Craft Printing Pty Limited v Dwyer - [2009] NSWDC 190

CITATION: Craft Printing Pty Limited v Dwyer [2009] NSWDC 190

HEARING DATE(S): 30 and 31 March 2009

JUDGMENT DATE:
7 April 2009

JURISDICTION: Civil jurisdiction

JUDGMENT OF: Johnstone DCJ

DECISION: 1. Judgment is to be entered for the plaintiff for $416,592.39.
2. The defendant is to pay the plaintiff’s costs, on the ordinary basis. Leave to apply within 7 days for some other order.

CATCHWORDS: GUARANTEE - debts of corporation guaranteed by sole director - whether that corporation ceased to be the contracting party in respect of the debts - if so, whether the defendant engaged in misleading or deceptive conduct or unconscionable conduct relied upon by the plaintiff to its detriment - whether the debts were extinguished by the plaintiff’s appropriation of payments received to the oldest outstanding invoices first

LEGISLATION CITED: Civil Procedure Act 2005
Business Names Act 2002
Fair Trading Act 1987
Trade Practices Act 1974 (Cth)
Australian Securities and Investments Commission Act 2001 (Cth)

CASES CITED: Deeley v Lloyds Bank Limited [1912] AC 756
Equity Access Pty Ltd v Westpac Banking Group [1989] FCA 506
General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546
Henville v Walker [2001] HCA 52
Lam v Ausintel Investments Australia Pty Ltd (1997) 97 FLR
McLean v Discount & Finance Ltd (1939) 64 CLR 312
Reid Murray Holdings Ltd (in liq) v David Murray Holdings Pty Ltd (1972) 5 SASR 386
Simson v Ingham (1823) 2 B & C 65
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514

PARTIES: Craft Printing Pty Limited (Plaintiff)
Paul Andrew Dwyer (Defendant)

FILE NUMBER(S): 1997/08

COUNSEL: Mr P Greenwood SC and Mr G George (Plaintiff)
Mr B Coles QC and Mr I Archibald (Defendant)

SOLICITORS: David Purvis (Plaintiff)
W Lawyers (Defendant)

JUDGMENT

The proceedings and the issues
1. These proceedings arise from a personal guarantee signed by the defendant on 30 July 2003 in respect of any amount due or owing by Comsta Pty Ltd, a corporation of which he was the sole shareholder and director, to the plaintiff. The guarantee was given in conjunction with an Application for Credit Account made to the plaintiff, signed by the defendant on behalf of Comsta Pty Ltd, in respect of the anticipated supply of printing services to the Paul’s Group, of which Comsta Pty Ltd was the management company. The application was approved by the plaintiff on 31 July 2003. One of the plaintiff’s Credit Terms, to which the defendant agreed by signing the document, was the requirement that a personal guarantee be provided by the director(s) of the company to which credit was to be extended: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52.

2. Pursuant to this arrangement the plaintiff then provided printing services, on credit, to…

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: [2009] NSWDC 190
Decision Date: 7 April 2009

CaseChat Overview and Summary

Craft Printing Pty Limited sued Dwyer, a sole director of the company, over guarantees provided in relation to debts of the corporation. The plaintiff alleged that Dwyer had engaged in misleading or deceptive conduct and unconscionable conduct that led to the plaintiff's detriment, and sought recovery of the debts guaranteed. Dwyer argued that the corporation had ceased to be the contracting party in respect of the debts and that the debts were extinguished by the plaintiff's appropriation of payments to the oldest outstanding invoices first. The court was required to determine whether the corporation had ceased to be the contracting party, whether Dwyer engaged in misleading or deceptive conduct or unconscionable conduct, and whether the debts were extinguished by the plaintiff's appropriation of payments.

The court found that the corporation had not ceased to be the contracting party, and that Dwyer had engaged in misleading or deceptive conduct and unconscionable conduct that led to the plaintiff's detriment. The court held that Dwyer's conduct amounted to misleading or deceptive conduct as it was likely to lead the plaintiff to assume that the corporation was still the contracting party. The court also held that Dwyer engaged in unconscionable conduct by taking advantage of the plaintiff's disadvantageous position. The court further held that the debts were not extinguished by the plaintiff's appropriation of payments to the oldest outstanding invoices first, as the plaintiff was entitled to appropriate payments in that manner.

The court ordered that judgment be entered for the plaintiff for $416,592.39, representing the amount of the debts guaranteed by Dwyer. The court also ordered that the defendant pay the plaintiff's costs, on the ordinary basis, and granted leave to apply within 7 days for some other order. This decision highlights the importance of ensuring that corporations and their directors comply with their obligations under guarantee agreements and the potential consequences of failing to do so.

Orders

Orders of the court

1. Judgment is to be entered for the plaintiff for $416,592.39. 2. The defendant is to pay the plaintiff's costs, on the ordinary basis. Leave to apply within 7 days for some other order.

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.

CITATION:	Craft Printing Pty Limited v Dwyer [2009] NSWDC 190
HEARING DATE(S):	30 and 31 March 2009
JUDGMENT DATE:	7 April 2009
JURISDICTION:	Civil jurisdiction
JUDGMENT OF:	Johnstone DCJ
DECISION:	1. Judgment is to be entered for the plaintiff for $416,592.39. 2. The defendant is to pay the plaintiff’s costs, on the ordinary basis. Leave to apply within 7 days for some other order.
CATCHWORDS:	GUARANTEE - debts of corporation guaranteed by sole director - whether that corporation ceased to be the contracting party in respect of the debts - if so, whether the defendant engaged in misleading or deceptive conduct or unconscionable conduct relied upon by the plaintiff to its detriment - whether the debts were extinguished by the plaintiff’s appropriation of payments received to the oldest outstanding invoices first
LEGISLATION CITED:	Civil Procedure Act 2005 Business Names Act 2002 Fair Trading Act 1987 Trade Practices Act 1974 (Cth) Australian Securities and Investments Commission Act 2001 (Cth)
CASES CITED:	Deeley v Lloyds Bank Limited [1912] AC 756 Equity Access Pty Ltd v Westpac Banking Group [1989] FCA 506 General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 Henville v Walker [2001] HCA 52 Lam v Ausintel Investments Australia Pty Ltd (1997) 97 FLR McLean v Discount & Finance Ltd (1939) 64 CLR 312 Reid Murray Holdings Ltd (in liq) v David Murray Holdings Pty Ltd (1972) 5 SASR 386 Simson v Ingham (1823) 2 B & C 65 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514
PARTIES:	Craft Printing Pty Limited (Plaintiff) Paul Andrew Dwyer (Defendant)
FILE NUMBER(S):	1997/08
COUNSEL:	Mr P Greenwood SC and Mr G George (Plaintiff) Mr B Coles QC and Mr I Archibald (Defendant)
SOLICITORS:	David Purvis (Plaintiff) W Lawyers (Defendant)