Plaintiff v Defendant

INTRODUCTION

1 In this proceeding, the plaintiff, PMP Print Ltd ("PMP"), by amended statement of claim, claims from the defendant, Mr Colin Wood, the sum of $354,427.76 allegedly due under a guarantee executed on 12 December 2003, whereby the defendant guaranteed the payment of moneys owed to PMP by Design Graphics Pty Ltd ("Design Graphics"). Alternatively, the plaintiff claims the sum of $305,466.79 under a guarantee which Mr Wood executed in its favour on 4 June 2003.[1]

2 Mr Wood, who is not legally qualified, represented himself at trial. Mr Wood had legal representation for a part of the preparation for trial. His defence and counterclaim dated 2 December 2004 to the plaintiff's statement of claim dated 17 September 2004 were drawn by counsel. The statement of claim dated 17 September 2004 made claims only in relation to the guarantee dated 12 December 2003. The defendant's defence and counterclaim responded only to those claims.

3 By application made 29 April 2005 the plaintiff sought, and was granted, leave to file and serve an amended statement of claim, which added the alternative claim based on a guarantee dated 4 June 2003. The defendant, who by that date appeared in person, did not oppose the plaintiff's application for leave to amend. He did not file and serve a defence to the plaintiff's amended statement of claim.

SUMMARY OF FACTS AND BACKGROUND

4 The plaintiff, PMP, is a printing company. It had a longstanding commercial relationship with Design Graphics, a company controlled by the defendant, Mr Wood, until it went into voluntary administration in 2004. Design Graphics' principal business was the publication of monthly editions of a magazine entitled "Design Graphics", together with some other educational publications.

5 Throughout the relevant period, PMP's dealings with Design Graphics were conducted principally by its senior sales manager, Mr Ross Williams. Mr Rodney Lamb, PMP's credit and collections manager, who managed Design Graphics' account and credit, also had dealings with Mr Wood and Design Graphics.

6 PMP had standard terms and conditions which, according to the testimony of Mr Williams, were throughout the relevant period routinely delivered with, or attached to, its quotations. Previously, PMP's standard terms and conditions were printed on the back of its quotations.

7 Although PMP's standard terms and conditions altered slightly from time to time, they consistently included a term requiring payment within 30 days after invoice and a term permitting a 5% variation from the quantity ordered. Further, they included a term entitling PMP to suspend works if there was an unremedied breach of any terms or conditions or if the customer failed to pay its debts as they fell due.

8 It was not disputed that by longstanding agreement, the term for payment by Design Graphics was 60 days after invoice. Further, the exact quantity ordered was required to be supplied.

9 At trial, Mr Wood conceded that from late 2001 Design Graphics had experienced considerable financial difficulty. He attributed Design Graphics' problems principally to the abrupt cessation of payments from its American distributor following the September 11 incident. He acknowledged that Design Graphics' financial difficulties resulted in its persistent failure to pay within the agreed 60 day terms and an increasing outstanding debt to PMP. Mr Wood conceded that on a number of occasions, he had agreed that Design Graphics would clear the outstanding debt pursuant to repayment schedules, but Design Graphics had been unable to comply.

10 In April 2002, Mr Lamb became aware of PMP's problems in receiving payments from Design Graphics within the applicable 60 day limit, and of the "backlog" of outstanding amounts due.

11 The e-mail of Mr Wood to Mr Williams dated 13 May 2002 acknowledged an amount of over $70,000 due for over 90 days and an amount of over $57,000 due for over 60 days. It referred to a payment schedule to clear the backlog within three months. The letter of PMP to Design Graphics dated 15 May 2002 accepted Design Graphics' "commitment to pay us $80,000 for the next three months" to bring the account back to "our agreed 60 day terms". It stated that "As this account has continued to exceed our 60 day trading terms for many months, we stress that the above arrangements must be adhered to. Failure to maintain the above arrangement may result in us reviewing your account terms for future business and possible suspension of services".

12 The e-mail of Ross Williams to Design Graphics dated 1 May 2003 referred to amounts outstanding for over 120 days and a large amount outstanding for over 90 days, which must be cleared. It stated, "PMP Print do not want to halt production on issue #95 as we did on issue #94".

13 Design Graphics did not succeed in bringing its account within the applicable terms. By May 2003, its total debt to PMP had increased to over $207,000.

14 By letter to Design Graphics dated 27 May 2003, Mr Lamb required Mr Wood to provide a guarantee and indemnity in order "to finalise your account". The letter recommended that "you have the document looked at by your legal adviser". On 29 May 2003, Mr Williams delivered the guarantee and indemnity and an accompanying letter to Mr Wood at Design Graphics' premises.

15 An e-mail of Mr Williams to Mr Wood dated 3 June 2003 stated that approximately $40,570 was now 120 days overdue. PMP required that amount to be paid before it printed the scheduled edition of the Design Graphics magazine. It also required the execution of the guarantee and indemnity which had been delivered to Mr Wood.

16 The instrument of guarantee and indemnity ("June guarantee") was executed by Mr Wood in the presence of Mr Williams on 4 June 2003.

17 A prominent warning in a box at the top of the June guarantee stated:

"Warning. This guarantee and indemnity makes you liable for all monies owing by the customer to PMP Print Pty Ltd under the agreement specified in item 4 of the particulars. All guarantors should seek independent financial and legal advice prior to executing this guarantee and indemnity."

18 The June guarantee nominates Design Graphics as the customer and Colin Wood as the guarantor.

19 By clause 24.1, "Agreement" is defined to mean "the agreement specified in Item 4 of the Particulars".

20 Particular 4 states "Agreement continuing credit contract".

21 Clause 7.1 of the June guarantee provides that it is "independent of and in addition to any other guarantee or security held now or at any time by the company for all or any of the guaranteed obligations ... ".

22 By clause 19.1, the June guarantee provides that PMP's rights under "this guarantee are additional to, and will not merge with, affect or be affected by:

(1) any other securities now or subsequently held by the company from the Customer, the Guarantor or any co-surety; or

(2) any other obligation of the Guarantor to the Company notwithstanding any role of law of equity to the contrary."

23 Immediately above the area for signature of the June guarantee is a prominent box containing the following:

"Important instructions to be read before signing.

1. The document is a very important one and you should read it carefully to ensure that you clearly understand your obligations under it.

2. PMP Print believes that you should seek legal advice as to the effect of this document and urges you to do this. If any part of this document is not understood, do not sign until you first see your own solicitor and have him or her explain the document to you.

3. If you have any doubts about your financial ability to comply with the obligations imposed by this guarantee and indemnity, you should confer with your accountant or financial adviser.

4. Prior to signing this guarantee and indemnity, you should be fully aware of the financial position of the customer. This is because you are liable to pay the amount which the customer owes or may come to owe PMP Print. If you have any doubts in relation to the customer's financial position, you should seek advice from your own solicitor, accountant or financial adviser."

24 Mr Wood insisted that the June guarantee should apply for only one year. He refused to execute it unless such a limitation applied. Although the June guarantee does not specify a limited term, Mr Lamb agreed to the limitation by telephone. He confirmed it by an e-mail dated 4 June 2003, which stated that the director's guarantee would be valid for a period of one year from the date of signing.

25 Following the execution of the June guarantee, the credit problems of Design Graphics continued. By 27 June 2003, Design Graphics' debt stood at over $211,000 and no substantial payment had been made to PMP. Mr Lamb ordered a halt to the scheduled printing work for Design Graphics. Mr Williams, by an internal e-mail dated 4 July 2003, directed PMP staff to halt all work on all issues of Design Graphics publications.

26 Clause 21 of PMP's then current standard terms and conditions provided for the suspension of printing works if Design Graphics was in breach of any term or condition, or, inter alia, it failed to pay its debts as they fell due.

27 On 14 July 2003, Messrs Lamb and Williams met Mr Wood to discuss Design Graphics' indebtedness. Mr Wood advised that he had sold a property. He promised to make a payment of $40,000 to $50,000 by the end of the week. Mr Wood authorised Mr Lamb to speak directly with Mr Wood's solicitor about his financial position and that of Design Graphics. Mr Lamb consequently lifted the stop order on printing works, but PMP subsequently received only $20,000 on 18 July 2003, rather than the promised amount.

28 In August 2003, Design Graphics made a further payment to PMP, but it fell far short of the amount required to bring its account back to within 60 days.

29 In September 2003, Mr Wood offered to pay PMP certain sums, which were insufficient to bring Design Graphics' account back to within 60 days.

30 Mr Wood authorised Mr Lamb to communicate directly with Design Graphics' new financial adviser, Kimberley Smith. By e-mail dated 23 October 2003 to Kimberley Smith, Mr Lamb stated that it had been "a battle" to ensure that Design Graphics settled its account within the agreed 60 days trading terms.

31 The e-mail stated that the total amount owed by Design Graphics was $243,186 and of that sum $132,816 was outside the temporarily extended 90 day terms. Payment of $132,816 was due on 31 October 2003. The e-mail stated that PMP was seeking "some comfort that the account due by 31 October will be paid on time" and an assurance that Design Graphics would be in a position to bring the account back to within 60 days by the end of December. It requested the provision of financial statements relating to Design Graphics.

32 Kimberley Smith, by e-mail to Mr Lamb dated 27 October 2003, responded that he was finalising the accounts and was assisting Mr Wood to restructure the working capital of Design Graphics.

33 At a meeting on 12 November 2003, attended by Mr Williams and Mr Lamb of PMP and by Mr Wood, the PMP officers required three conditions to be satisfied in consideration for PMP's continued provision of extended trading terms to Design Graphics. They were:

(1) an achievable repayment schedule for next three months;

(2) a new guarantee;

(3) a statutory declaration for the financial situation of Mr Wood.

34 Messrs Williams and Lamb testified that at the meeting, Mr Wood agreed that all of those conditions, including the provision of a new guarantee, would be satisfied. Although the June guarantee was still current at the time, Mr Lamb testified that PMP's solicitors had recently provided PMP with a new form of guarantee, which he wished to use.

35 Mr Wood conceded that at the meeting on 12 November 2003, he agreed to provide the repayment schedule and the statutory declaration, but denied that he agreed to give a new guarantee. He testified that, although already subject to the June guarantee, he was unwilling to give a new guarantee, because he wished to know why a new guarantee was required. He denied that he raised no objection at the meeting to the provision of a new guarantee, stating that "I was quite emphatic in my questioning".

36 Mr Wood conceded that he was informed, and was aware, that the new guarantee was an "updated" guarantee, but stated that he did not know whether there were differences from the June guarantee. Mr Wood denied that he was aware or suspected that there might be any differences due to the updating of the guarantee.

37 He stated that he was surprised at being requested to execute a new guarantee, and at the meeting on 12 November 2003 and on various occasions thereafter, asked Ross Williams or Rodney Lamb to explain the differences between the two guarantees, but was never given a satisfactory answer. He acknowledged that PMP recommended that he obtain legal advice in relation to the new guarantee, but stated, "I think the onus is on them to explain ... to me".

38 Mr Williams did not recall that Mr Wood at any stage asked for an explanation of the differences between the two guarantees. He recalled informing Mr Wood that the December guarantee was a new guarantee. He stated that it was not his role to discuss the contents of the guarantee and that he did not do so at any time. Mr Williams was not himself aware of the differences between the two guarantees. Mr Lamb recalled that Mr Wood, at the meeting on 12 November 2003, asked why a second guarantee was required when the first guarantee had not expired. He recalled that he responded that there were differences between the guarantees and "to have them reviewed by your legal representative". It was undisputed that Mr Lamb at no stage explained any specific differences to Mr Wood.

39 Mr Wood stated that he communicated his refusal to sign the December guarantee to Mr Williams. Mr Williams and Mr Lamb, however, gave firm evidence that Mr Wood agreed to execute the December guarantee at the November meeting. Mr Lamb testified that the execution of the December guarantee was a precondition of PMP continuing to provide extended trading terms to Design Graphics. Messrs Williams and Lamb presented as honest and credible witnesses. Their testimony was clear, direct and consistent. I accept their evidence, which accords with the contemporaneous documentation. Mr Wood, in contrast, was not an impressive witness. His evidence was evasive, inconsistent and unconvincing. His alleged refusal to execute the December guarantee is not reflected in the correspondence or documentation. It is also, in my view, improbable that he refused to execute the December guarantee, either at the November meeting or thereafter, or otherwise expressed unwillingness to comply with the specified conditions for PMP's continuing accommodation and forbearance. Mr Wood conceded that he was aware that if he refused to execute the December guarantee, PMP would not be prepared to continue to permit Design Graphics to trade outside the 60 day limit, and could call in the entire outstanding debt.

40 I conclude that the only explanation advanced by PMP's officers for their request for the new December guarantee was that the guarantee was "new" or "updated". I conclude that although Mr Lamb probably stated at the meeting on 12 November 2003 that there were differences between the two guarantees, neither he nor Mr Williams offered any specific explanation of any term, or pointed out any particular difference. I conclude that Mr Wood agreed at that meeting to provide the new guarantee. I conclude that PMP, on several occasions, made both oral and written recommendations that Mr Wood obtain his own legal advice in relation to the December guarantee. I find that Mr Wood understood that advice.

41 Mr Lamb, by letter to Design Graphics dated November 2003 (incorrectly dated 15 May 2002 due to a computer error) confirmed the discussion at the meeting on 12 November 2003. The letter stated that PMP required three conditions to be fulfilled in order to continue providing 60 day terms to Design Graphics. It stated that PMP was concerned about Design Graphics' level of indebtedness, but was prepared to continue supporting it to reduce the debt if the following were provided:

"(a) a detailed(achievable) repayment schedule for the next three months;

(b) a newly completed Directors' Guarantee (our form has recently been updated); and

(c) completion of the statement of financial position form and signing under statutory declaration requirements."

42 The letter recommended that the documents be looked at by Wood's legal adviser. It sought that the documents be completed by 21 November 2003.

43 On 18 November 2003, Mr Williams delivered the new guarantee document and the statutory declaration to Mr Wood at Design Graphics' premises. Mr Williams testified that when he hand delivered the new instrument of guarantee, he did not say anything about its contents.

44 Mr Wood did not at any stage obtain legal advice about the December guarantee. His failure to do so would appear inconsistent with his testimony that he was very anxious to understand any differences between the two guarantees and had repeatedly, but unsuccessfully, sought explanations from PMP. Design Graphics, or Mr Wood, retained solicitors both before and after the execution of the December guarantee, in relation to other matters. Mr Wood acknowledged that he was aware that he would have to execute the December guarantee in order for Design Graphics to keep trading beyond the 60 day terms. Further, he stated that he knew that if he failed to execute it, PMP could call in Design Graphics' debt. He therefore considered that it would be "irresponsible to spend money on a solicitor". He did not deny that PMP suggested that he obtain legal advice about the December guarantee and that he had the time and opportunity to do so. At trial, he stated that according to his general information, such legal advice could be as much for the creditor's protection as for that of the guarantor. At one stage, he asserted that he believed that PMP might be dissuaded from its insistence on the execution of the new guarantee. He conceded, however, that PMP consistently required its execution.

45 Mr Wood testified that he considered that PMP was obliged to provide him with an explanation of the terms and effect of the December guarantee and that it was "disgraceful" that it did not do so. He did not assert that he read the December guarantee at any stage prior to signing it, despite his professed concern about its contents. Mr Wood did not assert that he had any understanding at all of the terms of the December guarantee.

46 He stated that he was in a state of uncertainty about the contents of the December guarantee and had refused to sign it, "insisting that they tell me what the differences were and why they needed a second guarantee ... ".

47 He also testified that he did not seek a solicitor's advice prior to signing the December guarantee as he "didn't wish to consider to sign it" and "the whole idea of signing another guarantee was unacceptable to me".

48 By the e-mail of Kimberley Smith dated 5 December 2003, the financial materials and statements of Design Graphics were forwarded to PMP, as it had required at the meeting on 12 November 2003.

49 The statutory declaration of Mr Wood dated 12 December 2003, containing his personal financial details, was also forwarded to PMP, as required at the meeting on 12 November 2003.

50 Mr Wood testified that on 10 December 2003, while he was in Sydney, his assistant informed him by telephone that Mr Williams had advised her that PMP would not commence printing the January issue of the Design Graphics magazine unless Mr Wood signed the December guarantee. He stated that he then signed a copy of the December guarantee sent to him in Sydney by facsimile transmission, because "we were desperate for cash flow", and the January issue of the magazine would otherwise not be available before Christmas. Mr Williams conceded that he had telephoned Wood's assistant and had, in effect, intended to convey that the new guarantee must be signed before the printing of the January issue of the magazine would proceed.

51 After signing on 10 December 2003 a copy of the December guarantee sent to him that day in Sydney by facsimile transmission, Mr Wood, on his return to Melbourne also executed another copy of the December guarantee on 12 December 2003. Mr Williams collected the executed December guarantee from Mr Wood on 12 December 2003.

52 The December guarantee contained a warning box which stated:

"This guarantee and indemnity makes you liable for all monies owing by the customer to PMP Print Pty Ltd under the agreement specified in item 4 of the particulars. All guarantors should seek independent financial and legal advice prior to executing this guarantee and indemnity."

53 Particular 4, however, did not refer to any agreement. It stated:

"Applicable Law - The law of the state or territory to apply is Victoria."

54 Clause 2.1 of the December guarantee was an "all moneys" clause, which relevantly provided:

"The Guarantor guarantees to the company performance by the Customer of and payment to the Company by the Customer in respect of:

(1) all moneys which are or become payable by or recoverable from the Customer by virtue of any and every present and future contract dealing, agreement, transaction or arrangement whatsoever (Agreements) between the Customer (either alone or jointly with some other person) and the Company;

(2) all moneys in respect of which the Customer is now or at any time may become indebted or liable or contingently indebted or liable to the company under any of the Agreements;

(3) the due and prompt observance and performance of all covenants, obligations, terms and conditions on the part of the Customer to be performed or observed under, pursuant to or in connection with any of the Agreements; and

(4) all moneys and damages which are or may become payable by or recoverable from the Customer under or pursuant to or in connection with any of the Agreements,

('the Guaranteed obligations')."

55 Clause 2.4, the definition provision, provided, inter alia:

"(2) Agreement means the agreement specified in item 4 of the Particulars."

56 Above the signature section, a box contained the following:

"Important instructions to be read before signing.

This document is a very important one and you should read it carefully to ensure that you clearly understand your obligations under it.

PMP Print Pty Ltd believes that you should seek legal advice as to the effect of this document and urges you to do this. If any part of this document is not understood, do not sign it until you first see your own solicitor and have him or her explain the document to you.

If you have any doubts as to your financial ability to comply with the obligations imposed by this guarantee and indemnity, you should confer with your accountant or financial adviser.

Prior to signing this guarantee and indemnity, you should be fully aware of the financial position of the customer. This is because you are liable to pay the amount which the customer owes or may come to owe to PMP Print Pty Ltd. If you have any doubts in relation to the customer's financial position, you should seek advice from your own solicitor, accountant or financial adviser."

57 Following the execution of the December guarantee, PMP continued to print the Design Graphics magazine.

58 By April 2004, however, further problems in relation to late payment had arisen and the Design Graphics debt had again blown out.

59 By an e-mail to Mr Lamb dated 26 April 2004, Wood acknowledged that Design Graphics had slowed down in its "catch up" payments to PMP and was now attempting to restructure its financial arrangements with ANZ.

60 The e-mail of Mr Lamb to Design Graphics dated 19 May 2004 stated that Design Graphics' total debt was now $365,359.72, with an amount of $254,323.56 outside the agreed trading terms.

61 The e-mail of Mr Wood to Mr Lamb dated 29 April 2004 referred to the delay in giving a more definite payment schedule. The e-mail further stated, "I am confident that this is a temporary hiatus". Wood thanked PMP for its "continued patience".

62 Further communications from Mr Wood to PMP during April and May 2004 reported on the proposed financial restructuring of Design Graphics and requested that PMP support the printing of further issues of the Design Graphics magazine in order to assist cash flow.

63 The e-mail of Mr Lamb to Mr Wood dated 19 May 2004 stated that PMP could not continue to support Design Graphics unless a substantial payment were made. It referred to a total outstanding debt of $365,359.72, with an amount of $254,323.56 outside the agreed trading terms.

64 On 29 July 2004, a meeting took place between Wood and his financial adviser and Messrs Lamb, Williams and Alan Paul a sales manager of PMP, to discuss the repayment of Design Graphics' debt to PMP.

65 The internal e-mail of Alan Paul dated 30 July 2004 referred to Design Graphics' offer, made at the meeting on 29 July, to pay $10,000 per month on account of its outstanding debt. Design Graphics proposed to pay cash on delivery for each future issue of the magazine, but wished to reserve the right to take each printing job "to market". If a lower price were obtainable, Design Graphics would not use PMP to print any future issues of the magazine. The e-mail noted that Design Graphics' offer was deemed unacceptable. PMP had decided to call upon the director's guarantee.

66 The letter of demand of PMP's solicitors to Design Graphics dated 30 July 2004 sought payment of the sum of $354,427.76 within seven days, together with legal costs.

67 The letter of PMP's solicitors to Mr Wood dated 12 August 2004 demanded payment of $354,427.76 pursuant to the personal guarantee dated 12 December 2003 within seven days, together with costs.

68 The letter of PMP's solicitor to Mr Wood dated 18 August 2004 rejected an offer made by Mr Wood, and reiterated that payment was required.

69 On 27 August 2004, David John Cranstoun and John Feddema were appointed joint and several voluntary administrators of Design Graphics, pursuant to s.436A of the Corporations Act 2001.

70 The Report to Creditors dated 13 September 2004 stated that the total assets of Design Graphics were "nil", its total liabilities were $602,549 and the dividend prospects were "nil". The Report noted that the major unsecured creditor was PMP, which had lodged a proof of debt for $354,427.

71 The report stated that Design Graphics was part of a group of three companies, which together operated the business. It stated that DG International Pty Ltd (a company of which Wood was a director) had purchased the goodwill and the mortgage debenture held by ANZ over the assets of all the companies for $479,541.

72 The voluntary administrators recommended that Design Graphics be wound up.

73 On 22 September 2004, at the meeting of creditors, it was resolved to wind up Design Graphics. Messrs Cranstoun and Feddema were appointed joint and several liquidators. Mr Feddema, in his witness statement dated 19 May 2005, stated that the liquidation of Design Graphics will not result in any payment to creditors.

WHETHER DECEMBER GUARANTEE UNENFORCEABLE

74 The defence and counterclaim dated 2 December 2004 allege that the December guarantee is unenforceable on the grounds of misleading and deceptive conduct, unconscionable conduct, absence of consideration and incompleteness and uncertainty.

75 At trial, Mr Wood contended that the December guarantee was void for uncertainty and, as I understood his submission, on the basis that it did not relate to any ascertainable agreement. He also relied upon duress.

Misleading and deceptive conduct

76 The defence alleges that in order to induce Mr Wood to sign the December guarantee, PMP, in contravention of s.52 of the Trade Practices Act, falsely represented to him that the December guarantee was intended to replace the June guarantee and was simply an updated form, incorporating the terms of a "previous guarantee".

77 Mr Wood, at trial, contended that the PMP officers stated that the December guarantee was updated, but made no other representations concerning the terms, contents or effect of the December guarantee. His principal complaint was not that Messrs Williams and Lamb misrepresented the terms of the December guarantee but that they repeatedly refused to offer any explanation of its terms and its differences, if any, from the June guarantee, in response to his many requests. It was not disputed that the PMP officers informed Mr Wood that the December guarantee was "updated". That information was correct. Although Mr Wood did not concede it, I am satisfied that Mr Lamb, as he testified, accurately informed him that the December guarantee was "different" from the June guarantee. I am further satisfied that the PMP officers did not attempt to explain the terms or effect of the December guarantee. Rather, they advised Mr Wood on a number of occasions to seek independent legal advice.

78 Mr Wood did not assert that he was misled, confused or deceived by the contents of the December guarantee. He did not positively assert that he read it at any stage prior to execution. When cross-examined as to whether he had read the guarantee, he responded, "not in any detail". Mr Wood did not assert that he had any understanding at all of the terms or effect of the December guarantee. His evidence was that he signed the December guarantee without having read it in detail, if at all, and without having sought any legal or other independent advice, although his questions of the PMP officers remained unsatisfied.

79 I am satisfied that the PMP officers did not make any false, misleading or deceptive representations concerning the December guarantee and that PMP was not otherwise guilty of misleading or deceptive conduct in relation to it. Further, I am satisfied that Mr Wood was not mistaken or confused as to the contents or meaning of the December guarantee. Mr Wood's evidence was that he signed it having no knowledge or understanding of its terms.

No Consideration

80 The defence alleges that there was no, or no sufficient, consideration for the December guarantee.

81 Clause 1.1 of the December guarantee expressly provided that the guarantee was "given in consideration of PMP at the guarantor's request agreeing to or giving any credit or other accommodation to or agreeing to continue such credit or accommodation to the customer ... ".

82 I am satisfied that at the meeting on 12 November 2003, PMP agreed, at Mr Wood's express or implied request, to continue to extend its accommodation of Design Graphics' outstanding indebtedness beyond the applicable 60 day terms, to refrain from taking the action otherwise available to it in relation to that indebtedness and to continue to provide further printing services to PMP, in consideration of, inter alia, Wood's agreement to execute the December guarantee. Mr Wood acknowledged at trial that he was aware that the execution of the December guarantee was required in order for PMP to print the January issue of the magazine and to refrain from demanding the outstanding debt.

83 I am satisfied that PMP gave good consideration for Mr Wood's execution of the December guarantee.

Unconscionable Conduct

84 The defence also alleges that PMP's conduct in threatening on 10 December 2003 not to proceed to print the January issue of Design Graphics unless Wood signed the December guarantee, was unconscionable pursuant to s.51AC of the Trade Practices Act and s.8A of the Fair Trading Act, in circumstances where, if printing did not commence by Monday 15 December 2003, the January edition could not be distributed prior to Christmas, and where, to PMP's knowledge, Design Graphics could not secure another printer in the available time, and would therefore be deprived of a significant source of income from sales. Further, it is alleged that the threat not to proceed to print the January issue constituted a breach of PMP's contractual obligation to print it, which obligation was to be inferred from the fact that PMP had commenced pre-press work.

85 At trial, Mr Wood characterised PMP's conduct as "duress", on the basis that he did not initially agree to sign the December guarantee, and did so only on 10 December 2003 when he was "forced to sign in Sydney ... because that was the last day when press time was available to print the January issue of Design Graphics magazine" in time for Christmas. Mr Wood stated that he felt as if he "was in a position of great stress and duress".

86 I have rejected Mr Wood's evidence that he did not agree to sign the December guarantee. I am satisfied that he agreed to sign it at the meeting on 12 November 2003, as Messrs Lamb and Williams testified, and that he did not thereafter express any objection or unwillingness to do so.

87 As discussed in detail below, I have also rejected Mr Wood's evidence on the receipt of PMP's standard terms and conditions, as varied from time to time. I find that they were provided with each quotation, as Mr Williams testified and (subject to the agreed variations as to the 60 day term and the requirement for an exact quantity) were incorporated as terms of each individual service contract between PMP and Design Graphics. As such, PMP was entitled to cease to print whilst there was an unremedied breach of an obligation, whether to pay moneys or otherwise.

88 As Mr Wood conceded, PMP had on a number of previous occasions declined to proceed with further printing services until stated conditions were satisfied. Further, on 12 November 2003, PMP agreed to continue to support Design Graphics to reduce its debt to the agreed 60 day terms, but its accommodation was conditional on matters including the execution of the new guarantee by Mr Wood. PMP was on no view contractually obliged to permit Design Graphics to incur any further indebtedness unless the specified conditions, including the execution of the new guarantee, were satisfied. A refusal by PMP to proceed with the printing of the January issue unless the December guarantee were executed as agreed did not, in my view, constitute a breach of any contractual obligation.

89 Unconscionability under s.51AC(3) of the Trade Practices Act sets out a number of factors to which the Court may have regard in determining unconscionability. It has, however, been stated that the determination of unconscionability under s.51AC is "at large" and is not restricted to equitable or common law notions.[2] Rather, unconscionability bears its ordinary meaning of "showing no regard for conscience, irreconcilable with what is right or reasonable".[3]

90 In Hurley v McDonald's Australia Ltd[4] the Full Court of the Federal Court considered that unconscionability in the context of s51AC requires a pejorative moral perspective and "serious misconduct or something clearly unfair or unreasonable".[5] In Australian Competition and Consumer Commission v 4WD Systems Pty Ltd[6] Selway J discussed the standard of conduct required to satisfy the requirement of unconscionability, stating:

"Normally it might be expected that behaviour would only be 'unconscionable' if some moral fault or responsibility is involved. Normally it might be expected that this would involve either a deliberate act, or at least a reckless act. Mere unreasonableness or unfairness may not be sufficient, at least in the absence of some moral fault. This is why it was critical to the conclusion he reached in Simply No-Knead that Sunberg J was able to find an 'overwhelming case of unreasonable, unfair, bullying and thuggish behaviour'."[7]

91 In Crescendo Management Pty Ltd v Westpac Banking Corporation,[8] McHugh JA considered duress. He stated:

"In my opinion the overbearing of the will theory of duress should be rejected. A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.

In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104, Lord Wilberforce and Lord Simon of Glaisdale pointed out (at 634; 121):

' ... in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as illegitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion'."

92 In the present case, PMP had extended its trading terms and credit to Design Graphics on numerous occasions since April 2003, despite its increasing outstanding debt, its repeated failures to honour assurances to pay, to reduce the indebtedness and to return to the agreed 60 day trading terms.

93 PMP's officers repeatedly acceded to Mr Wood's requests for time to pay and accommodated Design Graphics' continuing financial difficulties. As Mr Wood acknowledged, PMP showed patience and consideration. PMP's requirement on 12 November 2003 that Wood and Design Graphics satisfy the three specified conditions in order to secure continuing accommodation was not, in my view, unreasonable, in circumstances where Design Graphics then owed PMP over $300,000 and had repeatedly breached its obligations to pay, both under the applicable standard terms and various agreed repayment schedules. Ample time and opportunity were provided for Mr Wood to seek legal advice in relation to the December guarantee. PMP's officers recommended him to do so on a number of occasions, both orally and in writing. Mr Wood deliberately determined not to do so. PMP did not misrepresent any terms of the December guarantee. PMP was not obliged to provide explanations of the December guarantee to Mr Wood who, to the officers' knowledge, was an experienced businessman with a demonstrated capacity to insist on modification of contractual terms and who had access to legal and financial professional advice.

94 There was, in my opinion, nothing unlawful, illegitimate or irreconcilable with what is right or reasonable in PMP's general conduct, or in its insistence that the December guarantee be executed before it proceeded to print the January issue.

95 While Mr Wood doubtless felt pressured, and felt that he had no alternative but to sign the December guarantee, the pressure arose from the severe financial problems of Design Graphics (which were not attributable to any fault of, or misconduct by, PMP), coupled with his justifiable apprehension that PMP would proceed to exercise its legitimate legal remedies to recover the outstanding debt should he fail to comply with the condition to which he had agreed in order to secure further indulgence. Such circumstances do not constitute duress by PMP.

96 Mr Wood's assertions of the likely consequences of PMP's failure to proceed to print the January issue on 10 December 2003 were not, in any event, supported by evidence. He adduced no evidence in relation to the possibility of obtaining alternative printers, the cost and capacity to fund such alternative services, or the quantum of probable loss to Design Graphics.

97 In all the circumstances, I am satisfied that PMP's conduct did not constitute duress and that it was not otherwise unconscionable.

Uncertainty

98 The defence alleges that the December guarantee is unenforceable due to incompleteness or uncertainty, because the initial "warning" inaccurately stated that the guarantee applied to "the agreement specified in item 4". There was no agreement referred to in item 4. Item 4 stated that the law of Victoria would apply to the guarantee.

99 At trial, Mr Wood reiterated the allegations of uncertainty. As discussed above, he did not contend that he had been confused or misled by the defect. Rather, he submitted that it was a ground of avoidance.

100 Although the warning box refers to an agreement in item 4 (which is non-existent) as the guaranteed obligation, clause 2.1 of the December guarantee (set out in paragraph 55) defines in detail the "guaranteed obligations" the subject of the December guarantee. Clause 2.1 is an "all moneys" clause. It is consistent with paragraph 4 of the instructions immediately above the place for signature of the December guarantee (set out at paragraph 57) which states, inter alia, "You are liable to pay the amount which the customer owes or may come to owe to PMP Print Pty Ltd".

101 Further, clause 24.1(2), (the definition clause of the December guarantee) provides that "agreement" means the agreement specified in Item 4 of the particulars. Clause 2.1, in contrast, refers to defined "Agreements" as the subject-matter of the guaranteed obligations. The reference to the "agreement" in the introductory warning box is therefore clearly confined. It does not apply to the definition of guaranteed obligations.

102 Mr Collinson, senior counsel for the plaintiff, submitted as a primary argument that the statements in the warning box and the associated item 4 are representational rather than promissory and therefore without contractual force. Alternatively, as a subsidiary argument, he contended that the contents of the initial warning box and the associated statement in Item 4, even if terms of the December guarantee, were meaningless, and could properly be disregarded or severed.

103 Relevant authority indicates that if the statements in the initial warning box and the related Item 4 were intended to describe or explain the terms of the contract, rather than to embody an independent contractual obligation, they will not constitute a term of the contract. Their uncertainty or vagueness would not render the contract unenforceable.

104 In Hospital Products Ltd v United States Surgical Corporation[9] Gibbs CJ summarised the relevant principles as follows:

"A representation made in the course of negotiations which result in a binding agreement may be a warranty -- ie it may have binding contractual force -- in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties. In JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435, at p 442 and Ross v Allis-Chalmers Australia Pty Ltd (1980) 55 ALJR 8, at pp 10 and 11, it was said that a statement will constitute a collateral warranty only if it was 'promissory and not merely representational', and it is equally true that a statement which is "merely representational" -- ie which is not intended to be a binding promise -- will not form part of the main contract. If the parties did not intend that there should be contractual liability in respect of the accuracy of the representation, it will not create contractual obligations. ........... The intention of the parties is to be ascertained objectively; it "can only be deduced from the totality of the evidence": Heilbut Symons & Co v Buckleton [1912] UKHL 2; [1913] AC 30, at p 51. In other words, as Lord Denning said in Oscar Chess Ltd v Williams [1956] EWCA Civ 5; [1957] 1 WLR 370, at p 375:

'The question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice.

The intelligent bystander must however be in the situation of the parties, for "what must be ascertained is what is to be taken as the intention which reasonable persons would have had if placed in the situation of the parties": Reardon Smith Line v Yngvar Hansen-Tangen (1976) 1 WLR 989, at p 996'."[10]

105 In Gates v City Mutual Life Assurance Society Ltd,[11] the plaintiff had an existing superannuation policy and life policy with the defendant insurer. He applied for the addition of a total disability clause to both policies. The defendant's agent assured him that pursuant to the clause, the policy benefits would become payable if he suffered illness or injury as a result of continuous inability to attend his occupation for 90 days. In fact, the policy entitled the plaintiff to benefits only if he became incapable of attending to any gainful occupation. He subsequently sustained an injury which resulted in his incapacity to carry on his business as a builder.[12]

106 The plaintiff's claim for breach of contract was upheld by the trial judge, but dismissed on appeal, where the Full Court of the Federal Court found that the agent's statements were not contractual in character. The Full Court stated:

"The statements by the agent were not a promise to make payment in different circumstances from those provided for in the policies but a representation as to the circumstances in which, under the policies, the obligation to make payment would arise. What was said was not promissory and was moreover inconsistent with the terms of the applications signed by Mr Gates".[13]

107 This reasoning was endorsed on appeal to the High Court. Gibbs CJ stated:

"The conclusion of the Full Court of the Federal Court that the statements had no contractual force is plainly correct. The question whether the statements constituted a collateral contract depends on the intention of the parties: Heilbut, Symons & Co v Buckleton [1913] AC 30 at 49-51. In the present case the statements were not promissory in form -- they purported to be descriptive or explanatory of one of the terms of the formal written contracts into which the parties proposed to enter. I find it impossible to say that either of the parties actually intended that the statements should constitute a term of the contracts between them or (if it matters) that an objective inference can be drawn that they did so intend. The statements were representations and nothing more."[14]

108 In Australian National Nominees Pty Ltd v GPC No 11 Pty Ltd [15]the plaintiffs made secured loans to the defendants in response to an invitation contained in Information Memoranda. The plaintiffs subsequently sued for breach of the terms contained in the Information Memoranda.

109 Einstein J held that, viewed objectively, the statements contained in the Information Memoranda were not intended to be promissory and did not constitute contractual terms. His Honour observed that:

"A particular indicator contradicting the central proposition put by the plaintiffs is to be found in the initial two sentences in the Summary of the Note Issue segment where the Notes are referred to. The sentences read:

'Each Note contains the payment obligations of the Issuer with regard to its Principal Amount and Interest. All other provisions relating to the Notes are contained in the Security Trust Deed to be entered into by the Issuer and EMC (Nominees) Pty Ltd as Security Agent.'

In short the sentences make plain that the Notes contain the relevant payment obligations and that the Security Trust Deed sets out all other provisions of relevance to the Notes. There is no suggestion that the Information Memoranda identify contractual obligations."[16]

110 In the present case, Mr Collinson argued that the statement, "Warning - This guarantee and indemnity makes you liable for all monies owing by the customer to PMP Print Pty Ltd under the agreement specified in item 4 of the particulars", was not promissory in character. Rather, it served to warn the guarantor and purported to identify the source, and paraphrase the content, of liabilities to be found elsewhere in the document. He argued that the inclusion of the statements in a 'box' preceded by the wording "Warning", fortified the conclusion that the relevant statements were discrete and preliminary to the main contract.

111 Mr Collinson also relied on Osric Investments Pty Ltd v Clout.[17] In that case, Drummond J held that statements about the investment potential and tax advantages of a cattle embryo investment plan contained in an "Overview" document (provided to prospective investors prior to their entry into formal written agreements) did not constitute collateral warranties. His Honour considered that even some statements which were promissory in character merely paraphrased the contractual obligations under various agreements, which dealt with exactly the same subject matter. As such, the statements could not give rise to additional contractual liability. His Honour stated:

"Some of these statements, eg, those touching on anticipated proceeds of cattle sales in the future, the likely value of cattle at the end of the five year term of the arrangement and the possible availability of taxation benefits, are, at most, representational rather than promissory and so incapable of constituting warranties: see JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435 at 442. Other statements, eg, those touching on the production of the investor's herd of progeny from the specific recipient cows leased from Woburn Downs are promissory in character. But they are merely paraphrases of contractual obligations undertaken by the relevant Woburn Downs respondents to the applicant under the various Agreements ultimately entered into and so cannot provide a source of contractual liability additional to that arising from the promises to the same effect contained in the executed Agreements. I do not think any liability in contract can arise on what would otherwise be a warranty collateral to an agreement when exactly the same subject matter of the collateral warranty is the subject matter of a promise in the agreement: see De Lassalle v Guildford [1901] 2 KB 215 at 222."[18]

112 Mr Collinson also submitted that the inclusion of a recommendation to seek independent financial and legal advice in the warning box, immediately after the reference to the agreement in item 4 of the particulars, reinforced the view that the statement merely purported to paraphrase specific obligations contained in the body of the document. He argued that, in effect, the impugned sentence was an 'expression of opinion',[19] and a generalised summation of, and caveat about, the effect of the guarantee. As such, its uncertainty or inaccuracy did not render the December guarantee ineffective. Mr Wood did not contend that he had been deceived or misled by the statement.

113 In my opinion, an intelligent bystander reading the December guarantee in its entirety would not reasonably infer that the impugned sentence and the related Item 4 were intended to be promissory. The statement in the warning box appears to constitute a paraphrase or description of the effect of a term appearing elsewhere in the document, to which it refers. The character of the statement thus appears representational. Taken in conjunction with Item 4, to which it refers, the statement is meaningless, and inconsistent with the unambiguous, detailed definition of guaranteed obligations contained in the body of the guarantee.

114 Alternatively, on the basis that contracts of guarantee negotiated between business people should be construed according to a reasonable commercial meaning, as recognised in _Ankar Pty Ltd v National Westminster Finance (Aust) Ltd [20]_and related authorities,[21] in my opinion, if the relevant statements could be considered terms of the December guarantee, they are meaningless, and as such, may properly be severed.

115 It is plain that the agreement specified in item 4, to which the statement in warning box refers, does not exist. The reference in item 4 is to the applicable law. It could not be reasonably understood to refer to any agreement. It would be immediately apparent to a reasonable reader of the December guarantee that the impugned references were the result of mistake or drafting error.

116 At trial, Mr Wood also appeared to dispute that Design Graphics had any agreement with PMP. He denied that PMP's standard terms and conditions applied to the parties' dealings on the bases that:

(a) Two provisions of the standard terms and conditions as varied from time to time (namely, payment within 30 days of invoice and a tolerance as to quantity) had been excluded;

(b) the PMP standard terms and conditions were not delivered with, or included on the back of, its quotations to Design Graphics in accordance with its usual practice;

(c) Mr Wood had expressly excluded the application of PMP's standard terms and conditions to Design Graphics.

117 In particular, Mr Wood testified that he had expressly rejected PMP's standard terms and conditions in the course of a conversation with a PMP officer. He was unable to recall when the conversation took place, or to recall the identity of the salesperson to whom he had spoken, but conceded that it was "some years ago now, probably before Mr Williams' time".

118 Mr Williams testified that PMP's standard terms and conditions, as applicable from time to time, were always delivered with or attached to the quotations provided to Design Graphics. Mr Williams testified that Mr Wood never at any stage disputed the application of the standard terms and conditions to Design Graphics, save for the two agreed variations.

119 Mr Wood initially denied that Design Graphics had received any standard terms and conditions with the quotations delivered periodically by Mr Williams from 2003 onwards. He stated that no terms and conditions from this period had been located in Design Graphics' files, but conceded that the liquidators could possess such documents. No enquiries had been made of the liquidators. Mr Wood ultimately conceded that he had made discovery of standard terms and conditions in the course of this proceeding. He could not explain how the documents came into his possession.

120 PMP tendered three e-mails sent by Mr Williams to Alison Matthews of Design Graphics during the period 2003-2004. The e-mails contained, as separate attachments, quotations, and PMP's standard terms and conditions. Mr Wood conceded that Alison Matthews was his personal assistant during the relevant period. He denied having seen the e-mails and suggested that they may have been deleted without his knowledge. Mr Williams testified that PMP's computer system automatically notified a sender if an e-mail is not received by a recipient, and that no such notification had been received in relation to the e-mails.

121 Mr Wood contended that the quotations were for relatively small print jobs which could be approved by Ms Matthews, so that it could not be assumed that he had reviewed them. He maintained that no terms and conditions had been supplied with the larger quotations delivered to him by Mr Williams. Mr Williams testified that he had had telephone discussions with both Ms Matthews and Mr Wood regarding e-mailed quotations. Several quotations in evidence referred to enclosed standard terms and conditions.

122 Mr Wood's evidence on this issue was evasive, contradictory, and inconsistent with the contemporaneous documents in evidence. I do not accept it. I am satisfied that, as Mr Williams testified, and as the documentation in evidence indicates, PMP's standard terms and conditions were routinely delivered with, or attached to, all quotations provided to Design Graphics. I am satisfied that, subject to the agreed variations, Mr Wood did not express any rejection of those standard terms and conditions to PMP.

123 Mr Wood also submitted that no single written document embodied the terms and conditions of Design Graphics' arrangement with PMP. Whilst at one stage he contended that PMP had no more than an "informal arrangement" with Design Graphics, at another point, he submitted (and the plaintiff did not dispute) that each printing job was performed pursuant to a separate contract. Mr Wood at no stage disputed that PMP had performed the relevant printing services for Design Graphics in return for an agreed consideration and on standard terms of payment within 60 days of invoice with a requirement for the exact quantity ordered. He did not dispute that the total amount claimed by PMP from Design Graphics was owed in respect of the work performed, save for the alleged overcharges now not pressed by PMP. Mr Wood did not deny that PMP, on a number of occasions, agreed to extend credit to Design Graphics, provided that it adhered to various payment schedules or other conditions.

124 In my opinion, each printing job by PMP was provided pursuant to an agreement between PMP and Design Graphics, to which PMP's standard terms and conditions applied, save for the two agreed variations. Further, I conclude that on 12 November 2003, the parties agreed, inter alia, that Design Graphics would pay the total outstanding amount pursuant to a payment schedule which it agreed to provide. As at 12 December 2003, the moneys due and payable pursuant to those agreements constituted "guaranteed obligations" pursuant to clause 2.1 of the December guarantee. The amounts which became payable pursuant to subsequent agreements or arrangements between the parties also fell within the definition of "guaranteed obligations".

CONCLUSION

125 In my opinion, the plaintiff has established its entitlement to the payment of the sum claimed from the defendant pursuant to the December guarantee. The December guarantee is not invalid or unenforceable on any basis. Given that conclusion, it is unnecessary to consider the enforceability of the June guarantee.

[1] At trial, Mr Wood contended that the amount claimed by PMP included certain overcharging. He was unable to clarify the alleged amount of overcharging, but the plaintiff did not press its claim to $3,804.76 of the principal claim of $354,427.76.

[2] Australian Competition and Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850 at [183].

[3] Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301 at [44].

[4] [1999] FCA 1728; (2000) ATPR 41-741.

[5] Ibid at 40,585.

[6] Australian Competition and Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850.

[7] Ibid at [185].

[8] [1988] 19 NSWLR 40 at 45-46.

[9] [1984] HCA 64; (1984) 156 CLR 41.

[10] Ibid at 61.

[11] (1986) 160 CLR 1.

[12] Ibid at 2.

[13] Ibid at 10-11.

[14] Ibid at 5.

[15] [2004] NSWSC 773.

[16] Ibid at [50]-[51].

[17] [2001] FCA 1402.

[18] Ibid at [123]; see also Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 at 467.

[19] JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435 at 442.

[20] [1987] HCA 15; (1987) 162 CLR 549 at 560-561.

[21] See O'Donovan J and Phillips J, The Modern Contract of Guarantee, 3rd edn, 1996 at 216-218.