Capitalink Pty Ltd v Withnall (No.2) - [2023] NSWDC 547

District Court

New South Wales

Amendment notes

Medium Neutral Citation: Capitalink Pty Ltd v Withnall (No.2) [2023] NSWDC 547
Hearing dates: 30 November 2023, 1 December 2023
Date of orders: 7 December 2023
Decision date: 07 December 2023
Jurisdiction: Civil
Before: Abadee DCJ
Decision:
See paragraph [189]

Catchwords:
GUARANTEES – arrangement (by deed) between land owner and construction company to complete construction of partially constructed townhouses – defendant was party to arrangement as guarantor - whether guarantee void or unenforceable for want of consideration – whether guarantee void for uncertainty in identifying co-sureties - whether guarantee discharged by variation to contract – whether guarantee discharged by land owner’s termination of contract with construction company for the latter’s breach
CORPORATIONS – an entity different to the land owner pays costs to complete development and is expected to pay future costs – whether land owner entitled to recover expenses that were paid by the different entity
DAMAGES – whether delay damages clause limited land owner recovery of further damages – whether failure by land owner to mitigate – whether rent received from tenants in occupation of townhouses to be treated as collateral benefit in reducing damages.
EVIDENCE – whether opinion in a business record was admissible as an exception to hearsay rule – whether Jones v Dunkel defence drawn from defendant’s failure to give evidence relating to issue of the identity of co-sureties.

Legislation Cited:
Civil Procedure Act 2005 (NSW), s 56, s 100
Corporations Act 2001 (Cth), s 127

Cases Cited:
Ankar Pty Ltd v Westminster Finance Australia (1987)162 CLR 549
Carminco Gold & Resources Ltd v Findlay & Co Stockbrokers (Underwriters) Pty Ltd (2007) 243 ALR 472
Chandrasekeran v Western Sydney Local Health District [2023] NSWCA 288
Commonwealth v Amann Aviation (1992) 174 CLR 64
Eppinga v Kalil [2023] NSWCA 287
Herron v HarperCollins Publishers Australia Pty Ltd (2022) 292 FCR 336
Industrial Equity Ltd v Blackburn (1977) 137 CLR 567
Jin Resources (Aus) Pty Ltd & Ors v Steven Nicols & Anor [2022] QSC 158\
Lang v R [2023] HCA 29
Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509
Matouk v The Entrance Seabreeze Pty Ltd [2010] NSWSC 649
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
National Insurance Co of NZ Ltd v Espagne (1961) 105 CLR 569
Pico Holdings Inc v Wave Vistas Pty Ltd (Formerly Turf Club Australia Pty Ltd) (2005) 79 ALJR 825
Saloman v Saloman & Co Ltd [1897] AC 22
Schellenberg v Tunnel Holdings (2000) 200 CLR 1
State of New South Wales v Stevens [2012] nswca 415
Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429
Walker v Wimborne (1976) 137 CLR 1

Texts Cited:
J O’Donovan and J Phillips, The Modern Contract of Guarantee (Thomson Reuters, now in its online version)
J.D Heydon, Heydon on Contract (2019, Thomas Reuters) at [5.100].
G Andrews & R Millett, Law of Guarantees (Sweet & Maxwell, sixth ed, 2011)

Category: Principal…

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: [2023] NSWDC 547
Decision Date: 07 December 2023

CaseChat Overview and Summary

Capitalink Pty Ltd, the owner of a residential property, engaged a construction company to develop the property into townhouses. When the construction company failed to complete the project, Capitalink sought to enforce a guarantee signed by the defendant, Mr. Withnall, who was a guarantor for the construction company’s obligations under the contract. The dispute involved various legal issues, including the enforceability of the guarantee, the applicability of certain clauses in the contract, and the calculation of damages due to the construction company’s breach.

The court was required to determine whether the guarantee was void for lack of consideration, void for uncertainty in identifying co-sureties, or discharged due to a variation in the contract or the termination of the contract for breach. Additionally, the court needed to address whether Capitalink could recover expenses paid by an entity different from the land owner, and whether certain clauses in the contract limited the recovery of damages. The court also had to decide on the admissibility of certain evidence and whether there was a failure to mitigate damages.

In addressing the issues, the court found that the guarantee was enforceable, not void for lack of consideration, and not discharged by the variation or termination of the contract. The court held that Capitalink could recover expenses paid by the different entity and that certain clauses in the contract did not limit the recovery of damages. The court further found that some evidence was admissible, and there was no failure to mitigate damages. The court assessed the quantum of damages, taking into account the rent received from tenants in the townhouses as a collateral benefit.

The court ordered that Mr. Withnall was liable to pay the outstanding amount of the guarantee, along with interest and costs, subject to certain adjustments. The court also directed that the evidence of the rent received from the tenants be considered in calculating the damages payable by the construction company to Capitalink.

Orders

Orders of the court

See paragraph [189]

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.

Medium Neutral Citation:	Capitalink Pty Ltd v Withnall (No.2) [2023] NSWDC 547
Hearing dates:	30 November 2023, 1 December 2023
Date of orders:	7 December 2023
Decision date:	07 December 2023
Jurisdiction:	Civil
Before:	Abadee DCJ
Decision:	See paragraph [189]
Catchwords:	GUARANTEES – arrangement (by deed) between land owner and construction company to complete construction of partially constructed townhouses – defendant was party to arrangement as guarantor - whether guarantee void or unenforceable for want of consideration – whether guarantee void for uncertainty in identifying co-sureties - whether guarantee discharged by variation to contract – whether guarantee discharged by land owner’s termination of contract with construction company for the latter’s breach CORPORATIONS – an entity different to the land owner pays costs to complete development and is expected to pay future costs – whether land owner entitled to recover expenses that were paid by the different entity DAMAGES – whether delay damages clause limited land owner recovery of further damages – whether failure by land owner to mitigate – whether rent received from tenants in occupation of townhouses to be treated as collateral benefit in reducing damages. EVIDENCE – whether opinion in a business record was admissible as an exception to hearsay rule – whether Jones v Dunkel defence drawn from defendant’s failure to give evidence relating to issue of the identity of co-sureties.
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 56, s 100 Corporations Act 2001 (Cth), s 127
Cases Cited:	Ankar Pty Ltd v Westminster Finance Australia (1987)162 CLR 549 Carminco Gold & Resources Ltd v Findlay & Co Stockbrokers (Underwriters) Pty Ltd (2007) 243 ALR 472 Chandrasekeran v Western Sydney Local Health District [2023] NSWCA 288 Commonwealth v Amann Aviation (1992) 174 CLR 64 Eppinga v Kalil [2023] NSWCA 287 Herron v HarperCollins Publishers Australia Pty Ltd (2022) 292 FCR 336 Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 Jin Resources (Aus) Pty Ltd & Ors v Steven Nicols & Anor [2022] QSC 158\ Lang v R [2023] HCA 29 Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509 Matouk v The Entrance Seabreeze Pty Ltd [2010] NSWSC 649 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 National Insurance Co of NZ Ltd v Espagne (1961) 105 CLR 569 Pico Holdings Inc v Wave Vistas Pty Ltd (Formerly Turf Club Australia Pty Ltd) (2005) 79 ALJR 825 Saloman v Saloman & Co Ltd [1897] AC 22 Schellenberg v Tunnel Holdings (2000) 200 CLR 1 State of New South Wales v Stevens [2012] nswca 415 Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429 Walker v Wimborne (1976) 137 CLR 1
Texts Cited:	J O’Donovan and J Phillips, The Modern Contract of Guarantee (Thomson Reuters, now in its online version) J.D Heydon, Heydon on Contract (2019, Thomas Reuters) at [5.100]. G Andrews & R Millett, Law of Guarantees (Sweet & Maxwell, sixth ed, 2011)
Category:	Principal…