and deceptive conduct by Capital;
(c)negligence by Capital;
(d)estoppel against Capital;
(e)the Agreement was void.
(a) Breach of the agreement
35 The third defence alleged that it was a specific term of Melbourne South’s application to Capital for the hire purchase finance that there was no agreement between those two parties until such time as the agreement was signed by an authorised officer of Capital. Devon said that before Capital executed the offer on 11 March 2011, Melbourne South changed the terms of the offer by advising that Capital must not pay the settlement proceeds to Akyman until such time as Melbourne South “had approved the inspection and notified the plaintiff that the equipment was ready for collection”.[24] By way of particulars, the defendant said:
[24]Notice of Further Amended Defence para 6, CB 27-28
“Particulars
In a telephone conversation on or about 1 March 2011, Mr Hugh Devon for and on behalf of the first defendant advised Miss Julie-Anne Morcos of the plaintiff that the first defendant required inspection of the equipment in an assembled and working order. As such he advised her not to pay Akyman until such time as the first defendant had approved the inspection and notified the plaintiff that the equipment was ready for collection.
By a letter dated 9 March 2011 Mr Devon, for and on behalf of the first defendant, advised Miss Julie-Anne Morcos of the plaintiff not to pay Akyman until such time as the first defendant had approved the inspection and notified the plaintiff that the equipment was ready for collection.”
36 Devon contended (and Capital agreed) that Capital entered into an agreement with Melbourne South to finance the purchase of the computer equipment from Akyman in the sum of $109,710.36.[25] However, Devon alleged that, in so far as the terms of the hire purchase agreement were in writing, they were constituted both by Capital’s document and the letter dated 9 March 2011 from Hugh Devon to Julie Morcos of Capital. Further, in so far as the terms of the finance agreement were oral, they were said to be constituted by a telephone conversation between Mr Devon and Miss Morcos on 3 March 2011. On this basis, Devon contended that it was a term of the Agreement that Capital would not pay the settlement proceeds to Akyman until such time as Melbourne South had approved the inspection and notified Capital that the equipment was ready for collection.[26]
[25]Notice of Further Amended Defence para 8, CB 28
[26]Notice of Further Amended Defence para 8, CB 29
37 Melbourne South alleged that the equipment supplied by Akyman was not fit for purpose or of merchantable quality.[27] The equipment was said to be not new but second-hand and of poor condition. Devon alleged that Mr Devon attended Akyman’s offices on 17 March and was informed that new equipment and relevant software would not be supplied. Accordingly, Melbourne South alleged that it cancelled the finance agreement on 17 March 2011 upon discovering the equipment was not fit for purpose or of merchantable quality. Melbourne South then contended that Capital released the settlement sum to Akyman “without the plaintiff’s (sic) written advice that the equipment was ready for collection”.[28]
[27]Notice of Further Amended Defence para 9, CB 30
[28]Notice of Further Amended Defence para 11, CB 31
38 The defendant’s assertion about the further term of the agreement with Capital was central to her case. Mr Devon stated it was a very important provision which was at the forefront of his mind at all times in relation to this transaction.[29] Mr Devon said that he raised the matter in several conversations with Julie Morcos in early March 2011 and that she, on behalf of Capital, agreed to the proposed term.
[29]T156, 187
39 Devon referred to a number of file notes which he said he made at the time of his conversations with Ms Morcos.
40 In addition, Mr Devon said that he posted Ms Morcos a letter dated 9 March 2011.[30] The letter was in the following terms:
[30]CB 190
“Thank you for all your help in respect of dealings and thank you for advising me that Akyman is now being approved as a qualified merchant as we may purchase more equipment in the future.
I seek the settlement ASAP.
As advised we need to inspect the goods first before settlement. Please advise as soon as you are ready to settle. Please do not pay until we advise in writing that the equipment is ready for collection.
I will send the other documents ASAP.
Should you have any queries please do not hesitate to contact me.”
41 Mr Devon said he posted the letter and did not send it by email.[31] I note the letter did not have an address for Capital. Ms Morcos denied that she received the letter.[32] She said she had not seen the letter before the court proceeding.
[31]T 165, 186
[32]T 26, 76
42 Mr Devon said that he also posted to Capital a letter dated 18 March 2011 which purported to rescind the contract with Capital.[33] Again, Ms Morcos said that she had no recollection of receiving this letter or seeing it before the proceedings.[34]
[33]CB 193
[34]T 73
43 I do not accept that the further term alleged by Devon formed part of the Agreement between Capital and Melbourne South. I make this finding for several reasons.
44 First, I do not consider that Capital agreed to the inclusion of the further term in the Agreement. The defendant put to Ms Morcos the fact of the conversations which Hugh Devon claimed to have with her on 1, 9, 11, 15 and 18 March 2011. Ms Morcos said that she could possibly have had a number of those conversations. She agreed that she spoke numerous times to Hugh Devon throughout the transaction but she could not give specific times or dates relating to those conversations. However, Ms Morcos did not agree that:
· Hugh Devon emphasised that he needed to inspect the equipment before settlement and Capital paid for the goods;
· Hugh Devon said Capital should not pay for the goods until after the inspection had taken place;
· in the phone call on 15 March 2011, Hugh Devon told her that he had just completed his inspection of the computer equipment; Hugh Devon said there was a problem with the computer equipment; Hugh Devon said the equipment was not new; Morcos said that if the stock were no good, then the supplier would provide a refund;
· Hugh Devon said a number of times that he wanted the inspection to happen before the paying of the money.
45 Further, Ms Morcos did not accept that she had a conversation on 18 March 2011 with Mr Devon in which he said that he wanted the settlement urgently but he wanted the inspection to happen first because that was important.
46 The defendant did not put directly to Ms Morcos (or any other Capital witness) that Capital actually agreed to the further term alleged. In re-examination, Ms Morcos did not agree that she ever had a conversation with Mr Devon in which he said to her that he money for the goods was not to be paid until after he inspected the goods.
47 Given the importance to Melbourne South’s case of the further term alleged, it is odd that it was not directly put to Ms Morcos that she, on behalf of Capital, agreed to the further term as part of the Agreement between the parties. There is well established authority that it should be made clear to witnesses, not only that part or parts of their testimony is to be challenged, but how or on what basis the challenge is to be made.[35] In circumstances where one party has not directly raised an important factual aspect of its case with the relevant witness for the other party, I am not inclined, in the absence of special circumstances, to give much weight on the point to the former’s position.
[35]Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1, 22-4
48 Even had Ms Morcos been questioned about the matter, I very much doubt that she would have agreed that the further term formed part of the Agreement. She was a relationship manager at Capital. She was responsible for arranging the finance, getting it approved by the credit department and liaising with Melbourne South in respect of the transaction. She was aware of the limitations of her responsibilities. At one point in her evidence, she noted that any decision about refunding monies was not one which she was able to make. Also Ms Morcos referred to other limitations in her role and authority: there was a credit department which decided whether to offer finance to a potential customer; an asset management department decided whether the goods were appropriate for the proposed hire-purchase agreement; she was not responsible for loading the contract details on to the plaintiffs computer system after settlement; she was not responsible for the collection or auction of the goods after Devon failed to collect them from the supplier Akyman.
49 Second, although the two letters are dated 9 and 18 March 2011, there was no reference to them in the defendants’ court material until later than would be expected normally.
50 Notwithstanding the important nature of the term alleged, there was no reference to either letter in the initial defence dated 6 June 2012. The first reference to the letter dated 9 March was in the second defence dated 18 April 2013.
51 Devon swore an affidavit in support of an application for further and better discovery by the plaintiff on 11 April 2013. Although the plaintiff’s discovery did not include either letter, Mr Devon’s affidavit made no explicit mention of either letter in seeking the further discovery. In another affidavit sworn 24 April 2013 in support of further and better discovery by the plaintiff, Mr Devon referred to the letter dated 9 March. This was at a time when the trial was scheduled for hearing on 14 May 2013.
52 Devon, in an affidavit sworn 2 May 2013[36] to vacate the trial date, referred to the plaintiff’s failure to discover the letter of 9 March. Then, in an affidavit of documents sworn on 10 May 2013, Devon referred for the first time to the letter dated 18 March.
[36]Exhibit P6
53 I accept Ms Morcos’ evidence that she did not receive either of the letters at about the time they were dated.[37] I have substantial doubts that Hugh Devon wrote the two letters in March 2011. Also, in circumstances where there was heavy use of email in communications between Capital, Melbourne South and Mr Devon, it was surprising that Mr Devon chose to post the letters of 9 March and 18 March 2011.
[37]T 75-6
54 Third, I note that Mr Devon said the reason for the failure to discover or refer to the two letters much earlier arose because they were on the hard drive of his computer which became corrupted.[38] He said it took time for a professional organisation to “lift” or rescue the documents from the corrupted drive. This meant there was a delay of about six months.[39]
[38]T 161
[39]T 162, L3-6
55 Initially Hugh Devon denied that he had a file with hard copies of relevant documents.[40] But he later admitted that he did have a file and that the letters dated both 9 and 18 March were on that file.[41] For that reason, he agreed that the problem with the hard drive on his computer had nothing to do with the failure to refer to these documents.[42] He accepted that he would always have had copies of those documents in his possession.
[40]T 161, L32
[41]T 161, L32 -162, L 24
[42]T 162, L17-19
56 Where documents are important in a proceeding it is common that the party relying upon them makes ready reference to them and does not withhold the documents, especially on the basis of an explanation which they later acknowledge to be untrue.
57 Fourth, Hugh Devon was not an impressive witness. I have referred already to the false explanation he offered about the reason why correspondence was not produced or referred to.
58 Also, it was apparent from the correspondence between Capital and Melbourne South that Capital required extra documentation from Melbourne South in order to arrange the hire purchase agreement. Hugh Devon agreed that Capital required three further documents. Mr Devon seemed to have a practice of putting the postal stickers in his diary on the day when he sent the letters.[43] The letter dated 9 March which was allegedly posted that day says that he “will send the other documents ASAP”. However, it appears from the postal sticker reference number retained in his diary that the three documents were dispatched to Capital on 8 March.[44] Mr Devon agreed that he sent the documents on that day to Capital.[45]
[43]T 155-6
[44]CB 211,80 and T 163
[45]T 163, L2-9
59 When it was put to Mr Devon that he sent the extra documents to Capital on 8 March and no documents thereafter, he said he believed that he sent another document on 9 March – possibly an insurance document. However, I have found no reference in the tendered documents to a requirement that Melbourne South insure the goods the subject of the Agreement. Nor have I found an insurance document listed in the parties’ discovery. I note further that it was not put to any Capital witness that Capital received from Melbourne South an insurance document (or indeed other documents) after the request for the three documents was responded to on 8 March.
60 Finally, by comparison with Hugh Devon, Ms Morcos was an impressive witness. Although she left the employment at Capital sometime ago, she was direct and clear in her evidence, indicating without equivocation what she knew or recalled and what she did not. In a lengthy and sometimes repetitive cross-examination, she answered carefully and consistently and without contradiction. I accept her as a witness of truth.
61 For the reasons already given, I do not have the same view about the truth or reliability of Hugh Devon’s evidence.
62 Where the evidence of Hugh Devon and Ms Morcos conflict, I prefer the evidence of Ms Morcos.
63 In closing submissions, Devon sought to argue that Capital acted improperly or in breach of contract by settling the transaction without complying with the approval conditions set out in the approval advice.[46] Devon referred specifically to the condition that Melbourne South pay the first instalment due under the Agreement before settlement. Devon complained that Capital settled on 11 March 2011 even though she did not supply the signature confirmation on the direct debit form until 15 March and the monies were not taken from the applicable account until 17 March. Ms Morcos said that Capital decided to settle the transaction to assist the client notwithstanding that it had not received payment from Melbourne South.[47] After some discussion, Devon’s counsel acknowledged that where a contract contains a condition designed primarily to protect the interests of one party, that party can waive the condition to enable the contract to proceed. In my view, this concession was properly made.[48] In any event, because there was no counterclaim alleging this breach and claiming relief, such a complaint would not have availed Devon even if Capital’s alleged breach were otherwise established.
[46]CB 98
[47]T 97, L7-11
[48]See Gange v Sullivan (1966) 116 CLR 418 at 430, 443; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 543, 552, 560 and 565.
(b) Misleading and deceptive conduct by Capital
64 The allegation by Melbourne South of misleading and deceptive conduct is related to the breach of agreement allegation to the extent that Melbourne South relied upon the facts alleged regarding the further term as the basis of Capital’s representation to Devon that the settlement sum would be released to Akyman only upon the plaintiff’s (sic) written advice that the equipment was ready for collection.[49]
[49]See paragraph 19 of the third defence
65 Devon then argued that, induced by and in reliance upon the representation, she executed the guarantee on 3 March 2011 and remained guarantor of Melbourne South. The defendants contended that the representation was false, misleading and deceptive in so far as Capital released the settlement sum without obtaining Melbourne South’s written advice that the equipment was ready for collection.
66 The fundamental difficulty with the defendants’ allegations regarding the representation was that there was no evidence of Capital making any representations to Devon. When counsel for Devon sought to reopen his case during the final submissions made on behalf of Capital (as to which I will say more later), he argued[50] that a representation made to Hugh Devon as an employee of Melbourne South was a representation to Devon because she was a director of Melbourne South and signed off on everything regarding the company. When she gave evidence, Devon confirmed that she signed the agreement with Capital and the guarantee of Melbourne South’s obligations in favour of Capital. She said her husband was guiding her in terms of their business affairs. In discussions with him, he informed her that, when the time came, he was going to inspect the goods because he had some concerns about the company which was providing them. He said to Devon that Capital would not pay out any funds till he provided authority for them to do so. I note, in relation to the misleading and deceptive conduct claim, that Devon did not give evidence that:
(a)her husband said to her that Capital had made any representation to him regarding the withholding of funds until Hugh Devon had provided authority for them to do so; and
(b)she had been induced by any such representation to execute the Guarantee in favour of Capital.
[50]T 229
67 Further, as noted previously, Devon did not seek any declaratory relief or counter-claim in respect of the claimed misrepresentation and, in the circumstances, the allegations in the third defence are ineffectual.
68 Additionally, to the extent that the representation alleged is a term of the finance agreement which Capital executed on 11 March 2011, there may well be difficulty in saying that such a representation, if otherwise established, induced Devon to enter into the guarantee which she admittedly signed on 3 March 2011.
(c) Negligence of Capital
69 The negligence claim was based upon the plaintiff paying Akyman for the equipment before receiving the approval of Hugh Devon, consistently with the further term alleged by Devon. Again, the allegation has no substance in circumstances where I have decided the further term alleged was not part of the Agreement.
(d) Estoppel against Capital
70 Devon’s estoppel argument depended inter alia upon a finding that the Agreement between Capital and Melbourne South contained the further term alleged by Melbourne South and that Capital breached that term of the Agreement. Given that I have found that Melbourne South failed to prove that the alleged further term was part of the Agreement, this point cannot avail Devon.
(e) The Agreement was void
71 Devon alleged that because Capital purported to accept the performance of Melbourne South’s obligations under the Agreement, as if the further term were not part of that Agreement, then such conduct did not constitute a valid acceptance of the offer supposedly made by Melbourne South and rendered the Agreement void. Given that I have found against Devon’s submission that the Agreement contained the further term, this argument cannot assist Devon.
The defendant’s application to reopen its case and adduce fresh evidence
72 At a late stage in the trial Devon applied to re-open her case and adduce fresh evidence. At the time, I allowed the application and said that I would give more detailed reasons in the judgment.
73 This unusual application arose in the following circumstances. The parties had closed their cases and the defendant had completed her closing submissions. During the plaintiff’s closing submissions, counsel commented on problems which Devon faced in proving certain allegations contained in the final version of the amended defence with respect to alleged misleading and deceptive conduct by Capital. Specifically, the plaintiff contended that in circumstances where Devon failed to give evidence, she could not prove that she was induced to enter into any particular contract in reliance upon representations allegedly made by Capital.
74 At this point, counsel for Devon interrupted to say that as a result of a discussion held with the plaintiff’s counsel, he understood that the plaintiff did not require Devon to give evidence even though she was present at court and able to do so. Indeed, counsel had opened Devon’s defence on the basis that there would be two witnesses namely Mr and Mrs Devon. Counsel for Capital confirmed that in discussion with his counterpart, he had indicated that he did not require that Devon be called but said that there was no agreement made between counsel regarding her evidence or its status in the event that she was not called.
75 Accordingly, a situation had arisen in which counsel for Devon said that, but for his mistaken understanding of his discussions with the plaintiff’s counsel, he could and would have called Devon to give evidence. He sought leave to do so.
76 I was satisfied that the court had jurisdiction to allow Devon to reopen her case and call fresh evidence. The issue was whether it was appropriate to exercise that jurisdiction in Devon’s favour.
77 In a recent decision of the Victorian Court of Appeal in Spotlight Pty Ltd v NCON Australia Ltd[51] the court referred with approval[52] to the judgment of Kenny J in Inspector-General in Bankruptcy v Bradshaw.[53] In that case, her Honour said[54]:
“The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to re-open, although these classes overlap and are not exhaustive. These four classes are (1) fresh evidence (Hughes v Hill [1937] SASR 285 at 287; Smith v New South Wales Bar Assn [No 2] (1992) 108 ALR 55 at 61–2); (2) inadvertent error (Brown v Petranker (1991) 22 NSWLR 717 at 728 (application to recall a witness); Murray v Figge (1974) 4 ALR 612 at 614 (application to tender answers to interrogatories); Henning v Lynch [1974] 2 NSWLR 254 at 259 (application to re-open); (3) mistaken apprehension of the facts (Urban Transport Authority of NSW v NWEISER (1992) 28 NSWLR 471 (‘UTA’) at 478; and (4) mistaken apprehension of the law (UTA at 478). In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open: see UTA at 478; also The Silver Fox Co Pty Ltd as Trustee for the Baker Family Trust v Lenard’s Pty Ltd (No 2) [2004] FCA 1310 (‘Silver Fox’) at [22] and [25].”
[51][2012] VSCA 232
[52](supra) at [25]
[53][2006] FCA 22
[54](supra) at [24]
78 In one of the cases her Honour cited, namely Urban Transport Authority of NSW v NWEISER (1992) 28 NSWLR 471, the New South Wales Court of Appeal said at [478]:
“The principle which should guide the court in determining whether to grant an application for leave to re-open is whether the interests of justice are better served by allowing or rejecting the application as the case may be. No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not call the witness in the party’s case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel’s deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel.”
79 Capital opposed the application, providing cogent reasons why the court should exercise its discretion against Devon.
80 However, it seemed to me that, in circumstances where the overriding principle requires the court to consider whether, taken as a whole, the justice of the case favoured the grant of leave, the discretion ought be exercised in favour of Devon. It was clear that there had been, from Devon’s perspective, a mistake or misapprehension of the facts by her counsel with respect to the issue of the need to call the witness formally. The failure to call the witness was not made for tactical reasons and was based on a mistaken apprehension of the situation.
Other Matters
81 I note that Devon’s submissions made no reference to authorities such as Yerkey v Jones[55] or Garciav National Australia Bank Ltd [56]. The defence was not run on any basis which took account of the legal principles associated with those cases. Nor was the plaintiff called upon to address the issues considered in those cases. Accordingly, I was not required to consider those issues or the relevance and potential application of those principles in this case.
[55](1939) 63 CLR 649
[56](1998) 194 CLR 395
Conclusion
82 I am satisfied that Capital has proved its case. Subject to hearing from the parties I propose to order that:
a) there be judgment for the plaintiff against the second defendant;
b) the second defendant pay the plaintiff’s costs of the proceeding, including reserved costs, to be taxed on scale D in default of agreement.
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