Webb v Glen Eden Vale Pty Limited

[2008] NSWSC 123

CITATION:	WEBB & ANOR v GLEN EDEN VALE PTY LIMITED [2008] NSWSC 123 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	14/02/08
JURISDICTION:	COMMON LAW DIVISION
JUDGMENT OF:	Adams J at 1
EX TEMPORE JUDGMENT DATE:	14 February 2008
DECISION:	Execution of the judgment of the Local Court dated 21 December 2007 is stayed. If the sum of $74,473.93 is not paid into Court by the plaintiffs by the close of business on 21 February 2008 the stay is dissolved and the defendant may execute the said judgment. I order the plaintiffs to pay the defendant's costs of proceedings No 10249 of 2008.
CATCHWORDS:	Appeal from Local Court whether judgment should be stayed - prospects of success of the appeal - relevance of illness of appealing party.
CATEGORY:	Principal judgment
CASES CITED:	Walton Stores Interstate Ltd v Maher (1988) 164 CLR 387
PARTIES:	GRAHAM BRUCE WEBB LYNDY ANNE WEBB (Plaintiffs) GLEN EDEN VALE PTY LIMITED ACN 000 711 124 (Defendant)
FILE NUMBER(S):	SC 2008/10249
COUNSEL:	K McLean (Plaintiffs) M Bloom (Defendant)
SOLICITORS:	McLean and Associates (Plaintiffs) Whittens Solicitors and Consultants (Defendant)
LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	12735/2005
LOWER COURT JUDICIAL OFFICER :	Maloney LCM
LOWER COURT DATE OF DECISION:	21/12/07

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ADAMS J

THURSDAY 14 FEBRUARY 2008

No 10249/08

GRAHAM BRUCE WEBB & ANOR v
GLEN EDEN VALE PTY LIMITED

JUDGMENT

Ex tempore - checked

1 HIS HONOUR: On 21 October 2007 the Local Court gave a verdict for the plaintiffs in the sum of $54,600 together with interest and issue and service costs and ordered that the defendants pay the plaintiff’s costs as agreed or assessed. The history of the matter as set out in the Magistrate's reasons for decision is briefly summarised below. The defendants have appealed to this Court and, in the meantime, seek a stay of execution of the judgment.

2 Mr and Mrs Webb, operating through G & L Webb Pty Limited, conducted a restaurant and catering business at various locations using the name "Lyndy's Bistro and Restaurant”. The business name “Lyndy's Bistro and Restaurant” was originally used by G & L Webb Pty Limited and had undertaken the business of that company for many years. As it appears, Mr Webb was not actively involved in the business which was conducted principally by his wife.

3 The plaintiff in the Local Court (in this judgment called the 'supplier') agreed to supply smallgoods and food products to G & L Webb Pty Limited. An account was opened on 29 January 2002 providing for the supply of those goods on credit. The foundational account document, which was signed by the Webbs as officers of the company, contained the following clause:

“Personal Guarantee: I/We note the trading terms listed on this form and the attached terms and conditions of sales have been explained to us by the supplier. I/We guarantee payment of any and all accounts for goods purchased by the above company/business together with any legal personal representatives of the company/business or out-of-pocket expenses associated with the collection of any outstanding moneys. All products remain the property of [the supplier] until all moneys owing to [the supplier] have been paid. I/We understand this guarantee binds us personally.”

The following clause also appeared on the account document –

"Acknowledgement: I undertake to advise of any change of ownership and I agree to the trading terms listed on this form and the attached terms and conditions of sale.”

4 I interpolate that what is meant by the phrase "legal personal representatives" is not entirely clear. It is a phrase that usually refers to the executor or administrator of a deceased estate. This rather suggests that the guarantee term was not drafted by a solicitor. (This case is perhaps an example of the folly of not obtaining proper legal advice.) In my view, in the context the term can only mean an agent, that is to say, a person lawfully authorised to act on behalf of the purchaser.

5 The conditions said to be attached were not placed in evidence, but I take it that they are immaterial.

6 So far as the acknowledgement is concerned, this amounted to a personal undertaking by the Webbs that any change of ownership of the business would be notified.

7 It appears that satisfactory trading occurred for some time on this account.

8 Lyndy's Catering Pty Limited was incorporated on 24 June 2003. The restaurant and catering businesses fell into difficulties and the accumulated accounts of the supplier could not be paid. In the end, the debt was in excess of $50,000. When the supplier sought payment of this debt under the guarantee it was informed that the Webbs took the view that they were not liable since they had, before the debt was incurred, transferred the business to Lyndy's Catering Pty Limited and they had not guaranteed the debts of that company.

9 The supplier claimed that the Webbs had not notified it of any change. The Webbs claimed that, by one mode or another, notice had been given. Evidence was given by Mrs Webb, in substance, that she thought that she had, in a telephone conversation with the relevant person at the supplier, given notice of the change but was not certain about this. She said that a certain Mr Rosario, who had acted in some respects as a manager of the business affairs of the companies had, as she understood it, given notice of the change of business. Witnesses called by the supplier denied that they had been given any such notice and, so far as the documentary evidence went, none evidenced either notice or any change of business ownership. Mr Rosario was not called.

10 Although the Magistrate accepted Mrs Webb as an honest witness, he concluded that her evidence was not sufficient to prove that notice had been given, in substance because it was not a matter of which she had or claimed personal knowledge. He accepted the evidence given by the witnesses called by the supplier to the effect that they had not received any notice, either written or oral.

11 A degree of documentation was tendered before the Magistrate tending to show that supplies were ordered in the names of various persons or businesses, all plainly associated in the context one way or the other with Mrs Webb, and in the context (as I think the Magistrate was plainly entitled to find) for and on behalf of G & L Webb Pty Limited. Certainly the goods were ordered on its account with the supplier. The Magistrate did not think that this material (which mentioned various names other than G & L Webb Pty Limited) gave constructive notice of the change of business ownership to the supplier.

12 The Magistrate held, in effect, that notice of change of ownership had not been given, that the effect of this and the continuing supply of goods under the old account amounted to a holding out by G & L Webb Pty Limited and/or the Webbs that it was the customer and that that account was still in existence and still operated. There was no doubt that the account was not closed and, on the evidence accepted by the Magistrate, that the supplier believed and was entitled to believe the goods were ordered on the account. On a somewhat more refined view, whoever ordered the goods – assuming it was Lyndy’s Catering Pty Limited – was an agent for G & L Webb Pty Limited, which held the account and which, necessarily, authorised its account to be utilized. However, this approach was not precisely that which was articulated in the Local Court. It is significant that at no stage was it suggested that Lyndy's Catering Pty Limited ever sought to create a new account. It seems to me that it is an inevitable conclusion that Lyndy's Catering Pty Limited, if it was conducting the business, was conducting it under the account entered into by G & L Webb Pty Limited, an account which, as I have mentioned, was guaranteed by the Webbs.

13 It is not submitted that the Magistrate erred in the finding of any foundational facts but that the inferences as to lack of notice, and as to the holding out were unjustified. It is also submitted that there were other errors made by the Magistrate, the principal one of which is that, assuming there was no notice, this merely amounted to a breach of contract by the Webbs in respect of which damages might be payable, but such an action was not brought by the supplier and was not part of the proceedings before the Magistrate, so that his Honour erred in awarding judgment under the guarantee.

14 The Webbs appealed to this Court seeking leave to appeal in relation to alleged errors of fact as well as to complain of alleged errors of law. I have carefully considered the judgment of the Magistrate and the material facts disclosed in the affidavits and have had the advantage of careful, thorough and helpful submissions, especially by Ms McLean for the Webbs. It seems to me that the inferences found by the Magistrate were unarguably open though perhaps I would not necessarily draw the same conclusions. I hasten to add that I am far from persuaded that any error of fact has been demonstrated.

15 It is for me to determine whether a stay should be granted to the Webbs pending determination of the appeal. A very significant consideration when a stay is sought is the prospect of success of the appeal. I am very doubtful that leave would be granted to appeal as to the facts found by the Magistrate and, if leave were granted, I am very doubtful that any appeal on that ground would succeed.

16 It was unnecessary for the purposes of this case for the Magistrate to deliver a thesis on the law of guarantees. In substance, he held that in the absence of notice of any change of business, and because the Webbs continued to hold out in effect that nothing had changed, and permitted goods to be ordered on the original account, they were bound by their guarantee to pay the debts incurred on that account, which had been created by them with the supplier by G & L Webb Pty Limited. Whether this was a matter within the contract of guarantee or whether the Webbs were estopped from denying that the goods were supplied to or on the account of G & L Webb Pty Limited for which they are liable (see Walton Stores Interstate Ltd v Maher (1988) 164 CLR 387) matters little. I am of the view that the prospects of success of an appeal on a question of law alone are slight.

17 The Webbs rely also on the sad fact that Mrs Webb is in fragile health and that confronting her with the necessity of dealing with the consequences of the judgment such as facing the risk of bankruptcy is so harsh a consequence of the proceedings that this should be placed in scales of in favour of a stay. I do not see how this consideration can affect the matter, although one's humanity is necessarily engaged. Were the prospects of success of the appeal more substantial, although perhaps not enough alone to justify a stay, it might be that such a personal consideration could tip the balance, but in light of my views about those prospects I do not see how it can do so.

18 The supplier has foreshadowed the issue of a bankruptcy notice for the purpose of enforcing its judgment and the Webbs argue that the effect of such a notice, if it is not adjourned, will be to place them in a position that they will or might commit an act of bankruptcy with all that follows from that situation and this will be not be able to be remedied in the event that the appeal succeeds. I do think that this is a material factor but it does not overcome the lack of merit of the appeal as I see it.

19 It is also submitted that the funds may not be able to be recovered from the supplier if the appeal succeeds. The evidence shows that the supplier is a company with only a small sum in capital, although the Goddens who operate it appear to be persons of some substantial worth. To overcome this point, the supplier has agreed that it would consent to a stay were the outstanding judgment debt paid into Court pending the outcome of the appeal. It seems to me this would reasonably deal with the apprehensions of the Webbs about repayment, should they succeed in their appeal.

20 I propose, therefore, to grant a stay subject to the condition that the plaintiffs (the defendants below) pay into Court within seven days from today's date the sum of $74,473.93 (the agreed judgment debt, not including costs).

21 The amount of costs is in dispute, although I think the Magistrate thought that the form of his order would have allowed that matter to be determined without further intervention by him. Mr Bloom of counsel for the supplier concedes that the question of costs is a live issue in that, although his client was entitled to costs, the course of the proceedings involved interlocutory applications in respect of which it was at least arguable that the Webbs should have the costs. Accordingly, if it is material, I order a stay of the judgment so far as the question of costs is concerned. As I understand it, Mr Bloom on behalf of the supplier consents to this course.

Order:

22 Execution of the judgment of the Local Court dated 21 December 2007 is stayed. If the sum of $74,473.93 is not paid into Court by the plaintiffs by the close of business on 21 February 2008 the stay is dissolved and the defendant may execute the said judgment.

23 I order the plaintiffs to pay the defendant's costs of proceedings No 10249 of 2008.

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25/02/2008	-	Name of magistrate changed, he changed to she, and his to her. - Paragraph(s) Coversheet, paras 10 and 13
25/02/2008	-	Name of magistrate changed, she changed to she, and her to his. - Paragraph(s) Coversheet, paragraphs 10 and 13
25/07/2008	-	Additional paragraph 23 - Paragraph(s) 23