Charles v Parkinson

The case of Charles v Parkinson involved a dispute between Mr and Mrs Charles, as creditors, and Mr and Mrs Parkinson, as debtors, over a personal guarantee provided by Mrs Parkinson for Glenloch's obligations under an agreement. The legal issues were whether Mrs Parkinson had a real opportunity to defend the proceedings in the District Court and whether she agreed to give the personal guarantee. The court considered the evidence provided by Mrs Parkinson, including her claim that she was denied a real opportunity to defend the proceedings and that she did not agree to give the personal guarantee. The court concluded that substantial reasons existed to go behind the judgment, as Mrs Parkinson was effectively precluded from defending the allegation due to a costs order made in the previous proceedings. Additionally, the court found that there was a high probability that the contract contained a clause intended to create personal guarantees by Mr and Mrs Parkinson for the performance of Glenloch's obligations, but the question remained whether Mrs Parkinson agreed to give that personal guarantee.

The court's reasoning focused on the burden of proof, which lay on the petitioning creditors to show that the debt was owing. The court accepted that Mrs Parkinson's failure to seek to have the costs order set aside was explained by her reliance on her lawyer's advice that she could not do so, and that she failed to comply with the order because she lacked the financial means to do so. The court also considered the Agreement and whether it was to be treated as a guarantee binding Mrs Parkinson. The court found that the mere initialling of the Agreement by Mrs Parkinson, rather than executing it in the way the agreement contemplated, could not objectively be taken to have manifested an intention by her to be bound by its terms. Furthermore, the court found that a defence of non est factum could not be maintained assuming the initialling of the Agreement by Mrs Parkinson would otherwise evidence her agreement to its terms.

The final orders of the court were that the petition was dismissed and costs were reserved. The dismissal of the petition meant that Mrs Parkinson's liability under the personal guarantee in the document dated 20 August 1992 was not finally determined by the court. The reservation of costs meant that the court would decide on the allocation of costs at a later stage.