National Builders Group Pty Ltd v Jademark Homes Pty Ltd

[2012] VCC 1521

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
EXPEDITED CASES DIVISION

Case No. CI-11-03372

NATIONAL BUILDERS GROUP PTY LTD & ANOR	Plaintiffs
v.
JADEMARK HOMES PTY LTD & ANOR	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	8 October 2012
DATE OF JUDGMENT:	8 October 2012 (revised 8 October 2012)
CASE MAY BE CITED AS:	National Builders Group Pty Ltd & Anor v Jademark Homes Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2012] VCC 1521

REASONS FOR JUDGMENT

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Catchwords:             Guarantee – Discrepancy between description of “licensor” in the licence agreement and the guarantee and indemnity – Whether definition of “licensor” is the licence agreement applied to the guarantee and indemnity

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr N. Pane	Mills Oakley Lawyers
For the Defendants	(No appearance)

HIS HONOUR:

1The trial of the action has proceeded today; the defendants did not appear. The plaintiffs are two companies which are now in liquidation. The business of the plaitniffs involved “facilitating the construction of domestic dwellings by marketing copyright plans and designs to potential homebuyers and introducing them to registered builders with whom it has licence agreements”.

2On 23 July 2008, the plaintiffs entered into a licence agreement with the first defendant. The first defendant is sued for the balance of moneys owing to the plaintiffs including an annual licence fee and other licence fees payable as a result of the plaintiffs’ facilitating the entry by the first defendant into agreements with prospective purchasers of domestic dwellings. The second defendant is sued as guarantor of the obligations of the first defendant pursuant to the licence agreement.

3The defendants were originally represented by solicitors and filed a defence and counterclaim on 16 September 2011. Later, the defendants’ solicitors withdrew. The second defendant represented himself and sought leave to represent the first defendant at various interlocutory hearings. The defendants were given the opportunity to make application to amend their defence and counterclaim. They did not pursue that opportunity. The second defendant was given the opportunity of seeking leave to represent the first defendant at trial; he did not pursue that opportunity.

4As a result of the liquidation of the plaintiffs, the defendants needed leave to pursue their counterclaim against the plaintiffs. This required leave from either the Supreme Court or the Federal Court; no such leave was obtained. In the circumstances, the bases for the defendants to defend the action were limited.

5The second defendant alleged that the second plaintiff was “not a party to the purported guarantee and indemnity”. The licence agreement dated 23 July 2008 is in evidence. The defendants admit that they “signed page 17 of the said document”. The document comprises 18 pages. Page 17 is the third of three pages comprising schedule C, headed “Guarantee and Indemnity”. Under the heading, the following is noted:

“National Builders Group Pty Ltd (ABN 96 092 675 164) of level 4, 150 Albert Road, South Melbourne, in the State of Victoria (Licensor).

The party described in item [2] of schedule A (guarantor)”.

6Clause 5.1 of that schedule provides that “defined terms in the licence agreement have the same meaning in this document”. In the licence agreement on page 2, it refers to “National Builders Group Pty Ltd (ABN 96 092 675 164) and Homes Now Pty Ltd (24 118 294 714) of level 4, 150 Albert Road, South Melbourne in the State of Victoria (herein and after referred to as ‘the licensor’) and the licensee described in item 2 of the schedule hereto (herein and after referred to as ‘the licensee’).”

7Plaintiffs’ counsel Mr Pane submitted that the licence agreement, including the schedules, and particularly schedule C headed “Guarantee and Indemnity”, should be read as a whole and that therefore, the guarantee should be read as providing that the “individual” Maric Sekic, referred to in schedule A on page 12 of the agreement, should be regarded as “the guarantor”, Jademark Homes Pty Ltd as “the licensee”, and both National Builders Group Pty Ltd and Homes Now Pty Ltd as “the licensor”.

8From a reading of the provisions of the licence agreement, including the obligations of the guarantor in schedule C, I consider it appropriate that the interpretation urged by Mr Pane should be accepted.

9The amounts claimed by each of the plaintiffs is set out in schedules attached to the Statement of Claim. In relation to the first plaintiff, it includes an annual licence fee of $5,500, which is the fee set out in item 4 of schedule A to the licence agreement of $5,000 per annum, to which GST must be added. The other amounts claimed by the first plaintiff and the second plaintiff are the amounts set out in invoices raised by the plaintiffs in respect of projects where the plaintiffs introduced potential home buyers to the first defendant.

10An amount of $11,001.13 was claimed in relation to the job of Dhokia. The invoice at page 1341 of the Court Book, refers to that amount as the total of the invoice but then notes “less deposit paid $8,548.94”. Mr Barry Suckling, a former director of the plaintiffs, said that the invoice had noted the payment of a deposit of $8,548.94 in error. He said that, whilst he did not have personal knowledge of the financial arrangements in relation to this particular project, and no reference could be made to any other documentation of the first plaintiff which confirmed that an error had been made, from his study of the invoice and his knowledge of similar errors made in other instances, he was satisfied that the purported deduction was incorrect. In the absence of more direct evidence, I have not accepted Mr Suckling’s evidence, and accordingly, the claim of the first plaintiff has been reduced by the amount said to represent a deposit paid.

11As a consequence, I consider that the appropriate orders in the circumstances are as follows:

a.    Judgment for the first plaintiff against each defendant that the defendants pay to the first plaintiff the sum of $118,490.25, together with interest pursuant to statute from 13 July 2011 to today of $15,448.89, making a total of $133,939.14.

b.    Judgment for the first plaintiff against each defendant that the defendants pay to the second plaintiff the sum of $85,271.01, together with interest pursuant to statute from 13 July 2011 to today of $11,117.73, making a total of $96,388.74.

c.     The first defendant is to pay the plaintiffs’ costs of the proceeding, including any reserved costs, to be taxed on a party party basis in default of agreement.

d.    The second defendant is to pay the plaintiffs’ costs of the proceeding, including any reserved costs, to be taxed on an indemnity basis in default of agreement.

e.    In relation to paragraphs 3 and 4, each order for costs shall be subject to the taking account of any amount recovered by the plaintiffs from either defendant.

12. I have made an order in respect of indemnity costs against the second defendant. Pursuant to the guarantee and indemnity, the guarantor had “an independent principal obligation” to indemnify the licensor “against all liability, loss, damage, costs or expense suffered or incurred by the licensor…as a result of the licensee’s defaulting performing, any part of its obligations under the licence agreement or paying any guaranteed money”.

13.In these circumstances, I consider that the second defendant’s liability as guarantor extends to the payment of indemnity costs in respect of the plaintiffs’ claim

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Certificate

I certify that the preceding 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 8 October 2012 and revised on that day.

Dated: 8 October 2012    

Catherine Kusiak

Associate to His Honour Judge Anderson