Equuscorp Pty Ltd v Wright
[2002] VSC 109
•12 April 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5690 of 1998
| EQUUSCORP PTY LIMITED (formerly EQUUSCORP FINANCIAL SERVICES LIMITED) (ACN 006 012 344) | Plaintiff |
| v | |
| DONALD WRIGHT and JULIE EILEEN WRIGHT | Defendants |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 3, 4 and 5 April 2002 | |
DATE OF JUDGMENT: | 12 April 2002 | |
CASE MAY BE CITED AS: | Equuscorp Pty Ltd v Wright | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 109 | |
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Contract – guarantee – whether executed by guarantor.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P.W. Lithgow | Mark Leaker |
| For the Second Defendant | Mr B.R. FitzGerald | Clayton Utz |
HIS HONOUR:
The defendants, Donald Wright and Julie Eileen Wright, were married in England in 1966. They migrated to Australia in 1972 with their two children. In 1989, when occurred the events with which I am concerned, they were living together in Hereford Road, Lilydale. Theirs was not a happy marriage. Mrs Wright had left her husband and lived in New Zealand following a serious assault in about 1978. She had returned after about a year and they continued to live together under the same roof until they separated in March 1990. They were divorced about 10 years ago.
In 1983 a company, Merdeka Pty Ltd (“Merdeka”), was established or acquired with Mr and Mrs Wright as directors and shareholders. Merdeka was the trustee of the Donald Wright Family Trust. Mrs Wright said, and I accept, that her husband was the moving spirit behind Merdeka and its business. He made the commercial and financial decisions and did not welcome suggestions from her. From about 1980 to early 1986 she was employed by Merdeka as a secretary and receptionist at its Bayswater office but she had no other involvement in its affairs. The Wrights were also directors of another company, Cooloola Sales (Queensland) Pty Ltd (“Cooloola”). In 1989 Merdeka carried on the business of marketing blocks of land in a sub-division called Cooloola Village near Rainbow Beach in Queensland. I was told that these sales were achieved by a sale of a lot from Cooloola to Merdeka which then commonly on-sold the land to a purchaser under a terms contract. In late 1989 Merdeka approached the plaintiff, Equuscorp Pty Ltd, then called Equuscorp Financial Services Ltd, for finance under a factoring arrangement. Equuscorp and Merdeka entered into an agreement which is contained in a letter of offer with a signed acceptance and a Discount Deed each dated 2 October 1989. The originals of these documents are Exhibit 1 and Exhibit 2 in this proceeding. Under this agreement Merdeka assigned contracts to Equuscorp for a price with the consequence that the purchasers became obliged to make payment, not to the vendor, but to Equuscorp.
Within twelve months defaults occurred under this agreement when a purchaser, Kovacs, failed to pay to Equuscorp instalments due in September and October 1990. By April 1991 a number of purchasers had defaulted and Equuscorp, as it was entitled under the Discount Deed, required Merdeka to take back the offending contracts and to pay out their value. This was not done so that Merdeka itself then fell into default.
Things went from bad to worse for Merdeka and, on 18 November 1993, a winding up order was made against it. It was deregistered on 20 December 1994. The indebtedness of Merdeka to Equuscorp as at November 1997 stood at $1,166,933.68. The amount of this debt, which was evidenced by a certificate given under cl. 11.3 of the Discount Deed, was challenged but I am satisfied on the balance of probabilities that this was the amount then owing.
This proceeding has been brought against the Wrights as guarantors under the Discount Deed. They were separately represented through the interlocutory stages On the morning of day 1 of the trial, Mr Wright became bankrupt on his own petition[1]. The proceeding against him was, accordingly, stayed by s. 58(3) of the Bankruptcy Act 1966. He was not called as a witness.
[1]Bankruptcy Act 1966, s. 55(4A).
Equuscorp in its amended statement of claim dated 6 December 1999 seeks judgment against Mrs Wright as guarantor of the Merdeka debt. It seeks in addition to maintain two caveats over certain real property in Tasmania situate at and known as 87 Saddle Road, Kettering and being the land more particularly described in Certificate of Title Volume 4314 Folio 37 standing in her name. The caveats were lodged by it as chargee of the land pursuant to cl. 9.19 of the Discount Deed. Since this clause was unhappily worded – to such an extent that it did not create the charged relied on – Equuscorp has sought rectification of this clause.
In her defence and counterclaim dated 25 January 2000 Mrs Wright raises a large number of defences and puts Equuscorp to its proof on many matters. Most of these, like many of the allegations of Equuscorp in its statement of claim, are no longer pressed having regard to the evidence which was presented and, further, having regard to a sensible acceptance by the parties of the reality that, if Mrs Wright is a guarantor of the Merdeka debt all else would follow.
What is left, therefore, is a solitary issue: whether Equuscorp has established on the balance of probabilities that the signature “JE Wright” appearing on the guarantee of Merdeka’s liability to Equuscorp was in fact made by Mrs Wright. It was accepted by the parties that, if this question were answered in the affirmative, judgment should go against Mrs Wright for the sum of $1,166,933.68 plus interest and that the caveats should remain in place. If, on the other hand, the answer to the question is in the negative, then there should be judgment for her against Equuscorp.
The finance facility was negotiated at a number of meetings between Mr Wright and his sales manager Frank Schotti and, on behalf of Equuscorp, by its managing director Nicola Russo and John Simpson. Mrs Wright was not involved. Indeed, she professed little if any knowledge of it other than having been told by her husband that he was arranging fresh finance. Mr Simpson who presently lives in the USA was not called as a witness, nor was Mr Schotti. It seems that financial statements, credit references and company details were provided and checked by Mr Simpson who prepared a proposal for his managing director. A company search at this time would have shown that Mrs Wright was a director and shareholder, although she said that, earlier in 1989, she had signed a document resigning as director.
This culminated in the letter of offer from Equuscorp which is undated. The original document which is in evidence has bound in with it a signed form of acceptance dated 2 October 1989. This acceptance bears the unwitnessed company seal of Merdeka and the apparent signatures of two guarantors, Mr and Mrs Wright, each witnessed by Barbara Ann Glerum. Mrs Wright swore that the signature “JE Wright” on the document was not hers.
The Discount Deed is also dated 2 October 1989. It is executed by the seals of Merdeka and Cooloola both described as having been affixed in the presence of Mrs and Mr Wright as director and secretary respectively. It is also executed, apparently by Mr and Mrs Wright, again witnessed by Ms Glerum. An annexure to the Deed also bears the seal of Merdeka, apparently fixed in the presence of Mrs and Mr Wright. Again, signatures purporting to be their signatures appear in this capacity. In all, Mrs Wright’s signature appears four times in the Deed. She swore that none of those signatures was hers.
It should be noted immediately that the absence of Mr Wright from this trial as a party or as witness created particular difficulty for the other parties. As will be seen, it was he, and not Equuscorp, who was involved in the execution of the documents on behalf of the guarantors; it was he and not Mrs Wright who was involved in the negotiations which led to the drafting of cl. 9.19; and it was he and not she who was in the best position to mount a challenge to the indebtedness of Merdeka to Equuscorp. Since it could not be said that he was in the camp of either of the other parties I draw no inference from the failure of a party to call him. It is just that his absence left a gaping hole in the picture which was presented to me.
The letter of offer and the Discount Deed were prepared by the solicitors for Equuscorp following the negotiations between the four men who were present at the meetings in 1989. Merdeka also had its own solicitors acting for it and I was told that the two firms exchanged drafts until the deed in a form acceptable to both emerged.
The evidence of execution of these documents by Merdeka, Cooloola and the guarantors was sketchy. Mr Russo said that the documents were presented to him presumably by Merdeka bearing the seals and signatures of those parties which they now bear. They appeared to him to be apparently genuine and in order and he acted upon them. He gave no evidence of execution.
The attesting witness, Ms Glerum, was called on behalf of Equuscorp. She was, at the time of execution, employed by Merdeka as a bookkeeper. She verified that she signed the Discount Deed and the acceptance of the letter of offer each in two places as witness to the signature of Mr Wright and Mrs Wright as guarantors. She said, however, that she could not recall signing the documents nor the circumstances of their execution. She said that Mrs Wright had signed documents in her presence on or about three or four occasions before this occurred, and that, on these earlier occasions, she had herself signed as a witness to Mrs Wright’s signature. This caused her to be familiar with Mrs Wright’s signature. On one or two occasions, however, Ms Glerum signed as a witness when she had not in fact been present when Mrs Wright had signed. On these occasions she had done this when Mr Wright had told her that it was his wife’s signature and following his request that she witness it. She said that at these times the signature which she witnessed appeared to be that of Mrs Wright.
When asked directly whether, today, she was able to say whether she recognised the signatures on Exhibits 1 and 2 as being those of Mrs Wright, Ms Glerum said that she could not. She was unable to recall whether she signed these exhibits as witness to the signature of Mrs Wright on an occasion when Mrs Wright signed in her presence or whether the documents were brought to her with the signatures already on them.
A further question was asked of Ms Glerum whether, in 1989, she was able to identify the signature on the document as that of Mrs Wright. This question was objected to and I received the evidence subject to objection. She said that in 1989 she was then familiar with the signature of Mrs Wright and that she would not have signed as a witness if she had not then recognised the signature as hers. It was submitted that her state of belief as to this matter in 1989 was irrelevant. On reflection, I think this is not correct. The issue is whether the witness could identify the signature on the document. This the witness cannot do today, but she can say what was her state of mind on this matter in 1989 in the same way as an identity witness who is in the same situation[2]. Her evidence, therefore, amounts to an assertion that in 1989 she was able to and did identify the signature. It is admissible as such.
[2]See Alexander v R (1981) 145 CLR 395 at 404, per Gibbs CJ.
The difficulty which then arises is that my confidence in her evidence as to this was somewhat diminished by her cross-examination by counsel for Mrs Wright. The witness was evidently shaken by counsel’s suggestion that she acted improperly in signing as witness to a signature whose making she did not in fact witness. The suggestion that this amounted to “some measure of dishonesty” was probably not correct because she maintained, and I accept, that she believed at the time that the signature had been made by Mrs Wright.[3]
[3]See Brott v R (1992) 173 CLR 426 where it was held that a person who signs as a witness in these circumstances is not guilty of forgery.
Ms Glerum conceded that she was unable to recall whether the documents which Mrs Wright signed in her presence included the documents Exhibit 1 and Exhibit 2. Indeed, at the end of her evidence she said that the documents which she truly witnessed were not bound like the two exhibits which were before her. If this be correct, then she must have signed the exhibits as a witness on an occasion when they were presented to her with Mrs Wright’s signatures already present. She said that she did not remember whether the occasions on which Mrs Wright signed in her presence occurred before or after she signed as witness on the two exhibits.
It was submitted on behalf of Mrs Wright that, in these circumstances, I should find that the two exhibits were signed by Ms Glerum when she was not a true witness to Mrs Wright’s signature and that her satisfaction as to the genuineness of that signature was the result of Mr Wright’s suggestion rather than of her own familiarity with the writing of his wife. On these matters I find that Equuscorp has not established on the balance of probabilities that the signature on the guarantee was made by Mrs Wright in the presence of the witness. I accept the evidence of Ms Glerum that, when she signed as a witness she believed the signature to have been made by Mrs Wright, but I am not satisfied that this belief was the result of her familiarity with Mrs Wright’s signature made in her presence on previous occasions.
Counsel on behalf of Mrs Wright, naturally enough, urged me to accept her testimony that she did not sign the guarantee. He observed, as was the case, that she was unshaken on this point notwithstanding a searching cross-examination. He drew attention, too, to the apparent disparities between the signatures on the guarantee and other signatures accepted as having been made by Mrs Wright about this time.
I turn first to the evidence of Mrs Wright. She was, of course, speaking of events over twelve years past. I am conscious, too, that she has a powerful motive to disavow the signatures on the guarantee. Her case was that in late 1989 her marriage was an unhappy one and that, indeed, she decided to purchase a separate house in Tasmania in December of that year. She had long been excluded from any effective role in her husband’s business and had stopped working as a receptionist some years earlier. She had, in the circumstances, requested her husband on a number of occasions to release her from the directorship of Merdeka and, early in 1989, she had in fact signed a resignation form but this was not lodged with ASC until December of that year. By late 1989 she did not see herself as having an involvement in her husband’s business and would not, she said, have become a guarantor had he asked in October 1989. Her unspoken suggestion, therefore, was that Mr Wright forged or caused to be forged his wife’s signature on the finance documents including the guarantee and then persuaded Ms Glerum that they were genuine so that she felt comfortable signing as a witness before the documents were submitted to Equuscorp.
These are very serious allegations against Mr Wright and I did not have the benefit of his version of events or an opportunity to see and assess him. His absence as a party had the further disadvantage that Mrs Wright was not tested by cross-examination from his perspective. I mention these things to underline the fact that any conclusion I express must be understood as having been reached on the evidence which is in fact before me; not on speculation as to evidence which might otherwise have been before me.
Mrs Wright gave her evidence in a forthright way. She struck me as an intelligent woman and one who had greater familiarity with her husband’s business than she would have had me believe. It was clear, too, that she has still considerable antipathy towards him. For my purposes this led her, in my assessment, to exaggerate aspects of her evidence which concerned him and which put him in a bad light.
A very telling piece of evidence concerned a document dated 20 September 1990 which it was said Mrs Wright signed in Tasmania on that date. It will be recalled that she moved to Tasmania in March 1990. Thereafter, she would have me accept, she had severed ties with Mr Wright and his business. He had paid for a cottage which she bought in Kettering in December 1989 and he contributed to or paid for its renovation in 1990. In September 1990 Mr Wright sought further funding from Equuscorp on behalf of Merdeka for the purchase of a car. Equuscorp required for this a guarantee from Mrs Wright. The document in question is a page from this guarantee. It bears a signature “JE Wright” said to have been made in the presence of Shannon James Lawless. Two copies of the document are in evidence as exhibits 14 and 15. Exhibit 14 bears the original signatures of the guarantor and witness and exhibit 15 is a fax copy of exhibit 14 sent to Cooloola Sales in Melbourne and which bears the imprint of the fax machine of Margate Hardware Store at 11.25 on 20 September 1990.
Mrs Wright was asked about this signature in the context of her assertion that, from about 1986 she ceased to have any dealings with the Merdeka business, that she did not consider herself to be a director from early 1989 and that, in October of that year, about 12 months before September 1990, she would not have signed the guarantee upon which Equuscorp relies. She said, with some emphasis, that she did not believe it was her signature. She professed no knowledge of the witness, Mr Lawless, who it was put, was a sales employee at the hardware store at Margate. This is a town about 20 minutes’ travel from Kettering where she was then living. Mrs Wright said that she did not patronise the Margate Hardware Store except perhaps to buy minor items such as firelighters; that she did not send or cause to be sent the fax from that store and she added that her husband opened an account at the store and ran up a bill of about $11,000, ordering things for himself from Melbourne. She said that his failure to pay this and other bills was a cause of some embarrassment to her.
I gave leave to the plaintiff to call Mr Lawless in reply. He identified his signature as witness on exhibit 14. He said he did not know a Mrs Wright and did not recall witnessing the signature on the document in 1990. He said, however, that he would not have signed as a witness if the person whose signatures he was witnessing had not signed in his presence. He said that the store had a fax machine which was, on occasions, used to send customers’ documents and he identified the fax header imprint as being of that machine. I accept this evidence. He said, too, that he handled the accounts of customers at the store over the past five years. He was not aware of an account in the name of Mr Wright, Mrs Wright or Merdeka and stated that there was certainly no account which had been run to $10,000 or more. The reliability of this last statement, at least insofar as it concerned 1990, was somewhat diminished by the production of a credit invoice in the name of Merdeka from the Margate store dated 11 May 1990 showing purchases totalling a little over $1,000 and bearing a note that this account was paid on 6 June 1990. The purchases in the invoice appear to be for the renovations to Mrs Wright’s cottage at Kettering.
I make the following findings about the evidence of Mrs Wright with respect to the document of 20 September 1996:
1.I find that Mrs Wright signed the guarantee on 20 September 1990. I make this finding notwithstanding her evidence that she did not. I should record, in fairness to her, that her denials on this matter were less definite as the cross-examination proceeded so that she finally said that the signature did not appear to be hers.
2.I find that in September 1990 the relationship between Mrs Wright and Mr Wright was not as strained as she described. She was prepared to stand as guarantor for a loan for Merdeka at a time when her interest in its affairs was less than it was in October 1989.
3.Mrs Wright was prepared to exaggerate, if not misrepresent, the facts to achieve her own ends.
I turn now to the appearance of the signatures “JE Wright” on the documents Exhibit 1 and Exhibit 2. Counsel for Mrs Wright very properly warned me against my undertaking anything in the nature of an expert comparison of the handwriting with the admitted signatures made on 14 March 1989 and 23 December 1991 and with the signature on the document of 20 September 1990 which I have found to be hers. No handwriting expert was called by either party. Accepting this to be the case, there are, nevertheless, a number of readily observable differences between the supposed signatures and the established signatures of Mrs Wright.
I now bring these findings together in the context of the solitary issue in this case. Equuscorp bears the burden of proving the signature on the guarantee. I am not prepared to find that this onus is discharged by the evidence of Ms Glerum. Since Mrs Wright was not involved in submitting the guarantee to Equuscorp, no inference against her can arise from the fact that she or Merdeka represented her signature as genuine. I am not prepared to act on her denials of the signature given the successful attack on her credit. This conclusion, however, does not carry the further conclusion that her unsatisfactory evidence proves that she did make the signature. Finally, the signature in question, like the other “JE Wright” signatures on Exhibit 1 and Exhibit 2 do not appear to have been made by the same hand as made the acknowledged signatures.
I conclude from all of this that Equuscorp has not discharged the burden which it bears of proving that the guarantee was executed by Mrs Wright. Its claim against her must therefore fail.
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