Fcl Interstate Transport Services P/L v Quirke - [2004] SADC 137

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
FCL INTERSTATE TRANSPORT SERVICES P/L v QUIRKE
Judgment of Her Honour Judge Trenorden
12 October 2004
GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE
Defendant director of company now in liquidation - guaranteed company's debts to plaintiff - guarantee referred to goods but services only provided - whether guarantee failed as a result - relevance of Statute of Frauds - whether guarantee enforceable against defendant - whether consideration for contract of guarantee
Statute of Frauds 1677 (Imperial) s4; Statutes Amendment (Enforcement of Contracts) Act 1982, s3, referred to.
Walter & Morris Limited v Lymberis (1965) SASR 204; Rawcliffe v Bianco Hiring Service P/L 224 LSJS 266; Citibank v Nicholson (1997) 70 SASR 206, considered.

FCL INTERSTATE TRANSPORT SERVICES P/L v QUIRKE
[2004] SADC 137
Introduction

From about 30 June 2002 to about late August 2002, the plaintiff provided transport services to Dayrise Produce Proprietary Limited (“Dayrise Produce”), a company which has been in liquidation since 17 June 2003. At the relevant time the two named defendants were directors of Dayrise Produce, which sorted and packed citrus fruit for market. The plaintiff transported the citrus fruit to wholesaler, Bullfrog International (“Bullfrog”) in Perth and other markets.
The first named defendant did not appear at the trial of the matter. He became bankrupt upon presentation of his own petition on 19 May 2004. Leave had not been obtained by the plaintiff to proceed further.
The second named defendant who had been represented by solicitors at the time of the filing of his defence, appeared self-represented at the trial of the action. I will refer to him in these reasons as the defendant.
On 1 July 2002 Dayrise Produce submitted a credit application to the plaintiff. In addition, a document that on the plaintiff’s argument purported to guarantee monies due and payable to the plaintiff by Dayrise Produce (“the purported guarantee”) was signed by both defendants, apparently on the same date, and forwarded to the plaintiff. Upon receipt of these two documents, both of which were on the plaintiff’s letterhead, the plaintiff committed to providing transport services to Dayrise Produce.
The purported guarantee included, in fine print, the following words:
“In consideration of you My/Our request agreeing from time to time to sell to the abovenamed Purchaser (hereinafter called the “Purchaser”) such goods in the way of its business as the Purchaser may require upon such terms and considerations as to payment of otherwise as may at any time or from time to time be agreed between the Purchaser and you I/We the above mentioned guarantors hereby irrevocably and unconditionally guarantee to you, both jointly with the Purchaser and severally, the due payment for all such goods as may be sold to the Purchaser as aforesaid and for the due performance and observance of any such terms and conditions as may be agreed in respect of any such sale and I/We expressly acknowledge and agree that this guarantee is unlimited and that I/We require no notice of the amount of credit from time to time extended to the Purchaser or the conditions whether as to interest, time for payment or otherwise whatsoever attaching to the sale of any such goods and further that this is a continuing guarantee and that I/We shall not be released from this guarantee by any arrangement with the Purchaser with or without My/Our consent as guarantor or by any alteration in the obligations undertaken by the Purchaser or by any forbearance whether as to payment, time, performance or otherwise and further that this guarantee will not be revoked except after the expiation of three (3) months notice in writing to you”.
The defendant admits that:
·there was an agreement between the plaintiff and Dayrise Produce;
·the plaintiff provided transport services to Dayrise Produce between about June 2002 and about August 2002, pursuant to the agreement;
·    Dayrise Produce failed to pay the plaintiff the total amount of $50,123.26 being a total of all amounts due and payable to the transport services provided by the plaintiff;
·    that Dayrise Produce had agreed to pay interest at the rate of 1.5% per month on any amount outstanding for 30 days or more;
·    Dayrise Produce had agreed that it would be responsible, and would reimburse the plaintiff for all costs incurred and payable in any collection and/or legal action taken for the recovery of monies due and owing.
Issues
The issues in these proceedings having regard to the defendant’s filed defence, are:
1)was there a contract in the nature of a guarantee between the plaintiff and the defendant?
2)did the defendant guarantee to the plaintiff monies due and owing to it by Dayrise Produce, on account of services provided?
3)should the purported guarantee be set aside as enforceable against the defendant?
Defendant’s Application to Amend Defence
During the course of the trial, the defendant unsuccessfully sought leave to amend his defence to argue that the guarantee fell foul of the Statute of Frauds. It seems that he sought to argue that the omission of the words “and services” after the word “goods” or the insertion of the word “goods” in lieu of the word “services”, was fatal to the plaintiff’s case, as s4 of the Statute of Frauds which required a contract of guarantee to be in writing.
The problem with this argument is that the Statute of Frauds no longer applies in this State with respect to a guarantee.
S4 of the Statute of Frauds 1677 (Imperial) had specified that:
“no action shall be brought… whereby to charge the defendant upon any special promise to answer for the debt, default on miscarriages of another person … unless the agreement upon which such action shall be brought, or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.”
Thus, s4 of the Statute of Frauds required contracts of guarantee (insofar as they are constituted a “special promise”) to be evidenced by writing. In South Australia, the Statutes Amendment (Enforcement of Contracts) Act, 1982 declared s4 to be no longer in force:
“3. Section 4 of the Imperial Act 29 Charles II C.3 (the Statute of Frauds 1677) has no force or effect in this State.”
It followed that a contract of guarantee was no longer required to be evidenced by writing. I do not believe that the law has changed in this regard, since 1982. In his written closing submissions, the plaintiff relied on several authorities which he submitted showed the continued existence of s4 of the Statute of Frauds. None of these were relevant, as they all concerned interest in land to which sections 26 and 29 of the Law of Property Act 1936 applied (these sections incorporate the Statute of Frauds provision with respect to dealings in land).
The primary reason for the Court’s rejection of the defendant’s application for leave to amend his defence was that there was no reasonable prospect of success.
The Law
A guarantee is a contract. A contract of guarantee supports an obligation by a debtor to pay a creditor with whom the debtor has contracted. Thus, a corporate director may guarantee the payment of monies to a person with whom the corporation has contracted to supply goods and/or services at an agreed price. A contract of guarantee then, is a secondary obligation assumed by the guarantor in the sense that it stands behind a primary obligation between the supplier and the person whose debts the guarantor has agreed to guarantee.
There must be consideration supporting the contract as for any contract (unless it is under seal), but with the guarantee this is usually in the form of the creditor incurring a detriment in reliance on the promise by the guarantor to guarantee the debts of the principal debtor. (see The Modern Contract of Guarantee, 3^rd Ed., O’Donovan and Phillips, LBC, 1996 at pp 9, 52).
It is a question of fact in each case as to whether a contract is a guarantee.
It will be sufficient consideration if the creditor who supplies goods or services to the debtor, permits the debtor to run up an account for those goods/services, or in other words, forgoes immediate payment for each supply of goods/services, and agrees to accept periodic payment upon account.
A court will examine the substance of the transaction which it is alleged resulted in a contract of guarantee. The words in the guarantee document are not necessarily to be considered in isolation but the context at the time it is alleged that the contract of guarantee was entered into may be considered. Where there is ambiguity in the terms of the guarantee, it is appropriate that oral evidence and evidence of surrounding circumstances be given to explain the written form.
The matter of Walter & Morris Limited v Lymberis [1965] SASR 204 concerned a claim by the plaintiff against the defendant as surety for the price of building materials sold and delivered to a company, of which the defendant was the managing director. The defendant had claimed that the written guarantee, which he admitted signing, was not a guarantee in law, being void for uncertainty, in that it was in a form prepared for use by more than one guarantor. The Full Court rejected the argument on appeal, and in his reasons Napier CJ said:
“We have been urged to hold that this language is inapt, and incapable of being applied to the purpose of a sole, as opposed to a joint, guarantee. But it appears to me that in construing any written document, the Court is not obliged “to stop at the letter, and so to stick in the skin”. I think that “the Court must, in every case, do the best that it can to arrive at the true meaning of the parties, upon a fair consideration of the language used, and the facts properly admissible in evidence” (see per Lord Parker, in Eastwood v. Ashton (1915) AC 900 at p913). As Sir Owen Dixon said in the case to which our attention was called (Automobile Fire & General Insurance Co. of Australia Ltd. v. Davey (1936) 54 CLR 534 at p542:-
‘No doubt it is important to give a steady and perhaps liberal application to the principle that the words are not the chief thing in a writing but the intent and design of the makers (cp., per Willes C.J., Smith v. Packhurst (1742) 3 Atk. 135, at p. 136 (26 E.R. 880, at pp. 880,881).
The common use of printed forms gives a new and more frequent application to the rule of interpretation which authorizes Courts to disregard particular expressions and even provisions and to understand them in a sense varying from that which they exactly express. But an essential condition must be fulfilled before such a course is justified. The document itself, when applied to the circumstances and explained by such evidence as is legitimate, must contain indications of the real meaning of the parties which are sufficient to produce a reasonable certainty as to their intention in reference to the matters that are material.’
That is, I think, the rule for all documents, however formally expressed and however solemnly executed.”
In Rawcliffe v Bianco Hiring Service P/L (224) LSJS 266, Justice Lander with whose reasons Doyle CJ and Bleby J agreed, quoted at page 283, the following passage from NEC Information Systems Australia Pty Ltd v John Linton [1985] SCNSW BC 850 0877 (unreported, Wood J, 17 April 1985) as a correct statement of the law:
“… regard should be had … to the circumstances surrounding (the deed’s) execution. The inquiry to be made by reference to these matters concerns what the parties must objectively and fairly be understood to have intended by the document once executed. Evidence of subjective intention is to be disregarded.”
His Honour Justice Lander, at para 126 of the judgment, also quoted with approval from the judgment of Giles J. in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd and Ors (1989) 21 NSWLR 160, at page 174:
“In the result, I conclude that the proper approach is to inquire whether there is to be found an intention that the signatory be personally bound to the contract evidenced in the document, meaning thereby not a subjective intention but an intention to be bound objectively, notwithstanding a qualification attached to the signature. ... That intention, or lack thereof, is to be found upon the construction of the document as a whole, including but not being limited to the qualification attached to signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible.”
In Rawcliffe, the issue had been whether the two directors of Rams Development Pty Ltd (Rams) by sending to Bianco Hiring Service Pty Ltd the completed documents, the Account Application and Guarantee, offered to Bianco that they would enter into a guarantee in favour of Bianco, provided that Bianco would agree to provide goods and services on credit to Rams. In that case it was necessary to determine whether the two directors had “executed the contract in their capacity as guarantors or whether they had affixed their signatures as directors and witnesses to the execution of the common seal (of Rams)”. His Honour continued (at paragraphs 136-137):
“It was therefore necessary to have regard to the matters of facts which surrounded the execution of the document to determine objectively the capacity in which they executed the contract.”
The matter could not be resolved by their evidence as to what they intended. Their subjective intention was not relevant in the determination of that issue.
On the third issue, it is pleaded in the defence that Mr Parish was acting as the plaintiff’s servant or agent in obtaining the defendant’s signature as guarantor in favour of the plaintiff. In Citibank v Nicholson (1997) 70 SASR 206, the Supreme Court per Perry J described how the law has addressed this kind of situation at p226-227:
“There is a long line of cases in which the court has held that where a creditor entrusts the debtor with security or guarantee documents with a view to the debtor procuring the execution of them, the court will construe the situation as giving rise to a species of agency, so as to hold the creditor responsible for any misrepresentation or undue influence brought to bear by the debtor towards the third party: see, eg, Chaplin and Co Ltd v Brammall [1908] 1 KB 233; Turnbull & Co v Duval [1902] AC 429; Barclays Bank Plc v Kennedy [1989] 1 FLR 356; Burke v State Bank of New South Wales Ltd (1994) 37 NSWLR 53; Avon Finance Co Ltd v Bridger [1985] 2 All ER 281; Coldunell Ltd v Gallon [1986] 1 QB 1184; Bank of Baroda v Shah [1988] 3 All ER 24; Cairncross v Paterson (1894) 20 VLR 258; Contractors Bonding Ltd v Snee [1992] 2 NZLR 157.
Many of the cases involved a situation where a husband had been entrusted with guarantee documents by a creditor who leaves it to the husband to procure the signature of his wife. But the principle is not confined to husband and wife cases.
I have used the expression “species of agency”, as the cases make it clear that the test for determining whether a creditor affected by the actions of a person to whom it has entrusted the documents for execution differs from the test for determining the existence of agency in the ordinary sense.
In Barclays Bank Plc v Kennedy, the matter was put in this way by Purchas LJ (at 363):
‘Again, the concentration on actual or ostensible authority being ‘given to the husband to act on behalf of the Bank’ may not be a reliable way of applying the test now well established by authority, albeit since this judgment was delivered, that the real question is whether the Bank were content to leave it to the husband to obtain the wife’s signature upon the charge.’ See also Kings North Trust Ltd v Bell [1986] 1 WLR 119 at 123-124; [1986] 1 All ER 423 at 427, per Dillon LJ and Bank of Credit & Commerce International SA v Aboody [1990] 1 QB 923 at 962-963.
As it was put succinctly by Lord Lindley in Turnbull & Co v Duval (at 435), ‘They left everything to Duval and must abide the consequences.’”
If I am satisfied that a guarantee exists, for the guarantee to be unenforceable the defendant would have to prove that:
a) there was misrepresentation or undue influence exerted by Parish to obtain the signature on the guarantee document; and
b) that the plaintiff knew or ought to have known that Parish was in a position to have done so.
Facts
My observations of the witnesses are set out in the following paragraphs. There were only 2 witnesses; Ms Jensen for the plaintiff and the defendant himself.
Ms Jensen endeavoured to tell the truth, as far as she could recall, but I find that to some extent, when her memory failed her, she was either reconstructing, or giving evidence of her usual practice when employed by the plaintiff, as opposed to recounting what had actually occurred.
The defendant, Mr Quirke, was essentially truthful, but his evidence was coloured to a degree by his desire to inform the Court that he was not aware until much later, of the nature of the document he had signed, and that in his view, the document did not relate to the services that had been provided by the plaintiff.
I find, on the balance of probabilities, that the facts are as set out in the following paragraphs.
The company Dayrise Produce was established in 2001. It operated a packing shed at Loxton, but had an office in North Adelaide, where Mr Chris Parish, who administered the affairs of Dayrise Produce, was based. Mr Parish was assisted by Mr Mark Lawson, based in Loxton. As one of the two directors, of Dayrise Produce, the defendant was “hands-on” in the packing shed and left financial and administrative matters generally to his co-director Mr Lekakis and the employees Parish and Lawson.
Ms Jensen, employed by the plaintiff, contacted by telephone, Mr Chris Parish, the self-styled “financial controller” of Dayrise Produce, in June 2002, with a view to selling the plaintiff’s services to Dayrise Produce. Mr Parish operated from his office in North Adelaide, which was also the Adelaide office of Dayrise Produce, and from time to time from the company’s office at the packing shed at Loxton.
Prior to 20 June 2002, Ms Jensen met with Mr Parish. The plaintiff provided to Dayrise Produce, by fax, a quote for freight rates, “depot to door” to Perth, on 20 June 2002. Subsequently that was revised and a new quote was faxed to Chris Parish of Dayrise Produce, on 25 June 2002. The copy of the fax admitted into evidence states that “an FCL credit application” followed the 2 page letter containing the quote.
Mr Parish accepted the quotation on Dayrise Produce’s behalf, by telephone, prior to 29 June 2002. There was now an arrangement whereby the plaintiff agreed to transport Dayrise Produce’s perishable goods (fruit) to Perth by rail freight at an agreed rate, but there was no written agreement recording this or the terms of payment. Ms Jensen forwarded to Mr Parish by fax, a document entitled “Credit Application” on the plaintiff’s letterhead, including a form of guarantee, also on the plaintiff’s letterhead.
On 29 June 2002, Dayrise Produce despatched a consignment of fruit to the plaintiff for delivery to Perth. This consignment was duly placed in a container and transported to Perth. On 1 July 2002 Ms Jensen of the plaintiff company became aware of the shipment and spoke to Mr Parish for Dayrise Produce, indicating that the fruit could not be conveyed to its final destination, Bullfrog, in Perth until an AQIS certificate and a completed credit application had been received by the plaintiff. At the request of Mr Parish, Ms Jensen faxed another copy of the credit application to him. Mr Parish then took steps to have these documents completed and forwarded to the plaintiff.

The “Credit Application” was identified by Ms Jensen as comprising two pages, each of which carried the plaintiff’s name and ABN in the header; one of which was entitled “CREDIT APPLICATION” and the other had no heading but was a form with spaces to be filled in, including under the words “References” and “Guarantors”.
The plaintiff received by fax from Dayrise Produce on 1 July, 4 pages. These comprise exhibit P3, and appear to have been faxed to the plaintiff at 15:22 on 1 July 2002 from Dayrise Produce’s North Adelaide office. However 2 of the pages, being the 1 page document entitled “CREDIT APPLICATION” and another 1 page document being the second page of the credit application and the purported guarantee document, were faxed from Dayrise Produce’s North Adelaide office at 15:11 and from Dayrise Produce’s Loxton office at 15:19 on the same day, again from Dayrise Produce’s North Adelaide office at 15:22 and also faxed (together with another page - the last page of P3) from the plaintiff’s office at 15:41/15:42; all on 1 July 2002.
Exhibit D10 comprised the same 2 pages, but there are differences between these pages and the 2 pages of exhibit P3 described above.
The most likely course of events is that the 2 pages of the “Credit Application” including the purported guarantee document were faxed by Chris Parish or another person from Dayrise Produce’s North Adelaide office at 15:11 on 1 July 2002 to Dayrise Produce’s Loxton office. There, they were signed, but not dated or witnessed as required, by both directors of Dayrise Produce, and faxed back to the North Adelaide office at 15:19, where the date was added to both documents and they were then faxed, with the page headed “CUSTOMER ACCOUNT INFORMATION” and a covering note (being 4 pages in total) to the plaintiff at 15:22. On the balance of probabilities I find that this was the sequence of events.
It follows that the defendant’s evidence that Chris Parish handed him the purported guarantee document to sign at Loxton, might not have been correct. Mr Quirke could not recall whether it was 1 July 2002 when he signed the document, but he denied reading the document at the time of signing or seeing the “Credit Application” document. I accept that he signed the document on 1 July. This document was signed by both directors and the page titled “CREDIT APPLICATION” was signed by Mr Lekakis during the period that elapsed between the pages being taken from the fax machine at 15:11 or thereabouts and subsequently being faxed to North Adelaide at 15:19.
I accept the defendant’s evidence that the only document he saw was the purported guarantee. His co-director Mr Lekakis signed both the credit application page and the purported guarantee. It may have been either of Chris Parish or Mark Lawson who placed the documents before the defendant and his co-director Mr Lekakis, but whoever it was, it is most likely that having called the two directors into the Loxton office, this person told them that a credit application must be signed in order to get the consignment of fruit which was already in Perth, delivered to the Perth wholesaler, and then placed the relevant documents for signing before them. As the defendant’s signature was solely required on the purported guarantee document, this may have been the only document he saw.
Although not lacking in capacity in any sense, the defendant had a slim opportunity of reading the fine print in this document given the time period in which both he and the first-named defendant signed it ,and the size and quality of the print; the document having already been twice through fax machines. I was invited to, and do, take judicial notice of the fact that a document is reduced by a small amount, by each fax machine through which it passes. Upon being signed, the documents were taken by this person and faxed immediately to Chris Parish or another person in the North Adelaide office, and thence to the plaintiff. A period of only 8 minutes had elapsed between the documents being faxed from the North Adelaide office to Loxton and from Loxton to the North Adelaide office.
The defendant stated that he had not intended to personally guarantee the debts of Dayrise Produce. However he signed the purported guarantee document, having trusted Mr Parish to do what was necessary to have the company’s consignment of fruit delivered to Bullfrog on 1 July 2002, and generally to open an account with the plaintiff. His intention in signing the purported guarantee was to get the paperwork in order, so that the plaintiff would deliver Dayrise Produce’s fruit.
I find that the defendant signed the purported guarantee document that had been filled out by Mr Parish, and which he had been told or understood, was a credit application; that he did not seek or obtain any advice on, the contents of this document that he saw for the first time and signed on 1 July 2002.
Whether a Guarantee Existed Between the Plaintiff and the Defendant
The purported guarantee document is evidence of an intention on the part of the signatories, to be bound to guarantee the debts of Dayrise Produce. This document, on the plaintiff’s letterhead was not titled, but was, by its contents, partly credit application and partly a proforma guarantee document in support of a credit application. The stamp of Dayrise Produce had been placed at the top of that part of the form to be filled in, next to the identifier “Company”. Other identifiers which were completed were “Estimated Monthly Purchases”, “Bank”, “References” and “Guarantors” (completed with names only).
The purported guarantee amounted to an offer by the defendant to the plaintiff. Although a name had not been inserted adjacent to the word “To:” as it appeared above the words of guarantee, it is clearly to be inferred, upon an objective approach, that the offer of guarantee is addressed to the plaintiff, whose name appears in letterhead style at the top of the document. The offer was accepted by the actions of the plaintiff in providing services, which the defendant agrees were provided.
I am satisfied that there is nothing in the defendant’s pleading that there was no consideration received by him. The plaintiff, in reliance upon the guarantee (the promise by the defendants), was agreeing to incur a detriment, namely providing services upon credit to Dayrise Produce, instead of insisting on immediate payment for each service rendered. This is sufficient consideration, according to the authorities (see. The Modern Contract of Guarantee at pp 52-53).
Did the Defendant Guarantee to the Plaintiff the Payment of the Debts of Dayrise Produce on Account of Services Provided?
The defendant has pleaded that the purported guarantee is in relation to goods, not services, and that it does not bind him, as services only were provided by the plaintiff to Dayrise Produce.
A court will look at evidence extrinsic to the contract document, including surrounding circumstances to clarify any ambiguous terms therein. Given that the plaintiff provided no goods, the term as it appears in the guarantee, is ambiguous. It is clear here that the intention of the parties was in relation to the services to be provided by the plaintiff. Indeed, the evidence shows that the services had begun to be provided, in that a consignment of fruit had been transported part way to its destination by the plaintiff at the request of Dayrise Produce, and the very reason why the guarantee was needed was that the directors of Dayrise Produce wanted the fruit to be delivered to Bullfrog.
I must conclude that the evidence, considered objectively in its commercial context, reveals that the guarantee, although it appeared by its words to be in respect of goods, was actually in respect of the services provided to Dayrise Produce by the plaintiff.
Should the Guarantee be Set Aside as Unenforceable Against the Defendant?
I find that the plaintiff entrusted Parish as an employee of Dayrise Produce to obtain guarantees from the directors. However, this does not mean that Parish was the plaintiff’s agent.
Mr Parish was not called to give evidence. It was not established that he acted as agent of the plaintiff in obtaining signatures, but the case does not revolve around whether Parish acted as agent for the plaintiff.
This case is different from the line of bank cases where a lender has agreed to lend monies to a borrower provided guarantees are given in favour of the lender by natural persons but the principles established by these authorities are applicable. This case concerns a business arrangement where the plaintiff agreed to provide services to Dayrise Produce, with the directors of Dayrise Produce to guarantee the payments due by Dayrise Produce for those services.
The general rule is that in the absence of unusual features in the transaction, the plaintiff as creditor was entitled to leave it to the debtor, Dayrise Produce, to seek to have its directors (who were also shareholders) provide guarantees as part of a credit application. This was one of the bases upon which it would agree to provide its service. Dayrise Produce could either accept or look elsewhere. There was nothing unusual in the transaction. The plaintiff was entitled to rely on the signed guarantee presented to it.
In the absence of proof, it cannot be said that the plaintiff knew or should have known that Dayrise Produce would seek to mislead, misinform or unduly influence its directors. In the absence of proof of fraud or deception on the part of Parish or any other Dayrise Produce employee who might have been involved in obtaining the guarantees for the company, calculated to benefit the company, the defence fails.
The defendant failed to persuade the Court that it would be inequitable to enforce the guarantee against him.
Conclusion
The document constitutes a guarantee in respect of debts incurred for services provided to Dayrise Produce by the plaintiff. It would not be inequitable for the plaintiff to rely on the guarantees presented to it. If the defendant failed to read or seek advice on the guarantee document, that is unfortunate and perhaps reflects on the state of communication within the company, the level of support provided to the directors by Dayrise Produce’s financial manager, the knowledge of the directors and perhaps misplaced trust, but it cannot disentitle the plaintiff to relief, on the basis of the guarantee document, upon the evidence brought before the Court.
Interest
The form of the guarantee is comprehensive. The defendant, by the terms of the guarantee, is committed to meet all the obligations of Dayrise Produce to the plaintiff, including the payment of interest on the amount of the debt at the rate of 1.5% per month. Unfortunately for the defendant, his liability was not limited.
The plaintiff gave notice to Dayrise Produce of its claim on 19 December 2002 and claims interest from that date. On 12 June 2003 a receiver was appointed to Dayrise Produce, and on 17 June 2003 the company was placed in liquidation.
Dayrise Produce could not further incur debt once a liquidator was appointed; it was being wound up. It follows that the defendant cannot be liable for the payment of interest pursuant to the guarantee beyond 17 June 2003. Simple interest at the rate of 1.5% per month, for the period 19/12/02 to 17/6/03 amounts to (6 months less 2 days) $4461.65.
Decision
I would allow judgment for the plaintiff on its claim in the sum of $50,123.26 plus interest on the debt fixed at $4461.65. I will hear the parties.