vo. JUDGMENT No. sudedacraenal «eet 4 4 Lo CATCHWORODS Trade Practices - allegatzon that pages signed in diank on representation that document would be completed in a certain form - allegation that representation false or misleading - claim that document void ab inito Trade Practices Act 1974, ss. 53, 87 ALISA MAUDE MULLARD v. ESANDA LIMITED No. NSW G 10 of 1983 Neaves J. 3 May 19824 Sydney { IN THE FEDERAL CCURT OF ALSTRALIA ) ) - NEW SOUTH WALES DISTRICT REGISTRY ) No. Gi0 of 1983 ) ) GENERAL DIVISZOMN BETWEEN: ALISA MAUDE MULLARD Applicant AND: ESANDA LIMITED Respondent ORDER JUDGE MAKING ORDER Neaves J. DATE OF ORDER. 3 May 1984 WHERE MADE Sydney THE COURT ORDERS THAT: 1. The application be dismissed. 2. There be judgment for the respondent upon its cross-claim in the sum of $56,123.77. 3. The applicant pay the costs of the respondent of the application and the cross-claza. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G10 of 1983 ) ) GENERAL DIVISION . BETWEEN : ALISA MAUDE MULLARD Applicant AND: ESANDA LIMITED Respondent CORAM. Neaves J. DATE: 3 May 1984 REASONS FOR JUDGMENT Mrs. Alisa Maude Mullard ('"'the applicant") seeks an order pursuant to sub-section 87(1A) of the Trade Practices Act 1974 ("the Act") declaring the whole of a contract of guarantee made between the applicant and fsanda Limited ("the respondent") on 29 June 2977 to have been void ab initio (see para- graph 87(2)(a) of the Act) The baszs of the clara ie) 3 lisely co Se 1s) no uy iV) n er th tt a (D ' 1s cha spp licar eu, of , i rey cr the d J a Qo th iad fi) wo fa r ret) wn S$ loss or damage by cancuc ee) pe) Hs] engaged un incontravention of dara ug rapn wi lo rs a, ~ oO I tTNe act That paragraph provides that e@ corporation shall rot, an trade or commerce, in commexion with the supply or possible supply of goods or services or 1m comnexion with the promotion by any means of the supply or use of goods or services make a false or nisleading scatement concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. The statement of claim filed on behalf of the applicant alleges that on or about 29 June 1977 the applicant at the request of the respondent by lts agent, Mr. Zorzo, signed two blank sheets of paver and a third sheet which was blank except for the words - "Date the day of 197 (Signatures of Witness) (Signatures of Guarantors)" and dotted lines appearing thereunder. It further alleges that the three pages 'rere then completea bv the respondent by typing the worcs which now appear thereon. Paragraphs 6 and 7 of the Statament oF Ciaim are in the following terms - "6 Prior to the signing of the said three pages the respondent oy its agent, Mr Zorzo, represented to the applizeant that it was uts intention to complete the said guarantee by inserting therein, inter alia, words tothe effecr that - (1) the guarantee -roulé be in respect 22 the trailer tae by a Mr Patrick Ca Mes Patriczré Turn fay +] Cc ia} r fv La 2) og A mai sp uw 1G r "S43 c Vy pn ~ v wT { tb opportunity of paying earny lease payments im resdect of a lease <r be entered into betvear the starr fo Patrick Cart Turner and Patricia Turner and the respondent in the event that default vas made by the said Patrick Carl Turner and Patricia Turner. . (11i) That the applicant would be notified of any default by the said Patrick Carl Turner and Patricia Turner in making payments under the said lease agreement. 7. It was not the respondent's then present intention by its agent, Mr Zorzo, *o insert the clauses in the guarantee re- ferred to in paragraph 6 above and:- (a) the guarantee was not restricted to the trailer referred to in paragraph 6(1) above. (b) The guarantee made no provision for the matters referred to in paragrapns 6(ii) and (1i1) above." The statement of claim further alleges that the appl2cant relied upon the reoresentations so made co her and thac those representations were false and mzsleacing in the manner garticularised in paragyaph 7. On 18 February 1977 an agreement had been entered into between Patrick Carl Turner and Patricia Turner of Adamstown, N.S.W. ('the lessees'') and tne respondent whereby the respondenz egreed to lease to the lessees a Xenworth K125 prime rover for 2a perzod of 36 tionths on the terms and conditzcnms set out in the agree- ment On 29 June 1977 a leasing agreament was entered into between the same parties That agraemernc relatec to a Haulmark tri-axle semi-trarler, tne seriou of the lease being 4% months Lo On 17 Novemser 1978 two further agreements were made between the lessees and the responcenr. One related to the Kenworth X¥125 prime mover and the otner to the Haulmark tri-axle semi-trailer. The lessees were then in arrears in making the payments for which the earlier agreements had provided and the agreements dated 17 November 1978 took their slace. The lessees defaulted under =he agreements dated 17 November 1978 and the respondent re-took possession of the prime mover and the semi-tzrailer on or about 6 February 1979. The semi-trailer and the prime mover were disposed of by the respondent on or about 26 February 1979 and 22 May 1979 respectively. The respondent has cross-cla:zmed against the applicant seeking to recover che sum of $56,123.77 under clause 1 of the guarantee dated 29 Jure 1 By that clause the applicant gueranteed to the respondent - "Payment of all noneys and damages whicn are or may become payabie or recoverable from the Lessee under (a) Each and every lease agreement nor existing between Zsanda and the Lessee (b) Each and every lease agreement 'wnick tay at amy time after the signing hereof by the Guarantor be entered ints betveer the Lessee and Bsarda Provigec tnat 12 tne Guarenror gives to Esanda notice in reiting revoking this Guarancee sich Guarerree shell not apply to lease Prososals made y+ ¥ the Lessee more than seven days after receipt by EZsanda of such notice, but such notice shall not affect the liability of the Guarantor in respect of lease agreements now existing or lease agreements signed by the Lessee prior to the expiration oF such seven days." The schedule to the guarantee identified the lessee as Patrick Carl Turner and Patricia Turner. The applicant gave evidence that Mr. Patrick Turner is a cousin of her late husband, Alan Harold Turner. She sard that on 28 June 1977 she telephoned Mr. Patrick Turner at his home at Adamstown in response to a message which she had received asking that she do so at 6.30 p.m. that evening. She explained that ske lived at Elands via Wingham, that that was an isolated community and that she did not have a telephone service _connected to her house. The nearest telephone service, she said, was distant some miles. le) 1] i) The applicant said that during her teleph conversation with Mr. Turner he asked her to go to the Taree >brancn of the ANZ Bank to sign a guarantee in respect of a trailer he was purchasing. She said thar was the first occasion on which che subject had been AN Mentioned. She was aware that Mr Turner hac a prime mover out if was not mentioned in che sonmverscotien In response to that telednone conversation in tb the applicent went the nenc day, 29 June 1977, co th Taree branch of the ANZ Bank. She arrivec at 19.00 a.m. and went to the incurry counter. Having stated her business she was taken to an office to see Mr. Zorzo. She said that she informed Mr. Zorzo that she had come to che bank "so sign a paper for Pat Turner. The arrangements had been nade for me to do it. She said that in referring to a paper for Pat Turner she had meant a guarantee paper relating to the purchase by Mr. Turner of a semi-trailer. According to the applicant Mr. Zorzo informed her that he knew nothing about the transaction and he would need to make a telephone call to the branch of the bank in Newcastle to rind out what he had to do. The applicant then informed Mr. Zorzo that the branch of the bank dealing with che matter was the branch at Hamilton. Mr. Zorzo then, accorcing to the applicant, left the roon and returned some five minutes later. He said that he had no guayantee forms there burt that he would have one typed up by the afternoon when the applicant could sign it The applicant said she informed him that she could not remain in Taree for that perirod of time as sne had rU) to be back at Elands, some considerable cuistence away, by 11.00 an The applicant said thac lr. Zorcto then assed her -shether she vroula be prapared to (D © it send her a cop. Her eviuence conctiniecs - "Q. Did you reply to that immeciately" A, I asked alm what would be zinvolved on the pages, what would be written on them. Q. Did he make any reply? A. Just that 2.t was to grarancor the payments on the traiier. Q. Did you say anything else to him in relation to the effect of the guar- antee and your rights under that guarantee? A. Yes. Q. What did you say? A. If Pat failed with payments would I be able to take over the payments and have possession of the trailer, - and he assured me I would. Q. What did he say to you? A. That I would be the first to be told if he missed payments. Q. Was there any conversation between yourself and Mr Zorzo 1f there was any default? A. Yes, I asked him would I be able to take possession of that trailer. At the time I had a truck of my owm and I could use it if he did not pay for it. Q. Was there any comment made by Ir Zorzo? A. He told me I would be able ro Q. To do what? A. To take possession 1f he fariec on the payments and finish paying for ic." The appiircant then, according to ker evidence, Signed three sheets of paper Tyo. waich she signed at 5 i 2 =nNe DOL 'y aed ware el lans nec cr oO (b r tu m, Ww tu ) (tT VU the wor an tv esorict "(Signatures of GLarantors) ie) ty ian uc fo[an hh B on re) ty (p wn iy ga pf v rs E He) tras blank except for the w ~~ "Dete the", "day or", "197", "(Signatures typescrinvt, of Witness)" and " (Signatures of Guarantors)" and a number of dotted lines identifving where the signatures were to be placed. She also sazd that Mr. Zorzo had note paper on which he wrote down particulars of assets of which she informed hin. at the bank for 20 minutes She said that she remained at the most. The applicant further said that she did not receive a copy of the guarantee - that she first saw a copy of it when 1t was shown to her by her solicitor at Wauchope sometime in 1980 and that she saw the original guarantee for the first time when it was shown to her in the witness box. In cross-examination the applicant categorically denied that on 29 June 1977 sne had only signec page 3 o= the guarantee and had returned occasion end signed pages Mr. with the ANZ Bank since 22 1977 he was working at the also at that tame, and had aj fo represencative in ree oF the ANZ Banking Group. c o> Zorzo gave evicence to the bank on 4 later and 2 in Mr. Zorzo's presence. that he nad been employed rebruary 1971 anda that in June Taree branch of tae bank. He was since early 1976 been, the che resdondent. 2 surstuLarr ci atthe Taree branch of the bank on the morning of 29 June 1977, received instructions by telephone from a Mr. Hoptzood at Mr. Zorzo said that he first met the apvlicant He said that on the day defore that meeting he had the Hamilton branch of the bank concerning a guarantee to be signed by her. The applicant, he said, came to his office and he introduced himself as did she. dis evidence continued - "Q, A. Doing the best you can - I know it is difficult to recall conversations, so long ago - what was said by you and by her in that conversation? She said that she had been contacted by damilton branch and requested to call to sign a guarantee. I said yes, I was contactéd the previous day about a guarantee in favour of her son, Patick Turner and Patricia Turner. How did the conversation then go" I explained to her that Hamilton branch bad requested me to have her sign 4 guarantee covering the business by -~vay of lease, provided by Esanda. The guar- antee was for recurrent contract and finance as the Turners had insufficienc security tc provide Esanda In that conversation I offered Mrs Muilard the guarantee to read over or to seek legal advice 1f she required. I explainec co her in a genexal fashion that wnder the guarantee ---- Doing the best you can, Mr Zorzo, wiil you say what 1& was you said to her and she to you? . I sazd to Mrs Mullard wider the zg 1f your son anc caughter-in-law rf arrears at all wich their payment may call woon ~cu 59 assist wien payments, Sne replied that she kn what the guarantee -7as about becau she had oe€en speaxing co ber son or and she then szgned tae guacanzee seemed to be happv with rac = haa She did not asx Tor any Turther c WD m 1G os o Cr ie rm BRO Re) Q You mentioned that you offered her some opportunity tc take advice? A. That 1s righte. Q. Nhat did you say in that connection? aA. You mey take the guarantee with you and have a read of 1t or seek legal advice. Q Did she make any response to that? A. The only response she made was that she understood what was required under the guarantee. Q. Was any reference made by you or anyone in that conversation to possible future leases? A. I explained to her that the guarantee - was Of a continuing nature. It covered the current contract and any other contract that may be given. Q. At the end of that conversation did she execute the svarantee" A. Yes, she did." Mr. Zorzo said that the applicant signed page 3 of the guarantee and he witnessed her signature and inserted the date. The applicant, he said, dic not on that occasion sign pages 1 and 2 of the guarantee. He said that the form of guarantee he used was a standara roneoed form provided by the respondent from its Svdenev office. The procedure was to have a stock of those forms on hand at the Taree brancn and to obtain further forms when the stock on hance started to get low The form signed by the applicant "sas one he obtazned fron the stock neld at the Taree oranca. w [e) Or H{b rs or 'Ss ne = ™ oO ry t ws Tlyab Ha] th ig | o ry un be] ve h ro ty i) j t w New South Watas division of the respondent. That memozr- andum refarrea to the guarantee signed Dy the applicant and requestec that pages ] and 2 be sigmed by her. A letter daced 19 October 1977 was then addressed to the applicant by Mr. Zorzo on behals of the respondent. That letter contained the following paragraph - "Pages one and two of the guarantee were not signed by you at the time of execution of the document. Please call to this Branch at your earliest convenience so this matter may be finalised." Mr. Zorzo said that a few days later the tw applicant called at the Taree branch of the bank. He apologised Zor the inconvenience caused and requested her to sign pages 1 and 2. This she did. He did not recollect whether the applicant made any attempt to read the guarantee. He saic that at no time did she ask him for a copy. In cross-examination Mr. Zorzo amplified some of the answers he had given in his evicence in chzref. He said that Mr. Hopwood had requested him to have the avolicant sign what he referred coas a'continuing long form guarantee", an axpression he said was cormonly used in the bank to describe the document he had presented to branch of the bans to sign 4 guarantee. Mr. said, had alss cunformec him crat he hac been in cortact with the apolicant. Having said thar ae hendea the dociment to the applicant he vas asked what the applicant c1c '7th 1¢. He said that the applicant stated that she knew what she was there for in regard to tne guarantee and she signed it. Before doing so she asked how she should sign the document as she had recently remarried. Mr. Zorzo informed her she should sigr the name "Mullard'. She then signed page 3 of the guarantee and handed ut back to him. Mr. Zorzo denied that he had asked the applicant to sign blank sheets of paper or that he had inforned her that the document was only to guarantee payments on the semi-trailer. He further denied that the applicant had asked i= she would be able to take over the terns of the leasing agreement between the respondent anc the lessees or herselt take possession of the semz-trailer in the event of the lessee's defauic. Asked whether he had said to the applicant that she would receive some notification from the respondent if there vere defatit in the payments, Mr. Zorzo said he advised the applicant that the respondent may contact her cepencing on the arrears 2.2 tne paymencs became in arrears then wnder tne guarantee she 'iould be liable for the arrears adjustment section. He statec that the forms of guarantee similar to that signed by the applicant were preoared in the respondent's headquarters in Melbourne anc distributed to the respondent's offices in New South Wales through the Sydney office or the respondent. The forms wera produced, he said, by the roneo method of printing. I do not accept the evidence of the applicant char on 29 June 1977 she was invited by Mr. Zorzo to sign and that she did sign two blank sheets of paper and a third sheet having only the words and figures on it of tmyn1ich she spoke. Nordol accept her evidence that Mr. Zorzo represented to her that the sheets she had signed would be filled up so as to record a guarantee in respect only of the lease covering the Haulmark semi-trailer or that the guarantee would provide _for Ner, in the event of defaulc by the lessees, to take possession of the trarler or thet it would provide for her to be notified as soon as any default on the part of the lessees should occur. I accest the evidence of llr. Zorzo as to what cook place at the meeting at the Taree branch of the ANZ Bank on 29 June 1977. I also accept his evidence that on that occasion the applicant signea page 3 onty of the guarantee in evidence before me and that che applicant attended at the bank on a later occasion, prooabl: in Qecobver 1977, ce sign pages e)oO m ny fo i) bn "2 Fn (Tt ia) 'D tal o wa UU fe) A art fo {) an F ri) w w oO tv re] iP) ry fa} In finding, as I de, that the applicanrc on 29 June 1977 axecured the guarantee in its oresent form I rely not only on the evidence of Mr. Zorzo but also on the internal evidence provided by che document itsel= and the evidence of Mr. Symons as to the process b7 which such documents are produced. Mr. Symons' evidence clearly establishes that the document was not produced directly on a tybewriter. It was produced by a roneo process which involves the duplication of copies from a master sheet which is itself produced on a typewriter. Indeed, an examination of the document demonstrates beyond any doubt that the document signed by the applicant was not produced directly on a typewriter. To accept the applicant's version of what tcok place 1t would be necessary to find thar, although Mx. Zorzo did not nave available a copy of the form of guarantee for execution by the applicant, he did have available to him a sheat othervise blank on which the words "Date the day of 197 ", "Signatures of Wizness" and "Signatures cf Guarantors" had been reproduced by the romeo process and chat thereafter the text which now appears io on page oz the guarantee was insertec, again by roneo process, in such a way chat one cannet aiscern that that text was inserted after the sheet had been signed. To has not established that the represencations alieged were in fact made to her, the application must be dismissed. I now turn to the respondent's cross-claim. That rt claim does not arise under the Trade Practices Ast 1974 or any other law made by the Pariliamenr but under the general law of contract. Ne question was raised as to the Court's jurisdictzon to entertain the cross-claim and having regard to the principles which have been enunciated by the High Court un a series of decisions the most recent of which 1s Stack v. Coast Securities (No. 9) Pty. Ltd. (1983) 57 A.L.J.R. 731 I am satisfied that the Court has jurisdiction to deal with the cross-claim and that it should do so. Clause 7 of the guarantee executed by the applicant provides that a certificate signed by an officar of che ras- pondent or any person authorised by it for the purpase stating the amount owing under the guarantee by the guarantor as at the date statea in the certificate is to be vrima Facia evidence of the facts therein stated. Mr. Symons gave evidence that he haa preparea such a certificate and the certificate, signed by him, 1s in evidence before me. There was no chailenge to the correctness o£ the certificate ve. a xoas iy. Symons was asxea whether credicz th ) except in so 1aqa 13* wv ean =rom the lessees or on ther benalt, including a-ouints recezved from the bankrupt 2astates of tne lessees I accepc My Symons' evicence shat the vesvondernt kee ns recoris by way of ledger cards relating te each lessee and that the practice zs to racord on that ledger card, inter alza, amounts received from the lessee or on the lessee's behalf including the proceeds of the sale of re-possessed goods and, where dbankruptcy has supervened, amounts received from the lessee's bankrupt estate. It has not been shown that the certificate 1s other than an accurate statement of the amount due under the terms of the guarantee. I am, therefore, of opinron that the respondent is entitled to judgment on its cross-claim in the sum of The applicant is to pay the respondent's costs of the proceedings. ee | certify ihat this and the ffr2eN (15) 7 prececi-g pages are a true cop" of the Reasons ior Judgment he erein of tis Roncur ete — i Ha oO