Fielders Australia Pty Ltd v Garyowen Roof and Plumbing Services Pty Ltd (in liquidation)
[2013] VCC 1181
•18 September 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised (Not) Restricted |
COMMERCIAL LIST - GENERAL DIVISION Case No. CI-12-03973
| FIELDERS AUSTRALIA PTY LTD | Plaintiff |
| v | |
| GARYOWEN ROOF AND PLUMBING SERVICES PTY LTD | Defendants |
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JUDGE: | HIS HONOUR JUDGE ANDERSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5-6 September 2013 | |
DATE OF JUDGMENT: | 18 September 2013 | |
CASE MAY BE CITED AS: | Fielders Australia Pty Ltd v Garyowen Roof and Plumbing Services Pty Ltd (in liquidation) & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1181 | |
REASONS FOR JUDGMENT
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Catchwords: Guarantor alleging economic duress and unconscionability – Whether guarantor liable for debts incurred prior to execution of the guarantee.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A. McNab | Collins & Stephens |
| For the Second Defendant | In person |
HIS HONOUR:
1 Garyowen Roof and Plumbing Services Pty Ltd, the first defendant, (“Garyowen”) is in liquidation. It was indebted to the plaintiff, Fielders Australia Pty Ltd (“Fielders”) for the supply of roofing materials. The second defendant, Mr John Schroen, was a director of Garyowen. On 10 January 2012, he signed a credit application on behalf of Garyowen and executed a personal guarantee. Mr Schroen is now sued on that guarantee. By the document, he undertook to pay “all amounts whether in respect of past, current or future debts which at any time for any reason or circumstances are payable”.
2 Fielders’ claim is in two parts:
a.$83,039.51 for goods supplied between October 2011 and January 2012 on a trading account in the name of GO Roofing, Schroen Investments Pty Ltd (“Schroen Investments”), which account was also guaranteed by Mr John Schroen;
b.$170,181.18 for goods supplied to Garyowen between January and June 2012.
From the total of $253,220.69, $121,946.08 has been paid, leaving a balance of $131,271.61.
3 In relation the claim for the trading account in the name, Schroen Investments, the plaintiff asserts that:
a.the terms of the guarantee made Mr Schroen liable for the “past” debts of the “customer”;
b.in the credit application and guarantee, the “customer” was described as Garyowen;
c.although the goods supplied had previously been invoiced to Schroen Investments, Mr Schroen on behalf of Schroen Investments and Garyowen, had informed Fielders prior to October 2011 that the correct customer to invoice the goods was Garyowen, as it was the entity ordering the goods;
d.later Magistrates’ Court proceedings against Mr Schroen and Schroen Investments were discontinued on the basis that Garyowen was the appropriate contracting party;
e.the later payment by Mr Schroen of $121,946.08 was not allocated to any particular portion of the debt to Fielders.
4 Mr Schroen, who appeared at the trial to represent himself, relied upon matters raised in the defence filed earlier on his behalf by solicitors. He submitted that in relation to his personal liability:
a.he had not executed a guarantee in respect of the liability of Schroen Investments;
b.he had informed Fielders that Schroen Investments was a trustee and was not a trading company and could not be invoiced for the goods supplied;
c.he had been asked to submit a further credit application and sign a personal guarantee;
d.the guarantee he signed was unenforceable because certain details in the document were not completed;
e.the guarantee was unenforceable because he was not advised by Fielders that it related to past debts and he had not been given the opportunity to seek independent legal advice;
f.he had signed the guarantee under duress, as otherwise Fielders would have ceased the supply of goods to his companies;
g.his liability under the guarantee was limited to the extent that could be obtained from the realisation of the property at 49 Bastow Road, Lilydale;
h.the credit application and guarantee had been wrongfully taken from him by the plaintiff before he had sought legal advice. In the circumstances, it would be unconscionable to enforce the guarantee against him;
i.entries in the statements of account of Fielders showing four invoices for the supply of goods in February 2012, with the reference “51-59 Kensington Rd”, did not relate to Garyowen. These invoices totalled $27,700.83;
j.Garyowen had a setoff for approximately $32,000 in respect of insurance work invoiced to Fielders for the labour costs involved in replacing defective roofing materials Fielders had supplied.
5 Evidence was given at the trial by Mr Robert Jackson, the plaintiff’s national credit manager since May 2011, who is based in Adelaide. Mr Jackson said that soon after he took over his responsibilities, and had reviewed the plaintiff’s accounts, he discovered that the name of the company GO Roofing Pty Ltd had been changed to Schroen Investments Pty Ltd. An ASIC search discloses that GO Roofing Pty Ltd was incorporated on 2 July 2004 with ACN 109875961. On 16 January 2007, the name of the company was changed to Schroen Investments Pty Ltd. Mr Schroen had been a director of the company since 22 December 2006.
6 An application for credit was made to Fielders by GO Roofing Pty Ltd in about July 2004. The application was signed by Gary Schroen. A guarantee which formed part of the terms and conditions of the credit application was signed by both Gary Schroen and John Schroen, the second defendant. Mr Jackson said that prior to October 2011, Mr Schroen contacted him and asked why the plaintiff’s invoices were in the name Schroen Investments. Mr Schroen said that that the company was his superannuation investment company and he was trading as Garyowen. Mr Jackson and Mr Schroen met in Melbourne on about 14 October 2011. It was agreed that a new credit application would be submitted by Mr Schroen in the name of Garyowen.
7 On 17 October 2011, Mr Jackson sent a blank application form and guarantee by email to Mr Schroen’s assistant requesting that she “please ask John to sign this so we can sort out the account details”. There were further emails over the next two days about executing the documents and a payment to be made to Fielders. The applications and guarantee were not, however, returned until Mr Schroen sent an email to Mr Jackson on 12 January 2012, which noted, “Please see attached as requested”. Attached were the application and guarantee. The application was signed by Mr Schroen and dated 10 January 2012. The guarantee was signed, “as a deed”, by Mr Schroen in the presence of his assistant and dated 10 January 2012.
8 Between October 2011 and January 2012, Fielders continued to receive orders and to supply goods to Mr Schroen’s business. After the executed application, form and guarantee were returned by email to Fielders, in January 2012, the trading continued.
9 Proceedings were issued by Fielders in the Melbourne Magistrates’ Court in August 2012 against Schroen Investments and Mr Schroen as guarantor in relation to the supply of goods between October 2011 and January 2012. Mr Schroen and his lawyers advised that Garyowen was responsible for the debts. As a consequence, the Magistrates’ Court proceeding was discontinued on 14 December 2012. An order was made by consent that “The proceeding be discontinued without adjudication on the merits. No order as to costs”. On 7 February 2013, an amended writ was filed in the present proceeding to include the earlier claims.
10 Mr Schroen gave evidence that he had reached a “gentlemen’s agreement” with Mr Jackson at the meeting in Melbourne in October 2011 in relation to the property at 49 Bastow Road, Lilydale. Although it was not clear from the evidence, it appeared that Mr Schroen was suggesting that any recovery under the guarantee should be limited to the extent to which the security property at Lilydale could be realised. He had later “honoured the debt” with the Bastow Street property. Mr Schroen said that he signed the guarantee under duress because, if he had not done so, Fielders would have ceased the supply of goods.
11 Mr Schroen said that he had explained to Mr Jackson, or the plaintiff’s state manager in Victoria, Mr Dean Lovett, that he had not had any legal advice about the documents. He said his assistant, Nadine, had told him that Mick, a sales representative of the plaintiff, had picked up the guarantee from the offices of Garyowen. He also gave evidence that the Kensington Road invoices were not jobs he identified as Garyowen’s and that Fielders had failed to pay an invoice for about $32,000 for Garyowen’s labour costs to replace defective roofing materials that Fielders had supplied.
12 Mr Schroen admitted in cross-examination that from October 2011 through to January 2012, Garyowen was the customer of Fielders ordering the goods. He agreed that his solicitors (who had acted for him until recently) had been supplied with a memory stick containing copies of relevant documentation, including invoices and purchase orders.
13 In the circumstances, I consider that the following findings and conclusions are appropriate:
a. Mr Schroen admitted in the notice to admit procedure that he executed the guarantee dated 10 January 2012;
b. the guarantee by its terms covers both the previous and the later trading. The previous dealings between October 2011 and January 2012 were admitted by Mr Schroen to have been for Garyowen;
c. the discontinuance of the Magistrates’ Court proceeding, and the inclusion of those claims in the present proceeding, should prevent Mr Schroen denying that the goods supplied before the guarantee was executed in January 2012, were for Garyowen;
d. Mr Schroen had previously been a guarantor for the GO Roofing account with Fielders. The change of the company’s name in 2007 to Schroen Investments did not affect that liability;
e. any details, such as the “credit limit” , that were not inserted in the application form or the guarantee dated 10 January 2012 were not material and would not affect the enforceability of the guarantee;
f. there is no evidence of circumstances sufficient to support a defence by Mr Schroen that the guarantee was signed under duress or without him having had the opportunity for proper consideration, including by obtaining independent legal advice. There is not sufficient evidence that the documents were wrongfully taken by the plaintiff’s representatives from Garyowen’s offices;
g. the guarantee does not refer to the property at Bastow Street, Lilydale, except as the address of Mr Schroen. It does not refer to the fact that the Lilydale property was specifically offered as security for the guarantee. There is no evidence to support the contention that the guarantee was limited to the extent that recovery could be made by realising that property;
h. the issues about invoices totalling $27,700.83 being incorrectly charged, and a setoff for replacement work to the value of $32,000 had not been raised earlier in the proceeding and should not be permitted to be relied upon;
i. the collection costs paid to AMA totalling $7,710.34 in respect of the recovery of the sum of $121,946.08 were reasonable.
14 In the circumstances, Mr Schroen is liable to Fielders for the balance owing for goods supplied to Garyowen of $131,274.61, together with the collection costs of $7,710.34. There will be judgment for the plaintiff against the second defendant, that the second defendant pay to the plaintiff the sum of $138,984.95. I will hear further from the parties on questions of interest and costs.
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Certificate
I certify that the preceding 6 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 18 September 2013.
Dated:18 September 2013 Philippa Gilkes
Associate to His Honour Judge Anderson
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