Docklands Press v Stewart - [2014] VSC 536

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL LIST

S CI 2013 02036

DOCKLANDS PRESS PTY LTD (ACN 097 210 074)	Plaintiff
v
CRAIG FORBES STEWART	First Defendant
and
MARK FREEMAN	Second Defendant

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JUDGE:	VICKERY J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 October 2014
DATE OF JUDGMENT:	24 October 2014
CASE MAY BE CITED AS:	Docklands Press v Stewart & anor
MEDIUM NEUTRAL CITATION:	[2014] VSC 536

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GUARANTEE AND SURETY - Application for a commercial credit account – Guarantee by directors of customer – Whether guarantors liable retrospectively for the debt of the customer in addition to debt incurred after entry into the guarantee - Liability of the surety is strictissimi juris and ambiguous contractual provisions should be construed in favour of the surety – Guarantee ambiguous – Construction in favour of the guarantor – Whether payment made by co-guarantor discharged the indebtedness of the customer rendering the other guarantor free from liability under the guarantee.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Clarke	HWL Ebsworth
For the Defendant	Mr M Stirling	Richmond & Bennison

HIS HONOUR:

This proceeding involves the construction of a guarantee in writing entered into between parties who had traded together for some time. The fundamental question for determination is whether the guarantee was confined to guaranteeing payment for goods and services supplied after entry into its terms, or whether in addition, it guaranteed past indebtedness.

Complete Printing Solutions Pty Ltd (‘CPS’) conducted business as a print broker from about 1999. From about 6 December 2011 until about 6 February 2013 it purchased printing services and products from the Plaintiff, Docklands Press Pty Ltd (‘Docklands Press’). In late October 2012, Docklands Press provided a written Application for Commercial Credit Account (the ‘Application for Commercial Credit Account’ or the ‘Application’) to CPS which contained a guarantee clause to be signed by the directors of CPS, who were the First Defendant (‘Stewart’) and the Second Defendant (‘Freeman’).

The Application for Commercial Credit Account, contained terms which included a guarantee (the ‘Guarantee’). The Application was completed (and signed) by CPS on 30 October 2012. The Guarantee was then signed by Stewart and Freeman on 31 October 2012.

As at 31 October 2012, arising from the prior trading relationship, CPS was indebted to Docklands Press in the sum of $1,008,363.

Following execution of the Guarantee, and after the Commercial Credit Account was opened, CPS purchased further printing services from Docklands Press in the sum of $119,068, which have not been paid for by CPS.

On 19 December 2012, Freeman as co-guarantor made a payment of $282,000 to Docklands Press.

The trading relationship between CPS and Docklands Press continued until about 6 February 2013.

The case of Docklands Press is that CPS is currently indebted to it in the sum of $688,753 (excluding interest), of which $119,068 (excluding interest) relates to debts incurred by CPS after the execution of the Guarantee on 31 October 2012.

There are two principal issues raised…

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.

Continue reading Docklands Press v Stewart

Details

AGLC: Docklands Press v Stewart [2014] VSC 536
Case: [2014] VSC 536
Decision Date: 24 October 2014

CaseChat Overview and Summary

The Docklands Press sought to recover monies owed by Stewart, with the guarantors of Stewart’s credit account arguing they were not liable for the debts incurred prior to the guarantee. The matter was heard in the Supreme Court of Victoria. The primary issue was whether the guarantors were liable for debts incurred prior to the guarantee and whether a payment made by one guarantor could discharge the customer’s indebtedness, thereby relieving the other guarantor of their liability.

The court examined the strict liability of sureties and the principle that ambiguous contractual provisions should be construed in favour of the surety. The guarantee in question was found to be ambiguous concerning the period of liability of the guarantors. The court held that since the guarantee was ambiguous, it should be construed in favour of the guarantors, thereby limiting their liability to debts incurred after the guarantee was entered into. Furthermore, the court held that a payment made by one guarantor did not discharge the customer’s indebtedness, and thus, the other guarantor remained liable for the full amount of the debt.

The court ordered that the guarantors were not liable for debts incurred prior to the guarantee and that the payment made by one guarantor did not absolve the other guarantor of their liability. The guarantors were only liable for the debts incurred after the guarantee was entered into.

Orders