Jaafar v TUF (NSW) Glass Services Pty Ltd

Case •

[2023] NSWSC 88

•

17 February 2023

Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Jaafar v TUF (NSW) Glass Services Pty Ltd [2023] NSWSC 88
Hearing dates: 9 February 2023
Date of orders: 17 February 2023
Decision date: 17 February 2023
Jurisdiction:Common Law
Before: Davies J
Decision:

1. Grant leave to the plaintiff pursuant to s 40 of the Local Court Act 2007 to appeal on grounds 2 and 4 in the Amended Summons.

2. Uphold the appeal.

3. Vary the judgment entered by the Magistrate as follows: Judgment for the plaintiff in the sum of $13,552.18.

4. The defendant is to pay the plaintiff’s costs of the appeal.

5. The defendant is to have a certificate under the Suitors’ Fund Act 1951 (NSW) if otherwise entitled.

Catchwords:

APPEAL – from Local Court – ss 39 and 40 of Local Court Act 2007 (NSW) – defendant supplying materials to company – plaintiff sole shareholder and director of company – plaintiff signed Credit Agreement on behalf of company – defendant made claim for moneys payable on basis of signed personal guarantee of plaintiff – where Local Court found in favour of defendant for whole of its liquidated claim – determination of quantum – whether question of law or question of mixed fact and law raised – where Local Court accepted guarantee took effect retrospectively - error established by finding defendant entitled to full quantum of claim sought – appeal upheld in part

ESTOPPEL – Anshun estoppel – whether necessary for creditor to join all guarantors in action against principal debtor – no error established in Local Court rejecting defence based on Anshun estoppel

Legislation Cited:

Local Court Act 2007 (NSW) ss 39, 40

Suitors’ Fund Act 1951 (NSW)

Cases Cited:

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 45

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44,

Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165

Texts Cited:

Nil

Category:Principal judgment
Parties: Abed Jaafar (Plaintiff)
TUF (NSW) Glass Services Pty Ltd (Defendant)
Representation:

Counsel:
M Elnajjar (Plaintiff)
M Marnani (Defendant)

Solicitors:
Avondale Lawyers (Plaintiff)
Checks and Balances Law (Defendant)
File Number(s): 2022/114041
Publication restriction: Nil
 Decision under appeal 
Court or tribunal:
Local Court of NSW
Jurisdiction:
Common Law
Citation:

Nil

Date of Decision:
25 March 2022
Before:
Seagrave LCM
File Number(s):
2022/114041

Judgment

  1. The defendant, TUF (NSW) Glass Services Pty Ltd commenced proceedings in the Local Court against the plaintiff Abed Jaafar and two other persons claiming $28,129.00, interest of $2,100.00 and costs, in respect of invoices sent to Mr Jaafar and his company Belco Glass Pty Ltd (“Belco Glass”). The two other persons were Mouna Diani (apparently an accountant at Belco Glass) and Belco Glass itself. To avoid confusion, I shall refer to the present plaintiff as Mr Jaafar and to the present defendant as TUF.

  2. The proceedings were heard in the Local Court on 10 March 2022. On 25 March 2022 Magistrate Seagrave delivered judgment in favour of TUF against Mr Jaafar, the amount of the judgment being $32,054.00. The Magistrate ordered Mr Jaafar to pay TUF’s costs on an indemnity basis.

  3. By a summons filed 21 April 2022 Mr Jaafar sought that if leave was required, it be granted, and sought that the judgment of the Magistrate be set aside and either that the claim by TUF against him be dismissed, in the alternative, that the amount of the judgment be limited to $12,559.56. By an amended summons filed on the morning of the hearing, the amount of $12,559.56 was reduced to $11,598.25, alternatively to $1,598.25.

  4. The appeal is brought pursuant to s 39 and/or s 40 of the Local Court Act 2007 (NSW).

  5. The evidence before the Magistrate disclosed that TUF had been supplying materials to another company run by Mr Jaafar, Belco Aluminium. On 1 May 2020 an employee of Belco Glass, Mouna Diani, forwarded an email to TUF saying (inter alia):

Please ensure all future invoices are made out to Belco Glass Pty Ltd as Belco Aluminium has now been deregistered for GST.

  1. On 2 May 2020 Mr Naseer Al-Hafedh, a director of TUF, responded by an email as follows:

Please find attached a credit application to be completed for the new company BELCO GLASS PTY LTD for our records.

The credit limits will be the same as $20k.

Please maintain your account so we can keep serve you (sic) with all your glass needs.

Thank you and I appreciate your business with us.

Attached to the email was an Application for Credit Account.

  1. The Application was completed by Mr Jaafar on 14 May 2020 and signed by him. The Application was also signed by Mouna Diani, but the Magistrate held that she had done so as a witness only. The claim against Ms Diani was dismissed, and there is no appeal from that part of the judgment.

  2. Mr Al-Hafedh signed the Application on 12 June 2020 on behalf of TUF, and inserted an amount of $25,000.00. I shall refer to the signed Application as “the Contract”.

  3. The significant questions before the Magistrate and on the present appeal involve the proper construction of the Contract. It is necessary, therefore, to set out much of what that document contained as follows:

APPLICATION FOR CREDIT ACCOUNT

NOTICE TO APPLICANTS

1)   The applicant has entered into or intends to enter into an agreement with TUF(NSW) Glass Services Pty Ltd ("TUF”) for TUF to provide glass related products to it.

2)   The applicant wishes to make payments to TUF by utilising a credit facility that will be provided by TUF.

…

4)   The credit facility does not take effect unless and until TUF notifies the applicant in writing that the facility has been approved.

Applicant:   ABED JAAFAR   

(Full name of individual, partners or company)

Trading name (if any):      Belco Glass Pty Ltd

…

Contact name:         Mouna Diani

…

Terms and conditions

1)   TUF will issue a statement to the applicant at the end of each calendar month (“the monthly statement”) for all relevant transactions.   

2)   The applicant must pay all amounts due under the monthly statement within 30 days of the date of the statement.   

3)   If the applicant fails to pay any amount due pursuant to condition 2) above, a default is deemed to have occurred.

4)   Once a default occurs, all amounts charged by TUF in its statement/s become payable immediately.

5)   Once a default occurs, interest at the rate of 18% per annum will be charged by TUF from the date of issue of the statement until such time as all outstanding amounts are paid in full.

4)(sic)   Once a default occurs, the applicant shall be liable to pay all legal costs incurred by TUF on indemnity basis.

I/We, being:

ABED JAAFAR

Company/Partnership/Sole Trader hereby acknowledge that l/We

1)   have read and understood and agree to abide by the above terms and conditions.

2)   …

3)   have obtained legal advice or have had the opportunity to obtain legal advice about the contents of the document.

I, ABED JAAFAR of (address) … MOOREBANK hereby acknowledge that I

1)   have read and understood the above terms and conditions.

2)   have obtained legal advice or have had the opportunity to obtain legal advice about the contents of the document.

3)   hereby personally guarantee the repayment of all and any debts arising from this agreement including interest and legal costs.

Dated this:   14.5.20       Day of ______________

Signed by:   (Mr Jaafar’s signature) in the presence of, (Ms Diani’s signature)

Print Name:   ABED JAAFAR      Print Name:   MOUNA DIANI

Position:   M. DIRECTOR      Position:   ACCOUNTANT

(All portions in bold italics were in handwriting and, except for the signature of Ms Diani, in the handwriting of Mr Jaafar.)

  1. Proceedings in the Local Court commenced by the filing of a statement of claim on 23 April 2021. The three defendants were Mr Jaafar, Ms Diani and Belco Glass. The pleading asserted that the “plaintiff and defendant” (sic) entered into a credit facility contract. It asserted that it was a term of the contract that the first or the third defendant entered into the contract for provision of glass related products provided by the plaintiff to the third defendant, that the first defendant was to make payment to the plaintiff, and then, somewhat inconsistently, that the first or third defendants must pay all monies due to the plaintiff within 30 days of the statement. The statement of claim further alleged that the second defendant signed the contract as a guarantor.

  2. A defence was filed by Mr Jaafar on 21 March 2021 which, in substance, pleaded that the first defendant (Mr Jaafar) had only entered into the contract on behalf of the third defendant (Belco Glass).

  3. On 10 February 2022 TUF filed an amended statement of claim alleging that on 12 June 2020 the “plaintiff and defendants” entered into a credit facility contract. The amended statement of claim pleaded that it was a term of the Contract that the defendants were to make payments to TUF by way of the credit facility. It also alleged that the first and second defendants (Mr Jaafar and Ms Diani) had signed the Contract as guarantors on 14 May 2020. No further defence was filed.

  4. It appears that shortly after the Contract was signed by Mr Jaafar in May 2020 and by TUF in June 2020, Belco Glass defaulted in paying what was claimed by TUF. On 27 August 2020 TUF issued a statement of claim in the Local Court against Belco Glass seeking $49,964.25. When no defence was filed, a default judgment was given for TUF against Belco Glass on 11 November 2020 for $51,508.56.

  5. On 22 April 2021 Mr Jaafar, the sole shareholder and director of Belco Glass resolved to wind the company up, and he appointed Danny Vrkic as the liquidator. TUF may not have known about the winding up when it issued its statement of claim on 23 April 2021, but no leave was ever sought to proceed against Belco Glass. At the hearing, TUF abandoned its claim against Belco Glass.

The judgment of the Local Court

  1. The learned Magistrate identified the issues for determination as these:

1.   Whether the guarantee was operative.

2.   If the answer was in the affirmative, whether consideration passed between the parties.

3.   If the guarantee was operative, whether it only guaranteed amount of $25,000.00

4.   If the guarantee was operative, whether it guaranteed repayment of Belco’s debt incurred before 12 June 2020 when Belco’s application was approved by the plaintiff.

5.   Whether the second defendant was a party to the contract to provide goods and services to Belco or liable on the other alleged bases.

6.   Was the plaintiff barred from bringing its claim against the defendants by reason of the first proceedings, pursuant to Anshun estoppel?

7.   Was the plaintiff entitled to rely on the contractual entitlement to costs?

  1. In relation to the first issue, whether the guarantee was operative, the learned Magistrate noted a submission on behalf of Mr Jaafar that he did not understand the document to include the guarantee and he did not intend to enter into one. The Magistrate said that that submission relied on Mr Jaafar’s evidence; however, her Honour did not accept Mr Jaafar’s evidence. Her Honour said his evidence did not have a ring of truth about it, and it was difficult to reconcile with his other evidence that he did not read the document. Her Honour detailed a number of surrounding circumstances involving the way Mr Jaafar and his companies had done business with TUF prior to the entry into the present contract.

  2. Her Honour concluded:

Whatever his reason, to my mind the signature of the first defendant on the contract objectively evidenced the fact the first defendant on the contract objectively evidenced the fact that the first defendant understood and intended to be bound by the terms of the guarantee, as part of the agreement, through credit facility to be provided by the plaintiff. If, as the plaintiff’s lawyer raised in her submission, the defendant relied upon a defence of non est factum, the evidence demonstrated the first defendant had neglected to exercise care and read the document.

  1. In relation to the second issue, the Magistrate held that the guarantee itself was adequate consideration, that a credit facility was provided and that there was a guarantee as to its performance in the repayment of monies.

  2. In relation to whether the guarantee was limited to $25,000.00, her Honour said:

The evidence showed the defendants would have known by 14 May 2020, when the first defendant signed the contract, Belco was already in excess of the credit limit. But Belco continued to request and was supplied with the plaintiff company’s glass product.

…The terms and conditions and guarantee of the document were clear and unambiguous. Upon Belco’s default, the first defendant became personally liable for repayment “of all amounts charged”. I did not accept the defendant’s submission a guarantee was for an amount limited to $25,000.00.

  1. On the fourth issue of whether the guarantee covered repayments of accounts invoiced to Belco Glass before 12 June 2020, the Magistrate said:

The plaintiff submitted the first defendant, by his guarantee, promised repayment of all invoices, including those that predated 12 June 2020. The plaintiff meant the invoices of 4 May 2020 onwards. The defendant submitted to the contrary. It was the defendants’ submission the guarantee was only enforceable in relation to invoices surrendered as and from 12 June 2020. It was Mr Al-Hafedh’s evidence the guarantee was intended to provide for repayment of all invoices rendered to Belco. His evidence was plausible and satisfactory and, in my view, consistent with the clear and unambiguous terms of the document.

There was no evidence of objective circumstances that supported the defendant’s contention. I reject it.

  1. The fifth issue does not arise on the appeal.

  2. On the sixth issue concerning Anshun estoppel, the learned Magistrate noted that Anshun estoppel had not been expressly pleaded, but that the major thrust of the submissions made by by Mr Jaafar was that TUF was prevented from proceeding with its claim because of the operation of Anshun estoppel. This was because of the failure to join Mr Jaafar to the earlier proceedings.

  3. The Magistrate said:

In the first proceedings, the plaintiff’s claim arose from Belco’s breach of contract. The claim against Belco was not litigated. The defendants in these proceedings were not parties in the first proceedings and the plaintiff obtained a default judgment against Belco in the first proceedings. So, while both proceedings relied upon the existence of the contract, there was no evidence give with cross-examination conducted in the first proceedings. There appeared to have been no issue in the first proceedings about the legality of the contract, which would have made the defendant’s claim in these proceedings, relevant to the earlier proceedings.

…Contrary to the defence claim that the plaintiff had “intentionally or proactively” determined not to litigate the present claims in the first proceedings, there was no evidence that the plaintiff had misused or abused the process of the Court as alleged. Apart from the defendant’s claim, there was scant, if any, evidence the plaintiff commenced these proceedings from an ulterior or improper or abusive purpose.

  1. The Magistrate also noted that Mr Al-Hafedh had acted for himself in suing Belco Glass in the first proceedings. Mr Al-Hafedh had said that he thought he had “to go against the company first”. The Magistrate accepted his evidence in that regard. She concluded:

In such a situation it was not unreasonable per se, for the plaintiff to have not relied on his claims in these proceedings, in the first proceedings.

  1. The seventh issue does not arise on the appeal.

Grounds of appeal

  1. Mr Jaafar’s appeal grounds are as follows:

1.   Her Honour erred at law, in that she found that an express guarantee applied retrospectively.

2.   Her Honour erroneously, took into account guarantees involving third parties for unrelated transactions that were not pleaded by the plaintiff, nor admitted into evidence.   

3.   Her Honour erred in her judgment in characterising the defendant’s claim as a warranty claim despite the defendant’s claim being prosecuted as a guarantee claim in the Court below.

4.   Her Honour erred at law, by finding that the defendant was entitled to the full quantum of the claim sought when the evidence at its height, could only establish a proportion of the sum sought.

  1. Mr Jaafar identified the following as the issues to be determined on the appeal:

(a)   Whether the document relied upon by TUF Glass constitutes a personal guarantee.

(b)   Whether the guarantee applied retrospectively and without limitation.

(c)   The quantum of the claim.

(d)   The allocation/application of payments made to TUF in the context of the agreement sued upon by TUF.

(e)   Whether estoppel operates that TUF was precluded from instituting these proceedings against Mr Jaafar.

Submissions

  1. Mr Jaafar submitted that the learned Magistrate was in error in construing what Mr Jaafar had signed as a personal guarantee. He pointed to the fact that the Contract was called “Application for Credit Account” and that there was no separate document amounting to a guarantee. He submitted that the document did not contain definitions to describe what performance was being guaranteed by him, and that the document was ambiguous and vague. He submitted that there was only one section permitting a signature by a customer, and that followed cl 3) at the end of the document. He submitted that there was an absence of consideration for the personal guarantee and the document did not constitute a deed to provide its own consideration.

  2. Mr Jaafar submitted that if the Contract constituted a personal guarantee it could only have been a guarantee for the debts of Belco Glass and not any other party including Belco Aluminium. Mr Jaafar submitted that the learned Magistrate appears to have included amounts carried forward from Belco Aluminium’s liability to TUF in the amount she included in the judgment. Mr Jaafar submitted that there was no evidence that any other guarantee of credit facility with Belco Aluminium had been extinguished or terminated. He submitted that all of the evidence pointed to this credit facility for Belco Glass being a fresh application and not a novation or assignment of any prior credit facility.

  3. Mr Jaafar contended that the legal rights and responsibilities flowing from the agreement commenced on 12 June 2020, being the date the agreement was accepted by TUF.

  4. Mr Jaafar submitted that the Magistrate’s finding that Mr Al-Hafedh’s evidence, that the guarantee was intended to provide for repayment of all invoices rendered to Belco, was unsound. That was because it was unclear which Belco corporation was being referred to, that the guarantee sued upon was one in relation to Belco Glass, and Mr Al-Hafedh’s evidence was only evidence of his subjective intention.

  5. In relation to the claim of estoppel, Mr Jaafar submitted that the earlier action was effectively identical to the present claim because it was premised on the credit application provided by Belco Glass. That credit application was the foundation of both the earlier proceedings and the present proceedings, Belco Glass was named as a defendant in both proceedings. Mr Jaafar submitted that that was sufficient to constitute an Anshun estoppel.

  6. I did not gain a great deal of assistance from the written submissions relied upon by TUF. Rather than address the substance of Mr Jaafar’s submissions, TUF’s submissions contained personal invective such as “the submissions made by the Appellant … are so absurd, they hardly require a response”, and that the appeal was vexatious and abuse of process. Ms Marnani for TUF also made personal attacks on Mr Jaafar’s integrity and business practices in her oral submissions. These were neither helpful nor appropriate.

  1. In oral submissions, TUF accepted that the issue of construction of the Contract was a question of law, but submitted that other issues were questions involving mixed fact and law, in respect of which leave should not be given under s 40 of the Act. No reason was offered for why leave should not be granted.

  2. TUF said that Mr Jaafar was obliged under the guarantee to pay all of what was outstanding under the invoices, and not just for those which post-dated the entry into the Contract. This was because of the default judgment which Belco Glass never sought to set aside. It was submitted that this bound Mr Jaafar because he was the sole director of Belco Glass.

  3. TUF submitted that cl 3) of the acknowledgements in the Contract required payment of “all and any debts”, and that this clause “easily encompasses” any debts already owing. TUF pointed to the existing business arrangements between TUF and Mr Jaafar and his companies to submit that it was the parties’ intention that all the prior debts were covered by the guarantee.

  4. TUF submitted that no estoppel arose from the earlier proceedings and judgment against Belco Glass. TUF submitted that a significant issue in considering whether an Anshun estoppel arises is the possibility of inconsistency of verdicts. TUF submitted that no such issue arose in the present case.

Consideration

  1. A number of things should be noted about the grounds of appeal. First, Mr Jaafar effectively abandoned ground 3 because he was not able to point to the alleged characterisation of TUF’s claim by the Magistrate as a warranty claim. However, even had her Honour found to that effect, nothing flows from it in circumstances where her Honour found that Mr Jaafar had given a personal guarantee and was liable in that guarantee.

  2. Secondly, no ground of appeal challenges her Honour’s determination on the issue of Anshun estoppel. Nevertheless, written and oral submissions were made at the hearing of the appeal by both parties in relation to that issue, and it will be considered in due course.

  3. Thirdly, whilst ground 1 only, on its face, raises the issue of the retrospectivity of the guarantee, Mr Jaafar’s submissions challenged the determination by the learned Magistrate that he had given a personal guarantee (and see the issues identified by Mr Jaafar at [26] above). Submissions were made by both parties about whether a guarantee was provided by Mr Jaafar, and that issue will be dealt with.

  4. Fourthly, whilst ground 1 arguably involves a question of law, grounds 2 and 4 at best raise a mixed question of fact and law. However, because those matters are intimately connected with the issue raised in ground 1, I consider that leave should be granted under s 40 of the Act.

(a)   Whether the document relied upon by TUF Glass constitutes a personal guarantee

  1. In my opinion, no error is demonstrated in relation to the learned Magistrate’s determination (at [17] above) that Mr Jaafar had given a personal guarantee in the Contract. The terms of that portion of the Contract are clear. They relevantly say:

I, Abed Jaafar… hereby personal guarantee the repayment of all and any debts arising from this agreement including interest and legal costs.

  1. The submission that there was no separate document amounting to a guarantee, or that the promise was ambiguous and vague should be rejected. Consideration was provided by TUF in that it agreed to supply glass related products to Belco Glass, with that company (or, strictly Mr Jaafar, since he described himself as the applicant when competing the Contract) utilising a credit facility.

(b)   Whether the guarantee applied retrospectively and without limitation

  1. Mr Jaafar’s principal submission in relation to this matter is that cl 4) of the opening clauses of the Contract provided:

The credit facility does not take effect unless and until TUF notifies the applicant in writing that the facility has been approved.

He submitted, therefore, that his guarantee of “debts arising from this agreement” was circumscribed by that clause.

  1. In construing this provision, consideration will normally have to be given not only to the text but also to the surrounding circumstances known to the parties and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [22]; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52 at [40]; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352.

  2. The evidence discloses that TUF had supplied glass products to Belco Aluminium, another company controlled by Mr Jaafar. Belco Aluminium was deregistered, and that resulted in the email from Ms Diani of 1 May 2020 asking for all future invoices to be made out to Belco Glass. While there is no direct evidence that there was a credit application contract and/or guarantee in place in respect of Belco Aluminium, a reasonable inference from Mr Al-Hafedh’s email in response of 2 May 2020 is that there was such an agreement. Clearly, a new contract needed to be signed now that Belco Glass was to have the principal liability for paying TUF for the products supplied.

  3. However, the evidence discloses that following the email from Ms Diani of 1  May 2020, product continued to be supplied and Belco Glass was invoiced for that supply. At least from 14 May 2020 Mr Jaafar was undertaking to guarantee the repayment of all the debts from the new agreement which he had sought to be put in place.

  4. There is no basis, as TUF submitted, for a finding that the agreement signed by Mr Jaafar on 14 May 2020 would operate retrospectively for debts incurred by Belco Aluminium. There is nothing in the Contract which mentions Belco Aluminium, and cl 3) of the acknowledgements speaks only of “debts arising from this agreement”. If TUF sought to bind Mr Jaafar for debts incurred prior to the notification of the change of companies and invoicing, it would need to do so expressly.

  5. As it happens, no invoices were issued to Belco Glass between 14 May 2020 and 16 June 2020. It is not necessary, therefore, to decide if Mr Jaafar would have been liable for invoices issued in that period.

  6. The Magistrate accepted Mr Al-Hafedh’s evidence that the guarantee was intended to provide for repayment of all invoices rendered to “Belco” (her Honour did not specify if that was confined to Belco Glass), because his evidence was plausible and satisfactory. In my opinion that was an error because Mr Al-Hafedh’s subjective intentions about the guarantee were not relevant to a consideration of the proper construction of the agreement: Toll v Alphapharm at [40].

  7. Grounds of Appeal 1 and 2 should be upheld.

(c)   The quantum of the claim

(d)   The allocation/application of payments made to TUF in the context of the agreement sued upon by TUF

  1. The evidence discloses that the following invoices were issued to Belco Glass from the date Mr Jaafar signed the Contract (14 May 2020):

Invoice date

Invoice Number

Invoice Amount

22 June 2020

10210

$5,490.36

29 June 2020

10219

$1,673.62

29 June 2020

10227

$3,290.53

3 August 2020

10308

$1,143.74

24 August 2020

10370 – Interest Charges

$961.31

Total

$12,559.56

  1. None of these invoices was paid. Mr Jaafar is liable for them under the terms of the guarantee.

  2. It is apparent that the Magistrate accepted the evidence of Mr Al-Hafedh, that the amount outstanding to TUF was $28,129. This was said to be what was outstanding, presumably, after payments made by Belco Glass subsequent to the default judgment entered against it. From an examination of the Statement issued on 19 May 2021, it seems that it is made up of the invoices and interest charges in the above table, together with an unpaid invoice dated 4 May 2020 in the sum of $15,569.46. The invoice of 4 May 2020 pre-dates the date the Contract was signed by TUF, but more significantly it pre-dates the date Mr Jaafar signed the Contract, undertaking the personal guarantee. For the reasons given when considering the issue of retrospectivity above, Mr Jaafar does not have a liability for that invoice.

  3. The Statement of 19 May 2021 discloses that on 10 March 2021 the sum of $10,065.63 was paid to TUF. That is the amount described as $10,000 by Mr Al-Hafedh. It was said to be the amount paid pursuant to an agreement with Belco Glass for monthly instalments and the vacation of an examination hearing, presumably of Mr Jaafar and/or Ms Diani.

  4. Mr Jaafar submitted that this amount should be deducted from the total of the invoices and interest charges in the table above. However, that is to overlook the fact that it has already been accounted for on the Statement to reach what was said to be the amount outstanding to TUF. All that is to be excluded from that amount is the invoice of $15,569.46. Mr Jaafar would receive a double benefit if the amount of $10,065.63 was again deducted.

  5. Before the Magistrate it was submitted that the guarantee was limited to the sum of $25,000.00.

  6. Mr Al-Hafedh gave this evidence in cross-examination:

Q. Besides the date stated there, 12 June 2020, there is a figure which I see to be $25,000, do you agree with that?

A. Yes.   

Q. Can you please tell me what that figure means?

A. That they have a limit of $25,000 but always they go over that, so we chasing them always.

Q. You agree that this facility, the maximum of that credit that you could have given, was $25,000, is that correct?

A. On paper, yes, in but reality different.

Q. Is it correct to say that you have breached your own terms of the agreement by providing, allegedly providing in excess of $25,000 worth of o supplies is that correct?

A. When you're (sic) client come standing in your office beg you to proceed with some jobs and because you've been dealing with them for long, so we just put the what in paper aside and try to help him because both of you is a partner any job we do.

  1. The questions about what the agreement meant by the figure of “$25,000” were probably inadmissible but no objection was taken to them. The Magistrate said in relation to this evidence and whether the guarantee was limited to $25,000:

The plaintiff submitted that upon Belco’s default, the guarantee required repayment of all moneys, ail amounts owed. The defendant submitted the j guarantee amount was fixed at $25,000, an amount equivalent to the quantum of the credit facility with Belco as recorded in the approval section of the contract. Mr Al-Hafedh gave evidence with respect to the meaning of his notation.' He said at the time he approved the credit application, he limited the credit facility for Belco to $25,000, even though in his email of 2 May 2020 he referred to the credit facility as $20,000.   

He did this because he was "always chasing Belco” for payment, but he said the limit was not definitive. He meant he increased the limit when necessary because he had an established business relationship with Belco. He wanted that relationship to continue and it was his business practice to “try to help” customers where he could. He meant even if ongoing supply exceeded the credit limit. His evidence was plausible and satisfactory. The evidence showed the defendants would have known by 14 May 2020, when the first defendant signed the contract, Belco was already in excess of the credit limit. But Belco continued to request and was supplied with the plaintiff company’s glass product.

It was not Mr Al-Hafedh’s evidence the notation represented a monetary limit on the guarantee’s liability under the document. His evidence was plausible and satisfactory and consistent with the terms, conditions and guarantee of the contract. The terms and conditions and guarantee of the document were clear and unambiguous. Upon Belco’s default, the first defendant became personally liable for repayment of “all amounts charged”. I did not accept the defendants’ submission the guarantee was for an amount limited to $25,000.

  1. In my opinion, the Magistrate was in error in accepting Mr Al-Hafedh’s evidence about the meaning of $25,000.00. In any event, the acceptance of that evidence does not lead to the conclusion that Mr Jaafar was liable for “all amounts charged”. On a proper construction of the Contract, and having regard to the circumstances in which it was made, the credit limit under the contract was $25,000.00. If TUF was prepared to allow the amount outstanding to exceed that limit, that was a risk it took in terms of being able to enforce payment against Belco Glass. Mr Jaafar had not undertaken pursuant to the contract to be personally guaranteeing more than $25,000.00.

  2. As is apparent from the discussion of quantum above, this limit has not, in any event, been exceeded. TUF is entitled only to the amount of $12,559.56 together with interest.

(e)   Whether estoppel operates that TUF was precluded from instituting these proceedings against Mr Jaafar

  1. In Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44, the joint judgment of French CJ, Kiefel, Keane and Nettle JJ said:

[55]   The appellant's submission, that an Anshun estoppel is made out by reference to similarities between the matters raised in the two proceedings, regardless of whether the matters sought to be raised in the present proceedings could practicably have been raised in the group proceeding, is contrary to authority on two levels.

[56]   An Anshun estoppel is not based upon degrees of similarity, which may be a matter of impression. It was made clear in Anshun that there could be no estoppel "unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it" (emphasis added). It was further explained:

“Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding.”

  1. Further, the significant matter in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 was that what was sought to be done in the second proceeding was inconsistent with the judgment which had been obtained in the earlier proceedings. The party that was seeking to do so, the Authority, was claiming against a party against whom it had made a claim in the earlier proceedings, but had not raised the further matter in the earlier proceedings.

  2. The position in the present matter is significantly different. Mr Jaafar was not in the earlier proceedings, and the judgment against Belco Glass was not concerned with the personal guarantee given by Mr Jaafar. A creditor is not, as a result of the decision in Anshun, obliged always to join all guarantors in an action against a principal debtor. It will frequently be the case that guarantors will never need to be sued because matters will be resolved between the creditor and the principal debtor as a result of judgment and satisfaction of that judgment. It cannot be said that the claim made against Mr Jaafar was so relevant to the subject matter of the first action that it would have been unreasonable not to make it in that first action.

  3. The joint judgment of Gibbs CJ, Mason and Aickin JJ in Anshun, having stated the principle that no estoppel arises unless the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it, the judgment went on to say (at 602):

In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.

  1. The Magistrate did not err in rejecting a defence based on Anshun estoppel.

Conclusion

  1. The appeal should be upheld in part. The amount of the judgment should be varied to be $12,559.56 together with interest up to the date of this judgment of $992.62. The order for costs made by the Magistrate should not be disturbed.

  2. I make the following orders:

  1. Grant leave to the plaintiff pursuant to s 40 of the Local Court Act 2007 to appeal on grounds 2 and 4 in the Amended Summons.

  2. Uphold the appeal.

  3. Vary the judgment entered by the Magistrate as follows: Judgment for the plaintiff in the sum of $13,552.18.

  4. The defendant is to pay the plaintiff’s costs of the appeal.

  5. The defendant is to have a certificate under the Suitors’ Fund Act 1951 (NSW) if otherwise entitled.

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Decision last updated: 17 February 2023

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