Marginson v Ian Potter & Co

HIGH COURT OF AUSTRALIA

Gibbs, Mason and Jacobs JJ.

MARGINSON v. IAN POTTER &CO.

(1976) 136 CLR 161

25 June 1976

Statute of Frauds—Principal and Agent

Statute of Frauds—Guarantee—Promise to answer for debt, default or miscarriage of another—Promise relating to legal or equitable interest in property for &hich promisor antecedently liable—Alternative promises—One promise within Statute—Whether Statute applies—The Statute of Frauds and Limitations Act of 1867 (Q.), s. 5 (2)* Principal and Agent—Undisclosed principal—Judgment against agent—Merger of liability of principal. * Section 5 (2) of the Statute of Frauds and Limitations of 1867 (Q.) provides that no action shall be brought "whereby to charge the defendant upon any special promise to answer for the debt default or miscarriages of another person" in the absence of a sufficient note or memorandum in writing relating to such promise.

Decisions

June 25.
The following written judgments were delivered: -
GIBBS AND MASON JJ. This is an appeal by the appellant (defendant) against a judgment for $69,381.05 entered against him in favour of the respondent (plaintiff) in an action heard by Douglas J. in the Supreme Court of Queensland. The action was one in which the respondent, a firm of stockbrokers trading on the Melbourne Stock Exchange, alleged that the appellant had contracted to satisfy the liability to the respondent of Commerce Australia Pty. Ltd. ("the company"), this liability amounting to $84,211.19 at the time when the appellant guaranteed its repayment. (at p164)

2. In 1969 the appellant with other men named Tanner, Rice and Bushell agreed to join with the Ostwald family in forming a company called Baldore Pty. Ltd. To provide their proportion of the amounts to be invested in this company the appellant and his three associates decided to speculate on the stock market. For this purpose they proposed to use the Company which was a dormant company as a vehicle for their operations. It had only two shareholders, the appellant and his wife; it had a paid-up capital of $100 and accumulated losses of $3,000. By arrangement with the respondent the company was allowed a credit of $30,000 by the respondent with which to trade. In the period from October 1969 to April 1970 it engaged in trading operations, buying and selling shares. At the end of the period the company owed the respondent $84,915.21, an amount slightly in excess of the figure already mentioned. The debt was not paid and the respondent threatened to exercise a power of sale which was conferred upon it by the rules of the Melbourne Stock Exchange. This power of sale related to shares which had been purchased by the respondent for the company, title to which had not been vested in the company or in the members of the syndicate. On various occasions the appellant requested the respondent to postpone the exercise of this power of sale. The respondent acceded to these requests and it is on the agreements reached in connexion with the postponements that the respondent sued in the action. (at p165)