BBX Financial Solutions Pty Ltd v Wallace - [2011] NZCA 667

IN THE COURT OF APPEAL OF NEW ZEALAND

CA850/2010
[2011] NZCA 667

BETWEEN BBX FINANCIAL SOLUTIONS PTY LTD
First Appellant

AND TRADE MANAGEMENT (2010) PTY LTD (IN LIQUIDATION)
Second Appellant

AND WAYNE ANDREW WALLACE
Respondent

Hearing: 9 August 2011

Court: Chambers, Arnold and Stevens JJ

Counsel: A R B Barker for First Appellant
J Strauss for Respondent

Judgment: 19 December 2011 at 4 pm

JUDGMENT OF THE COURT

A The appeal is allowed.

B The judgment in the High Court is set aside and the judgment in the District Court is restored.
C The appellants are entitled to costs from the respondent on an indemnity basis. In the absence of agreement, those costs are to be fixed in the High Court.
DThe costs in this Court are also to be on an indemnity basis. In the absence of agreement, this Court will fix those costs.

REASONS OF THE COURT
(Given by Chambers J)
Table of Contents
Para No

The BBX trading exchange [1]

Issues on the appeal [4]

With which companies did Ad-A-Cab contract and what were the terms

of that contract?
The BBX companies[8]
Subissues  [15]
Our evaluation  [19]
No contract with the exchange company?  [25]
Contract with a New Zealand company?  [34]
No incorporation of the Rules?  [42]
The exchange company no longer exists?  [60]
Did Mr Wallace give a valid guarantee and, if so, what did he
           promise and to whom did he make his promise?  [62]
Was the guarantee limited?  [68]
Was the quantum of the BBX claim calculated correctly?  [81]
Result  [87]

The BBX trading exchange

Between 2001 and 2005, the BBX group of companies[1] ran a trading exchange in Australia and New Zealand.[2] The members of the exchange were all businesses which were, through the exchange, able to trade their goods and services with each other. The exchange worked on the basis of “trade dollars” (BBX$), an accounting unit used to keep track of the value of goods and services traded. Each member of the exchange had an account. Trades were facilitated by use of transaction vouchers issued by BBX.
[1]There seem to be a large number of companies within the BBX group – and to complicate matters, they seem regularly to change their company names. For the purposes of this introduction, we simply refer to the group and its companies as BBX. The appellants are two of the companies in the group. The relevant history of their names is set out at [9] below.
[2]The exchange started before 2001 and continued after 2005, but 2001 to 2005 is the relevant period for the purposes of this litigation. The way the exchange operated may have changed since 2005.
In 2001, Wayne Wallace, the respondent, decided that his company, Ad‑A‑Cab (1998) Ltd, should become a member of the exchange. He signed the company up. Mr Wallace was required to give a guarantee. Ad-A-Cab later failed and was struck off the register of companies in November 2003. At that time its BBX account was in…

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: [2011] NZCA 667
Decision Date: 19 December 2011

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal from BBX Financial Solutions Pty Ltd and Trade Management (2010) Pty Ltd, who were collectively known as the BBX group, against Wayne Andrew Wallace. The BBX group had operated a trading exchange between 2001 and 2005, and Wallace's company, Ad-A-Cab (1998) Ltd, had been a member of the exchange. When Ad-A-Cab failed and was struck off the register of companies, it left a debit balance in its BBX account. BBX sued Wallace in the District Court and secured a judgment for a little over $114,000, plus interest and costs. Wallace appealed the decision, and the High Court set aside the District Court judgment, ruling in his favour. The BBX group then appealed to the Court of Appeal.

The appeal raised several issues, including the identification of the companies Ad-A-Cab had contracted with and the terms of that contract, the validity of Wallace's guarantee, and the calculation of the BBX claim. The Court of Appeal found that Ad-A-Cab had contracted with the BBX exchange company and the management company, and that the terms of the contract included the Rules of the Trading Program. The Court rejected arguments that there was no contract with the exchange company, that Ad-A-Cab had contracted with a New Zealand company, or that the Rules were not incorporated into the contract.

Regarding the guarantee, the Court found that Wallace had given a valid guarantee for Ad-A-Cab's debts and liabilities arising from the agreement, and that his liability was not limited to the cash equivalent of BBX$10,000. The Court also found that the quantum of the BBX claim was correctly calculated.

The appeal was allowed, the judgment in the High Court was set aside, and the judgment in the District Court was restored. The appellants were entitled to costs from the respondent on an indemnity basis. The costs in the Court of Appeal were also to be on an indemnity basis.

Orders