Print National v Helps

DECISION : (1) The application for an extension of time to file the appeal is refused; (2) The appeal is dismissed; (3) The decision of Freund LCM dated 18 December 2006 is affirmed; (4) The amended summons filed 4 September 2007 is dismissed; (5) The plaintiff is to pay the defendant's costs as agreed or assessed.

CATCHWORDS : APPEAL - Local Court Magistrate - guarantee

Fair Trading Act 1987 LEGISLATION CITED : Local Courts Act 1982 Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005

Allen v Kerr & Anor [1995] Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Brueckner v Carroll (1995) ATPR 41-379 Carr v Neill [1999] NSWSC 1263 Clark Equipment Credit of Australia Ltd v Kiyose (1989) 21 NSWLR 160 Devries v Australian National Railways Commission (1993) 177 CLR 472 Follacchio v Harvard Securities Pty Limited [2002] FCA 1067 Gallo v Dawson (1990) 64 ALJR 458 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378 CASES CITED : Jebeli v Modir and Golyaei [2005] NSWCA 184 Jung v Son, NSWCA 18 December 1998 (unreported) NEC Information Systems Pty Limited v Linton (1985) NSWConVR 55-240 Pettitt v Dunkley (1971) 1 NSWLR 376 R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479; [2002] NSWSC 1082 Ronald Wallace Gould v Peter Vaggelas (1984) 157 CLR 215 Scottish Amicable Life Assurance Society v Reg Austin Insurance Pty Limited (1985) NSWConvR 55-249 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588 Swain v Waverley Municipal Council (2005) 220 CLR 517 VSH Ltd v BKS Air Transport Ltd [1964] 1 Lloyds Rep 460 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

PARTIES : Print National Pty Ltd - Plaintiff Mark Helps - Defendant

COUNSEL : Mr D Allen (Plaintiff) Mr T Rickard (Defendant)

SOLICITORS : Catalyst Legal (Plaintiff) Alfred J Morgan & Son (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

10493/2007 - PRINT NATIONAL PTY LTD v MARK HELPS

JUDGMENT (Appeal decision of Local Court Magistrate - guarantee) 1 HER HONOUR: By amended summons filed 4 September 2007, the plaintiff seeks firstly, an order that time be extended pursuant to Rule 46.3 of the Uniform Civil Procedure Rules 2005 for the filing of this summons to the date of filing this summons; secondly, that orders 1 and 2 of the judgment of Freund LCM made on 18 December 2006 in Local Court proceedings numbered 3926/2006 in the Downing Centre Local Court (General Division) be set aside, and in lieu thereof, judgment be entered for the plaintiff in the sum of $45,186.23 plus interest and costs; and fourthly, in the alternative, the matter be remitted to the Local Court for rehearing. 2 The plaintiff is Print National Pty Ltd (Print National). The defendant is Mark Helps (Mr Helps). Print National relied on the affidavit of David George Brooks sworn 4 May 2007. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 permits a party who is dissatisfied with a judgment as being erroneous on a point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor [1995] Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479; [2002] NSWSC 1082. The judicial officer cannot act on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 In Swain v Waverley Municipal Council (2005) 220 CLR 517, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 5 Section 75 of the Local Court Act provides that the court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.

Extension of time to file the appeal 6 It is for the party seeking the extension to persuade the court that it is in the interests of justice that it should be granted. Such persuasion will usually depend on the provision of an acceptable or satisfactory explanation as to why the time limits were not complied with - see Gallo v Dawson (1990) 64 ALJR 458; Jackamarra v Krakouer (1998) 153 ALR 276 at 283-284. 7 On 18 December 2006, judgment was given. On 25 January 2007, the summons was filed. It should have been filed by 15 January 2007. It is 10 days out of time. No reasons have been proffered. Had I been of the view that the appeal ought to be allowed I would have given the plaintiff an opportunity to explain the delay. However, as this is not the situation the application for an extension of time is refused.

Grounds of Appeal 8 By amended summons filed 4 September 2007, Print National appeal against the whole of the judgment of Freund LCM dated 18 December 2006 on the basis that the Magistrate firstly, erred in law in holding that a credit application which stated Mark Helps (the second defendant in the Local Court proceedings) to be a guarantor and which was signed by Mark Help was not an offer by Mark Helps to guarantee the debts of Cromwell's Sydney Pty Limited (Cromwell's the first defendant in the Local Court); and secondly, the Magistrate failed to apply the law of estoppel by representation and/or failed to give adequate reasons for rejecting the cases based on estoppel by representation; thirdly, the Magistrate erred in law in failing to give adequate reasons in that she failed to give reasons why the conduct of signing the credit application in the context of orally offering to guarantee the debts of Cromwell's and would personally ensure that any money that was owing was paid, did not constitute misleading and deceptive conduct within the meaning of s 42 of the Fair Trading Act 1987; and fourthly, The Magistrate failed to apply the law relating to ss 42 and 68 of the Fair Trading Act (or ss 52 and 82 of the Trades Practices Act 1974 (Cth)) in that Freund LCM held that a representation was not misleading or deceptive or capable of being misleading or deceptive: (a) if the person who represented they would do an act actually had no intention of doing the act; and (b) if the representation was ambiguous.

Local Court proceedings 9 By amended statement of claim Print National sought to recover from the first defendant Cromwell's and its Chief Executive Officer Mark Helps the second defendant, the sum of $45,186.23 with respect to printing work it carried out for Cromwell's for the period 31 October 2005 to 24 April 2006. Print National obtained judgment against Cromwell's in relation to the amount. Cromwell's has subsequently gone into liquidation. Print National sought to recover the sum from Mr Helps pursuant to an alleged guarantee entered into by Mr Helps on or about 5 October 2005. 10 The issues determined by the Magistrate were (a) if there was a valid guarantee between Print National and Mr Helps, (b) if there was no valid guarantee was Mr Helps estopped from denying there was an agreement between himself and Print National that he would personally guarantee the debt of Cromwell's, and (c) did Mr Helps do something by way of his conduct that amounted to misleading and deceptive conduct that induced Print National into thinking that there was a guarantee between the parties.

The Magistrate's decision 11 There were a number of agreed facts set out in paragraphs [3]-[9] of the Magistrate's judgment which I have condensed. Mr Helps was the CEO of Cromwell's. David Langdon was the General Manager of Print National. In September 2005, there was a conversation between Mr Helps and Mr Langdon in which Mr Helps requested the opening of a credit account. The substance of that conversation was in dispute. There was a subsequent meeting after which Mr Langdon requested Mr Salmon the Finance Manager of Print National to forward a credit application to Cromwell's. The credit form was sent to Ms Karpel by email. 12 Ms Karpel who is an employee of Cromwell's filled out the credit application form in her handwriting. She included Mr Helps' name in the guarantor section on the first page of the application. Mr Helps then signed the second page of the application as the Authorised Person on 5 October 2005. Mr Helps did not sign the application in the section designated for the guarantor to sign. Ms Karpel witnessed Mr Helps' signature as the authorised person. When Ms Karpel was asked how Mr Helps' name was written as the guarantor (on the first page) she replied, "I thought that it meant authorised person". 13 Freund LCM then summarised the evidence at [11]-[21] of her decision. The Magistrate did not comment upon the demeanour of witnesses nor did the Magistrate make any findings as to their credit. Mr Helps, Ms Karpel, Mr Langdon and Mr Salmon gave evidence and were cross examined.

(i) Whether there was a valid guarantee 14 The plaintiff submitted that whether Mr Helps gave a guarantee is a matter of law and the question is one of whether Mr Helps offered a guarantee. 15 The plaintiff referred to NEC Information Systems Pty Limited v Linton (1985) NSW ConvR 55-240; Scottish Amicable Life Assurance Society v Reg Austin Insurance Pty Limited (1985) NSW ConvR 55-249; and Clark Equipment Credit of Australia Ltd v Kiyose (1989) 21 NSWLR 160; and Follacchio v Harvard Securities Pty Limited [2002] FCA 1067. The defendant referred to VSH Ltd v BKS Air Transport Ltd [1964] Lloyd's Rep 460, to which the Magistrate made reference and distinguished. 16 The plaintiff referred to two passages by McHugh JA in the Court of Appeal in Scottish Amicable Life. They are well known and read: "The formation of a contract does not depend upon the actual intention of the parties. A contract exists because the law attaches rights and obligations to the external conduct o the parties, one at least of whom has expressly or impliedly made a promise… The present case, therefore, depends on what the parties did and not what they intended to do when they signed the Indemnity and the agency agreement. And what they did depends on the construction to be placed on the documents which they signed. A commercial documents, however, must be construed in its commercial setting - in accordance with the surrounding circumstances known to the parties: Codefla Construction Pty. Ltd. V. State Rail Authority of New South Wales (1982) NSW ConR 55-070; (1982) 149 CLR 337 at pp. 352-353. This is so whether the issue concerns construction in the strict sense or whether, as here, the issue concerns the capacity in which a person signed a document…" 17 Similar statements are made in Linton, Kiyose and Follacchio. 18 The plaintiff submitted that what is determinative in this case is that the details of the guarantor were completed and if Mr. Helps was not going to offer his guarantee the details would have been left blank. According to counsel for Print National, there was evidence to support the finding that a guarantee was offered. The evidence according to counsel is that the guarantee is an important element of the document and that the guarantee was an essential element of the bargain. The plaintiff submitted that objectively there was an offer of a guarantee in that what Print National received was a form with the details of the guarantor completed signed and thereby authenticated by the person offering the guarantee. 19 On the issue of whether there was a valid guarantee, Freund LCM stated: "23. It is clear from the Credit Application form that Mr. Helps signed only as an Authorised Officer and not as guarantor. The section of the first page of the credit application that referred to as Mr. Helps as the guarantor was filed out by Ms Karpel. However I note that it did not disclose Mr. Helps' personal address merely the address of Cromwell's. It is undisputed that Mr Helps did execute the second page of the credit application form which stated "guarantor to sign". 20 Freund LCM further stated that Mr Helps did not execute the document as guarantor but merely as an authorised person of the company. The Magistrate reached the view that Mr Helps could not be said to have accepted the terms of the guarantee as he did not execute the part of the document which would bind him personally for any debts of the company. Finally, Freund LCM stated that the credit application form was nothing more than an application for credit by Cromwell's which constitutes an offer and the contract did not become complete until Print National accepted the application. 21 In my view the Magistrate considered the construction of the document and the objective facts and circumstances known to the parties. There was evidence to support the Magistrate's decision. It was open to Freund LCM to come to the decision she did. There was no error of law.

Duty to give sufficient reasons 22 The plaintiff submitted that the Magistrate did not give sufficient reasons in relation to the claims of misleading and deceptive conduct and estoppel. The duty of a judicial officer to give reasons for his or her decision is uncontroversial (see Pettitt v Dunkley (1971) 1 NSWLR 376; Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378 at 385-6 per Mahoney JA; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247). The duty does not require the judicial officer to spell out in minute detail every step in the reasoning process or refer to every single piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings that are critical to the determination of the proceedings (see Stoker v Adecco Gemvale Constructions Pty Ltd & Anor [2004] NSWCA 449 per Mason P, Sheller and Santow JJA; Gorczynski v Beilby [2005] NSWSC 884 Kirby J at [96-97]). To paraphrase, reasons should include firstly, the what, where and when of the matter; secondly, the evidence that goes to liability; thirdly, the findings on the evidence; and fourthly, an indication, where there is conflict, why some rather than other evidence is preferred. 23 In Jung v Son, Matter No CA 40442/97 [1998] NSWSC 698 (18 December 1998), Stein JA concluded: "…While a judge does not have to state reasons for every aspect of the case, his reasons must be sufficient to satisfy the requirements of Pettit v Dunkley [1971] 1 NSWLR 376. The reasons must be sufficient to enable an appellate tribunal to gain a proper understanding of the basis of the verdict. Not to do so is an error of law (Asprey JA at 382 and Moffitt JA at 388). Failure to give reasons also makes it impossible for an appellate tribunal to give effect to a plaintiff's right of appeal. Issues critical to the case, as these were, must be dealt with by reasons (Samuels JA in Mifsud v Campbell (1991) 21 NSWLR 725 at 728)." 24 In short, the judicial officer should make it clear what he or she is deciding and why.

False and misleading conduct 25 Print National needed to establish firstly, conduct on the part of Mr Helps; secondly, conduct that is misleading or deceptive; thirdly that there was reliance on the conduct; and fourthly, loss or damage caused by the conduct - see Ronald Wallace Gould v Peter Vaggelas (1984) 157 CLR 215 and Jebeli v Modir and Golyaei [2005] NSWCA 184. The plaintiff referred to Brueckner v Carroll (1995) ATPR 41.379.

Local Court 26 At the hearing, Print National alleged that Mr Helps made representations to the effect that he would give a guarantee and Print National relied upon that representation to give credits to Cromwell's. Freund LCM in her reasons at [27] stated: "a. The first alleged representation allegedly occurred in a telephone conversation between Mr. Langdon and Mr. Helps in about September 2005. Mr. Helps denied the allegation that he offered to guarantee the debt. Furthermore, even if he said words to the effect that "I will guarantee the debts will be paid" it was Mr. Langdon's own evidence that this could not be construed as a binding contract. [the telephone representation] … c. Finally, the third alleged representation namely, the filling out of the section of "guarantor" in the Credit application form. It was the clear unequivocal evidence of Mr. Helps that he never intended and has never personally guaranteed the debts of Cromwell's. He did not fill out the credit application and merely signed the application as the Authorised Officer. Ms Karpel corroborates his evidence in this regard. It is my view that if Print National were intending to rely on the guarantee of Mr. Helps they should have ensured that the guarantee was properly filled out and executed prior to their accepting Cromwell's as its customer." [the form representation] 27 Freund LCM considered a second representation at [27(b)] but Print National does not rely upon this alleged representation in its appeal. 28 In relation to the telephone representation, Print National submitted that the Magistrate did not determine what words were said. Counsel for Mr Helps submitted that the Magistrate did not find that Mr Helps had orally offered to guarantee the debts and that in fact she found the opposite. Counsel further submitted that the Magistrate described it as an alleged representation and then said that Mr Helps denied saying the words in paragraph [27(a)]. According to counsel for Mr Helps, in the context of her judgment Her Honour made a finding that she accepted Mr Helps' version. It follows, according to counsel for Mr Helps, that the Magistrate's next comment was predicated on the fact that he did not say those words and goes forward to address the issue of whether it could have been accepted as a representation or would have been relied on by Mr Langdon.

The disputed telephone conversation 29 Mr Langdon's version of the telephone conversation is that Mr Helps said words to the effect: "You don't have to be worried. Jim Byrnes is getting out of the business. I will be CEO and taking a 25% interest in the company. I understand your concerns about Jim Byrnes but like to think that you know me as an honest guy and that with me guaranteeing the debt, you guys can be assured that you will be paid." 30 Mr Langdon replied: ""OK, that should be fine. I will arrange to come and meet you so that we can work out your print requirements." 31 In addition to [27(a)] Freund LCM at [13] recorded that Mr Langdon, during cross examination admitted that he understood that a personal guarantee needed to be executed before it was enforceable; he also admitted that the conversations and the meeting prior to the execution of the credit application in no way committed Crowell's or Mr Helps to a contract with Print National. 32 It would have been preferable if the Magistrate had resolved what was actually said during that telephone conversation. But it is clear that whatever was said during that conversation, it was not relied upon by Mr Langdon. Referring to the telephone conversation in cross examination, the following exchange took place with Mr Langdon. "Q. So you didn't regard that as a commitment by Mr Helps, did you? A. I did not. Q. It wasn't a contract between Print National and Mr Helps-- A. Not at that time, no. Q. --that he would guarantee anything? A. Not at that time, no. Q. Because you'd only accept a guarantee or any contract in writing, wouldn't you? A. Correct. Q. Properly executed? A. Yes." (t 8.37-53). 33 There is evidence to support the Magistrate's finding that Mr Langdon did not rely on the statements made by Mr Helps during the telephone conversation.

The form representation 34 In relation to the form representation Mr Langdon knew, in so far as the guarantee form was concerned, that it had to be properly executed and by executed that means it has to be signed (t 6.49). However, it is Mr Salmon the finance manager's evidence which is relevant to the form representation. Mr Salmon's evidence is that he believed that "by Mr Help signing as the authorised person that also covered the guarantee document" (t 16.20). The Magistrate also recorded that Mr Salmon's evidence was that accounts greater than $5,000 always required a guarantor who was also a general manager and managing director of the company. Mr Salmon admitted that Print National usually checked the credit history of a guarantor and ran a credit reference check on the guarantor and that neither occurred in relation to Mr Helps. 35 The Magistrate decided that if Print National was intending to rely on the guarantee they should have ensured that the guarantee was properly filled out before accepting Cromwell's as it customer. 36 The plaintiff's Counsel submitted that ambiguity is often why conduct is misleading and deceptive. However, in Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) ATPR 40-303 at 40-751; (1982) 42 ALR 177 at 202 the Full Federal Court stated: "Irrespective of whether conduct produces or is likely to produce confusion or misconception, it cannot, for the purposes of s.52, be categorized as misleading or deceptive unless it contains or conveys, in all the circumstances of the case, a misrepresentation. The difficulty which will commonly arise in a s.52 case is in determining whether the conduct contains or conveys, in all the circumstances, a misrepresentation and in assessing the significance to that question of evidence that one or more persons were in fact led into error. In extreme, but not necessarily infrequent, cases, it may be correct to hold that, as a matter of law, conduct said to contravene s.52 is incapable of conveying the untrue meaning alleged or any other false meaning. Such cases aside, whether or not conduct amounts to a misrepresentation is a question of fact to be decided by considering what is said and done against the background of all surrounding circumstances…." - see also Santow J in Brueckner . 37 As to whether Mr Helps overall conduct was misleading or deceptive, Freund LCM at [30] stated: "…I am of the view that none of the alleged representations made by Mr Helps, as submitted by Print National, were misleading or deceptive. At their highest they were ambiguous. On the evidence before me there was nothing said by Mr Helps that was misleading or deceptive which induced Print National to enter to the agreement and provide services to Cromwell's which resulted in there suffering loss and damage." 38 Freund LCM made findings of fact that neither the telephone nor the form representation were misleading or deceptive. The Magistrate summarised the circumstances. There is evidence to support the Magistrate's findings. There is no error of law.

Estoppel 39 At the hearing, counsel for Mr Helps submitted that Freund LCM had no jurisdiction to hear a claim for equitable estoppel as the Local Court does not have jurisdiction to hear equitable matters. However, after receipt of further written submissions, it seems to be common ground that the Magistrate has jurisdiction to hear common law estoppel. Estoppel under the common law must have the following characteristics: (1) there must be word or conduct (2) reasonably likely to be understood as a representation of fact (3) a representation of fact is to be contrasted with a mere expression of intention (4) the representation of fact must be made to another person, either innocently or fraudulently (5) in such circumstances that a reasonable person would regard themselves as invited to act upon it in a particular way (6) and that the representation should have been material in inducting the person to whom it was made to act on it in that way (7) so that his position would be altered to his detriment if the fact were otherwise than as represented: per Jordan CJ in Franklin v Manufacturers Mutual Insurance Ltd (1935) 36 SR (NSW) 76 at 82. 40 On the question of whether common law estoppel may be used as a cause of action, Brennan J had this to say in Waltons Stores (Interstate) Ltd v Maher (1987) 164 CLR 387 at 415: "It has been said that estoppel in pais is merely a rule of evidence and not a cause of action (Seton v Lafone (1887) 19 QBD 68; Low v Bouverie [1891] 3 Ch 82; Re Ottos Kopje Diamond Mines Ltd [1893] 1 Ch 618) but that proposition needs some explanation. If the estoppel relates to the existence of a contract between the parties, the legal relationship between the parties is ascertained by reference to the terms of the contract which has been assumed to exist. If, in the assumed state of affairs, the contract confers a cause of action on the party raising the estoppel, the cause of action may be enforced." 41 According to Print National, in order to prove estoppel it had to show that it expected that firstly, Mr Helps would guarantee the debts of Cromwell's; secondly, Mr Helps induced Print National to adopt the expectation that Mr Helps made a representation to the effect that he guaranteed the debts of Cromwell's; thirdly, Print National acted in reliance of the expectation that Print National gave credit; fourthly, Mr Helps knew or intended Print National to do so; fifthly, Print National would suffer detriment if the expectation was not fulfilled; and sixthly, Mr Helps had not acted to avoid the detriment. 42 The Magistrate decided that Mr Helps conduct in no way estopped him from denying there was an agreement between himself and Print National that he would personally guarantee the debts of Cromwell's. 43 The appeal is dismissed. The decision of Freund LCM dated 18 December 2006 is affirmed. The amended summons filed 4 September 2007 is dismissed. 44 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

(1) The application for an extension of time to file the appeal is refused.

(3) The decision of Freund LCM dated 18 December 2006 is affirmed.

(4) The amended summons filed 4 September 2007 is dismissed.

(5) The plaintiff is to pay the defendant's costs as agreed or assessed. **********

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