Greenhills Propagations Nursery Pty Ltd v Payneham Plant Distributors Pty Ltd

[2013] VCC 34

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-12-01402

GREENHILLS PROPAGATIONS NURSERY PTY LTD	Plaintiff
v.
PAYNEHAM PLANT DISTRIBUTORS PTY LTD & ORS	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	6 February 2013
DATE OF JUDGMENT:	6 February 2013 (Revised 7 February 2013)
CASE MAY BE CITED AS:	Greenhills Propagations Nursery Pty Ltd v. Payneham Plant Distributors Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2013] VCC 34

REASONS FOR JUDGMENT

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Catchwords:            Guarantee provided by directors of company with an administrator appointed – whether action against guarantors involves the “enforcement” of a guarantee against the directors – s. 440J(1) Corporations Act 2001 (Cth) – Bank of Western Australia Ltd v Clift [2010] QSC 366, Margaret Wilson J followed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Werner	Duffy & Simon Lawyers
For the Defendants	No appearance

HIS HONOUR:

1The plaintiff’s claim against the defendants relates to the sale of goods to the first defendant and the claim is made against the second and third defendants as guarantors of the obligations of the first defendant.

2An external administrator was appointed to the first defendant on 4 February 2013. Accordingly, the action against the first defendant cannot proceed today.

3The claim has proceeded against the second and third defendants. I have followed the decision of Margaret Wilson J in Bank of Western Australia Ltd v Clift [2010] QSC 366 where Her Honour decided that an action against guarantors may proceed although the debtor company is in administration.

4The defendants were served with a Notice to Admit on 14 January 2013. There has been no response by the defendants to the notice. Accordingly, I am entitled to accept the absence of a Notice of Dispute as an admission of the matters contained within the Notice to Admit. In the present case, that relevantly involves an admission that the terms of trade were included as part of pricelists delivered to customers of the plaintiff at the start of each calendar year. There is evidence from Mr Leah Opie, a director of the plaintiff, that the relevant price lists were sent to the first defendant each year.

5The parties commenced trading in about 2002. The first defendant defaulted in payments from about 2007. Previously, the plaintiff had offered the first defendant a discount of 10% as an incentive for prompt payment. When payments were not made, the discount was withdrawn. The terms of trade provided for interest to be charged at a rate of 11.5% per annum on outstanding invoices. The defendants, in their Defence filed in the proceeding, have claimed that there was an agreement for a volume discount of 10% and that the interest charge of 11.5% was unenforceable.

6The document at Court Book 1553A is an email from the third defendant on behalf of the first defendant dated 12 May 2011 which includes the following statement: “If we could settle your account earlier we would, not only because we’d much prefer to be in a current situation with you, but also because it’s costing us 11.5% interest plus loss of our 10% discount for bulk. Over the past year alone this has amounted to over $20,000”.

7The documents tendered in evidence include the outstanding invoices and statements sent to the first defendant between July 2009 and May 2012 referring to the interest charge of 11.5%. The defendants did not assert that the interest charged should not be paid until after the proceeding had been issued. A calculation of the outstanding interest has been tendered as Exhibit P3. The rate of 11.5% per annum is only marginally more than the penalty interest rate of 10.5% per annum which has applied in this State for many years.

8The plaintiff has paid legal costs to its solicitors including the sum of $2,000 which has been applied to the pre-issue work completed by the solicitors and I have allowed this amount as part of the plaintiff’s claim.

9I have made an award for costs on the basis that costs should be taxed on an indemnity basis. The plaintiff’s solicitors sent the defendants’ solicitors a letter dated 20 January 2012 which offered to settle the dispute for $150,000 “all in” with payments to be made by three equal instalments over two and half months and appropriate settlement and release terms. The offer was open for acceptance for fourteen days and an indication was given that costs would be claimed on an indemnity basis if the offer were not accepted. The offer of $150,000 “all in” was, at least, $20,000 less than the sum to which I have found the plaintiff was entitled at that time. Further, the letter discussed the legal issues that had been raised by the defendant. These were principally the issues which the parties later litigated and which I have determined today. I consider in the circumstances that it is appropriate for me to order the plaintiff’s costs to be taxed on an indemnity basis.

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Certificate

I certify that these 2 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 6 February 2013 and revised on 7 February 2013.

Dated: 7 February 2013

Catherine Kusiak

Associate to His Honour Judge Anderson