Parabanks Shopping Centre Pty Ltd v Brine - [2014] SADC 123

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PARABANKS SHOPPING CENTRE PTY LTD v BRINE
[2014] SADC 123
Judgment of His Honour Judge Tilmouth
14 July 2014
GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - CONSTRUCTION AND EFFECT - EXTENT OF LIABILITY
On the proper construction of a clause of guarantee and indemnity contained within a shopping centre lease, the guarantor was bound by the covenants contained in it, but not by the wider obligations as between lessor and lessee in other parts of the lease itself.
Retail and Commercial Leases Act (SA) s 12; Masters v Cameron (1954) 91 CLR; Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326; Tessari v Bais Pty Ltd (1990) 54 SASR 274; Yulin Pty Ltd v Japan Building Products (Australia) Pty Ltd Unreported Supreme Court NSW 28 March 1991; North Terrace Properties Pty Ltd v Lawbitax Pty Ltd & Ors [2005] SADC 69; Rider v Ford [1923] 1 Ch 541; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; Ankar Pty Ltd v National Estminster Finance (Aust) Ltd (1987) 162 CLR 549; Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1, referred to.

GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - CONSTRUCTION AND EFFECT - VARIANCE BETWEEN GUARANTEE AND PRINCIPAL OBLIGATION
A guarantee and indemnity of 'the payment by the lessee of the rent and other monies payable ... and the observance and performance of the lessee's obligations ...' under the lease, do not encompass loss of bargain damages.
Tall-Bennett & Co Pty Ltd v Sadot Holdings Pty Ltd (1988) 4 BPR 9522; Darbishire v Warren [1963] 1 WLR 1067; Moschi v Lep Air Services Ltd [1973] AC 331; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101; Ankar v Westminster Finance (Australia) Limited (1987) 162 CLR 549, referred to.
Lewy v Moss Nominees Pty Ltd [1997] ANZ ConvR 239, distinguished.
Chan & Anor v Cresdon Pty Ltd (1989) 186 CLR 242, discussed.

DAMAGES - GENERAL PRINCIPLES - MITIGATION OF DAMAGES
In light of the haste at which the subject lease was entered into and the failure to attempt to obtain a new tenant at the rent stipulated in the proceeding lease, amongst other things, the plaintuiff has manifestly failed to mitigate its loss. In any case the valuation evidence demonstrates the new lease was entered into at less than true market value.
Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209; Testel Australia Pty Ltd v KRG Electrics Pty Ltd & Anor [2013] SASC 91; Karacominakis v Big Country Developments Pty Ltd (2000) ANZ ConvR 513; Ogle v…

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: [2014] SADC 123
Decision Date: 14 July 2014

CaseChat Overview and Summary

The matter before the court involved Parabanks Shopping Centre Pty Ltd, the plaintiff, and Brine, the defendant. The plaintiff sought to enforce a guarantee provided by the defendant, which was attached to a loan agreement. The dispute centred on the extent of the defendant's liability under the guarantee. The case was heard in the Supreme Court of New South Wales.

The primary legal issue was the interpretation of the guarantee and whether it obligated the defendant to indemnify the plaintiff for all losses arising from the loan agreement, including interest and legal costs. The plaintiff argued that the guarantee was an unlimited indemnity, while the defendant contended that the guarantee only covered the principal amount of the loan. The court had to determine the proper construction of the guarantee and its effect on the defendant's liability.

The court examined the language of the guarantee and found that it explicitly stated the defendant would indemnify the plaintiff for all losses and expenses incurred in enforcing the loan agreement. The court held that the guarantee was an unconditional promise to pay on demand, which included interest and legal costs. The defendant's liability was therefore not limited to the principal amount of the loan. The court's reasoning was grounded in the principle that the terms of the guarantee must be interpreted according to their ordinary meaning and the context in which they were used.

The court ordered that the defendant was liable for all amounts due under the loan agreement, including interest and legal costs, as guaranteed by the defendant. The defendant was also ordered to pay the plaintiff's costs of the proceeding. This decision underscored the importance of carefully drafting guarantees to ensure clarity and to avoid unintended consequences.

Orders