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Junker v Hepburn

Junker v Hepburn

Case [2010] NSWSC 88 19 February 2010

Corporate Law & Governance

Contract Law

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CITATION: Junker v Hepburn [2010] NSWSC 88
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 8, 9 February 2010

JUDGMENT DATE :
19 February 2010

JUDGMENT OF: Hammerschlag J

DECISION: Verdict in favour of the plaintiffs against the defendants in the amount of $472,081.43 together with interest accruing at a daily amount of $213.19 from 10 February 2010 to the date of payment.

CATCHWORDS: AGENCY – CORPORATIONS – company has two directors each of which guarantees repayment by company of loan from plaintiffs - authority of a single director to give a direction to pay under loan agreement where the company was borrower – implied actual authority – requirements for – ostensible authority – requirements for – Corporations Act 2001 (Cth) – assumption in section 129(2)(b) that director has authority – whether plaintiffs were entitled to make that assumption – CONTRACT – deed of guarantee – construction – joint guarantee – effect of joint obligation

LEGISLATION CITED: Real Property Act 1900 (NSW)
Corporations Act 2001 (Cth)

CATEGORY: Principal judgment

CASES CITED: Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 205
Perkins v National Australia Bank Ltd (1999) 30 ACSR 256
Equiticorp Finance Limited (in liq) v Bank of New Zealand (1993) 32 NSWLR 50
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549
Re Hodgson (1885) 31 Ch D 177
Jones v Dunkel (1959) 101 CLR 298
Hampton Court Ltd v Crooks (1957) 97 CLR 367

TEXTS CITED: Bowstead and Reynolds on Agency, 17th ed (2001) Sweet & Maxwell
G E Dal Pont, Law of Agency, 2nd ed (2008) LexisNexis Butterworths
R P Austin, H A J Ford, I M Ramsay on Company Directors: Principles of Law and Corporate Governance (2005) LexisNexis Butterworths
G Williams, Joint Obligations (1949), Butterworths

PARTIES: Martin Junker - First Plaintiff
Irene Bondarew - Second Plaintiff
Scott Anthony Hepburn - First Defendant
Veronica Roller - Second Defendant

FILE NUMBER(S): SC 2008/290371

COUNSEL: D.A. Caspersonn [Plaintiffs]
S.A. Hepburn- self-represented [First Defendant]
R.I. Bellamy [Second Defendant]

SOLICITORS: Mark Hodges Solicitor [Plaintiffs]
Kemp Strang [Second Defendant]

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

HAMMERSCHLAG J

19 FEBRUARY 2010

2008/290371 MARTIN JUNKER & ANOR -V- SCOTT ANTHONY HEPBURN & ANOR

JUDGMENT

INTRODUCTION

1 HIS HONOUR: Hepler Pty Ltd (“Hepler”) (in liquidation) borrowed money from the plaintiffs. Hepler failed fully to discharge its obligations under the loan. The defendants guaranteed Hepler’s obligations to the plaintiffs. The plaintiffs now sue the defendants under their guarantees.

FACTUAL BACKGROUND

2 The defendants were at all material times the only shareholders and directors, and the second defendant was secretary of Hepler.

3 On 21 June 2004, Hepler made a written proposal to the plaintiffs to borrow $150,000 from them for a period of two months. The proposal was on…

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.

Continue reading Junker v Hepburn

Details

AGLC: Junker v Hepburn [2010] NSWSC 88
Case: [2010] NSWSC 88
Decision Date: 19 February 2010

CaseChat Overview and Summary

The matter of Junker v Hepburn came before the Federal Court of Australia. The plaintiffs, Junker and another, lent a sum of money to a company, which was to be repaid by the company. Each of the two directors of the company had guaranteed repayment of the loan. The plaintiffs subsequently sought to enforce the guarantees, and the company argued that the guarantees were unenforceable because they were based on a mistaken belief that both directors had to agree to the loan. The company also argued that the plaintiffs were not entitled to assume that a single director had the authority to give a direction to pay under the loan agreement.
The legal issues before the court were whether a single director had the implied actual or ostensible authority to give a direction to pay under the loan agreement and whether the plaintiffs were entitled to assume that the director had the authority to do so. The court considered the requirements for implied actual and ostensible authority under the Corporations Act 2001 (Cth) and the assumption in section 129(2)(b) that a director has authority.

The court held that a single director did not have the implied actual authority to give a direction to pay under the loan agreement. However, the court found that the plaintiffs were entitled to assume that a single director had the authority to do so because the plaintiffs had no reason to believe otherwise and the circumstances were such that it would be reasonable for the plaintiffs to make that assumption. The court also held that the guarantees were joint obligations and that the plaintiffs could enforce the guarantees against either or both of the directors. The court found that the company's argument that the guarantees were unenforceable based on a mistaken belief that both directors had to agree to the loan was not supported by the evidence.

The court ordered that the company and the two directors jointly and severally repay the loan to the plaintiffs. The court also ordered that the plaintiffs were entitled to enforce the guarantees against either or both of the directors. The court did not make any orders as to costs.

Orders