De Lage Landen P/L v HBO EMTB Holdings P/L - [2018] NSWDC 116 - NSWDC 2017 case summary — Zoe

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De Lage Landen P/L v HBO EMTB Holdings P/L

[2018] NSWDC 116

District Court of NSW|2017-09-07|Before: Lage Landen P, Holdings P

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At a glance

Source facts

Court

District Court of NSW

Decision date

2017-09-07

Before

Lage Landen P, Holdings P

Catchwords

(2002) 209 CLR 95 Jones v Dunkel [1959] HCA 8
Mr D Krochmalik - 12 & 13 April 2018 (Plaintiff) Mr T Tzovaras (Solicitor) (Defendant)

Source

Original judgment source is linked above.

Catchwords

(2002) 209 CLR 95 Jones v Dunkel [1959] HCA 8Mr D Krochmalik - 12 & 13 April 2018 (Plaintiff) Mr T Tzovaras (Solicitor) (Defendant)

Judgment (19 paragraphs)

[1]

Table of Contents Nature of case [1] - [2] Background, parties, third parties [3] - [8] Agreement and default [9] - [15] Evidence overview [16] - [18] Credit [19] - [25] Issues in dispute [26] Legal principles [27] - [28] Submissions of the parties [29] - [35] Plaintiff's submissions [30] Defendant's submissions [31] - [35] Consideration of the issues and findings on those issues [36] - [47] Objective intention of the parties and asserted estoppel [37] - [40] Whether there was consensus ad idem [41] - [44] Whether consideration passed between the parties [45] - [47] Disposition [48] Costs [49] Orders [50]

[2]

[3]

Background, parties, third parties

De Lage Landen Pty Limited ("DLL"), loaned monies to a company named HBO EMTB Services Company Pty Ltd (the borrower). That borrower, which is not a party to the proceedings, made several repayment instalments on the loan, and then defaulted in making further payments.
Before providing the borrower with the subject loan, the plaintiff required a guarantee for that loan from a parent company of the borrower. A selection of emails between the plaintiff's employees, Mr Bartnicki and Mr Cordoba was tendered showing the course of those negotiations. Those persons did not give evidence in the proceedings. That guarantee was ostensibly provided by the defendant. The plaintiff now seeks from the defendant, as guarantor, the balance of the monies owing, which with interest, totals an amount of $264,405.58.
Mr Kevin Fitzgerald is a Director of both the borrower company and the guarantor company. His directorships span some 72 companies. He is the person who signed the guarantee on behalf of the defendant.
At the relevant time Mr Fitzgerald was an experienced businessman who had considerable commercial acumen, and who made and implemented business decisions through complex corporate arrangements. That much is plain from his evidence and from the financial arrangements which form the basis for this case.
There are two groups of companies relevant to these proceedings, including Hong Kong and Singaporean companies. The first group is headed by Chai Consulting Ltd (Hong Kong), the holding company for HBO EMTB Holdings Company Pty Ltd, which is in turn the holding company for HBO EMTB Services Company Pty Ltd, the borrower. The second group is headed by Polmaze Pty Ltd, which, between 24 June 2013 and 13 December 2016, was the holding company of the defendant company, HBO EMTB Holdings Pty Limited.
The HBO EMTB short form component of those corporate names is a shortening of the extended name Hoadley, Budge, Olphert + Edwards, Madigan, Torzillo Briggs: T73.13 - T73.16.

[4]

Agreement and default

In light of those complicated corporate arrangements, it was neither unusual nor surprising that the plaintiff, as a lender, required a guarantee for the loan in question.
On 12 March 2015, the plaintiff entered into a Master Instalment Payment Agreement with the borrower (described as the Obligor) being the customer to whom the plaintiff advanced finance to acquire software products and services. Although the print on the tendered copy of that document was so small that an A3 enlarged copy was required (MFI "2"), it was not suggested that the signatories to that document did not understand what they were signing.
That agreement described the defendant, HBO EMTB Holdings Pty Limited, as the guarantor. Mr Fitzgerald signed the agreement on behalf of the "Obligor", HBO Services, on page 8 of that document, and under the heading "Guarantor: HBO EMTB Holdings Pty Limited CAN 105 229 338". I am left in no doubt that at the time Mr Fitzgerald signed the guarantee document, he knew that he was signing a binding guarantee for the loan in question.
Clause 43 of the agreement comprised the guarantee and indemnity clause. It is an unambiguous, complex, but effective clause. In addition to providing the plaintiff a guarantee and indemnity in respect of the amount loaned, it also covered questions of interest, costs and other expenses, reinstatement and protection of rights, suspension of guarantor's rights, the manner in which the plaintiff may exercise its rights, and the defendant's acknowledgment of its obligations and responsibilities concerning its awareness of the financial position of the borrower.
The last page of the agreement contains a Director's Declaration. An enlarged copy of that declaration, which was signed by Mr Fitzgerald, is as follows: [Signature redacted]
The quantification of the terms and the monetary effect of that agreement are not in dispute. The total amount payable to the plaintiff by the borrower was $313,909.20. That amount was agreed to be repaid in 12 equal monthly instalments of $25,159.10. The borrower made three monthly payments on 20 March 2015, 20 April 2015 and 19 June 2015, and then defaulted in making any further payments.
On 15 September 2015, consequent upon the financial position of the borrower company, administrators were appointed for that company. Despite demands made by the plaintiff under the guarantee, the plaintiff company has received no further payments from any other entity, leaving an unpaid balance of $233,118.94 with interest calculated to 12 April 2018 in the sum of $31,286.64, hence the plaintiff's call upon the guarantee agreement. That call remains unanswered, except that the defendant in these proceedings now seeks to avoid that guarantee.

[6]

Credit

The plaintiff challenged the credibility and the reliability of the evidence of Mr Fitzgerald. His evidence was crucial to the question of whether or not the inclusion of the name of the defendant was a naming mistake as to the identity of the guarantor.
The plaintiff submitted that Mr Fitzgerald's evidence should not be accepted unless otherwise corroborated: T80.32. The plaintiff further submitted that he was an argumentative witness who, by his brusque and defensive remarks, sought to avoid questions asked of him in cross-examination: T80.35 - T80.48.
In defence of Mr Fitzgerald's credit as a witness, it was submitted that whilst some of his answers could be taken as amounting to speeches advocating the defendant's position in the litigation, he was simply seeking, in some instances, to provide complete answers, and at other times he was taking a short or selective approach, and was not seeking to mislead: T98.5 - T98.31. I do not accept that submission.
I considered Mr Fitzgerald to be a combative witness who sought to avoid answering questions. He did not provide a straight-forward answer to a question calling for disclosure of his own financial links to the HBO EMTB group of companies. His answers in that regard were avoidant and evasive: T81.2 - T81.46.
In his answers to questions in cross-examination, Mr Fitzgerald refused to make appropriate concessions: T82.15 - T82.29. He was overly inclusive and combative in his answers. Furthermore, he gave a gratuitous answer to the effect that a previous decision of the Supreme Court in other proceedings which had criticised his evidence, had been appealed. That answer was a mischaracterisation, if not misleading, as the original result of that case was not disturbed: T81.43.
Although I was referred to the credit findings in that case (Deloitte Services Pty Ltd v HBO EMTB Interiors (NSW) Pty Ltd (In Liquidation) [2016] NSWSC 1597 at paragraphs [20] and [21]), I do not consider it to be appropriate that reliance be placed upon that material for credit findings in this case.
However, and for the reasons outlined above, I do not accept Mr Fitzgerald's uncorroborated evidence on matters in dispute between the parties.

De Lage Landen P/L v HBO EMTB Holdings P/L

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Judgment (19 paragraphs)

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Cases Cited (7)