G E Commercial Corporation Australia Pty Ltd v Brevtex Pty Ltd
[2005] WASC 27
•4 MARCH 2005
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: G E COMMERCIAL CORPORATION AUSTRALIA PTY LTD -v- BREVTEX PTY LTD & ORS [2005] WASC 27
CORAM: BLAXELL J
HEARD: 4 FEBRUARY 2005
DELIVERED : 4 MARCH 2005
FILE NO/S: CIV 2305 of 2004
BETWEEN: G E COMMERCIAL CORPORATION AUSTRALIA PTY LTD (ACN 009 974 747)
Plaintiff
AND
BREVTEX PTY LTD (ACN 010 860 401)
First DefendantSEABAY ENTERPRISES PTY LTD (ACN 052 454 065)
Second DefendantJEFFREY FRANCIS LESLIE
Third DefendantANNE ELIZABETH LESLIE
Fourth Defendant
Catchwords:
Practice and procedure - Plaintiff's application for summary judgment - Claim under guarantees for debt due from company of which third and fourth defendants were directors - Defence of unconscionable conduct - Whether or not triable issues - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 14
Trade Practices Act 1974 (Cth), s 51A, s 51AC
Result:
Summary judgment as to parts of claim
Category: B
Representation:
Counsel:
Plaintiff: Mr P G Clifford
First Defendant : Mr P Redding
Second Defendant : Mr P Redding
Third Defendant : Mr P Redding
Fourth Defendant : Mr A H Karp
Solicitors:
Plaintiff: Lawton Gillon
First Defendant : Redding & Associates
Second Defendant : Redding & Associates
Third Defendant : Redding & Associates
Fourth Defendant : Karp Steedman Ross-Adjie
Case(s) referred to in judgment(s):
Anka Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
Bolton v Salmon [1891] 2 Ch 48
Clarke v Union Bank of Australia Ltd (1917) 23 CLR 5
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Gillon v Kyle, unreported; FCt SCt of WA; Library No 9123; 16 October 1991
Jacob v Booth Distillery Co [1901] 85 LT 262
Tognini v Australian Mutual Provident Society, unreported; FCt SCt of WA; Library No 920646; 3 December 1992
Webster v Lampard (1993) 177 CLR 598
Yerkey v Jones (1939) 63 CLR 649
Case(s) also cited:
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2003] HCA 18
Barclays Bank plc v Kennedy [1989] 1 Fam R 356
Bolton v Darling Downs Building Society [1935] 2 St R Qd 237
Bond v Hongkong Bank of Australia Ltd (1991) 25 NSWLR 286
Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
Corumo Holdings Pty Ltd v C Itoh Ltd & Ors (1991) 5 ACSR 720
Eng Mee Yong v Letchumanan [1980] AC 331
Evans v Bartlam [1937] AC 473
General Credits (Finance) Pty Ltd v Shipton Holdings Pty Ltd, unreported; SCt of WA (Brinsden J); Library No 2054; 19 May 1977
Hills v Sklivas [1995] 1 VR 599
Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161
Kerry Stirling Hanel & Anor v John O'Neill [2003] SASC 409
Re Malley SM; Ex parte Gardner [2001] WASCA 83
Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 310
Savings & Investments Bank Ltd v Gasco Investments [1984] 1 All ER 296
Shepherd v Midland Bank plc [1987] 2 Fam Law R 175
Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21
White v Johnston (1886) 8 ALT 53
Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd, unreported; FCt SCt of WA; Library No 920347; 19 June 1992
BLAXELL J: The plaintiff in this matter applies for summary judgment in the sum of $1,868,073.31 against each defendant as guarantor of a debt due from Brevtex Machine Tools Pty Ltd (In Liq) ("Brevtex"). Pursuant to the terms of various deeds of guarantee executed by the defendants, the plaintiff also claims orders that they execute legal mortgages over certain land.
The defendants dispute the quantum of the debt due from Brevtex, and also deny that they are required by the guarantees to execute the mortgages. They further assert that the guarantees are unenforceable by reason of the financial arrangements between the plaintiff and the principal debtor being altered without their consent and/or by reason of the plaintiff's unconscionable conduct.
The undisputed facts
I have before me numerous affidavits including those sworn by the plaintiff's general manager (Shane Kingsley Smith), the receiver and manager of Brevtex (Neil Raymond Cribb), and the third and fourth defendants. It is apparent from these affidavits that the following facts are either not disputed or are not seriously challenged.
The third defendant ("Mr Leslie") and the fourth defendant ("Mrs Leslie")are husband and wife, but have been separated since June 2001. At all material times they were the only directors of Brevtex and of the first and second defendants. The three companies are related entities, with the shareholders being Mr Leslie, Mrs Leslie and/or their children.
Prior to its liquidation, Brevtex conducted a business trading in machine tools and equipment. On 16 June 2001, the plaintiff approved an application by Brevtex for a wholesale credit facility with a credit limit of $500,000 for the purchase of new fabrication equipment (commonly known as a "floor plan"). This approval was subject to a number of conditions including the execution of a bailment agreement by Brevtex, the execution of secured guarantees and "acknowledgments of guarantor" by each defendant, and the lodgement of caveats against certain properties. These properties were land at 32 Savannah Drive, Darwin (owned by the second defendant), 369 Sandy Bay Road, Sandy Bay, Tasmania (owned by the first defendant) and 61 Hobbs Avenue, Dalkeith (owned by Mr and Mrs Leslie jointly).
All of these conditions were duly complied with, and it is relevant to note that the bailment agreement executed by Brevtex included the following terms:
•(Clause 2.1) Brevtex could request the plaintiff to purchase particular items of equipment to be taken on bailment by Brevtex.
•(Clause 3.1.7) Upon purchasing each item of equipment the plaintiff would issue Brevtex with a "Trust Receipt" as defined in cl 13.
•(Clause 3.1.9) Possession of each item of equipment by Brevtex was solely for the purpose of resale in the ordinary course of its business.
•(Clauses 4.1 ‑‑4.3) Pending resale of each item of equipment, Brevtex would pay the plaintiff monthly "rent" in respect of the same.
•(Clause 8.2) Upon the sale of any item of equipment, Brevtex would be deemed to have purchased the same immediately prior to the sale for the amount specified in the trust receipt, which amount was immediately due and payable to the plaintiff.
•(Clauses 10.1.1, 10.1.1.6, 11.6) The plaintiff was entitled to terminate the agreement inter alia upon Brevtex's failure to pay any amount due and owing, or upon an order being made for the winding up of Brevtex.
The "secured guarantee" that was executed by each defendant was in a standard form and recited that "the guarantor has requested (the plaintiff) to enter into commercial transactions with (Brevtex)". The terms of each guarantee included the following:
•(Clause 1) "The guarantor hereby guarantees to (the plaintiff) the due payment of all moneys that may now be due and payable or may hereafter become due and payable by the debtor to (the plaintiff) and the due and punctual performance by the debtor of all its obligations pursuant to the said commercial transactions".
•(Clause 7(2)(b)) The guarantor "shall grant to (the plaintiff) a legal mortgage of any land now or hereafter held by (the guarantor) …. such mortgage to be in the form set out in the 14th Sch of the Transfer of Land Act 1893, as amended".
From and after 8 August 2001 the plaintiff, at the request of Brevtex, purchased various items of equipment which Brevtex took on bailment in accordance with the bailment agreement.
On 20 March and 8 July 2002 the plaintiff approved successive increases in credit limits for Brevtex, culminating in a total facility of $2,971,000. These increased limits were subject to conditions, including execution by each defendant of an "acknowledgement of guarantor of further liability". All conditions were duly complied with, and Mr and Mrs Leslie each signed the letters of approval (from the plaintiff) "in acknowledgement".
Prior to 19 February 2004 the securities held by the plaintiff included a first mortgage over the property at 369 Sandy Bay Road, Hobart, owned by the first defendant. On that date, the first defendant refinanced the property with the Commonwealth Bank, and the first mortgage held by the plaintiff was discharged by payment of $828,296.50. At the request of Mr Leslie, the plaintiff immediately advanced $327,844.94 of these moneys to Mrs Leslie's solicitor to facilitate her purchase of a property at 59 Hobbs Avenue, Dalkeith. This advance was conditional upon lodgment of a caveat against the title to the property, which caveat was duly lodged.
From 1 February 2004 until 31 August 2004 Brevtex failed to pay to the plaintiff monthly rentals (totalling $125,279.89) which were due and owing on certain items of equipment. On 16 July, the plaintiff lodged a petition for the winding up of Brevtex which resulted in an order for winding up on 26 August 2004. By notice dated 30 September 2004, the plaintiff terminated the bailment agreement.
Upon entering into possession of Brevtex's property, the receiver and manager, Mr Cribb, discovered that Brevtex had received sums totalling $800,950 from the sale of items of equipment the subject of the bailment agreement, which moneys had not been remitted to the plaintiff. Mr Cribb also discovered that between May 2002 and August 2004 numerous payments had been made by Brevtex to or for the benefit of Mr Leslie, Mrs Leslie, their children, or to a related family company. These payments included cheques made out to those defendants or to members of their family, credit card payments, house payments, school fees, and lease payments to a finance company for the family's Golf, Mercedes and Peugeot motor vehicles. After deducting amounts redeposited into Brevtex's account, the total net benefits to Mr and Mrs Leslie or their family over that two and a quarter‑year period had been $1,216,691.16.
When the plaintiff first applied for summary judgment, the amount owing by Brevtex totalled $2,020,365.59, and pursuant to the terms of the bailment agreement, interest was accumulating thereon at the rate of 11.35 per cent per annum (as from 8 October 2004). However, as a result of the realisation of assets in the course of winding up, the amount claimed by the plaintiff has been reduced to $1,868.73.31 (as at 4 February 2005).
The facts asserted by the defendants
Mr and Mrs Leslie both say that although she was a director of each of Brevtex, the first, and the second defendants, she played no part in the management of those companies or in the decisions made in the conduct of their respective businesses. However, at all material times, Mrs Leslie was employed by Brevtex and performed general clerical duties such as answering the telephone, going to the post office, and attending to banking. Although Mrs Leslie was a signatory to the Brevtex cheque account, she only signed cheques when Mr Leslie was away and when he instructed her to do so.
From June 2001, the couple were separated and Mrs Leslie was in a "fragile emotional state". Nevertheless, she continued to repose trust and confidence in Mr Leslie in respect of all financial and business matters. According to Mrs Leslie (at par 15 of her affidavit sworn 23 November 2004):
"In relation to every document signed by me, the third defendant in each case simply asked me to sign the document, and, by virtue of the trust that I had in him, I signed the document without having read the document and without knowing or understanding what I had signed or the implication thereof."
And, further, at par 17 of her affidavit:
"At no time did I believe or understand that by executing any document, I would be putting anything at risk beyond the assets of Brevtex Machine Tools, and certainly at no time did I believe or understand that by executing any document, my personal assets would or could be placed at risk."
Furthermore, no‑one explained the documents to her or at any time warned her of the consequences of executing the same. It was never suggested that she should obtain independent legal or financial advice, and she did not in fact obtain any such advice.
At the time of purchasing 59 Hobbs Avenue, Dalkeith, Mrs Leslie was unaware of the fact that the plaintiff had released funds which were allocated towards the purchase price. She believed that the relevant funds had come from the Colonial Bank.
Mr Leslie largely corroborates his wife's affidavit. He also states that at all material times after the execution of the bailment agreement he had very little control over the affairs of Brevtex. In par 10 of his affidavit sworn on 15 December 2004 he deposes that:
"The Plaintiff had total control over the manner in which funds received would be used under the floor plan (Bailment Agreement) entered into with Brevtex Machine Tools. It was Mr Smith that decided how the funds were to be allocated. I had no say in the matter. I trusted Mr Smith from the outset. I always did as he demanded or recommended. Mr Smith appeared to me to be very good with figures. He was often calculating numbers very quickly. I understood, at all times, that Mr Smith was helping Brevtex Machine tools by allocating funds in the particular way he did. I could never understand completely why he did allocate funds in the manner he did. Brevtex Machine Tools, and myself, were entirely at the mercy of Mr Smith. He had almost total control over the funds of Brevtex Machine Tools. Neither Brevtex Machine Tools nor I had any real say or choice in how the funds received from machinery sales were to be allocated."
Mr Leslie has also deposed to a number of particular instances where he asserts that decisions as to what would happen to particular items of machinery or to the proceeds of sale therefrom would be made by the plaintiff rather than by himself. He further claims, at par 20.9 of his affidavit, that he was "confused about how the plaintiff operated the floor plan".
According to Mr Leslie he was the only defendant aware of the increases in credit limits granted by the plaintiff. His affidavit states:
"20.10I confirm the letters of increase in credit limit were not passed by me to the fourth defendant.
20.11I confirm the letters of increase in credit limit or any communications regarding the increase in credit limit were not received by Brevtex, Seabay or myself, as guarantors;"
As to the circumstances surrounding the purchase by Mrs Leslie of the property at 59 Hobbs Avenue, Dalkeith, Mr Leslie deposes that the property at 369 Beachworth Road, Hobart, had been sold for $1.65 million and the proceeds collected by the plaintiff at settlement. Mr Leslie "did not understand, at the time, why this was necessary", but trusted Mr Smith and "did everything he required of Brevtex and myself in this regard." Mr Smith had also demanded the refinancing of the property at Sandy Bay in Tasmania and approximately $828,000 was borrowed against that property. According to Mr Leslie, some time shortly thereafter "in circumstances not precisely known to me" the plaintiff arranged for some funds to be released to Mrs Leslie towards the purchase price of 59 Hobbs Avenue (par 20.9 of his affidavit).
Further facts asserted in Mr Leslie's most recent affidavit
On the hearing of the application, I granted the plaintiff leave to file further affidavits from Mr Smith (sworn 31 January 2005) and from Mr Cribb (sworn 4 February 2005). I also allowed each defendant leave to file an affidavit in response within 21 days.
An affidavit in response on behalf of the first, second and third defendants was sworn by Mr Leslie on 25 January and filed on 28 January 2005 (viz, three days late). The defendants seek an extension of time within which to file the affidavit, and, in my view, that extension of time should be granted. Nevertheless, there are matters in that affidavit which are not responsive to the affidavits of Messrs Smith and Cribb. I will accordingly disregard those matters (which are to be found in pars 3 ‑ 7 inclusive and pars 10 and 11).
Some of the remaining content of the affidavit is quite startling. Mr Leslie, once again, asserts that particular documents were not read by or discussed with Mrs Leslie in his presence. In relation to each "acknowledgement of guarantor of further liability" signed by Mrs Leslie and himself when Brevtex's credit limit was increased, he states (at par 8.1):
"As far as I can tell, the signature which purports to be that of the Fourth Defendant was not affixed to those documents by the Fourth Defendant, herself. It was commonplace for myself or Tony Celani to place the Fourth Defendant's signatures on many documents. Whilst I cannot now recall whether it was Mr Celani or I who placed the Fourth Defendant's signatures on those documents, I verily believe that it would have been one of us that did so;"
Mr Leslie's affidavit also deals with numerous transactions concerning the sale of equipment by the receiver in the course of the winding‑up. It is unnecessary that I should go into the detail of those transactions at present.
The law as to summary judgment
The principles governing the present application are well known and need little elaboration. The applicant for summary judgment has the onus of establishing that there is no defence to the claim and that there is a prima facie right to judgment. On discharge of that onus, the burden shifts to the defendant to satisfy the Court in terms of O 14 r 3 of the Rules of the Supreme Court 1971 (WA) (Tognini v Australian Mutual Provident Society, unreported; FCt SCt of WA; Library No 920646; 3 December 1992).
The power to grant summary judgment must be exercised with great care, and should never be exercised unless it is clear that there is no real question to be tried (Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99). In order to obtain leave to defend, all a defendant need do is show that there is an arguably good defence or that the case ought to be heard (Clarke v Union Bank of Australia Ltd (1917) 23 CLR 5, 8). Even when the facts asserted are inconclusive, if it is not possible to say without doubt on the whole of the material that there is no question to be tried, there should be leave to defend (Fancourt (ibid) at 99).
The Court does not dispose of the factual merits on a conflict of affidavits (Jacob v Booth Distillery Co [1901] 85 LT 262) or by rejecting the defendants' affidavit evidence because of its arguable inconsistency with documentary evidence adduced by the plaintiff (Gillon v Kyle, unreported; FCt SCt of WA; Library No 9123; 16 October 1991).
If a version of the facts is put forward by the defendants which is not inherently incredible, then given the absence of any opportunity to cross‑examine, it is incumbent upon the Court to proceed on the basis that that version will ultimately be accepted at the trial of the action (Webster v Lampard (1993) 177 CLR 598 at 608).
Whether there is a triable issue on the claim against the first, second and third defendants
On behalf of these defendants, issues are raised as to particular items of equipment which came into the possession of the receiver and manager of Brevtex following the winding up order, and as to the proceeds of sale therefrom. The plaintiff has sought to deal with these issues and to account for all proceeds in the most recent affidavit of Mr Cribb sworn on 4 February 2005. The defendants, nevertheless, challenge the final position that Brevtex was indebted to the plaintiff in the sum of $1,868,073.31 as at 4 February 2005. Their counsel asserts that by reason of the detailed matters raised in Mr Leslie's affidavits, there is an issue as to quantum of up to "$500,000 or $600,000".
The first, second and third defendants also contend that they have arguable defences based upon their assertions that they were not consulted about the increases in credit limits, that the plaintiff had complete control of Brevtex's funds, and that it was "constantly altering the financial arrangement between the plaintiff and the principal debtor". It is submitted that this conduct by the plaintiff "renders the guarantees entered into by the first to fourth defendants void".
This contention is based upon the principle to be found in a number of authorities such as Bolton v Salmon [1891] 2 Ch 48:
"Where a surety pledges his personal credit by bond or covenant, and by the same contract pledges his goods or mortgages or charges his lands as security for the same debt, any alteration of the contract by the mortgagor and the principal debtor behind the back of the surety … not only discharges the surety from all personal liability but also releases the property which the surety had included in the contract."
Similarly in Anka Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549, 559, the majority of the High Court noted that:
"According to the English cases, the principle applies so as to discharge the surety when conduct on the part of the creditor has the effect of altering the surety's rights, unless the alteration is unsubstantial and not prejudicial to the surety".
However, the facts asserted on behalf of the first, second and third defendants do not go anywhere near meeting the criteria that must be present for this principle to apply. In this regard it is firstly relevant to note that Mr Leslie was at all times a director and shareholder of the first and second defendant. Accordingly, those other defendants had notice of all matters that he was aware of.
Furthermore, on each occasion that the plaintiff granted an increase in credit limits, it required each of the defendants to execute an "acknowledgement of guarantor of further liability". The acknowledgements executed on behalf of the first and second defendants were signed by Mr Leslie and (purportedly) Mrs Leslie as directors of those companies. Each such Acknowledgement acknowledged that the plaintiff was providing additional credit to Brevtex, and that the relevant guarantee would extend to the additional facility. Accordingly, there is no basis for any of those defendants to argue that it was unaware of the increases in credit limits.
As to the alleged intervention by the plaintiff in the financial affairs of Brevtex, it is not submitted by any defendant that the plaintiff's conduct was contrary to or fell outside the terms of the bailment agreement. Nor does Mr Leslie claim that he was unaware of or objected to any of the plaintiff's alleged conduct. He simply asserts that he was "confused" about how the plaintiff operated the floor plan.
In any event, Mr Leslie's claim that the plaintiff "had total control over the manner in which funds received would be used under the floor plan" is contradicted by the fact that over a two and a quarter‑year period some $1,216,691.16 was withdrawn from Brevtex's account to support what can be fairly described as a relatively lavish lifestyle enjoyed by him and his family. These payments were funded from the proceeds of machinery sales (which pursuant to the bailment agreement should have been remitted to the plaintiff) and by the steadily accumulating debt which is the subject of the present claim. Mr Leslie does not contend (and in any event it would be completely contrary to logic) that the plaintiff in any way condoned these payments to him and his family.
With regard to the plaintiff's claim for orders requiring each defendant to execute certain legal mortgages, it is submitted that there is an issue of construction arising from the relevant term in the guarantees. Clause 7(1)(b) of each guarantee requires the guarantor to grant to the plaintiff:
" … a legal mortgage or any land now or hereafter held by the person … such mortgage to be in the form set out in the 14th Sch of the Transfer of Land Act 1893, as amended."
The first and second defendants submit that on a proper construction of this provision it applies only to land within the State of Western Australia, and that they are not liable to execute mortgages over the lots that they respectively own in Darwin and Hobart.
I consider such a construction to be quite unreasonable, and in my view cl 7(1)(b) is unambiguous when referring to "any land". In any event, there is nothing before me to indicate that a mortgage in the form of the 14th schedule of the Transfer of Land Act 1893 (WA) would not be accepted for registration in either the Northern Territory or Tasmania.
It follows that the first, second and third defendants have failed to raise any triable issue in respect of their liability under the guarantees. The only question requiring determination is the quantum of the debt owing by Brevtex, and as to that the first, second and third defendants' counsel asserts that a maximum of "$500,000 or $600,000" is in issue. Accordingly, it follows that there should be summary judgment against those defendants for the balance of the plaintiff's claim.
Whether there is a triable issue in respect of the claim against the fourth defendant
It is submitted on behalf of Mrs Leslie that her affidavits raise triable issues as to unconscionable conduct, alternatively undue influence (brought to bear through the agency of the third defendant), or in the further alternative, breach of a duty of care by the plaintiff to ensure that she was properly advised prior to executing the guarantee.
The relevant facts in this regard are Mrs Leslie's assertions that she played no part in the dealings between the plaintiff and Brevtex, that her husband had told the plaintiff that she would do whatever he told her to do, that she was at no time informed of the consequences of executing the guarantee or told to seek independent advice, did not seek independent advice, was in a "fragile emotional state", did not understand the documents that she signed, did not realise that she was putting her personal assets at risk, and was not kept informed as to the extent of Brevtex's liability from time to time.
Further affidavits have been filed as a result of these assertions, and it is not in issue that:
•Mrs Leslie's signature appears on Brevtex's 2001 annual return, as well as on a declaration certifying that there were reasonable grounds to believe that the company was able to pay its debts as and when they fell due.
•Mrs Leslie signed (as "chairperson") minutes of a meeting of directors of Brevtex dated 14 January 2002. (However, Mrs Leslie states that she never attended or chaired any such meeting, and must have signed the minutes at her husband's request).
•At a meeting between Mr Smith of the plaintiff and Mrs Leslie on 21 August 2001 he explained to her the plaintiff's invoicing procedure, and the procedures and obligations under the floor plan facility. (Mrs Leslie does not remember this meeting, but does not deny that it took place).
•At a further meeting at the plaintiff's office on 11 February 2002 between Mr Smith, Mrs Leslie, and Brevtex's manager (Mr Celani), the former explained the plaintiff's procedures for raising letters of credit. Reference was also made to a deed of priority between the plaintiff, National Australia Bank and Brevtex. There was then a discussion about the possibility of a new business loan and an increase in Brevtex's floor plan facility. (According to Mrs Leslie she attended the meeting to learn about the letter of credit facility so that "letters of credit could be raised when (Mr Leslie) was away". She does not recall the other matters being discussed, but if they were, they would have "gone over my head").
•Mrs Leslie attended further meetings on 18 March 2002 (with Mr Smith and Mr Celani), and on 10 June 2002 (with Mr Smith and her husband). These meetings were to discuss the execution of security documentation for a further business loan to be provided by the plaintiff to the first defendant. (Mrs Leslie does not "specifically recall" these meetings. However, she "never had any discussions with anyone or received explanations from anyone in relation to any such security documentation other than simply having been advised where to sign").
•At all materials times, Mrs Leslie attended to Brevtex's banking requirements, and Mr Cribb's affidavit sworn 2 December 2004 annexes copies of all of the relevant deposit slips completed and signed by her during the period between October 2000 and July 2004.
It is significant that Mrs Leslie does not claim that at any material time she was subject to any illness, ignorance, inexperience, impaired faculties, financial need or other circumstances which affected her ability to conserve her own interests. Quite obviously, she is a reasonably intelligent woman who has been able to act as a director of at least three family companies, to handle the affairs of those companies in the absence of her husband, to attend to the companies' banking needs, and to understand the procedures under the plaintiff's floor plan, including letters of credit.
Notwithstanding these capabilities, Mrs Leslie claims that she signed numerous deeds of guarantee and acknowledgements of guarantee without knowing or understanding what she had signed. This is so, notwithstanding that four of the documents (each a little more than a page in length) were headed "Secured Guarantee", and another four of the documents were a single page with the very bold heading: "Acknowledgement of Guarantor". Furthermore, there are another 12 documents (also a single page in length) with the heading in bold print "Acknowledgement of Guarantor of Further Liability" which Mrs Leslie does not remember, but nevertheless does not deny signing.
Any adult of average intelligence understands the meaning of the words "guarantee" and "guarantor". Mrs Leslie does not say that she was blindfolded or had her eyes closed when she was asked by her husband on at least two separate occasions to sign the relevant documents. To my mind, Mrs Leslie's claim that she did not know or understand what she was signing is inherently incredible.
Nevertheless, even if Mrs Leslie's assertions are accepted as being correct, they fail to raise a reasonably arguable case that she was under a special disability viz‑a‑viz the plaintiff which enabled the plaintiff to take an unfair or unconscionable advantage of her. It is not enough that Mrs Leslie simply found herself in a situation of unequal bargaining power. As Mason J stated in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, 462:
" … the disabling condition or circumstance (must be) one which seriously affects the ability of the innocent party to make a judgment as to his own best interest … "
Furthermore, this is not a case where a plaintiff has acted unfairly in snaring the assets of a guarantor that otherwise would not have been available to it. Quite the contrary, the facts show that by providing the guarantee, Mrs Leslie was able to join with her husband in obtaining moneys from the plaintiff which have been to her direct benefit. In this regard, she was a substantial beneficiary of the payments withdrawn from Brevtex while it was in breach of the bailment agreement, and she has also acquired the property at 59 Hobbs Avenue, Dalkeith, as a result of the plaintiff voluntarily reducing its security. (Significantly, Mrs Leslie also had the advice of her own solicitor in respect of that last transaction.)
The facts asserted also fail to establish any undue influence on Mrs Leslie by her husband (whether on his own behalf or as agent for the plaintiff). There is no presumption of undue influence arising from the relationship of husband and wife (Yerkey v Jones (1939) 63 CLR 649, 675) and Mrs Leslie has not condescended to any particulars of what she claims in this regard. Although separated from her husband at the material times, it would appear to have been entirely a matter of her own choice to repose trust in him when deciding to execute the relevant documents.
For all of the above reasons, it also follows that there is nothing in the materials before me to support the argument that the plaintiff was under a duty of care to ensure that Mrs Leslie was independently advised.
However, there is one aspect of the claim against Mrs Leslie, which on the materials presently before me, does raise a question to be tried. This concerns Mr Leslie's assertion in his most recent affidavit that his wife's purported signatures on the documents headed "Acknowledgement by Guarantor of Further Liability" may have been written by him or Mr Celani. Mrs Leslie herself has not denied that these are her signatures, but this assertion by Mr Leslie has come very late and neither she nor the plaintiff has had an opportunity to respond.
In the end, the materials presently before me satisfy me that Mrs Leslie does not have any good defence to that part of the claim against her which arises from her original guarantee. That original guarantee applied to Brevtex's initial credit limit of $500,000, and it follows that there should be summary judgment against Mrs Leslie in respect of that sum.
Conclusions
For all of these reasons, there should be judgment for the plaintiff against each of the defendants substantially in the terms as set out in the application, but at this stage limited to the sum of $500,000 in respect of the fourth defendant, and to an amount of no less than $1,268,073.31 in respect of each of the remaining defendants. I propose to hear further submissions as to the appropriate orders in all of the circumstances, and as to whether the application for summary judgment in respect of the balance of the amounts claimed should be further adjourned.