Eph Enterprises Pty Ltd v Van der Horst

[2013] VCC 67

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-12-04707

EPH ENTERPRISES PTY LTD	Plaintiff
v.
TIM VAN DER HORST & ROBERT DUNCAN	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	12 February 2013
DATE OF JUDGMENT:	12 February 2013 (revised 13 February 2013)
CASE MAY BE CITED AS:	EPH Enterprises Pty Ltd v. Van der Horst & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 67

REASONS FOR JUDGMENT

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Catchwords:            Practice and procedure – Application to set aside default judgment – Whether arguable defence shown – Action on a guarantee provided by a director of a corporation – Deed of guarantee omitted name of “debtor” – Guarantee executed at the same time the director completed an application for credit on behalf of the corporation – Intention of the parties obvious – No arguable basis shown to defend the claim – Application dismissed.  

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. McInnis	Doherty & Colleagues
For the First Defendant	Mr R.J. Sadler	Featherbys

HIS HONOUR:

1On 22 November 2012, judgment was entered against the defendants in default of defence for the sum of $177,818.73 together with interest and costs. The first defendant, by summons filed 11 December 2012, seeks to set aside the judgment as it applies to him.

2The first defendant and his solicitor provide an explanation for the entering of the default judgment. The solicitor has said that he mistakenly diarised the matter for action upon the wrong date and, by that date, the judgment had been entered.

3The application was made by the issue of the summons soon after the first defendant became aware of the judgment. The inadvertence of his solicitor is not a matter which ordinarily would disentitle the first defendant from having judgment set aside. I am therefore satisfied of the explanation given as to why judgment was not entered in this case.

4The principal matter of dispute in the application is whether the first defendant has an arguable defence. He is sued upon a guarantee dated 19 April 2011 in respect of the company Ecoform Landscape Design & Construction Pty Ltd. At the time, the first defendant was a director of the company. The second defendant was the other director. The guarantee is executed as a deed, apparently by both directors. The first director signed in the presence of Daniel Copsey, the second defendant apparently signed in the presence of the first defendant as witness. The first defendant says in an affidavit sworn in support of his application that, “Although I have no personal recollection of signing the guarantee, the guarantee appears to have my signature affixed”.

5The first defendant relies upon the fact that in the deed of guarantee the space where the name of “the debtor” would be inserted has been left blank. He asserts in a draft defence, “that the document purportedly executed by me as the guarantee referred to therein did not expressly or otherwise identify the Ecoform Landscape Design & Construction Pty Ltd as the debtor therein”. It is asserted that an arguable defence arises because a vital element of the contract has been omitted and therefore it is void for uncertainty.

6Mr Copsey, who witnessed the first defendant’s signature on the document, was the Operations Manager of the company Ecoform Landscape Design & Construction Pty Ltd at the relevant time. He now works for the plaintiff as a Sales Representative. In an affidavit sworn 8 February 2013, he states that he recalled receiving “a Credit Application Form which had attached to it a Guarantee dated 19 April 2011”. He continued: “I can recall the Credit Account Application Form being filled out by the first defendant in my presence and note that my name appears on that document as the ‘foreman or contact person on site’…I refer to the Guarantee…and note that I have signed and noted my former address on that document. The other details on that document were inserted by the first defendant…I recall that [the Guarantee], at the time that I saw the original, was stapled together and that the Application for Credit was made by Ecoform and accordingly it was the debtor”. There has been no response by the first defendant to the matters deposed to by Mr Copsey.

7At the request of first defendant’s Counsel, Mr Sadler, I was handed a copy of the original credit account application form and the original guarantee. Both documents are dated 19 April 2011. Both contain handwriting which appears to be in the same hand and which Mr Copsey has identified as the handwriting of the first defendant.

8It seems clear beyond any doubt that the intention of the first defendant in completing the guarantee and executing it, and the intention of the plaintiff, was that the defendants, as the directors of Ecoform Landscape Design & Construction Pty Ltd, would guarantee the trading account of that company. The company commenced to trade on credit with the plaintiff and the judgment debt arises as a result of the default and subsequent liquidation of Ecoform Landscape Design & Construction Pty Ltd.

9Mr Sadler relied upon the judgment of Ormiston J in Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32 at page 68 where His Honour commented upon the absence in the contract in the case before him of a “vital” term. In that case, the vital term omitted was reference to a specific ship which was to be used in a joint venture as a live sheep carrier chartered for the export of live sheep to the Middle East. In that case, the learned trial judge considered that the omission was so significant that the usual approach by the courts to give effect to commercial transactions, notwithstanding uncertainties or occasional omissions, could not be followed in the absence of the reference to a particular ship in the contract before him.

10Mr Sadler also referred to the decision of the Court of Appeal of the New South Wales Supreme Court in Thompson v White [2006] NSWCA 350 where the judgment of the Court was delivered by Tobias JA. At paragraph 100, Tobias JA set out the relevant principles applicable to the determination of whether a commercial contract should fail because of uncertainty and/or incompleteness. At subparagraph (e), the learned judge stated that: “The context in which the contract is arrived at and, in particular, the conduct of the parties may be relevant to the questions of incompleteness. However, once the Court has determined that the requisite intention of the parties is present, it is then necessary to go onto consider whether the contract is so incomplete or uncertain as to be void”.

11In my view, the first defendant has not disclosed an arguable defence which would justify the setting aside of the default judgment. I consider that it would be “fanciful”, as that term has been used in a number of recent decisions relevant to the question of whether summary judgment is appropriate in the context of the Civil Procedure Act 2010 (Vic), to suggest that the failure to complete the space in the guarantee where the name of “the debtor” was intended to be inserted would render the parties’ agreement void for uncertainty.

12It is clear from the context in which the document was executed by the first defendant, and the attachment of the guarantee to a credit account application form, also completed by the first defendant, that there is no vital element missing from the document which would render it unenforceable. In the circumstances, the first defendant’s application should be dismissed.

13The plaintiff has sought that the costs of the first defendant’s summons be taxed on a solicitor-client basis rather than a party-party basis. I consider in the circumstances that such an order should be made. It would seem that by paragraph 6 of the guarantee the defendants undertook to keep the plaintiff indemnified against all losses and other matters, “including legal costs”, which may become owing and payable. This would seem to me to justify an order for indemnity costs. The lesser basis of costs, namely solicitor-client costs, has been sought by the plaintiff.

14In the circumstances, I propose to order as follows:

1.        The first defendant’s summons filed 11 December 2012 is dismissed.

2.The first defendant must pay the plaintiff’s costs of and incidental to the summons including the hearing today to be taxed on a solicitor-client basis in default of agreement.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 12 February 2013 and revised upon 13 February 2013.

Dated: 13 February 2013

Catherine Kusiak

Associate to His Honour Judge Anderson