Australian and New Zealand Banking Group Limited v Dennis Radmanovic & 4 Ors [2002] NSWSC 368

New South Wales Supreme Court

CITATION : Australian and New Zealand Banking Group Limited v Dennis Radmanovic & 4 Ors [2002] NSWSC 368 revised - 25/06/2002 FILE NUMBER(S) : SC 50041/00 HEARING DATE(S) : 22/4/02 JUDGMENT DATE : 22 April 2002

PARTIES : Australian and New Zealand Banking Group Limited (Plaintiff) Mr John Boghos (Fifth Defendant) JUDGMENT OF : Einstein J

COUNSEL : Mr C Newlinds (Plaintiff) Litigant in person ( Fifth Defendant) SOLICITORS : Kemp Strang (Plaintiff) Litigant in person (Fifth Defendant) CATCHWORDS : Guarantees and Indemnities - Enforcement of guarantee against director of company - Whether defendant entered into an unlimited guarantee to secure overdraft for company DECISION : The orders of the Court are as follows (1) Order that the fifth defendant pay to the plaintiff the sum of $166,444.97 (2) Order that the fifth defendant pay the plaintiff's costs of the proceedings.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERICAL LIST

Einstein J

Monday 22 April 2002 ex tempore Revised Tuesday 30 April 2002

50041/00 Australian and New Zealand Banking Group Limited & Dennis Radmanovic & 4 Ors JUDGMENT The Proceedings 1 These proceedings are brought by the Australian and New Zealand Banking Group Limited against the fifth defendant, Mr John Boghos, pursuant to a guarantee ["the subject guarantee"], which the plaintiff claims to have been signed by the fifth defendant on 19 November 1999, whereunder the fifth defendant is said to have agreed to pay to the plaintiff on demand all moneys owing or unpaid to the plaintiff by Tilex & Co Pty Ltd ["the company"]. The company had entered into an overdraft agreement with the plaintiff on 9 March 2000, whereunder the plaintiff had agreed to provide an overdraft with a limit of $100,000 on account number 350152653. 2 A copy of the document entitled "Standard Guarantee and Indemnity", upon which the plaintiff sues, is appended to this judgment. The document forms, as to a copy thereof, pages 120 to 139 of exhibit MH 1 to the statement of Mr Hancock made on 27 July 2001. 3 The proceedings before the Court included the admission into evidence first of the document marked for identification P 1, which later became exhibit P 5, and is said to be the original of the Standard Guarantee and Indemnity upon which the plaintiff sues. A careful examination of exhibit P 5 will disclose that the first page and the reverse page appear to have been detached at some time from the pages which are numbered 2 through to 17 inclusive at the bottom right hand corner, and the execution page and the back page. The page which is part of the exhibit, which has been stapled together with the Standard Guarantee and Indemnity, is entitled "Schedule 2 Solicitor's Certificate". On the evidence at the time when the Standard Guarantee and Indemnity was signed, the Solicitor's Certificate was altogether a separate document from the original stapled form of the Standard Guarantee and Indemnity when signed. 4 The proceedings originally joined five defendants. The first defendant was Mr Dennis Radmanovich, and as I understand the evidence, the fifth defendant and the first defendant were both directors of the company. The second and third defendants are the parents of the first defendant, and the fourth defendant is the wife of the first defendant. The proceedings against the first four defendants have been settled. It is, however, relevant to note that the proceedings, so far as the first four defendants had been concerned, had also included claims that these defendants, relevantly on 19 November 1999, had signed a guarantee whereunder they agreed to pay to the plaintiff all moneys owing or unpaid by the company limited to an amount of $50,000, and had subsequently, apparently so it was pleaded on 21 March 2000, signed a further guarantee whereunder they agreed to pay to the plaintiff all moneys owing or unpaid by the company to a limit of $100,000. 5 The subject guarantee includes a page entitled "Details Page". It may be convenient from time to time to refer to the pagination of the exhibit to Mr Hancock's statement, which is exhibit MH 1. The page entitled "Details Page" is to be found at page 121 of that exhibit. At the foot of this page there appear the words "unlimited liability". The execution page [exhibit page 138] shows the document as having been signed by the fifth defendant in the presence of Mr Danny Lagapodis, solicitor of Wollongong, as witness. 6 Also before the Court is the Solicitor's Certificate, to which I have already referred, which although stapled to exhibit P 5, on the evidence was a separate document at the time that it was executed. 7 The fifth defendant; · Denies ever having signed any document to guarantee the unlimited liability of the liabilities of the company; · Denies signing any guarantee on 19 November 1999; · Denies having attended a conference with Mr Danny Lagapodis or any other solicitor on 19 November 1999; · Denies that Mr Danny Lagapodis ever gave him any advice with respect to a guarantee to secure the unlimited liability of the company; · Denies that Mr Danny Lagapodis ever gave him any advice with respect to a guarantee dated 19 November 1999; · Gave evidence that he had never previously seen the document earlier identified in judgment as the Solicitor's Certificate, and gave evidence in his affidavit that the contents of the document are not true. 8 There are clear problems with the first defendant's recollection of a number of relevant events, as during the course of his cross-examination he appeared to readily accept. One only of the examples which comes to mind is that in the course of his cross-examination, as I understood his evidence, the fifth defendant had not seen, at the time when he accepts that he signed his own affidavit made on 12 October 2001, documents paginated as suggested in paragraph 2 of that affidavit. Other problems with his recollection apparently relate to circumstances in which the company went into liquidation. 9 The evidence of the fifth defendant is that, as I understand it, he recalls signing a guarantee in favour of the plaintiff in about August 1999 in the presence of Mr Danny Lagapodis, who at this time was not only his solicitor, but was also the solicitor acting for Mr Dennis Radmanovich and the company. The fifth defendant's evidence is that the guarantee which he signed in about August 1999 was the same or substantially similar to the document already identified as the Standard Guarantee and Indemnity, save that the details at the foot of the first page limited his liability to $50,000. He refers, for example, to the Details Page of the 19 November 1999 guarantee, apparently executed by the first, second, third and fourth defendants, which appears at page 100 of the exhibit, where one sees towards the foot of the page the words "limited liability $50,000 plus interest, costs and other amounts [referred to in clause 2.2]". 10 The fifth defendant's evidence is that at no time did he intend to give an unlimited guarantee to secure the debts of the company. His evidence is that in the period between late June 1999 and early August 1999 he contributed approximately $65,000 to the company's account, and that his arrangement with Mr Dennis Radmanovich was that he would contribute an equivalent amount, but that in fact Mr Dennis Radmanovich did not make his full contribution. 11 The fifth defendant has given evidence that at one stage Mr Dennis Radmanovich arranged loans of $20,000 and $10,000 from his parents-in-law. On the fifth defendant's evidence both he and Mr Dennis Radmanovich were jointly responsible to pay those loans, although they did not have a formal agreement, but this was what they had discussed between themselves. On the evidence of the fifth defendant, Mr Dennis Radmanovich did not contribute any of his own funds, and the fifth defendant became increasingly concerned in that period and up to September 1999 that he alone was providing finance for the company, and that Mr Dennis Radmanovich was "not pulling his weight". The fifth defendant also gave evidence that there was a problem arising from the terms of the shareholders' agreement. On his evidence that agreement included terms to the effect that when the previous company overdraft with National Australia Bank was paid out, Mr Dennis Radmanovich would pay $15,000 to the fifth defendant. The fifth defendant's evidence was that he paid out the overdraft on 3 August 1999 from the sale of his house, but Mr Dennis Radmanovich did not pay him the $15,000. 12 The fifth defendant's further evidence was that he accordingly telephoned Mr Danny Lagapodis to arrange a meeting between himself, Mr Dennis Radmanovich, and the fifth defendant in about September or October 1999. His evidence was that Mr Lagapodis arranged a meeting at 11am on the same day in Mr Lagapodis' office, and that Mr Lagapodis explained the purpose of the meeting and invited the fifth defendant to voice his concerns. The fifth defendant's affidavit evidence was that words to the following effect were then said in the course of the meeting: "6. Accordingly, I telephoned Danny Lagapodis to arrange a meeting between himself, Dennis Radmanovich and me. This was in September or October 1999. Mr Lagapodis arranged a meeting at 11am that same day. The three of us met at Mr Lagapodis' office. Mr Lagapodis explained the purpose of the meeting. I was then invited to voice my concerns. I said words to the following effect: 'I am concerned about the Company finances and that money is not being paid in equal shares in accordance with the agreement in April [or May] 1999'.