Padstow Corporation Pty Ltd v Fleming (No 2) - [2011] NSWSC 1572

Supreme Court

New South Wales

Medium Neutral Citation: Padstow Corporation Pty Ltd v Fleming (No 2) [2011] NSWSC 1572
Hearing dates: 31 October 2011, 1, 2, 3 & 4 November 2011
Decision date: 16 December 2011
Jurisdiction: Equity Division
Before: Gzell J
Decision:
Plaintiff entitled to damages on claim. First cross-claim succeeds. Second cross-claim fails. Third cross-claim discontinued on settlement. Fourth cross-claim fails. Damages to be assessed.

Catchwords: GUARANTEE AND INDEMNITY - Actions Against Surety - defence that not bound as signed as director of company and not in personal capacity - defence that guarantee unjust in terms of the Contracts Review Act 1980 - first cross-claim for breach of share sale agreement in failing to ensure transferor removed from guarantee - second cross-claim for misleading or deceptive statement in contravention of the Fair Trading Act 1987, s 42; negligence and equitable contribution from co-guarantor - third cross-claim discontinued - fourth cross-claim for negligence or breach of duty of care by solicitor
Legislation Cited: Corporations Act 2001 (Cth)
Contracts Review Act 1980
Fair Trading Act 1987
Fair Trading Amendment (Australian Consumer Law) Act 2010
Law Reform (Miscellaneous Provisions) Act 1946
Trade Practices Act 1974 (Cth)
Cases Cited: Padstow Corporation Pty Ltd v Fleming [2011] NSWSC 1337
Delaney v Purves [1930] QWN 6
National Commercial Banking Corporation of Australia Ltd v Cheung & Anor (1983) 1 ACLC 1,326
Ariadne Steamship Co v James McKelvie & Co [1922] 1 KB 518
NEC Information Systems Australia Pty Ltd v Linton (1985) NSW ConvR 55-240
Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909
Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160
Follacchio v Harvard Securities (Aust) Pty Ltd [2002] FCA 1067
St George Bank Ltd v Trimarchi & Anor [2004] NSWCA 120
Fast Fix Loans Pty Ltd v Samardzic [2011] NSWCA 260
CIT Credit Pty Ltd v Blayn Norman Keable [2006] NSWCA 130
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR
Fitzgerald v Watson [2011] NSWSC 736 San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [1986] HCA 68; (1986) 162 CLR 340
Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1
Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129
Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242
Category: Principal judgment
Parties: Padstow Corporation Pty Ltd (Plaintiff)
Thomas John Fleming (Second Defendant)
Harold O'Brien (Third Defendant)
Thomas Maurice Fleming (First Cross-Claimant)
Alan Sher (Third Cross-Claimant)
Robert Minter (Cross-Defendant to Fourth Cross-Claim)
Representation: Counsel
J Sleight/C Mulvey (Plaintiff)
R Angyal SC/L Doust (Second Defendant)
J Sheller (Third Defendant)
G Rich/L Thomas (First Cross-Claimant)
J Merkel (Third Cross-Claimant)
G Curtin SC (Cross-Defendant to Fourth Cross-Claim)
Solicitor
Neville & Hourn Legal (Plaintiff)
Cordato Partners (Second Defendant)
Gilchrist Connell (Third Defendant)
Addisons Lawyers (First…

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

Case: [2011] NSWSC 1572
Decision Date: 16 December 2011

CaseChat Overview and Summary

Padstow Corporation Pty Ltd sought to recover monies from Mr Fleming, a former director, who had provided a personal guarantee for debts of the company. The dispute included cross-claims by Mr Fleming for breaches of contract and misleading conduct by Padstow Corporation, as well as claims against the company’s solicitor. The case was heard in the Supreme Court of New South Wales. The legal issues addressed by the Court included whether Mr Fleming was bound by the personal guarantee he signed, whether the guarantee was unfair under the Contracts Review Act 1980, and whether there were breaches of contract or misleading conduct by Padstow Corporation. The Court found that Mr Fleming was bound by the personal guarantee he signed, as he did not evidence that he signed in a personal capacity rather than as a director. The Court also held that the guarantee was not unjust under the Contracts Review Act 1980, as it was a fair and reasonable term given the commercial realities of the agreement. Regarding the cross-claims, the Court dismissed Mr Fleming’s claims for breach of contract and misleading conduct, as well as the claim against the solicitor. The Court held that Padstow Corporation was not in breach of the share sale agreement, and there was no misleading conduct or negligence by the solicitor. The Court ordered Mr Fleming to pay the full amount owed under the guarantee, plus interest and costs.

Orders