Re Farm Pride Foods Ltd - [1999] QSC 174

IN THE SUPREME COURT

OF QUEENSLAND No. 5641 of 1999

Brisbane

[Re Farm Pride Foods Ltd]

IN THE MATTER of Order 64 of the Supreme Court Rules
-and-
IN THE MATTER of the Land Title Act 1994
-and-
IN THE MATTER of caveat numbers 703319106, 703319101 and 703319104 lodged by Farm Pride Foods Limited ACN 080 590 030
REASONS FOR JUDGMENT - CHESTERMAN J

Judgment delivered 29 June 1999

CATCHWORDS: TORRENS SYSTEM - Caveat - application for removal.

GUARANTEE AND INDEMNITY - consideration - whether agreement referred to in guarantee was sufficiently certain to be binding - whether guarantee took effect as a deed - liability of guarantors - whether it was intended that there be two guarantors despite only one signature on the guarantee - construction and effect - whether agreement was uncertain because name of co-guarantor missing.

Counsel:Mr P Hackett for the applicant
Ms A Phillippides for the respondent

Solicitors:H Drakos & Company for the applicant
Mullins & Mullins for the respondent

Hearing Date: 25 June 1999

REASONS FOR JUDGMENT - CHESTERMAN J

Judgment delivered 29 June 1999

The applicants, Christos and Magadalene Dimitrakipolous, are directors of GCS Seafoods Pty Ltd (“Seafoods”) which bought a large quantity of eggs and egg products from the respondent, Farm Pride Foods Limited. The respondent commenced supplying goods to Seafoods in November 1998 on terms which allowed it thirty days’ credit. By 27 April, 1999, Seafoods owed the respondent about $313,000.00 which, in accordance with the terms of trade between the two companies was due and payable. On 29 April, 1999, Mr Dimitrakipolous met with officers of the respondent at its premises in Melbourne. He there signed a document entitled “Guarantee and Indemnity”, clause 13 of which provided
“In order to better secure the Deed we the Guarantors hereby charge all of our real and personal estate in favour of the Creditor with all money due and payable pursuant to this Instrument of Guarantee”.

The document identified the respondent as the “creditor”.

On 5 May, 1999 the respondent lodged three caveats in the Land Titles Office forbidding dealings with three properties, two of which are owned jointly by the applicants and one of which is owned by Mr Dimitrakipolous alone.
By their summons dated 17 June, 1999 the applicants seek an order that caveats 703319106, 703319101 and 703319104 be removed and a declaration that the guarantee dated 30 April, 1999 is void and unenforceable. The only ground advanced for the removal of the caveats is that the guarantee is ineffective. The respondent has no other basis for claiming a proprietary interest in the applicants’ property.
The first ground argued by the applicants is that the guarantee is unsupported by consideration. It recited
“IN consideration of [the respondent] agreeing with [Seafoods] ... for the payment of all monies due and owing by [Seafoods] to the [respondent] from time to time plus any interest and costs ... by instalments pursuant to a written agreement dated 30 April 1999, WE the persons whose names, addresses…

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.

Continue reading Re Farm Pride Foods Ltd

Details

AGLC: Re Farm Pride Foods Ltd [1999] QSC 174
Case: [1999] QSC 174
Decision Date: 29 June 1999

CaseChat Overview and Summary

The Supreme Court of Queensland considered an application by Christos and Magdalene Dimitrakipolous, directors of GCS Seafoods Pty Ltd, to have caveats removed and to declare that a guarantee provided to Farm Pride Foods Ltd was void and unenforceable. The respondents had lodged caveats against the applicants' properties after the applicants failed to settle a debt owed by their company. The applicants argued that the guarantee was ineffective because it was unsupported by consideration, and that the guarantee should not bind Christos as his wife had not also signed it.

The court found that the guarantee was supported by consideration, as there was a written agreement between the parties that provided for payment of the debt by instalments. The court also held that Christos was not bound by the guarantee as his wife had not signed it, and it was intended that both applicants would become guarantors. The court found that the intention that both applicants were required to be guarantors was evident from the agreement recorded in the respondent's letter, which was referenced in the guarantee. The court rejected the argument that the guarantee was uncertain because only one applicant had signed it, as the agreement identified the intended sureties.

The court granted the applicants' relief and ordered that the caveats be removed and that the guarantee be declared unenforceable. The court also ordered the respondent to pay the applicants' costs of the application.

Orders