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TW Timber Treatment Pty Ltd v Giddings

TW Timber Treatment Pty Ltd v Giddings

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Case Copied 29 July 2022 50 min read

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0112

TW TIMBER TREATMENT PTY LTD	Applicant
v
AARON LYALL GIDDINGS	Respondent

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JUDGES:	McLEISH, T FORREST and MACAULAY JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	3 May 2022
DATE OF JUDGMENT:	29 July 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 147
JUDGMENT APPEALED FROM:	[2021] VCC 1286 (Judge Cosgrave)

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GUARANTEE – Enforceability – Director’s guarantee – Application for credit trading terms – Where answer ‘no’ given to question whether director prepared to be personally bound – Intention to be personally bound inferred from whole of the document including the placement of signature beneath express terms – Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160, Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909 applied – Appeal allowed.

INSOLVENCY – Deed of company arrangement (DOCA) – Interest – Liability for interest on principal debtor’s debt pursuant to director’s guarantee – Whether ongoing liability for interest under guarantee terminated by operation of DOCA releasing principal debtor’s debt – Creditor’s rights under director’s guarantee including interest not affected by DOCA – Corporations Act 2001 (Cth) s 444H, s 444J – McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 applied – Perrott v Newton King Ltd [1933] NZLR 1131, Jowitt v Callaghan (1938) 38 SR (NSW) 512, Hill v Anderson Meat Industries Ltd [1971] 1 NSWLR 868, Hill v Anderson Meat Industries Ltd [1972] 2 NSWLR 704, Gan v Sanders (1994) 15 ACSR 298, Helou v PDM Mulligan Pty Ltd (2003) 57 NSWLR 74, Hanson Construction Materials Pty Ltd v Davey (2010) 79 ACSR 668 considered.

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Counsel
Applicant:		Dr O Bigos QC with Mr D Gration
Respondent:		Mr CE Shaw QC with Mr DP Lorbeer
Solicitors
Applicant:	James Partners Lawyers
Respondent:	Peer Legal

MCLEISH JA
T FORREST JA
MACAULAY JA:

Introduction

TW Timber Treatment Pty Ltd (the ‘applicant’ or ‘TW Timber’) supplied outdoor timber to a now deregistered company Aarons Outdoor Living Pty Ltd (and its predecessors) (the ‘Company’). Mr Aaron Lyall Giddings (the respondent) was the director and secretary of the Company. Not long after being supplied with the timber, the Company was placed into voluntary administration, entered a Deed of Company Arrangement (‘the DOCA’) and was ultimately wound up and deregistered without having paid the applicant $282,868.06 for the timber.
In the County Court, the applicant pursued the debt pursuant to what it alleged was a binding guarantee given by the respondent. For the guarantee, the applicant relied upon a facsimile transmission (‘the fax’) sent from the Company to the applicant containing an application for credit trading terms. A judge of the County Court dismissed the applicant’s claim[1] after finding that the respondent had not given a binding guarantee. Had the judge decided otherwise, his Honour would have found the respondent liable for interest on the debt…

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: [2022] VSCA 147
Decision Date: 29 July 2022

CaseChat Overview and Summary

The case of TW Timber Treatment Pty Ltd v Giddings involved a dispute between TW Timber and Giddings, which came before the court following Giddings' application for credit trading terms. The central issue was the enforceability of a guarantee provided by a director of TW Timber, specifically whether the director's signature on the credit application, despite indicating "no" to being personally bound, could still be construed as an intention to be personally bound. The enforceability of the director's guarantee was further complicated by the question of whether the guarantee's terms, including the liability for interest, were affected by a deed of company arrangement (DOCA) that released the principal debtor's debt.

The court was tasked with determining the legal validity of the director's guarantee and whether the liability for interest continued under the guarantee despite the DOCA. The court considered several precedents, including Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd, and Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd, to infer the director's intention from the placement of their signature and the document's overall context. Regarding the DOCA, the court examined provisions of the Corporations Act 2001 (Cth) and cases such as McDonald v Dennys Lascelles Ltd, Perrott v Newton King Ltd, Jowitt v Callaghan, Hill v Anderson Meat Industries Ltd, Gan v Sanders, Helou v PDM Mulligan Pty Ltd, and Hanson Construction Materials Pty Ltd v Davey to determine whether the creditor's rights under the guarantee, including interest, were preserved despite the DOCA.

The court ruled that the director's signature, despite the negative response to being personally bound, could still be interpreted as an intention to be personally bound based on the document's context and the signature's placement. The court also determined that the liability for interest under the guarantee was not terminated by the DOCA, as the creditor's rights, including interest, were not affected by the release of the principal debtor's debt. The appeal was allowed in favour of Giddings. The court's decision affirmed the enforceability of the guarantee and the ongoing liability for interest under it, notwithstanding the DOCA.

Orders