Russo v Buck & Ors

Case [2006] SASC 380

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

RUSSO v BUCK & ORS

[2006] SASC 380

Judgment of The Honourable Chief Justice Doyle

19 December 2006

GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - MISREPRESENTATION OR NON-DISCLOSURE

GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - CONSTRUCTION AND EFFECT - EXTENT OF LIABILITY

EQUITY - GENERAL PRINCIPLES - REMEDIES AND PROCEDURE - RATIFICATION, AFFIRMATION AND WAIVER

The plaintiff claims orders to the effect that he is not bound by two loan contracts as between himself and Mr and Mrs Buck nor by a second mortgage purportedly given by him as security for loans – the first loan contract makes the plaintiff liable for 80,000 dollars – the plaintiff claims he was in substance a guarantor and not a borrower – the plaintiff claims he was mislead or confused as to the content of the contract he signed - the plaintiff claims the second loan contract, being an extension for 70,000 dollars, is a forgery and of no effect as between himself and the first and second defendants – the first to fourth defendants denied they had mislead or confused the plaintiff in respect of the first loan contract – the first to fourth defendants denied the second loan contract was a forgery and argued that if the document was forged the forgery was ratified by the subsequent actions or omissions of the plaintiff – the fifth defendant Mr Buttigieg gave evidence that he witnessed the forgery of the second loan contract – the plaintiff gave evidence corroborated by another witness that he was in New South Wales at the time of the alleged forgery – the plaintiff’s claim as to misleading and deceptive conduct or conduct contrary to the Fair Trading Act 1987 (SA) fails – the plaintiff’s claim against the third and fourth defendants fails – the first loan contract is valid and enforceable against the plaintiff as borrower – the second loan document is a forgery – the fifth defendant Mr Buttigieg did not forge or arrange for the forgery of the loan contract as an agent of the plaintiff – the plaintiff did not by his actions or omissions ratify the conduct of Mr Buttigieg – on that basis the purported contract for a loan of 70,000 dollars is of no legal effect as between the plaintiff and the first and second defendants and the plaintiff’s claims succeed in part on that basis.

Fair Trading Act 1987 (SA) s 54, s 56, s 57, s 85; Misrepresentation Act 1972 (SA) s 7, referred to.
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Harrisons & Crossfield Ltd v London & North-western Railways Company [1917] 2 KB 755; Shell Company of Australia v National Shipping and Bagging Services Ltd [1988] 2 Lloyd's Rep 1; Blair v Curran (1939) 62 CLR 464; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR…

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Russo v Buck & Ors [2006] SASC 380
Case
[2006] SASC 380
Decision Date

CaseChat Overview and Summary

The case of Russo v Buck & Ors involves a dispute between the plaintiff, Mr Russo, and multiple defendants, including Mr and Mrs Buck, Ms Conn, and PFM. The plaintiff sought orders to avoid being bound by two loan contracts and a second mortgage that he signed, arguing that he was misled or confused about the contents of the agreements and that one of the contracts was a forgery. The defendants denied any wrongdoing and argued that any forgery was ratified by the plaintiff's subsequent actions. The plaintiff also sought to avoid liability on the basis of misleading or deceptive conduct and contraventions of the Fair Trading Act 1987 (SA) and the Misrepresentation Act 1972 (SA).

The central legal issues before the court included whether the plaintiff was misled or confused about the nature of the loan agreements, whether he ratified the alleged forgery, and whether he was liable under the contracts. The court found that the plaintiff's claims of misleading or deceptive conduct and contraventions of the Fair Trading Act and the Misrepresentation Act failed. The court also determined that the first loan contract was valid and enforceable against the plaintiff as a borrower, while the second loan contract was indeed a forgery. However, the court held that the plaintiff did not ratify the forgery through his actions or omissions, and thus the second loan contract was of no legal effect between the parties.

The court's decision resulted in partial success for the plaintiff's claims. The court dismissed the claims for orders to set aside the first loan contract and the second mortgage, ruling that these documents were binding and enforceable. However, the court granted the plaintiff's claim that the second loan contract was a forgery and of no effect. Consequently, the court ordered that the purported contract for a loan of $70,000 between the plaintiff and the Bucks on 6 June 2002 was null and void. The court also dismissed the plaintiff's claims against the defendants for engaging in misleading or deceptive conduct and other related claims. The court noted that the plaintiff's claim against certain defendants had entirely failed, which would be a factor in determining the appropriate costs order.

The court concluded that it would need to hear the parties on the question of costs, taking into account the partial success of the plaintiff's claims against the Bucks. The court did not grant the plaintiff's claims for orders relating to possession proceedings or other consequential claims for damages and other orders. The court's final orders reflect the outcomes of the various claims, focusing on the validity and enforceability of the loan contracts and the second mortgage.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

As the case was not presented on this basis, it is not necessary to deal with this issue. Were it necessary to deal with it the same preliminary point would arise, that there is no suggestion that Mr Buttigieg is a co-debtor in respect of the first advance. And, moreover, the question would remain of whether a favourable conclusion on this issue would lead to any different result.Conclusion I now set out the conclusions that follow from what I have decided. The orders that I propose to make do not reflect or deal with all of the claims for relief made in the Statement of Claim. Some of the orders claimed are unnecessary or inappropriate. In this, as in other respects, the Statement of Claim is confused and confusing. The claim for an order setting aside the contract of loan purportedly made between Mr Russo and the Bucks on 15 March 2001 should be refused. Mr Russo is bound by the contract. The claim for an order setting aside the second mortgage granted by Mr Russo in favour of the Bucks must be refused. The second mortgage is binding and effective. An order should be made declaring that the purported contract for a loan of $70,000, between the Bucks and Mr Russo, of 6 June 2002 is of no effect as against Mr Russo. It will be necessary to determine the amount owed (if any) by Mr Russo to the Bucks under the loan contract of 15 March 2001. Any amount due will be secured by the second mortgage over the Aldinga property, as will any other moneys falling within the scope of that mortgage. There may be other liabilities, such as costs, secured by the mortgage. It may be appropriate to refer that matter to a Master. Alternatively, the amount due by Mr Russo to the Bucks could be determined in the possession proceedings. The claims for orders in this action relating to the possession proceedings in action number 857 of 2003 and 654 of 2004 should be refused. I have no power to make those orders in these proceedings. In any event, the second mortgage is valid and effective. The claims against the Bucks, Ms Conn and PFM that they have engaged in conduct contrary to s 54, s 56, s 57 or s 85 of the Fair Trading Act 1987 (SA) should be dismissed, as should the claims for breach of s 7 of the Misrepresentation Act1972 (SA) and for misrepresentation generally. The consequential claims for damages and other orders should be dismissed. I will need to hear the parties on the question of costs. The plaintiff’s claim against Ms Conn and PFM has failed entirely. The plaintiff’s claim against the Bucks has succeeded in part. These are matters that will have to be taken into account in arriving at an appropriate order as to costs.

Ratio Decidendi

Legal Principle Established

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