Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd
[2009] NSWADT 121
•26 May 2009
CITATION: Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd [2009] NSWADT 121 DIVISION: Retail Leases Division PARTIES: APPLICANT
Meriton Properties Pty Ltd1ST RESPONDENT
2ND RESPONDENT
DCM Leases-Five Pty Ltd
Wayne Douglas PlantFILE NUMBER: 085163 HEARING DATES: 25 March 2009 SUBMISSIONS CLOSED: 18 March 2009
DATE OF DECISION:
26 May 2009BEFORE: Chesterman M - Deputy President CATCHWORDS: Guarantee – formation of contract LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994CASES CITED: Davidson v Cooper (1844) 13 M & W 344
Jones v Dunkel (1959) 101 CLR 298
Kindful (Australia) Pty Ltd v Country Villa Holdings Pty Ltd (No 2) [2006] NSWADT 357
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Pirie v Saunders (1966) 104 CLR 149
Saunders v Anglia Building Society [1970] 3 All ER 961
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 265; [2004] HCA 52REPRESENTATION: APPLICANT
T Maltz, barrister1ST RESPONDENT
2ND RESPONDENT
No appearance
E Hyde, barristerORDERS: 1. The First Respondent is liable to the Applicant for damages totalling $114,944.56, inclusive of interest in the sum of $4,940.08
2. The Second Respondent is liable to pay to the Applicant the sum of $114,944.56
3. Any application for costs in the proceedings between the Applicant and the Second Respondent must be filed and served, with supporting submissions, within 28 days of the date of this decision. The opposing party must file and serve submissions in reply within a further 28 days. Unless reasons are advanced for a hearing to be conducted, the matter will be resolved ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
Introduction
1 In this case, the only question in dispute was whether the person named as guarantor of a lessee’s obligations under a retail shop lease was in fact bound by his signature on the document of lease, which he had affixed while indicating at the time to the lessor that he was not prepared to assume the responsibilities of a guarantor.
2 By a memorandum of lease dated 17 March 2006 (‘the Lease’), the Applicant, Meriton Properties Pty Ltd (‘Meriton’), leased premises at Shop 19, Tiffany Plaza, 422 Oxford Street, Bondi Junction (‘the Premises’), to the First Respondent, DCM Leases-Five Pty Ltd (‘DCM’), for a term of five years commencing on 1 November 2005.
3 The Lease, which was subsequently registered, was governed by the Retail Leases Act 1994 (‘the RL Act’). It permitted DCM to operate what may loosely be called a doughnut and coffee shop in the Premises.
4 The person named as guarantor in the Lease was the Second Respondent, Mr Wayne Plant. He was the sole director of DCM at all relevant times.
5 On or about 27 September 2007, Meriton served a notice of default on DCM.
6 On 17 October 2007, Meriton terminated the Lease, on the ground that DCM had failed to pay rent since 16 August 2007 and had not kept the coffee shop open during trading hours stipulated in the Lease.
DCM’s liability to Meriton
7 In its Application to the Tribunal, Meriton claimed that DCM was liable to it for damages in the amount of $109,779.48, on account of its having breached terms of the Lease. This represented lost rent due under the Lease (up to its expiry date on 31 October 2010) and expenses incurred in reletting the Premises, less sums obtained by Meriton through calling on a bank guarantee contained in the Lease, selling goods left by DCM at the premises and reletting the Premises for a term of five years commencing on 1 May 2008.
8 A schedule forming part of the evidence tendered by Meriton showed how this amount of $109,779.48 was calculated. A significant matter shown in it was that the initial monthly rent under the Lease was $6,006.05, whereas the initial monthly rent under the lease commencing on 1 May 2008 was the significantly lower figure of $3,466.67. A further matter of significance is that a substantial portion of the total sum claimed – about $46,000 – is future economic loss. It is constituted by the difference between the rent that DCM was bound to pay under the Lease and the rent now being received, with respect to the period between the date of the present decision and the date of expiry shown in the Lease, more than 17 months hence.
9 The Application contained an annotation suggesting that Meriton alleged unconscionable conduct under section 62B of the RL Act on the part of DCM and/or Mr Plant. No such allegation was, however, maintained at the hearing and the claims against both these parties were treated as retail tenancy claims only, as defined in section 70.
10 Meriton also claimed awards for interest, under section 72A of the RL Act, and for costs, including Tribunal filing fees totalling $115.00 and service fees of $110.00.
11 DCM filed no reply or evidence and did not appear at the hearing. Mr Maltz, who appeared for Meriton, sought orders against DCM in the terms set out in the Application.
12 It was not suggested at the hearing by Mr Plant, the sole director of DCM, that DCM did not receive due notice of the Application and of the Tribunal hearing.
13 In the absence of any opposition from DCM, and taking into account further evidence tendered by Meriton in its case against Mr Plant, I therefore determine that Meriton is entitled to an order against DCM for damages totalling $109,779.48.
14 Having regard to section 72A of the RL Act, I consider that Meriton should also receive an amount by way of interest. This section states that the rate of interest must not exceed the rate prescribed from time to time for judgment debts of the District Court. This rate was 10% during the period between 16 August 2007 and 9 March 2009 and has been 9% since 9 March 2009. But to award interest on the whole sum of $109,779.48 at these rates would be excessive. It would involve ignoring the following considerations shown in the schedule tendered by Meriton: (a) the amount drawn down by Meriton on DCM’s bank guarantee accounted wholly for the rent due up to 22 November 2007; (b) thereafter, the aggregate of the rent due from DCM grew by monthly amounts of $6,006.05 until 1 May 2008 and thereafter by monthly amounts of about $2,500.00; and (c) as pointed out above at [8], a significant proportion – about 42% – of the principal sum of $109,779.48 represents future economic loss, on which no interest should be awarded.
15 For these reasons, I propose to apply a low interest rate – 3% – to this principal sum, and to calculate interest only for the period of 18 months or thereabouts between 22 November 2007 and the date of this decision. The amount awarded is accordingly $4,940.08.
16 In the circumstances, I consider it appropriate also that Meriton should recover $225.00 for filing and service fees from DCM, pursuant to section 77A of the RL Act and section 88 of the Administrative Decisions Tribunal Act 1997.
17 The total amount for which DCM is liable to Meriton is therefore $114,944.56. But since it appears that DCM has no assets, the orders being made against it are likely to be of little or no practical benefit to Meriton.
18 The background to the Lease
19 In order to determine whether Mr Plant is liable to Meriton as guarantor by virtue of having placed his signature on the Lease, it is necessary to take into account some earlier dealings and communications involving Mr Plant and Meriton.
20 Mr Plant gave evidence, not disputed by Meriton, to the following effect. Mr Plant owned and operated a chain of franchised doughnut and coffee shops under the name of DCM Coffee & Donuts (‘DCD’). DCM was a company associated with DCD. Since about 1999, Mr Plant and DCD maintained a policy of refusing to guarantee any lease for a franchised doughnut and coffee shop. They insisted that the franchisees, which owned and operated the individual shops should provide any guarantee required by the lessor.
21 Between March and May 2001, DCD and Meriton conducted negotiations for a lease of the Premises to DCM Café (Leases) Pty Ltd, a company associated with DCD. In the course of these negotiations, Meriton indicated in writing that ‘personal guarantees’ would be required. In response, DCD stated that both bank and personal guarantees would be provided by the intended franchisee. Meriton through its solicitors indicated that it agreed to this arrangement.
22 On 5 November 2001, Meriton and DCM Café (Leases) Pty Ltd entered into a five-year lease of the Premises (‘the Earlier Lease’) commencing on the following day. The franchisee, a company called Bao Bao Pty Ltd (‘Bao Bao’), provided a bank guarantee to Meriton. Mr Plant did not provide a personal guarantee. He did not know (and the evidence did not establish) whether the owner of Bao Bao provided a personal guarantee.
23 By a deed dated 15 August 2003, DCM Café (Leases) Pty Ltd assigned to DCM its interest as lessee under the Earlier Lease. Although entitled under clause 30.5(c) of this lease to require that ‘any guarantee… reasonably required’ by it should be provided, Meriton consented to the assignment without requiring that a personal guarantee be given. It did, however, insist that certain other conditions be satisfied.
24 By mid-2005, Bao Bao, having realised that it could not trade profitably in the Premises, sought a buyer for its business. A prospective purchaser and franchisee, Best Future Pty Ltd (‘Best Future’), requested that a new five-year lease of the Premises be concluded, since the Earlier Lease had only about a year to run.
25 In cross-examination, Mr Plant asserted that Best Future did not stipulate the grant of a new lease as a pre-condition of acquiring the business from Bao Bao and becoming a franchisee. He explained this by pointing out that the purchase price was relatively low.
26 Best Future did not in fact take over from Bao Bao the responsibility of paying rent for the Premises until completion of its purchase of the business on 19 December 2005.
The circumstances surrounding the execution of the Lease documents
27 On 5 October 2005, at an early stage of the negotiations for the Lease, a solicitor employed by Meriton, Ms Mani Phompida, forwarded a document headed ‘Offer of Lease’ to DCM. It contained the following relevant clauses:-
Directors’ Guarantee: Required from all directors if the tenant is a company.
Special Terms: 4. The new lease will be on the same terms as the current lease except for any commercial changes as noted above and any terms that are no longer relevant.
If you accept this offer please sign below and return it to Meriton. Meriton will then refer the offer to its solicitors for preparation of an Agreement for Lease.
28 Mr Plant testified that he interpreted the ‘Directors’ Guarantee’ and ‘Special Terms’ clauses as signifying that, in accordance with previous practice, Meriton would require personal guarantees from the directors of the prospective franchisee, not from himself as the director of DCM.
29 On 6 October 2005, Mr Plant made some changes in handwriting to the Offer of Lease, signed it on behalf of DCM and sent it back to Ms Phompida. These changes did not affect the clauses that have just been quoted.
30 In a letter faxed on 18 October 2005 to Mr Mark Scott, an employee of DCM, Ms Phompida indicated that Meriton accepted only one of the amendments to the Letter of Offer that Mr Plant had made. She faxed also a revised version of the Letter showing this amendment.
31 According to Mr Plant, Mr Scott acted as his personal assistant, referring all important matters to him. It is convenient to note here that Mr Scott, although substantially involved in the events of significance in this case, did not give evidence.
32 On 25 October 2005, Ms Phompida sent a letter to Mr Scott enclosing (inter alia) an unexecuted memorandum of surrender of lease relating to the Earlier Lease, a disclosure statement and three unexecuted copies of a memorandum of lease of the Premises from Meriton to DCM. Her letter stated that this lease was ‘substantially the same as the current lease’, with certain defined exceptions of no present relevance. She asked Mr Scott to ‘arrange for the documents to be executed and completed as appropriate’.
33 Except as indicated below, this memorandum of lease was in the same form as the Lease that was ultimately registered. For present purposes, its features of relevance were these:-
Two pages at the commencement stated (inter alia) who were the parties. They identified Meriton as the lessor and DCM as the lessee and contained spaces (on page 2) for execution of the lease by these two parties. They made no reference to a guarantor.
In clause 1.1 of Annexure A, the term ‘Guarantor’ was defined as ‘the person or person named in Item 15’ and ‘Item’ was defined as ‘an Item in the Lease Schedule to this lease’.
Clause 39 of Annexure A commenced with the following words: ‘The Guarantor gives this guarantee and indemnity in consideration of the Lessor agreeing to enter into this lease’. The balance of the clause set out the Guarantor’s obligations in standard form. The guarantee included an agreement to pay or reimburse the lessor for all its ‘costs, charges and expenses in making, enforcing and doing anything in connection with this guarantee…’
In Item 15 of the Lease Schedule (which included a reference to clause 1.1), the name Wayne Douglas Plant appeared under the word ‘Guarantor’.
At the end of the Lease Schedule, there was an attestation clause. This clause commenced with the phrase ‘Executed as a deed’. It included the words ‘signed, sealed and delivered by Wayne Douglas Plant’ and had spaces both for his signature (appearing over the words ‘Signature of Wayne Douglas Plant’) and for the signature and the name of a witness.
34 At some time between 25 October and 9 December 2005, Mr Plant deleted, by means of a straight line in ink, his name where it appeared beneath the word ‘Guarantor’ in Item 15 of the Lease Schedule. He placed his signature beside the deletion. He also placed his signature in the attestation clause of the memorandum of surrender of the Earlier Lease, in the attestation clause at the foot of the Lease Schedule and at the foot of a few of the pages of the Lease. He did not, however, sign the Lease at page 2 on behalf of DCM. At his request, Mr Scott signed the Lease Schedule as the witness to his signature, made copies of the surrender of lease and the Lease and sent them back to Meriton.
35 Early in December 2005, Ms Li-Eng Wong commenced employment as in-house corporate counsel for Meriton. She took over from Ms Phompida the task of completing the Lease. On 9 December, she received these two documents from DCM, amended and signed in the manner just indicated. She observed that the Lease had not been executed on behalf of DCM on page 2.
36 A file note that Ms Wong made at the time reads as follows:-
9/12/05
Rec’d from tenant
1. Signed surrender of lease x 1
2. Signed disclosure statement x 1
3. Lease signed x 2.
37 In the course of reviewing the file, Ms Wong noted that in the Offer of Lease Meriton had required a director’s guarantee and that Mr Plant, in requesting changes to the Offer of Lease, had not asked to be relieved of the obligation of guaranteeing the lessee’s obligations. She stated in her evidence that according to her understanding at the time Meriton had in the past had difficulties recovering rental arrears from corporate tenants and that it therefore had a policy of requiring personal guarantees from directors.
38 At some time between 9 and 13 December 2005, Ms Wong wrote the name ‘Wayne Douglas Plant’ in her own handwriting underneath the deleted version of this name appearing below the word ‘Guarantor’ in Item 15 of the Lease Schedule.
39 On 13 December 2005, Ms Wong sent a letter to DCM in the following terms:-
We refer to the lease documents received by our office on 9 December 2005.
We note the following:
1. Lease (in duplicate)
a. The Leases have not been executed by the Tenant on page 2. We enclose the Lease (in duplicate) for the Tenant to execute on page 2 of the Leases.
b. Item 15 of the Lease Schedule “Guarantor” has been deleted. This is not agreed by the Landlord. We refer to the Letter of Offer signed and accepted by you that director’s guarantee (sic) is required from all directors if the Tenant is a company. Therefore I have reinstated “Wayne Douglas Plant” as the guarantor.
2. The following items are still outstanding:… [Ms Wong then identified three cheques and a direct debit form required from DCM].
I look forward to receiving the signed Lease (in duplicate) and the items 2(a) to (d) at your earliest convenience.
40 Ms Wong addressed this letter to Mr Scott since she had noted from the file that all previous correspondence relating to the Lease had been addressed to him.
41 According to Mr Plant’s testimony, he assumed at the time that if Meriton or its lawyers did not accept his deletion of his name from Item 15 of the Lease Schedule, the page would have been reprinted and he would have been asked to sign it once again. He testified that some time in December 2005 Mr Scott brought him the ‘signing pages’ of the Lease and told him that he had not signed them on behalf of DCM. He did not see the remainder of the Lease or, indeed, Ms Wong’s letter of 13 December. He signed the Lease on page 2 on DCM’s behalf and gave the ‘signing pages’ back to Mr Scott to be returned to Meriton.
42 On 16 December 2005, Ms Wong received from Mr Scott the original of the letter that she sent to him on 13 December, together with the two copies of the Lease. She placed ticks against items 1(a) and (b) of the letter (reproduced above) indicating that these two requirements had been satisfied. She then noticed, however, that Mr Plant’s signatures (on behalf of DCM) on page 2 of the copies of the Lease were not in blue or black ink. She said in evidence that she believed that they were in pencil. She also realised that the documents requested in item 2 of her letter had not been provided.
43 In a letter to DCM dated 16 December 2005, addressed to Mr Scott and enclosing the two copies of the Lease, Ms Wong pointed out that because neither blue nor black ink had been used, the Lease had not been properly executed on page 2. She asked that this be rectified and that the three cheques and the direct debit form requested in her letter of 13 December be sent to her.
44 In cross-examination, Mr Plant testified as follows on these matters: (a) he did not remember ever signing the Lease in pencil; (b) he did not usually sign documents in pencil; (c) he remembered receiving and signing the Lease twice, but not three times; and (d) on the second occasion he did not read the Lease.
45 On 13 January 2006, Ms Wong received from DCM the original of her letter of 16 December 2005. It was accompanied by the two copies of the Lease, executed in ink on page 2, but not by the cheques or the direct debit form. She wrote the phrase ‘Only rec’d 2 leases’ on the letter. She made further requests to DCM for the cheques and the direct debit form. She received these on 8 February 2006
46 On or about 17 March 2006, Meriton executed the Lease. Ms Wong then attended to its stamping and registration.
Subsequent events
47 In July 2006, Best Future, having found it difficult to trade profitably in the Premises, advised DCM that it was selling the franchisee business to a new franchisee, Mr Wai Chau.
48 In a letter faxed on 8 August 2006, Ms Alice Chan of Alliance Lawyers, who was the solicitor acting for Mr Wai Chau, advised Meriton that he would sign a franchise agreement ‘together with a license to occupy’ the Premises on the day when the sale of the business was completed, and that he therefore did not need a new lease or an assignment of the existing Lease.
49 In a reply faxed to Ms Chan on 9 August 2006, Ms Wong advised that under clause 30.7 of the Lease, no licence to occupy the Premises could be granted by DCM unless Meriton gave its consent. In order that this might occur, she asked Ms Chan to respond to four specific requests. The second of these requests was as follows: ‘We note that Wayne Douglas Plant is the guarantor under the Lease. Will he remain as guarantor under the Lease?’
50 On the same day, Ms Chan sent a fax to Mr Scott at DCM in the following terms:-
Please see attached letter from Meriton. We have provided information regarding item 4. We appreciate if you would reply item 1 to 3 to Meriton directly.
51 A copy of his fax was tendered at the hearing by counsel for Meriton without the ‘attached letter’ to which it referred.
52 A letter to Ms Wong from Mr Scott dated 10 August 2006 commenced with the words ‘In response to your letter of 9th August to Alice Chan…’ Mr Scott advised that DCM would continue to be the lessee under the Lease, that the Lease did not need to be changed and that the incoming franchisee would provide a bank guarantee. He did not mention Mr Plant’s alleged status as a guarantor.
53 A fax to Ms Wong from Ms Chan dated 14 August 2006 commenced with the words ‘We refer to your fax dated 9 August 2006’. In the course of responding to the four requests contained in Ms Wong’s fax, Ms Chan stated with reference to the second of them that ‘the current guarantor remained (sic) unchanged under the lease’.
54 On 25 June 2007, Ms Chan notified Mr Scott that Mr Wai Chau intended to terminate his franchise on 18 August 2007. DCM was unsuccessful in attracting a new franchisee. Rent payments under the Lease accordingly ceased on 16 August 2007, with the consequence, as outlined above at [5 – 6], that Meriton served a default notice on DCM and repossessed the Premises.
An objection to the Tribunal’s jurisdiction
55 In an outline of submissions handed up at the hearing, Mr Hyde, counsel for Mr Plant, argued that the Tribunal had no jurisdiction to make any order against Mr Plant because, not being the lessor or the lessee under the Lease, he was not a ‘party’ or ‘former party’ within the meaning of section 63 of the RL Act, with the consequence that the dispute between him and Meriton was not a ‘retail tenancy dispute’ within that section and Meriton’s claim against him was not a ‘retail tenancy claim’ under section 70. Mr Hyde did not elaborate at length on this argument at the hearing.
56 As pointed out by Mr Maltz, however, the definitions of ‘party’ and ‘former party’ in section 63 expressly include guarantors. It is well established (see for example Kindful (Australia) Pty Ltd v Country Villa Holdings Pty Ltd (No 2) [2006] NSWADT 357 at [13 – 23]) that the definition of ‘retail tenancy claim’ in section 70 includes claims against a guarantor of a lessee’s obligations under a retail shop lease.
57 This objection to jurisdiction must accordingly be rejected.
Meriton’s claim that Mr Plant was a guarantor under the Lease
58 Mr Maltz, appearing for Meriton, argued that Mr Plant was liable to Meriton as guarantor under clause 39 of Annexure A by virtue principally of the following matters:-
1. In her letter of 13 December 2005 addressed to Mr Scott at DCM, Ms Wong stated expressly that (a) Meriton did not agree to Mr Plant’s prior deletion of his name from the space under Item 15 of the Lease Schedule where he had been named as guarantor, and (b) that she had ‘reinstated’ him as the guarantor
2. Neither in the versions of the Lease that Ms Wong received back from Mr Scott on two subsequent occasions (16 December 2005 and 13 January 2006) nor in accompanying correspondence did Mr Plant, or anyone on his behalf, indicate that he did not consent to his ‘reinstatement’.
3. Before permitting the Lease to be sent back to Ms Wong on the latter occasion, Mr Plant both (a) signed (in ink) on behalf of DCM on page 2 of the Lease and (b) left his signature unchanged in the attestation clause at the foot of the Lease Schedule.
4. In the version of the Lease that Meriton executed on or about 17 March 2006, Mr Plant was accordingly identified as the guarantor on a page of the Lease Schedule which also contained (at its foot) an attestation clause that he had signed.
59 According to Mr Maltz, Mr Scott, by sending the Lease to Ms Wong on or shortly before 13 January 2006, conveyed an offer by DCM and Mr Plant to enter into a single agreement with Meriton, comprising both a lease and a guarantee and containing the terms set out in the Lease. The Lease in this form, bearing a recently affixed signature by Mr Plant on page 2 and his earlier signature at the foot of the Lease Schedule, constituted the ‘final projection’ of his intentions. A reasonable reader of it, along with the accompanying correspondence, would have assumed that he intended to be a guarantor. When Meriton accepted this offer by executing the Lease, Mr Plant therefore became contractually bound by the terms of the guarantee as set out in clause 39 of Annexure A.
60 Mr Maltz relied also on the following aspects of the evidence: (a) the statement in the Offer of Lease that Meriton required directors’ guarantees; (b) the evidence from Mr Plant that Mr Scott, his personal assistant, referred all important matters to him; (c) the fact that at the time when Meriton, through Ms Wong, was pressing for a director’s guarantee to be provided, Mr Plant could not suggest that a director of Best Future would guarantee the Lease because the sale of Bao Bao’s business to Best Future had not yet been completed; (d) the absence of any denial of Mr Plant’s status as guarantor by Mr Scott in his letter of 10 August 2006 to Ms Wong; and (e) the lack of any testimony from Mr Scott in these proceedings.
61 Mr Maltz submitted that the Tribunal should draw two inferences arising from these matters. One was that, contrary to evidence given by Mr Plant, Best Future was not prepared to complete its purchase of Bao Bao’s franchise business until it became clear that the new lease to DCM would be granted. The other was that, because Mr Scott was in DCM’s and Mr Plant’s ‘camp’, the Tribunal should assume that they could have called him as a witness and should therefore infer, applying the principles laid down in Jones v Dunkel (1959) 101 CLR 298, that any evidence given by him would not have assisted Mr Plant’s case.
62 A further submission by Mr Maltz was that Mr Plant’s testimony should be rejected with regard to matters which were not corroborated. He based this submission on a claim that Mr Plant’s recollection appeared insufficient on what he called ‘unhelpful’ facts, while being entirely adequate where ‘helpful’ facts were concerned. He suggested, however, that the reliability of Mr Plant’s testimony was ultimately a ‘peripheral’ matter only.
63 The principal authority cited by Mr Maltz was the joint judgment of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 265; [2004] HCA 52. The primary question in that case was whether a party to an agreement (Richard Thomson) was bound by certain ‘Conditions of Contract’ that had been set out on the reverse side of a form of application for credit that its agent had signed on its behalf. The signature was placed immediately below a request in the following terms: ‘Please read “Conditions of Contract” (overleaf) prior to signing’. It was argued that the Conditions of Contract’ did not form part of the agreement on the ground (inter alia) that the agent had not read them before signing and the other party (Finemores) had not done what was reasonably sufficient to bring them to his notice.
64 The High Court held that the Conditions of Contract did form part of the agreement. It treated both sides of the form of application for credit as a single contractual document. It rejected the argument that the Appellant had been bound to do what was ‘reasonably sufficient’ to bring the Conditions of Contract to the notice of Richard Thomson, while also holding that in any event the request appearing above the space where the agent signed clearly constituted reasonable notice.
65 Among the paragraphs of the joint judgment to which Mr Maltz specifically drew my attention, the following appear to me to be of particular relevance in this case (see the judgment at 179-181):-
[39] Any suggestion that the agreement between Richard Thomson and Finemores was vitiated by misrepresentation would be untenable. Mr Gardiner-Garden [Richard Thomson’s agent] signed a document which invited him to read the terms and conditions on the reverse before signing. He was not rushed or tricked into signing the document. He chose to sign it without reading it. He could have read it had he wished. Finemores did not set out to conceal from him the terms and conditions on the document, or to encourage him not to read them. Finemores had no way of knowing that he did not read the document. No case of mistake or non est factum is advanced.
[40] This Court, in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]).
[45] It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents…, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
66 Mr Maltz also relied on the following statement of principle by Lord Pearson in the decision of the House of Lords, rejecting a plea of non est factum, in Saunders v Anglia Building Society [1970] 3 All ER 961 at 980:-
Suppose a man signs a deed without knowing or enquiring or having any positive belief or formed opinion, as to its nature or effect; he signs it because his solicitor or other trusted adviser advises him to do so. Then his intention is to sign the deed that is placed before him, whatever it may be or do. That is the intention in his own mind as well as the intention which by signing he manifests to others.
Mr Plant’s claim not to be bound as guarantor
67 The principal contentions raised by Mr Hyde on Mr Plant’s behalf were that at the time when Mr Plant signed the Lease Schedule he was not named in it as a guarantor (because he had deleted his name from Item 15) and that his later execution of page 2 of the Lease on behalf of DCM did not affect the legal position with regard to the alleged guarantee because the Lease and the contract of guarantee were two separate agreements, not a single agreement.
68 In support of these contentions, Mr Hyde placed emphasis on the following aspects of the evidence: (1) the Lease at its commencement named Meriton and DCM as the sole parties and made no reference to a guarantor; (2) the Lease Schedule was expressed to be, and was executed by Mr Plant as, a deed; (3) in her letter of 13 December 2005 to DCM, Ms Wong requested only that the Lease should be executed by DCM, not that the Lease Schedule should be signed again by Mr Plant; and (4) there was no evidence to contradict Mr Plant’s statement that he did not see this letter.
69 Mr Hyde sought to rebut any argument that Mr Plant was estopped from denying that he was bound by the guarantee by pointing out that Ms Wong well knew that he was not willing to be a guarantor. Any belief by Ms Wong that it was not necessary for Mr Plant to sign the Lease Schedule a second time was, he said, ‘self-induced’ and not the consequence of any conduct or statement by Mr Plant.
70 A further submission by Mr Hyde was that the absence of any testimony by Mr Scott did not warrant application of the rule in Jones v Dunkel (1959) 101 CLR 298 because (a) he should not be considered to be in the ‘camp’ of DCM and Mr Plant and (b) there was no evidence to suggest that he would have been available if called as a witness. Finally, Mr Hyde argued that Mr Scott’s failure to mention the alleged guarantee by Mr Plant in his letter of 10 August 2006 to Ms Wong was of no significance.
The Tribunal’s conclusions regarding the guarantee
71 After carefully considering the evidence and counsel’s submissions, I have reached the conclusion that this case falls to be governed by the emphatic statements of principle to be found in the High Court’s judgment in Toll v Alphapharm. The key factor in the evidence is that Mr Plant permitted the Lease, in the form later executed by Meriton, to be returned to Ms Wong on 16 January 2006 bearing his recent signature on behalf of DCM, on page 2 and his earlier signature, on his own behalf, at the foot of the Lease Schedule. He thereby gave Meriton reasonable grounds for believing that he had no objection to the ‘reinstatement’ of his name as guarantor in Item 15 of the Lease Schedule.
72 Having regard to the terms of the Offer of Lease and to Ms Wong’s statements in her letter of 13 December 2005 relating to Mr Plant’s deletion of his name from Item 15, it might well be inferred that Meriton would have refused to execute the Lease if it had believed (a) that Mr Plant still persisted with his refusal to assume the potential liabilities a guarantor and (b) that his conduct with regard to the lease documentation was sufficient in law to protect him from these liabilities. When deciding whether it should execute the Lease in the form in which Mr Scott returned it, Meriton was reasonably entitled to believe that Mr Plant no longer maintained his opposition to being a guarantor.
73 This conclusion involves rejecting Mr Hyde’s argument that the Lease and the guarantee must be regarded as separate documents. This argument is unsustainable, in my opinion, for two reasons. First, both the definition of ‘guarantor’ and, most significantly, the terms of the guarantee itself were situated within the body of the Lease, at clauses 1.1 and 39 respectively. Secondly, Item 15 of the Lease Schedule included a reference to clause 1.1. In accordance with common practice in lease documentation, the guarantee was not drafted as a separate and independent document. These considerations override any contrary inference arising from the fact that the persons identified as the parties to the Lease at its commencement did not include the guarantor.
74 I do not need to make any finding as to whether Mr Plant became aware, whether through reading Ms Wong’s letter of 13 December 2005 to DCM, rereading the Lease Schedule after this date or by any other means, that Meriton objected to his deletion of his name from Item 15 of the Lease Schedule and that she had accordingly ‘reinstated’ it. What matters is that he permitted Mr Scott, whom Meriton could legitimately regard as an agent having authority to bind both him and DCM, to return the Lease to Ms Wong with his name reinstated as the guarantor and his signature underneath. If Mr Scott failed to draw his attention both to this part of Ms Wong’s letter and to the reinstatement of his name, this might give him grounds for criticising Mr Scott’s performance as his personal assistant. It does not, however, provide a basis for him to deny liability as a guarantor in accordance with the relevant clauses of the Lease.
75 Because Meriton were entitled to regard Mr Scott as the agent of both DCM and Mr Plant (a proposition that Mr Hyde did not contest), it is not necessary for me to decide whether the failure of Mr Plant to call him as a witness attracts the operation of the rule in Jones v Dunkel. What matters in this case is the interpretation reasonably to be placed by Meriton on relevant aspects of Mr Scott’s conduct, not what Mr Scott communicated, or failed to communicate, to Mr Plant.
76 I have given some consideration to discussions in case law and contract law texts of an issue that was not specifically addressed at length in the parties’ submissions: namely, the legal consequences that arise when a deed or other contractual document that has been signed by one party is materially altered by the agent of another party. The authorities that I have consulted include the following: Davidson v Cooper (1844) 13 M & W 344; Pirie v Saunders (1966) 104 CLR 149 at 154; Carter & Harland, Contract Law in Australia (4th edn, 2002) paragraph [514]; and Chitty on Contracts (29th edn, 2004) paras 4-034, 4-035 and 44-051.
77 Shortly stated, my conclusions from this investigation are as follows. A significant alteration in handwriting such as Ms Wong made (somewhat unconventionally, it might be said) to the Lease Schedule after Mr Plant had signed it might well have had a major impact on the rights of the parties if at this stage the Lease had also been signed by Meriton. However, because the Lease had not yet become a binding agreement, no legal principle relating to deeds or to contractual documents generally prevents the implied assent to this alteration conveyed by Mr Plant (through his agent) to Meriton following resubmission of the Lease to him from having the impact that I have attributed to it, in accordance with the law stated by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 265; [2004] HCA 52.
78 For the foregoing reasons, I conclude that Mr Plant is liable to Meriton as guarantor of the obligations of DCM under the Lease.
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80 I held, at [17] above, that the total liability of DCM to Meriton was to be assessed at $114,944.56. Having regard to the range of the obligations guaranteed by Mr Plant under clause 39 of the Lease, he must be held liable to DCM in the same amount.
81 The Application instituting these proceedings included a claim by Meriton for an order that the costs of the proceedings against Mr Plant should be paid by him. This matter falls to be determined under section 77A of the RL Act and section 88 of the ADT Act. By virtue of legislation in 2008 amending the latter Act, the criterion to be applied under section 88 is no longer that of ‘special circumstances’, but one of ‘fairness’. This new criterion is applicable to the present proceedings even though they were instituted before the amendment came into operation: see ADT Act, Schedule 5, clause 43(2)(i).
82 The question whether any costs should be awarded in the proceedings between Meriton and Mr Plant is to be resolved according to the following procedure. Any application for costs must be filed and served, with supporting submissions, within 28 days of the date of this decision. The opposing party must file and serve submissions in reply within a further 28 days. Unless reasons are advanced for a hearing to be conducted, the matter will be resolved ‘on the papers’, pursuant to section 76 of the ADT Act.
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