New South Wales Supreme Court CITATION : Coast Reo Pty Limited v O'Brien & (2) Ors [2006] NSWSC 1098 HEARING DATE(S) : 17 October 2006 JUDGMENT DATE : 17 October 2006 JURISDICTION : EQUITY DIVISION JUDGMENT OF : Lloyd AJ EX TEMPORE JUDGMENT DATE : 10/17/2006 DECISION : 1. A declaration that the Plaintiff has a caveatable interest in the First Defendant's interest in Folio Identifier 14/SP73420 and Folio Identifier 5/13304 ("the property"). 2. Judgment for the Plaintiff in the sum of $330,125.95. 3. Interest pursuant to clause (i) of the agreement between the Plaintiff and the First Defendant dated on or about 10 August 2003. 4. In the alternative to 4 above, interest pursuant to section 100 of the Civil Procedure Act 2005. 5. An order that Messrs Scott Darren Pascoe and Alan Hayes of Sims Partners, Level 24, 264 George Street, Sydney be appointed trustees of the property. 6. An order that the said property be vested in the trustees subject to any encumbrances affecting the entirety of the property to be held by the trustees upon trust for sale. 7. An order that the trustees pay out the proceeds of sale: - a) Council rates, Water rates, Vendor's Duty, Land Tax and any other statutory duties or charges if any. b) The real estate agent's commission and charges. c) The Trustees' costs and charges. d) The amounts owing to any person having a secured interest save the Plaintiff. e) Account to the Second and Third Defendants for their portion of the balance. f) From the First Defendant's portion of the balance the amount of the Judgment together with interest and costs. g) Balance to the First Defendant. 8. Costs for the Plaintiff as agreed or failing agreement as assessed. 9. These orders be stayed for twenty eight days. 10. The exhibits may be returned after twenty eight days. CATCHWORDS : COMMERCIAL CREDIT SUPPLY AGREEMENT: – construction of agreement – whether signing of agreement attracted personal liability – charge over property – appointment of trustees for sale – liquidators not disqualified from appointment as trustees LEGISLATION CITED : Conveyancing Act 1919 s 66G Coast Reo Pty Limited - Plaintiff Robert O'Brien - First Defendant PARTIES : Joanne Therese O'Brien - Second Defendant Ricki Craig O'Brien - Third Defendant FILE NUMBER(S) : SC 3179/06 COUNSEL : M R Aldridge SC and D J Durston (barrister) - Plaintiff M W Young (barrister) - Defendants SOLICITORS : Peninsula Law - Plaintiff Streeter Commercial Lawyers - Defendants - 6 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Lloyd AJ Tuesday, 17 October 2006 3179/06 COAST REO PTY LIMITED v ROBERT O'BRIEN & (2) ORS EX TEMPORE JUDGMENT 1 HIS HONOUR: The plaintiff, Coast Reo Pty Limited, is in the business of selling plaster board and other products for the building industry. The first defendant, Mr Robert O'Brien, is the sole director and company secretary of Allcoast Linings Pty Limited. The second defendant is Mrs Joanne Therese O'Brien, the defendant's wife, and the third defendant is Mr Ricki Craig O'Brien, the defendant's brother. The second and third defendants are both shareholders in Allcoast Linings Pty Ltd ("Allcoast"). Allcoast is in the plastering business and purchases building materials from the plaintiff. 2 On or about 10 August 2003 Mr O'Brien signed a document called a "Commercial Credit Facility Application and Supply Agreement" made between the plaintiff and Allcoast. There is some dispute as to the circumstances in which the agreement was signed but I do not have to decide that dispute; what is important is that the agreement was signed and the parties are governed by its terms. 3 The plaintiff contends that the agreement enables it to charge any property of the first defendant with the obligations under that agreement including the lodging of caveats in respect of the interest thereby conferred. 4 The plaintiff has lodged two caveats on real estate owned by the defendant and now seeks to enforce the charge. Since the real estate in question is owned by the second and third defendants as well as the first defendant the plaintiff seeks the appointment of trustees for sale of the properties pursuant to s 66G of the Conveyancing Act 1919. 5 The questions for determination are (i) whether in signing the agreement Mr O'Brien did so only on behalf of Allcoast so that he did not become personally bound; and (ii) what is the proper construction of the agreement and, in particular, clause (o) thereof. 6 The agreement is, as I have said, entitled "Commercial Credit Facility Application and Supply Agreement". The parties agree that the buyer described in the agreement is Allcoast Linings Pty Limited. The agreement is set out on a document which contains three A4 size pages in one continuing sheet and printed on both sides. It is fair to say, as Mr M W Young who appears for the defendant points out, that the application form is in two parts: the first part relates to the trading terms and credit facility, and the second part on the reverse side of the form is a guarantee and indemnity provision. 7 Section 1 of the document is headed "Details of Account Customer" and then there is space for ticks to be applied under three kinds of entity – "Company or Corporation", "Partnership" and "Sole Trader". The tick in the present case is placed alongside "Company or Corporation". 8 Section 2 is headed "If a Company or Corporation". Under that heading the details of that company or corporation are set out. Here the name of Allcoast Linings Pty Ltd is stated and the date of incorporation of the company is stated as being May 2003. 9 Section 3 of the document is headed "If a Partnership or Sole Trader" and that section is left blank. 10 Section 4 is headed "Particulars of all parties to this Facility are required below. Full Names of Addresses of Directors/Partners/Sole Traders". Under that heading is set out the full name of the first defendant, Robert Ian O'Brien. Alongside that name is a question "Do you own your own home? Y/N" and then "N" is circled. Mr O'Brien's private address is stated as "10 Dover Road, Wamberal". 11 Section 5 is headed "Operational Details" and that section has not been completed. Section 6 is headed "Trade References" and that section is also left blank. 12 On the following page of the application form are set out what are said to be "Trading Terms & Conditions of the Credit Facility". Those trading terms and conditions are set out in a number of sub-paragraphs marked from (a) to (o). Of particular relevance in the present case is sub-par (o), which is as follows: The Company and/or individual person(s) referred to in Section (2), (3) and/or (4) of this application hereby Charge all their Right, Title, Interest (if any) in the property or properties referred to in Section (2), (3) and (4) of this application and also any property or properties that they own currently or may acquire in the future solely or jointly or have or become to have a beneficial interest in, in favour of "COAST REO & MIDCOAST", with the due and punctual observance and performance of all of the obligations of the Buyer. Such person(s) acknowledge that "COAST REO & MIDCOAST", may at its discretion register and lodge a Caveat(s) on such property or properties in respect of the interests conferred on it under this clause. Such registration of a Caveat by "COAST REO & MIDCOAST" over the Customer(s) property(ies) shall not be challenged by the Buyer in any way whatsoever, and the Buyer agrees not to take any steps in filing a "Lapsing Notice" via the Land Titles Office to have the Caveat removed, until such time the Buyer has paid all monies owing by it to "COAST REO & MIDCOAST" as claimed from time to time. 13 Section 7 is headed "Name of Person Authorised to Sign". Under that section the words "Robert Ian O'Brien" appear together with his signature and a contact telephone number. 14 There is then a heading "Authority under Privacy Act 1988 (As amended)" which concludes with the following printed statement: This is to certify that I/We have read, comprehended and accept the above-mentioned terms and conditions and further without undue influence or unfair pressure append my/our signature(s) hereunto. I/We further acknowledge having received, read and understood this application and further the Conditions of Sale in respect to this Application for Credit." 15 Finally, in this part of the document there is space for what is said to be the "Buyer's Signature" and there appears the signature of Mr O'Brien alongside of which he lists his title as "Director". 16 The reverse of the document is the guarantee and indemnity provision which contains a number of sub-paragraphs but that part of the application form has not been completed or signed. 17 Mr M W Young, appearing for the defendant, submits that Mr O'Brien in signing the document was not intended to be personally bound and he is not a party to the agreement. As Mr Young points out, the document is in two parts and the second part, being the guarantee and indemnity section, has not been completed. According to the submission, if it were intended to personally bind Mr O'Brien then that section of the document would have been completed. 18 I must say that there is some force in this submission, but notwithstanding the force of the submission it remains to determine precisely what it is that the first part of the document contains and whether or not that part itself binds Mr O'Brien in his personal capacity. 19 It is fair to say that the document has been somewhat poorly drafted and there are a number of inconsistencies throughout it. The references in it to "the Buyer" and to "the Customer" seem to be interchangeable but the agreement can nevertheless be construed on its face and according to its terms. 20 As I have noted, the heading to s 4 of the agreement is "Particulars of all parties to this Facility are required below" and here the name of Mr O'Brien is inserted. He is thus clearly identified as a party to the agreement. It seems to be the intention that any individual person or persons whose names are identified in s 4 would be parties to the agreement, otherwise there would be no point in identifying such persons. 21 In turning to the crucial clause, namely sub-par (o), it is important to bear in mind, I think, the opening words of that sub-paragraph, namely "The Company and/or individual person(s) referred to in Section (2), (3) and (4) of the application hereby Charge all their Right, Title, Interest ...". The words "and/or individual person(s) referred to in Section (2), (3) and (4)" suggest it is not only the company but also the individual persons mentioned in those sections who agree to charge their right, title and interest etc in any property or properties that they own. 22 This is an inescapable conclusion drawn from a plain reading of those opening words. That, in my opinion, is sufficient to conclude the matter in favour of the plaintiff. The words which follow in sub-par (o) do not, in my view, cut down or limit the opening words. Despite the submissions of Mr Young to the contrary, I am forced to the inescapable conclusion that it is not only the company but also the individual person or persons referred to in those sections who agree to the giving of a charge on any property in favour of the plaintiff. In the present case only one such person is identified and that is Mr O'Brien. 23 This conclusion means that the plaintiff must succeed and the application for the appointment of trustees for sale must be granted. 24 The two trustees nominated are liquidators. As Mr Young has pointed out, they are not the usual kind of persons who are appointed trustees for sale under s 66G of the Conveyancing Act 1919. The fact that they are liquidators, however, does not disqualify them from being appointed as trustees for sale. It is true that ordinarily the trustees for sale appointed under s 66G of the Conveyancing Act 1919 are a solicitor and a real estate agent, but liquidators are accustomed to doing such things in other contexts. I see no objection to their appointment. 25 The parties have informed me that there is no dispute as to the amount owing to the plaintiff by the defendant. 26 Accordingly, I grant the relief sought by the plaintiff and I make the formal orders as set out in pars 1, 3, 4, 5, 6, 7, 8 and 9 of the amended summons dated 6 July 2006. In relation to par 6 of the summons, in addition to Scott Darren Biscoe I add the name of Alan Hayes. In par 3 I include the agreed sum of $330,125.95. At Mr Young's request these orders are stayed for 28 days. The exhibits may also be returned after 28 days if no appeal is filed. I hereby certify that the preceding 26 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd. Associate Dated: 17 October 2006 ********** 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.