Soane and Anor v The Distribution Group Limited (t/as Lawrence & Hanson)

[2002] VSCA 10

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 5395 of 2000

ANDREW PITT SOANE AND

CHRISTOPHER PETER GALE

Appellants

v.

THE DISTRIBUTION GROUP LTD (ACN 000 091 930)

(TRADING AS LAWRENCE & HANSON)

Respondents

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JUDGES:	PHILLIPS, BATT and VINCENT, JJ.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	14 February 2002
DATE OF JUDGMENT:	14 February 2002
MEDIUM NEUTRAL CITATION:	[2002] VSCA 10

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Contract – Guarantee – Extension of credit facility to company – Clause containing guarantee or indemnity by directors in respect of debtor company’s liability for goods supplied – Signed by two directors – Whether directors personally liable – Whether signed only on behalf of company – Whether consideration given – Whether adjournment improperly refused at trial – No error established – Appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr D.A. Klempfner	Rigby Cooke
For the Respondents	Mr J. Kaufman Q.C. with Mr. J.R. Holdsworth	Ward Taylor

PHILLIPS, J.A.: 

1. This appeal is from judgment given in the County Court by his Honour Judge Hanlon on 26 April 2000.  The judgment, which was for $60,902.33 with interest and costs, was given against the defendants, the present appellants, in a proceeding brought by the respondent as plaintiff.  The claim was, in substance, for the price of goods sold and delivered by the plaintiff to a company called Stadenet Pty Ltd, trading as Interior Electrics ("the company"), of which at the relevant time the defendants were directors.  On 7 May 1996 the company was placed into liquidation and the plaintiff was seeking payment for the goods from the directors on the basis that they had guaranteed the payment of all outstanding debts owed by the company to the plaintiff or had agreed with the plaintiff to indemnify it in respect of all moneys owed to the plaintiff for goods sold and delivered to the company.  The allegation that they had agreed to the guarantee or had agreed to provide indemnity was denied by the defendants.

1. The basis for the plaintiff's claim was a document headed "Application for credit facility", signed by the two defendants and dated 21 June 1995.  The plaintiff sued in the name The Distribution Group Ltd trading as Lawrence and Hanson, and the document I have mentioned was also headed "Lawrence and Hanson".  Underneath were the words "a division of ALH Australia Ltd", the former name of the plaintiff.  At trial there was some argument because the ACN given in the heading for ALH Australia Ltd ended 091  303, whereas the ACN of the plaintiff ends 091 930, but that point is not pursued now; no difference is now asserted between the company named in the heading of the document and the plaintiff.

1. As will be apparent from the judgment given, the judge concluded, by reference to the document "Application for credit facility", that the two defendants had undertaken to guarantee payment of, or to provide indemnity for, all debts owing for goods sold and delivered to the company.  It was admitted in the pleadings that the document I have mentioned was completed by the defendants on or about 21 June 1995 "on behalf of the company".  There was oral evidence from Mr Dimitropolous, the credit manager in Victoria for the plaintiff, to the effect that the company had opened a credit account with Lawrence and Hanson in 1990, that in 1995 it had applied to increase the credit limit, and that that had led to the completion of the application for credit facility signed on or about 21 June 1995, in consequence of which the credit facility of the company was increased to $150,000.

1. It is plain enough that the basis of the defendant's liability to the plaintiff, as found by the judge, lay in this clause on the first page of the application for credit facility: 

"I/we further accept liability jointly and severally with the debtor company named for all outstanding debts and I/we charge all our property both real and personal with the amount of any indebtedness." 

1. In a schedule, the company is named (Stadenet Pty Ltd) and its directors are also named, "Chris Gale" and "Andrew Soane".  Their names are also printed at the foot of the first page and they have signed.  There is no other execution for and on behalf of the company.  The name of each of the signatories is followed by a description, the first as "managing director" and the second "director", and the submission made by the appellants is that they signed only for and on behalf of the company and not personally as guarantors or indemnifiers.

1. This point was taken at trial and it was rejected by the trial judge.  That is now said to be error but in my view the submission is without substance.

1. It is one question to ask whether the company was bound by the application for credit facility when there was no separate execution expressly for and on behalf of the company, but in view of the clause I have quoted and the signature of the two directors appearing at the foot of the page on which that clause appears, I can see no basis upon which it could properly be concluded that the two directors, by signing, were not accepting "liability jointly and severally with the debtor company named for all outstanding debts".  According to the appellants, it was only the debtor company who was bound by the credit application and in context it must follow, it was argued, that the clause I have just quoted had no effect at all.  Such a conclusion demonstrates to my mind that the submission is untenable.  Moreover if the appellants were correct, clause 3 under the heading "Guarantor's Consent", which relates to certain privacy considerations, would also have to be ignored as having no operation.  In my view his Honour was plainly right in the construction he placed upon the document and in concluding, in effect, that the defendants were liable by reason of the words I have quoted.  No error has been established in that regard.

1. A second point taken on appeal, but not, I suspect, argued below, is that there was no consideration given by the plaintiff for the guarantee or indemnity obtained from the defendants (as I shall continue to call them).  Again, this is a point without substance.  The plaintiff, trading as Lawrence and Hanson, plainly gave consideration by extending the credit limit of the company and it is nothing to the point that that was to the benefit of the company as distinct from the directors themselves.  The defendants sought a benefit for the company and that benefit was obtained.  That was the consideration given for the promise of the company to pay its debts and for the promise of the directors to guarantee that liability or to indemnify the plaintiff against default.

1. Finally, I mention one other point.  At the trial, application was made at the outset by a barrister representing the defendants for an adjournment.  The application was supported by an affidavit sworn by Benjamin Harold Wyatt on 26 April 2000, the solicitor acting in Victoria on behalf of the defendants, as agent for solicitors in Western Australia.  His Honour rejected the application and the trial went ahead.  It appears that the adjournment was sought on the footing that the defendants were resident outside Victoria (one in Western Australia and one in New South Wales), the cost of getting to Melbourne for the trial would be considerable and they were in financial difficulties.  It was not said that they could not arrive in Melbourne but just that they were not able to arrive on 26 April, the day fixed for the trial, and as it happened, the day after a public holiday.  Although this last was emphasised as an excuse for not travelling on 25 April, the submission was almost impertinent.  As His Honour said, moreover, the distance between Perth and Melbourne was not going to alter and quite probably the cost of moving from one to the other for the sake of a trial was not going to alter either, to which counsel replied:  "No, but having been given a fright this time, they will make proper plans to be here next time."

1. In my opinion it is not surprising that His Honour rejected the application.  As he said, no grounds for granting it were made out in the face of the opposition of the plaintiff, who was ready, willing and able to proceed.  It is a ground of appeal that His Honour erred in refusing the adjournment but quite plainly there was no error there.  Counsel told us from the Bar table that the real reason for seeking an adjournment on 26 April had not been disclosed to the judge, but that does not bespeak error on his Honour's part.  Anyway, the further reason related only to the personal convenience of one of the two defendants.  Significantly, I think, the affidavit relied upon contained no assertion that either defendant was intending to give evidence and was being prevented from doing so through no fault of his own.

1. As I have indicated, the three grounds taken in argument on this appeal are only that there was no undertaking in the relevant document by the defendants personally; that there was no consideration given by the plaintiff for the obligation it asserted; and there was error in the judge's refusing to grant an adjournment.  For the reasons I have given, I regard all three points as quite hopeless.  There is nothing in this appeal.  One might be forgiven for thinking that the appeal had been brought simply to defer for those already in financial difficulty the need to meet their obligations under the judgment.  Moreover, the defendants, as appellants, were late in complying with the practice statement of this Court which required the filing of a summary and an outline of submissions not less than 7 days before the date fixed for the appeal and that default, which no doubt occasioned further difficulty for the respondent, is perhaps all of apiece.  But that is not the reason the appeal fails.  The appeal fails because it altogether lacks merit.

BATT, J.A.:

1. I agree.

VINCENT, J.A.:

1. I agree. 

MR KAUFMAN:

1. I seek an order for costs.

PHILLIPS, J.A.:

1. Yes.  You can't resist that, can you? 

MR KLEMPFNER:

1. I certainly can't.

PHILLIPS, J.A.:

1. Very well.

1. The order of the Court is as follows:

Appeal dismissed with costs. 

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