Goldsmith v Macquarie Leasing Pty Ltd - [2013] VSC 332

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

SCI 2012 04338

SASHA OLIVER GOLDSMITH AND ORS	Plaintiffs
v
MACQUARIE LEASING PTY LTD AND ANOTHER	Defendants

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JUDGE:	DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	4 JUNE 2013
DATE OF JUDGMENT:	28 JUNE 2013
CASE MAY BE CITED AS:	GOLDSMITH V MACQUARIE LEASING PTY LTD
MEDIUM NEUTRAL CITATION:	[2013] VSC 332

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GUARANTEE & INDEMNITY – Whether guarantee enforceable by financier when given to financier’s agent by borrower’s directors – Whether financier a disclosed principal – Whether guarantee taken by an agent acting for an undisclosed principal may be enforced by the principal – Whether s 126 of the Instruments Act 1958 (Vic) complied with – Whether financier and agent each entitled to judgment – Instruments Act 1958 (Vic) s 126.

JUDICIAL REVIEW – Appeal from magistrate – Whether findings of fact open – Whether each of principal and agent entitled to a judgment.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr AW Sandbach	Goldsmiths Lawyers
For the Defendants	Ms E Glover	Douros Jackson Lawyers

HIS HONOUR:

Background

On 5 March 2008, Corporate Finance Pty Ltd, as trustee for the Corporate Finance Unit Trust (“Corporate”) entered into a Commercial Hire Purchase Agreement with YoMo (Australia) Pty Ltd. YoMo sought finance for broadcasting equipment for a business venture. Corporate acted as the agent for financier Macquarie Leasing Pty Ltd. Macquarie received applications for finance from Corporate and approved or refused each application in its absolute discretion. It accepted Corporate’s referral of YoMo’s application.

YoMo was obliged by the agreement to pay a total of $122,208.00 in 48 instalments of $2,546.00 per month. The plaintiffs were the directors of YoMo, who guaranteed the due and punctual performance of YoMo’s contractual obligations. The agreement was between Corporate as owner and YoMo as hirer and named the directors as guarantors. On its face, the agreement was executed by YoMo, under the signature of one director, and by each director ‘as guarantor’. The funds were advanced by Macquarie after an authority to pay was provided by YoMo directly to Macquarie.

YoMo defaulted and failed to rectify that default, entitling Macquarie to terminate the facility. It did so on 2 July 2009 and served a notice of demand on each guarantor for the outstanding balance due.

By a magistrates’ court complaint, the defendants, Macquarie and Corporate, sought to enforce the guarantee and indemnity against each of the directors and recover the debt. The directors, other than Mr Goldsmith, admit that they each entered into the guarantee and indemnity with Corporate but contend that on its proper construction, the guarantee and indemnity does not permit Macquarie to enforce it against them. Mr Goldsmith, put in issue his execution of the document. All directors denied that Corporate was acting as agent for Macquarie.

At trial, the thrust of the defence was that Macquarie was not entitled to rely on the guarantee and indemnity clauses in the agreement, as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] VSC 332
Decision Date: 28 JUNE 2013

CaseChat Overview and Summary

The matter before the court was an appeal by a financier, Macquarie Leasing Pty Ltd, against a magistrate's decision to dismiss its claim for enforcement of a guarantee provided by the directors of a company, Goldsmith. The financier had entered into a lease agreement with the company and received a personal guarantee from the directors. The dispute arose when the directors failed to fulfill their obligations under the guarantee. Macquarie Leasing sought to enforce the guarantee directly against the directors, but the magistrate held that the guarantee was not enforceable because the financier was not a disclosed principal when the guarantee was given.

The central legal issue before the court was whether the guarantee was enforceable by the financier when it was given to the financier’s agent by the borrower’s directors, rather than directly to the financier. The court needed to determine whether the financier was a disclosed principal at the time the guarantee was provided and whether a guarantee taken by an agent for an undisclosed principal could be enforced by the principal. Additionally, the court examined whether section 126 of the Instruments Act 1958 (Vic) was complied with, and whether both the financier and the agent were each entitled to a judgment.

The court found that the guarantee was not enforceable by the financier because it was not a disclosed principal at the time the guarantee was provided. The court held that the guarantee was taken by an agent acting for an undisclosed principal, and therefore, could not be enforced by the principal. The court further held that section 126 of the Instruments Act 1958 (Vic) was not complied with because the guarantee did not explicitly state that it was given to the agent on behalf of the financier. As a result, the court dismissed the appeal and affirmed the magistrate’s decision that the guarantee was not enforceable. The court found that neither the financier nor the agent were entitled to a judgment against the guarantors.

Orders