Rawcliffe v Bianco Hiring Service Pty Ltd - [2002] SASC 430

RAWCLIFFE v BIANCO HIRING SERVICES PTY LTD
[2002] SASC 430
Full Court: Doyle CJ, Lander and Bleby JJ

DOYLE CJ. I would dismiss the appeal. I agree generally with the reasons of Lander J. I add these following brief remarks.
The issue before the District Court Judge was whether Mr Monz and Ms Rawcliffe, by sending to Bianco Hiring Services Pty Ltd (“Bianco”) the “Account Application” (“the application”) and the “Guarantee” (“the guarantee”), offered to Bianco that if Bianco would agree to provide goods and services on credit to Rams Development Pty Ltd (“Rams”), they would enter into a guarantee in favour of Bianco in terms of the guarantee.
That issue was to be decided by considering the interpretation which would be placed upon the words and actions of the parties by a reasonable person. It was not to be determined by reference to the subjective intentions of the parties. There is no need to cite authority for that basic proposition.
The application was a request by Rams to Bianco that Bianco agree to allow Rams to purchase goods and services from Bianco on the basis that Rams would be allowed thirty days to pay for goods purchased and services acquired.
The completed application that was sent to Bianco gave the names of Mr Monz and Ms Rawcliffe as the “name of any director or shareholder to give personal guarantee if called upon to do so.”
The fact that when Bianco sent the application to Rams, it also sent the guarantee (and a document relating to disclosure of credit information) indicated that Bianco was calling upon Rams to provide the name of a person or persons who would give a personal guarantee of the liability of Rams to Bianco. The fact that the names of Mr Monz and Ms Rawcliffe were inserted in the relevant space indicates, when the document is viewed objectively, that they were willing to give such a guarantee. There is nothing surprising about this. It is commonplace for credit to be granted to a company only on the basis that guarantees are provided by directors or shareholders.
In those circumstances, the fact that Ms Rawcliffe and Mr Monz signed the guarantee (assuming for the moment that they did intend to sign it in their personal capacity) and returned the guarantee to Bianco with the application, is powerful evidence that they were offering to Bianco to provide a guarantee, in terms of the guarantee, in consideration of Bianco agreeing to provide goods and services to Rams on credit.
A reasonable person in the position of Bianco, on receipt of these documents, and knowing the circumstances in which they were provided, would be entitled to so conclude.
The evidence indicates that when the guarantee was returned to Bianco, the spaces in the Schedule for the insertion of “name and address of customer” and “names and addresses of all persons executing guarantee” had been left blank. In my view that does not alter the fact that a reasonable person…

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: [2002] SASC 430
Decision Date: 20 December 2002

CaseChat Overview and Summary

The case of Rawcliffe v Bianco Hiring Service Pty Ltd involves the appellant, who challenges the trial judge's decision that the guarantee was a valid contract binding on her. The appellant argues that the guarantee should have been binding on the company, Rams, but not on her as an individual. The appellant executed the guarantee while acting in her capacity as a director of Rams, and thus, she contends that the guarantee should not be enforceable against her personally. The trial judge determined that the appellant signed the guarantee with the intent to provide a personal guarantee, rejecting the claim that the guarantee was binding only on Rams. The central legal issue in this case is whether the trial judge correctly assessed the capacity in which the appellant executed the guarantee. The appellant argues that she signed the guarantee in her capacity as a director of Rams, thereby making the guarantee binding on the company but not on her personally. Conversely, the trial judge found that the appellant signed the guarantee with the intention to provide a personal guarantee, making it enforceable against her.

The court examined the surrounding circumstances to determine the capacity in which the appellant executed the guarantee. The court found that the documents sent to the appellant indicated that she and Mr Monz were required to give a personal guarantee if called upon to do so. The trial judge concluded that the execution of the guarantee demonstrated their willingness to provide such a guarantee, rejecting the suggestion that the inclusion of a common seal rendered the guarantee unusual. The trial judge's findings were deemed reasonable, as the appellant's argument that the guarantee should only bind Rams would render the transaction commercially unrealistic. The court upheld the trial judge's decision that the guarantee was a valid personal obligation of the appellant.

The court's reasoning led to the conclusion that the appellant's execution of the guarantee was indeed intended as a personal obligation. Therefore, the trial judge's decision that the guarantee constituted a valid contract binding on the appellant was upheld. The court found no error in the trial judge's assessment of the capacity in which the guarantee was executed. The findings of the trial judge were supported by the objective evidence and the surrounding circumstances of the case. The court rejected the appellant's argument that she signed the guarantee only in her capacity as a director of Rams, thereby limiting its enforceability to the company. The final orders of the court confirmed that the guarantee was valid and enforceable against the appellant as a personal obligation.

Orders

Orders of the court

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Background

Background to the litigation

On this appeal the appellant claims that the trial judge erred in finding that the guarantee constituted a valid contract binding on the appellant. The appellant asserts that the trial judge should have found that the appellant executed the contract of guarantee in her capacity as a director of Rams and that in those circumstances the guarantee was binding upon Rams but not upon her.The Facts Mr Monz approached the plaintiff on behalf of Rams seeking credit in respect of building supplies and for the hiring of building services. The respondent sent Rams three documents. The first document was an Account Application which consisted of four pages. It provided for applications for accounts by sole traders/partnerships/trade accounts, personal accounts or company accounts. It included a questionnaire which had to be answered whoever the applicant was. The Account Application included the terms and conditions of the account, which are unimportant in a consideration of this case, and it provided for the signature by the applicant or the applicant’s authorised representative. On the fourth page of the Account Application there was provision for the applicant to sign and for the respondent to accept the application and to approve the account. When executed by the applicant the Account Application amounted to an offer to the respondent to open an account on the terms and conditions included in the account. The questionnaire which, as I have said, had to be completed by the applicant, whoever it might be, sought information relating to the applicant’s assets and the structure of its business including whether or not the applicant was the trustee of a discretionary trust and whether the applicant would make the trust deed available. It also included the following:“NAME OF ANY DIRECTOR OR SHAREHOLDER TO GIVE PERSONAL GUARANTEE IF CALLED UPON TO DO SO.” It then provided a space for the names of two persons. The second document which was sent was a Notice of Disclosure of the Applicant’s Credit Information to a Credit Reporting Agency. That document required the signature of the applicant so that the respondent could obtain personal information about the applicant pursuant to s 18E(8)(c) of the Privacy Act 1988 (Cth). That document is unimportant. The third document was a guarantee and headed “Guarantee” and was addressed to the respondent. The opening words of the guarantee were in the following form:“In consideration of Bianco agreeing to supply goods, on such terms as it may in its absolute discretion think fit, to the Customer (being the party or parties named and described in item 1 of the schedule hereto) the Guarantor (being the party or parties named and described in item 2 of the schedule hereto) AGREES as follows;” The guarantee then makes it clear that the guarantor or guarantors are guaranteeing all monies payable for such goods and services as the respondent may supply to the customer. The second page of the guarantee identifies the document as a deed and allows for three separate signatures to the deed by the guarantors, each signature to be appended in the presence of a witness. Provision is made for the witness’ address.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

DOYLE CJ (dissent) LANDER J

Where there is an ambiguity as to the capacity in which a party has executed a contract the court may have regard to the surrounding matrix of facts to determine the contracting party. That is only one incident of the wider rule to which Mason J referred in Codelfa Construction Proprietary Limited v State Rail Authority Of New South Wales (supra); Young v Schuler (1883) 11 QB 651; Edwards v Edwards (1918) 24 CLR 312; Mallinson v The Scottish Australian Investment Company Limited (1920) 28 CLR 66 at 75; Perpetual Trustee Co Ltd v Bligh (1940) 41 SR (NSW) 33. Conclusions In this case it was necessary to determine whether Mr Monz and the appellant executed the contract in their capacity as guarantor or whether they fixed their signatures as witness to the execution of the common seal. It was therefore necessary to have regard to the matters of facts which surrounded the execution of the document to determine objectively the capacity in which they executed the contract. The matter could not be resolved by their evidence as to what they intended. Their subjective intention was not relevant in the determination of that issue. The trial judge found, as a matter of fact, that Mr Monz received the Account Application, the Notice of Disclosure of Credit Information to a Credit Reporting Agency and the Guarantee. He received those documents on 11 March 1997. At that time the appellant was in Queensland on holidays. Mr Monz filled out the documents. He filled out the section which stated that he and the appellant would give a personal guarantee “... if called upon to do so”. The trial judge found that the appellant executed the documents on or after 27 March in the presence of a witness. Implicitly the trial judge found that the guarantee was executed at that time. He was not able to find if it was Mr Monz or the appellant who affixed the common seal but I think again implicitly he found one or other of them did. The trial judge found that the contract documents indicate clearly that the Mr Monz and the appellant intended to give a personal guarantee. The Account Application, as has already been observed required the directors to give a personal guarantee if called upon to do so. The fact that the guarantee was then sent to the directors indicated that they had been asked to give the guarantee and the fact that they executed the guarantee, so the trial judge found, showed that they were prepared to do so. He rejected the suggestion that the guarantee was out of the ordinary. He found that the inclusion of the common seal was of no significance. In my opinion, the findings of the trial judge were open to him. Mr Monz and the appellant’s claim that they executed the guarantee on behalf of the company and in their capacity as directors of the company, if accepted, would mean that they intended (objectively) that the company would guarantee its own obligation to the respondent. As the trial judge observed such a claim meant that the whole transaction lacked commercial reality.

Ratio Decidendi

Legal Principle Established

Established by: LANDER J

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