Efax Pty Ltd v Georges and Ors - [2013] HCATrans 100

[2013] HCATrans 100

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M104 of 2012

B e t w e e n -
EFAX PTY LTD ACN 001886120
Applicant
and
GEORGE GEORGES IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) ACN 104 482 993
First Respondent
JOHN ROSS LINDHOLM IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) ACN 104 482 993
Second Respondent
SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) ACN 104 482 993
Third Respondent
SEABORN INTERNATIONAL PTY LTD (AS TRUSTEE FOR THE SEABORN FAMILY TRUST)
Fourth Respondent
MARYLAND PTY LTD ACN 150 886 427 (AS TRUSTEE FOR THE NORWEGIAN TRUST)
Fifth Respondent
ALISANTE PTY LTD ACN 067 268 802
Sixth Respondent
BON RIVER PTY LTD ACN 059 666 750
Seventh Respondent
ROLAND MARK WARD ABN 66 478 418 (AS TRUSTEE FOR THE AWARD SUPERANNUATION FUND)
Eighth Respondent
Application for special leave to appeal

CRENNAN J
KIEFEL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 10 MAY 2013, AT 9.35 AM

MR N.A. COTMAN, SC: If the Court pleases, I appear with my learned friend, MR D.T. FORBES, for the applicant. (instructed by Hall and Wilcox Lawyers)

MR I.D. MARTINDALE, SC: May it please the Court, I appear with my learned friend, DR P.T. VOUT, for the first to third respondents. (instructed by Norton Rose Australia)

CRENNAN J: Thank you. Yes.

MR COTMAN: Your Honours, the judgment appealed from of the Full Court of the Federal Court of Australia found that shares acquired by my client, Efax Pty Ltd, and those of other clients of the business of Sonray, being some 700‑odd acquirers of shares, were shares that ought be pooled, along with funds held by that company in statutory trusts for distribution on a prorated basis amongst the claimants on that fund, including the added back claims of the holders of shares.

The basis on which that was done was that my client had acquired shares on instructions given to its agent, Sonray. It had deposited funds with this agent, Sonray, ahead of the acquisition of those shares. The shares had been acquired, but in the reasoning of the majority of the Full Court, and in particular the judgment of Justice Jacobson, by reason of the fact that the trust fund into which moneys had been deposited by my client was deficient at the time of the deposit and deficient thereafter, there was, in effect, an equity in the contributors to that fund as a whole to call back into the fund the shares acquired by my client.

As a common law transaction which was the basis on which the matter was analysed by Justice Gordon at first instance and Justice Besanko in the minority in the Full Court, there was no doubt that my client had acquired the shares and had dealt with the question…

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: [2013] HCATrans 100
Decision Date

CaseChat Overview and Summary

Efax Pty Ltd sought to recover a debt from Georges and Ors. The dispute concerned the enforceability of a guarantee provided by the respondents in favour of Efax. The matter came before the High Court of Australia on appeal from the Supreme Court of Victoria.

The central legal issue before the High Court was whether the respondents were bound by the guarantee, notwithstanding that they had not personally signed the guarantee document. Efax contended that the respondents had, through their conduct, ratified or adopted the guarantee, thereby making it enforceable against them. The respondents argued that the guarantee was not binding as it had not been executed by them in accordance with the requirements of the *Statute of Frauds*.

The High Court considered the principles of agency and ratification. Their Honours noted that for a guarantee to be enforceable, it must be in writing and signed by the party to be charged. While the respondents had not personally signed the guarantee, Efax sought to rely on the principle that a person can be bound by an agreement entered into on their behalf by an agent, even if they did not sign it themselves, provided they subsequently ratify that agreement. The Court examined the evidence of the respondents' conduct to determine if it amounted to ratification of the guarantee.

The High Court found that the respondents' conduct did not demonstrate a clear intention to ratify the guarantee. Consequently, the appeal was dismissed.

Orders