Canty v PaperlinX Australia Pty Ltd

Background 16The primary judge noted (at [2]) that it was common ground by the time of closing submissions that there was no contest that: (1)PaperlinX had proved the delivery of the paper in question. (These deliveries were the subject of 50 individual supply contracts which were invoiced to TQG between 23 January 2009 and 22 April 2009 totalling $1,084,350.92); (2)TQG had not paid; (3)the appellants had executed the guarantees on which they were sued; and (4)at least prima facie, those guarantees extended to the debts in question. 17The main substantive defence relied upon at trial and pressed on appeal (albeit in a reformulated manner) was that PaperlinX had breached obligations owed to TQG under an alleged second credit agreement for the supply of paper, as varied in July 2008, which had a credit limit of $1.6 million. Those obligations of PaperlinX to TQG were said to have been incorporated, either expressly or impliedly, into the Deed of Guarantee. The alleged breaches by PaperlinX of the second credit agreement were said to be: (1)invoicing paper before it was delivered; (2)appropriating payments made by TQG for deliveries of paper towards payment of storage charges; and (3)refusing to allow TQG a credit limit greater than $1.2 million. 18The primary judge found that PaperlinX extended credit to TQG on the terms of a commercial credit application dated 24 May 2004 (which had been made by TQG to Paper Australia Pty Ltd (Paper Australia), a related company of PaperlinX), and that PaperlinX and TQG conducted their relationship, from 1 July 2005, on the basis that those terms governed the provision of credit: at [37]. Accordingly, PaperlinX was entitled to withhold delivery, or to deliver only on cash terms, if any due invoice was not paid according to its terms: at [38]. His Honour found that initially TQG's credit limit was $500,000 in June 2005, increasing to $800,000 in June 2008 and to $1,200,000 on 31 July 2008. The credit limit was extended for a brief period in late October 2008 to $1,625,000, but returned to $1,200,000 in early November 2008: at [13]. His Honour found that PaperlinX imposed these limits on TQG, and that TQG was aware of them: at [14]. There is no challenge to these findings. 19The appellants contended in their commercial list response that in early or mid July 2008 Mr Allard of PaperlinX and Mr Canty of TQG negotiated a variation of the existing arrangements for the supply of paper on credit. The appellants' case was that TQG agreed to procure the guarantees of, amongst others, the appellants, if PaperlinX would increase TQG's credit limit to $1.6 million, and that PaperlinX agreed to increase the credit limit if the guarantees were given. The primary judge did not accept Mr Canty's evidence of this alleged agreement: at [77]. His Honour found that there was no agreement in July 2008 that TQG could have the benefit of a credit limit of $1.6 million: at [75]. It followed that there was no breach by PaperlinX of obligations owed to TQG by refusing to allow TQG a credit limit greater than $1.2 million: at [78]. There is no challenge to these findings. 20The primary judge also found that there was no evidence to support the other "defences" of breaches by PaperlinX of the alleged second credit agreement by (a) invoicing before delivery and (b) misapplying payments made by TQG: at [39]. His Honour noted that counsel for the appellants had accepted that this was a consequence of his Honour's rulings, made in the course of the hearing, refusing leave to the appellants to particularise the relevant parts of their commercial list response which had asserted these breaches by PaperlinX, and another ruling by the Commercial List judge refusing leave to rely on evidence not served by 31 May 2013 in accordance with a "guillotine order" made on 8 May 2013: at [40]. 21Nonetheless his Honour observed, in relation to the early invoicing complaint, that the available evidence suggested that invoices were generated and issued on, or in conjunction with, delivery: at [42]. As to the complaint relating to the appropriation of payments towards storage and demurrage charges, his Honour found that this was discussed between PaperlinX and TQG from at least 3 October 2008, when Mr Canty signed and delivered a letter to PaperlinX acknowledging its right to be paid for outstanding storage and demurrage charges. Further, there was no evidence of any appropriation of payments by PaperlinX prior to that date. After that date, to the extent that such appropriation occurred, his Honour considered that it was consensual: at [43]. 22In relation to Mrs Canty's claim under the Contracts Review Act, the primary judge found that there was no evidence of any "procedural injustice": at [103]. His Honour also noted that it was not alleged that the terms of the Deed of Guarantee went beyond what was reasonably necessary for the protection of the legitimate interests of PaperlinX: at [104]. His Honour found that the arrangements (in respect of the giving of the Deed of Guarantee) were made for the benefit of the business that was held on trust for the Denise Canty Family Trust, of which Mrs Canty was the nominator and one of the two named beneficiaries: at [107]. Further his Honour found that Mrs Canty was not denied the opportunity to seek independent legal advice as to the nature and effect of the Deed of Guarantee at all, let alone by any conduct on the part of PaperlinX for which it should be held responsible: at [111].