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Maddestra v Penfolds Wines Pty Ltd

Maddestra v Penfolds Wines Pty Ltd

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Case Copied 27 August 1993 20 min read

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DOMINIC MADDESTRA; CHRISTOPHER JOHN BORELLA and CLYDE WILLIAM BADGER v.
PENFOLDS WINES PTY. LTD.
No. WAG26-28 of 1993
FED No. 586
Number of pages - 8
Contract - Bankruptcy
(1993) 44 FCR 303

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
GENERAL DIVISION
Ryan(1), O'Loughlin(1) and Drummond(1) JJ

CATCHWORDS

Contract - Construction of contracts - guarantee executed by directors of Retail Equity Pty. Ltd. in consideration for the supply of goods to the company on credit - Deed of Guarantee names "Retail Equity Limited" as principal debtor - reference to "Retail Equity Limited" construed as a reference to "Retail Equity Pty. Ltd.".

Bankruptcy - Court going behind judgment debt - Bankruptcy Court not concerned with the sufficiency of the pleading or of the evidence in the Court in which judgment was obtained - Bankruptcy Court must be satisfied only that there is in fact a debt that arises on the same basis as that on which the judgment was obtained - even if rectification of guarantee necessary to entitle petitioning creditor as plaintiff to judgment in action on guarantee against the bankrupts as defendants, failure to seek order for rectification does not prevent the Bankruptcy Court making a sequestration order based on non-compliance with a bankruptcy notice demanding payment of the amount of the judgment on the guarantee.

Bankruptcy - judgment debtors are plaintiffs in litigation unconnected with the petitioning creditor - most of judgment debtors' creditors indicated informally that they were opposed to the bankruptcy of the judgment debtors - Court will rarely allow a debtor to avoid bankruptcy on the basis of informal arrangements with creditors - submissions based on the absence of any assets of judgment debtors - judgment debtors' impecuniosity is only a basis for refusing a sequestration order if it is clear that the judgment debtor has no assets - evidence indicating that the administration of the estates in bankruptcy may yield divisible assets - sequestration orders allowed to stand.

Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1

Codelfa Constructions Pty. Ltd. v State Rail Authority of New South Wales (1982) 149 CLR 337

Corney v Brien (1951) 84 CLR 343

M.P. Darcy; Ex parte The Pre-Term Foundation (Full Court of Federal Court, unreported, 23 May, 1988)

F. Goldsmith (Sicklesmere) Ltd. v Baxter (1970) 1 Ch 85

In Re Field (1978) Ch 371

Re Gourlay (Burchett J, unreported, 16 August, 1989)

In Re Hester; Ex parte Hester (1889) 22 QBD 632

Re McCollum (1987) 71 ALR 626

Re Skaff; Ex parte Farrow Mortgage Services (1993) 113 ALR 715

Story v Boulton (Full Court of Federal Court, unreported, 18 September, 1992)

Totterdell v Nelson (1990) 97 ALR 341

Ex parte Whelan (1986) 1 QdR 500

HEARING

BRISBANE, 20 July 1993

#DATE 27:8:1993

Counsel for the appellants: P. Kyle

Solicitor for the appellants: Kyle and Company

Counsel for the respondent: C.L. Zelestis QC and P. Donovan

Solicitors for the respondent: Mazza McCallum and Robinson

ORDER

THE COURT ORDERS…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1993] FCA 586
Decision Date: 27 AUGUST 1993

CaseChat Overview and Summary

The matter before the court involved a dispute between Maddestra and Penfolds Wines Pty Ltd. The issue at hand was the interpretation of a guarantee executed by the directors of Retail Equity Pty Ltd, which was in consideration for the supply of goods to the company on credit. The Deed of Guarantee named "Retail Equity Limited" as the principal debtor, whereas the correct name should have been "Retail Equity Pty Ltd." The court was tasked with determining whether the reference to "Retail Equity Limited" in the guarantee deed was to be construed as a reference to "Retail Equity Pty Ltd."

The court examined the context and language of the guarantee deed, as well as the surrounding circumstances of the contract's formation. The court found that the parties intended for the guarantee to apply to the correct entity, Retail Equity Pty Ltd, despite the error in the name. The court held that the reference to "Retail Equity Limited" was a mistake and should be interpreted as referring to "Retail Equity Pty Ltd." The court also noted that the parties had consistently treated the guarantee as applying to the correct entity throughout the proceedings.

As a result, the court dismissed the appeal and ordered that the respondent's costs be taxed and paid from the estate of the bankrupt in accordance with the Bankruptcy Act 1966. The court found that the guarantee was valid and enforceable against the guarantors, and that the error in the name did not affect the enforceability of the guarantee. The court also noted that the guarantors had not raised any objections to the enforcement of the guarantee until after the company had gone into liquidation.

Orders

Orders of the court

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The respondent's costs be taxed and paid from the estate of the bankrupt in accordance with the Bankruptcy Act 1966.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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