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Willis v Teparyl Pty Ltd

Willis v Teparyl Pty Ltd

Case [2010] VSCA 318 26 November 2010

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SUPREME COURT OF VICTORIA
COURT OF APPEAL

S APCI 2009 3810

DIANNE MARGARET WILLIS ROBERT BRUCE ANDREWS	1^st Appellant
DIANNE MARGARET WILLIS ROBERT BRUCE ANDREWS	2^nd Appellant
v
TEPARYL PTY LTD ROWLAND JOHN HASSALL JOHN JAMES BYRNE TWENTY-THREE ASTAWAYNE PTY LTD GARY KEITH SHEARD	1^st Respondent 2^nd Respondent 3^rd Respondent 4^th Respondent 5^th Respondent

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JUDGES:	MANDIE and HANSEN JJA, VICKERY AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15 November 2010
DATE OF JUDGMENT:	26 November 2010
MEDIUM NEUTRAL CITATION:	[2010] VSCA 318
JUDGMENT APPEALED FROM:	Teparyl Pty Ltd v Willis [2009] VSC 259 (Byrne J)

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GUARANTEE - Lease - Assignment - Whether release by lessor of original lessee and original lessee's guarantor discharged guarantee by assignee's guarantors - Whether assignee's guarantors would have had a right of contribution against original lessee's guarantor.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr J K Arthur	Mackinnon Jacobs Horton & Irving Pty Ltd
For the 2^nd and 3^rd Respondents	Mr N J O’Bryan SC with Mr C G Juebner	TressCox Lawyers
For the 1^st, 4^th and 5^th Respondents	No appearance	McKean Park

MANDIE JA:

Introduction

This appeal arises out of a proceeding in the Trial Division. The relevant parties for present purposes are the plaintiff (Teparyl) which was a lessor, the first and second defendants (Willis and Andrews) who were the guarantors of the assignee of the lease, the third and fourth defendants who were the solicitors for the lessor (Hassall and Byrne) and the second and third defendants to the counterclaim (Astawayne and Sheard) who were the original lessee and the guarantor of the original lessee respectively. On the appeal, the appellants were the assignee’s guarantors (Willis and Andrews) and the respondents were the lessor’s solicitors (Hassall and Byrne). I will refer to the parties in their respective capacities rather than by name.

The appeal was brought against a judgment entered in favour of the lessor’s solicitors as a result of a negative answer to a question set down for preliminary determination. The substance of the question that was so answered in the negative was as follows:

Does the deed made 24 February 2006 (Release) between [the lessor] and [the original lessee] and [the original lessee’s guarantor] have the effect as pleaded [by the assignee’s guarantors] of releasing [them] from all and any obligations to the lessor?

The essence of the argument that failed below and that was advanced again on appeal was that the assignee’s guarantors were released from liability to the lessor under their guarantee by reason of the fact that the lessor had released the original lessee’s guarantor from all liability under his guarantee and therefore under the lease. The primary basis of the argument was that the assignee’s guarantors had a right of contribution vis-à-vis the original lessee’s guarantor which they had lost as a result of the release in his favour by the lessor. The lessor said that, if the release had the effect so contended for by…

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 Willis v Teparyl Pty Ltd

Details

AGLC: Willis v Teparyl Pty Ltd [2010] VSCA 318
Case: [2010] VSCA 318
Decision Date: 26 November 2010

CaseChat Overview and Summary

The case of Willis v Teparyl Pty Ltd involved a dispute concerning a lease agreement and the subsequent assignment of the lease. The lessor, Teparyl Pty Ltd, had initially entered into a lease agreement with an original lessee, who was guaranteed by a guarantor. The lease was later assigned to a new lessee, who was guaranteed by additional guarantors. The central issue was whether the release by the lessor of the original lessee and the original lessee's guarantor discharged the guarantee by the assignee's guarantors. Another legal question was whether the assignee's guarantors would have had a right of contribution against the original lessee's guarantor.

The court examined the contractual terms and relevant case law to determine the effect of the release on the guarantees. It was noted that the release of the original lessee and guarantor did not automatically discharge the assignee's guarantors, as the guarantees were separate and independent. The court also considered whether the assignee's guarantors would have a right of contribution against the original lessee's guarantor, but concluded that such a right would not exist as the original lessee's guarantor was not a party to the agreement with the assignee's guarantors.

The court held that the release by the lessor of the original lessee and the original lessee's guarantor did not discharge the guarantee by the assignee's guarantors. The assignee's guarantors remained liable for the obligations under the lease agreement. The court also found that the assignee's guarantors would not have a right of contribution against the original lessee's guarantor, as the original lessee's guarantor was not a party to the agreement with the assignee's guarantors.

As a result of the court's decision, the assignee's guarantors remained liable for the obligations under the lease agreement, and the release of the original lessee and the original lessee's guarantor did not affect their liability. The court did not grant any relief to the assignee's guarantors in relation to the original lessee's guarantor.

Orders