Waco Kwikform Limited v Jabbour [2011] NSWSC 1328

Supreme Court New South Wales

Medium Neutral Citation: Waco Kwikform Limited v Jabbour [2011] NSWSC 1328 Hearing dates: Tuesday, 25 October 2011 Decision date: 26 October 2011 Jurisdiction: Equity Division Before: White J Decision: Refer to paras [55] and [53] of judgment. Catchwords: GUARANTEE AND INDEMNITY - enforcement of guarantee and charge - deed of company arrangement does not affect creditor's rights under guarantee and indemnity - charge secures costs incurred in enforcing the charge assessed on the ordinary basis and interest pursuant to s 100 of the Civil Procedure Act 2005 - defendant to be afforded a reasonable time to pay amount for which he is liable before order for judicial sale Legislation Cited: Civil Procedure Act 2005 Corporations Act 2001 (Cth) Cases Cited: Re Leighton's Conveyance [1937] Ch 149 Inglis v Commonwealth Trading Bank of Australia (1973) 47 ALJR 234 Re Adelphi Hotel (Brighton) Ltd [1953] 1 WLR 955 AGC (Advances) Limited v West (1984) 5 NSWLR 301 Sandtara Pty Ltd v Australian European Finance Corporation Ltd (1990) 20 NSWLR 82 Category: Principal judgment Parties: Waco Kwikform Limited (Plaintiff) Simon Jabbour (Defendant) Representation: Ms L Young (Plaintiff) T O Bland (Defendant) HWL Ebsworth Lawyers (Plaintiff) Emprise Legal & Corporate Advisory (Defendant) File Number(s): 2010/366384

Judgment 1HIS HONOUR : These are proceedings to enforce a guarantee and charge. The plaintiff is in the business of providing equipment and labour to the building industry. The defendant is a director of a company formerly called Jabbour Construction Management Pty Ltd and later called Jabbcorp Pty Ltd ("Jabbcorp"). At relevant times Jabbcorp was in business as a builder. 2In October 2008 Jabbcorp was constructing a building at Carters Lane, Towradgi. It negotiated with the plaintiff for the plaintiff to supply labour and scaffolding for that project. The plaintiff's accounts department provided a document to be signed by Jabbcorp entitled " Application to Open/Continue to Operate an Account ". This document incorporated terms and conditions of hire and sale of equipment and terms and conditions of supplying labour, if the plaintiff were to supply equipment and/or labour. The document was not tailored to a specific project. 3On the same page there was a form of guarantee and indemnity. The general manager of Jabbcorp completed and signed for Jabbcorp the Application to Operate/Continue to Operate an Account. The defendant signed the guarantee and indemnity. The document was returned to the plaintiff. The Towradgi project was duly completed. Nothing is owed by the defendant to the plaintiff under the guarantee in respect of debts incurred in connection with that project. 4In 2009 Jabbcorp entered into a contract with Mistrina Pty Ltd for the design and construction of a project at 340 Bay Street, Brighton-Le-Sands. Jabbcorp contracted with the plaintiff for the plaintiff to provide scaffolding and labour for that project. Jabbcorp and the plaintiff signed a subcontract dated 2 February 2010. It was not on the terms of the plaintiff's standard terms and conditions of hire and sale or terms and conditions for supplying labour. The subcontract included a term that it constituted the entire agreement between the parties and superseded any prior agreement between the parties. The plaintiff provided scaffolding and labour to Jabbcorp pursuant to the subcontract. 5Receivers were appointed to Mistrina Pty Ltd. It stopped payments to Jabbcorp. Jabbcorp, as it was entitled to do, terminated its subcontract with the plaintiff. It did so by notice received by the plaintiff on 5 October 2010. On that day, Jabbcorp was placed into voluntary administration. On 26 November 2010 it entered into a deed of company arrangement. 6The plaintiff lodged a proof of debt with the deed administrator for $49,194.33. The proof of debt was accepted. A dividend was paid by the deed administrator of 3.3 cents in the dollar. On 16 May 2011 the plaintiff received $1,628.33 as its dividend under the deed of company arrangement. Pursuant to the deed of company arrangement, the plaintiff's claim against Jabbcorp has been released. 7The plaintiff sues the defendant for $47,566 under the guarantee and indemnity. It seeks interest pursuant to s 100 of the Civil Procedure Act 2005 and costs on the indemnity basis pursuant to the guarantee and indemnity. 8The guarantee and indemnity included a charge of all of the defendant's real and personal property. The plaintiff seeks an order for judicial sale of a property in Punchbowl owned by the defendant. The defendant says that the guarantee and indemnity given in 2008 in respect of the Towradgi project does not apply to the debt incurred in 2010 by Jabbcorp to the plaintiff in respect of the Brighton-Le-Sands project. He also disputes the quantum of the debt claimed by the plaintiff to have been owing by Jabbcorp. 9The issues are, first, whether the guarantee and indemnity signed by the defendant on 14 October 2008 and provided to the plaintiff, applies to the debt incurred by Jabbcorp to the plaintiff in respect of the Brighton-Le-Sands project. 10Secondly, if so, what is the quantum of the debt? 11Thirdly, whether the completion of the deed of company arrangement whereby Jabbcorp has been released from the debt it owed the plaintiff affects the plaintiff's right to recover under the guarantee and indemnity. 12Fourthly, whether costs on the indemnity basis are recoverable under the guarantee and indemnity. 13Fifthly, if the plaintiff is entitled to recover any moneys from the defendant as a debt or damages under the guarantee and indemnity, whether the charge secures, as well as that amount, interest under s 100 of the Civil Procedure Act and costs. 14Sixthly, whether any, and if so what, orders for judicial sale should be made to enforce the charge. 15I have reached the following conclusions. First, the guarantee and indemnity does apply to the debt incurred by Jabbcorp to the plaintiff in respect of the Brighton-Le-Sands project. 16Secondly, the principal amount recoverable as a debt under the guarantee or as damages under the indemnity is the amount claimed by the plaintiff, that is, $47,566. 17Thirdly, the release of Jabbcorp by completion of the deed of company arrangement does not affect the plaintiff's right to recover that sum from the defendant. 18Fourthly, costs are not recoverable on the indemnity basis pursuant to the guarantee and indemnity. The plaintiff is entitled to its costs on the ordinary basis. 19Fifthly, the charge secures the principal sum of $47,566 plus interest that will be included in the judgment to be entered pursuant to s 100 of the Civil Procedure Act plus costs as agreed or assessed on the ordinary basis. 20Sixthly, a declaration should be made as to what is secured by the charge, but no order for judicial sale should be made at this stage. The defendant should be given the opportunity to pay the amount for which judgment will be entered. The proceedings will be reserved for further consideration. Orders for judicial sale can be made if the judgment is not satisfied. In the meantime, the plaintiff's caveat over the Punchbowl property will be maintained. 21My reasons for these conclusions are as follows.