District Court New South Wales Medium Neutral Citation: Charles Parsons & Co Pty Ltd v Brown [2012] NSWDC 128 Hearing dates: 22 August 2012 Decision date: 22 August 2012 Jurisdiction: Civil Before: Gibson Decision: As between the plaintiff and first defendant (1) Note - claim between plaintiff and first defendant settled in principle, matter stood over to Friday 31 August 2012 at 9:00am to hand up Terms of Settlement. As between the plaintiff and second defendant (1) Second defendant called three times outside Court 13D at 10:00am - no response. (2) Second defendant called three times outside Court 13D at 10:23am - no response. (3) Judgment for the plaintiff against the second defendant for $234,660.55 plus interest of $50,436.94, totalling $285,097.49. (4) Second defendant pay plaintiff's costs on an indemnity basis. (5) Exhibits retained for 28 days. Catchwords: CONTRACT - guarantee by company director - breach of contract - damages Legislation Cited: - Cases Cited: - Texts Cited: - Category: Principal judgment Parties: Plaintiff: Charles Parsons & Co Pty Ltd First Defendant: Gregory Brian Brown Second Defendant: David Charles Donnelley Representation: Plaintiff: Mr R J Steward First Defendant: Ms N Ballard (solicitor) Second Defendant: No appearance Plaintiff: Prime Lawyers First Defendant: Adams & Partners Lawyers Second Defendant: No appearance File Number(s): 2011/247193 Publication restriction: None Judgment 1HER HONOUR: The plaintiff by statement of claim filed on 1 August 2011 seeks payment of a sum currently computed to be $234,660.55 plus interest in the sum of $50,436.94, making a total of $285,097.49 from the second defendant, who is asserted to be jointly and severally liable with the first defendant in these proceedings in relation to an application by Installa Australia Pty Ltd ("Installa") for credit from the plaintiff. 2The first and second defendant were directors and shareholders of Installa and each guaranteed the credit account entered into with the plaintiff by Installa on 11 January 2010. I note the first defendant has entered into a settlement with the proceedings, and this judgment relates to the liability of the second defendant. The second defendant was called outside the court three times and has not appeared. Accordingly, I have done my best to construe the contents of the defence, with the assistance of counsel for the plaintiff. 3The claim against the second defendant is set out in the statement of claim as follows. The guarantee included the terms set out in paragraph 6 of the statement of claim, which included an unconditional and irrevocable guarantee of the due and punctual payment of all money due to the plaintiff, whether jointly or severally, actually or contingently ("the guaranteed money") and the directors were obliged to pay such moneys upon demand without setoff, deduction, condition or withholding. The pleading states that the directors similarly indemnified the plaintiff against any loss incurred by reason of any failure to pay the guaranteed money on time, but nothing turns on this, or indeed the other provisions set out in paragraph 6, because this is a straightforward claim for goods ordered to the value of $234,660.55, plus interest. 4In accordance with the credit account, the plaintiff supplied Installa with goods as requested from time to time by the servants and agents of Installa, and in particular between August and December 2010, when the plaintiff supplied goods and issued invoices which were not paid. On 8 July 2011, the plaintiff demanded payment for the sum outstanding, which at that stage amounted to $231,436.15, but this sum was not paid. 5The terms of the contract between the plaintiff and defendants are to be found at page 73 of the affidavit of David Andrew Timmis, the operations manager of the plaintiff, who has set out a history of the transactions and his dealings with Installa, as well as the delivery of the goods in question. The following clauses are particularly noteworthy: (a)First of all, in relation to interest, the contract provides that interest on overdue accounts is charged at the rate provided in the National Australia Bank's benchmark business lending indicator plus 3% p.a.; (b)Secondly, that there is a provision in clause 17 that if it is necessary for there to be any proceedings by way of reliance upon the guarantee, the directors (namely, the defendants) are to pay all costs and expenses, including legal fees, on a "full indemnity" basis "insofar as they are incurred relating to the claim". 6A defence was filed by the second defendant, which makes the following claims: (a)He admits that he executed a credit application form but otherwise does not make any admissions. There is no claim of non est factum. As to paragraphs 6 and 15 of the statement of claim, the second defendant denies that the guarantee contains the terms as alleged, and says that the terms of the guarantee were never communicated to the second defendant by the plaintiff. This claim can be dealt with in fairly short compass, in the sense that he has signed the document and must be taken to have understood what he was signing. (b)Alternatively, it is claimed in paragraph 6 that the terms of the guarantee were limited to $20,000. The basis for this can be seen in the application form which was initially limited to $20,000. That amount was later increased to $100,000 as the handwritten notation adds, and in any event goods were ordered to the totally of $234,660.55. In terms of the indemnity, it is for payment of all goods ordered, not simply the credit limit, and the fact that the defendants through their company Installa went over the credit limit does not entitle them to a windfall in relation to the guarantee. (c)Finally, the second defendant in paragraph 7 (in relation to paragraphs 5, 6 and 15 of the statement of claim), states that the terms of the contract are unconscionable. I cannot see anything in this fairly standard contract which amounts to unconscionability, and the failure of the defendant to identify by way of particulars in his pleading the term or terms asserted to be unconscionable is fatal. 7I also note that there is a claim that the second defendant did not receive the plaintiff's solicitors' letter dated 8 July 2011. That document, which appears at pages 76 to 77, was one of a series of letters sent to the second defendant. I note, for example, an email at page 74 of the affidavit, where the address to which the letter was sent is identified as being the warehouse/office address of Installa. That related to a payment plan in which the second defendant and first defendant acknowledged their indebtedness and put forward a payment plan. It is unlikely that the second defendant did not receive the letter set out at page 76, which I note was in identical form to that sent to the first defendant (at page 77). 8Accordingly, I am satisfied that any defence relied upon by the second defendant must fail. I propose, however, prior to making final orders, to having the second defendant called outside the court three times again, it currently being 10:23am. Orders 9I make orders as follows: As between the plaintiff and first defendant (1)Note - claim between plaintiff and first defendant settled in principle, matter stood over to Friday 31 August 2012 at 9:00am to hand up Terms of Settlement. As between the plaintiff and second defendant (1)Second defendant called three times outside Court 13D at 10:00am - no response. (2)Second defendant called three times outside Court 13D at 10:23am - no response. (3)Judgment for the plaintiff against the second defendant for $234,660.55 plus interest of $50,436.94, totalling $285,097.49. (4)Second defendant pay plaintiff's costs on an indemnity basis. (5)Exhibits retained for 28 days. ****** 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. Decision last updated: 29 August 2012