Court of Appeal
Supreme Court
New South Wales
- Summary available
- Amendment notes
Medium Neutral Citation: Hopper v D J Sincock Pty Ltd [2021] NSWCA 305 Hearing dates: 29 September 2021 Date of orders: 13 December 2021 Decision date: 13 December 2021 Before: Brereton JA at [1];
McCallum JA at [57];
Simpson AJA at [58]Decision: (1) Allow the appeal and the cross-appeal;
(2) Set aside the judgments and orders of the District Court given on 6 May 2021 and substitute:
(a) judgment that the defendants (jointly and severally) pay the plaintiff $217,814, such judgment to take effect from 6 May 2021, the defendants being entitled and liable to contribution inter se in proportions 51% as to the first defendant, 39% as to the second defendant, and 10% as to the third defendant;
(b) order that upon any defendant paying its share, the other defendants indemnify it against any further payment or liability under this judgment and, by payment to it or to the principal creditor or otherwise, exonerate it from liability beyond the extent of its own share;
(c) reserve liberty to apply to the District Court in the event of any difficulty arising in the implementation of order (b); and
(d) order that the second defendant pay the plaintiff’s costs; and
(3) Order that the respondent pay the appellant’s costs.
Catchwords: GUARANTEE AND INDEMNITY – Guarantor – Right to indemnity – Refinance agreement entered into by corporate agent of partnership comprised of three companies – Respective directors as guarantors – One partner seeking to leave the partnership – Corporate agent defaults – Settlement negotiated by one guarantor – No express right of indemnity of guarantors – Whether implied contractual right of indemnity inferable – Whether principal debtor requested guarantors to give guarantee – Whether request inferable from circumstances of case – Majority of directors of corporate agent and majority of partners in partnership aware guarantee would be provided and acquiesced to such a course – Commercial circumstances evinced request for guarantee so business could continue to operate – Guarantee given in same document that established debt obligation – Express request for guarantee by creditor irrelevant – Right to indemnity established – Appeal allowed
GUARANTEE AND INDEMNITY – Indemnities – Construction – Whether right to indemnity excluded by inconsistent express or implied agreement or otherwise estopped – Assurances by one partner to departing partner regarding freedom from liability not made with knowledge or authority of third partner – Departing partner did not consider concluded agreement to have been reached – No inconsistent agreement – No estoppel
PARTNERSHIPS AND JOINT VENTURES – Rights and duties between partners – Implied authority to bind other partners by representations – Representations of freedom from liability made to departing partner – Representations not made to third party – Representations not made in ordinary course of business of partnership – No authority
GUARANTEE AND INDEMNITY – Guarantor – Rights against co-guarantors – Contribution before payment made – Partners liable to contribute in proportion to their interests…
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- AGLC
- Hopper v D J Sincock Pty Ltd [2021] NSWCA 305
- Case
- [2021] NSWCA 305
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether an implied contractual right of indemnity could be inferred in favour of the guarantors, and if so, whether this right was excluded by any inconsistent agreement or estoppel. Specifically, the court had to determine if the principal debtor had effectively requested the guarantors to provide the guarantee, a prerequisite for an implied right of indemnity. The court also considered whether assurances made by one partner to a departing partner regarding freedom from liability had any bearing on the matter, and whether partners had the implied authority to bind each other through such representations. Finally, the court examined the rights of contribution between co-guarantors before payment had been made.
The Court of Appeal, in allowing the appeal and cross-appeal, found that a majority of the directors of the corporate agent and a majority of the partners in the partnership were aware that the guarantee would be provided and acquiesced to this course of action. This commercial context evinced a request for the guarantee, enabling the business to continue operating. The court held that the guarantee was given in the same document that established the debt obligation, and therefore, an express request for the guarantee by the creditor was irrelevant. Consequently, the court established the right to indemnity. The court also determined that assurances of freedom from liability made by one partner to a departing partner were not made with the knowledge or authority of the third partner, and thus did not create an inconsistent agreement or an estoppel.
The Court of Appeal set aside the judgments and orders of the District Court. It substituted orders for judgment against the defendants jointly and severally for $217,814, with contribution proportions determined by their respective interests in the partnership (51% for the first defendant, 39% for the second, and 10% for the third). The orders also included provisions for indemnification between the defendants upon payment and reserved liberty to apply. The second defendant was ordered to pay the plaintiff’s costs, and the respondent was ordered to pay the appellant’s costs.
Orders
Orders of the court
(1) Allow the appeal and the cross-appeal;
(2) Set aside the judgments and orders of the District Court given on 6 May 2021 and substitute:
(a) judgment that the defendants (jointly and severally) pay the plaintiff $217,814, such judgment to take effect from 6 May 2021, the defendants being entitled and liable to contribution inter se in proportions 51% as to the first defendant, 39% as to the second defendant, and 10% as to the third defendant;
(b) order that upon any defendant paying its share, the other defendants indemnify it against any further payment or liability under this judgment and, by payment to it or to the principal creditor or otherwise, exonerate it from liability beyond the extent of its own share;
(c) reserve liberty to apply to the District Court in the event of any difficulty arising in the implementation of order (b); and
(d) order that the second defendant pay the plaintiff’s costs; and
(3) Order that the respondent pay the appellant’s costs.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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