PANG v BYDAND HOLDINGS Pty Ltd [2010] NSWCA 175 | Case summary

27 July 2010 VINCENT PANG v BYDAND HOLDINGS PTY LIMITED Judgment 1 ALLSOP P: I agree with Handley AJA. 2 MACFARLAN JA: I agree with Handley AJA. 3 HANDLEY AJA: This is an appeal from the judgment of Hammerschlag J who held that the appellant had guaranteed the obligations of Pineland Property Holdings Pty Ltd as purchaser under a contract of sale and entered judgment against him for $4,183,176.21. The contract in the standard form (2005 edition) dated 20 June 2007, was for the sale of 122 Walker St North Sydney by Bydand Holdings Pty Ltd (the vendor) for a purchase price of $11,700,000. It fixed 28 February 2008 as the completion date. Completion did not occur on that date or subsequently and the vendor terminated the contract for breach on 26 March 2008. 4 The vendor resold the property under general condition 9 within 12 months after termination of the contract. The market had fallen and the deficiency on resale was $3,629,793.21. The vendor recovered judgment for this amount and interest against the purchaser and the latter's liability is no longer in dispute. 5 The appellant, Vincent Pang, who signed the contract of sale on behalf of the purchaser was its sole director and secretary. The special conditions included cl 46 which relevantly provided (CAB 104): "46 GUARANTOR 46.1 If Purchaser is a company This clause only applies if the purchaser is a company which is not listed on the Australian Stock Exchange. 46.2 Purchaser to give guarantee It is an essential provision of this contract that the Purchaser give the Vendor on the date of this contract a guarantee and indemnity in the form of the guarantee annexed to this contract in Annexure J (" Guarantee "). 46.3 Execution The Guarantee must be properly: (a) completed with all relevant details; (b) executed by the directors of the Purchaser as guarantors, and witnessed; and (c) …" 6 A document described as "Deed of Guarantee and Indemnity" was annexed, but was not marked J. The operative provision was cl 2 which relevantly provided (CAB 110): "2. Guarantee 2.1 The Guarantor guarantees to the Vendor that the Purchaser will perform all of the Obligations and in default of the performance by the Purchaser of any of the Obligations the Guarantor covenants with the Vendor to perform the Obligations or cause them to be performed as if the Obligations were primarily the responsibility of the Guarantor. 2.2 If the Purchaser defaults in the payment of any money under the Contract, the Guarantor will on demand by the Vendor pay the money to the Vendor." 7 The vendor's counterpart was in evidence, but not the purchaser's. The contract (CAB 76-144) physically incorporated a form of Deed of Guarantee and Indemnity. This is undated but was signed by Mr Vincent Pang and his signature was witnessed by his solicitor. The formal parts were as follows: " DEED OF GUARANTEE AND INDEMNITY

Nothing was inserted. 9 The appellant contended that the guarantee was incomplete, and could not take effect as a deed when delivered on exchange to the vendor's solicitors as part of the contract of sale. 10 The substantive obligations in cll 2.1 and 2.2 referred to "the Purchaser". Clause 2.1 contained a guarantee "that the Purchaser will perform all of the Obligations", defined in cl 1.1.1 as "each and all of the obligations of the purchaser under the contract". Clause 2.2 was a covenant by the Guarantor that if "the Purchaser defaults in the payment of any money under the Contract", the Guarantor will pay the money to the Vendor on demand. 11 The submission by Mr Murr SC, who appeared with Mr Lonergan for the appellant, was that the blank in the definition of Purchaser made the document incomplete. Without an effective definition of purchaser the guarantor's obligations under cll 2.1 and 2.2 were undefined and ineffective, and the document could not be a deed. 12 Clause 1.1.1 defined "Contract" as the contract for sale between the Vendor and the Purchaser for the sale of a Property at the Price. "Price" was defined as the price stated in the Contract for the purchase of the Property, and Property was defined as the property described in the Contract. 13 The general rule relied on by the appellant and its limits is summarised in Halsbury's Laws of England 4th ed (2007 reissue) Vol 13, p 21 at [28] as follows: "A Deed must be written before it is sealed. If, therefore, it person seals and delivers a writing which is left blank in some material part … it is void for uncertainty and it is not his deed … A deed, however, is not necessarily void for uncertainty by reason of its having been executed with some blank spaces left in it; its language may be sufficient without filling up the blanks to ascertain the intention of the party who has executed it to do or enter into some act or agreement valid or enforceable in law, and if so, the writing is his deed as it stands." 14 Hibblewhite v M'Morine (1840) 6 M & W 200, 215, one of the authorities cited, fully supports the general rule. 15 This case turns on the qualification mentioned by Halsbury. The primary judge held that there was no difficulty in concluding that "Purchaser" in the instrument meant Pineland Property Holdings Pty Ltd. In my judgment he was correct. 16 The putative deed of guarantee was physically incorporated in the contract of sale. Mr Pang signed that copy and the putative guarantee which formed part of it. 17 There is no need to consider whether evidence of the existence and terms of the contract of sale was part of the surrounding circumstances admissible in aid of the construction of the putative guarantee. There is also no occasion to consider whether the putative guarantee incorporated the contract of sale by reference. It was incorporated physically in the contract of sale to form a single composite document. 18 What man has physically joined the law does not put asunder: M'Ewan v Dynon (1877) 3 VLR (L) 271, 274; Lawrence v Fordham [1922] VLR 713-4. The composite document must be read and construed as a whole. 19 In Toohey v Gunther [1928] HCA 19, 41 CLR 181 Isaacs J considered the construction of separate instruments executed by the same parties at or about the same time. He said at 196: "The true principle of construction in such cases is stated by Knight Bruce LJ, when delivering the judgment of the Privy Council in Shaw v Jeffery (1860) 13 Moo PCC 432, 456-7 as follows: 'When the same parties execute contemporaneously several instruments relating to different parts of the same transaction all must be considered together; all must be examined in order to understand each; apparent inconsistencies are to be reconciled; and where there are real inconsistencies, the governing intention of the parties is still to be collected from the consideration of the language of all the instruments, and effect given to it.' Applying that principle no doubt can exist that the three documents are integral parts of the same wide transaction, intended to regulate as a totality the relations and rights and obligations of the parties … and therefore incapable of being treated as independent of each other." 20 These principles apply with added strength where one of the instruments is physically incorporated in the other. 21 A cognate principle applies where the Court has to determine whether two or more separate documents can be read together to form a memorandum to satisfy the Statute of Frauds and its modern equivalents. In Timmins v Moreland Street Property Co. Ltd [1958] Ch 110 CA the question was whether a cheque and a receipt could be read together for that purpose. Jenkins LJ, after a comprehensive review of the authorities, said at 130: "… it is still indispensably necessary, in order to justify the reading of documents together for this purpose, that there should be a document signed by the party to be charged, which, while not containing in itself all the necessary ingredients of the required memorandum, does contain some reference, express or implied, to some other document or transaction. Where any such reference can be spelt out of a document so signed, then parol evidence may be given to identify the other document referred to, or, as the case may be, to explain the other transaction, and to identify any document relating to it. If by this process a document is brought to light which contains in writing all the terms of the bargain so far as not contained in the document signed by the party to be charged, then the two documents can be read together so as to constitute a sufficient memorandum". 22 In Elias v George Sahely & Co [1983] 1 AC 646, 655 Lord Scarman, giving the advice of the Privy Council, said that this was a correct statement of the modern law. Their Lordships cited a passage from Stokes v Whicher [1920] 1 Ch 411, 418 with approval. Since the same passage was cited with approval in Harvey v Edwards Dunlop & Co. Ltd [1927] HCA 13, 39 CLR 302, 307, 310, there is every reason for thinking that the conclusions of Jenkins LJ represent the law in Australia. 23 Once one construes the contract of sale and the putative guarantee together there is no difficulty and no doubt. The purchaser whose obligations were guaranteed was Pineland Property Holdings Pty Ltd. In my judgment the Deed of Guarantee and Indemnity was not incomplete but was valid and binding. The appeal should be dismissed with costs. **********

PANG v BYDAND HOLDINGS Pty Ltd

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