Whether Ucer and Ms Ye were liable as a matter of law (grounds 1, 2, 3, 4 and 5)
- The grounds concerning the contractual liability of Ucer and Ms Ye are as follows:
"1 The learned magistrate erred in finding (at [34] - [40]) the document dated 17 December 2017 (Document) constituted a contract of guarantee where the Document was a mere representation and did not bear the character of a contract.
2 The learned magistrate erred in relying on extrinsic evidence to interpret the Document (at [36] - [40]) and find that it was a contract of guarantee when the meaning of the Document was plain, clear and without ambiguity.
3 The learned magistrate erred (at [34] - [40]) in conflating the implication of contractual terms with the interpretation of contractual terms in finding that the first plaintiff and defendant had entered into a contract of guarantee.
4 The learned magistrate erred (at [34] - [40]) in implying terms into the putative contract of guarantee in circumstances where there was no bases to imply such terms, either in fact or in law.
5 The learned magistrate erred after having found (at [37]) that the Document was susceptible to more than one meaning, the ambiguity was not resolved in favour of the first plaintiff as the putative surety."
[Emphasis in original.]
- It is apparent from the grounds that they concern only Ms Ye's liability since Ucer's liability derives from the Agreement. As there is significant overlap between the grounds, it is convenient to address them together.
- For the purposes of these grounds, Mr Cheema did not seek to challenge her Honour's findings regarding the credibility of witnesses. Rather, he argued, that Ms Ye ought not have been found liable under the December 2017 document on the basis of its terms, even accepting (for the purposes of these proceedings) that she signed it.
- Mr Cheema argued that her Honour was in error in construing the December 2017 document as imposing a liability on Ms Ye for the following reasons:
1. as the Agreement did not stipulate a time within which the Visa application had to be lodged, Ucer had not been shown to be in breach;
2. the December 2017 document did not provide that Ms Ye would be responsible for Ucer's breach;
3. the December 2017 document did not contain a forbearance to sue;
4. Ms Ye ought to have been taken to have signed the December 2017 document on behalf of Ucer and not on her own behalf;
5. if Ms Ye ought be taken to have made a promise, it was not supported by consideration flowing from Yu Chen;
6. at best, the December 2017 document was an offer to vary the Agreement by stipulating a time for performance of 31 January 2018;
7. as there was no ambiguity in the December 2017 document, her Honour erred in having regard to the surrounding circumstances; and
8. any ambiguity in the December 2017 document ought result in the document being construed in favour of Ms Ye, the putative guarantor: Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28 (Andar).
- Although the Agreement did not stipulate a time within which the Visa was to be lodged, business efficacy would require a reasonable time to be implied: see category (2) in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] 52 ALJR 20 at 26; cited by Mason J in Codelfa at 347 and Falconer v Wilson [1973] 2 NSWLR 131 at 140D-141D (Mahoney J). While this implied term was not pleaded, the case was conducted on that basis: Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70.
- Furthermore, Ms Ye had made repeated representations to Yu Chen and her associates that the Visa application had been lodged. It was open to her Honour to infer that, had this occurred, Ms Ye, as a director of Ucer, would have been able to produce the reference number, given the length of time since Ms Ye assured Yu Chen that the Visa application had been lodged.
- The December 2017 document, which is extracted in full earlier in these reasons, cannot be understood without reference to the surrounding circumstances. Her Honour was entitled, for the reasons given by Mason J at 352-353 in Codelfa, to have regard to the objective circumstances as established by the evidence to construe the December 2017 document.
- I reject Mr Cheema's submission that Ms Ye ought be taken to have signed the December 2017 document on behalf of Ucer and not on her own behalf. First, there is no mention of Ucer in the document. Secondly, the words, "to investigate the progress and circumstances" are apt to refer to Ms Ye rather than to Ucer which was the entity responsible under the Agreement for lodging the Visa application. Thirdly, the surrounding circumstances indicate that Yun Chen's associates were looking to Ms Ye to provide a guarantee of Ucer's performance.
- I am not persuaded that any error has been shown in her Honour's conclusion that the December 2017 document contained a promise by Ms Ye in return for a forbearance to sue. Indeed, this construction is one which is consistent with the objective circumstances and the text of the document and is, in my view, correct. On this basis, the promise made by Ms Ye to Yu Chen was supported by consideration flowing from Yu Chen: see the summary of authorities in Edlin v Williams [2000] ANZConvR 43 (McMurdo P and Shepherdson J) at [41]-[43].
- I reject the submission that the December 2017 document was no more than an attempt to vary the Agreement. The parties were, in any event, different. Yu Chen was not promising Ucer that she would not sue Ucer before 31 January 2018; her promise was made to Ms Ye, in return for Ms Ye's promise that if proof of lodgement of the Visa application was not provided by 31 January 2018, Ms Ye would be liable for the refund. On this basis, her Honour was not in error in finding Ms Ye liable on the basis of the December 2017 document (or Ucer liable on the basis of its breach of the Agreement).
- It was common ground that, in accordance with Andar, a doubt as to the construction of a provision in a guarantee or indemnity should be resolved in favour of the surety or indemnifier. I am not persuaded that, when regard is had to the surrounding circumstances, in so far as they affect the parties' objective intentions, there is any real doubt as to the meaning to be accorded to the December 2017 document. Thus, I am not persuaded that there is any scope for the application of the principle set out in Andar.
- Her Honour was correct to find that Ms Ye had requested that Yu Chen forbear from suing Ucer until 31 January 2018 in return for Ms Ye's promise to refund the amounts paid if the reference number of the Visa application was not provided by 31 January 2018. This is sufficient, for the reasons given by her Honour, to render Ms Ye personally liable to Yu Chen.
- I am not persuaded that any of grounds 1, 2, 3, 4 or 5 has been made out. However, I am disposed to grant leave in respect of these grounds.