Permanent Trustee Co Ltd v Gulf Import and Export Co - [2008] VSC 162

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 8130 of 2002

PERMANENT TRUSTEE COMPANY LIMITED	Plaintiff
v
GULF IMPORT AND EXPORT COMPANY AND EMIRATES TRADING AGENCY LLC	Defendants

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JUDGE:	HANSEN J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 and 31 May, 1-2, 6, 8 and 15 June 2006, 21-23, 28-31 May, 4, 6-7, 12, 19, 21-22 and 25-28 June, 2-5, 24, and 30-31 July 2007
DATE OF JUDGMENT:	14 May 2008
CASE MAY BE CITED AS:	Permanent Trustee Co Ltd v Gulf Import and Export Co
MEDIUM NEUTRAL CITATION:	[2008] VSC 162

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Guarantee and indemnity – Defendants provided guarantees and indemnities in respect of amounts owing by trading company to two banks – Guarantees held by plaintiff as security trustee for banks – Certificates produced by plaintiff and banks stated amounts payable – Signed under powers of attorney – Regularity – Effect of certificates - Sufficient evidence unless matter or sum stated proved to be false – Clause in guarantees precluded guarantors, while guaranteed money unpaid, from setting up a defence, set-off or counterclaim in reduction of liability under guarantee and indemnity – Clause precluded defence that amount not payable – Unnecessary and undesirable to consider defence on the merits given terms of the guarantees and fact that defence raised serious allegations against non-parties yet could not affect conclusion that plaintiff must succeed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P J Jopling QC and Mr J F Styring	Minter Ellison
For the Defendants	Mr R M Garratt QC and Mr A M Thomas	Aitken Walker & Strachan

HIS HONOUR:

Introduction

The plaintiff, Permanent Trustee Company Limited (“Permanent”), sues the defendants, Gulf Import and Export Company (“Gulf”) and Emirates Trading Agency LLC (“Emirates”), for the amount owed by them as guarantors of the debts of a commodity trader Bustan International Pty Ltd (“Bustan International”) and its non-trading holding company Bustan Australia Holdings Pty Ltd (“Bustan Holdings”). The claim arises in the following circumstances, briefly described.

Bustan International and Bustan Holdings, which were registered in Victoria on 28 April 1994, were established by the Al Ghurair Group of Dubai in the United Arab Emirates primarily to procure wheat, grain and other commodities in Australia for the Group. Bustan Holdings owned the five issued shares in Bustan International. The shares in Bustan Holdings were and are held as to 85 percent by five individuals (as to 17 percent each) in the Al Ghurair family or Group. These individuals were also directors of each company. The balance of 15 percent was and is owned by C E & L Condon as trustee for the Condon Family Trust which represented the interest of Clinton Edward Condon who from 1 June 1995 until 22 February 2003 was also a director of each company and in charge of the office in Melbourne at which Bustan International conducted its business. He was the chief executive officer of the companies.

For the purpose of conducting its business Bustan…

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: [2008] VSC 162
Decision Date: 14 May 2008

CaseChat Overview and Summary

In the case of Permanent Trustee Co Ltd v Gulf Import and Export Co, the plaintiff, acting as a security trustee for two banks, sought to enforce guarantees and indemnities provided by the defendants in respect of debts owed by a trading company. The guarantees and indemnities were held by the plaintiff and were supported by certificates from the plaintiff and the banks stating the amounts payable. The certificates were signed under powers of attorney and, according to the plaintiff, constituted sufficient evidence unless the matter or sum stated was proven to be false. The defendants argued that the amounts stated in the certificates were incorrect and sought to raise a defence on the merits, but the guarantees included a clause precluding the guarantors from setting up a defence, set-off, or counterclaim in reduction of their liability while the guaranteed money remained unpaid.

The legal issues before the court were whether the certificates produced by the plaintiff and the banks were sufficient evidence of the amounts payable and whether the clause in the guarantees precluded the defendants from raising a defence that the amount was not payable. The court held that the certificates were sufficient evidence unless proven to be false and that the clause in the guarantees precluded the defendants from raising a defence that the amount was not payable. The court further held that it was unnecessary and undesirable to consider the defence on the merits given the terms of the guarantees and the fact that the defence raised serious allegations against non-parties that could not affect the conclusion that the plaintiff must succeed.

The court's reasoning was based on the terms of the guarantees and the certificates produced by the plaintiff and the banks. The court held that the certificates were sufficient evidence unless proven to be false, and that the clause in the guarantees precluded the defendants from raising a defence that the amount was not payable. The court held that it was unnecessary and undesirable to consider the defence on the merits given the terms of the guarantees and the fact that the defence raised serious allegations against non-parties that could not affect the conclusion that the plaintiff must succeed. The court ultimately held in favour of the plaintiff and ordered the defendants to pay the amount stated in the certificates.

The final orders of the court were that the defendants were to pay the amount stated in the certificates to the plaintiff as security trustee for the banks. The court held that the guarantees provided by the defendants were valid and enforceable, and that the defendants were liable to pay the amount stated in the certificates. The court further held that the clause in the guarantees precluding the defendants from raising a defence that the amount was not payable was valid and enforceable, and that the defendants were precluded from raising such a defence. The court ordered the defendants to pay the amount stated in the certificates to the plaintiff as security trustee for the banks, with interest accruing from the date of the judgment.

Orders