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James v Surf Road Nominees Pty Ltd

James v Surf Road Nominees Pty Ltd

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CITATION: JAMES & ORS. v. SURF ROAD NOMINEES PTY. LIMITED & ORS. [2004] NSWCA 475

HEARING DATE(S): 27/05/2004; 22/06/2004

JUDGMENT DATE:
21 December 2004

JUDGMENT OF: Beazley JA; Tobias JA; McColl JA

DECISION: 1. The parties to bring in agreed Short Minutes of Order reflecting these reasons by 4 February 2005.; 2. Liberty to apply on or before 4 February 2005 if the parties cannot reach agreement on the Short Minutes of Order.; 3. The respondents are to pay 90% of the second appellant's costs of the appeal.; 4. The respondents are to have a certificate under the Suitors Fund Act 1951 (NSW) if so entitled.

CATCHWORDS: GUARANTEE - Joint and several guarantee - Subsequent agreement between creditor and one co-guarantor - Construction - Whether subsequent agreement a release or covenant not to sue - Release of one co-guarantor discharges other co-guarantors. - GUARANTEE - Joint and several guarantee - Express or implied obligation to maintain the security - Failure to maintain will release the guarantor - Guarantor not released where failure to perform obligation to maintain does not affect the nature of the obligation guaranteed. - EVIDENCE - Evidence of value - Reliance upon series of inter partes transactions as evidence of value - Trial judge erred in failing to accept transactions as evidence of value. - REASONS - Adequacy - Adoption of one party's submissions by trial judge.

CASES CITED: Codelfa Constructions Pty. Limited v. State Rail Authority (NSW) (1982) 149 CLR 337
Hancock v. Williams & Anor (1942) 42 SR (NSW) 252
Re Wolmerhausen (1890) 62 LT 541
Smith v Wood [1929] 1 Ch 14
Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247
Taylor v Bank of NSW (1886) 11 App Case 596
Walker v Bowry (1924) 35 CLR 48

PARTIES :
Tass Alexander James (First Appellant)
Janet Margaret James (Second Appellant)
New South Head Nominees Pty. Limited (ACN 088 322 472) (Third Appellant)
Surf Road Nominees Pty. Limited (ACN 087 719 060) (First Respondent)
Chris Burke & Co. Pty. Limited (ACN 062 554 849) (Second Respondent)
I.G. Martyn Real Estate Pty. Limited (ACN 001 210 304) (Third Respondent)
WIT Investments Pty. Limited (ACN 087 762 856) (Fourth Respondent)
Vincent Palmieri (Fifth Respondent)
Terry Ian Wilson (Sixth Respondent)
Andrew Peter Mortimer (Seventh Respondent)

FILE NUMBER(S): CA 40330/04

COUNSEL: C.R.C. Newlinds SC/A.P. Coleman (Appellants)
T. Alexsis SC/K. Sainsbury (Respondents)

SOLICITORS: The Argyle Partnership (Appellants)
Pritchard Law Group (Respondents)

LOWER COURTJURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): ED 50108/2001

LOWER COURT
JUDICIAL OFFICER : Einstein J

CA 40330/2004
ED 50108/2001
BEAZLEY JA
TOBIAS JA
McCOLL JA
20 December 2004

JAMES & ORS v. SURF ROAD NOMINEES PTY. LIMITED

(ACN 087 719 060) & ORS.

HEADNOTE

The parties were participants in a real estate business venture which failed. As part of the initial business arrangements the first and second appellants provided personal guarantees supported by security provided by the 3rd appellant.

Upon the failure of the business venture, the respondents commenced proceedings against the appellants…

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: [2004] NSWCA 475
Decision Date: 21 December 2004

CaseChat Overview and Summary

The appeal in *James v Surf Road Nominees Pty Ltd* concerned a dispute arising from a joint and several guarantee. The appellants, who were co-guarantors, sought to set aside a judgment obtained against them by the respondent, Surf Road Nominees Pty Ltd, the creditor. The core of the dispute revolved around the effect of a subsequent agreement between the respondent and one of the co-guarantors.

The Court of Appeal was required to determine whether a subsequent agreement between the respondent and one co-guarantor constituted a release of that co-guarantor, which would, in turn, discharge the other co-guarantors from their obligations under the joint and several guarantee. Additionally, the court had to consider whether the respondent had an express or implied obligation to maintain the security provided, and if so, whether a failure to do so would release the guarantors. The court also had to assess whether the trial judge erred in his assessment of the evidence of value, specifically concerning a series of inter partes transactions.

The Court of Appeal held that the subsequent agreement between the respondent and one co-guarantor was a covenant not to sue, rather than a release, and therefore did not discharge the other co-guarantors. Regarding the security, the court found that while there was an obligation to maintain it, the failure to do so did not affect the nature of the obligation guaranteed, and thus did not release the guarantors. The court also determined that the trial judge had erred in failing to accept the series of inter partes transactions as evidence of value. The court further noted that the trial judge's adoption of one party's submissions without independent reasoning was inadequate.

The Court of Appeal ordered that the parties bring in agreed Short Minutes of Order reflecting these reasons by 4 February 2005, with liberty to apply if agreement could not be reached. The respondents were ordered to pay 90% of the second appellant's costs of the appeal and were granted a certificate under the Suitors Fund Act 1951 (NSW) if entitled.

Orders

Orders of the court

1. The parties to bring in agreed Short Minutes of Order reflecting these reasons by 4 February 2005.; 2. Liberty to apply on or before 4 February 2005 if the parties cannot reach agreement on the Short Minutes of Order.; 3. The respondents are to pay 90% of the second appellant's costs of the appeal.; 4. The respondents are to have a certificate under the Suitors Fund Act 1951 (NSW) if so entitled.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	JAMES & ORS. v. SURF ROAD NOMINEES PTY. LIMITED & ORS. [2004] NSWCA 475
HEARING DATE(S):	27/05/2004; 22/06/2004
JUDGMENT DATE:	21 December 2004
JUDGMENT OF:	Beazley JA; Tobias JA; McColl JA
DECISION:	1. The parties to bring in agreed Short Minutes of Order reflecting these reasons by 4 February 2005.; 2. Liberty to apply on or before 4 February 2005 if the parties cannot reach agreement on the Short Minutes of Order.; 3. The respondents are to pay 90% of the second appellant's costs of the appeal.; 4. The respondents are to have a certificate under the Suitors Fund Act 1951 (NSW) if so entitled.
CATCHWORDS:	GUARANTEE - Joint and several guarantee - Subsequent agreement between creditor and one co-guarantor - Construction - Whether subsequent agreement a release or covenant not to sue - Release of one co-guarantor discharges other co-guarantors. - GUARANTEE - Joint and several guarantee - Express or implied obligation to maintain the security - Failure to maintain will release the guarantor - Guarantor not released where failure to perform obligation to maintain does not affect the nature of the obligation guaranteed. - EVIDENCE - Evidence of value - Reliance upon series of inter partes transactions as evidence of value - Trial judge erred in failing to accept transactions as evidence of value. - REASONS - Adequacy - Adoption of one party's submissions by trial judge.
CASES CITED:	Codelfa Constructions Pty. Limited v. State Rail Authority (NSW) (1982) 149 CLR 337 Hancock v. Williams & Anor (1942) 42 SR (NSW) 252 Re Wolmerhausen (1890) 62 LT 541 Smith v Wood [1929] 1 Ch 14 Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 Taylor v Bank of NSW (1886) 11 App Case 596 Walker v Bowry (1924) 35 CLR 48
PARTIES :	Tass Alexander James (First Appellant) Janet Margaret James (Second Appellant) New South Head Nominees Pty. Limited (ACN 088 322 472) (Third Appellant) Surf Road Nominees Pty. Limited (ACN 087 719 060) (First Respondent) Chris Burke & Co. Pty. Limited (ACN 062 554 849) (Second Respondent) I.G. Martyn Real Estate Pty. Limited (ACN 001 210 304) (Third Respondent) WIT Investments Pty. Limited (ACN 087 762 856) (Fourth Respondent) Vincent Palmieri (Fifth Respondent) Terry Ian Wilson (Sixth Respondent) Andrew Peter Mortimer (Seventh Respondent)
FILE NUMBER(S):	CA 40330/04
COUNSEL:	C.R.C. Newlinds SC/A.P. Coleman (Appellants) T. Alexsis SC/K. Sainsbury (Respondents)
SOLICITORS:	The Argyle Partnership (Appellants) Pritchard Law Group (Respondents)

LOWER COURTJURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	ED 50108/2001
LOWER COURT JUDICIAL OFFICER :	Einstein J