Cellnet Group Ltd v Grigg [2006] NSWSC 1423 | Case summary

6106/06 - CELLNET GROUP LTD v GRIGG JUDGMENT 1 HIS HONOUR: The plaintiff is Cellnet Group Limited who is a creditor of Colleen Grigg, also known as Colleen Deans, who operated a business known as Better Computer Shop Australia Pty Ltd. The plaintiff gave credit to Mrs Grigg. There is in evidence three pages of a form which she filled in, signing on each page. The first says "The applicant applies for a credit account with [the plaintiff]". It notes that the credit application is to be completed by the applicant but nowhere is the word "applicant" defined. The date of the application is said to be 6 December 2004. 2 The second piece of paper is headed Terms and Conditions of Credit and it commences: "I/WE hereby agree to be bound by the following terms and conditions in relation to the accommodation of credit by Cellnet Group Limited... and/or Cassa Australia Pty Limited being member of the Cellnet group". 3 Thereafter are set out nineteen terms and conditions. 4 The third sheet of paper is headed "Guarantee and Indemnity". It is then endorsed with the name of Cellnet and the other company. Recital A says: "The Guarantors acknowledge that … [blank] (the Company) has, at the request of the Guarantors submitted an application to be supplied by Cellnet".

It bears date 9 December 2004. 5 Unfortunately that was not completed and indeed there was no company involved. Mrs Grigg was the sole trader under a business name as the person/applicant who accordingly guaranteed herself - which is a rather odd thing to do - and it may mean that the guarantee is of no effect. Again, because the Statute of Frauds still applies in Queensland to the case of guarantees, it appears that the guarantee does not comply with the requirements of the Statute to set out the four Ps involved, (parties, price, premises and property) and thus it may be unenforceable. The document accordingly is a very questionable one. 6 The Court has pointed out before on numerous occasions but particularly in the Court of Appeal in Teoh v QBE Insurance (Australia) Ltd [2006] NSWCA 281 and in my decision in Northstate Carpet Mills Pty Ltd v BR Industries Pty Ltd [2006] NSWSC 1057 that if businesses - and Queensland businesses seem to be particularly prone to do this - use printed forms especially with small print which are improperly completed and do not comply with the formalities of the law, then they have no one but themselves to blame if the Court does not uphold their validity. 7 If I had to determine as to whether there was any liability of Mrs Grigg under the so-called guarantee, it would be very difficult for the plaintiff to succeed though it might succeed in establishing liability. 8 I should also note that so far as the Statute of Frauds point is concerned, there is not the evidence at the moment which would justify one reading together the three pieces of paper and it would seem from cases like Timmins v Moreland Street Property Co Ltd [1958] Ch 110, that unless one can find evidence which would entitle the Court to read the documents together, one would not be able to translate the word "applicant" from one of the three pieces of paper to the guarantee. 9 However, I am not doing anything more at the moment than hearing an application under section 74 O of the Real Property Act 1900 to allow a second caveat to be filed. 10 The plaintiff did file a caveat relying on clause 7 of the so-called guarantee which purported to charge any real and personal property held now or in the future by the guarantor. The guarantor had an interest in land in New South Wales and the plaintiff lodged a caveat. The registered proprietor sought that the caveat be removed. It was realised that the caveat was too wide and an order was sought that the caveat be amended to restrict its operation and that it be extended. However, the order that the Court actually made - how I am not too sure - was merely that the caveat be amended. Accordingly the Registrar General considered that the caveat had not been extended and accordingly under the Statute he was obliged to remove it from the registered property of the plaintiff. The solicitor says that the Registrar General did not accept the terms of the Court's order and committed a mistake but that is not at all clear. 11 It would seem it was carelessness either in and about putting to the judge what order should be made or by some mechanical process within the Court. However, s 74 O of the Real Property Act 1900 makes it clear that where a caveat has lapsed it is not to be relodged without the approval of the Court. 12 In the present case there is a clear technical problem and the purpose of the section is to make sure that vexatious caveats are not lodged and not to block proper caveats which have been removed from the register by some mistake on somebody's part. Accordingly if the caveat, to use the word in s 74K, has validity, it should go back on. 13 I have doubts as to whether the plaintiff does have any interest in the land for a number of reasons. 14 (1) I have already set out the problem with the guarantee document. 15 (2) There is a clause in the guarantee which provides that all actions are going to be brought in Queensland. This is an indication that the charge over the land is only to refer to land within the state of Queensland because if all actions have to be brought within Queensland, as New South Wales is the only Court with jurisdiction to apply caveats on New South Wales land then the parties could not have intended the guarantee to referring to New South Wales land. It must be remembered that guarantees must be read strictly against the person proffering them. 16 (3) The plaintiff seems to be saying that because of clause 7 an equitable interest in land was created. This is again strongly arguable. 17 The Court of Appeal in Troncone v Aliperti (1994) 6 BPR 13,291 held that when one has a clause such as the present, the Court may assume that the parties intended to guarantee an equitable charge or that they intended to create a situation whereby the Court would impose an equitable charge. However, it must be remembered that such a clause will not always have that effect. The court must be careful to see that the document does not contain sufficient indication to the contrary: Coleman v Bone (1996) 9 BPR 16,235, 16,239. It is a matter of construing the documents in the factual matrix. 18 Where one sees that the only court with jurisdiction is the Supreme Court of Queensland, so that the parties have agreed that they are not to go near the New South Wales Supreme Court one might infer that the document is only concerned with a charge that a Queensland court might impose. As the New South Wales Supreme Court is probably the only one which can create or supervise an equitable charge, then the whole of the material might suggest that no equitable charge was created and accordingly there is no interest in the land. 19 Miss Carpenter, for the plaintiff, in her patient address and written submissions for which I am grateful, addressed the question of jurisdiction. That is not really a major problem because the clause about exclusive jurisdiction is not to be construed as an ousting of jurisdiction. Rather it is an agreement between the parties which either of them, or certainly both of them, can waive. 20 The more problematic matter is whether looking at the whole of the document the Court of Equity in New South Wales has power to create and/or enforce an equitable charge. If the Court in New South Wales does not have the ability to do so or would not do so, then there is no interest in the land. 21 However, although there are a number of reasons why if this matter ever comes to trial the plaintiff would lose, it may be it would succeed and it may well be that more evidence will be available on the final hearing if it ever comes to that than is available now. 22 Accordingly, the plaintiff has shown that its caveat may have validity and thus an order should be made in accordance with paragraph 1 of the summons. 23 I make order 1 in the summons. The order is that under section 74 O of the Real Property Act 1900 the plaintiff has leave to lodge a further caveat against the interest of Colleen Helen Grigg in the land comprised in Folio Identifier 1/DP510690 in accordance with exhibit PXO1 in these proceedings. The order may be taken out forthwith.

Cellnet Group Ltd v Grigg

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Judgment (11 paragraphs)

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Cases Cited (2)