Saints Management Pty Ltd v Jellicoe Pty Ltd and Christopher John Salmon [2016] NSWSC 1453

Supreme Court New South Wales

Medium Neutral Citation: Saints Management Pty Ltd v Jellicoe Pty Ltd and Christopher John Salmon [2016] NSWSC 1453 Hearing dates: 4, 5 and 6 October 2016 Date of orders: 14 October 2016 Decision date: 14 October 2016 Jurisdiction: Equity - Commercial List Before: Bergin CJ in Eq Decision: Judgment for the plaintiff against the second defendant. Catchwords: GUARANTEE – whether plaintiff's right of recovery under guarantee limited by reason of alleged representation – whether claim is statute-barred Legislation Cited: Contracts Review Act 1980 Limitation Act 1969 Cases Cited: 400 George Street (Qld) & Ors v BG International Limited [2010] QCA 245 HM&O Investments v Ingram [2012] NSWSC 958 Netglory Pty Ltd v Caratti [2013] WASC 364 O'Neill v Foster [2004] NSWSC 906 Reeves v Butcher [1891] 2 QB 509 Category: Principal judgment Parties: Saints Management Pty Ltd (Plaintiff) Jellicoe Nominees Pty Ltd (1st Defendant) Christopher John Salmon (2nd Defendant) Representation: Counsel: MR Elliott/D Steirn (Plaintiff) CJ Salmon (in person) (2nd Defendant)

Solicitors: Rankin Ellison (Plaintiff) File Number(s): 2015/149063 Publication restriction: Nil

Judgment 1. These proceedings arise out of the failure by the first defendant, Jellicoe Nominees Pty Ltd (Jellicoe), to repay a loan made to it by the plaintiff, Saints Management Pty Ltd, in respect of which the second defendant, Christopher John Salmon (the defendant), the sole director and shareholder of Jellicoe, was a guarantor. On 23 October 2015 judgment was entered for the plaintiff against Jellicoe in the amount of $2,571,041.13 (the principal sum of $1,566,666.67, plus interest) and Jellicoe was ordered to pay the plaintiff's costs of the proceedings against it. The plaintiff now seeks to enforce the guarantee against the defendant. 2. By Loan Agreement dated 2 April 2007 between the plaintiff and Jellicoe (as trustee for the defendant's family trust), the plaintiff agreed to provide a cash facility to Jellicoe from which advances could be drawn (clauses 2 & 3). The aggregate of the advances was repayable three years after the date of the initial advance (clause 4.1). Interest was also repayable on any outstanding balance from time to time (clause 5). The defendant executed the Loan Agreement on behalf of Jellicoe and was noted in the Schedule to the Loan Agreement as "Guarantor". 3. By Deed of Guarantee dated 2 April 2007 between the plaintiff and the defendant, the defendant agreed to guarantee the performance of the Loan Agreement by Jellicoe and to indemnify the plaintiff in respect of that performance (clause 2). 4. The real issue in the proceedings is whether the defendant is liable to the plaintiff under the Deed of Guarantee. The defendant claims that he is not liable because of a representation it is alleged Mr O'Shea, a director and shareholder of the plaintiff, made at the time of the signing of the Deed of Guarantee and also because the plaintiff's claim is allegedly statute barred. There is no issue that if the defendant's defences are not made out judgment should be entered for the plaintiff against the defendant for the principal sum together with interest on that sum. 5. Although the defendant brought a Cross-Claim against the plaintiff and Mr O'Shea for damages for misleading or deceptive conduct in respect of alleged misrepresentations at the time of the execution of the Deed of Guarantee and alleged misrepresentations in respect of a settlement the defendant reached with the Australia New Zealand Banking Group (ANZ), it was abandoned and dismissed by consent on the final day of the hearing. 6. The proceedings were heard on 4, 5 and 6 October 2016 when Mr MR Elliott, of counsel, leading Mr D Steirn, of counsel, appeared for the plaintiff and the defendant appeared unrepresented. 7. The plaintiff relied upon the affidavits of Mr O'Shea sworn on 27 August 2016 and 19 September 2016; those of the plaintiff's solicitors, Mr Michael Callanan sworn on 19 September 2016, Mr John Riordan sworn on 19 September 2016 (who are the instructing solicitors in these proceedings) and Mr Michael Yee sworn on 19 September 2016 (who was the solicitor acting for the plaintiff in respect of, amongst other things, the Loan Agreement and Deed of Guarantee); and the plaintiff's Senior Counsel, Mr Anthony Cheshire sworn on 5 October 2016 (who was previously briefed in these proceedings). The evidence of Messrs Callinan, Riordan and Cheshire SC related to the defendant's Cross-Claim. The evidence of Mr O'Shea and Mr Yee relates to the plaintiff's claim under the Deed of Guarantee. 8. The defendant relied upon his own affidavits sworn on 28 April 2016 and 15 August 2016. He also called Mr Glenn Rufford, who appeared in answer to a subpoena. 9. Each of the deponents of the affidavits and Mr Rufford were cross-examined. 10. Although the factual matters for determination revolve around events within a short time frame just prior to and at the time of the execution of the Loan Agreement and the Deed of Guarantee on 2 April 2007, it is necessary to recount some of the background to the parties' relationship to put the respective claims in context.