Follacchio v Harvard Securities (Aust) Pty Ltd

FEDERAL COURT OF AUSTRALIA

Follacchio v Harvard Securities (Aust) Pty Ltd [2002] FCA 1067

CONTRACT – guarantee – signature by director – whether signatory attracting personal liability – principles of construction

Ariadne Steamship Co v James McKelvie & Company [1922] 1 KB 518 not followed
Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160 applied
Heald v O’Connor [1971] 1 WLR 497 applied
National Commercial Banking Corporation of Australia Ltd v Cheung (1983) 1 ACLC 1326 not followed
Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909 referred to

DOMINIC FOLLACCHIO v HARVARD SECURITIES (AUST) PTY LTD

V437 of 2002

FINKELSTEIN J
7 AUGUST 2002
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 437 of 2002

On Appeal from a Magistrate of the Federal Magistrates Court of Australia

BETWEEN:	DOMINIC FOLLACCHIO Appellant
AND:	HARVARD SECURITIES (AUST) PTY LTD Respondent
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	7 AUGUST 2002
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The appeal be dismissed.
2. The appellant pay the respondent’s costs including any reserved costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 437 of 2002

On Appeal from a Magistrate of the Federal Magistrates Court of Australia

BETWEEN:	DOMINIC FOLLACCHIO Appellant
AND:	HARVARD SECURITIES (AUST) PTY LTD Respondent

JUDGE:	FINKELSTEIN J
DATE:	7 AUGUST 2002
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. A company called Westgarth Development Pty Ltd constructed a number of residential units in Northcote.  By several agreements, it engaged the respondent, Harvard Securities (Aust) Pty Ltd, a real estate agent, to sell the units.  The engagements were in the form of the General Sale Authority published by the Real Estate Institute of Victoria Ltd.  That authority contains the following provision:

   “Any signatory for a proprietary company Vendor will be personally liable for the due performance of the Vendor’s obligations as if the signatory was the Vendor.  If required by the Agent the signatory will procure the execution by all Vendor company directors of a guarantee to be prepared by or on behalf of the Agent.”

2. Each authority made provision for signature “by or for the Vendor”.  The appellant, Mr Follacchio, a director of Westgarth Development, signed the authority.  The agent found purchasers for units 8, 13 and 14 and became entitled to its commission.  When the commission was not paid it brought proceedings in the Federal Magistrates Court to recover the amounts due, which totalled $43,740, from both Westgarth Development and the appellant.  It obtained judgment for the amount claimed (less $26), together with interest.  That is the judgment from which this appeal is brought.

3. The reason the magistrate found against the appellant was that he was personally liable for the commission.  The magistrate said:

   “There is then an issue of the basis on which the second Respondent might be liable.  Provisions such as clause 6 [the reference should be…