JMAC Investment Group Pty Ltd v 3.1 Entertainment Pty Ltd
[2017] WASC 352
•8 DECEMBER 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: JMAC INVESTMENT GROUP PTY LTD -v- 3.1 ENTERTAINMENT PTY LTD [2017] WASC 352
CORAM: ARCHER J
HEARD: 8 NOVEMBER 2017
DELIVERED : 8 DECEMBER 2017
FILE NO/S: CIV 2127 of 2017
BETWEEN: JMAC INVESTMENT GROUP PTY LTD
Plaintiff
AND
3.1 ENTERTAINMENT PTY LTD
First DefendantIRENE VALERIE GRIMES
Second DefendantREGISTRAR OF TITLES
Third Defendant
Catchwords:
Personal guarantee - Whether guarantor bound by her signature - Vitiating element - Unilateral mistake - Unconscionable conduct under Australian Consumer Law - Turns on its own facts
Legislation:
Australian Consumer Law, s 21, s 22
Result:
Judgment for the plaintiff against the second defendant
Category: B
Representation:
Counsel:
Plaintiff: Ms R Young
First Defendant : No appearance
Second Defendant : Mr L A Warnick
Third Defendant : No appearance
Solicitors:
Plaintiff: Valenti Lawyers
First Defendant : No appearance
Second Defendant : Equitas Lawyers
Third Defendant : No appearance
Case(s) referred to in judgment(s):
Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; (2016) 341 ALR 572
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Khosa v Legal Profession Complaints Committee [2017] WASCA 192
Paciocco v Australia and New Zealand Banking Group [2016] HCA 28; (2016) 258 CLR 525
Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199
Taylor v Johnson (1983) 151 CLR 422
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21; (2015) 47 WAR 547
ARCHER J:
Background
The plaintiff, JMAC Investment Group Pty Ltd (JMAC), conducts business as a liquor distributor. At the relevant time, JMAC conducted the business in the name of Liquor Home Delivery Malaga. Mr Chittick is a director of JMAC.
In 2008, the first defendant, 3.1 Entertainment Pty Ltd, took over the lease of the Sawyers Valley Tavern. Mr Scott Higginson is the sole director and shareholder of 3.1 Entertainment.
The second defendant, Ms Grimes, is Mr Higginson's mother. Ms Grimes is now retired, but she worked for about 30 years for United Credit. From the time that 3.1 Entertainment took over the tavern lease, Ms Grimes helped her son in the running of the tavern.
Prior to 2014, 3.1 Entertainment had sourced its liquor from various wholesalers. In 2014, 3.1 Entertainment decided to source its liquor from JMAC. JMAC provided 3.1 Entertainment with a credit application form. Ms Grimes filled in the first page and the top part of the second page of the form. The bottom third of the second page is a section dealing with guarantees. It concludes with a signature clause for guarantors, to execute the form as a deed. The terms and conditions include that the guarantor grants a charge over all the guarantor's land to secure payment of monies owed under the agreement and consents to an absolute caveat being registered by the creditor at any time in respect of such land to protect its charge.[1]
[1] Exhibit 4, cl 18 of the terms and conditions. See also cl 14 and the first paragraph of the guarantee section itself.
Ms Grimes signed the guarantor signature clause of the form, and gave it to Mr Chittick. Within a day or two, JMAC began to supply liquor to 3.1 Entertainment.
It was understood between the parties that 3.1 Entertainment would first pay off its debt to a previous supplier before commencing to pay JMAC. However, after that time, 3.1 Entertainment failed to keep up with its payment obligations. The debt began to grow. Mr Chittick and JMAC staff made numerous requests to 3.1 Entertainment for more money to be paid or for payment plans to be entered into.
In January 2017, Mr Higginson signed as a guarantor on a new credit application form.[2]
[2] Exhibit 5.
JMAC continued to supply 3.1 Entertainment with liquor until Mr Chittick discovered that the tavern had closed down. He found out on Australia Day 2017, which fell on 26 January.
In February 2017, JMAC registered a caveat over land owned by Ms Grimes. In June 2017, Ms Grimes applied to the Registrar of Titles for a notice to be issued to JMAC requiring JMAC to obtain a court order extending the caveat, failing which the caveat would lapse.
In July 2017, JMAC filed an originating summons seeking an order extending the caveat. JMAC also commenced an action seeking a declaration that the interest claimed in the caveat was valid and to recover the money owed to it and interest. JMAC brought the action against 3.1 Entertainment as the debtor, and against Ms Grimes as the guarantor.
On 10 July 2017, I ordered that the operation of the caveat be extended until further order.
In August 2017, JMAC obtained a default judgment against 3.1 Entertainment for the money owed, interest and costs.
Ms Grimes defends the action against her. She admits signing the guarantee, but says that she should not be bound by her signature. She says, in essence, she was rushed into signing the form, and signed it in the wrong place. She says she thought she was signing the application for credit. Ms Grimes says that Mr Chittick knew that she was signing in the wrong place and did not point that out to her. Ms Grimes raises a claim for equitable relief for unilateral mistake and a claim for statutory relief under s 21 of the Australian Consumer Law for unconscionable conduct.
The legal principles are not in dispute. The outcome of this case depends on what facts I find.
Legal principles
The general rule is that a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, unless there is a vitiating element or a claim for equitable or statutory relief.[3]
[3] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [57].
In Taylor v Johnson,[4] the High Court identified when equitable relief would be available to a person who entered into a written contract under a serious mistake about its contents in relation to a fundamental term. The court said such a person will be entitled in equity to an order rescinding the contract if two facts exist.[5] First, that the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term. Second, that the other party deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension.
[4] Taylor v Johnson (1983) 151 CLR 422, 432.
[5] The court may be able to grant equitable relief for unilateral mistake in cases not covered by this principle (see Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21; (2015) 47 WAR 547 [171] ‑ [180]). However, it is unnecessary to consider a broader application of equitable principles in light of the way in which the defence case was conducted and the critical facts in issue.
Statutory relief is available under the Australian Consumer Law. Section 21 provides that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable. In this case, there is no dispute that JMAC was engaged in trade and commerce in connection with the supply or possible supply of goods or services. The issue is whether JMAC acted unconscionably.
Section 22 of the Australian Consumer Law provides a non‑exhaustive list of factors to which the court may have regard in determining whether s 21 has been contravened.
The meaning of 'unconscionable' in this context has been explained in numerous cases.[6] It is unnecessary to explore the possible reaches of the word 'unconscionable' in this context. This is because Ms Grimes asserts that JMAC's conduct was unconscionable because Mr Chittick knew she had mistakenly signed the guarantee and Mr Chittick added his signature as a witness and added a date, seeking to take advantage of the mistake and bind Ms Grimes to liability as a guarantor. JMAC does not dispute that, if those propositions are established, it would have acted unconscionably.[7]
[6] Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199 [259] ‑ [306]; substantively approved on appeal to the High Court, see Paciocco v Australia and New Zealand Banking Group [2016] HCA 28; (2016) 258 CLR 525 [292] ‑ [294] (Keane J), [2] (French CJ), [70] (Kiefel J); and Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; (2016) 341 ALR 572 [55] ‑ [60].
[7] ts 14.
Issues
The starting point is Ms Grimes will be bound by her signature on the credit application form unless she can establish a basis to displace the general rule.
There is a significant conflict between the evidence of Mr Chittick and Ms Grimes. Ms Grimes accepts that, in order to establish a basis to displace the general rule, she must prove her version of the critical facts on the balance of probabilities.[8]
[8] ts 104 ‑ 105.
Ms Grimes accepts that she must prove the following matters asserted by her:[9]
1.Mr Chittick did not make a specific request to Ms Grimes that she sign a personal guarantee.
2.Ms Grimes did not intend to sign the guarantee clause.
3.Mr Chittick knew that Ms Grimes did not intend to sign the guarantee clause, and knew that she was only intending to sign the application for credit.
4.Mr Chittick then:
(a)deliberately set out to ensure that she did not become aware of her mistake; or
(b)sought to take advantage of her mistake by adding to the guarantee section his signature as witness and a date, and that, in doing so, he acted in breach of generally accepted norms of honesty and fair dealing.
[9] ts 100, 103 ‑ 104.
Signed it in her personal capacity
Before discussing the evidence relating to these issues, I should note one other matter arising from the pleading. At trial, Ms Grimes did not seek to maintain numerous matters pleaded in the Second Defendant's Defence and Counterclaim[10] (Defence). Counsel for Ms Grimes explained that the Defence was filed prior to discovery, and that various matters were not now pressed. He confirmed that the defence was now limited to unilateral mistake or statutory unconscionability.[11] Nevertheless, for the avoidance of doubt, I will briefly explain why I find that Ms Grimes signed the credit application form in her personal capacity.
[10] Second Defendant's Defence and Counterclaim dated 11 August 2017.
[11] ts 14 ‑ 16 and 100. See also the Second Defendant's Outline of Submissions and List of Authorities dated 6 October 2017.
As will be seen, I find that Mr Chittick said that JMAC required a personal guarantee. Ms Grimes then signed her name and wrote her name in the guarantee signature clause. Ms Grimes was not a director, an officer or an employee of 3.1 Entertainment. She could not have entered into an agreement on behalf of 3.1 Entertainment.
The evidence on the critical facts
Mr Chittick
Mr Chittick's affidavit[12] evidence was to the following effect.
[12] Affidavit of James Anthony Chittick sworn 5 September 2017, exhibit 3 (Chittick Affidavit).
On 11 August 2014, a staff member sent Mr Chittick an email from Ms Grimes.[13] The email said 'I have rang [sic] a couple of times and asked if i could be contacted by manager or owner. i am Val from sawyers valley tavern and would like to talk about conducting some business with your company'. The email included Ms Grimes' mobile phone number.
[13] Chittick Affidavit, attachment JC1.
The same day, Mr Chittick telephoned her number. The phone records show that the call lasted for just over two minutes.[14]
[14] Chittick Affidavit, attachment JC2.
Mr Chittick then had two meetings with Ms Grimes, on 14 August 2014 and 8 September 2014. Both meetings were at the tavern. Mr Chittick's phone records confirm that he was in Sawyers Valley on each of these days.[15]
[15] Chittick Affidavit, attachment JC2.
During the first meeting, Mr Chittick gave the credit application form[16] to Ms Grimes to review.
[16] Exhibit 4.
The next day, Ms Grimes emailed him, writing:[17]
Hi Jamie thanks for your visit I have filled out the forms and will get Scott to sign today
I only want one account to pay that will be your company
so i need to make sure that you can order and deliver from ALM, BEER AND KEGS FROM FOSTERS AND LION NATHAN also Scott said you ring all reps
I am thinking that the ordering for me will be so much more easy and simple all I have to do is put all three of the above with you thanks Val
[17] Chittick Affidavit, attachment JC3.
On 8 September 2014, Mr Chittick telephoned Ms Grimes' number. The phone records show that the call lasted for just over one minute.[18] In cross‑examination, Mr Chittick said that someone, he thought Ms Grimes, had rung him wanting to place an order, and he had said he could come up on the following Monday. He said that is why he rang on 8 September (which was a Monday) to confirm Ms Grimes was there.[19]
[18] Chittick Affidavit, attachment JC4.
[19] ts 29.
Later that day, Mr Chittick went to the tavern and met with Ms Grimes. After a short time, Ms Grimes went to see if Mr Higginson was there. She returned with Mr Higginson. Mr Chittick spoke briefly with Mr Higginson. Mr Higginson said he needed to leave and left, leaving Mr Chittick with Ms Grimes.
During the second meeting, Ms Grimes handed Mr Chittick the credit application form. He said he would take it away to review. She said she needed an order by tomorrow. Mr Chittick then skimmed the credit application form and saw that the guarantee section had not been completed. He told Ms Grimes that JMAC required a personal guarantee. Ms Grimes said she would do that, and she signed the guarantee clause.
The original credit application form
Mr Chittick identified what he said was the original signed credit application form, and it became exhibit 4. It is five pages.
The first two pages contain the details sought from the applicant, under the heading 'Credit Application'. About half way down page two, there is a signature clause and a box within which to place a common seal. There then appears, on page two, the heading 'Guarantee', followed by the headings 'Indemnity' and 'Continuing Guarantee'. The document states 'Executed as a Deed' and has space for the date and the full names and addresses of guarantors. Page two concludes with a signature clause for guarantors.
The third page is headed 'Terms and Conditions of Trade'. The terms and conditions continue over to the fourth page.
The fifth page is an email relating to checking a trade reference. Neither party suggested that the fifth page had been included in the credit application given to Ms Grimes. It had obviously been stapled to the form at a later date.
Ms Grimes
Ms Grimes' affidavit[20] evidence was to the following effect.
[20] Affidavit of Irene Valerie Grimes sworn 11 August 2017, exhibit 6 (Primary Affidavit).
Ms Grimes only met Mr Chittick once. Mr Chittick walked into the bar of the tavern one day and said he had an appointment with Mr Higginson. She told him she was Mr Higginson's mother and would look at the paperwork.
Ms Grimes then contacted Mr Higginson and told him that Mr Chittick was in the bar at the tavern. Mr Higginson lived in the tavern, and quickly came into the bar.
Mr Chittick took out a document. He said it was an application they would have to fill out. It was a credit application. It took up two sides of a single piece of paper. Ms Grimes filled out the form, in between serving customers. Ms Grimes saw the part about a guarantee and deliberately did not fill that out. After she had filled in the form, Ms Grimes went back to serving customers.
Mr Chittick and Mr Higginson continued talking. Then Mr Chittick picked up the form. He and Mr Higginson then went out to the veranda area.
About 20 minutes later, Mr Chittick returned alone and pushed the credit application across the bar to her. He asked her to sign it, saying that, if she did, he could bring a delivery for her in the morning. He did not ask her to give a guarantee or tell her the form contained a guarantee, and the word 'guarantee' was never mentioned. Ms Grimes looked at the credit application and saw 'signature' on the bottom. She signed on the dotted line at the signature clause.
Ms Grimes' oral evidence was inconsistent with her affidavit evidence, and she also added more details. This is discussed later.
Mr Higginson
Mr Higginson's affidavit[21] evidence was to the following effect.
[21] Affidavit of Scott Higginson affirmed 11 August 2017, exhibit 9 (Higginson Affidavit).
Mr Higginson first met Mr Chittick when Mr Chittick was working as a sales representative for Bottlemart. At the time, 3.1 Entertainment bought its liquor supplies from Bottlemart.
After Mr Chittick left Bottlemart, Mr Higginson bumped into him at a Bottlemart warehouse. Mr Chittick told Mr Higginson he was running his own business and could supply liquor to Mr Higginson more cheaply than his current supplier.
Sometime later, Mr Chittick called Mr Higginson and asked if he was interested in switching to Mr Chittick's business, JMAC. Mr Higginson said he was, and asked him to drop by the tavern to discuss it.
Mr Chittick arrived at the tavern on a day that Mr Higginson was not working. His mother rang him, and he went to meet with Mr Chittick in the bar area of the tavern. He and Mr Chittick went out to the veranda to talk. Mr Chittick said he could make a delivery the next day if they filled out an application form. Mr Chittick went to get a form from his car. Mr Higginson went back inside the bar to see his mother.
Mr Chittick came into the bar carrying one or two pages of paperwork. Mr Higginson took it from him and gave it to his mother. Mr Higginson told his mother it needed to be filled out.
Mr Higginson continued to talk to Mr Chittick, while his mother was moving back and forth, serving customers.
Mr Higginson signed what he thought was the credit application form while looking over his mother's shoulder. He then left Mr Chittick with his mother.
Mr Higginson's oral evidence was inconsistent with his affidavit evidence, and he also added details not included in his affidavit. To the extent this is relevant, the inconsistencies and additional details are discussed later.
Challenge to Mr Chittick's evidence
Counsel for Ms Grimes submitted that the court should find that Mr Chittick had not been honest in his evidence.[22] Counsel submitted that:
[22] ts 104.
1.Mr Chittick embellished his affidavit evidence;
2.Mr Chittick's evidence was only supported by the documentary evidence to a limited extent;
3.Mr Chittick's account of how the guarantee clause was signed was implausible;
4.Mr Chittick's conduct after the form was signed was inconsistent with his claim that he believed she had signed the guarantee clause on purpose; and
5.Mr Chittick gave inconsistent answers in his evidence.
Did Mr Chittick embellish his evidence?
The guarantee conversation
Mr Chittick said in his affidavit that, after Ms Grimes had handed him the credit application form on 8 September 2014 and he noticed that the guarantee section had not been completed, he said to Ms Grimes 'words to the effect that we would need a personal guarantee'.[23] In cross‑examination, he was asked to give his actual words. He said 'I said the account would not be opened without a personal guarantee'. He later said he told her 'I won't be able to open the account without a personal guarantee'.[24]
[23] Chittick Affidavit [27].
[24] ts 32 ‑ 33.
Counsel for Ms Grimes submitted that this was an embellishment.[25] I do not accept this submission. Mr Chittick did not purport to set out the precise words in his affidavit, and it is not surprising that Mr Chittick would not precisely remember his actual words. Mr Chittick was, however, sure that he had used the word 'guarantee'. He said that he had checked the form for 'any problems, skim‑read it, in case they hadn't signed the guarantee or whatever … otherwise if I had driven back - if I had driven back to Malaga and the office went, "They haven't signed the guarantee," well, they wouldn't have got an order the next day'.[26] He said someone had to guarantee the form.[27] It was not put to Mr Chittick that JMAC would have started trading with 3.1 Entertainment (or any other customer) without a guarantee.
The prior phone call with Mr Higginson
[25] ts 83.
[26] ts 31.
[27] ts 34.
In cross‑examination, Mr Chittick said that, prior to receiving the 11 August email, he had spoken to Mr Higginson. He said that Mr Higginson rang him within a month prior to his first visit to the tavern. Another customer, Dave from 'Gidgie Grog', had given Mr Chittick's details to Mr Higginson.[28] Mr Chittick agreed he did not mention the call from Mr Higginson in his affidavit, saying he thought 'no one really asked me that question'.[29] I accept that explanation. Counsel for Ms Grimes did not suggest in his closing submissions that I should not accept it.
To what extent was Mr Chittick's evidence supported by documents?
[28] ts 26.
[29] ts 28.
Counsel for Ms Grimes submitted that the documents showed only that Mr Chittick had gone to the tavern on two occasions and that Mr Chittick had left some forms to be signed on the first occasion. He submitted that the documents did not show:
1.that Mr Chittick had met with Ms Grimes on 14 August 2014;
2.that the credit application form signed in September was the same document that Mr Chittick left at the tavern in August; and
3.that Ms Grimes was acting as the primary representative for 3.1 Entertainment.
Email of 11 August 2014
Counsel for Ms Grimes submitted that the 11 August email was consistent with Ms Grimes simply writing what Mr Higginson told her to write.
On its face, the 11 August email tends to show that Ms Grimes was acting as a manager or primary representative of 3.1 Entertainment. She introduced herself as 'Val from sawyers valley tavern'. She wrote that she wanted to talk about conducting business with JMAC. She gave her mobile phone number as the only contact number.
As will be seen, I do not accept the evidence of Ms Grimes and Mr Higginson as to Ms Grimes' role in 3.1 Entertainment. I do not accept that she was nothing more than a conduit for Mr Higginson's words and only 'did some paperwork' for him.
Accordingly, the 11 August email does support Mr Chittick's evidence that Ms Grimes was acting as the primary representative of 3.1 Entertainment.
Email of 15 August 2014
Counsel for Ms Grimes accepted that the 15 August email showed that Mr Chittick went to the tavern on 14 August and left a credit application form to be signed.[30] However, he submitted that the 15 August email was consistent with the form not being the same credit application form that was signed in September.[31]
[30] ts 93.
[31] ts 85.
He submitted that the email was consistent with the following scenario. Mr Chittick attended the tavern on 14 August and gave to someone other than Ms Grimes or Mr Higginson a credit application form to be signed. Ms Grimes filled it in and sent the email, confirming she had filled it in and would get Mr Higginson to sign it. Ms Grimes then gave the form to Mr Higginson, who threw it in the bin. When Mr Chittick returned to the tavern in September, he produced a fresh, blank credit application form, which is the one that Ms Grimes signed.[32]
[32] ts 85 ‑ 86.
There are a number of problems with this scenario.
Most importantly, the scenario is inconsistent with Ms Grimes' emphatic denial that she was not referring to a credit application form in her email of 15 August.[33] It was put to Ms Grimes that her words 'I have filled out the forms' was a reference to a credit application form. She said no. She was asked what form she was referring to, if it was not a credit application form. At the time she was asked that question, she had her email of 15 August and the credit application document in front of her in the witness box. She said:[34]
I don't know what the forms are that I refer to there [in the email]. I don't know what the forms are. I thought they may have been order forms, because this [the credit application document] isn't a form. This is an application. I just said 'Thank you, Jamie, for your application'. This [the credit application document] is an application. I don't know what the forms [referred to in the email] are.
[33] This was conceded by her counsel - ts 94.
[34] ts 56.
She agreed she was not given any other forms by Mr Chittick, and she did not remember getting any forms from Mr Higginson. She was then asked again whether she might have been referring to a credit application form in her email. She said 'No. I would have called it an application - a credit for[35] application. I - I would have called it what it is. I wouldn't have called it a form'.[36]
[35] The transcript records this phrase as 'credit for application', but it seems more likely that Ms Grimes said 'credit form application.' However, it is unnecessary to listen to the recording in order to determine whether she did. I will assume the transcript is correct.
[36] ts 56.
Later, in response to a question about whether the word 'guarantee' was used in her conversation with Mr Chittick, she denied that it had been used, and then volunteered 'And this was just an application. You take it away. You go and do your homework. This is an application. This is not a contract'.[37]
[37] ts 58.
This evidence was highly implausible, and I do not accept it.
Even though I reject her evidence, her adamant denials that she was not referring to a credit application form in that email presents an obstacle to the acceptance of her counsel's scenario. There are, however, additional reasons to reject it.
First, the scenario does not sit well with Ms Grimes' evidence in her affidavit sworn 11 August 2017 (Primary Affidavit).[38] In her Primary Affidavit, Ms Grimes described what occurred when Mr Chittick was at the tavern on 8 September:
'Jamie took out a piece of paper from a blue folder. He said we would have to fill out an application, and he gave the paper to me. I looked at it and saw that it was an application for credit'.[39]
[38] Affidavit of Irene Valerie Grimes sworn 11 August 2017, exhibit 6.
[39] Primary Affidavit [12].
If Mr Chittick had already left a credit application form at the tavern, and had been told by the 15 August email that it had been filled in, the events she described would not make sense.
Second, Ms Grimes did not give evidence that she gave a completed credit application form to Mr Higginson. Mr Higginson did not give evidence of having received one.
Third, if Ms Grimes had given Mr Higginson a completed credit application form, it is inherently unlikely that Mr Higginson would throw it away.
In his evidence, Mr Higginson said he was not aware that Mr Chittick had provided documentation to Ms Grimes at his first meeting with her. He was asked if, after that meeting, his mother ever told him, 'I've got a form to fill out - I've filled out a form, and I need you to sign the form'. He replied 'I, more than likely, would have binned it. I was too busy. I had too much going on'.[40] He said a lot of sales representatives came through.
[40] ts 73.
It was put to Mr Higginson that it would be rare for Ms Grimes to fill out a form if they did not actually want to purchase from a potential supplier. He said 'No. She does - as again, she does what she's told. If I tell her to do something, she does it a certain way, because that's how I need it done. I need to remember what's done'.[41] This answer would make it even less likely that he would throw away a form she had filled in. On his evidence, she would only have filled in a form if he had told her to.
[41] ts 74.
Further, Mr Higginson's evidence was that he wanted to change his source of liquor, and thought JMAC would be more convenient as it was a 'one bill structure'.[42] Ms Grimes sent an email on 11 August 2014 seeking to discuss doing business. It does not make sense that Mr Higginson would discard a JMAC credit application form presented to him by Ms Grimes for his signature in those circumstances.
[42] ts 70.
Counsel for Ms Grimes also submitted that the 15 August email was consistent with Mr Chittick attending the tavern in August without meeting with Ms Grimes.
Counsel for Ms Grimes pointed out that the 15 August email did not say anything like 'it was nice to meet you', but merely said 'thanks for your visit'. I accept that the phrase 'thanks for your visit' does not compel a conclusion that Ms Grimes met with Mr Chittick. Nevertheless, I consider that it does tend to indicate that she did meet with him, in combination with the other evidence, in particular the phone calls. It is true that Ms Grimes did not write 'it was nice to meet you', but nor did she write 'thanks for dropping off the document. Person x passed it on to me'.
Counsel for Ms Grimes also noted that the email did not refer to anything that Mr Chittick had said to Ms Grimes. It only referred to Mr Higginson saying that Mr Chittick 'rang all reps'. Mr Higginson did not give evidence that Mr Chittick said this to him. Mr Chittick denied saying it. Mr Chittick said he does not ring sales representatives, as that is not how his business operates.[43] It may be that Dave from Gidgie Grog told Mr Higginson something about what Mr Chittick did. However, it is unnecessary to speculate (and inappropriate) as, in my view, this evidence is neutral. No one suggests that Mr Chittick met with Mr Higginson on 14 August 2014. Accordingly, the reference to what Mr Higginson had said does not shed any light on whether Mr Chittick met with Ms Grimes on 14 August 2014.
[43] ts 27 ‑ 28.
Counsel for Ms Grimes also pointed out that the email asked for confirmation that Mr Chittick could order particular goods from particular entities. He submitted that, if Mr Chittick had met with Ms Grimes, Ms Grimes would have known this. Mr Chittick's evidence was that he told Ms Grimes at the 14 August meeting that he could get supplies from all the different liquor suppliers.[44] In my view, this does not mean that Ms Grimes would not have needed, or wanted, to confirm that Mr Chittick could order particular goods from particular entities.
[44] ts 27.
Counsel for Ms Grimes also submitted that Mr Chittick had not been sure that he had met with Ms Grimes on 14 August 2014.[45] Mr Chittick was asked if it was possible that he had left the forms with someone else. He replied 'I'm pretty - as much as I can remember I'm sure I spoke to her'. The question was repeated, and he said 'It might be possible, but I think I spoke to her'.[46] In the overall context of Mr Chittick's evidence, this was not a concession that he may not have met with Ms Grimes on 14 August. Rather, Mr Chittick was allowing for the possibility that his memory could be wrong. In my view, Mr Chittick's recollection is that he did meet with Ms Grimes on 14 August. Obviously, his memory could be faulty in view of the passage of time. However, I consider that his recollection is supported by his telephone call to Ms Grimes on 11 August and the 15 August email.
[45] ts 91.
[46] ts 27.
On its face, the 15 August email tends to show that Ms Grimes had met with Mr Chittick on 14 August and had filled in the credit application form. It also tends to show she was acting as the primary representative of 3.1 Entertainment.
Was Mr Chittick's evidence as to how the guarantee clause came to be signed implausible?
Counsel for Ms Grimes submitted that Mr Chittick's account of how the guarantee clause came to be signed was implausible.
Mr Chittick's evidence was that, during the second meeting, Ms Grimes handed him the credit application form. He said he would take it away to review. She said she needed an order by tomorrow. Mr Chittick then skimmed the credit application form and saw that the guarantee section had not been completed. He told Ms Grimes that JMAC required a personal guarantee. Ms Grimes said she would do that and signed the guarantee clause.
Counsel for Ms Grimes pointed out that, despite this evidence, Mr Chittick did not actually ensure that the guarantee section was completed. Ms Grimes signed it, printed her name, and Mr Chittick witnessed her signature. The guarantee section had a place for the guarantor's full name and address to be inserted. This part of the form was left blank. Counsel for Ms Grimes submitted that, if Mr Chittick was so concerned about getting a personal guarantee, he would not have accepted a guarantee from 'someone he didn't know, he had never met before, didn't know her full name, didn't know her address'.[47]
[47] ts 84.
Mr Chittick said he accepted Ms Grimes as a guarantor because he believed that she had bought the business and was running the business. He said he had been told that she and Mr Higginson had bought the tavern.[48] Mr Chittick said that she 'did all the dealings' with him and had filled out the credit application form. He said that he knew what her name was because someone had told him.[49] He said that he thought the address would be the tavern, although he knew that Ms Grimes lived in town, not in the tavern. He said that he was sure that he thought 'the form was done' at the time.[50]
[48] ts 33, 35.
[49] ts 35.
[50] ts 35.
Counsel for JMAC pointed out that Ms Grimes did more than sign the guarantee clause. Ms Grimes also wrote her name 'Val Grimes' next to her signature. Further, the business address for the tavern was already on the front page of the form, and Mr Chittick knew where the business operated from, having visited on two occasions.[51]
[51] ts 113.
Counsel for Ms Grimes next pointed out that, despite Mr Chittick's evidence that he had skim‑read the form and noticed that the guarantee section had not been completed, Mr Chittick did not ensure that the applicant for credit, 3.1 Entertainment, had signed the form, and he did not go back to the tavern to get it signed.[52]
[52] ts 84.
Mr Chittick said that, when he skim‑read the document, the 'bit' that he noticed was that the guarantee section had not been completed.[53] His evidence was to the effect that he considered all that was required was for a guarantor to sign the application, and this would be sufficient to 'sign up' 3.1 Entertainment as a credit customer as well as providing the guarantee.[54]
[53] ts 34.
[54] ts 34, 36.
Counsel for Ms Grimes submitted that the fact that the guarantee section was not fully filled out, and only contained Ms Grimes' signature and printed name, tended to confirm that Mr Chittick had not said he needed a personal guarantee. Counsel submitted it was more consistent with Mr Chittick just asking Ms Grimes to sign the form.[55]
[55] ts 84.
If only the credit application form is considered, there is force in this submission. However, Mr Chittick is not a lawyer or a sophisticated businessman running a large commercial enterprise. While JMAC employed staff, Mr Chittick agreed the business was 'his' and that he was one of the owners.[56] Mr Chittick's emails were written in a casual, informal style.[57] He personally attended the tavern on two occasions to arrange for the credit application form to be completed. He personally telephoned Ms Grimes on 11 August in response to her 11 August email, and on 8 September to check she would be at the tavern. His language in the witness box was not erudite.
[56] ts 21.
[57] See, for example, Chittick Affidavit, pages 19 and 177.
Accordingly, the fact that the guarantee section was not fully filled out does not cause me to reject Mr Chittick's evidence on this point, or more generally. Nor does it have that effect when considered in combination with the other criticisms of his evidence.
Counsel for Ms Grimes also said that Mr Chittick would not have said 'we' need a personal guarantee or 'I can't get this accepted without a personal guarantee' when Mr Chittick was the boss and one of the people who signed off on application forms.[58]
[58] ts 84.
I do not accept this submission. I have earlier set out what Mr Chittick said in his affidavit and oral evidence. He did not say that he had said 'I can't get this accepted without a personal guarantee'. Further, if he used the word 'we', this would not be telling. In several of the emails tendered in evidence, Mr Chittick used the word 'we' to refer to JMAC's needs.[59]
Conduct after the form was signed
[59] See, for example, Chittick Affidavit, page 177.
Counsel for Ms Grimes submitted that Mr Chittick's conduct after the credit application form was signed was inconsistent with his claim that he believed she had signed the guarantee clause on purpose. Counsel submitted that Mr Chittick's conduct suggested that Mr Chittick knew that Ms Grimes had signed the credit application form in the wrong place and made a late decision to exploit her mistake, as 'an afterthought'.[60]
[60] ts 90.
In support of this submission, counsel first referred to Mr Chittick's failure to send Ms Grimes a copy of the credit application form after it was signed.
Mr Chittick agreed he did not send Ms Grimes a copy of the credit application form after it was signed. He said she did not ask him to send her a copy. He said 'We don't generally get asked by anyone'.[61] As noted earlier, Mr Chittick is not a sophisticated businessman. It appears that JMAC did not have a practice of sending copies of contracts to its clients. I do not accept that Mr Chittick's failure to send Ms Grimes a copy makes it implausible that he believed she had intentionally signed the guarantee clause.
[61] ts 42.
Counsel also referred to Mr Chittick's failure to include Ms Grimes as a guarantor in the January 2017 credit agreement.
Mr Chittick said he had not personally arranged for Mr Higginson to enter into a new credit agreement in January 2017. Mr Chittick said Mr Higginson had attended JMAC's office, and a JMAC staff member had thought it would be a good idea to get Mr Higginson to sign a personal guarantee.[62] Mr Higginson's evidence was that Wendy, the JMAC staff member who handled 3.1 Entertainment's account, asked him to fill out a new credit application form. Mr Higginson did not suggest that Mr Chittick had made this request, or that Mr Chittick was present at the time.[63]
[62] ts 23 ‑ 25, 41.
[63] Higginson Affidavit [24].
It was put to Mr Chittick that, once the 2017 application form had been completed, he had a 'whole new arrangement with 3.1 Entertainment'. He said 'Nothing changed, really'.[64] He was asked if the 2017 application form was intended to improve JMAC's chances of recovering money from 3.1 Entertainment. He said:
'Yes. We wanted Scott to sign as well … we got Scott to sign it, because he was a director and we thought, yes, we would have a better chance of recovering our money from both parties'.[65]
[64] ts 23.
[65] ts 23 ‑ 24.
Mr Chittick agreed that Mr Higginson was the guarantor on the 2017 application and that Ms Grimes was not included as a guarantor. He agreed that he had not asked for her to be included. He pointed out that initially he had not asked for Mr Higginson to be the guarantor either, but that, once the new application had been completed, he checked it off and signed it. He said 'I just wanted to get Scott added as a guarantor'.[66]
[66] ts 24 ‑ 25.
In my view, Mr Chittick's answers were credible, particularly in the light of my finding that he is not a sophisticated businessman. I accept his evidence.
Counsel for Ms Grimes also referred to Mr Chittick's failure to mention the guarantee when the debt started to grow and his failure to make a demand on the guarantee until the caveat was filed. Counsel submitted that, if Mr Chittick's evidence was true, Mr Chittick would have expressly raised the fact that Ms Grimes had given a personal guarantee when the debt had grown and the relationship was becoming strained. Counsel also submitted that Mr Chittick would have made a demand on the guarantee before the caveat was filed.
I do not accept these submissions, in light of the following.
Mr Chittick was asked if, prior to the tavern closing down, he had reminded Ms Grimes of the guarantee. He said that he probably did not because 'every time I went to the tavern I was told, "Don't worry about the debt, it will be sorted, got people looking at selling the pub," they were going to sell limos and pay the debt down. Scott even offered to give me his car and we could have it until they paid it. And they said they had people looking at it all the time, they said people were going to buy it'.[67] In my view, this is a credible explanation. Further, it is supported to an extent by an email Mr Chittick wrote on 10 November 2016.[68] In that email, Mr Chittick wrote 'Originally I was told that you would sell some cars and give me a lump sum but nothing is happening.' I accept Mr Chittick's explanation.
[67] ts 40.
[68] Chittick affidavit, page 177.
Mr Chittick agreed that JMAC did not make a demand on the guarantee until after he had learned that the tavern had closed down.[69] He said that JMAC had continued to supply 3.1 Entertainment until he learned the tavern had closed.[70] It was put to Mr Chittick 'So, you only thought about a guarantee claim against Ms Grimes after the tavern closed. Is that right?' Mr Chittick said 'Yes. I don't know why - why you would - why you would follow up a guarantee before they didn't pay you. I don't know'.[71]
[69] ts 39 ‑ 40.
[70] ts 39.
[71] ts 41.
In late 2016, Mr Chittick made numerous pleas for money to be repaid and for payment arrangements to be made.
On 11 August 2016, Mr Chittick sent an email to 3.1 Entertainment in relation to the mounting debt. In that email, he wrote 'I need a commitment and a payment plan from you going forward otherwise I will need to look at other options to get my money before you send my business broke'.[72] In his evidence, Mr Chittick said that it was 'not so much that we were going to go broke, it was just a lot of money'.[73]
[72] Chittick Affidavit, page 173.
[73] ts 22.
In the email of 10 November 2016, Mr Chittick explained the problems the debt was causing to JMAC. Towards the end of that email, he wrote 'I know you ordered from alm and they giver [sic] you 28 days but at the moment we are giving you three to 4 months so we need to be looked after 1st until you can pay us back otherwise we will have to take other action and I don't really want to go down that road but if you don't communicate with us I wont be able to help it'.[74]
[74] Chittick Affidavit, page 177.
The evidence indicates that Mr Chittick was aware he had legal remedies available to him, but that he chose to refer to the possibility of legal action in understated terms. Given that Mr Chittick continued to supply liquor to 3.1 Entertainment for about two months after this email was sent, it appears that JMAC was seeking to maintain the relationship. JMAC may have hoped that, by continuing to supply 3.1 Entertainment, its debt would eventually be repaid without the need for any legal action, and the relationship could continue into the future. In any event, the fact that Mr Chittick did not expressly mention the guarantee is not inconsistent with him knowing he might have to rely on it.
Inconsistencies in Mr Chittick's evidence
Arguably, Mr Chittick gave contradictory responses about when Ms Grimes handed him the credit application form during his second visit to the tavern. He was asked when she first 'produced' the form, and he said probably before he spoke to Mr Higginson.[75] He was then asked what he did with it when she 'gave' it to him. He said he 'would have' just had it in his hand. It was then put to him that he said in his affidavit she handed it to him near the end of the second meeting. He said he saw it at the start of his visit, but he thought Ms Grimes had it until after he had spoken to Mr Higginson.[76]
[75] ts 30.
[76] ts 31.
This arguably inconsistent evidence does not affect my assessment of Mr Chittick's evidence, either on its own, or in combination with the other issues raised by counsel for Ms Grimes. If it was an inconsistency, it was an inconsistency going only to a minor detail of timing. In light of my assessment of Mr Chittick's evidence as a whole, supported as it is by the documents, it does not affect my assessment of his evidence. Counsel for Ms Grimes did not suggest in his closing submissions that this was an inconsistency or, if it was, that it affected Mr Chittick's credibility.
Counsel for Ms Grimes submitted that Mr Chittick's recollection in relation to the credit limit was 'a little unreliable'.[77] Mr Chittick said in his affidavit that there was a credit limit of $30,000, but it was an internal credit limit. However, he wrote in an email to 3.1 Entertainment that he had given them a limit of $20,000. In addition, there was an email from a JMAC staff member referring to a limit in that amount. Mr Chittick explained that he knew that 3.1 Entertainment had a large debt to ALM and it was understood that 3.1 Entertainment would pay that debt first, before commencing to make payments to JMAC. In other words, the debt to ALM would effectively be transferred to JMAC over time. He said he did not know why the email referred to $20,000 and could only assume the staff member did not know this. In relation to the email that came from him, he said he sometimes forwarded material to clients that staff members had sent to him.[78]
[77] ts 99 ‑ 100.
[78] ts 36 ‑ 39.
My overall assessment of Mr Chittick as a witness is not affected by his evidence on this issue. His explanation was not inherently implausible. His evidence that he knew that 3.1 Entertainment would be effectively transferring its $30,000 debt from ALM to JMAC was supported by the evidence of Ms Grimes and Mr Higginson.[79]
Overall assessment of Mr Chittick
[79] ts 63, 64 and 80, and Higginson Affidavit [13].
Mr Chittick's evidence was not inherently implausible and was not contradicted by contemporaneous documents. On the contrary, his evidence was supported by documents. The documents that support his account are Ms Grimes' emails of 11 August and 15 August 2014, the phone records, and the original credit application form.
As will be seen, I do not accept Ms Grimes' evidence. Therefore, to the extent that Mr Chittick's evidence was contradicted by Ms Grimes, this does not affect my assessment of his evidence. I prefer Mr Chittick's evidence.
Mr Higginson's evidence contradicted Mr Chittick's evidence to an extent, but also contradicted Ms Grimes' evidence in some respects. As will be seen, I do not accept Mr Higginson's evidence. To the extent Mr Chittick's evidence was contradicted by Mr Higginson, this does not affect my assessment of Mr Chittick's evidence. I prefer Mr Chittick's evidence.
Mr Chittick's credibility was not substantially damaged in cross‑examination.
I accept Mr Chittick's evidence.
On that evidence, he believed Ms Grimes had signed the guarantee signature clause on purpose. On that evidence, even if I accepted that she signed the guarantee by mistake, there would be no reason why Mr Chittick ought to have known that. Further, I would not accept that, if she did make a mistake, he deliberately set out to ensure that she did not become aware of the mistake, or that he acted unconscionably.
Ms Grimes
I do not accept Ms Grimes' evidence.
Her evidence sits uncomfortably with various documents and, in some instances, is inconsistent with documents. Her oral evidence did not sit well with her Primary Affidavit, contradicted another of her affidavits and, in at least one respect, included a matter that was not put to Mr Chittick by her competent counsel. Further, while aspects of her evidence were corroborated by Mr Higginson, he contradicted her evidence in several significant respects.
Was Ms Grimes only a conduit?
The evidence of Ms Grimes and Mr Higginson was to the effect that Ms Grimes was nothing more than a conduit for Mr Higginson's words and she did some paperwork for him. Both gave (unchallenged) evidence that Mr Higginson is dyslexic. Ms Grimes said that was why she would fill out forms for him.[80] In re‑examination, Ms Grimes said that she also sent emails on his behalf. The following exchange with her counsel then occurred:[81]
Does Scott have any rules about how you write when you're writing for him?‑‑‑Yes. I have to write what he and how he is saying it, not to pretty it up the way I want it to sound.
It has to be exactly what he says; is that right?‑‑‑It has to be exactly what he says.
So when we see these emails here that you've sent to Jmac, that's Scott speaking, is it?‑‑‑That's Scott speaking.
Even though you sign it off?‑‑‑Even though I sign it off.
[80] ts 48.
[81] ts 66.
This evidence was not consistent with the content of the two emails Ms Grimes sent. For example, in the 11 August email, Ms Grimes wrote 'i am Val' and gave her own telephone number. In the 15 August email, Ms Grimes wrote 'I have filled out the forms and will get Scott to sign today'. This statement could not have been Mr Higginson speaking.
The evidence was also not consistent with another email, sent on 24 October 2014. In that email, Ms Grimes asked JMAC to call her about a delivery, giving her own mobile phone number.[82]
[82] Chittick Affidavit, page 49.
Further, as noted above, the 11 August email and 15 August email tend to show that Ms Grimes was acting as the primary representative of 3.1 Entertainment, that Ms Grimes had met with Mr Chittick on 14 August, and that she had filled in the credit application form.
In addition, I do not accept the evidence of Ms Grimes and Mr Higginson about Ms Grimes' role in the business and in these events. I will discuss Mr Higginson's evidence later. In relation to Ms Grimes, her evidence was troubling in many respects.
First, in her Primary Affidavit, Ms Grimes described how she first met Mr Chittick. She asserted that, on the day she signed the credit application form:[83]
[A] man came into the bar and spoke to me. I had never seen him before. He said he was Jamie from Liquor Home Delivery and he had an appointment with Scott.
Up until this time we had not been buying from Liquor Home Delivery. We had been dealing with another liquor supplier, HLW/Bottlemart.
I told Jamie I was Scott's mum and I would look at the paperwork. I rang Scott and told him Jamie was there.
[83] Primary Affidavit [9] ‑ [11].
Her affidavit made no mention of her 11 August 2014 email, or the telephone calls on 11 August and 8 September 2014. The account in her affidavit of how she came to meet Mr Chittick is inconsistent with that email and those calls.
Second, Ms Grimes swore a discovery affidavit in which she said that she did not have access to any documents passing between herself and JMAC.[84] It appears that Ms Grimes was only made aware of the contents of her emails after she was provided with JMAC's discovered documents.
[84] Affidavit of Irene Valerie Grimes sworn 29 August 2017, exhibit 7.
In her oral evidence, Ms Grimes asserted that, when Mr Chittick called her on 11 August, she told him he had to call Mr Higginson and that he had to make an appointment to see Mr Higginson.[85] This was not put to Mr Chittick in cross‑examination.[86] Instead, Mr Chittick was asked if, when he rang Ms Grimes on 11 August, she handed the phone over to Mr Higginson.[87] Her evidence is also implausible in view of the contents of the 11 August email. In that email, she did not give any contact number other than her own mobile number, and she did not suggest that there was anyone who wanted to talk about doing business apart from her.
[85] ts 49 ‑ 50.
[86] This was conceded by counsel for Ms Grimes, ts 91.
[87] ts 26.
Third, Ms Grimes said there was only one meeting and she filled out the form in that meeting while Mr Chittick was present. This evidence is inconsistent with her email of 15 August 2014. I have already discussed the submission made by her counsel in relation to the significance of this email.
Fourth, as explained earlier, Ms Grimes' emphatic denial that she was referring to the credit application form in her email of 15 August was implausible.
Fifth, Ms Grimes said that, on the only occasion she met with Mr Chittick, he said he was from Liquor Home Delivery and had an appointment with Mr Higginson.[88] In cross‑examination, she said she did not know what Liquor Home Delivery was. She was then taken to her email on 11 August, which she sent to '[email protected]', and in which she wrote that she would like to talk about conducting some business. She said 'Well, it's Liquor Home Delivery. It doesn't say it's business delivery'.[89] This answer was implausible in light of the contents of that email.
[88] Primary Affidavit [9].
[89] ts 51.
Sixth, Ms Grimes said that she signed a credit application form that had writing only on two sides of a page and that she did not see any terms and conditions.[90] In her Defence, she pleaded that it was a two‑page document with no terms and conditions annexed.[91]
[90] Primary Affidavit [18].
[91] Defence [5(e)].
In Ms Grimes' oral evidence, she was emphatic that the credit application form that she signed was not given to her with the pages containing the terms and conditions.[92]
[92] ts 54 ‑ 55.
There is a clear imprint of Ms Grimes' signature and printed name on one of the pages containing the terms and conditions in the credit application form tendered in evidence.[93] Ms Grimes was shown the exhibit in the witness box. She was asked if she agreed that there was an imprint of her signature on the back of page three. She said 'Not really, no. That might be so but I didn't see the terms and conditions at all'. She was then asked to have a close look, and asked whether she agreed her signature and name were imprinted on the back of page three. She said 'Not really'.[94] She was wearing her glasses at the time she gave this evidence.
[93] It can best be seen when looking at the blank back page of the third sheet of the document (exhibit 4), which has an imprint of the mirror image of parts of Ms Grimes' signature and printed name.
[94] ts 60.
Counsel for Ms Grimes did not submit that the exhibited document did not have an imprint on it. Instead, he submitted that memories can be faulty. However, he properly conceded that Ms Grimes was adamant in her evidence that the terms and conditions pages were not attached to the form that she signed.[95]
[95] ts 99.
Ms Grimes' refusal to accept that her signature was imprinted on the back of page three of the document was troubling. It suggested that Ms Grimes was not doing her best to give truthful and reliable evidence, and that she was instead seeking to advance her position.
Seventh, during cross‑examination, counsel for JMAC sought to establish that Ms Grimes had a financial interest in the tavern business. In the course of this, counsel put to Ms Grimes that she had lent money to Mr Higginson's company. Ms Grimes said 'I hadn't lent money. I had given him money'. She agreed Mr Higginson was repaying money to her but said 'I never wanted any payments back from him'.[96] This evidence was inconsistent with an affidavit sworn by Ms Grimes on 8 September 2017[97] (Debt Affidavit). There, she swore that she loaned over $330,000 to 3.1 Entertainment between 24 December 2007 and 31 December 2015. She swore that she expected to be repaid when the business was up and running or when it was sold. She swore that, from 11 January 2008 to 23 August 2016, she received loan repayments to a total of $185,420.56.
[96] ts 61.
[97] Affidavit of Irene Valerie Grimes sworn 8 September 2017, exhibit 8.
Eighth, it was put to Ms Grimes that, as at late August 2016, she knew that 3.1 Entertainment had a large debt to JMAC. This was the exchange:[98]
You did, however, appreciate that the business had a rather large debt to Jmac?‑‑‑I did know that the business had a debt to Jmac.
And that ‑ ‑ ‑?‑‑‑And I did know that before we took on Jmac, we didn't have a debt.
Did you not have a debt of about $30,000 to Bottlemart or ALM?‑‑‑Well, I don't know what the amount was. I did tell Jamie when he was leaving after I had signed the paper that we had another commitment and, at that stage, I didn't know what the commitment was but the commitment was to be paid off. We were paying off that commitment well before it was due.
[98] ts 63.
Ms Grimes' statement that 'before we took on Jmac, we didn't have a debt' was not responsive, and was not accurate. It was also one of many examples where Ms Grimes used the word 'we' when describing matters connected to the business.
Ninth, it is implausible that Ms Grimes did not realise she was signing a guarantee, for the following reasons.
First, she said it was a single page of two sides. She noticed the guarantee section and, she says, deliberately did not fill that in. Yet she says that less than half an hour later, when the document was given back to her, she signed the guarantee clause, not realising it was the guarantee clause. This seems unlikely. Perhaps to address this, in re‑examination Ms Grimes' counsel observed that she had put glasses on when she had to read something in the witness box. He asked her if she had worn her glasses when she filled out the application form. She said that she had worn them to fill out the form, but was not wearing her glasses when she signed the guarantee clause. She said she did not need her glasses when she was working behind the bar.[99] If the purpose of these questions was to suggest that Ms Grimes signed in the wrong place because she could not see where she was signing or that her vision was in some way impaired, I do not accept that proposition. Ms Grimes did not mention in her affidavit that she was not wearing glasses. She did not suggest that she had any vision trouble at the time she signed the form. On the contrary, she said 'I looked at the form and saw "signature" at the bottom'.[100]
[99] ts 65 ‑ 66.
[100] Primary Affidavit [17].
Second, Ms Grimes worked for 30 years for United Credit. She first worked as a teller and then as a business development officer. She said her job did not include filling out loan application forms, 'but I did see my share of forms within the credit union organisation'.[101] She said she had seen loan application forms but not forms with guarantees.[102] After her retirement, she did volunteer work at a payday lending company. In that capacity, she filled out forms for loan applications that people made over the phone.[103] She said those forms did not have a requirement for a guarantee. However, she agreed that she was familiar with the fact that sometimes there is a requirement for a guarantee on a loan, and knew that made the guarantor liable to pay someone else's debt if the debt was not repaid.[104]
[101] Primary Affidavit [2].
[102] ts 46.
[103] ts 46.
[104] ts 46. See also ts 54.
Third, Ms Grimes was not a director of 3.1 Entertainment and could only have signed the document in her personal capacity as a guarantor.
The combination of these matters makes her claim that she did not realise she was signing a guarantee implausible.
Further, as I find that there were two meetings with Mr Chittick, and that he did leave the credit application form with her at the first meeting, her claim becomes even more implausible.
Support from the circumstances?
Counsel for Ms Grimes submitted that it is extremely unlikely that a person experienced in the finance industry, who knew very well what a personal guarantee was, would simply sign a personal guarantee on the spot, without question, when the request for a personal guarantee is 'dropped on her out of the blue'.[105]
[105] ts 96.
I do not accept this submission for the following reasons.
First, I find that Ms Grimes was given the credit application form on 14 August 2014. She knew that the form contained a guarantee section. It is likely that, with her experience, and from looking at the form itself, she contemplated that JMAC might require a guarantee. It is unlikely to have been a surprise to her to be told that they did require a guarantee.
Second, Ms Grimes had a long standing history of providing significant financial support to her son. She swore in her Debt Affidavit that she loaned over $330,000 to 3.1 Entertainment between 24 December 2007 and 31 December 2015.[106] Accordingly, she continued to lend money to her son more than a year after the credit application was signed.
[106] Debt Affidavit [4].
Third, the evidence demonstrates that Ms Grimes was responsible for making orders from JMAC, and for receiving statements of amounts owed. She therefore knew, at all times, the amount of money owed by 3.1 Entertainment to JMAC.
Mr Higginson
The evidence of Mr Higginson supports Ms Grimes' account in some respects. However, it also contradicts her account. In addition, I have concerns about Mr Higginson's credibility and reliability.
Mr Higginson supports Ms Grimes' account that, on the day the form was signed, Mr Chittick and Mr Higginson spoke together on the veranda for a period of time longer than five minutes. Mr Higginson said it was long enough to 'have a couple of beers'.[107] Mr Chittick said he would not have had a beer but agreed that he spoke to Mr Higginson briefly on the veranda. Mr Chittick estimated that he spent about five minutes with Mr Higginson.[108]
[107] ts 78.
[108] ts 30.
Mr Higginson's evidence also supports Ms Grimes' account that she was moving backwards and forwards, attending to customers. Mr Chittick said there were barely any customers in the tavern at the time.[109]
[109] Chittick Affidavit [21].
Mr Higginson supports, to an extent, Ms Grimes' account that she filled in the form on the day.
However, Mr Higginson contradicts Ms Grimes' evidence of this day in other respects.
Ms Grimes said that, after Mr Higginson arrived in the tavern, he and Mr Chittick sat together in the bar area. She said Mr Chittick produced the credit application form, and she filled it in. Then Mr Chittick picked up the form, and the two men went out onto the veranda. She said that, about 20 ‑ 30 minutes later, Mr Chittick came back inside the bar, without Mr Higginson, and asked her to sign the form.[110]
[110] Primary Affidavit [11] ‑ [15]. See also ts 58 ‑ 59.
Mr Higginson's affidavit evidence was to the following effect.[111] Mr Higginson arrived in the bar area where Mr Chittick was talking to Ms Grimes. The two men went out on the veranda to talk. Mr Chittick then went to his car to get the application form. Mr Higginson went back into the bar. Mr Chittick came in a minute or two later, carrying some paperwork. Mr Higginson grabbed the paperwork from Mr Chittick and told Ms Grimes to fill it out. Ms Grimes said there was no rush, and Mr Higginson said 'I don't want to deal with HLW any more'. The two men had a further discussion about credit limits. Mr Higginson then signed something, while looking over Ms Grimes' shoulder. After he had signed it, he was 'quite pushy with her', telling her she had to fill it out, and that he had to go. Mr Higginson left Ms Grimes and Mr Chittick in the bar.
[111] Higginson Affidavit [9] ‑ [16].
Mr Higginson's oral evidence was a little different.
He was asked if his mother had already showed him the credit application form before he came into the bar that day. He said 'No. Pretty sure that form came in with Jamie, yes'. He then said it 'was already sitting on the till'. I infer from the context, in particular the exchange that followed, that he meant that the form was already sitting on the till when Mr Higginson first arrived in the bar area on this day. This was, of course, inconsistent with his affidavit evidence. He may have realised this. When his answer was repeated back to him 'And so it was already sitting on the till, before you came out to meet Jamie?', he said he did not know.[112]
[112] ts 78.
However, he then said that there was a form on the till when he first arrived in the bar. He said that, after he and Mr Chittick had a couple of beers, Mr Chittick got something from his car and that he, Mr Higginson, 'was like "See you later'. And off I went'.[113] This was entirely inconsistent with his affidavit.
[113] ts 78.
Mr Higginson then agreed that he had not seen the form come into the tavern for the first time.[114]
[114] ts 78 ‑ 79.
The overall effect of Mr Higginson's evidence about the day the document was signed does not support Ms Grimes' version in critical respects. In particular, he does not support her version that Mr Chittick produced the credit application form after Mr Higginson arrived, or that she filled it in before the two men went out on the veranda.
Mr Higginson also supported his mother's evidence that she was a mere conduit and that she had to write emails exactly as he told her to.[115] I have already noted the documentary evidence that is inconsistent with these propositions.
[115] For example, see ts 82.
There are several other problems with Mr Higginson's evidence.
First, his evidence is to the effect that the credit application form was filled in and, although not in his presence, signed on the same day. This is inconsistent with Ms Grimes' email of 14 August 2014.
Second, he said in his affidavit that he thought he signed the form on the day he met with Mr Chittick. In his oral evidence, he was asked if he could be mistaken about that. He said 'If I was mistaken about it, what did I sign?'[116] It was put to him that his signature was not on the credit application form. He said that 'It wouldn't have been produced, then'.[117] However, he agreed that, as at 2014, the only documents he might potentially sign would be the credit application form and to acknowledge receiving goods from a delivery driver.[118]
[116] ts 76.
[117] ts 76.
[118] ts 77.
There is no evidence that there was more than one form to be signed on 8 September. It is therefore highly unlikely Mr Higginson signed any other form on that day. It is common ground between the parties that Mr Higginson did not sign the credit application form, and that Ms Grimes did.
Therefore, I conclude that Mr Higginson was unwilling to accept he might be mistaken, when he was mistaken. Further, it is implausible that, if Ms Grimes was indeed a mere conduit, Mr Higginson would have left the tavern without signing the form.
Third, his evidence as to his involvement with Mr Chittick prior to August 2014 significantly shifted.
In his affidavit, Mr Higginson said he first met Mr Chittick when Mr Chittick was working as a sales representative for Bottlemart. He said 'After Jamie left Bottlemart I bumped into him at a Bottlemart warehouse. He told me he was running his own business and he could get me cartons of Jim Beam for a lot less than the price I was paying for it'. Mr Higginson said that 'Quite a while after that, I got a call from Jamie. He asked if I was interested in switching over from Bottlemart to his business, JMAC. I said I was, and I asked him to drop by the Tavern and talk to me about it'. Mr Higginson said Mr Chittick did come to the tavern, but at a time when Mr Higginson was not there. He described being called by his mother, and returning to the tavern to meet with Mr Chittick.[119] This was the occasion on which the credit application form was signed.
[119] Higginson Affidavit [7] ‑ [10].
In Mr Chittick's affidavit, he said he never worked at Bottlemart.[120]
[120] Chittick Affidavit [2].
In Mr Higginson's oral evidence, he was reminded of his affidavit evidence that he had met Mr Chittick from 'his time at Bottlemart'.[121] Mr Higginson said 'HWL. I would have met him at the Shed. Yes. But he has also come to my hotel before then'.[122] Mr Higginson said that Mr Chittick had come to the tavern about six months to a year before the visit when the credit application form was signed. He said Mr Chittick had asked him to 'sign up'. He said Mr Chittick was working for home deliveries by that time.[123] Later in his evidence, Mr Higginson said that Mr Chittick had asked him to 'sign up a few times'.[124] It was never put to Mr Chittick that he attended the tavern any earlier than when he said he had first attended on 14 August 2014.[125] It was never put to him that he asked Mr Higginson to 'sign up' on any earlier occasion.
[121] ts 68.
[122] ts 68.
[123] ts 69.
[124] ts 71.
[125] ts 26 ‑ 27.
The interactions between Mr Higginson and Mr Chittick prior to August 2014 are not central issues. It may be understandable that neither felt it necessary to include all of the detail. I note that Mr Chittick did not include in his affidavit that Mr Higginson telephoned him prior to August 2014. However, Mr Higginson's oral evidence was not merely more detailed than his affidavit. It was inconsistent as to when he first met Mr Chittick. It also included an assertion that Mr Chittick had been to the tavern prior to August 2014. I do not place a lot of weight on these matters, in the overall context. Nevertheless, they support my other concerns about the evidence adduced on behalf of Ms Grimes.
For all of these reasons, I am unable to accept Mr Higginson's evidence.
Further, there were aspects of Mr Higginson's evidence that had an air of rehearsal and of advocating a position. He repeatedly said 'Val did what she was told'. His evidence was that she had to write exactly what he said when she was sending emails. As noted earlier, this evidence was not consistent with the content of the emails of 11 August, 15 August and 24 October 2014.
Finally, Mr Higginson's demeanour in giving evidence was unconvincing. I am aware that scientific research casts doubt on the ability of judges to determine credibility based on demeanour.[126] Nevertheless, had I sought support for his evidence from his demeanour, I would not have found it.
[126] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [31], recently cited by the Court of Appeal in Khosa v Legal Profession Complaints Committee [2017] WASCA 192 [165].
In particular, on the occasions that he said 'Val did what she was told' or words to that effect, he would pause and then say the words in a tone of reluctance, as if he was concerned his words would offend Ms Grimes.[127] This appeared rehearsed and was unconvincing.
[127] ts 71, 74, 81.
Findings
As a result of my acceptance of Mr Chittick's evidence, rejection of Ms Grimes' evidence, and the inferences that can reasonably be drawn from Mr Chittick's evidence and the documentary evidence, I find the following to be facts.
1.Ms Grimes met Mr Chittick on two occasions at the tavern, on 14 August 2014 and 8 September 2014.
2.Mr Chittick left the credit application form with Ms Grimes during the first meeting. The document he left for her was a four page document, which included the terms and conditions.
3.After the first meeting, but before the second meeting, Ms Grimes filled in the credit application form but did not sign the guarantee signature clause.
4.During the second meeting, Mr Chittick said he would take the credit application form away for review. Ms Grimes told him she needed an order by tomorrow. Mr Chittick then skimmed the application form and told Ms Grimes that JMAC required a personal guarantee. Ms Grimes said she would do that, and she signed the guarantee signature clause and printed her name.
5.Ms Grimes did not sign the guarantee clause by mistake.
Therefore, I find that the general rule applies - Ms Grimes is bound by her signature. She has not established, on the balance of probabilities, that there was a vitiating element or that she is entitled to equitable or statutory relief. Ms Grimes was not rushed into signing the document, and did not mistakenly sign the guarantee clause.
Accordingly, I find that the guarantee is not void by reason of mistake or unconscionability. Ms Grimes is bound by the guarantee.
Conclusion
Judgment should be entered for JMAC against Ms Grimes.
I will hear from the parties in relation to the appropriate relief, as well as to costs, before making orders finally disposing of the proceedings.
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