National Australia Bank Ltd v Sinn

[2013] VCC 559

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
BANKING & FINANCE DIVISION

Case No. CI-12-02083

NATIONAL AUSTRALIA BANK LIMITED	Plaintiff
v.
ANDREW FRANCIS SINN & ANOR	Defendants

---

JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	23 May 2013
DATE OF JUDGMENT:	23 May 2013 (revised 24 May 2013)
CASE MAY BE CITED AS:	National Australia Bank Ltd v. Sinn & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 559

REASONS FOR JUDGMENT

---

Catchwords:             Banking – Guarantee – Alleged representation that the bank would first exhaust recovery against the principal debtor – Principal debtor a deregistered company – Guarantor executed guarantee, including a certificate and declaration, without reading the document – Alleged representation inconsistent with the terms of the guarantee and the guarantor’s declaration.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C. Salpigtidis	Thomsons Lawyers
For the Defendant	Mr A. Sinn in person
For the Third Party	Mr L. Stanistreet	Nick Stretch Legal

HIS HONOUR:

1The bank sues the defendant on a guarantee signed by him on 29 November 2006. The formalities, including the execution of the document and the receipt of notices served by the bank on the defendant, are not contested on the pleadings. The bank recently served a notice to admit. There was no response to the notice by the defendant and accordingly the matters contained in the notice are deemed to be admitted.

2The defendant’s solicitors were granted leave to withdraw, by application at the trial today, and the hearing has been conducted by the defendant personally.

3At the outset of the hearing, when it became apparent that reliance would be placed on admissions made by the defendant’s failure to respond to the notice to admit, I reserved the question of whether I would hear an application by the defendant for leave to withdraw the admissions deemed to be made. Having heard the evidence, I consider that there would be little point in permitting the defendant to pursue such an application, because the matters to which the deemed admissions relate appear to be adequately covered by other evidence.

4The defence filed on behalf of the defendant by his previous solicitors asserts that at the time he signed the guarantee, a representation was made to him by a bank officer, Mr Wattling, that the bank, ”would only seek to recover payment by the defendant under the guarantee, if the [bank] had first fully exhausted efforts to recover payment from the principal debtor JV Aust Investments”.

5In the third party proceeding, the defendant alleges that the third party had represented to him that he “would not be personally liable for the guarantee”. During the course of his evidence, the defendant stated that Mr Carpi, the third party, and the bank officer, Mr Wattling, had brought the document to him and said, “Here is where you sign”. The defendant said that he “didn’t get any advice” and “didn’t even read” the document. He was told that he needed to sign the guarantee in order for the bank to provide a facility to JV Aust Investments Pty Ltd (“JV Aust”), and that, “the bank would pursue JV Aust before pursuing the guarantors”.

6During cross examination by plaintiff’s counsel, the defendant was referred to other guarantees signed by him with the bank on 27 June 2006, to secure an advance of $225,000, 17 April 2007, to secure an advance of $1,500,000 and on 13 March 2008 to secure an advance of $300,000. The first guarantee signed by the defendant on 27 June 2006 was signed in the presence of Mr Rod Stumbles, a solicitor from Lewis Holdway who were the solicitors involved in the transaction and who signed a certificate “from guarantor’s solicitor” that, “I explained the effect of this guarantee and indemnity to the guarantor who appeared to be aware of, and understand the nature and effect and obligations of the guarantor under this guarantee and indemnity and executed in my presence”.

7The defendant said he had no recollection of the circumstances in which he had executed that guarantee and said further that he had no recollection of signing any of the guarantees. He did say that he recalled in relation to the guarantee, in which he is sued in this proceeding, that he was “under duress to sign” and was, “requested by the bank and Carpi to sign it” and that, “Carpi and Wattling said I would not be personally liable”.

8In view of the totality of the evidence given by the defendant, I am unable to accept that he has a clear recollection of the representation that he asserts in his defence to the claim. In any event, it would appear that any such representation would be contrary to the express terms of the guarantee and contrary to the terms of the certificate and declaration that he signed as part of the guarantee documents. In his declaration, the defendant declared as follows, “I have not relied upon the advice or explanation of any other person (including any employee or agent of NAB) relating to the legal, financial and other risks associated with executing the guarantee”.

9The guarantee makes clear that, “NAB can claim amounts from me without having to first exhaust claims against the customer”. No claim was in fact made against the defendant by the bank until notices had been served on JV Aust. That company was deregistered on 2 December 2012. The effect of the deregistration is that, pursuant to section 601AD of the Corporations Act 2001, “the company ceases to exist on deregistration” and apart from trust property which “vests in the Commonwealth”, all ”other company property vests in ASIC”.

10The defendant was a director of JV Aust from July 1999 until its deregistration. Mr Carpi had been a director of the company between November 2006 and March 2010. The defendant has always been the sole shareholder of the company. It appears that for a number of years prior to deregistration that no documents were filed with ASIC by the company and the company received no income during 2011 or 2012 and no financial accounts were prepared during that period.

11The defendant gave evidence that JV Aust had assets. He said that the company was a shareholder in Boambee Central Pty Ltd, which apparently conducts a shopping centre near Coffs Harbour. The ASIC search of the company produced by the defendant in evidence shows that Mr Carpi is a shareholder in the company and has been since 25 June 2008, but the company JV Aust is not a shareholder. The defendant produced a list of shareholders of Boambee Central Pty Ltd which he said was from the records of the company. The document is dated 2007 and shows JV Aust as a shareholder at that time. There was no clear evidence before me that the company JV Aust had any assets when it was deregistered.

12The notice to admit served by the plaintiff asked the defendant to admit the following matters:

“21. In or about 2 December 2012, JV Aust Investments Pty Ltd had no assets.

22. On or about 2 December 2012, JV Aust Investments Pty Ltd had no realisable assets.”

13In view of the other evidence about the deregistration of the company and the management of that company in the years prior to the deregistration, by the defendant as its sole director and shareholder, I consider that there would be little basis for permitting the defendant to withdraw the deemed admissions of those paragraphs of the notice to admit.

14The quantum of the claim has been proved by certificates filed by a bank officer in accordance with the guarantee. In the circumstances, it is appropriate for judgment to be entered for the plaintiff against the defendant for the amount of $539,125.18, which includes interest to date, as set out in the certificate.

15The third party proceeding, as between the defendant and Mr Carpi, has also been heard today. In the third party proceeding, the defendant seeks, “A declaration that the defendant is entitled to be indemnified by the third party against any judgment including costs which the plaintiff may obtain in this proceeding. Alternatively a declaration that the defendant is entitled to contribution as to the Court seems just and equitable”.

16The defendant has not paid any money in respect of the guarantee to the bank. The bank has apparently not pursued Mr Carpi. There was a third guarantor, the company PIA Finance Pty Ltd. That company is not a party to the present proceeding. I did hear some evidence from the defendant and from Mr Carpi in relation to the purpose of the facility which has given rise to the present proceeding. Although it was not part of the bank’s case, plaintiff’s counsel has informed me that, pursuant to the facility, there were 3 draw-downs and one payment in reduction of the facility.

17I consider that it would not be appropriate to determine the third party proceeding at this time, in the absence of any payment by the defendant or the third party to the bank and in the absence of hearing from the third guarantor or some explanation as to why it would be unnecessary or inappropriate for that company to be part of the third party proceeding. Further, the evidence given as to the benefits derived from the facility was inadequate for me to determine any question of contribution between guarantors.

18The third party’s counsel agreed that in the circumstances it would not be appropriate for a final determination to be made on the third party proceeding. I have therefore proposed orders which will defer any further consideration of that matter, at present, and I will receive further submissions from the parties in that regard.

- - -

Certificate

I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 23 May 2013 and revised on 24 May 2013.

Dated: 24 May 2013

Catherine Kusiak

Associate to His Honour Judge Anderson