Kingstream Steel Ltd v Stemcor UK Ltd - [2001] WASCA 138

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: KINGSTREAM STEEL LTD -v- STEMCOR UK LTD [2001] WASCA 138

CORAM: SCOTT J
STEYTLER J

HEARD: 23 FEBRUARY 2001

DELIVERED : 1 MAY 2001

FILE NO/S: FUL 145 of 2000

BETWEEN: KINGSTREAM STEEL LTD (ACN 009 224 800)
Applicant (Defendant)
AND
STEMCOR UK LTD
Respondent (Plaintiff)

Catchwords:

Practice and procedure - Leave to appeal from Master's refusal to order summary judgment in favour of defendant - Contract - Rescission - Consecutive contracts - Partial advance of purchase price for goods - Guarantee of repayment

Legislation:

Nil

Result:

Leave to appeal granted
Appeal dismissed

Representation:

Counsel:

Applicant (Defendant) : Mr D H Solomon
Respondent (Plaintiff) : Mr M J Buss QC & Mr P K Walton

Solicitors:

Applicant (Defendant) : Solomon Brothers
Respondent (Plaintiff) : Jackson McDonald

Case(s) referred to in judgment(s):

Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429
Black v Smallwood (1966) 117 CLR 52
Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91
F Goldsmith (Sicklesmere) Ltd v Baxter [1970] Ch 85
Jackamarra v Krakouer (1998) 195 CLR 516
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Nittan (UK) Ltd v Solent Steel Fabrication Ltd (1981) 1 Lloyd's Rep 633
Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Trade Indemnity Co v Workington Harbour and Dock Board [1937] AC 1
Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238
Whittam v W J Daniel & Co Ltd [1962] 1 QB 271
Wren v Emmett Contractors Pty Ltd (1969) 43 ALJR 213

Case(s) also cited:

Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218; (1999) 21 WAR 425
Anderson v Effexseven (1999) 10 ANZ Ins Cases 64-424
Australian Broadcasting Commission v Australian Performing Right Associated (1973) 129 CLR 99
Baltic Shipping Company v Dillon (1992) 176 CLR 344
Beach Petroleum NL v Johnson (1993) 43 FCR 1
Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393
Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd (1981) 1 NSWLR 429
Chan v Chresdon Ltd )1089) 168 CLR 242
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981) 149 CLR 337
Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Ltd [2000] HCA 35; (2000) 172 ALR 346
Concut Pty Ltd v Worrell [2000] HCA 14; (2000) 176 ALR 693
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 182
Covus Corporation Pty Ltd v Coastal Launch Services Pty Ltd [2000] WASC 221
Dan v Barclays Australia Ltd (1983) 46 ALR 437
Darrel Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401
Deputy Commissioner of Taxation v Reading (1991) 22 ATR 251
Dixon v Winch [1900] 1 Ch 736 at 745
El Ajou v Dollar Land Holdings PLC [1994] 2 All ER 685
Elders Lensworth Finance Ltd v Australian Central Pacific Ltd [1986] 2 Qd R 364
Frederick E Rose (London) Ltd v Williams H Pim Jnr & Co Ltd [1953] 2 QB 450
Fung Ping Shan v Tong Shun [1918] AC 403
Goldsmith (F) (Sicklesmere) Ltd v Baxter [1970] Ch 85
Goss v Chilcott [1996] AC 788
Harman v Energy Research Group Australia Ltd (1985) 9 ACLR 897
Hyundai Heavy Industries Co Ltd v Papadopolous [1980] 1 WLR 1129
Issa v Berisha [1981] 1 NSWLR 261
Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566
Keene v Devine [1986] WAR 217
Krakowski v Eurolynx Properties Pty Ltd (1995) 183 CLR 563
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
Mincode Pty Ltd v Isa Pty Ltd (1986) 17 WAR 245
Morris v Barron & Company [1918] AC 1
Moschi v Lep Air Services Ltd [1973] AC 331
MYT Engineering Pty Ltd v Mulcon Pty Ltd [1999] HCA 24; (1999) 195 CLR 636
Nangus Pty Ltd v Charles Donovan Pty Ltd (In Liquidation) [1989] VR 184
Newborne v Sensolid (Great Britain) Ltd [1954] 1 QB 45
NSW Medical Defence Union Ltd v Transport Industry Insurance Co Ltd (1986) 6 NSWLR 740
Phonogram Ltd v Lane [1982] QB 938
Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA 217; (1999) 21 WAR 350
Pukallus v Cameron (1982) 180 CLR 447
Re Butlin's Settlement Trusts [1976] Ch 251
Re North Queensland Auto Spares Co Pty Ltd [1984] 2 Qd R 241
Scott v Forster Pastoral Co Pty Ltd [2000] NSWCA 241; (2000) 35 ACSR 294
Stocznia Gdanska SA v Latvian Shipping Co Ltd [1988] 1 All ER 883
Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1956) 98 CLR 93
Tampion v Anderson [1973] VR 321
The Commonwealth v SCI Operations Pty Ltd [1998] HCA 20; (1998) 152 ALR 624
United Dominions Corporation (Jamaica) Ltd v Shoucair [1969] 162 CLR 549
Vane v Vane (1873) LR 8 Ch App 383
Wesdeutsche Landesbank Girozentrale v Islington London Burough Council [1966] AC 669
Western Australia v Watson [1990] WAR 248
Wickstead v Browne (1992) 30 NSWLR 1
Wilson v Metaxas [1989] WAR 285
Wilson v Union Insurance Co (1992) 112 FLR 166
Winks v WH Heck & Sons Pty Ltd [1986] 1 Qd R 226
Winstone Ltd v Bourne [1978] 1 NZLR 94
Womboin Pty Ltd v Savannah Island Trading Pty Ltd (1990) 19 NSWLR 364
Wongala Holdings Pty Ltd v Mulinglebar Pty Ltd (1994) 6 BPR 97481

JUDGMENT OF THE COURT: This is an application for leave to appeal, together with an appeal against the order of a Master of this Court dismissing the applicant's (defendant's) application for summary judgment made under O 16 of the Rules of the Supreme Court 1971.
The application by the defendant ("applicant") was to dismiss the plaintiff's ("respondent's") claim on the basis that it did not disclose a cause of action.
The claim arises out of three guarantees said to have been executed by the applicant in relation to a contract dated 17 July 1998 (to which we shall refer as "the first contract") entered into between the respondent and a Taiwanese company An Feng Steel Co Limited ("An Feng"). The contract was numbered EX 22164.
It is not necessary to descend into details as to the particulars of the first contract, but in broad terms An Feng was to supply the respondent Stemcor UK Limited ("Stemcor") with 10,582 metric tonnes of prime newly produced hot rolled steel sheet in coil. The contract specified in detail the quality, chemistry and coil conditions required, together with widths, thickness, tolerance, weight and other specifications for the steel. In the contract a price was fixed at $US210 per metric tonne. Stemcor had a right to convert the contract to one for "hot rolled coils supplied in the pickled and oiled condition".
The first contract also provided for shipment at the end of August, but by the latest on 30 September 1998.
The affidavit evidence indicates that Stemcor had previously entered into other transactions with An Feng for the purchase of steel.
In order to assist An Feng with the production of the steel, Stemcor agreed to advance to An Feng the sum of $US2M on terms and conditions referred to in the contract. The total purchase price for the steel to be supplied was $US2,220,222.00.
The advance made by Stemcor to An Feng was effected by way of a letter of credit payable on sight of various documents. One of these, required by subcl 3, was a signed certificate from An Feng saying that, in the event of non‑delivery of the steel by the latest date of shipment, 30 September 1998, An Feng undertook to repay the full drawdown amount of US$2M advanced under the letter of credit, including interest accrued thereon. Another, required by subcl 4, was:
"A SIMPLE LETTER OF GUARANTEE ISSUED BY AN FENG KINGSTREAM STEEL LTD STATING THE FOLLOWING: 'IN ACCORDANCE WITH CONTRACT NO. EX22164 BETWEEN STEMCOR UK LTD AND AN FENG STEEL CO. LTD, WE HEREBY GUARANTEE THAT IN THE EVENT OF THE NON‑PERFORMANCE OF AN FENG STEEL CO. LTD WE WILL REPAY THE FULL DRAWDOWN AMOUNT OF 2,000,000.00 (USD) ADVANCED UNDER THE CONTRACT EX22164 INCLUDING INTEREST ACCRUED (sic) ACCRUED THEREON TO STEMCOR UK LTD'."
An Feng Kingstream Steel Limited, as the applicant was then known, was the parent company of An Feng. It retained that name between 16 July 1987 and 8 April 1999 when its name was changed to its present name.
On 20 July 1998 a letter of guarantee (to which we shall refer as "the first guarantee") was also executed. The letter was headed with the name "An Feng Kingstream Steel Co Ltd". It is common cause that there was no such company, An Feng Kingstream Steel Ltd not having had the word "Co" or "Company" as part of its name. There followed the address of the company's headquarters and its telephone, telex and fax numbers. The letter then continued as follows:
" SIMPLE LETTER OF GUARANTEE
TO WHOM IT MAY CONCERN DATE: JULY 20, 1998
IN ACCORDANCE WITH CONTRACT NO. EX22164 BETWEEN STEMCOR UK LTD. AND AN FENG STEEL CO. LTD. WE HEREBY GUARANTEE THAT IN THE EVENT OF THE NON‑PERFORMANCE OF AN FENG STEEL CO. LTD. WE WILL REPAY THE FULL DRAWDOWN AMOUNT OF 2,000,000.00 (USD) ADVANCED UNDER THE CONTRACT EX22164 INCLUDING INTEREST ACCRUED THEREON TO STEMCOR UK LTD.
AN FENG KINGSTREAM STEEL CO. LTD.
(signature)
(AUTHORIZED SIGNATURE)"
The letter was signed by a director of the applicant.
On the following day a certificate dated 20 July 1998 ("the certificate") was executed by An Feng by which it promised to Stemcor that in the event of non‑delivery of the steel by the latest date of shipment it would repay the advance of US$2M and interest. The certificate read as follows:
"  AN FENG STEEL CO LTD
NO. DAH YEH SOUTH ROAD, HSIAO KANG
KAOHSIUNG, TAWIAN (sic), R.O.C.
TEL. NO.: 8712811    TELEX:72826     FAX NO.:8712090
BENEFICIARY'S CERTIFICATE
TO WHOM IT MAY CONCERN         DATE: JULY 20, 1998
WE HEREBY CERTIFY THAT IN THE EVENT OF NON‑DELIVERY OF THE STEEL BY THE LATEST DATE OF SHIPMENT 30/9/98, AN FENG UNDERTAKE TO REPAY THE FULL DRAWDOWN AMOUNT OF 2,000,000 (UNITED STATES DOLLARS TWO MILLION) ADVANCED UNDER THIS LETTER OF CREDIT INCLUDING INTEREST ACCRUED THEREON.
AN FENG STEEL CO. LTD."
Also on 21 July 1998, a second guarantee (also dated 20 July 1998) was executed ("the second guarantee). This guarantee was headed "AN FENG KINGSTREAM LTD" and gave an address, telephone number and fax number in Perth. The top of the letter was headed "LETTER OF GUARANTEE" and the letter was signed by a director of An Feng Kingstream Steel Ltd under the notation "An Feng Kingstream Ltd". It is otherwise identical to the first guarantee.
On 4 August 1998 a second contract (to which we shall refer as "the second contract") also numbered EX22164 was executed. The second contract provides in its first clause:
"This contract replaces the one issued on 17/07/98."
There were some differences between the second contract and the first contract in that the quantity of steel was reduced from the original quantity of 10,582 metric tonnes to 6,277 metric tonnes but still contained the same option to convert to "pickled and oiled condition" referred to earlier in these reasons. Other variations included a variation to the price to be paid if the steel was provided in pickled and oiled condition. Again, it is not necessary to refer to those variations (to which we will return below) in detail. In the second contract the proposed issuer of the letter of guarantee was again described as "An Feng Kingstream Steel Ltd".
A third guarantee ("the third guarantee"), also dated 20 July 1998, was executed on 16 November 1998. The evidence suggests that this was prepared so that the applicant was correctly named in the guarantee. It is identical to the second guarantee save that, in each place where it appears, the applicant's then name was correctly shown as "An Feng Kingstream Steel Limited".
In our view the misdescription of the guarantor in the first two documents is simply that, and an error of that kind is not fatal to the validity of the guarantee. Counsel for the applicant argued that because of the misdescription in the first and second guarantees, those guarantees were executed by a non‑existent company. He relied primarily on Black v Smallwood (1966) 117 CLR 52. That case concerned a proposed company that had not been incorporated at the date of execution of a document for the sale of land. The document was executed by the signatories in the belief that the company had been incorporated and that they were directors of it. The question that arose in that case was whether the signatories were personally liable in those circumstances. The court held that, because the company on whose behalf the signatories had purported to sign did not exist, the signatories were not parties to the contract. Their signatures had been made as part of the company's signature. They were not parties to the contract as agents or otherwise and there was no basis upon which they could be held liable upon it.
That case can be readily distinguished from the present where the respondent sought and obtained a guarantee from an existing company but that company was misdescribed in the guarantee. The company referred to in subcl 4 of the contract did exist. All that happened was that when the first guarantee came to be prepared the word "Co." was mistakenly inserted into its name and, when the second guarantee came to be prepared, the word "Steel" was mistakenly omitted from its name. That was, in each case, simply a misnomer made in circumstances in which it must have been plain to all who were concerned with the document that it was the applicant which was the guarantor there referred to. Even if there had been any doubt at all about that fact then this must have been laid to rest by the fact that the applicant was identified by its address, fax number and telephone number. In those circumstances it seems to us plainly to be arguable that the Court is, as a matter of construction, at liberty to correct the misnomer. (See Whittam v W J Daniel & Co Ltd [1962] 1 QB 271 at 277; F Goldsmith (Sicklesmere) Ltd v Baxter [1970] Ch 85 and Nittan (UK) Ltd v Solent Steel Fabrication Ltd (1981) 1 Lloyd's Rep 633.)
This conclusion makes it unnecessary for us to consider whether the error in setting out the name of the applicant was such as could be rectified by a court. However we should say that we are satisfied that, on the evidence which was before the learned Master, the contention is reasonably open that it was the common continuing intention of the parties that the guarantee was to be given by the applicant and that that intention was mistakenly expressed in the final instrument, with the consequence that the document is capable of being rectified by the court. (See, in this respect, such cases as Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 249 and Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429 at 430 but cf F Goldsmith (Sicklesmere) Ltd v Baxter, above, at 93.)
On that issue the learned Master in the judgment the subject of this appeal concluded:
"The plaintiff's argument is that the two guarantees were executed by the defendant and are binding on it and the misdescription of the defendant's name in each document was a simple misnomer which could be corrected by the judge by amendment or by rectification which could be pleaded in a reply.
I consider that the plaintiff's case on this point is arguable; indeed, very strong."
It is to be borne in mind that at this stage of these proceedings we are dealing with an interlocutory appeal against the decision of a Master on a summary judgment application. In The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, Malcolm CJ said at 56:
"The need to discourage unnecessary interlocutory appeals is such that I do not consider that, except where some point of special importance is involved, the fact that an order works an apparent injustice should warrant a grant of leave to appeal unless it appears that the decision below was clearly wrong or attended by sufficient doubt to warrant the intervention of the appellate court. That being said, what I myself said in Wilson v Metaxas [1989] WAR 285 was only intended to state that, 'In general' it must be shown that the decision was wrong or attended with sufficient doubt to justify the grant of leave and that, in addition, substantial injustice would be done by leaving the decision unreversed. The latter requirement was described as only a 'guideline'."
In relation to an appeal against an interlocutory decision by a Master, see also Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409.
In our view it cannot be said that the decision of the learned Master that the respondent's case on this point is arguable can be said to be wrong or even attended with sufficient doubt as to warrant the grant of leave to appeal. The applicant's application to strike out Stemcor's claim on the basis of the misdescription of the defendant in the guarantees was, in our opinion, rightly dismissed.
The application was argued, next, upon the basis that the learned Master erred in failing to find that the first contract was replaced by the second with the consequence that the various guarantees fell away, each of them having been directed to obligations under the first contract only.
This aspect of the application is referred to in proposed ground 3 of the grounds of appeal as follows:
"3.The learned Master erred in law in failing to construe the Guarantees strictissimi juris and holding that it is arguable that:-
3.1the contract between the respondent and An Feng Steel Co Ltd dated 17 July 1998 (the 'First Contract') was arguably varied, and not replaced by, the contract between the respondent (plaintiff) and An Feng Steel Co Ltd dated 4 August 1998 (the 'Second Contract.');
3.2by the Guarantees, or one the Guarantees (sic) the appellant (defendant) arguably guaranteed performance by An Feng Steel Co Ltd under the Second Contract or repayment of $2,000,000 pursuant to the Second Contract;
3.3that the ($US)2,000,000 paid by the respondent (plaintiff) under the First Contract to An Feng Steel Co Ltd was not deemed to be repaid on rescission of the First Contract and readvanced on entry into the Second Contract (which events occurred simultaneously);"
Counsel for the applicant contended that it is apparent, on a comparison between the first two contracts, that the second was intended entirely to replace the first. There is undoubtedly force behind this contention. The second contract is a stand alone document which, as we have said, expressly replaced the first. It repeated those terms which had been contained in the first contract and which had not been altered. There was, effectively, no work left to be performed by the first contract once the second had been executed. If the proposition that the second contract was substituted for the first is accepted, this presents a difficulty for the respondent in that the first and second guarantees were executed prior to the date of the second contract and the third guarantee (which bears the date 20 July 1998) was, as we have said, executed only in order to correct the misnomers to which we have earlier referred.
The respondent made three arguments in response to the contention that any guarantee referable to obligations under the first contract was discharged upon the replacement of that contract by the second. The first of these was that the second contract was merely a variation of the first made pursuant to a term of the first contract under which the respondent was given the option, if it chose, to increase the quantity of prime, newly produced, hot rolled steel sheet in coil to be purchased by it and/or to convert the contract to one for the purchase of hot rolled coils supplied in the pickled and oiled condition. The second, which is allied to the first, was that the applicant consented to the first contract being varied by the second. The third was that each guarantee secured the obligation which was reflected in the certificate rather than merely one contained within the first contract and the certificate survived any replacement of the first contract by the second, no new certificate having thereafter been signed.

It seems to us to be arguable that, notwithstanding the opening words of the second contract, it was merely a variation of the first which was redrafted for the sake of convenience so as to read as a stand‑alone document. The contract number remained the same and the commodity remained the same, namely "prime newly produced hot rolled steel sheet in coil". However, whereas there had, as we have earlier mentioned, previously been a requirement of 10,582 metric tonnes (with a right to increase that quantity to 30,000 metric tonnes) of dry steel of a specified quality (but "in buyer's option to be finally agreed") with an option to convert that requirement to one of hot rolled coils in the pickled and oiled condition, there was now a requirement of 6,277 metric tonnes of dry steel (with a right to increase that quantity to 30,000 metric tonnes) and 4,000 metric tonnes of pickled and oiled steel. This was the main change as between the two documents. While there were some other changes, some of these, at least, appear to us to have been consequential and we are satisfied that it is fairly arguable that the changes as a whole amounted to a variation of the first contract which remained within the general purview of that contract and hence of the guarantee.
If that is arguable then it is also arguable, in our view, that the guarantee (which was, in effect, only one of the undertaking to repay) was intended to continue to have effect even if there should be changes of the kind made (cf Wren v Emmett Contractors Pty Ltd (1969) 43 ALJR 213). Moreover, it seems to us also to be arguable that the facts and circumstances pleaded in the particulars to par 15 of the reamended statement of claim (in respect of which we were taken, in the course of submissions, to a range of affidavit evidence which it is unnecessary to repeat) are sufficient to give rise to an inference that the respondent consented to the variation. As has been pointed out in Rowlatt on Principal and Surety, 5th ed, at 92, a surety is not discharged by a variation to which he assents afterwards, even though there may be no fresh consideration for this assent. While the learned authors add that it is apprehended that assent, whether previous or subsequent to a variation, only renders the surety liable for the contract as varied where it remains a contract within the general purview of the original guarantee (as to which they refer to Trade Indemnity Co v Workington Harbour and Dock Board [1937] AC 1), we have already found that it is arguable that the variation in this case (if it was a variation) was one which remained within the general purview of the original guarantee.
These conclusions make it unnecessary for us to consider any other response made by the respondent to the argument advanced in this respect by the applicant.
Next, counsel for the applicant contended that the contract for the supply of steel by An Feng to Stemcor was repudiated by An Feng and that the repudiation was accepted by Stemcor with the consequence that, because the contract fell away once the repudiation was accepted, so too did the obligation under the guarantee (only the contractual obligation to repay having been guaranteed, and not An Feng's performance under the contract). This aspect of the application is referred to in ground 4 of the proposed grounds of appeal as follows:
"4.The learned Master erred in law in:-
4.1holding that it was arguable that the First Contract and/or the Second Contract was or were 'not totally repudiated';
4.2holding that it was arguable that the $US2,000,000 was repayable by An Feng Steel Co Ltd pursuant to the First Contract or the Second Contract after the respondent (plaintiff) accepted An Feng Steel Co Ltd's repudiation of the First Contract and/or the Second Contract;
4.3distinguishing and failing to apply Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245;
4.4holding that:-
4.4.1the Guarantees or one of the Guarantees guaranteed a restitutionary claim by the respondent (plaintiff) based on a total failure of consideration; and
4.4.2the respondent (plaintiff) had adduced sufficient evidence to establish an arguable restitutionary claim arising out of a total failure of consideration."
Counsel for the applicant relied, in this respect, upon McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 the headnote of which reads:
"Instalments of purchase money, other than the deposit payable, upon a sale of land cannot be retained or recovered by the vendor after the contract has been determined by his election to treat the purchaser's default as a discharge. In such a case the contract is determined only insofar as it is executory, and the party in default remains liable for damages for his breach; nevertheless, the contract being at an end, instalments which are prepayments on account of the price of the land become repayable at law, in the absence of a stipulation to the contrary, and equity relieves against such a stipulation. The liability of a surety for an instalment is also discharged when the contract of sale is so determined, because the principal debt to which his obligation is accessory is extinguished."
Counsel for the applicant (defendant) also sought to rely upon Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 which involved a guarantee for the sale of a home unit under a contract of sale. That case followed the earlier High Court decision in McDonald v Dennys Lascelles (supra) and held, inter alia, that where the balance of a purchase price payable on settlement had not been paid because settlement had not taken place and there was no conveyance, the balance of the purchase price had not become a debt payable by the purchaser. Accordingly, no liability had accrued on the part of the purchaser to make that payment and so the guarantors were not liable to pay the equivalent of the balance of the purchase price and interest.
In our view the question which falls for determination in this case is different to that under consideration in these cases in that here it is arguable that the applicant guaranteed to Stemcor the performance of An Feng's obligation under the certificate given by An Feng with the consequence that the guarantee survived the termination of the contract. The terms of that certificate have been set out earlier in these reasons.
In this case the contract itself (and we refer, here, to each of the first and second contracts) does not contain any provision requiring An Feng to repay the sum of US$2M in the event of non‑delivery of the steel by 30 September 1998. Rather, it provides that the letter of credit will be payable upon the production of a signed certificate from the "beneficiary" giving that undertaking. As will be apparent from what we have already said, the contract immediately thereafter provides that the production of the simple letter of guarantee there referred to is to be another prerequisite to payment under the letter of credit and that all that is to be guaranteed is the repayment of the full amount of US$2M in the event of the non‑performance of An Feng.
While it is true that the guarantee (in each of its forms) commences with the words "In accordance with contract number EX22164" those words are, in the circumstances, arguably capable of being taken to refer merely to the requirement, in the contract, that An Feng is to procure the execution of the letter of guarantee and not as importing any notion that the obligation guaranteed is one contained within the contract itself.
While the certificate and the contract are obviously intended to be read together as related documents (the certificate merely refers to non‑delivery of "the steel") this does not, in our opinion, necessarily detract from the respondent's argument in this respect and we consider that the point remains arguable that the certificate survived the termination of the contract and that the guarantee, being arguably directed only to the obligation evidenced by the certificate, likewise survived the termination of the contract.
This conclusion renders it unnecessary for us to consider an alternative contention advanced by counsel for the respondent to the effect that the guarantee, on its proper construction, guaranteed a restitutionary claim based on a total failure of consideration and that there was a total failure of consideration such as gave rise to a restitutionary claim.
Next, counsel for the applicant contended that any reliance upon the third guarantee must fail, either because there was no consideration for it or because any consideration was wholly past consideration. The conclusions at which we have already arrived make it unnecessary for us to deal with this contention.
It follows, from these conclusions, that we consider that the learned Master was right in his view that there was sufficient, in the arguments advanced on behalf of the respondent, to warrant the matter going forward. In expressing this conclusion we say nothing about the strength of the various arguments other than to say that they are fairly arguable. It has, in this respect, long been settled that a case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting its case for determination in the appointed manner by the court. (See Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, per Dixon J and Jackamarra v Krakouer (1998) 195 CLR 516 at 528, per Gummow and Hayne JJ.) In our opinion this was not such a case.
Whilst we are of the view that the application for leave to appeal should be granted, we are of the view that the appeal should be dismissed.