Coast RV Pty Ltd v T2 Projects Pty Ltd

[2013] NSWLC 34

Local Court

New South Wales

Medium Neutral Citation:	Coast RV Pty Ltd v T2 Projects Pty Ltd; Creswick, William John; Creswick, John Francis [2013] NSWLC 34
Hearing dates:	25 March 2013
Decision date:	30 April 2013
Jurisdiction:	Civil
Before:	Bradd LCM
Decision:	Verdict for the plaintiff.
Catchwords:	CIVIL LAW - application for credit - whether contract binds the defendant - whether plaintiff entitled to assume application was duly executed by the defendant - whether goods ordered
Legislation Cited:	Corporations Act 2001 (Cth), ss 126, 127, 128, 129, 130
Cases Cited:	Story v Advance Bank Australia Ltd & Anor (1993) 31 NSWLR 722
Category:	Principal judgment
Parties:	Coast RV Pty Ltd as trustee for the Coast RV Unit Trust t/as Coast to Coast RV Services (Plaintiff) T2 Projects Pty Ltd t/as Lifestyle RV's (Defendant) William John Creswick (Defendant) John Francis Creswick (Defendant)
Representation:	B Nolan (Counsel for the Plaintiff) W P Jones (Solicitor for the Plaintiff) B Le-Plastrier (Counsel for the Defendants) P Lynch (Solicitor for the Defendants)
File Number(s):	2012/202629
Publication restriction:	Nil

JUDGMENT          

1. Coast RV Pty Ltd claims that, in 2006, it entered into a contract with T2 Projects Pty Ltd for the provision of caravan goods and services. Coast RV Pty Ltd also claims that T2 Projects Pty Ltd executed an application for credit in favour of Coast RV Pty Ltd. 

2. Coast RV Pty Ltd claims that, in 2006, William John Creswick and John Francis Creswick executed a personal guarantee and indemnity agreement, whereby they guaranteed the obligations of T2 Projects Pty Ltd.

3. In 2011, Coast RV Pty Ltd provided goods and/or services to T2 Projects Pty Ltd, at the request of T2 Projects Pty Ltd, and rendered tax invoices.  The amount of $21,324.50 remains unpaid.

4. T2 Projects Pty Ltd denies that it executed an application for credit on 14 December 2006.  It also denies that Coast RV Pty Ltd sent tax invoices.

5. In 2007, William John Creswick was appointed as a director of T2 Projects Pty Ltd.  The ASIC company extract is at Ex 5.

Issues

6. Whether Coast RV Pty Ltd was entitled to assume that William John Creswick had been duly appointed as an officer of T2 Projects Pty Ltd, and had authority to enter into the contract.

7. Whether the contract is legally binding.

Did William John Creswick execute a contract on behalf of T2 Projects Pty Ltd?

8. There is no evidence from Coast RV Pty Ltd about the manner in which the credit application was received.  There appear to be facsimile markings on the top of the pages indicating that the forms were delivered by facsimile.  The facsimile page markings are in the following order:

(1)         Page 01/03 Credit Application Form

(2)         Page 02/04 Credit Application Form (Cont.)

(3)         Page 03/03 Credit Application Form (Cont.)

(4)         Page 03/04 Credit Application - Declaration

(5)         Page 04/04 Terms and Conditions of Trade

The credit application form TC-1 omits pages 02/03 and 01/04.  It is evident that there are two sets of documents.  The first set, comprising three pages, was transmitted on 17 November 2006 and 22 November 2006.  The second set, comprising four pages, was transmitted on 14 December 2006.

9. The first set comprises three pages, of which only page one and three are in evidence.  It is a credit application form signed by Bill Creswick as proprietor on 21 November 2006.  The application was authorised and account opened on 13 December 2006.

10. A business card appears in the “Notes” section of the first set in the name of “Bill Creswick Dealer Principal Lifestyle RV’s”.  Three other entities are listed on the card, two of the entities, “Roadstar” and “Swagman”, have been listed on page one as trade references. 

11. The second set comprises four pages, of which page one is not in evidence.  It is a credit application form signed by William Creswick as director on 14 December 2006. Page three is a declaration and guarantee signed by William Creswick and John Creswick as directors. 

12. Coast RV Pty Ltd relies on the second set of documents as the contract and, in particular, the signature of John Creswick on the declaration and guarantee, as evidence of execution of the contract by the sole director and company secretary of T2 Projects Pty Ltd.

Relevant Parts of the Corporations Act 2001 (Cth) ("the Act")

13. Section 126(1) of the Act prescribes:

"126 Agent exercising a company's power to make contracts

(1) A company’s power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company’s express or implied authority and on behalf of the company. The power may be exercised without using a common seal."

14. Section 127(1) of the Act prescribes:

"127 Execution of documents (including deeds) by the company itself 

(1) A company may execute a document without using a common seal if the document is signed by:

(a) 2 directors of the company; or

(b) a director and a company secretary of the company; or

        (c) for a proprietary company that has a sole director who is  also the sole   company secretary—that director."

15. Section 128 of the Act prescribes:

"128 Entitlement to make assumptions

(1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.

...

(4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect."

16. Section 129 of the Act prescribes:

"129 Assumptions that can be made under section 128

...

Officer or agent

(3) A person may assume that anyone who is held out by the company to be an officer or agent of the company:

(a) has been duly appointed; and

(b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company.

...

Document duly executed without seal

(5) A person may assume that a document has been duly executed by the company if the document appears to have been signed in accordance with subsection 127(1). For the purposes of making the assumption, a person may also assume that anyone who signs the document and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices."

17. Section 130 of the Act prescribes:

"130 Information available to the public from ASIC does not constitute constructive notice

A person is not taken to have information about a company merely because the information is available to the public from ASIC."

Analysis

18. Account 501320 was opened on 13 December 2006.  In the application Mr William Creswick held himself out to be a proprietor.  The business card attached to page three stated that he was a “dealer principal”.

19. The application form upon which the account was opened was not signed in accordance with s 127(1) of the Act.

20. In the second application, Mr William Creswick held himself out to be a director. He was not a director, so the application was not signed in accordance with s 127(1) of the Act.

21. Coast RV Pty Ltd may assume that a document has been duly executed by T2 Projects Pty Ltd if the document appears to have been signed in accordance with s 127(1) of the Act. Mr William Creswick did not hold himself out to be a sole director and company secretary, as required by subs (1)(c), which states: “for a proprietary company that has a sole director who is also the sole company secretary—that director." The document does not appear to have been signed in accordance with s 127(1) of the Act.

22. The credit application declaration page is undated apart from a facsimile marking of 14 December 2006.  The declaration is made the day after the account was opened. 

23. Coast RV Pty Ltd asserts that it is entitled to the assumption that Mr William Creswick had been duly appointed pursuant to s 129(3) of the Act. The provision would seem to apply if T2 Projects Pty Ltd held out Mr William Creswick to have been duly appointed. I have been referred to Story v Advance Bank Australia Ltd & Anor (1993) 31 NSWLR 722 at 733, where the Court of Appeal, in relation to a similar provision in the Companies (New South Wales) Code, stated that: “the concept of having dealings with the company must embrace… purported dealings." The combined effect of ss 129(3) and 129(5) of the Act might be that; based on document “Page 02/04 Credit Application Form (Cont.)” Coast RV Pty Ltd is entitled to assume that Mr William Creswick had been duly appointed as a director and was the sole director and company secretary.

At the time of dealings did Coast RV Pty Ltd know or suspect that the assumption was incorrect?

24. Mr Canta, the General Manager of Coast RV Pty Ltd, states in an affidavit dated 27 February 2013 that the contract is described in a credit application form marked TC-1.  Three trade references are listed on the form.  Coast RV Pty Ltd sent a request for a trade reference to each of the three listed entities. Mr Canta states in an affidavit dated 22 March 2013 that Coast RV Pty Ltd received the references.  I note that two of the references bear the same handwriting throughout, possibly indicating that information was taken by telephone; however, the correspondents have not filed affidavits.  Further, there is no affidavit from a representative of Coast RV Pty Ltd to state that the representative considered the references and made a certain decision about the creditworthiness of T2 Projects Pty Ltd.  The affidavit of Mr Canta does not state that he made such a decision.  Mr Canta states that “we heard from various sources”, but no affidavits have been filed deposing to certain conversations about the reputation of T2 Projects Pty Ltd.

25. There is information that gives rise to suspicion. Mr William Creswick signed the first set of documents as a proprietor; his business card identifies him as a “dealer principal”.  Two of the three trade references are listed on the business card, indicating that they are related entities.  Mr Canta says, “no alarm bells went off”, however, he does not say he was the person who authorised the opening of the account.  There is no evidence from the authorising officer whether the officer knew or suspected the assumption was incorrect. 

26. The onus is on Coast RV Pty Ltd to present evidence in relation to whether it knew or suspected that the assumption was incorrect.  Mr Canta was not cross-examined on the points I have raised. Consequently, I find that Coast RV Pty Ltd did not know or suspect that the assumption was incorrect. 

Status of second set of documents

27. T2 Projects Pty Ltd asserts that Coast RV Pty Ltd cannot rely on the document of 14 December 2006 because the account was opened on 13 December 2006.  There is force in the argument.  There is no evidence as to why a second set of documents was transmitted to Coast RV Pty Ltd.  Since the nature of the contract is a credit account for goods supplied and delivered some five years later, the documents of 14 December 2006 are relevant to the formation of the contract as it applied to goods supplied and delivered in 2011.

Evidence of T2 Projects Pty Ltd ordering the goods

28. T2 Projects Pty Ltd asserts that there is no evidence that the goods were ordered.  The affidavit of Ms Kim McFarlane (Ex 2) contains the invoices relied on.  The invoices relate to a period between September to November 2011.  The evidence of Ms McFarlane is that the invoices were rendered, and that Coast RV Pty Ltd did not receive any notice disputing any of the invoices.  The evidence of Ms McFarlane is that Coast RV Pty Ltd holds packing slips and proof of delivery information in relation to the majority of the invoices.  The matter was referred to a debt collection agency.  There is no evidence from the defendants in relation to the goods and services the subject of the invoices.  I am satisfied on the balance of probabilities that the goods and services, the subject of the invoices, were ordered, due to the lack of notice of dispute in relation to the invoices rendered.

Conclusion

29. T2 Projects Ltd is entitled to assume that Mr William Creswick had been duly appointed as an officer of T2 Projects Pty Ltd, and had authority to enter into the contract being the credit application. T2 Projects Pty Ltd owes Coast RV Pty Ltd for the amount of the unpaid invoices in the sum of $21,324.50

Orders

30. The verdict of the Court is for the plaintiff.  The judgment sum is $21,324.50.  Interest up until the date of judgment is payable in accordance with the contract.

31. A party may be heard as to costs if within 28 days from the date of judgment the party gives the other party seven days' notice of an intention to apply for a costs hearing.  If no such application is made, the defendant is to pay the costs of the plaintiff on an ordinary basis.

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Decision last updated: 16 July 2015