Landmark Operations v Temaru Holdings Pty Ltd (No 2)

[2014] SADC 221

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

LANDMARK OPERATIONS v TEMARU HOLDINGS PTY LTD AND ANOR (No 2)

[2014] SADC 221

Judgment of His Honour Judge Barrett

24 December 2014

GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - CONSIDERATION - GENERALLY

Judgment has been entered for the second defendant in the plaintiff's claim that he should be liable under a guarantee.  The second defendant counterclaimed that the plaintiff was guilty of misleading or deceptive conduct or that it engaged in unconscionable conduct.

Held:  Counterclaim dismissed.

Australian Consumer Law ss 18 and 20, referred to.
Landmark Operations Ltd v Temaru Holdings Pty Ltd and Anor [2014] SADC 142; Warramunda Village Inc v Pryde (2001) 105 LCR 437.; Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd (1919) 26 CLR 410.; Henjo Constructions v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546; Commercial Bank of Australia Ltd v Amadio (1982-3) 151 CLR 447, considered.

LANDMARK OPERATIONS v TEMARU HOLDINGS PTY LTD AND ANOR (No 2)
[2014] SADC 221

1. On 27 August 2014 I delivered judgment in a claim by the plaintiff to enforce a guarantee against the second defendant.[1]  I dismissed the plaintiff’s claim that the second defendant was bound by the terms of the guarantee he had signed to pay for livestock purchased by the first defendant, a company of which the second defendant was the sole director and shareholder.  The first defendant had consented to judgment for the purchase of the livestock but the first defendant was in liquidation, hence the plaintiff’s pursuit of the second defendant under the guarantee. 

   [1] [2014] SADC 142, delivered 27 August 2014.

2. I found that the guarantee executed by the second defendant related only to purchases by the first or second defendant of merchandise from the plaintiff’s store at Meningie and did not relate to the purchase (or the transport) of livestock.[2]

   [2]    As above, [66].

3. While I dismissed the plaintiff’s claim against the second defendant, I did not make findings in respect of the second defendant’s counter-claim.  After delivery of the judgment, the plaintiff applied to have me make findings on the counter-claim.  I accept that for the purposes of finality in the proceedings I should make findings in respect of the counter-claim.

4. I heard submissions by both parties in October 2014 and I received supplementary written submissions from them in November 2014. 

5. I explain why I dismiss the counter-claim.  The counter-claim is set out in paragraphs 17A of the Third Defence and Counter-claim of the second defendant (p 26 Trial Book).  Paragraphs 17.1 to 17.4 seek various declarations.  I decline to make any of those declarations because they are merely possible steps in the reasoning process leading to the decision on the substantive relief.[3]

   [3]    Warramunda Village Inc v Pryde (2001) 105 LCR 437.

6. Before turning to the substantive relief sought in paragraphs 17.5 and 17.6, I decline to order the rectification sought in paragraph 17.6A.  I agree with the plaintiff’s submission that rectification is only appropriate where the parties have erroneously recorded their agreed terms.  Rectification is not appropriate where there is a misunderstanding about the meaning or effect of the agreement.[4]

   [4]    Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd (1919) 26 CLR 410.

7. The substantive relief sought in paragraphs 17.5 and 17.6 is as follows:

   1. Damages arising from the plaintiff’s misleading or deceptive conduct pursuant to s 18 of the Australian Consumer Law.

   2. Damages arising from the plaintiff’s unconscionable conduct pursuant to s 20 of the Australian Consumer Law.

8. I do not believe that the plaintiff by itself, or by its agent, Ms Davy, engaged in either type of conduct alleged in the counter-claim.  I explain why.  I do so briefly because my reasons are really explained by my findings of fact made in the principal judgment at paragraphs 18, 33-35, 37, 46-54, 59-60 and 64-67.

9. Of critical importance are my findings in paragraph 65. There I found that the plaintiff’s agent, Ms Davy, had not misrepresented to the second defendant the agreement he signed. I found that both she and Mr Toop understood the agreement related only to merchandise from the store as opposed to livestock. In my view, the plaintiff’s later determination to sue the second defendant on the guarantee does not render it’s, or Ms Davy’s, actions at the time of entering into the agreement a breach of the Australian Consumer Law. I find that the plaintiff’s purpose, and that of Ms Davy, was merely to set up a new credit arrangement for the defendant so that he and his company could purchase merchandise from the store. There was about the transaction none of the moral turpitude required to make out either misleading and deceptive conduct[5] or unconscionable conduct.[6]

   [5]    Henjo Constructions v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546.

   [6]    Commercial Bank of Australia Ltd v Amadio (1982-3) 151 CLR 447.

10. I dismiss the applications for relief in paragraphs 17.5 and 17.6 of the counter-claim.

11. I will hear the parties as to costs.