MICHAEL CHRISTOPHER VADASZ v PIONEER CONCRETE (SA) PTY LTD No. SCGRG 93/2342 Judgment No. 4530 Number of Pages - 9 Equity - Guarantee and Indemnity (1994) ATPR 41-316 (1994) 62 SASR 150 - [1994] SASC 4530

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA OLSSON(1), MOHR(2) AND NYLAND(3) JJ

CWDS
Equity - general principles and maxims of equity - remedies and procedure - cancellation and recission

Guarantee and indemnity - the contract of guarantee misrepresentation or non-disclosure - Appellant entered a personal guarantee for past and future liabilities of a company to the respondent - prior to signing the instrument of guarantee an agent of the respondent misrepresented to the appellant that the guarantee related only to future liabilities - trial judge held appellant entitled to avoid liability under the guarantee as to past indebtedness but found appellant liable as to future indebtedness - recission, being an equitable remedy, it is open to a court granting it to impose conditions upon the party seeking relief to ensure equity is done - approach of trial judge justified. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 481; Taylor v Johnson (1983) 151 CLR 422 and The Bank of Victoria Ltd v Mueller (1925) VLR 642, applied.

HRNG ADELAIDE, 6 April 1994 #DATE 6:5:1994

Counsel for appellant: Mr S Walsh QC with Ms J Choate

Solicitors for appellant: Elston and Gilchrist

Counsel for respondent: Mr D Smith

Solicitors for respondent: Gun and Davey

ORDER
Appeal and cross-appeal dismissed.

JUDGE1 OLSSON J These are an appeal and cross appeal respectively in relation to a judgment entered by Lee DCJ in the District Court, whereby he adjudged the appellant liable to pay the respondent $170,929.32. That judgment was the outcome of an action in which the respondent had sued to recover $357,005 plus interest, said to be due by the appellant to it, pursuant to the terms of an instrument of guarantee dated 7 August 1992.

2. In reasons for judgment published by him, the learned trial judge carefully analysed the evidence led at trial and made detailed findings of primary fact. Neither the appeal nor the cross appeal, as prosecuted, seek to challenge those findings. Rather, they focus upon what are said to be the proper inferences and legal consequences which flow from them.

3. The facts, as found, may simply be summarized. The appellant was, at all material times, one of two directors of Vadipile Drilling Pty Ltd ("Vadipile"), which carried on business as a foundation piling contractor. The respondent was a manufacturer of readymixed concrete and, from time to time, supplied that commodity to Vadipile, for the purposes of its operations.

4. In January 1992 Vadipile experienced some operational problems which, in turn, gave rise to cashflow problems. It asked the respondent for and was granted an extension of trading credit from 45 to 60 days, for a period concluding on 30 June 1992. Far from improving, Vadipile's operational problems actually escalated, due, in part, to continuing excessively wet weather, with a result that, by 30 July 1992, its indebtedness to the respondent exceeded $200,000.

5. The appellant and his co-director Storer entered into negotiations with the respondent, through one…

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

AGLC: MICHAEL CHRISTOPHER VADASZ v PIONEER CONCRETE (SA) PTY LTD No. SCGRG 93/2342 Judgment No. 4530 Number of Pages - 9 Equity - Guarantee and Indemnity (1994) ATPR 41-316 (1994) 62 SASR 150 [1994] SASC 4530
Case: [1994] SASC 4530
Decision Date: 6 May 1994

CaseChat Overview and Summary

The appeal and cross-appeal in this case revolve around a judgment entered by Lee DCJ in the District Court, where the appellant, Michael Christopher Vadasz, was adjudged liable to pay the respondent, Pioneer Concrete (SA) Pty Ltd, the sum of $170,929.32. The respondent sued to recover this amount, claiming it was due under the terms of a personal guarantee signed by the appellant on 7 August 1992, which related to past and future liabilities of Vadipile Drilling Pty Ltd, a company of which the appellant was a director. The appellant argued that he was misled by the respondent's agent into believing the guarantee only related to future liabilities. The primary legal issue was whether the appellant was entitled to avoid his liability under the guarantee due to the respondent's misrepresentation, and if so, whether the trial judge was correct in imposing conditions on this rescission.

The court found that the trial judge's approach to the equitable remedy of rescission was justified. The court held that while the appellant was entitled to rescind the guarantee due to the respondent's misrepresentation, the remedy of rescission is equitable and discretionary. It is within the court's power to impose conditions on the rescission to ensure that equity is done. This principle was supported by authorities such as Spence v Crawford, Taylor v Johnson, and Commercial Bank of Australia Ltd v Amadio. The court found that the trial judge's decision to impose a condition that the appellant meet liabilities for supplies accruing from the date of the guarantee (7 August 1992) was fair and appropriate given the circumstances. The court also noted that the trial judge's decision on costs was within his discretion and there was no basis for the court to interfere with it.

In conclusion, the Full Court dismissed both the appeal and the cross-appeal, upholding the trial judge's judgment that the appellant was liable for liabilities accruing after the date of the guarantee, while allowing him to rescind the guarantee in relation to past indebtedness.

Orders