Appeal Panel - Internal CITATION: Plant v Meriton Properties Pty Ltd (RLD) [2009] NSWADTAP 62 APPELLANT Wayne Douglas Plant PARTIES: RESPONDENT Meriton Properties Pty Ltd FILE NUMBER: 099037 HEARING DATES: 15 October 2009 SUBMISSIONS CLOSED: 15 October 2009 DATE OF DECISION: 23 October 2009 BEFORE: O'Connor K - DCJ (President); Molloy G - Judicial Member; Harrison B - Non-Judicial Member CATCHWORDS: Retail Leases - Company Lessee - Director's Personal Guarantee - Whether Signature Binding in Circumstances - Objective Approach - Appeal Dismissed DECISION UNDER APPEAL: Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd [2009] NSWADT 121 FILE NUMBER UNDER APPEAL: 085163 DATE OF DECISION UNDER APPEAL: 05/26/2009 LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Benson-Brown v Smith [1999] VSC 208 CASES CITED: Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd [2009] NSWADT 121 Saunders v Anglia Building Society [1970] 3 All ER 961 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 291 CLR 265 APPELLANT D Leamey, solicitor REPRESENTATION: RESPONDENT T Maltz, barrister / L Wong, solicitor ORDERS: 1. Appeal dismissed. 2. Directions in relation to the respondent's foreshadowed application for costs of the appeal, see para [27]. REASONS FOR DECISION 1 The appellant, Mr Wayne Douglas Plant, appeals against a decision of the Retail Leases Division of the Tribunal, holding him liable as personal guarantor for the obligations of a company, DCM Leases-Five Pty Ltd (DCM), of which he is the sole director: see Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd [2009] NSWADT 121. In those proceedings the lessor and respondent to this appeal, Meriton Properties Pty Ltd, obtained orders for monetary compensation against both the company as lessee, and Mr Plant, as guarantor, for default following the lessor's termination of the lease in October 2007 of a lease of a retail shop to the company. 2 The shop is located at the Tiffany Plaza, Bondi Junction. The permitted use under the lease in issue was sale of doughnuts and coffee. The shop was one of a chain operating under the 'DCM' name. The leases were held by companies controlled by Mr Plant, and the businesses were run by franchisees. 3 An appeal may be made, as of right, on a 'question of law', and, with the leave of the Appeal Panel, an appeal may be extended to the merits: see Retail Leases Act 1994, s 77A; Administrative Decisions Tribunal Act 1997, ss 112, 113. This is an appeal on questions of law only. 4 Mr Plant submits that the Tribunal was wrong to find him liable as guarantor. His case is that he was not, in the circumstances of the case, a guarantor of DCM's liabilities under the lease. 5 The notice of appeal had four grounds. They were that the Tribunal erred in law: (a) in finding that Mr Plant was a 'party' or 'former party' within the meaning of s 63 of the RLA [this ground was not pressed at hearing]; (b) in applying the principles in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 291 CLR 265; (c) in failing to find that the deed of guarantee was a separate agreement to the Lease; and (d) in finding that Meriton was reasonably entitled to believe that Mr Plant no longer maintained his opposition to being a guarantor in that the Tribunal failed to have proper regard to the evidence of Ms Wong [solicitor for Meriton] that: (i) she knew that the deed of guarantee would only be binding against Mr Plant if it had been executed by Mr Plant when he was named as the guarantor in item 15 of the Lease Schedule; and (ii) she knew that following the 'reinstatement' of Mr Plant's name as the guarantor in item 15 of the Lease Schedule, that the deed of guarantee had not been re-executed by Mr Plant. 6 At the appeal hearing, Mr Leamey made oral submissions and filed written submissions. The written submissions were, in certain respects, at variance with the grounds. No objection was taken by the respondent, and the appeal took account of the additional matters canvassed in Mr Leamey's submissions. 7 Mr Maltz, for the respondent, raised the question of whether the appeal properly identified any question of law relating to the reasoning process of the Tribunal, and tabled written submissions going to the issue. He submitted that the appeal went only to the findings of the Tribunal as they related to the evidence before it. Once it had made those findings, for all of which there was available evidence, the Tribunal's conclusion that Mr Plant was a guarantor, and therefore incurred the liabilities covered by the guarantee, was unexceptional. 8 The lease under notice was executed in 2005. It had been preceded by an Offer of Lease. The Offer was to Mr Plant's company, not another company or a franchisee to DCM, required a director's guarantee to be provided, and was accepted by Mr Plant (who was the sole shareholder and director of DCM) by signing the Offer and returning it to Meriton. A Lease was then sent to DCM by Meriton. It provided that (consistent with the offer and acceptance) that Mr Plant would personally guarantee the obligations of DCM, the lessee. 9 Mr Plant returned the lease with amendments to certain clauses. In particular, he struck out the reference to his name as guarantor in the guarantee clause, item 15 of the Lease Schedule. 10 What then occurred is dealt with by the Tribunal as follows. There is no contest with this account. The 'Mr Scott' referred to in the following account is Mr Plant's executive assistant. Mr Scott did not give evidence at the Tribunal hearing. The Tribunal found that Mr Scott was the agent of DCM and Mr Plant. There is no challenge to that finding. '37 In the course of reviewing the file, Ms Wong noted that in the Offer of Lease Meriton had required a director's guarantee and that Mr Plant, in requesting changes to the Offer of Lease, had not asked to be relieved of the obligation of guaranteeing the lessee's obligations. She stated in her evidence that according to her understanding at the time Meriton had in the past had difficulties recovering rental arrears from corporate tenants and that it therefore had a policy of requiring personal guarantees from directors. 38 At some time between 9 and 13 December 2005, Ms Wong wrote the name 'Wayne Douglas Plant' in her own handwriting underneath the deleted version of this name appearing below the word 'Guarantor' in Item 15 of the Lease Schedule. 39 On 13 December 2005, Ms Wong sent a letter to DCM in the following terms:- We refer to the lease documents received by our office on 9 December 2005. We note the following: 1. Lease (in duplicate) a. The Leases have not been executed by the Tenant on page 2. We enclose the Lease (in duplicate) for the Tenant to execute on page 2 of the Leases. b. Item 15 of the Lease Schedule "Guarantor" has been deleted. This is not agreed by the Landlord. We refer to the Letter of Offer signed and accepted by you that director's guarantee ( sic ) is required from all directors if the Tenant is a company. Therefore I have reinstated "Wayne Douglas Plant" as the guarantor. 2. The following items are still outstanding:… [Ms Wong then identified three cheques and a direct debit form required from DCM]. I look forward to receiving the signed Lease (in duplicate) and the items 2(a) to (d) at your earliest convenience. 40 Ms Wong addressed this letter to Mr Scott since she had noted from the file that all previous correspondence relating to the Lease had been addressed to him. 41 According to Mr Plant's testimony, he assumed at the time that if Meriton or its lawyers did not accept his deletion of his name from Item 15 of the Lease Schedule, the page would have been reprinted and he would have been asked to sign it once again. He testified that some time in December 2005 Mr Scott brought him the 'signing pages' of the Lease and told him that he had not signed them on behalf of DCM. He did not see the remainder of the Lease or, indeed, Ms Wong's letter of 13 December. He signed the Lease on page 2 on DCM's behalf and gave the 'signing pages' back to Mr Scott to be returned to Meriton. 42 On 16 December 2005, Ms Wong received from Mr Scott the original of the letter that she sent to him on 13 December, together with the two copies of the Lease. She placed ticks against items 1(a) and (b) of the letter (reproduced above) indicating that these two requirements had been satisfied. She then noticed, however, that Mr Plant's signatures (on behalf of DCM) on page 2 of the copies of the Lease were not in blue or black ink. She said in evidence that she believed that they were in pencil. She also realised that the documents requested in item 2 of her letter had not been provided. 43 In a letter to DCM dated 16 December 2005, addressed to Mr Scott and enclosing the two copies of the Lease, Ms Wong pointed out that because neither blue nor black ink had been used, the Lease had not been properly executed on page 2. She asked that this be rectified and that the three cheques and the direct debit form requested in her letter of 13 December be sent to her. 44 In cross-examination, Mr Plant testified as follows on these matters: (a) he did not remember ever signing the Lease in pencil; (b) he did not usually sign documents in pencil; (c) he remembered receiving and signing the Lease twice, but not three times; and (d) on the second occasion he did not read the Lease. 45 On 13 January 2006, Ms Wong received from DCM the original of her letter of 16 December 2005. It was accompanied by the two copies of the Lease, executed in ink on page 2, but not by the cheques or the direct debit form. She wrote the phrase 'Only rec'd 2 leases' on the letter. She made further requests to DCM for the cheques and the direct debit form. She received these on 8 February 2006. 46 On or about 17 March 2006, Meriton executed the Lease. Ms Wong then attended to its stamping and registration.' 11 Mr Plant's case at hearing before the Tribunal was that he had not understood that he was, by signing these pages, committing himself personally as guarantor. 12 At the heart of Mr Plant's case are two matters. One, Meriton knew from prior dealings with him that his invariable practice when taking up leases in connection with his franchise operations was not to give a personal guarantee. Two, this had been the basis upon which the original lease deal covering the subject premises had been made. That deal was made in 2001. Before the Tribunal below and in the submissions to the Appeal Panel, considerable emphasis was given to the circumstances of 2001. Ms Wong, the solicitor, had only started with Meriton a few days before the events recounted above occurred, and she, on his case, did not have a proper appreciation of his stance in this matter. 13 In assessing the evidence, including the circumstances surrounding the 2001 lease, the Tribunal referred to the guidance given by the High Court decision in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52. The High Court re-emphasised the primacy of the terms of the contractual document where the bargain was made between commercial parties, and the document was signed. A party's signature is binding as to all terms regardless of whether the party has read or understood all of the terms. The exceptions to this proposition are narrow ones. As to signature or other formal methods of execution, the Court said at [47]-[48]: '47. … It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief. 48. In most common law jurisdictions, and throughout Australia, legislation has been enacted in recent years to confer on courts a capacity to ameliorate in individual cases hardship caused by the strict application of legal principle to contractual relations. As a result, there is no reason to depart from principle, and every reason to adhere to it, in cases where such legislation does not apply, or is not invoked.' 14 The setting for these comments was this. Toll is a trucking company. It agreed to transport pharmaceutical goods that required sensitive handling and storage. It failed to do so. It denied liability on the basis of a term in a standard contract signed by its customer. The allocation of insurance risk is a usual feature of commercial carriage contracts, giving rise to differential rates. Toll's position was that the term allocated the risk to its client. The contract document was a form with printing on the front and back. Immediately above the signature space appeared the words 'Please read 'Conditions of Contract' (Overleaf) prior to signing.' The term upon which Toll relied appeared on the back. The Supreme Court of New South Wales held that the term was not binding, as Toll had failed to give adequate notice of it. The Court of Appeal upheld the decision. The High Court allowed the appeal. In the courts below, considerable emphasis had been given to the case-law that has grown up in the so-called exclusion clause and ticket cases protecting parties against the imposition of sweeping or oppressive terms excluding liability. Almost invariably these cases are ones where there is no signature and the conditions are imposed in circumstances where the affected party has little room for negotiation and no practical notice of the terms. 15 The High Court noted as to the Toll case: '29. Each of the four parties to the case is a substantial commercial organisation, capable of looking after its own interests. This hardly seems an auspicious setting for an argument that a party who signs a contractual document is not bound by its terms because its representative did not read the document.' 16 In our view, similar observations can be made in the present case. The dealings took place between two substantial commercial parties. As noted, Mr Plant ran a chain of coffee shops. Meriton's Offer of Lease of 2005 was in line with usual commercial practice in the commercial leasing field of requiring a director's personal guarantee where the lessee was a private company. 17 Mr Plant's essential defence to being bound by his signature is that this had not been the way in which he had dealt in the past with lessors, including in particular Meriton (as per the 2001 lease). Further he had made it clear in his markings on the 2005 lease returned for acceptance that he would not give a guarantee. Finally, he had simply signed pages handed to him by his assistant without appreciating the implications, in circumstances where the solicitor for Meriton had not supplied him with a full copy of the contract. 18 It is difficult to discern any question of law that arises in relation to the Tribunal's appraisal of the evidence before it. While Mr Plant furnished a statement of evidence, and was cross-examined, his case was made difficult by the fact that Mr Scott, his assistant, was not called. 19 There is a suggestion in the way the case and this appeal have been conducted that it would have been better if Ms Wong had supplied a complete document to Mr Plant when asking for the affected pages to be re-signed. We do not think that is a significant matter in dealings between commercial parties, especially where documentation is relatively voluminous. It is not uncommon for only the pages requiring further amendment, notation or re-execution to pass between the parties. 20 The main submission on appeal that might be seen as raising a question of law is that the Tribunal was mistaken to approach the case by reference to the guidance in Toll, but should have given greater attention to the circumstances of the relationship extending back to 2001, and the subjective understanding of the parties. 21 In this case there was no evidence of any subjective understanding on the part of Meriton that differed from what it said in its 2005 Offer of Lease. It was for Mr Plant to renegotiate the Offer of Lease if he wanted to retain the same term (no personal guarantee) as had applied when the shop was originally leased in 2001. 22 Mr Plant's attempt to have the Tribunal decide the case by reference to his subjective understanding would, we think, subvert the clear indication given by the High Court in Toll as to the importance of objective evaluation of the terms of a contract. In our view, the High Court in Toll made it plain that in signed contract cases involving commercial parties, great caution is to be exercised in relieving a party from the terms of the agreement by reference to the broader circumstances of the transaction. 23 Mr Leamey drew the Appeal Panel's attention to the case of Benson-Brown v Smith [1999] VSC 208 (Ashley J), a director's personal guarantee case. The director's company was the purchaser in a transaction involving a consideration of approximately $1.4m, financed as to $0.3m by vendor finance supplied by the plaintiff. The purchaser fell into default. The plaintiff sued the director. The transaction documents were defective. They had not included a separate element for the personal guarantee and the usual signature and witnessing clauses. However, the plaintiff contended that the circumstances of the transaction were clear that the deal was done on the basis that a director's personal guarantee would be provided to secure the debt of the purchaser company. The defendant had as director executed the principal agreement in the usual way. It referred to the guarantee requirement. The Court was satisfied, viewing the circumstances of the transaction as a whole, that the mutual intention of the parties had been that a guarantee would be furnished to secure the deal. The Court rejected evidence led by the defendant in support of submissions to the effect that the defect in the document as presented for signature meant that no contract of guarantee had arisen or if there was one it was unenforceable. 24 In our view, this decision does not assist Mr Plant. The Court looked closely at the commercial nature of the transaction, and such matters as the letter of offer of the vendor. It had no doubt that the parties had a clear understanding during the deal-making phase that, in the usual way, a personal guarantee would be required of the directors of the purchaser company. The defect in the final documentation was due to a solicitor's error. The execution of the final contract document carried with it a commitment to the giving of a guarantee and indemnity in the terms set out in a schedule to the document. 25 Mr Leamey suggested that Mr Plant ought not be held liable because he did not understand the character of the document that he signed ('non est factum' as this defence has traditionally been described). Mr Maltz, in reply, noted that the non est factum defence is, usually, only invoked successfully by signatories who have obvious disabilities such as impairment of mind due to age, illiteracy or inability to understand spoken or written English. He referred the Appeal Panel to observations of the House of Lords in a case in 1970, Saunders v Anglia Building Society [1970] 3 All ER 961. We agree with Mr Maltz that there is nothing in the present case that would support a plea of non est factum. It is sufficient to refer to the following remarks of Lord Reid at 963: 'I do not say that the remedy can never be available to a man of full capacity. But that could only be in very exceptional circumstances; certainly not where his reason for not scrutinising the document before signing it was that he was too busy or too lazy. In general I do not think he can be heard to say that he signed in reliance on someone he trusted.' 26 In our view the burden of Mr Plant's appeal, as submitted by Mr Maltz, goes simply to the findings of fact made by the Tribunal below. There was ample evidence to support its findings, and those findings inevitably led to the conclusion that Mr Plant had given an enforceable personal guarantee. The Tribunal's decision was a careful and comprehensive one, free, we consider, of any arguable error of law. 27 Application for Costs of the Appeal. Mr Maltz foreshadowed an application for his client's costs of the appeal. We note that there is also an application for costs pending before the Tribunal below. We make the following directions: 1. Respondent to file and serve submissions in support of any application for costs of the appeal within 14 days of the date of delivery of this decision. 2. Appellant to file and serve submissions in reply within a further 14 days. 3. Unless there is an objection, in which case a hearing will be held to consider the objection, the Appeal Panel will determine the application without holding a hearing, as permitted by section 76 of the Administrative Decisions Tribunal Act 1997 . 4. Liberty to either party to apply to vary these directions. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.