Crane Distribution Limited v Yang

The parties

1. At the hearing Tradelink was represented by Mr M Condon of Senior Counsel, appearing with Mr K Josifoski of Counsel. Mr Yang was represented by Mr D P O'Connor of Counsel appearing with Ms F Boustos-McNeal of Counsel. Tradelink and Mr Yang were the only active protagonists.
2. The second defendant is Mr Yang's wife. She was joined because she is joint tenant with Mr Yang of No 64 and No 11.
3. The third defendant, National Australia Bank (the "NAB"), holds a registered mortgage over No 64 and No 11.
4. The fourth defendant, Hong Kong Noodle Cuisine Pty Ltd, is the registered lessee of No 11. Tradelink does not wish to disturb the possession of that company.
5. The Court is satisfied that the second to fourth defendants were all properly on notice of the proceedings. None of them filed a defence and none of them took an active part.

The Application

1. In order to understand these reasons it is necessary to appreciate the headings, layout and structure of the various parts of the Application. This can be best done by seeing the Application in its original form. A copy of the original Application (redacted only in relation to privacy matters) is set out in Schedule 1 to these reasons. It will be seen that the Application is in three parts, which in these reasons are referred to as the "Terms and Conditions", the "Agreement" and the "Guarantee".
2. There was no dispute that Mr Yang had signed the Application in relation to the Terms and Conditions and Agreement. Tradelink had originally contended that Mr Yang had also signed the Guarantee, but abandoned reliance on that signature in these proceedings. The only matter agreed before me - and the only matter which I have taken into account on that topic - was that Mr Yang did not sign the separate Guarantee. The Court had no evidence before it and was not invited to make any findings about the circumstances in which a signature purporting to be Mr Yang's had been affixed under the Guarantee. In reaching its conclusions the Court has not taken the purported signing of the Guarantee into consideration.
3. Some of the relevant terms of the Application are quite lengthy. In the interests of readability, quotation of particular terms and conditions is kept to a minimum in these reasons. The relevant parts of the Application in their entirety are set out in Schedule 2 to these reasons.

Mr Yang

1. Mr Yang was born in 1943 in South Korea. He graduated from high school in Korea in 1961 and then from a Korean university with a degree in mechanical engineering. All of his studies were in the Korean language. He learnt English at high school in Korea.
2. Mr Yang migrated to Australia in 1989 at the age of 45 with his wife and two children. After working as a mechanical engineer in a company where he mainly spoke Korean at work, he studied plumbing at TAFE. He did not take any English course when he arrived in Australia or at any time afterwards. His evidence was that when he came to Australia he could speak very little English and could understand only very basic written English. He says he could barely write in English.
3. In 1992 he set up his own plumbing business which went on to become the Company. Mr Yang gave his evidence in Korean through an interpreter. The fact that a witness gives evidence through an interpreter is not necessarily determinative of the English language proficiency of the witness for all purposes, only perhaps that he or she was not sufficiently proficient in English for the purposes of understanding and answering questions in the setting of a court room. Even for native English speakers that can be a challenging experience. On the retainer of interpreters, s 30 of the Evidence Act 1995 (NSW) provides: 30 Interpreters A witness may give evidence about a fact through an interpreter unless the witness can understand and speak the English language sufficiently to enable the witness to understand, and to make an adequate reply to, questions that may be put about the fact.
4. So it is that a witness may speak English sufficiently well to carry on day to day activities, including matters which they regularly encounter in the course of their employment. However, courts recognise that such a degree of proficiency may not be sufficient in the somewhat artificial, stressful and precision driven circumstances of a trial.
5. While I accept that Mr Yang does not present as a fluent speaker of English, having had the advantage of observing him in the witness box I am of the firm view that he sought to understate his capacity to speak English and, more importantly, his ability both to understand spoken and written English in environments with which he was familiar. That familiarity extended to documents he regularly encountered in the course of running the Company such as the Application. In addition to my general impression of Mr Yang, I make these findings by reference to the following specific matters: 1. He built up the Company to a substantial and successful concern, ultimately employing 12 people in the head office, with dealings not limited to the Korean community. The accounts department of the Company had up to three people in it, although by October 2010 this had been reduced to one. 2. On several occasions he correctly answered Mr Condon SC's questions before they had been interpreted for him by the interpreter, including reading documents in English that were before him at the time. 3. In 2007 he spoke in English when he met with representatives of Tradelink in relation to what he said was a miscalculation by Tradelink. In my view his evidence that at the meeting "[I] understood about 10-20% of the words and I spoke" was an exaggeration of his lack of understanding and an attempt to minimise his capacity to speak English. 4. He was a member of Auburn Council from 2012 until the suspension of that Council, attending and participating in meetings conducted in English. The preparation for those meetings with his fellow councillors was generally in English. In the course of evidence on this topic Mr Yang said (T84:34-37) "However I understand general English, however - everyday English. However, when there was a legal terms or when there was a difficult English language, there were some problems". 5. There is evidence of him preparing in English quite complex plumbing documents (for example a document "Project Trade Contract Agreement Plumbing-Building"). There were a number of other documents in evidence prepared by Mr Yang including drawings and diagrams and service protection reports which demonstrate that, at least in relation to the Company's business, Mr Yang had a sufficient command of English to conduct that business effectively. Furthermore, on the Application itself, Mr Yang clearly understood and was able to insert the details of his properties on page 1 and the financial information required on page 2. 6. In 2007 Mr Yang enrolled in a TAFE course. In the enrolment form, the question "How well do you speak English?" was answered "Well" and the question "Do you require help with English" was answered "No". Although I accept that form was completed by one of Mr Yang's staff, Mr Yang conceded in cross-examination that if he had thought the answers in the form were wrong, he would have corrected them. Again, in this context, Mr Yang sought to qualify his answers by referring to the level of English as being "a general English". 7. Mr Yang adduced evidence from a former long term employee, Mr Kim. Mr Kim described Mr Yang's intelligence as "pretty high" and that Mr Yang was very diligent in the business, being "the first one to start and the last one to finish".
6. The foregoing findings do not involve the Court rejecting Mr Yang's evidence that when he found something difficult he would refer it to or have it translated for him by one of his staff members who understood English better than he did. The point is that the Court concludes that Mr Yang had a more than adequate understanding of written and spoken English in the world of the Company and its affairs which enabled him, for example, to identify matters as being important which he did not understand properly and, if he wanted to, refer to someone in the Company whose English was better. In that regard, the Court finds that Mr Yang could read and understand documents such as the Application, including understanding that they were intended to affix him with personal liability. He was very familiar with documents such as the Application. He understood that in signing the Application he would be personally liable for the Company's debts to Tradelink and that his property was at risk. The findings in this paragraph rely upon the matters set out in the preceding paragraph and these additional matters: 1. Mr Yang accepted that at all relevant times up to and including 2010 he knew that plumbing supply companies always wanted company directors to be personally liable for their company's debts and that this included Tradelink (T184:43-T186:7). 2. Mr Yang had signed four previous applications on behalf of the Company for credit with Tradelink: 1. In March 1993 in which Mr Yang signed both the Agreement and Guarantee (which were in substantially the same terms as the Application); 2. In September 1997 (which contained terms and conditions substantially in the same terms as the Application and had a composite second section headed "Agreement, Charge and Guarantee"); 3. In August 1998 in the same terms as the September 1997 document; 4. In April 2004 (which contained terms and conditions substantially in the same terms as the Application and a composite section equivalent to the Agreement and Guarantee),albeit in each of them he had signed at least twice, being once in relation to the Terms and Conditions and Agreement and again as a guarantor under the Guarantee. 1. He understood that each time he had signed an agreement with Tradelink (see previous sub-paragraph), including the Application, he would be personally liable for the debts of the Company (T119:41-T120:1), although he thought his liability under the Application was limited to $150,000 (T121;10-23). 2. His understood that he would be legally bound by documents such as the Application whether or not he made inquiries about what it meant (T163:41-45). In relation to the Application, he accepted that he generally understood it but some particular sentences he couldn't understand, in relation to which he would ask his employees (T162:21-40). 3. His own affidavit evidence that since 1993 it had been his understanding that the word "guarantee" meant "my responsibility". In that context Mr Yang's attempts at various times to say that he did not understand the meaning of "guarantor" were completely unconvincing. 4. When he signed the Application in 2007 he expected that he would be personally liable for the Company's debts (T198:9-12). He had also read clause 3 "roughly" (T195:44) and understood that the word "mortgage" appeared there (T196:26-29). Furthermore, he understood that if the Company did not pay the money due to Tradelink then his own personal property could be mortgaged (T196:31-34). 5. Mr Yang was asked to examine 109 documents which he had signed on behalf of the Company, most of which were in the nature of credit applications, trade account opening forms and guarantees. Mr Yang acknowledged in respect of those documents "I knew briefly what the document is. However, I was unsure the exact meaning of each term in the document". As to the few documents which were not of that financial kind (for example, the 2007 TAFE application form - see paragraph [20(6) above]), Mr Yang acknowledged that he understand all the terms of the document.

Whether Mr Yang is personally liable to Tradelink - legal principles

1. The fundamental principles in relation to the construction of a contract have most recently been set out by the High Court in Electricity Generation Corporation Limited v Woodside Energy Limited [2014] HCA 7; (2014) 251 CLR 640 (citations omitted): 35. Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties ... intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience"
2. When a party signs a document which apparently embodies all the terms of a contract, the signing party is taken to have signified its assent to those terms, and to have held out to other parties that it has done so: Equus Corp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2012) 218 CLR 471 at [33]-[36]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 53; (2004) 219 CLR 165 at [42]-[48].
3. Next, in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160 at 174 Giles J held: In the result, I conclude that the proper approach is to inquire whether there is to be found an intention that the signatory be personally bound to the contract evidenced in the document, meaning thereby not a subjective intention but an intention to be found objectively, notwithstanding a qualification attached to the signature. That intention, or lack thereof, is to be found upon the construction of the document as a whole, including but not being limited to the qualification attached to the signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible. The inquiry is not limited to consideration of the signature and its qualification in order to determine whether or not the signature indicates an assent to be personally bound.
4. Finally, the terms of the Application were considered by Lindsay J in Crane Distribution Ltd v Minnicelli [2013] NSWSC 1611; (2013) 17 BPR 32,593. In that case (unlike the present), the first defendant did not dispute that he was bound to Tradelink in terms identical to those of clauses 3 and 4 of the Application. The question in that case, not relevant here, was whether or not Tradelink had a security interest in property held by the first defendant as trustee. Nevertheless, the proper construction of clause 4 was critical to Lindsay J's reasoning: 112. Turning, then, to clauses 3 and 4 of the "Agreement": (a) Clause 4 operates to impose on the first defendant an obligation as a principal debtor for the indebtedness of the Company. (b) The words of charge in clause 3 are stated broadly, without express confinement to property in which a signatory to the Agreement has a personal, beneficial estate or interest. The first defendant agreed to charge "all of my... real property", etc, with the expression "real property" again defined as including "estates and interest". (c) However, clause 3 is ambiguous. It could be read as confined in its intendment to charge only property in which a signatory had a beneficial interest or as extending to trust property: Corozo Pty Ltd v Total Australia [1988] 2 Qd R 366 at 371-376; Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 51-52. (d) That being so, the contrasting terminology used in clause 3, as compared with clauses 14-15 of the "Guarantee" leads me to conclude that clause 3 was not intended to operate as a charge on the trust assets.

Whether Mr Yang is personally liable to Tradelink - resolution

1. Without any disrespect to the thorough and careful way in which Mr Condon SC developed his client's submissions, his fundamental argument may be shortly stated. It was that the Application (in particular, the Agreement) said what it meant and meant what it said. In other words, there was no relevant ambiguity: it was quite clear from an examination of the language of the Agreement itself that Mr Yang had accepted liability as principal debtor (i.e. put himself in exactly the same position towards Tradelink as the Company) and, if more was required, as guarantor in relation to whatever the Company owed Tradelink. The Court accepts that submission.
2. The objective matters relied upon by Mr Yang in opposition to Tradelink's contract case were: 1. The Agreement did not include any notice (for example, a heading) to identify clauses 3 and 4 as containing a guarantee. 2. It was now accepted by Tradelink that Mr Yang had not signed the Guarantee section of the Application. This distinguished the Application from previous agreements which Mr Yang had signed with Tradelink and highlighted his objective intention that he would not be bound as guarantor. 3. The introductory words to the attestation clause "SIGNED and sealed by/on behalf of the Customer" were a qualification to his signature indicating a lack of objective intention that he should be bound personally. This conclusion was fortified by his description being inserted as "Managing Director". 4. The part of the Application headed "Agreement" refers to "guarantor" and "guarantee" several times but the only place where an individual could sign as guarantor was in that part of the document not signed by Mr Yang.
3. The matters relied upon by Mr Yang do not overcome the clear structure and language of the Application, to which the Court will now turn.
4. The Application is obviously intended to deal with the different ways in which Tradelink's customers might organise their business affairs. So much is clear from the boxes at the top of page 1 referring to, for example, sole trader, partnership or Pty Ltd company, among others.
5. Irrespective of the method of operation used by the customer, the second and third boxes on page 1 ("Particulars of directors, proprietors and partners") and "Details of Property (to include all private land and residences)" (emphasis added) are clear, objective indicators that the natural persons (and their assets) who stand behind the relevant business structure are, in accordance with the Application, sought to be brought within its ambit.
6. After the sections on page 1 and 2 where details relevant to the customer are required to be filled in, the Application has an obvious, tripartite structure. First, the Terms and Conditions headed "Crane Distribution Limited - terms and conditions of sale" set out the terms upon which Tradelink will do business with the customer. However, clause 1 of the Terms and Conditions immediately incorporates the next section of the Application by saying "In these Terms and Conditions and the following section of this document entitled "Agreement" ….". Significantly, there is no execution clause at the end of the Terms and Conditions.
7. The second section of the Application, the Agreement, immediately begins in clause 1 with "Each of us acknowledges". The "us" is obviously intended to incorporate, where appropriate, more than just the legal person with whom Tradelink is contracting as its customer. The place for execution of that part of the Application is immediately after the Agreement. The Court shall return to this shortly.
8. The third part of the Application is the Guarantee headed "Guarantee and Indemnity ("Guarantee") and Charge" which has its own section for execution by the guarantor or guarantors, expressed (by reference to being "signed, sealed and delivered") to be a deed.
9. The commercial object and structure of the Application is apparent from its terms. The Terms and Conditions and the Agreement are to be read as one. So much is made clear by the execution clause providing that the party signing has "read the preceding terms and conditions of sale and the terms of this Agreement" (emphasis added). The third part of the Application, the Guarantee (which has its own execution clause) is a document with separate legal effect. Again, its commercial purpose is obvious, being to obtain guarantees from persons who may not happen, in fact or law, to be able to execute the Terms and Conditions and Agreement on behalf of the customer with whom Tradelink is doing business but from whom Tradelink wants a guarantee.
10. Any of the alleged qualifications to Mr Yang's signature which he now calls in aid (see paragraph [27] above) are, as an objective matter, completely subsumed in the very clear language of clause 4 of the Agreement and the execution clause (emphases added): 4. If the applicant is an incorporated body: In consideration of and as an essential condition of the acceptance of this application by the Supplier I/we the undersigned do jointly and severally with the incorporated, body and in our own names: (a) accept liability to the Supplier for the payment as principal debtor of all monies owed by the incorporated body to the Supplier from time to time and waive all rights as a mere surety which may be inconsistent therewith and hereby guarantee to the supplier payment of all such monies. (b) bind the incorporated body and warrant our authority to bind the incorporated body. I/We hereby acknowledge, affirm and agree that I/We have read the preceding terms and conditions of sale and the terms of this Agreement and fully understand and comprehend same and certify the information supplied herein as the basis for you to grant credit is true and correct. Sign and print name: Sang Soo Yang Position: Managing Director Date: 21/11/07 Sign and print name
11. The terms of Clause 4 put beyond serious question that, by signing the Agreement, Mr Yang was objectively manifesting to the world that he was accepting the obligations in the Agreement both on behalf of the Company and "in his own name", that is to say on his own behalf.
12. Contrary to the submission put on behalf of Mr Yang, the fact that Mr Yang did not sign the Guarantee is not a sufficient objective indication that would justify reading down the terms or effect of Mr Yang's execution of the Agreement (including the Terms and Conditions). While there is a potential overlap between those who might sign the Agreement and the Guarantee, the two are clearly standalone documents as to their terms and effect.
13. Finally, in relation to the nature of Mr Yang's obligation, it is as principal debtor and, if more be required, also as guarantor. Again adopting the approach taken in Tradelink's submissions, accepting liability "as principal debtor" means what it says. In McGuinness v Norwich and Peterborough Building Society [2011] All ER(D) 63; [2011] EWCA Civ 1286, Patten LJ (with whom Moses and Ward LJJ agreed) said: 7. It is common ground that a guarantee of a loan may impose one or more of the following types of liability on the guarantor. These are: (1) a "see to it" obligation: i.e. an undertaking by the guarantor that the principal debtor will perform his own contract with the creditor; (2) a conditional payment obligation: i.e. a promise by the guarantor to pay the instalments of principal and interest which fall due if the principal debtor fails to make those payments; (3) an indemnity; and (4) a concurrent liability with the debtor for what is due under the contract of loan. 8. The obligations in classes (2) and (4) create a liability in debt. But it is well established that an indemnity is enforceable by way of action for unliquidated damages: see Firma C-Trade SA v Newcastle Protection and Indemnity Association [1991] 2 AC 1 at pages 33-36. The liability arises from the failure of the indemnifier to prevent the person indemnified from suffering the type of loss specified in the contract. A guarantee of the "see to it" type has also been held by the House of Lords to create a liability in damages. The obligation undertaken by the guarantor is not one to pay the debt but consists of a promise that the debt will be paid by the principal debtor: see Moschi v Lep Air Services Ltd [1973] AC 331.
14. Mr Yang's liability as principal debtor falls into the fourth category identified by Patten LJ, namely Mr Yang has a concurrent liability with the Company for what is due to Tradelink by the Company pursuant to the Terms and Conditions and the Agreement.

Is Mr Yang's liability to Tradelink limited to $150,000?

1. The last page of the Application, in unidentified handwriting, stated that the total amount of credit required was $150,000. It was common ground that limit was in place until monthly accounts were rendered that were due on 31 October 2010 and following. Those accounts (the relevant parts of which are set out in Schedule 3 to these reasons) record the credit limit as $300,000 and $450,000.
2. In support of his argument that if he had any liability to Tradelink it was limited to $150,000, Mr Yang drew attention to these clauses in the Terms and Conditions: 1. Clause 2(c) provided that "the Supplier may vary the terms and conditions by notice in writing to the Customer". 2. Clause 4(e) provided, inter alia, that: The Supplier will notify the Customer of any alteration in the credit limit by notice to that effect in the following month of the account statement. Any credit approval limit noted in this form, any monthly statement or otherwise is for the Supplier's convenience only.
3. Relying on those sections, Mr Yang submitted that if he had any liability to Tradelink then the Company's liability (and therefore his liability) was limited to $150,000, which, with interest, had almost been completely recovered by the payment referred to in paragraph [6] above. This argument was put as a "failure to comply with conditions". From that the Court understood that Mr Yang was submitting that Tradelink was not entitled to recover any amount owing in excess of an existing credit limit if an increase in that credit limit had not been properly notified. This argument suggested that, on their proper construction, the Terms and Conditions somehow placed a cap on the Company's (and therefore Mr Yang's) liability equal to the extant credit limit until an increase had been notified in accordance with clause 4(e).
4. Tradelink correctly submitted that the entirety of clause 4(e) of the Terms and Conditions was a complete answer. In context, that clause provided: 4. ACCOUNT TERMS a) Unless otherwise agreed in writing by the Supplier, the Customer shall pay for all goods delivered in any calendar month on or before the last trading day in the following month. b) Credit extended to the Customer for all goods sold will be made in accordance with the terms of credit as agreed by the Supplier at the time the Customer's account was established or as subsequently altered by the Supplier. In all other respects these terms and conditions will apply. … e) Despite any other clause in these terms and conditions the Supplier may withdraw the Customer's credit facilities at any time without notice or at its discretion alter the Customer's credit limit for any reason (including to meet the Customer's then buying needs). The Supplier will notify the Customer of any alteration in the credit limit by notice to that effect in the following monthly account statement. Any credit approval limit noted in this form, any monthly statement or otherwise is for the Supplier's convenience only.
5. Clause 4(e) makes Mr Yang's construction unsustainable for these reasons: 1. The preamble "despite any other clause in these terms and conditions" gives clause 4(e) paramount effect. For example, it therefore trumps, to the extent of any inconsistency, clause 2(c) which provides that "the Supplier may vary these terms and conditions by notice in writing to the Customer". 2. Tradelink could "at its discretion alter the Customer's credit limit for any reason (including to meet the Customer's then buying needs)". The right to make the alteration at its discretion is, in the absence of clear language, inconsistent with the suggestion that any alteration only becomes effective upon notice to the Company. Furthermore, the temporal reference to the Company's "then buying needs" (emphasis added) suggests that one of the reasons to alter the limit is a customer's immediate requirement for goods. It would give an uncommercial result to interpret the Terms and Conditions so that a decision to, for example, increase the credit limit to meet a customer's immediate need for supply could not be validly effected until notice of that decision had been given to the customer, presumably in accordance with the provisions of clause 15 of the Terms and Conditions. 3. If there were any doubt about the correctness of the conclusion expressed in the preceding sub-paragraph, it is dispelled by the obligation of Tradelink to notify the Company "of any alteration in the credit limit by notice to that effect in the following monthly account statement" (emphasis added). That provision makes clear that the notification is nothing more than that, i.e. informing the customer after the event that Tradelink has made a decision to the advantage of the customer by increasing its credit limit, rather than such a notification having substantive legal effect as a condition precedent to the validity of the alteration of the credit limit and Tradelink's entitlement to be paid for goods which, ex hypothesi, have already been sold in excess of the credit limit. (In reaching these conclusions the Court has not overlooked that Tradelink could also reduce the credit limit, but that is not the case at bar and it would not alter the Court's conclusions in any event.) 4. The final sentence also makes it clear that any notified credit limit is not something upon which the Customer can rely. It is only for Tradelink's benefit: "any credit approval limit noted in this form, in any monthly statement or otherwise is for the Supplier's convenience only".
6. Finally, Mr Yang submitted that changing the amount of the credit limit in subsequent monthly statements (see paragraph [40] above) did not constitute "notice to that effect" for the purposes of clause 4(e) of the Terms and Conditions. Given that the Court has taken the view that the notification of any alteration was not legally necessary or significant for the validity or efficacy of that alteration, the point is a moot one. However, were it necessary to decide it, the Court is satisfied that changing the amount in the box entitled "credit limit" is "notice to that effect" being notice of an alteration in the credit limit. The notice had to be "to that effect" and not "in those terms". In other words, it did not have to say that a decision had been taken to effect an alteration. All that it had to notify was the alteration. That was sufficiently done by changing the amount in the box marked "credit limit".

Can Tradelink rely on the Statement?

1. Clause 18 of the Terms and Conditions provides: 18. STATEMENT A statement in writing signed by the Supplier's Credit Manager stating the monies payable by the Customer to the Supplier shall be prima facie evidence of the amounts so payable.
2. Tradelink relied on the Statement, which stated: STATEMENT PURSUANT TO CLAUSE 18 OF THE SECTION OF THE CREDIT AGREEMENT DATED 20 NOVEMBER 2007 ENTITLED "TERMS AND CONDITIONS OF SALE" BETWEEN CRANE DISTRIBUTION LIMITED, STEVE YANG CONSTRUCTION PTY LIMITED AND STEVE YANG (ALSO KNOWN AS SANG SOO YANG), GUARANTOR I, Julie McHarg, national Credit Manager of Crane Distribution Limited t/as Tradelink Plumbing Supplies hereby state pursuant to Clause 18 of the abovementioned Credit Agreement that the sum of $677,838.12 is payable by Steve Yang Construction Pty Limited (now in liquidation) to Crane Distribution limited. The amount of $677,838.12 is made up as follows: 1. $198,001.97 being the unpaid costs of goods sold and delivered to Steve Yang Construction Pty Limited pursuant to the terms of the abovementioned Credit Agreement; and 2. $184,073.09 being interest on the unpaid costs of goods sold and delivered pursuant to the abovementioned Credit Agreement up to 4 March 2016. 3. $295,763.06 being legal costs and disbursements incurred by the mortgagee pursuant to the abovementioned Credit Agreement up to 4 March 2016. Dated: 4 March 2016 Julie Lynette McHarg National Credit Manager Crane Distribution Limited
3. A similar clause was considered by Duggan J in the Supreme Court of South Australia in Commonwealth Bank of Australia v Oberdan [2000] SASC 428: 10 Apart from tendering a number of documents, the plaintiff called only one witness, Mr Hampton, who is employed by the plaintiff as assistant manager in the credit management department of the bank. The plaintiff tendered certificates prepared by Mr Hampton which set out the amounts due and owing in respect of each of the guarantees. The certificates were prepared pursuant to a clause in each of the guarantees which is to the following effect: A certificate in writing made up from the books of the Bank and signed by an authorised officer of the Bank of the amount due or owing of the moneys hereby secured at the date mentioned in such certificate shall be prima facie evidence that such amount is so due or owing or secured and of all the other matters therein set forth without it being necessary to produce any books or vouchers to verify the same and without retrospection beyond the preceding half-yearly balance of account in the books of the Bank. (St Christopher Guarantee Clause 18, Haventide and Edinburgh Castle Guarantees Clause 17). 11 Further certificates were tendered on the last day of the trial so as to update the amounts due. 12 It will be seen from the wording of the clauses which authorise the issue of the certificates that they are directed towards establishing prima facie evidence of the facts stated therein and that they do not purport to establish the facts conclusively. 13 The use of certificates of this nature was considered by the High Court in Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643 at 651. The clause in the guarantee in that case purported to authorise the bank to provide a certificate which established conclusively the fact and amount of the customer's indebtedness to the bank. The court rejected an argument that the clause was void as being an attempt to oust the jurisdiction of the court and to substitute for the judgment of the court the determination or opinion of an officer of the bank. In the joint judgment of Rich, Dixon, Evatt and McTiernan JJ their Honours said (654): It is therefore a mistake to suppose that the policy of the law exemplified in the rule against ousting the jurisdiction of the Court prevents parties giving a contractual conclusiveness to a third person's certificate of some matter upon which their rights and obligations may depend. In Ex parte Young; In re Kitchin (1881) 17 Ch. D. at p 672 James L.J. says: If a surety chooses to make himself liable to pay what any person may say is the loss which the creditor has sustained, of course he can do so, and if he has entered into such a contract he must abide by it. There are many familiar kinds of contracts containing provisions which make the certificate of some person, or the issue of some document, conclusive of some possible question. The most conspicuous example, perhaps, is the certificate of the engineer or architect under contracts for the execution of works or the construction of buildings. For these reasons we think the certificate of the officer of the bank is conclusive upon the parties of the amount and existence of the customer's indebtedness." (See also Australia & New Zealand Banking Group Ltd v Carnegie and Hicks Crockett J, Supreme Court of Victoria, 16 June 1987, unreported). 14 A clause providing for a certificate of prima facie indebtedness is valid and effective for the same reasons (ANZ Banking Group Ltd v Walsh Beach J, Supreme Court of Victoria, 8 May 1991, unreported). If the certificate is properly tendered the onus falls upon the defendant to demonstrate by acceptable evidence that the certificate is incorrect.
4. Before considering Mr Yang's main attack on the Statement, it is convenient first to deal with his submission that, as a matter of construction of the Terms and Conditions, the Statement could not be deployed against him. The Court does not accept that submission for the reasons set out in the next paragraph.
5. By clause 4(a) of the Agreement, Mr Yang accepted liability to Tradelink "for the payment as principal debtor of all moneys owed by the [Company] to [Tradelink] from time to time". A statement pursuant to clause 18 of the Terms and Conditions is prima facie evidence of "the moneys payable by the [Company] to [Tradelink]". If the Court accepts the Statement as prima facie evidence of the amount owed by the Company to Tradelink then that necessarily quantifies the amount for which Mr Yang is liable as principal debtor to Tradelink. Being "principal debtor" can only mean that Mr Yang placed himself in a like position to the position of the Company. As such, the liability of the Company which Mr Yang promised to meet included its liability as established by the Statement. As a matter of construction, the objective intention of the parties is that Tradelink should be able to get payment from Mr Yang, if the Company did not pay, by reference to the Statement which determined the Company's liability to Tradelink. For a similar question of construction and result, see the decision of this Court in Sabemo Pty Ltd v De Groote, Giles J, 28 March 1991, unreported, BC9102171 at pp32-33.
6. To adapt the language of Duggan J, the question then becomes whether Mr Yang has demonstrated by acceptable evidence that the Statement is incorrect. The only attack made by Mr Yang on the correctness of the Statement appears to be an argument that the goods said to give rise to the indebtedness were not delivered. For the reasons given in the next section of this judgment, that argument fails. It follows that Tradelink is entitled to rely on the Statement as against Mr Yang.

Were the goods delivered?

1. Mr Yang challenged the Statement insofar as it asserted that $198,001.97 represented the unpaid cost of goods sold and delivered to the Company. The author of the Statement, Tradelink's National Credit Manager, Ms JL McHarg, proved how that figure was arrived at. Her evidence was that she obtained from Tradelink's records a printout of all outstanding invoices for the Company collated on a month by month basis. These showed a total amount outstanding of $372,956.11. This figure was derived from the invoices for the months of September, October and November 2010. In accordance with the Terms and Conditions, those invoices were payable, respectively, on 31 October 2010, 30 November 2010 and 31 December 2010.
2. From the total figure of $372,956.11, Ms McHarg deducted miscellaneous payments received on 11 June 2010 of $415.52 and a further payment of $174,538.62, being the payment received from Mr Yang following the sale of one of his properties (see paragraph [6] above). Those deductions gave a balance outstanding of $198,001.97.
3. As the Court has already determined, the effect of the Statement was to put the onus on Mr Yang to demonstrate that it was incorrect. Insofar as the figure in relation to goods sold and delivered is concerned, the obvious way of doing so would be demonstrate that some of the goods had not been delivered. Unsurprisingly, Mr Yang's evidence was that he was not personally aware of which goods had or had not been delivered. He said he could only determine this by reference to Tradelink's delivery dockets.
4. Mr Yang's argument was based upon his and his solicitors' analysis of delivery dockets produced by Tradelink for the period 1 September 2010 to 9 November 2010. It was submitted that analysis demonstrated: 1. The total amount invoiced by Tradelink was $360,415.61. 2. The total amount of delivery documents was $182,463.40. 3. The total amount of signed delivery dockets was $155,406.45. 4. The total amount of unsigned delivery dockets was $27,056.95.
5. Although it was not quite put in these terms, the Court understood the effect of Mr Yang's submissions on this point to be that the Statement had to be incorrect (at least in relation to goods sold and delivered) because Tradelink was only able to produce delivery dockets for goods to a value of $182,463.40 and, in any event, those signed on behalf of the Company evidencing delivery totalled only $155,406.45. It was therefore submitted that the amount owing by the Company to Tradelink as at 9 November 2010 for goods sold and delivered was the amount of $155,406.45.
6. Mr Yang submitted that the calculations in relation to the delivery dockets had to be understood in the context of how he had dealt with Tradelink. His affidavit evidence was: When the goods arrived on site, I checked the materials to see everything I ordered were there. If they were all there I signed the delivery docket. I kept one copy of the delivery docket and the delivery driver kept the other. If there were some materials missing I discussed with delivery driver. He changed the delivery docket to reflect what had been delivered. I signed the docket and kept a copy. If I was not on site the site manager signed the docket. I had told the site managers this is what they had to do. The delivery dockets were collected by me each week from each site office. I received a monthly invoice from Tradelink noting every purchase order and invoice for the month. I checked the amount of each invoice with the signed delivery dockets and purchase number and date. If there was difference I directly went to the Tradelink shop in Auburn and showed the delivery docket. We discussed and resolved the problem. Mostly I was right. The dispute was usually over two things. One was price differences traded by Tradelink for the same item each month. The second disuse was the discrepancies between invoiced amount and the actual delivered goods as per delivery docket. It has always been my practice to pay on the amount noted in signed delivery dockets. It is the only way I know definitely what material I received. I never paid according to the invoice only for that reason.
7. In another part of his affidavit he said: The site managers obtained purchase order number from the material department and they used that number to make an order with Tradelink. The material department also placed an order using purchase order number. The accounting department used Quality Assurance System. At end of each month, the accounting department received from Tradelink daily to compare with total amount invoiced each month. The accounting department compared delivery dockets handed in by the material department with the invoices from Tradelink. If there were discrepancies between the invoices and delivery dockets, the accounting department contacted the material department to find out why the discrepancies happened. If it was found that the discrepancies happened because of Tradelink's mistake, then the accounting department contacted Tradelink to rectify its mistake.
8. Tradelink cast doubt on Mr Yang's evidence by its witnesses testifying that signed delivery dockets were retained by Tradelink and not the Company (which makes sense, given such documents were the Company's evidence of receipt of the goods by the Customer). There was also evidence that not all goods delivered to the Company were signed for and that goods were collected from Tradelink's premises by Mr Yang and others which did not involve delivery dockets.
9. For the reasons which follow, the Court does not accept that Mr Yang has discharged the onus of demonstrating that the figure for goods sold and delivered in the Statement - derived from the invoices - is incorrect. Alternatively, assuming in Mr Yang's favour that he has discharged the onus, the Court relies on Tradelink's uncontroverted evidence to find that the figures relied upon by Tradelink for goods sold and delivered are correct. These conclusions can be, and have been reached, without having to resolve the inconsistencies between the parties' evidence in relation to delivery dockets where that evidence conflicts.
10. To accept Mr Yang's analysis would require the Court to find that in excess of $180,000 in goods invoiced by Tradelink to the Company had not in fact been delivered in circumstances where the invoices for the goods were provided to the Company and were recorded on the monthly statements provided to the Company. The Court accepts Tradelink's submissions, which may be reduced to three essential points: 1. Under the Terms and Conditions Tradelink was not required to obtain a signed receipt or other acknowledgement of delivery of goods. 2. An inference of delivery may be drawn from Tradelink's evidence of its invoicing and delivery system. 3. The lack of any contemporaneous complaint by the Company about invoices for undelivered goods, notwithstanding Mr Yang's evidence that both he and his accounts department were assiduous in checking invoices against delivery dockets before payment.
11. The starting point is these clauses of the Terms and Conditions: 4. ACCOUNT TERMS a) Unless otherwise agreed in writing by the Supplier, the Customer shall pay for all goods delivered in any calendar month on or before the last trading day in the following month. … 6. DELIVERY a) Goods will be delivered or deemed to be delivered, when they are delivered to the delivery place nominated by the Customer. If no such address is nominated, then delivery will be deemed to occur at the time when the goods are ready for collection at the Supplier's premises. … d) The Customer authorises the Supplier to deliver products to the place nominated by the Customer and to leave the products at such place whether or not any person is present to accept delivery. The Supplier shall not be liable on any basis whatsoever for loss suffered by the Customer after delivery to the nominated delivery place. e) The Supplier shall not be obliged to obtain a signed receipt or other acknowledgement from any person at the nominated place for delivery but if a signed receipt or other acknowledgement is obtained from someone believed by the Supplier to be authorised by the Customer to sign or otherwise take delivery, then such signed receipt or other acknowledgement shall be conclusive evidence of the Customer's acceptance of the goods delivered. … 10. CLAIMS UPON SUPPLIER a) Subject to clause 6(d), all claims for the Supplier's failure to comply with the Customer's order whether due to shortfall, incorrect delivery or otherwise must be made by giving written notice to the Supplier within five (5) days from the date or delivery. If the Customer fails to provide such notice then the Customer shall be deemed to have accepted the goods.
12. There are two important points to note from the preceding provisions. First, Tradelink was authorised by the Company to deliver product to the places nominated by the Company whether or not any person was present to accept delivery. Second, Tradelink was not obliged to obtain a signed receipt or acknowledgement from any person at the place of delivery.
13. Next, it was the uncontroverted evidence of various representatives of Tradelink that invoices were prepared as part of the process of delivery. That evidence may be summarised as being that when goods were prepared for delivery in response to an order, a Tradelink employee would place the order into Tradelink's computer system, which would generate a delivery docket in duplicate to go with the goods as well as a corresponding invoice to be sent to the customer. The invoices would then be recorded in the monthly statement. The goods would be placed in a storage area with the delivery dockets to be delivered by Tradelink's drivers. Those drivers were responsible for checking that in in relation to every delivery, the goods recorded on the delivery docket to be delivered were present on the delivery truck.
14. The matters set out in the previous paragraph enable the Court, as it does, to infer that delivery dockets and invoices were generated by Tradelink in response to orders placed by customers. Furthermore, the Court is satisfied that those documents were produced at the point of setting aside the goods in anticipation of their delivery to the customer by Tradelink's drivers. The evidence also establishes that Tradelink's drivers delivered goods that had been set aside for delivery with their delivery dockets. On the basis of that evidence the Court also infers that in the ordinary course of Tradelink's business, goods intended to be delivered (as opposed to collected) to a site nominated by the Company, and in respect of which an invoice and delivery dockets were raised, were in fact delivered.
15. The finding in the last sentence of the preceding paragraph is also made by reference to the fact that there is no evidence (documentary or through Mr Yang) of complaint by the Company to Tradelink that a substantial amount of goods which were invoiced and referred to in the monthly statements for September, October and November 2010 were in fact not delivered. The obvious inference from Tradelink's evidence as to its business practices is that the invoices relied upon by Tradelink for the purposes of the calculation in the Statement were generated in response to orders from the Company. The invoices were listed exhaustively in the monthly statements.
16. The Court takes all of these matters into account to infer that the goods the subject of the invoices relied upon by Tradelink were delivered because in addition to Tradelink's evidence of how invoices were generated and goods were delivered, there is no evidence of contemporaneous complaint by the Company of non-delivery. Perusal of the monthly statements shows that the Company appears to have obtained credits in comparatively small amounts from time to time. However, none of those credits uses the code "PD", which is the code in the monthly statements for "proof of delivery required". Accepting for present purposes Mr Yang's evidence about the care and attention he and his accounts department devoted to checking invoices and delivery dockets, it is fanciful to suggest that invoicing of in excess of $180,000 worth of goods over a three month period would have gone unnoticed. The Court concludes that there were no complaints because the Company did not dispute that the invoiced goods had been delivered.
17. The result is that the Company has failed to discharge its onus that the Statement is incorrect in relation to goods sold and delivered. Alternatively, in meeting that submission Tradelink has established that the Statement, derived from Tradelink's invoices to the Company, is correct in relation to the value of goods sold and delivered by Tradelink to the Company.

Is Mr Yang liable for Tradelink's costs of enforcement on the indemnity basis?

1. Tradelink relies on clause 4(d) of the terms and conditions of sale: (d) The Customer shall pay any legal costs (on a full indemnity basis), stamp duties, any bank charges or merchant fees or like charges levied on the Supplier by any banker or other credit provider whose banking or credit card facilities are utilised by the Customer for paying the Supplier any amounts on any account and any other expenses payable of and incidental to the performance or enforcement of or any litigation on these terms and conditions or any credit application or any security documents signed by the Customer or any guarantor together with any other collection costs and dishonoured cheque fees.
2. Tradelink submits that by reason of Mr Yang's position as having accepted liability under clause 4(a) of the Agreement as principal debtor and as a guarantor, then Mr Yang is liable for whatever the Company is liable under clause 4(d) of the Terms and Conditions. Tradelink refers to the decision of Ball J in MIS Funding No 1 Pty Ltd v Beefeater Sales International Pty Ltd [2015] NSWSC 1109: 62. Under the terms of the Loan Agreement, MIS is entitled to its costs on an indemnity basis from Beefeater. Under the terms of the Guarantee, Mr Woodland is liable for the amount for which Beefeater is liable. Notwithstanding the terms of the Loan Agreement, costs are in the discretion of the court: Kyabram Property Investments Pty Limited v Murray [2005] NSWCA 87 per Beazley JA (with whom Hodgson and Ipp JJA agreed) at [11]-[13]. Normally, however, the court would exercise its costs discretion consistently with the parties' contractual obligations. No reason has been advanced for why it should not do so in this case. It follows that Beefeater and Mr Woodland should pay MIS's costs on an indemnity basis.
3. Mr Yang made the following answers to Tradelink's claim: 1. He is not personally liable to Tradelink (which contention has been determined adversely to Mr Yang in paragraphs [26] to [39] above). 2. Even if Mr Yang had some liability to Tradelink as guarantor, it did not extend to a personal liability for the costs of enforcement because clause 4(d) of the Terms and Conditions was clearly framed in terms of the Company paying those costs (this argument is disposed of adversely to Mr Yang in paragraphs [72] and [73] below). 3. If the Court held that Mr Yang was liable only for $150,000 then, in the exercise of its discretion, the Court would not award indemnity costs because Mr Yang made offers for substantially more than that amount. The Court has not accepted that Mr Yang's liability is limited to $150,000 (see paragraphs [40] to [45] above) and, on that basis, the offers did not exceed the amounts owing by Mr Yang either at the time they were made or, even more so, today.
4. The fact that clause 4(d) of the Terms and Conditions is couched in terms that "the [Company] shall pay any legal costs (on a full indemnity basis) …" is not a basis for Mr Yang to avoid that liability. As the Court has already determined, under clause 4(a) of the Agreement Mr Yang has accepted liability as both principal debtor and guarantor of "all moneys owed by the [Company] to [Tradelink] from time to time". Tradelink has an existing contractual right under clause 4(d) against the Company for its (Tradelink's) legal costs on the indemnity basis "of and incidental to the … enforcement of or any litigation on" the Terms and Conditions. That right does not depend upon the Court making a costs order on the indemnity basis in favour of Tradelink against the Company (which is not a party to these proceedings).
5. However, Tradelink's costs of these proceedings are costs of and incidental to litigation on the Terms and Conditions. Mr Yang's obligations under clause 4(a) of the Agreement are to stand in the shoes of the Company in relation to Tradelink. Subject only to any relief to which Mr Yang is entitled under the CRA (see paragraphs [74] - [82] below), Mr Yang has failed to demonstrate any reason why the Court's costs discretion should not be exercised consistently with his contractual obligations to stand in the Company's shoes. The Court will exercise its costs discretion to give effect to Mr Yang's contractual obligation by making an order that he pay Tradelink's costs of these proceedings on the indemnity basis.

Whether Mr Yang is entitled to relief under the CRA - legal principles

1. The relevant provisions of the CRA are: 4(1) In this act, except insofar as the context or subject-matter either indicates or requires: … "unjust" includes unconscionable, harsh or oppressive, and … 7 Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order. (3) The operation of this section is subject to the provisions of section 19. … 9 Matters to be considered by Court (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract. (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made. (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.
2. I respectfully adopt the summary of the legal principles governing the application of the CRA set out by Sackar J in White v Wills [2014] NSWSC 1160 ("White"): 107. Under section 7(1) of the Act, a contract may be unjust in the circumstances existing when the contract was made. The contractual provision may be unjust, simply because it imposes an unreasonable burden on a person when it is not reasonably necessary for the protection of the legitimate interests of persons seeking to enforce it. Injustice may also flow because the claimant did not have the capacity to make an informed or real choice whether or not to enter the contract. 108. The contract may be unjust because of its terms or consequences, or its effects may be unjust. McHugh JA, as he then was in West v AGC (1986) 5 NSWLR 610 said at 621: Any contract or contractual provision not excluded from the operation of the Act and which the court considers is unjust in the circumstances existing at the time when it was made, may be the subject of relief under the Act... If a contract or one of its relevant provisions is neither unfair nor unreasonable so far as the applicant is concerned, it is difficult to see how the existence of inequality in bargaining power or lack of independent advice, for example, can render the contract or provision of the contract unjust. 109. The general policy of the law that people should honour their contracts has been stated in a number of authorities: see, for example, Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9 per Gleeson CJ. 110. The normative evaluation involved in determining whether or not a contract is one which calls for relief under the Act was discussed by Allsop P (as his Honour then was) in Provident Capital Ltd v Papa [2013] NSWCA 36 (at [7]): The broad evaluation of unjustness under the Contracts Review Act 1980 (NSW) ss 4, 7 and 9 involves the normative evaluation of the totality of relevant circumstances. Inevitably minds may differ as to conclusions about such questions. Also, it is often not fruitful to compare other cases with the particular circumstances at hand, lest one be deflected from an appropriate overall assessment by focus on particular aspects relevant to any such comparison. Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances. Here, there was no predation. There was no behaviour in which [the lender] sought to take advantage of [the borrower]. 111. In the judgment of Gleeson JA in Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 (Meagher and Leeming JJA agreeing), His Honour observed at [97]: In an application for relief under s 7 of the Act, the Court undertakes a three-stage process: Perpetual Trustee Co Ltd v Khoshaba (Khoshaba) at [99], per Handley JA; at [106], per Basten JA. The first stage is to make findings of primary fact. The second stage involves a finding that the contract is or is not unjust. The third stage is the exercise of the power to grant relief under the Act which may, but need not, follow from the conclusion that a contract is unjust.

Whether Mr Yang is entitled to relief under the CRA - resolution

1. In his further amended defence Mr Yang pleaded his case under the CRA by reference to the following matters: 34. The First Defendant migrated to Australia in 1989 at the age of forty-five (45). 35. On 21 November 2007, the First Defendant: (a) Was sixty-four (64) years of age; (b) spoke at home, in his community and with work colleagues at work Korean as his first language and not English; (c) Spoke limited English and could only understand very basic written English; and (d) had university qualifications from the University of Korea in mechanical engineering, but the only Australian tertiary education qualifications he held was in respect of plumbing obtained at TAFE. 36. By no later than 21 November 2007, the Plaintiff, by its authorised representatives, inter alios, Brian Baron, then branch manager of the Plaintiff's Silverwater Store knew that the First Defendant had limited proficiency in the English language and in particular written English. Particulars (a) Brian Baron had known the First Defendant since 1997/1998; (b) Brian Baron was able to recognise the First Defendant by sight; and (c) Further particulars may be provided following the issue of notices to produce and/or subpoenas. THE CONTRACTS REVIEW ACT 37. Neither before or at the time of the execution of the Conditions and the Agreement by the First Defendant, did any representative of the Plaintiff advise the First Defendant that the terms of the Agreement purported to include a guarantee by him of the Company's performance of the Conditions and the Agreement. 38. Neither before or at the time of the execution of the Conditions and the Agreement by the First Defendant, did any representative of the Plaintiff advise the First Defendant that he ought to obtain independent legal advice prior to executing the parts of the Application which were provided to him by representatives of the Plaintiff. 39. The First Defendant did not seek legal advice before executing the parts of the Application which were provided to him by representatives of the Plaintiff. 40. The Application was a standard form document created by legal representatives for the Plaintiff for use by the Plaintiff. 41. The Agreement: (a) Was contained in the Application directly above the words in bold and capital letters "GUARANTEE AND INDEMNITY ("GUARANTEE") AND CHARGE"; (b) Was not the subject of negotiation between the Plaintiff and the First Defendant; (c) Was in writing, in language which was complex, archaic, contained jargon, multiple undefined terms and was difficult to understand; (d) The introductory text to the Attestation Clause read "SIGNED and sealed by/on behalf of the Customer (as defined in the Conditions)"; (e) The Attestation Clause provided for the person signing the Conditions and Agreement to "Sign and print name", record their "Position" and record the date of execution of the Application; and (f) Contained clauses which were not for the legitimate protection of the interests of the Plaintiff, namely clauses 3 and 4 of the Agreement. 42. The covert insertion of clauses in the Agreement by the Plaintiff in its standard form of Application juxtaposed with the inclusion of a separate Guarantee and Indemnity and Charge in the same document amounted to unfair tactics within the meaning of s 9(j) Contracts Review Act 1980 (NSW). 43. The failure by any representative of the Plaintiff to identify or draw to the attention of the First Defendant that by signing the Agreement he was, on the construction placed by the Plaintiff upon clauses 3 and 4 of the Agreement, providing security and a guarantee amounted to unfair tactics within the meaning of s 9(j) Contracts Review Act 1980 (NSW). 44. By reason of some or all of the matters pleaded at paragraphs 33 to 43 of this Defence above, the Agreement was unjust within the meaning prescribed by the Contracts Review Act 1980 (NSW).
2. In response, Tradelink relied on a number of matters, including: 1. Mr Yang was an astute businessman. 2. He understood that suppliers required guarantees from the directors of corporate customers. 3. He knew that, as a guarantor, he was liable for the debts of the Company. 4. He was able to read the Application in English and, insofar as he did not understand it, could have, if he wanted, requested a staff member to translate it to him. 5. He was well familiar with credit applications generally. 6. He understood that the Company would have to pay for all products supplied by Tradelink even if thereby it exceeded the credit limit, something which Tradelink submitted Mr Yang knew had in fact occurred.
3. 78 Insofar as the three stage process in an application for relief under s 7 of the CRA (see paragraph [111] of White set out in paragraph [75] above), the Court repeats its findings of fact concerning Mr Yang set out in paragraphs [20] and [21] above.
4. 79 In the light of those findings and the terms of the Application, the outcome of the normative evaluation (see paragraph [110] in White set out in paragraph [75] above) is clear, particularly when the touchstone identified by Allsop P is taken into account: "At its heart, however, it is the recognition of the inadequacy of one party to protect her or his interests in the circumstances. Here, there was no predation. There was no behaviour in which [the lender] sought to take advantage of [the borrower]."
5. 80 The terms of the Application - in particular the Terms and Conditions and the Agreement - are not, in and of themselves or in the circumstances of this case, unjust. They appear to be standard terms in a commonplace transaction. They were terms whose effect, and the transaction was a transaction, with which Mr Yang was well familiar, notwithstanding his linguistic limitations. Mr Yang has been unable to point to anything that could fairly be described as predation. Nor was there any behaviour in which Tradelink might be found to have been trying to take advantage of Mr Yang.
6. 81 The Court is satisfied that Tradelink did not suggest to Mr Yang that he should obtain legal advice about the Application. That is unsurprising when the Application was the fifth iteration of a document, to like effect to its four predecessors, which Mr Yang had executed over a 24 year (in 2007) commercial relationship. In the circumstances of this case, failure to suggest he should obtain legal advice is not, in and of itself, sufficient to engage s 7 of the CRA. Mr Yang was well familiar with this type of transaction and there was no suggestion in the evidence that Tradelink did anything which would have had the effect of preventing Mr Yang from obtaining legal advice or having the Application translated for him to the extent that he was uncertain about any of its terms. Mr Yang was perfectly well able to protect his own interests in relation to the Application to the extent he wanted to do so. Instead, he chose to sign the Application with whatever level of understanding he had of the document, not as a result of any pressure or unfair tactics on the part of Tradelink, but as a result of his own voluntary decision recognising that he would be bound by the entirety of the document whether or not he had understood it.
7. 82 The Court does not accept that there was anything in the circumstances relating to the Application at the time it was made that would make it just for the Court to grant relief to Mr Yang under s 7 of the CRA. While that conclusion is based upon the matters set out in paragraphs [78] to [81] above, I am fortified in that result by the strong impression that I formed from observing him that in executing the Application where he did after the Terms and Conditions and the Agreement, Mr Yang knew and expected that he would be personally liable to Tradelink. There is much force in Tradelink's written submission that "the present allegations cynically take advantage of the fact that it is now apparent [Tradelink] cannot now rely upon the Guarantee component of" the Application".

Whether Tradelink is entitled to orders for possession and for sale of No 64 and No 11

1. Pursuant to clause 3 of the Agreement, Tradelink: 1. Registered a power of attorney at the Land Titles Office; and 2. Pursuant to the terms of that power of attorney executed mortgages over No 64 and No 11 which are unregistered.
2. By reference to the principles applicable to an application by an unregistered mortgagee to sell its security (being property registered under the Real Property Act 1900 (NSW)) set out by JC Campbell J (as his Honour then was) in King Investments Solutions v Hussain [2005] NSWSC 1076; (2005) 13 BPR 25,077 ("King"), Tradelink submitted: 1. Clauses 3 and 4 of the Agreement authorised Tradelink to execute a mortgage of the kind specified in clause 3 of behalf of Mr Yang. 2. Tradelink enlivened those clauses to execute such a mortgage after it made demand on Mr Yang. No form of mortgage was specified other than it being in a form that Tradelink reasonably required. 3. The mortgage that was registered provided for a power of sale. 4. Although not required, Tradelink has served notices pursuant to s 111(2)(b) of the Conveyancing Act, 1919 (NSW). 5. Tradelink served such notices on the NAB as first mortgagee and informed them of the hearing dates in this matter. 6. Tradelink has obtained appraisals for the properties, the most recent of which are: 1. Between $1.15m and $1.2m for No 64; and 2. In excess of $1.7m for No 11. 1. Based on documents produced by the NAB, the indebtedness of Mr Yang to the NAB as first mortgagee secured by the properties is: 1. $395,595.90 as at 31 December 2015 in relation to No 64; and 2. $195,846 as at 16 December 2015 in relation to No 11. 1. Tradelink has obtained the consent of trustees for sale.
3. Other than the various defences already dealt with in these reasons, Mr Yang did not raise any specific matters directed, in particular, to Tradelink's claim for possession and sale of No 64 and No 11. Given the significant amount of equity Mr Yang has in the properties after the interests of the NAB as first mortgagee are taken into account, the Court is satisfied that orders should be made for the possession and sale of No 64 and No 11, subject to the following two matters.
4. First, in King (at [111]) JC Campbell J made the observation that "There will always be a question of discretion whether it is appropriate to order an immediate sale, or to allow some further time in which redemption can take place". In the circumstances of the present case this discretion is enlivened by the fact that there are two properties in each of which, on the evidence, Mr Yang has sufficient equity after payment to the NAB to satisfy Tradelink's debt. It appears from the evidence that Mr and Mrs Yang live in No 64. That circumstance may, in and of itself, be sufficient to dissuade the Court, in the exercise of its discretion, to make orders for the possession and sale of No 64 where there is another property that could be sold.
5. To give effect to these reasons, the Court directs Tradelink and Mr Yang to discuss which of the two properties should be sold first. If they are unable to agree, then the Court will decide the matter. If after the sale there is still an amount owing to Tradelink, the Court would also expect that a further, short opportunity should be given to Mr Yang to pay that balance before orders for the possession and sale of the other property are made.
6. Second, the Court directs Tradelink to ascertain if it can agree with the NAB what, if any, amount of security Tradelink should be ordered to provide (see King at [106] - [110]) for NAB and what reserve price should be fixed (see King at [104]-[105]). This latter matter should also be discussed with Mr Yang. If the parties are unable to agree these matters, then it will be necessary for the Court to receive further submissions as to what orders should be made to give effect to these reasons.

Conclusion

1. Tradelink has succeeded in demonstrating an entitlement to relief, the particulars of which will require some working out. Mr Yang's amended cross-claim should be dismissed. Subject to hearing the parties, costs should follow the event. The Court will direct the parties to bring in short minutes to give effect to these reasons. Having regard to the matters referred to in paragraphs [87] and [88] above, those short minutes should also include liberty to apply.

Schedule 1 Crane v Yang (805 KB, pdf) Schedule 2 - Crane Distribution v Yang (42.8 KB, pdf) Schedule 3 - Crane Distribution v Yang (7.29 KB, pdf)

Amendments 13 May 2016 - Amendment to headings paras 74 and 76 - addition of "is" before entitled 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: 13 May 2016