CoreStaff Group Holdings Pty Ltd and Anor v Remote Contracting Services Pty Ltd and Anor and CoreStaff Group Holdings Pty Ltd and Anor v Gardner and Anor - [2015] NTSC 29

CoreStaff Group Holdings Pty Ltd & Anor v Remote Contracting Services Pty Ltd & Anor and CoreStaff Group Holdings Pty Ltd & Anor v Gardner & Anor [2015] NTSC 29
PARTIES:CORESTAFF GROUP HOLDINGS PTY LTD (ACN 122 760 427) and
CORESTAFF NT PTY LTD
(ACN 129 495 263)
v
REMOTE CONTRACTING SERVICES PTY LTD (ACN 124 154 981) and GARDNER, Norman Wayne
and
CORESTAFF GROUP HOLDINGS PTY LTD (ACN 122 760 427) and
CORESTAFF NT PTY LTD
(ACN 129 495 263)
v
GARDNER, Norman Wayne and
BUBNER, Graham John

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:95 of 2014 (21443223) and
96 of 2014 (21443879)

DELIVERED:  22 May 2015
HEARING DATES:  16 January 2015
JUDGMENT OF:  KELLY J
CATCHWORDS:

CONTRACTS – Construction and interpretation of contracts – Whether directors’ guarantees offered – Annotation to credit application declining to offer directors’ guarantees – Offer accepted by provision or continued provision of services – No offer of directors’ guarantees
CONTRACTS – Construction and interpretation of contracts – Whether directors’ guarantees offered – Director signed contract as guarantor – No annotation to credit application declining to offer directors’ guarantees – Offer of directors’ guarantees –offer accepted by provision or continued provision of services
Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1981) 149 CLR 337, applied
Ankar Pty Ltd v National Westminster Finance Australia Ltd (1986-7) 162 CLR 549; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, referred to

REPRESENTATION:
Counsel:
Plaintiff:M Crawley
Defendant:D Miller SC
Solicitors:
Plaintiff:De Silva Hebron
Defendant:Ward Keller
Judgment category classification:   B
Judgment ID Number:  KEL15008
Number of pages:  14

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
CoreStaff Group Holdings Pty Ltd & Anor v Remote Contracting Services Pty Ltd & Anor and CoreStaff Group Holdings Pty Ltd & Anor v Gardner & Anor [2015] NTSC 29
No. 95 of 2014 (21443223) and
96 of 2014 (21443879)

BETWEEN:
CORESTAFF GROUP HOLDINGS PTY LTD (ACN 122 760 427) AND
CORESTAFF NT PTY LTD
(ACN 129 495 263)
Plaintiff

AND:
REMOTE CONTRACTING SERVICES PTY LTD (ACN 124 154 981) AND NORMAN WAYNE GARDNER

Defendant
AND BETWEEN:
CORESTAFF GROUP HOLDINGS PTY LTD (ACN 122 760 427) AND
CORESTAFF NT PTY LTD
(ACN 129 495 263)
Plaintiff

AND:
NORMAN WAYNE GARDNER AND GRAHAM JOHN BUBNER

Defendant

CORAM: KELLY J
REASONS FOR JUDGMENT
(Delivered 22 May 2015)
On 8 May 2015 I handed down my decision in both of these proceedings, these are my reasons.
FACTS

Western Desert Resources Ltd (‘Western Desert’) and Remote Contracting Services Pty Ltd (‘Remote Contracting Services’) are companies involved in the mining industry. Western Desert is a publically listed company.
Mr Gardner is a director of both companies, and the sole director of Remote Contracting Services. Mr Bubner is a director of Western Desert.
CoreStaff Group Holdings Pty Ltd is the holding company of CoreStaff NT Pty Ltd. The CoreStaff Group of companies (“CoreStaff”) operate as labour hire companies.
On 9 October 2012, Western Desert and CoreStaff commenced discussions and an agreement was reached that CoreStaff would provide employees for the purposes of Western Desert’s business. CoreStaff sent a printed credit application form to Western Desert which was completed by Western Desert, signed by Western Desert’s directors Norman Wayne Gardner and Graham John Bubner, and sent to CoreStaff on 7 November 2012.
Clause 17 of the printed credit application form was in the following terms:

17.   Directors Guarantees

       To be completed as required.

       In consideration of the CoreStaff Group having agreed to our request to Supply Labour on the terms and conditions expressed on this form and to give credit to the applicant specified below (“the Applicant”), e (sic) the undersigned directors, hereby guarantee the payment of all sums of money, interest costs and damages which the Applicant may now or hereafter be liable to pay the CoreStaff Group. We further agree that upon default by the applicant to pay such money, interest costs and damage to the CoreStaff Group when due, that we pay the same to the CoreStaff Group upon demand. We further agree to indemnify the CoreStaff Group against all losses and costs suffered as a result of each and every default by the Applicant and/or any default by us under this Guarantee. This Guarantee is Continuing, Irrevocable and Joint and several and is a principal obligation. Our liability hereunder is absolute and shall not be affected by any other matter or indulgence granted to the Applicant by the CoreStaff Group and which but for this provision might have operated as a release in whole or in part. We have obtained independent legal advice on our obligations under this Guarantee. We confirm our acceptance of the agreement to Section 16 of the CoreStaff Group’s terms and conditions of the credit set out in the above application (Privacy Act authorisation).

Applicant:

The place indicated for signing the application immediately below clause 17 is the only place indicated for signing on the form. There is space for two signatories to sign. Each is in the following terms:
Signed Sealed and Delivered by:
------------------------------------------
Director
As Guarantor in the presence of
[There is space opposite each signing clause for a witness to sign and provide his or her name.]
Mr Gardner and Mr Bubner signed in the spaces indicated. The words “As Guarantor” were not crossed out.
The signed credit application form returned by Western Desert did not have the name of the company inserted in the space marked “Applicant” in clause 17. In addition, someone had typed at the top of the page: “Director Guarantees are declined as guarantees are not offered on behalf of publically listed entities.”
CoreStaff was engaged to provide employment services to Remote Contracting Services, beginning on 6 January 2013.
On 20 May 2013, CoreStaff sent a printed credit application to Remote Contracting Services which was completed by Remote Contracting Services and signed on 21 May 2013 by Remote Contracting Services’ director Mr Gardner.
The printed form sent to Remote Contracting Services was in substantially the same format as the form sent to Western Desert and contained a clause 17 in precisely the same terms.
Mr Gardner signed the form in the space indicated. On this form, too, the words “As Guarantor” were not crossed out. The signed credit application form returned by Remote Contracting Services did not have the name of the company inserted in the space marked “Applicant”. However, it did not contain any additional notation such as the one typed onto the form by Western Desert.
On 31 March 2014, Western Desert failed to pay an invoice to CoreStaff. Since then, a total of 31 invoices have gone unpaid, totalling $2,727,166.60.
On 27 April 2014, Remote Contracting Services also failed to pay an invoice to CoreStaff. Since then, 24 invoices have gone unpaid, totalling $929,026.33.[1]
On 5 June 2014, Western Desert and CoreStaff entered into a new labour hire agreement (the ‘2014 Western Desert Agreement’). This agreement commenced on 1 July 2014, but was not executed by Western Desert until 17 July 2014 and CoreStaff until 22 July 2014. It contained a clause in the following terms:
12.8 Entire understanding
(a)This Agreement contains the entire understanding between the parties as to the subject matter of this Agreement.
(b)All previous negotiations, understandings, representations, warranties, memoranda or commitments in relation to, or in any way affecting the subject matter of this Agreement are merged in and superseded by this Agreement and are of no effect. No party is liable to any other party in respect of those matters.
(c)No oral explanation or information provided by any party to another:
(i)Affects the meaning or interpretation of this Agreement; or
(ii)Constitutes any collateral agreement, warranty or understanding between any of the parties.
On 11 September 2014 CoreStaff’s solicitors sent letters of demand to Western Desert and Remote Contracting Services demanding payment of the then outstanding debts. It also sent letters of demand to Mr Gardner and Mr Bubner demanding payment of the amount owing by Western Desert, pursuant to what CoreStaff said was a director’s guarantee contained in the Western Desert credit application, and a letter of demand to Mr Gardner demanding payment of the amount owing by Remote Contracting Services, pursuant to what CoreStaff said was a director’s guarantee contained in the Remote Contracting Services credit application.
Western Desert is now in Administration. Remote Contracting Services continues to trade.
CoreStaff has commenced these proceedings against Mr Gardner claiming payment of the amounts owing by Remote Contracting Services, and against both Mr Gardner and Mr Bubner claiming payment of the amounts owing by Western Desert. On 7 November 2011 I gave leave under s 440J of the Corporations Act for CoreStaff to proceed against the directors of Western Desert up to judgment, but not to execution of any judgment.
Mr Gardner and Mr Bubner are defending the proceedings on the ground that, properly construed, the credit applications they completed and signed do not contain directors’ guarantees. In relation to the Western Desert debt, it is also claimed that, if there was a directors’ guarantee in the Western Desert credit application, it would only apply to debts incurred by Western Desert before the commencement of the 2014 Western Desert Agreement.
Action No 96 of 2014: The asserted Western Desert Guarantee
Neither Credit Application was signed by CoreStaff and there was no provision on either form for that to occur. Although each document is expressed to be executed as a deed, clause 17 (which contains the “Directors Guarantees”) uses the language of contract. The guarantee is expressed to be “in consideration of the CoreStaff Group having agreed to our request to Supply Labour on the terms and conditions expressed on this form and to give credit to the Applicant specified below”. When pressed to analyse the “agreement” by CoreStaff to supply labour referred to in clause 17, counsel identified the credit application as an offer by “the Applicant” which was accepted by CoreStaff’s conduct in supplying labour to the Applicant (or continuing to supply labour to the Applicant after the date of the credit application as the case may be). There being only one place for signature on behalf of the Applicant and its directors, clause 17 would also be part of the offer being made on the credit application, that is to say, an offer by the directors signing the application form “to guarantee the payment of all sums of money … which the Applicant may be liable to pay the CoreStaff Group”.
Looked at thus, it seems to me that CoreStaff cannot possibly succeed in its contention that the Western Desert credit application contained a directors’ guarantee. There seems to me to be no way that one could possibly construe clause 17 of that document, preceded as it is by the words: “Director Guarantees are declined as guarantees are not offered on behalf of publically listed entities,” (emphasis added) as an offer of directors’ guarantees.
Counsel for CoreStaff made the point that the words of clause 17 were not crossed out; neither were the words “As Guarantor” below the signing clause. It does not seem to me that it was necessary for clause 17 to be crossed out. Clause 17 contains the directors’ guarantee and nothing else. By adding the words that it did to the top of the page, Western Desert made it plain that it was not offering to provide director’s guarantees – in other words that clause 17 was not included in its offer.
When CoreStaff accepted the offer made by Mr Gardner and Mr Bubner on behalf of Western Desert, by supplying (or continuing to supply) labour to Western Desert, CoreStaff was accepting the offer which was made – ie one in which director’s guarantees were expressly not offered. It is not to the point that in sending Western Desert a credit application form containing clause 17, CoreStaff was inviting Western Desert to make a different offer – one which did contain directors’ guarantees. CoreStaff received the offer which was made on behalf of Western Desert. It was not obliged to accept it. It could have told Western Desert that the offer was not acceptable and that no labour (or further labour) would be supplied, and/or no credit extended, until an acceptable offer was forthcoming. It did not.
It does not seem to me to be necessary to analyse the document further than that or to apply any other principles of construction to what I consider to be the plain meaning of the offer.[2]
In Action 96 of 2014, there will be judgment for the defendants.
Action 95 of 2014: The asserted Remote Contracting Services guarantee

The position in relation to the pleaded Remote Contracting Services guarantee is different. What is it that was offered by Remote Contracting Services and accepted by CoreStaff continuing to provide services?
The only feature of the written offer Mr Gardner can point to in support of the contention that the contract between CoreStaff and Remote Contracting Services does not contain a director’s guarantee is the fact that the name of the applicant, Remote Contracting Services, was not inserted in the relevant space in clause 17.
It is contended on behalf of Mr Gardner that clause 17 (if operative) would be a collateral surety agreement, that it is not a standard or essential term of the credit application but optional, being preceded by the words “to be completed as required”. It is further contended that as the name of the applicant was not inserted it was not “completed”, and therefore presumably not “required”, and accordingly did not form part of the offer.
Counsel for the plaintiffs on the other hand disputes the categorisation of clause 17 as an optional extra and points out that the words are “to be completed as required” not “to be completed if required”, that in each case the guarantee clause is included in the document as one of the consecutively numbered paragraphs, and that there is only one place for the directors/guarantors to sign.
It is further contended on behalf of the defendants that the parties to the collateral surety agreement have not been identified. I do not agree. I agree with the plaintiffs’ submission that clause 17 is an integral part of the offer constituted by the credit application. There is only one Applicant clearly identified on page one of the document as Remote Contracting Services. It was not necessary for that name to be specified again in clause 17 and its absence does not introduce any ambiguity into the offer. Mr Gardner signed the document directly under clause 17 above the words:
“Director
As Guarantor in the presence of ”.
The punctuation may be unfortunate but does not in my view introduce any ambiguity. A similar idiosyncratic approach to capitalisation and other aspects of punctuation is evident elsewhere in the document – for example throughout clause 1.
The defendant placed reliance on the principle that where there is ambiguity in a guarantee, the guarantee should be construed strictly in favour of the guarantor. As it was expressed in Ankar Pty Ltd v National Westminster Finance Australia Ltd:[3]
“At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should therefore be construed in favour of the surety.”[4]
However, this principle is not relevant to the issue in the present case which is whether there is a guarantee at all which would make Mr Gardner a surety.
In my view the contract between the plaintiffs and Remote Contracting Services did contain a director’s guarantee by Mr Gardner in the terms set out in clause 17. He signed the document as Director of the Applicant (as defined in the Credit Application) and as Guarantor and communicated that offer to the plaintiffs who accepted the offer by providing (or continuing to provide) services to Remote Contracting Services.
I am reinforced in this view by the fact that when Mr Gardner signed the Credit Application for Western Desert and did not intend offering directors’ guarantees, this was expressly notified to CoreStaff on the document in the manner set out above. The actual intention of either party which was not communicated to the other party is not relevant and, following objections, I ruled out of the affidavits all references to such matters.[5] However, the context and circumstances under which the contract was entered into which were known to both parties is relevant to the construction of the contract.[6] The Western Desert Credit Application signed by Mr Gardner was sent to CoreStaff on 7 November 2012. In May 2013, it was a circumstance known to both CoreStaff and Mr Gardner that Mr Gardner (and the other director of Western Desert) did not offer to guarantee the debts of Western Desert, that this refusal was expressly stated on the Credit Application, and that the reason expressed for the refusal was that Western Desert was a “publicly listed entity”. It was also known to both parties that Remote Contracting Services was not a “publicly listed entity”, and that no refusal to provide a director’s guarantee was expressly stated on the Remote Contracting Services Credit Application. If, contrary to my view, the fact that the name of the Applicant was not inserted into clause 17 rendered the offer ambiguous, it seems to me that those circumstances point to the ambiguity being resolved in favour of interpreting the offer as including an offer by Mr Gardner to provide a director’s guarantee in terms of clause 17. A reasonable person in the position of the parties would have understood the Credit Application submitted on behalf of Remote Contracting Services and signed by Mr Gardner in the manner described above as including an offer of a director’s guarantee in terms set out in that clause.[7]
Counsel for the defendants in both proceedings relied on the fact that CoreStaff had performed credit checks on both companies.[8] As I understand the submission, the contention was that the Court could infer from the results of the credit checks that CoreStaff was content to offer credit to both companies without the comfort of directors’ guarantees. If that is the substance of the submission, it must fail as the subjective intentions of either party are not relevant to the task of interpreting their agreement. If, contrary to my understanding, the defendants’ contention is that both the fact of the credit checks and the results were circumstances known to both parties[9] and that a reasonable by-stander would have concluded that, in light of those results a director’s guarantee had not been offered by Mr Gardner and CoreStaff had accepted the offer without a guarantee, then I reject the submission, essentially for the same reasons already outlined. In the case of Remote Contracting Services, notwithstanding that CoreStaff had the results of the credit check, it sent Remote Contracting Services a Credit Application form which requested a director’s guarantee and the form was completed and signed by Mr Gardner in the manner already described and without any express qualification of the kind endorsed on the Western Desert Credit Application. In Action 95 of 2014, there will be judgment for the plaintiffs.
Although it is common ground between the parties that Remote Contracting Services is indebted to the plaintiffs, there is no evidence before me of the outstanding balance of the debt. There will therefore be judgment for the plaintiffs for an amount to be assessed.

[1] It was agreed by both parties that Remote Contracting Services has since made some payments to CoreStaff. It is not necessary for the purposes of this part of the proceeding for me to determine how much is owing by Remote Contracting Services to CoreStaff.

[2] At the hearing, I was handed a document prepared by counsel for the defendants, with the consent of counsel for the plaintiffs which was said to be an agreed statement of the principles applicable to construction of contacts. It was, in effect, an essay on the subject. This is not a practice which should be encouraged. The practice in our court encourages the provision of agreed facts. However, when it comes to the law, the usual, and preferred practice is for each party to provide the court with written submissions stating the conclusion which that party contends the court should reach on the basis of the facts (agreed or otherwise) citing only those propositions of law necessary to support the conclusion contended for. While it is perfectly proper, and desirable, for the other party to indicate that there is no dispute about a particular proposition of law relied on, a general statement of “agreed law” outside these parameters is unlikely to be at all helpful.

[3] (1986-7) 162 CLR 549

[4] at 561

[5] This included references to the internal workings of both companies.

[6] Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1981) 149 CLR 337 at 384

[7] Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462

[8] On 8 November 2012 (the day after the Western Desert Credit Application was returned) CoreStaff obtained a Payment Risk Report on Western Desert which concluded that Western Desert had a “below average” risk of delinquency. On 8 January 2013 (some time before the Remote Contracting Services Credit Application was returned) CoreStaff obtained a Payment Risk Report for Remote Contracting Services which reported that Remote Contracting Services had a risk of making severely delinquent payments, which was “low” compared to the industry average.

[9] There is no direct evidence of this, in particular that the results of the credit checks were communicated to the debtor companies.