Osborne v Drive Park Pty Ltd (Trading as Austral Meat) - [2004] SASC 261

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
OSBORNE v DRIVE PARK PTY LTD (TRADING AS AUSTRAL MEAT)
Judgment of The Honourable Justice White
27 August 2004
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - MAGISTRATES COURT
Appeal from decision of a Magistrate - Appellant filled in respondent's standard "Credit Application" form - Application included provision for the appellant to provide a directors' guarantee - Form sent to appellant by facsimile - Some of the conditions were obscured in the facsimile process - Appellant returned the form also by facsimile - Appellant filled out most of the form but left blank the space for the company's name in relation to the directors' guarantee - Still clear which company was the subject of the guarantee - Guarantee enforceable - No unconscionable conduct on part of respondent - No misleading and deceptive conduct on part of respondent - Appellant was not under a special disability - Defence of non est factum not available - Magistrate did not err in rejecting appellant's evidence - Respondent not in breach of pleadings rules as defence to counterclaim not required - Appeal dismissed.
Magistrates Court Act 1991, s 40; Trade Practices Act 1974 (Cth), s 51AC, referred to.
York Air-conditioning and Refrigeration (A/Asia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; Upper Hunter County District Council v Australian Chilling and Freezing Company Ltd (1968) 118 CLR 429; Kelly v Locklin (1912) 8 DLR 1039; Devries v Australian National Railway Commission (1993) 177 CLR 472; Fox v Percy (2003) 214 CLR 118, applied.
Garcia v National Australia Bank (1998) 194 CLR 395; Blomley v Ryan (1956) 99 CLR 362; CBA v Amadio (1983) 151 CLR 447, distinguished.
Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; Ankar v National Westminster Finance (Australia) Limited (1987) 162 CLR 549; Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290; NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68, considered.

OSBORNE v DRIVE PARK PTY LTD (TRADING AS AUSTRAL MEAT)
[2004] SASC 261
Civil
WHITE J:
Introduction

This is an appeal, brought pursuant to s 40 of the Magistrates Court Act 1991, from a decision of Ms Eldridge SM delivered on 25 February 2004 in the civil jurisdiction of the Magistrates Court.
By that decision, the Magistrate found that the appellant (the defendant in the proceedings at first instance) was liable to the respondent (then the plaintiff) under the terms of a guarantee dated 27 September 2000. Judgment was entered against the appellant in the sum of $15,458.11 in addition to costs.
The Parties
The respondent is (and was in September 2000) a supplier of meat: it buys livestock, kills it, and after processing the meat, sells it to a large number of food service and retail outlets. It has been in this business since 1986 and trades under the name “Austral Meat”.
In September 2000, Hahndorf Smallgoods Pty Ltd (“Hahndorf Smallgoods”) was engaged in the manufacture and sale of smallgoods. It obtained the meat for this purpose from a variety of suppliers. The Magistrate accepted that it had not, prior to 27 September 2000, acquired meat from the respondent.
The appellant was employed by Hahndorf Smallgoods. He was also its sole shareholder. His former wife, from whom he divorced in May 2001 (ie, after the events giving rise to the respondent’s claim), was its sole director. The appellant described his role as being that of a smallgoods maker together with buying in the raw products. His former wife attended to the administration of the company.
Background Circumstances
On 27 September 2000, Hahndorf Smallgoods had an order which it had to fill urgently. The appellant telephoned the respondent. He spoke to the respondent’s sales manager, Mr Nottage, and said he wished to place an order for the required meat. There was a dispute at trial about what then happened. The Magistrate found that the appellant spoke to Mr Nottage and later to Mr Potter, a director of the respondent. The respondent’s standard application form for a credit account, which included provision for a director’s guarantee, was faxed to Hahndorf Smallgoods at 9.45 am on 27 September 2000. In these reasons, for convenience, I will refer to this document as “the Credit Application”. The Magistrate found that the Credit Application was filled out, albeit incompletely, signed by the appellant, and returned by facsimile to the respondent on the same day at 10.41 am.
In its original form, the Credit Application comprised two pages. The first page contained the application for credit, requiring details of the applicant, and in the case of a company, requiring details of the directors. The first page also contained provision, in the case of a company applicant, for the personal guarantee by the directors of the company’s debts. The second page, which was on the reverse side of the first, contained the respondent’s terms of trade, and provision for signature certifying the correctness of the details provided. The Credit Application, as printed out by the respondent’s facsimile machine when returned by the appellant, was Exhibit P2 at the trial. Exhibit P2 had been printed out on 27 September 2000 as one continuous sheet on thermal paper. There was, apparently, no accompanying facsimile cover page.
In the form in which Exhibit P2 had been received at the respondent’s office at 10.41 am on 27 September 2000, a portion of the first page had been overlayed (apparently as a result of a mishap in the transmission) on a portion of the second page, thereby obscuring about one-third of the printed terms of trade. The appellant’s evidence was that the document had also been in that form when received, completed and signed by him. The Magistrate made no specific finding about the overlaying, as I have called it, of the two pages, nor as to when it occurred, nor as to its significance, if any. The Magistrate did say however, that she did not accept the evidence of the appellant relating to the circumstances of signing the Credit Application form and director’s guarantee.
The Magistrate rejected evidence of the appellant that at the time he completed and signed the Credit Application, he had not been able to read the document. Her Honour did not accept that the fact that certain of the spaces in Exhibit P2 had been left blank meant that the terms of the guarantee were vague or uncertain so as to make the contract unenforceable. The Magistrate found that the appellant was a person who was experienced in business dealings and found, contrary to the appellant’s assertions in evidence, that he did understand the nature and effect of a guarantee at the time that he signed the document.
The Magistrate rejected the appellant’s plea that he had been induced to enter into the guarantee by misrepresentations or misleading and deceptive conduct by Mr Nottage and/or Mr Potter. Finally, the Magistrate rejected a submission that the guarantee could not be enforced because the respondent had allowed Hahndorf Smallgoods to depart from the terms of its trading agreement, namely, it had continued to supply product to Hahndorf Smallgoods even though Hahndorf Smallgoods was not making payment as required within seven days of delivery.
The Appeal
The notice of appeal contains 38 grounds of appeal, each alleging a separate error by the Magistrate. Admittedly, some are in the nature of particulars of more general grounds, but it does seem that the appellant makes complaints about almost every, if not every, finding or conclusion of the Magistrate which was adverse to him. However, on the appeal, Mr Viscariello, who appeared for the appellant, addressed his submissions to some particular matters only. I will consider those matters in turn.
Incompleteness of the Contract
The appellant submitted that the contract was incomplete in two respects, so as to make it unenforceable.
The section in the Credit Application providing for the guarantee by directors appeared immediately below that section seeking details about the applicant for credit. In the form completed by the appellant, Hahndorf Smallgoods was named as the applicant for credit, and its Australian Company Number, address, telephone and facsimile numbers, contact person, and banker details were given. Two trade referees were named. Under the space for name and address of directors, the names and addresses of the appellant and his former wife were entered.
The section in the Credit Application providing for the guarantee was prefaced with these words:
“IF THE APPLICANT IS A COMPANY THE DIRECTORS ARE REQUIRED TO COMPLETE THE FOLLOWING GUARANTEE.”
Immediately under those words, the following words were printed in bold capitals:
“PERSONAL GUARANTEE BY DIRECTORS OF PAYMENT OF COMPANY DEBTS”
The operative words of the guarantee were then printed. Save for one respect to which I return, it is unnecessary in these reasons to quote those operative words. After the operative words, there followed a space for signature by the guarantor, in which the appellant entered his signature and opposite that wrote his name and address in the space provided.
Of significance to the present submission is that the appellant did not make any entry in the space for the name and address of the company to whom the respondent was to extend credit and in consideration of which the guarantee was being provided. Thus the operative words of the guarantee commenced with the following:
“To Austral Meat ACN 005 112 972
For value received and in consideration of the credit which (sic) hereafter granted to …………(Company name) of …………(Company registered office)
(hereinafter called ‘your customer’ I Don Osborne …. Guarantee …”
and then follow the operative words. In the document completed by the appellant, the spaces for company name and company registered office were left blank.
The appellant contended that these omissions were fatal to the validity of the guarantee. It was submitted that the identification of the customer was essential to the operation of the guarantee. I agree that it is essential to the validity of the guarantee that the identity of the customer be known, but do not agree, in the circumstances of this case, that the absence of entries in the spaces for name and address of the company customer makes the guarantee so incomplete as to be unenforceable.
Courts try to uphold bargains. Where it is clear that the parties intended to make a contract, courts will, if possible, give effect to that intention, even when difficulties of construction or difficulties because of incompleteness arise: York Air-conditioning and Refrigeration (A/Asia) Pty Ltd v The Commonwealth (1949) 80 CLR 11 at 26 per Williams J; Upper Hunter County District Council v Australian Chilling and Freezing Company Ltd (1968) 118 CLR 429 at 437 per Barwick CJ.
In the present case, it is clear enough that the customer whose obligations were being guaranteed was Hahndorf Smallgoods. This can be inferred from the fact that the contract of guarantee was included on the first page of the document by which Hahndorf Smallgoods applied for credit. It can also be inferred from the words with which the section in the Credit Application providing for the guarantee is prefaced. I have quoted those words above. No other company, as customer, is identified on the first page of the Credit Application. In my opinion, the inference is so strong that any other conclusion would be highly artificial.[1]
[1] Cf Kelly v Locklin (1912) 8 DLR 1039
Alternatively, I consider that any uncertainty as to the identity of the customer can be resolved by resort to extrinsic evidence. Such evidence is admissible to identify the subject of a contract. On this alternative basis, regard can be had to the application for credit which the guarantee accompanied in order to identify the customer whose obligations were being guaranteed: Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290 at 310; NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68 at 76.
Secondly, it was submitted that the obscuring of some of the terms of trade contained in the second page of the Credit Application meant that the contract was incomplete and therefore uncertain. In considering this submission, I will proceed on the footing that the overlaying occurred in the facsimile transmission of the credit application from the respondent to Hahndorf Smallgoods at 9.45 am on 27 September 2000. This is what the appellant submitted had occurred, although I regard the evidence about that as being somewhat equivocal. The document which was received in the office of Hahndorf Smallgoods and completed, and which was the document the facsimile of which was received by the respondent at 10.41 am on 27 September 2000, was not tendered in evidence. Perhaps this was because it is in the possession of Hahndorf Smallgoods which is in liquidation and with which the appellant no longer has any association.
I reject the submission as to unenforceability because of uncertainty based on the overlaying part of the two pages of the Credit Application. I do so for two reasons.
First, the portion of the document which was obscured was part of the document containing the terms of the trading agreement. Those terms are more relevant to the agreement between the customer and the respondent, rather than to the agreement between the appellant and the respondent, but I acknowledge that that consideration is not decisive.
Secondly, if the appellant’s evidence is to be understood, as Mr Viscariello contended, as containing a positive statement that the pages were overlayed when received by Hahndorf Smallgoods, and when completed and executed by him, ie, that he was conscious of the document being in that condition at that time, then it appears that the appellant chose, nevertheless, to go ahead and sign it both on behalf of Hahndorf Smallgoods, and in his own right as the guarantor, knowing that the document was in that state. That could have two consequences: the first that it is the document in its partly obscured (and incomplete) state, which comprises the contract between Hahndorf Smallgoods and the respondent and therefore the obligations guaranteed by the appellant. That is to say, the contract comprises the terms which were visible, and only those terms. Alternatively, the appellant’s signature on the document in its partially obscured state indicated an acceptance by him, both in his own right and on behalf of Hahndorf Smallgoods, of the respondent’s standard terms and conditions which were contained in its pro forma Credit Application. In either case, the contract would not fail for incompleteness.
Of these two alternatives, I prefer the latter. The document has all the hallmarks of a standard form. I note in passing that Mr Potter, whose evidence the Magistrate accepted, described the document as the respondent’s “regular application”. Viewed objectively, the appellant’s signature on the document in its partially obscured state is consistent with a presumed acceptance by him of those terms contained in the printed document, the original of which had been facsimiled to him.
I agree with the appellant that the issues said to arise from the overlay of portions of the two pages were not dealt with in the Magistrate’s reasons. However, for the reasons given above, I do not consider that the grounds of appeal, which rest on incompleteness or uncertainty, are made out.
The Evidence Of The Conversation Between Mr Potter And The Appellant
Next, the appellant submitted that the Magistrate erred in permitting the respondent to lead evidence from Mr Potter as to the conversation he had with the appellant on the morning of 27 September 2000. The evidence of that conversation should not have been permitted, so the appellant submitted, because the material said to arise from that conversation had not been pleaded.
Mr Potter gave evidence-in-chief to the effect that after Mr Nottage told him, on the morning of 27 September 2000, of the appellant’s interest in purchasing meat, he (Mr Potter) then spoke to the appellant. He told the appellant that Hahndorf Smallgoods would first need to complete a Credit Application, that a director’s guarantee was required, and that the terms would be “seven days”. This evidence was led without objection. However, immediately before commencing his cross-examination of Mr Potter, Mr Viscariello submitted that the Magistrate should not pay any regard to that evidence because it had not been pleaded by the respondent. In this Court, Mr Viscariello identified two matters which, he submitted, should have been pleaded by the respondent and were not. First, he submitted that it should have been pleaded that it was Mr Potter who had the relevant conversation with the appellant on 27 September 2000. Secondly, Mr Viscariello submitted that the respondent should have pleaded that Mr Potter told the appellant that the Credit Application included a requirement for a director’s guarantee and also Mr Potter’s explanation of the terms of trade, ie, “seven days”.
After hearing Mr Viscariello, the Magistrate indicated that she proposed, at that stage, “to leave the evidence in”. She indicated that if necessary she would make a ruling later. By that, I take it that the Magistrate indicated a willingness to hear further submissions later if Mr Viscariello wished but that in the meantime the trial was to proceed on the basis that the evidence had been received.
It is unclear whether any further submissions were made to the Magistrate on this topic. In any event, in her reasons for decision, the Magistrate rejected the appellant’s submission that she should disregard Mr Potter’s evidence. Her Honour referred to the practice of requiring and permitting “short form” pleadings only in the Magistrates Court and to the absence of any request by the appellant for further and better particulars of the respondent’s claim.
It would be unusual, in my opinion, for a court to rule that it would not have regard to evidence received without objection, which evidence was otherwise relevant to an issue in the case before it, because the material facts said to arise from that evidence had not been pleaded. In the circumstances of this case, the Magistrate was justified, in my opinion, in having regard to this evidence of Mr Potter.
The Magistrate was correct in holding that the respondent was not in breach of the pleading rules of the Magistrates Court. The Magistrates Court (Civil) Rules1992 require simplified pleadings only. If a party considers that a more detailed pleading is required, it must obtain an order from the court to that effect. This is apparent from Rules 24, 30, 31 and 34 of the Magistrates Court (Civil) Rules. The appellant had not made any application for such an order.
Rule 24 provides:
“24(1)(a) Subject to any order of the Court a short form of pleading disclosing the date(s), place(s), circumstances and the cause of action upon which the action is based is sufficient.
(b)If the Court requires a more detailed pleading the pleading must comply with the Supreme Court Rules 1987.
(2)…
(3)…
(4)…
(5)No pleading, beyond a reply, is allowed except with leave of the Court.”
Thus Rule 24 has the effect that a short form pleading is sufficient unless the Court requires a more detailed pleading. Ordinarily, the Court would only make an order for a more detailed pleading on an application by the opposing party for such an order. If the Court makes an order for a more detailed pleading, that pleading must then comply with the Supreme Court Rules 1987, in particular, Rule 46A.

Rule 30(1) provides:
“To defend an action (other than an action under Rules 26A, 37 and 38) a person must file the defence in Form 4, which may be filed at any Registry of the Court.”
Form 4 to the Rules contains provision for “Particulars of Defence” and requires a defendant to “state any part of the plaintiff’s claim which is admitted or denied and briefly state any defence”. This appears to require the defendant to plead positively the grounds of defence.
Rule 31 provides:
“A counterclaim or set off must be filed at the same time as the defence and in Form 5”.
The Form 5 to the Rules contains provision for particulars of the counterclaim to be provided and requires that the counterclaimant:
“briefly state the date, place and circumstances from which the counterclaim arose and the cause of action and the relief sought. Where the counterclaim is for damages, the amount claimed for each head of damages must be given”.
Thus the requirements for the pleading of a counterclaim are similar to those for the pleading of a claim.
Rule 34 of the Magistrates Court (Civil) Rules provides:
“(1) A plaintiff will be taken to have a filed a defence forthwith to a counterclaim or set-off, and pleaded to the general issue.
(2)A defendant may require a plaintiff to provide particulars of a defence to a counterclaim or set-off.”
Thus, Rule 34 does not require a plaintiff, against whom a defendant has filed a counterclaim, to file a defence. Instead, the plaintiff is “taken” to have filed a defence forthwith and to have put in issue the matters raised by the counterclaim. If the defendant making the counterclaim seeks particulars, it may require that of the plaintiff. If the plaintiff does not provide them voluntarily, the defendant can apply to the Court for an order for further and better particulars of the defence to the counterclaim.
In the present case, the plaintiff’s claim was filed on 2 August 2001. The Particulars to the claim, which were attached, were in the short form contemplated by Rule 24. The plaintiff (now the respondent) pleaded the application for credit, the provision of the guarantee, the supply of goods on credit and the failure of Hahndorf Smallgoods to pay for those goods.
For reasons which are not presently clear, a defence was not filed until approximately 12 months later. That defence, amongst other things, alleged misrepresentations to the appellant by a “salesman” of the respondent as to the requirements and significance of the Credit Application. The pleading alleged that the misrepresentations constituted misleading or deceptive conduct which relieved the appellant of any liability which might otherwise have arisen. The Magistrates Court Rules did not require the filing of a reply. The appellant did not make application that the respondent should file a reply setting out in detail its response to the allegations made in the defence.
The trial of the matter was listed for 6 November 2003. On 27 October 2003, the respondent made an interlocutory application for leave to amend the defence. That leave, which included leave to file a counterclaim, was granted on 29 October 2003. In the amended defence and counterclaim, the appellant again pleaded misleading or deceptive conduct “by the plaintiff’s salesman whose identity and name the defendant cannot now recall”. The respondent did not file a defence to the counterclaim but, as noted above, it was not required to do so. If the appellant sought a pleading specifying the respondent’s defence to the counterclaim, then it should have made application to the Magistrates Court for an order to that effect. As I understand it, no such application was made.
Thus, I am not satisfied that the respondent was in breach of the relevant Rules as to pleadings.
Even if there had been a breach of the pleading Rules, it would be an unusual case in which the evidence would be excluded on that account. The evidence of Mr Potter, which was impugned, was directly relevant to the claim of the respondent that he was victim of misleading or deceptive conduct. That being so, even if the Magistrate thought that the evidence was outside the pleadings, it would have been appropriate to receive the evidence and to allow an amendment to the pleading unless there was a form of incurable prejudice to the appellant. It is difficult to identify any prejudice, let alone incurable prejudice. Had the matters about which the appellant complained been pleaded, it is doubtful that the appellant’s preparation for, and conduct of, the trial would have been any different.
When pressed, Mr Viscariello identified the prejudice as an absence of time within which to pursue applications for further and better discovery, or in which to obtain instructions, or in which to prepare cross-examination, and a loss of opportunity to call rebuttal evidence. I doubt, in the circumstances, whether any of those matters constituted a relevant prejudice. Discovery had already been given and it is unlikely that the respondent had any further relevant documentation. There were unlikely to have been any witnesses, other than the appellant, who could give “rebuttal” evidence. Mr Viscariello did not identify any such witnesses. However, it is unnecessary to consider those aspects further because, if there was prejudice, that should have been put to the Magistrate, and if it was thought necessary, an adjournment sought. Mr Viscariello acknowledged that no application for an adjournment had been made.
In all these circumstances, and in particular having regard to the circumstance that no submission of prejudice was made to the Magistrate, and that no application for adjournment was made, I do not consider that this ground of appeal is made out. For similar reasons, the complaint that the Magistrate should not have permitted the respondent to tender in evidence, two documents which had not been discovered, should be rejected. If the absence of discovery prejudiced the appellant, the Magistrate would no doubt have considered sympathetically an application for an adjournment. No such application was made.
Rejection Of Appellant’s Evidence
The appellant submitted that having refused to disregard the evidence of Mr Potter, the Magistrate erred in preferring the evidence of Mr Potter and Mr Nottage to that of the appellant.
The Magistrate formed an unfavourable view of the appellant’s evidence. As noted above, the Magistrate did not accept the evidence of the appellant relating to the circumstances of the signing of the Credit Application form and director’s guarantee.
The Magistrate rejected the appellant’s evidence that he had not been able, even with glasses, to read the Credit Application form which was facsimiled to him. That conclusion seems well justified given that the document had been completed by the appellant with appropriate entries into most of the relevant spaces. Furthermore, the Magistrate observed that the appellant, without glasses, read portions of the Credit Application form whilst in the witness box. These considerations alone would have seriously undermined the appellant’s credibility. The Magistrate also found that the appellant had more business experience than he was prepared to concede. That finding, too, appears well justified.
The Magistrate had the advantage of seeing and hearing the witnesses. Her assessment of their evidence depended very much on her assessment of their credibility. The circumstances in which appellate courts interfere with findings based on credibility are limited. If a Magistrate’s findings depend to any substantial degree on the credibility of a witness, that finding stands on appeal unless it is shown that the Magistrate has failed to use, or has palpably misused, his advantage, or has acted on evidence which is inconsistent with facts incontrovertibly established by the evidence or which is glaringly improbable: Devries v Australian National Railway Commission (1993) 177 CLR 472 at 479. See also Fox v Percy (2003) 214 CLR 118.
In the present case, it cannot be said that the Magistrate has misused her advantage. On the contrary, her findings appear well justified. The appellant’s claim that he had been unable to read the document, even with glasses, seems implausible. His claim that he was unaware that he was signing a guarantee also seems implausible given the bold printing in capitals with which the section containing the guarantee was prefaced.
There is one particular finding which was specifically attacked on the appeal and which should be addressed separately. The appellant gave evidence to the effect that he was unaware that Hahndorf Smallgoods was operating outside the stipulated seven day trading terms, and that in some cases its payments were made many weeks after supply, and in other cases not at all. The Magistrate rejected that claim of the appellant. Her rejection was based in part on a statement made by the appellant in an affidavit sworn on 28 August 2002 in which the appellant stated:
“I was responsible for making and supervising the making of all of the smallgoods products made by the Company including ordering all the raw products and ingredients for the smallgoods. As part of my job I had to call supplies and order the meat and other products when we needed it. I got to know a few of the sales reps for some of the meat companies and I used to speak to them about ordering products. I recall that the plaintiff was one of the companies that I used to call to order meat.”
By reason of his involvement as disclosed in that affidavit, the Magistrate held that the respondent was aware of any difficulties with any of the suppliers of Hahndorf Smallgoods, and, by implication, of the state of its trading account with the respondent. The appellant complained of this finding, arguing that it did not follow from his involvement in placing orders that he thereby knew the state of the Hahndorf Smallgoods account with each supplier. That was a matter, he said, known to his former wife, who was responsible for the administration of the company and the payment of its accounts.
I think there is substance in this complaint of the appellant. Whilst it may have been the case, as the Magistrate concluded, that the appellant knew the state of the company account with other suppliers, there is very little evidence to support the existence of such knowledge in respect of its account with the respondent. It seems likely that the person with whom the appellant was accustomed to speak when he (and it was not always the appellant) placed orders with the respondent was Mr Nottage. However, Mr Nottage said that with the exception of one occasion relatively late in the trading history, he had not spoken to the appellant about the state of the Hahndorf Smallgoods account. In that circumstance, it could not safely be concluded that the appellant was aware, by virtue of his having placed orders with the respondent, of the status of the Hahndorf Smallgoods account with the respondent.
However, the Magistrate did not use her conclusion on this topic as part of her assessment generally of the credibility and reliability of the appellant. Rather, the Magistrate used this finding as part of her decision that the appellant was not relieved of liability under the guarantee because Hahndorf Smallgoods had been permitted to trade outside the respondent’s trading terms. For reasons which I will address below, this defence fails in any event on other grounds.
Misleading Or Deceptive Conduct
The appellant submitted that the Magistrate had erred in failing to find that the respondent had engaged in misleading or deceptive conduct.
The conduct said to be misleading or deceptive was said to be statements alleged by the appellant to have been made by Mr Nottage to him to the effect that the Credit Application form was required only so that the respondent could “tidy up its paperwork”, and do a credit check on Hahndorf Smallgoods; that it was nothing to worry about as all of the respondent’s customers had to sign such a document; and the failure to alert the appellant to the fact that a director’s guarantee was also required. The appellant claimed that he relied on these representations in executing the document, whilst at the same time claiming that he did not know that he was providing a guarantee.
The Magistrate rejected the evidence of the appellant on these topics. Her Honour accepted the evidence of Mr Nottage and Mr Potter. The Magistrate found that the appellant was aware of the nature of the document he was signing. These findings were very much based on the Magistrate’s assessment of the credibility of the respective witnesses. For the reasons outlined above, there is no basis for interference with those findings on appeal.
Unconscionability
Mr Viscariello submitted that the Magistrate was in error in failing to find that the respondent had engaged in unconscionable conduct in obtaining the guarantee from the appellant.
The submission was that the appellant was in a position of special disadvantage on 27 September 2000 and that the respondent had taken advantage of that position. As I understand it, the appellant’s position of special disadvantage was said to arise from the following circumstances:
(a)Hahndorf Smallgoods required a supply of meat urgently, and that fact was know to the respondent.
(b)The respondent knew that the appellant had the credit application for less than one hour before executing it and returning it.
(c)Although the appellant had been a maker of smallgoods for 30 years, he had had a limited education (having left school at Year 7) and had never been involved in the administration or paperwork of a business.
(d)The respondent had not alerted him to the fact that the Credit Application form contained a guarantee nor advised him to obtain advice about it before executing it.
(e)The appellant’s eyesight was such that he could not read the document.
(f) The appellant’s health at 27 September 2000 was impaired.
(g)The respondent must have known that overlaying had occurred at some stage in facsimile transmission of the document and yet had taken no steps to enquire whether Hahndorf Smallgoods or the appellant had the complete two pages.
(h)The respondent had made no enquiry as to the capacity of the appellant to understand the obligations he was undertaking by providing a guarantee.
In support of the submission on unconscionability, the appellant relied on a decision of the High Court in Garcia v National Australia Bank (1998) 194 CLR 395 and s 51AC of the Trade Practices Act 1974 (Cth).
The Magistrate made no specific finding with respect to the alleged unconscionability. It is unclear whether the submission was pursued actively at trial. In any event, I do not consider that a conclusion that the respondent had acted unconscionably was open on the evidence and on the Magistrate’s findings.
Some matters relied upon by the appellant in support of this submission are entirely without substance, or are not open having regard to the Magistrate’s rejection of substantial parts of the appellant’s evidence. Contrary to the appellant’s submission, he had been informed that the respondent required a director’s guarantee. His evidence that he could not read the document was rejected. In any event, there was no evidence that the respondent was aware of any inability on his part to read the document. There was no evidence to support the submission that the appellant had left school at Year 7, and, on the appellant’s own evidence, he had previously operated businesses of his own, both as part owner and as manager. As at 27 September 2000, the appellant was not uneducated or inexperienced.
The evidence about impairment of the appellant’s health was scant. The appellant said that he had stopped working in January 2001 because of a “breakdown”. Exhibit P6 was a letter from Hahndorf Smallgoods, signed by the appellant’s former wife, addressed to its suppliers. Exhibit P6 included the following sentence:
“In the latter part of 2000, Don’s health deteriorated to a point where he is no longer able to work”.
Neither of those pieces of evidence were directed to the appellant’s health as at 27 September 2000. There was no other evidence as to the appellant’s health as at that date. Further, there was no evidence suggesting that the respondent had notice of any ill health of the appellant as at that time. Neither Mr Potter nor Mr Nottage were cross-examined on this topic.
It is true that the respondent did not advise the appellant to obtain advice before executing the guarantee, nor did it make any inquiry about the appellant’s capacity to understand the document. But there was no obligation to do so. Contrary to the appellant’s submission, Garcia v National Australia Bank does not establish a general proposition that a creditor is obliged to ensure that a guarantor understands the nature and effect of the guarantee before it is executed, nor does it establish that where a creditor fails to do so, that the guarantee will be set aside as unconscionable.
Garcia establishes that a court may refuse to enforce a guarantee on the grounds of unconscionability in circumstances where:
(a)As a matter of fact, the guarantor did not, at the time of executing the document, understand the purport and effect of the transaction;
(b)The transaction was voluntary, in the sense that the guarantor obtained no gain from the contract the performance of which was guaranteed;
(c)The creditor may be taken to have known that the guarantor was relying on another whom he orshe trusted to explain fully and accurately the purport and effect of the transaction and to have known of the risk that that person may not give such an explanation; and yet
(d)The creditor did not itself take steps to explain the transaction or satisfy itself that someone else had.[2]
None of the circumstances (a), (b), nor (c) exist in the present case. Nor did the transaction involve unusual circumstances which might have required additional disclosure, or additional enquiry, by the respondent: cf, CBA v Amadio (1983) 151 CLR 447 per Gibbs CJ at 457.
[2] See Garcia v National Australia Bank at 409
There is no basis in the circumstances of this case as found by the Magistrate for holding that the appellant was in a position of special disadvantage vis-à-vis the respondent. The facts of this case are very different from those of Blomley v Ryan (1956) 99 CLR 362; CBA v Amadio and Garcia v National Australia Bank.
Nor does s 51AC of the Trade Practices Act avail the appellant. Although the concept of unconscionability in s 51AC is not the same as that in the unwritten law, its content is similar. The authorities were reviewed by Selway J in Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491. Selway J held in relation to the meaning of the word “unconscionable” in s 51AC:
“For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable must be demonstrated … The term carries the meaning given by the Shorter Oxford Dictionary namely, action showing no regard for conscience or that are irreconcilable with what is right or reasonable … Various synonyms used in relation to the term ‘unconscionable’ import a pejorative moral judgment …”
The respondent’s conduct in the present case simply does not warrant a characterisation of that kind. The defence, and the appellant’s claim for relief, based on alleged unconscionability was not made out.
Departure From Terms Of Trade
The respondent’s terms of trade as specified in the Credit Application required payment “7 days from date of delivery”. In the course of its trading relationship, the respondent allowed Hahndorf Smallgoods to depart from those terms of trade without notice to the appellant. The appellant submitted, relying on Ankar v National Westminster Finance (Australia) Limited (1987) 162 CLR 549, that by reason of this conduct, he was relieved of his liability under the guarantee.

The Magistrate rejected this submission, finding that the appellant was, as a matter of fact, aware of the status of Hahndorf Smallgoods account with the respondent in any event. I have found above that that conclusion by the Magistrate cannot be upheld.
Nevertheless, I consider that the Magistrate’s rejection of this defence was appropriate for other reasons.
In Ankar, the creditor had expressly agreed with the surety that it would notify the surety if the debtor proposed to dispose of its interest in the goods leased to it (which were the subject of the guarantee) and that in the event of the debtor being in default under the lease agreement, it would notify the surety, and consult with it with a view to determining the course of action which should be taken. The creditor breached both obligations. Those breaches were held by the High Court to relieve the surety of liability to the creditor. The majority held that the two provisions breached by the creditor were conditions a breach of which, at the surety’s option, discharged it from performance of its obligations under the guarantee.
In my opinion, departure from the seven day terms of trade in the present case does not have that effect. First, the appellant’s seven day payment term was a requirement of its contract with its customer Hahndorf Smallgoods, requiring that Hahndorf Smallgoods make its payment within seven days. It identified the time when payment became due. It is not, in my opinion, to be construed as containing, in addition an implied promise to the appellant that no further supply would be made by the respondent to Hahndorf Smallgoods in the event that payment for a prior delivery was not made within seven days. Such a construction would have an air of unreality about it in the present case.
Secondly, and in any event, the conclusion that the seven day term was not an essential term of the contract between the respondent and the appellant is made plain by the following provision in the operative words of the guarantee:
“I/we hereby further waive notice of default in payment of any of the said indebtedness, and I/we hereby consent that without notice to me/us the time of payment of such indebtedness or any portion thereof may be extended from time to time after the same becomes due and that such indebtedness may from time to time be converted from any particular form to any other form, all without releasing or affecting my/our liability hereunder.”
Thus the appellant explicitly waived an entitlement to be told that Hahndorf Smallgoods was not adhering to the seven day period for payment. Further, the appellant explicitly accepted that the seven day period could be extended.
In these circumstances it cannot be said that the term for seven days payment in the contract between Hahndorf Smallgoods and the respondent also contained a promise by the respondent to the appellant that it would only supply whilst adherence to those terms was maintained.
In these circumstances, the fact that the respondent allowed Hahndorf Smallgoods more than seven days in which to make the payment does not relieve the appellant from liability under the guarantee.
Non Est Factum
Lastly, the appellant sought to rely on the doctrine of non est factum. The Magistrate does not deal with a defence based on this ground in her reasons. I suspect the reason for this is that the Magistrate took the view (reasonably, in my opinion) that this defence had not been raised in the pleadings. However, on the appeal, in his reply, Mr Vicariello submitted that non est factum had been raised and pointed to certain pleas in the defence which could underpin the defence.
It is unnecessary to discuss this defence in any detail.
The Magistrate found that the appellant “was aware of the nature of the document he was signing”. The Magistrate also found it “inherently improbable that the [appellant] would not understand the nature and effect of a guarantee”.
Those findings were open to the Magistrate. To a significant extent they depended, no doubt, on the Magistrate’s assessment of the appellant’s reliability and credibility. There is no basis for interference with those findings on appeal. Those findings are fatal to a reliance on the defence of non est factum in this case.
Conclusion
In my opinion, none of the grounds of appeal are made out. The appeal should be dismissed. The order of the Court is that the appeal is dismissed.