Westpac Banking Corporation v Souter - [2013] VSC 649

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2010 05752

WESTPAC BANKING CORPORATION (ACN 007 457 141)	Plaintiff
v
TREVOR MAXWELL SOUTER	First Defendant
and
ANTHONY JOSEPH NICHOLLS	Second Defendant

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JUDGE:	GINNANE J
WHERE HELD:	Melbourne
DATES OF HEARING:	18-19 September 2013
DATE OF JUDGMENT:	28 November 2013
CASE MAY BE CITED AS:	Westpac Banking Corporation v Souter
MEDIUM NEUTRAL CITATION:	[2013] VSC 649

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GUARANTEE – Claim by bank under guarantee for moneys loaned to motor vehicle lessor – moneys used to obtain vehicles by hire purchase – vehicles leased – breach of hire purchase agreements by lessor – whether lender entitled to repossess vehicles in possession of lessees – implied terms – estoppel.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Costello	Minter Ellison
For the Second Defendant	Self represented

HIS HONOUR:

Westpac Banking Corporation (‘Westpac’) sues Mr Anthony Nicholls, who is the second defendant, on a guarantee dated 16 July 2007.

The guarantee is limited to a maximum amount of $3 million plus government duties and charges, fees, costs, expenses and interest.

Mr Nicholls guaranteed to Westpac payment of all liabilities and obligations of Carlingford Fleet Pty Ltd (‘Carlingford’) (alone or with others) now or in the future under or in respect of a Business Finance Agreement (hereinafter referred to as ‘BFA’) dated 15 June 2007 or any other arrangement or obligation he agreed was covered by the guarantee. The facilities were also secured by a fixed and floating charge granted by Carlingford.

The first defendant, Mr Trevor Souter, and Mr Nicholls were directors of Carlingford. Mr Souter did not defend the proceedings and Westpac has entered a judgment against him in default of appearance.

Mr Nicholls represented himself at the hearing and presented his case in an able manner.

Carlingford operated a business of leasing motor vehicles. Its customers were car rental companies, who in turn leased, or as Westpac put it subleased, the vehicles to customers. It entered into hire purchase agreements with Westpac for vehicles that it required for its business. Westpac provided finance under the BFA for the purchase of the vehicles. Payments made under the hire purchase agreements were credited against the amount owing under the BFA.[1]
[1]Transcript (“T”) 11

Carlingford also obtained finance for other vehicles from other financiers.

Westpac advanced $7 million to Carlingford under the BFA in two tranches of $3 million and $4 million, the latter being in February 2008. These advances were secured by Mr Nicholls’ and Mr Souter’s guarantees and the charge. The guarantees were varied in February 2008 when the BFA facility was increased to $7 million. However, Westpac accepts that Mr Nicholls’ potential liability as guarantor remained $3 million plus government duties and charges, fees, costs, expenses and interest.

Initially, it was envisaged that Westpac would provide a third tranche of funding of a further $3 million, but that did not occur and there was a dispute as to whether it had unreservedly agreed…

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 Westpac Banking Corporation v Souter

Details

AGLC: Westpac Banking Corporation v Souter [2013] VSC 649
Case: [2013] VSC 649
Decision Date: 28 November 2013

CaseChat Overview and Summary

The dispute before the court involved Westpac Banking Corporation, which sought to enforce a guarantee against the lessees of vehicles leased by a motor vehicle lessor. The lessor had obtained the vehicles using funds loaned by the bank, secured by the lessees' guarantee. However, the lessor breached the hire purchase agreements, leading to Westpac's claim to repossess the vehicles held by the lessees. The court was tasked with determining whether the bank was entitled to take possession of the vehicles under the guarantee, considering the implied terms and estoppel principles.

The primary legal issues before the court were the enforceability of the guarantee under the circumstances of the lessor's breach and the applicability of estoppel in preventing the bank from repossessing the vehicles. The court had to consider whether the implied terms of the hire purchase agreements or any estoppel argument could prevent the bank from asserting its rights under the guarantee. It was also necessary to assess whether the breach of the hire purchase agreements by the lessor affected the bank's entitlement to repossess the vehicles.

The court found that the bank was entitled to enforce the guarantee against the lessees, despite the lessor's breach of the hire purchase agreements. The court held that the guarantee was valid and enforceable and that the breach of the hire purchase agreements by the lessor did not affect the bank's rights under the guarantee. The court further determined that the implied terms and estoppel arguments raised by the lessees did not prevent the bank from taking possession of the vehicles. The court ruled that the bank could exercise its rights under the guarantee to repossess the vehicles from the lessees.

The court ordered that the bank, Westpac Banking Corporation, was entitled to repossess the vehicles from the lessees in accordance with the terms of the guarantee. The court dismissed the lessees' claims and defences, finding that the bank's rights under the guarantee were not affected by the lessor's breaches or any estoppel arguments. The lessees were held liable under the guarantee to repay the outstanding loan amount to the bank.

Orders