New South Wales Supreme Court CITATION : Bentley & Anor v Bearing Traders Pty Ltd & Anor [2003] NSWSC 369 HEARING DATE(S) : 17 April, 2003 JUDGMENT DATE : 17 April 2003 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Interlocutory injunction granted restraining First Defendant from asserting Plaintiffs liable on guarantee of accounts in default. CATCHWORDS : INTERLOCUTORY INJUNCTION - CREDIT RATING PUBLICATION - MISLEADING STATEMENTS - Second Defendant publishes credit rating information - First Defendant informs Second Defendant that Plaintiffs have guaranteed companies' trading accounts which are in default - Plaintiffs affected by adverse credit rating - Plaintiffs allege their signatures on guarantees are forged - serious question to be tried - balance of convenience in favour of granting interlocutory injunction - principles discussed. LEGISLATION CITED : Trade Practices Act 1974 (Cth) - s.51A, s.52, s.87 CASES CITED : Yorke v Lucas (1985) 158 CLR 661 Jon Bentley - First Plaintiff PARTIES : Gary Alexander Williams - Second Plaintiff Bearing Traders Pty Ltd - First Defendant Baycorp Advantage Business Information Services Limited - Second Defendant FILE NUMBER(S) : SC 2373/03 R. McKeand - First and Second Plaintiffs COUNSEL : D.A. Allen - First Defendant S. Jamieson - Second Defendant (excused) Tzovaras Legal - First and Second Plaintiffs SOLICITORS : Catalyst Partners - First Defendant In house - Second Defendant JUDGMENT – Ex tempore 1 By Summons filed on 15 April 2003 the Plaintiffs seek injunctions restraining the First Defendant from making statements or allegations or publishing information to the effect that the Plaintiffs have a liability to the First Defendant pursuant to a guarantee which they are said to have signed in respect of the trading account of Minfox Pty Limited with the First Defendant. 2 Leave was given to file and serve a Summons on short notice. The Summons and the supporting affidavits were served in accordance with the directions given and the matter was called on today before me. 3 At the hearing Mr McKeand appeared for the Plaintiffs and Mr Allen appeared for the First Defendant. The Second Defendant informed the court that it would abide by the decision of the Court and if an injunction was granted against the First Defendant then it would act in conformity with it. The Second Defendant was, therefore, excused from further attendance. 4 The Plaintiffs say that the purported signatures on a credit application agreement guaranteeing the obligations of Minfox Pty Limited to the First Defendant are not their signatures. They say that they have never guaranteed such debts and they have never guaranteed any debts of the companies with which they were associated which have traded with the First Defendant. 5 The Plaintiffs have, after some delay on the part of the First Defendant, procured a copy of the credit application agreement which is said to contain their signatures. They have submitted that document to the examination of a handwriting specialist. 6 Bearing in mind the difficulty of ascertaining the genuineness of a signature from a photocopy document (and a poor photocopy at that), the expert is, nevertheless, of the opinion that the alleged signature of Mr Williams bears no resemblance to Mr Williams' usual signature and that the alleged signature of Mr Bentley is gravely suspect. 7 The problem arises because the First Defendant has reported to the Second Defendant, which is a credit reporting service, that the Plaintiffs are liable as guarantors for the trading accounts of three companies and that those trading accounts are in default. Statements to that effect appear in the credit information published by the Second Defendant in respect of the Plaintiffs. 8 The evidence of the Plaintiffs is that the publication of those statements has already had severe financial consequences to them. Mr Bentley's credit cards have been cancelled. He is about to depart for a business trip overseas and says that he will find it difficult, if not impossible, to conduct that business trip if his credit cards are cancelled. 9 Mr Williams, likewise, has encountered financial difficulties. He was about to engage in the acquisition of property which required finance. That finance is under threat by reason of the adverse credit reference against him which appears in the Second Defendant's report. 10 It is notorious that, in a society such as ours, a person's ability to conduct his or her everyday affairs, let alone his or her ability to engage in business transactions, may be severely affected by an adverse credit rating. One must take that circumstance into account in evaluating where the balance of convenience lies in a case such as this. 11 I will come to the question whether there is a serious question to be tried shortly, but at this stage it is sufficient to note that as far as the balance of convenience is concerned, if an injunction is not granted which has the effect of removing from the Second Defendant's credit reports the statements as to alleged liabilities and default of the Plaintiffs, they probably will continue to suffer considerable financial difficulty in the conduct of their personal lives and their business transactions. 12 On the other hand, the First Defendant is concerned only to obtain payment of the debt owing by Minfox Pty Limited. That debt is not disputed. The problem is that Minfox is unable to pay and has been placed in voluntary administration. The First Defendant's claim, therefore, is to recover the debt from the alleged guarantors, Mr Bentley and Mr Williams. That claim is a simple common money count and can be pursued in the ordinary way in the appropriate Court. 13 The absence of an adverse credit rating for Messrs Bentley and Williams in the Second Defendant's publication will not impede the ability of the First Defendant to recover its alleged debt from them. However, the continuing presence of that credit reference is having an adverse effect on the Plaintiffs' credit. That it does so certainly gives the First Defendant a strong lever of persuasion, if not of coercion, against the Plaintiffs to pay their disputed liability on the guarantee. I do not think that this is a proper benefit for the First Defendant to seek to retain. 14 The causes of action which the Plaintiffs seek to raise against the First Defendant are as follows. 15 The first cause of action is founded on s.52 of the Trade Practices Act 1974 (Cth). It is said that the First Defendant has been guilty of conduct contravening s.52 in making statements to the Second Defendant so that they may be repeated by the Second Defendant to the broader commercial community. The statements are to the effect that the Plaintiffs are liable as guarantors for accounts of companies which are in default and that the Plaintiffs have not honoured their obligations under the guarantees. It is said that those statements are misleading or likely to mislead, because, in fact, the Plaintiffs are not liable on guarantees. 16 The second cause of action is deceit, that is, a fraudulent misrepresentation by the First Defendant that the Plaintiffs are liable on guarantee for accounts of the company. It is said that that fraudulent misrepresentation has been made by the First Defendant in order to obtain a benefit for itself. 17 The third cause of action is defamation. I am not persuaded that there is a serious question to be tried in relation to that cause of action. The statements appearing in the publication of the Second Defendant concerning Mr Bentley are as follows: " Overdue Account(s): These are accounts that have been reported by our subscribers as being in arrears. On 11/3/2003 BEARING TRADERS P/L NSW advised that a 30 Day account reference 1 FOXMCL was overdue. They reported the amount overdue as $6,788, due to a payment default. They also reported that you were acting as a guarantor of this account. On the 17/3/2003 it was advised that the account is under dispute. On 11/3/2003 BEARING TRADERS P/L NSW advised that a 30 Day account reference 1 MINFOX was overdue. They reported the amount overdue as $27,186, due to a payment default. They also reported that you were acting as a guarantor of this account. On the 17/3/2003 it was advised that the account is under dispute." 18 I do not think there can be any adverse imputation against anyone arising from the simple statement that that person is a guarantor of an account. I do not think that it makes any difference that a statement was also made that the account is under dispute. That account may be in dispute for any number of good and sufficient reasons. 19 The statements made in respect of Mr Williams are as follows: " Overdue Account(s): These are accounts that have been reported by our subscribers as being in arrears. On 12/3/2003 BEARING TRADERS P/L NSW advised that a 30 Day account reference 1 FOXMCL was overdue. They reported the amount overdue as $6,877, due to a payment default. On 12/3/2003 BEARING TRADERS P/L NSW advised that a 30 Day account reference 1 MINFOX was overdue. They reported the amount overdue as $28,259, due to a payment default. On 12/3/2003 BEARING TRADERS P/L NSW advised that a 30 Day account reference 1 FOXMAT was overdue. They reported the amount overdue as $2,051, due to a payment default. They also reported that you were acting as a guarantor of this account." 20 In respect of the first two statements, there is no explanation of how Mr Williams is said to be liable for the accounts of the company. In the case of the third statement, that is the statement relating to an account styled Foxmat, there is an allegation that Mr Williams is acting as guarantor of that account. I suppose the inference can be drawn in relation to all three accounts that Mr Williams is liable as a guarantor. There was no statement in the information relating to Mr Williams, as there is in the case of the information relating to Mr Bentley, that the accounts are in dispute. Therefore, I suppose it is possible to draw the inference that there is no dispute in relation to the accounts, that Mr Williams is liable for the accounts as guarantor, that he has not paid and that, accordingly, he is a bad credit risk. 21 However, I do not think that one needs to explore the question whether an injunction should go to restrain those statements as defamatory statements because I think that the matter can be resolved on the first cause of action which the Plaintiffs raise, that is the cause of action founded on the Trade Practices Act . 22 If the alleged guarantees are indeed forged in the sense that the signatures of Messrs Bentley and Williams are not genuine, then there is certainly a strong case that the statements as to their liability founded upon such guarantee are misleading and deceptive. As is well established, to be misleading or deceptive within the meaning of s.52 of the Trade Practices Act , a statement does not need to be made with intent to mislead or deceive. It is sufficient that the statement is, in fact, false or misleading or is capable of being false or misleading, even if it is made innocently: see Yorke v Lucas (1985) 158 CLR 661, at 666. 23 Accordingly, a statement by the First Defendant to the Second Defendant that the Plaintiffs are liable on guarantees when their signatures have been forged and a consequent statement by the Second Defendant to the public at large that the Plaintiffs have liability on such guarantees are capable of being misleading and deceptive for the purposes of s.52. There is no question that the First and Second Defendants are making or repeating those statements in trade or commerce. 24 It seems to me that there is established by the Plaintiffs a serious question to be tried as to whether the Trade Practices cause of action which they allege is made out. As I have said, there is evidence from a handwriting expert which challenges the validity of the impugned signatures. It is significant in this respect that allegations of forgery have been made which directly involve culpability by the First Defendant's managing director, Mr David James. His signature appears as witness to the impugned signatures. If those signatures are forgeries, it strongly suggests that Mr James himself has been guilty of a fraud. 25 One would have thought that in the face of such a serious allegation of dishonesty, Mr James would be anxious to defend his reputation by going into the witness box and denying that he was party to any fraud. One would have thought that if he was innocent, he would be keen to establish his innocence and would be keen to submit himself to cross-examination to establish his innocence. However, no affidavit has been put on by Mr James. No oral evidence has been proffered by him. From my observation, Mr James has not even been present in court. There has been no explanation proffered for his absence. I must weigh these circumstances heavily in considering whether a serious question to be tried has been established by the Plaintiffs and whether, in the exercise of the Court's discretion, an injunction should go. 26 I have already referred to the balance of convenience. It seems to me that the balance of convenience is, for the reasons I have given, heavily weighted in favour of granting the injunction. The First Defendant is able to pursue its claim in debt on the guarantees, if it has such a claim, in the usual way. All that will be impeded by the granting of the injunction is the First Defendant's ability to exert collateral pressure on the Plaintiffs for payment of the disputed debt. 27 In those circumstances, I think that the ground for granting an injunction has been made out and I propose to grant it. ~ oOo ~ Last Modified: 05/02/2003 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.