Sleaford v Worthing & Saunders [2020] NSWDC 231

District Court New South Wales

Medium Neutral Citation: Sleaford v Worthing & Saunders [2020] NSWDC 231 Hearing dates: 18 May 2020 Date of orders: 22 May 2020 Decision date: 22 May 2020 Jurisdiction: Civil Before: Priestley SC, DCJ Decision: See [44] Catchwords: GUARANTEE AND INDEMNITY — Contract of guarantee — Deeds Legislation Cited: Competition & Consumer Act 2010 (Cth) Fair Trading Act 1987 (NSW) Corporations Act 2001 (Cth) Civil Procedure Act 2005 (NSW) Cases Cited: Shevill v Builders Licensing Board (1982) 149 CLR 620 Alonso v SRS investments (WA) Pty Ltd [2012] WASC 168 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Category: Principal judgment Parties: Sleaford (First Plaintiff) Worthing (First Defendant) Saunders (Second Defendant) Representation: Counsel: Mr Batley Counsel for the First Plaintiff

Solicitors: Mr Flehr Solicitor for the Second Defendant. File Number(s): 2019/00200838 Publication restriction: Unrestricted.

Judgment 1. The plaintiff seeks to recover from the defendants monies advanced by her to a company ("the company") of which the first and second defendants were the directors. That company was a home building company and had financial difficulties and became insolvent and is now deregistered. The money was advanced by two advances the first of $100,000 and the second of $50,000. The bases of the claim are pursuant to a guarantee and indemnity or alternatively under the Australian Consumer Law ("ACL"). 2. The plaintiff and her husband met the 2 defendants in the course of having their home built. They came to know the first defendant quite well. The evidence shows that their dealings were predominantly with the first defendant and only minimal with the second defendant. The plaintiff and her husband were prepared to invest in that company though on particular conditions which the first defendant assured them would be met. In particular the plaintiff sought an assurance that she would be repaid the money advanced. 3. It is clear from the affidavit evidence of both the plaintiff and her husband which was not adversely affected by cross examination that prior to lending the money assurances had been received from the first defendant that the loan would be personally guaranteed by he and the second defendant. This was reflected in the first loan deed which contains a personal guarantee and indemnity provision referring to "guarantors" and referring to joint and several liability of those guarantors. There is no dispute however that the guarantee provision is only expressly signed by the first defendant and not the second defendant. A major argument in the case is whether viewed objectively the second defendant is a party to the guarantee and indemnity. 4. A second major argument is whether it can be said that the second defendant engaged in misleading and deceptive conduct or unconscionable conduct. There is clear evidence of assurances by the first defendant that could be relied upon to support this part of the pleading but no direct evidence of similar assurances being made by the second defendant or on his behalf with his authority. The argument is that the second defendant should have made it clear that he declined to give a guarantee before the funds were advanced under the 2016 deed. 5. $100,000 was provided in December 2016. I accept the evidence of the plaintiff that the balance of $40,000 was known to all as not being able to be paid at the time of the first loan deed but would be paid upon the expiration of a term deposit. That occurred and it was agreed that a further $50,000 rather than $40,000 would be advanced. There were similar conversations between the first defendant and the plaintiff and her husband in respect of this money as there was in respect of the $100,000. That is there were assurances by the first defendant that the repayment of the money would be personally guaranteed by the first defendant and the second defendant. Again there was nothing said by the second defendant to that effect. Furthermore on the second occasion there was no guarantee clause in the 2018 deed. 6. The second defendant says that he signed the second deed of loan on behalf of the company knowing that there was not that guarantee. He similarly says he signed the first loan deed but not the guarantee provision because of his unwillingness to go as a guarantor. 7. In late 2018 the company was placed in administration and subsequently was wound up. No repayment of the principal of the loans was made by the company resulting in this claim against the first and second defendants.