Temperzone Australia Pty Ltd v Amabile

1. [1]

   The plaintiff, Temperzone Australia Pty Ltd, proceeds by way of Amended Summons commencing an appeal filed on 29 March 2016 in respect of the judgment of the Downing Centre Local Court on 5 February 2016. The plaintiff’s claim in those proceedings was dismissed and verdict entered in favour of the defendant.

2. [2]

   The Amended Summons is supported by the affidavit of Clay Phillip Muir, solicitor, sworn 5 April 2016. The affidavit annexed copies of the transcript of proceedings in the Local Court on 1 February 2016 (Annexure A) and the transcript of the judgment of Local Court Magistrate Favretto of 5 February 2016 (Annexure B). In addition, the affidavit annexed copies of the affidavit evidence read in the proceedings below, being the affidavit of Norma Boutros, Credit Manager, sworn 17 November 2015 (Annexure C) and the affidavit of Stuart Battle, Sales Engineer, sworn 17 November 2015 (Annexure D), both of whom were employed by the plaintiff.

3. [3]

   Copies of the defendant’s affidavit evidence in the Local Court sworn by him on 4 December 2015, and read in the proceedings, were also attached to Mr Muir’s affidavit (Annexure E).

4. [4]

   The provisions pertaining to appeals from a judgment or order of the Local Court are to be found in ss 39 and 40 of the Local Court Act 2007.

5. [5]

   Set out below are the provisions of ss 39 and 40.

6. [6]

   In the proceedings in this Court the plaintiff does not seek leave to appeal and asserts an error of law under s 39(1) of the Local Court Act.

Background

1. [7]

   The plaintiff and the defendant in this Court were also the plaintiff and defendant to the proceedings before the Local Court.

2. [8]

   The plaintiff’s claim in the Local Court was for monies payable pursuant to a guarantee which the plaintiff company alleged the defendant had entered with it on 21 August 2009 (the Guarantee). The Guarantee related to the obligations of a company, Twin Air Pty Ltd (Twin Air), of which the defendant was one of two directors/shareholders. The Guarantee was included in a Credit Application made by the defendant to the plaintiff.

3. [9]

   The relief sought by the plaintiff in the Statement of Claim filed in the Local Court on 25 May 2015 was in the amount of $38,853.38 plus interest and costs.

4. [10]

   The company Twin Air went into liquidation on 5 July 2013 and was deregistered on 9 February 2015. Both the defendant and a Mr Vince Musico were directors/shareholders of Twin Air, each holding a one dollar ordinary share in the company prior to it going into liquidation.

5. [11]

   The defendant filed a Defence on 9 July 2015 in which he denied entering into or providing a guarantee of the obligations of Twin Air under the Credit Application made to the plaintiff. Further or by way of alternative defence, the defendant alleged that the plaintiff had engaged in misleading and deceptive conduct, within the meaning of The Australian Consumer Law (ACL) (S 2 to the Competition and Consumer Act 2011 (Cth)) and/or made false or misleading representations as to the nature and terms of the Credit Application and, by virtue of the Guarantee being incorporated therein, the Guarantee. It was claimed that the Guarantee was unenforceable against the defendant.

6. [12]

   In the proceedings below, both Ms Boutros and Mr Battle were cross-examined on their affidavits on behalf of the defendant. Mr Amabile was cross-examined on behalf of the plaintiff.

7. [13]

   As noted above, the proceedings were heard by the Local Court on 1 February 2016. The Magistrate delivered an ex tempore judgment.

Credit Application and Purchase Orders by Twin Air

1. [14]

   Ms Boutros gave evidence that the defendant completed an Application for Credit Account on behalf of Twin Air on or about 21 August 2009. A copy of the Credit Application was annexed to her affidavit and marked as Annexure A. She stated that it was in the form of a booklet which contained four pages headed as follows:

2. [15]

   As Ms Boutros indicated at [5] of her affidavit, the original of Annexure A purports to have been signed by the defendant on the pages headed “Acknowledgement and Agreement” and “Guarantee”.

3. [16]

   On the basis of the plaintiff’s acceptance of the Credit Application, it commenced the supply of goods and services to Twin Air.

4. [17]

   During the period May to June 2013, the plaintiff, Temperzone, received orders for goods from Twin Air and provided goods in accordance with the standard procedures set out in para [7] of Ms Boutros’ affidavit. Details of the relevant invoices dated 2 May 2013 and subsequent invoices concluding on 26 June 2013 totalling $41,253.14 were set out in para [9] of Ms Bourtos’ affidavit.

5. [18]

   On 12 July 2013 a credit of $2,399.76 was attributed to Twin Air’s account, reducing the total amount owing to $38,853.38.

The Guarantee

1. [19]

   A copy of the Acknowledgements and Agreement; and Guarantee were included in the Court Book (CB) at p 135. The Application for Credit Account and General Conditions of Sale are set out at CB 136.

2. [20]

   The Guarantee in question records that in consideration of the plaintiff’s agreement to supply or to continue supplying the company Twin Air, Mark Amabile (the defendant) and Mr Musico jointly and severally guaranteed immediate payment of all monies for goods and services supplied by the plaintiff. The Guarantee was headed in bold (i.e. “Guarantee”) and set out the Terms and Conditions in clauses 1, 2 and 3.

3. [21]

   The Guarantee document was dated (in handwriting) 21 August 2009. It was signed by both the defendant and Mr Musico as guarantors and their signatures were witnessed under the signature of Jo Amabile, the wife of the defendant.

4. [22]

   The Credit Application was also acknowledged and separately signed by both the defendant and Mr Musico, dated 21 August 2009. Their signatures were witnessed by Ms Amabile.

5. [23]

   In the plaintiff’s written submissions in the proceedings in this Court it was noted that there was no dispute between the parties that the wording of the Guarantee is clear and unambiguous and that the learned Magistrate so found: Submissions at [7].

6. [24]

   The issue before the Local Court did not involve any disputed issues of fact. His Honour identified the issue for determination as being whether the defendant was liable to guarantee the obligations of Twin Air pursuant to the Credit Application.

7. [25]

   The Magistrate found that the defendant signed the Credit Application as a director of Twin Air but that he did not intend to, and did not, enter into a contract with the plaintiff by way of the Guarantee sued upon.

8. [26]

   Having found that there was no contractual relationship between the plaintiff and the defendant on the Guarantee, his Honour considered that he did not need to determine the grounds of the defendant’s defence based on misrepresentation or s 18 of the ACL. However, notwithstanding his conclusion in that respect, the learned Magistrate did proceed to make some findings in respect of Mr Battle and in that regard, to the plaintiff’s conduct in respect of those grounds.

The Evidence

1. [27]

   The affidavit evidence of the defendant sworn 4 December 2015 was in fairly brief terms as set out in paragraphs [1]-[10] of the affidavit as follows:

2. [28]

   The affidavit evidence of Mr Battle was also in comparatively brief terms as follows:

3. [29]

   In the proceedings below, the cross-examination and re-examination of the defendant was also relatively brief. In the plaintiff’s written submissions in the proceedings in this Court dated 9 June 2016, the following references were made to the defendant’s evidence in cross-examination:

The Magistrate’s Decision

1. [30]

   In his reasons for judgment the learned Magistrate made a number of preliminary observations. These included that:

   1. (1)

      Through silence, there was misleading and/or deceptive conduct on behalf of the plaintiff (through the conduct of Mr Battle);

   2. (2)

      There was an absence of any deliberate misleading or deceptive conduct by Mr Battle; and

   3. (3)

      In the objective circumstances and the “immediacy of the circumstances”, there was “a reasonable expectation” that Mr Battle should have at least alerted the defendant as to the Guarantee and to the fact that the defendant should get legal advice or at least alert him to such a need for obtaining advice (CB 124).

2. [31]

   In the course of his decision, his Honour noted that all signatures were separately witnessed by Ms Amabile and that the uncontested evidence from the defendant was that the document was filled out by his wife during general discussions between Mr Battle, Mr Musico and Ms Amabile (CB 125).

3. [32]

   His Honour then set out the competing arguments put on behalf of the plaintiff and the defendant at T 3-4 (CB 126-7).

4. [33]

   The Magistrate referred in his reasons at T 4 (CB 127), to the defendant’s evidence in which he maintained that Mr Battle never mentioned the word “guarantee” and that he simply said “sign here”. He stated that he and Mr Musico did no more than sign the agreement believing it was a credit application for the company, without reading it: T 4 (CB 127).

5. [34]

   The Magistrate then set out principles stated by Robb J in Druin Pty Ltd v Corbin [2014] NSWSC 510: T 5-6 (CB 128-9).

6. [35]

   The operative part of the Magistrate’s judgment is recorded at T 6-7 (CB 129-130). The paragraphs extracted below are taken from the judgment:

Submission on Grounds of Appeal

1. [36]

   The plaintiff appeals on four grounds but only makes substantive submissions in respect of Grounds 1 & 2.

2. [37]

   Ground 1 to the Amended Summons is framed in the following terms:

Plaintiff’s Submissions

1. [38]

   The plaintiff’s submission in relation to Ground 1 noted that the Magistrate had been referred to the judgment of Robb J in Druin v Corbin, supra. However the plaintiff submitted that the facts in that case were “diametrically opposed” to the undisputed facts in the present case: at [18].

2. [39]

   At [19] it was submitted:

3. [40]

   It was submitted for the plaintiff that there was no evidence upon which his Honour could properly have found that the signed Guarantee was not objectively intended to be a guarantee: at [22].

4. [41]

   It was further noted that although not expressly pleaded, insofar as the defendant claimed that he did not read or understand the document that he had signed, he was essentially arguing a defence of non est factum: at [26] (CB 13).

5. [42]

   In that respect it was noted that a defendant relying on such a defence must show that the failure to read or understand the document was not due to carelessness on his part: Petelin v Cullen [1975] HCA 24 at [12]; 132 CLR 355 at 360.

6. [43]

   Further, it was submitted that there was no evidence the plaintiff knew or ought to have suspected that there was some misapprehension as to the character of the agreement: per Petelin at 360.

7. [44]

   It was submitted that the appeal should be upheld and an order made setting aside the judgment of the Local Court.

Ground 2

1. [45]

   Ground 2 was expressed in the following terms:

2. [46]

   In support of the plaintiff’s submissions in relation to Ground 2 (at [35]-[37]) reliance was placed upon the decision of the High Court in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31; 241 CLR 357. In that case it was noted that Miller (an insurance broker) had provided BMW with relevant insurance documents without specifically disclosing their nature. The Court nonetheless found there was no misrepresentation by silence for reasons therein set out and summarised at [38] of the plaintiff’s written submissions.

3. [47]

   It was submitted that the learned Magistrate was in error to infer that there had been a misrepresentation by silence as there was no further duty on Mr Battle upon which his Honour relied.

4. [48]

   As to the remaining grounds pleaded in the Amended Summons, they were said to depend upon Grounds 1 and 2 above.

Defendant’s Submissions

1. [49]

   The defendant relied upon its primary Written Submissions and Further Outline of Submissions dated 5 and 10 August 2016 respectively.

2. [50]

   In the primary written submissions for the defendant summarised the factual findings said to have been made by the Magistrate: [10(i)] to [10(xvi)].

3. [51]

   The Magistrate, it was noted, had found, on the evidence, that the defendant in signing the Credit Application, did not intend to and did not enter into a contract with the plaintiff: Written Submissions at [16].

4. [52]

   It was submitted that his Honour correctly identified the issue for determination, namely, the liability of the defendant to guarantee the obligations of Twin Air. The objective evidence to which the Magistrate referred was summarised at paragraphs 10(vi) to 10(xiii) of the plaintiff’s Written Submissions.

5. [53]

   It was noted that the question as to whether the evidence justifies a finding that a party objectively intended to be bound by the terms of an alleged contract is one of fact, not law: Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909 at 924.

6. [54]

   It was submitted that the only evidence that the plaintiff could point to that there was an intention by the defendant to enter into a legal contract with the plaintiff was the fact that the page which included the terms of the Guarantee was signed by the defendant: at [24].

7. [55]

   The defendant submitted that there could be no complaint or dispute as to the circumstances in which the Credit Application was signed. Additionally, the Magistrate had made factual findings as to the objective intention of the defendant to be bound by the terms of an alleged contract and if there was any error it was only an error of fact, not one of law: at [25].

8. [56]

   In answer to the plaintiff’s submissions, it was stated that the defendant did not argue a defence of non est factum and the Magistrate made no findings in the proceedings on that basis. It was further contended that in any event the plaintiff was not “an innocent” person as referred to in Petelin v Cullen, supra, at 360.

9. [57]

   The defendant concluded by submitting that the plaintiff was aware of the circumstances in which the defendant signed the Credit Application and did nothing to alert or bring to the defendant’s attention the fact that the document contained a guarantee that created personal liabilities and that he should read the document: at [28].

10. [58]

    In respect of Ground 2 it was noted that if the plaintiff does not succeed on Ground 1 then the Court does not need to consider Ground 2. The Magistrate dismissed the plaintiff’s claim on the basis that there was no legal (and enforceable) contract.

11. [59]

    In the event that Ground 1 was successful, the Magistrate did not in the circumstances specifically grant any relief as a consequence of any finding as to misleading or deceptive conduct.

12. [60]

    It was noted that the Magistrate had concluded that Mr Battle’s conduct, and specifically his omission to inform the defendant that he was signing a guarantee and to obtain legal advice amounted to misleading or deceptive conduct by silence. The defendant repeated its submission that this was a factual finding made by the Magistrate that the plaintiff has not sought leave to appeal pursuant to s 40 of the Local Court Act.

13. [61]

    The defendant contends that the plaintiff misstated the evidence. In that respect, it was noted that the plaintiff did not hand the defendant the “Guarantee” but rather handed the Credit Application and “more significantly” did not direct him to read the document before signing it.

14. [62]

    It was submitted that the Magistrate did not, in effect, impose a duty on or require the plaintiff (or Mr Battle) to read out the Guarantee document.

15. [63]

    The defendant disputed that the decision of the High Court in Miller & Associates Insurance Broking Pty Ltd v BMW precluded the possibility that there could be misleading or deceptive conduct by silence but that in the factual circumstances of that case the conduct was not sufficient for such a finding to be made.

16. [64]

    It was submitted that no error of law had been established by the plaintiff in respect of Ground 2.

17. [65]

    In the defendant’s Further Outline of Submissions, it was submitted that as this appeal is not a hearing de novo, this Court cannot make findings of fact for the purpose of determining what orders should be made: B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSWLR 481.

18. [66]

    It was argued that wrong or perverse findings of fact, or findings of fact made as the result of an unsound or illogical reasoning process do not amount to errors of law unless there is “no evidence” to support the finding.

19. [67]

    The defendant relies upon the observations of Brereton J in Jaksic v Yim [2011] NSWSC 962 at [13] where his Honour stated that what needs to be demonstrated is:

Consideration

1. [68]

   The issues in the present case are essentially twofold: was it was open to the Magistrate to find that the defendant was not bound by the terms of the Guarantee signed by him on 21 August 2009? Having regard to the signed Guarantee and the surrounding circumstances in which the defendant signed it, whether the Magistrate ought to have concluded that the defendant intended to enter into the contract of Guarantee?

2. [69]

   The principles to be applied to resolving such questions are well established.

3. [70]

   It has been held that it is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. The search for the intention sufficient to create contractual relations call for an assessment of the relevant objective circumstances including the external conduct of the parties which includes any uncommunicated subjective reservation or intention: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 per Gaudron, McHugh, Hayne and Callinan JJ at [24]-[25].

4. [71]

   In Scottish Amicable Life Assurance Society, supra, McHugh JA observed (at pp 11-12):

5. [72]

   His Honour also stated:

6. [73]

   The inquiry into whether the necessary intention to contract existed is, accordingly one that is not confined to the written document: Druin Pty Ltd v Corbin, supra, at [32] per Robb J. As his Honour stated, in an inquiry as to whether there is a contract at all it is logically necessary for there to be reference to all objective circumstances that bear upon the existence of the necessary intention.

7. [74]

   Accordingly, in the present case the issue directs attention as to whether or not there was evidence of objective circumstances from which the learned Magistrate could reach the conclusion that the defendant did not intend to enter into a contract of Guarantee. That in turn requires consideration of the matters regarded and adopted by the Magistrate as “objective circumstances” which enabled him to reach that conclusion.

8. [75]

   The relevant objective circumstances, in my opinion, would include:

   1. (1)

      The application for a credit facility, in particular the terms and conditions set out in the document, including that part of it subtitled Guarantee;

   2. (2)

      The fact that the defendant signed the Guarantee as one of two guarantors, his wife having previously inserted relevant personal details in the Application form with his signature then being witnessed by his wife;

   3. (3)

      The structure and content of the terms and conditions in two parts each submitted in bold print “Acknowledgements and Agreement” and “Guarantee” which each made provision for the defendant’s signature respectively as director and guarantor.

   4. (4)

      The commercial or business nature of the alleged contract, between the plaintiff as supplier of air conditioning equipment and the defendant as a director/guarantor of a company (Twin Air) described in the Application as in the business of “Air Conditioning Installations” and who the Magistrate found to be:

9. [76]

   The defendant’s case was, as the Magistrate noted, that he did not know that there was a guarantee on the form signed by him: T 3:45-50.

10. [77]

    The Magistrate concluded that, “the weight of the objective evidence…” pointed to “…the defendant not being aware of the guarantee indemnity”: T 6:16-18. On that basis his Honour concluded “… on an objective assessment in an analysis of the evidence” that the only intention that the defendant had was to act only on behalf of Twin Air and no more: T 6:20-21.

11. [78]

    The learned Magistrate stated that he would refer in his reasons to what he termed “the objective assessment of the totality of evidence”: T 6:23-24. However, he proceeded to note:

12. [79]

    The Magistrate stated that “The omission [an apparent reference to Mr Battle] does amount in the present circumstances to misleading or deceptive conduct by silence”. He again referred to what was described as the “uncontradicted evidence” of Mr Amabile that he did not read the document when he signed it there and then” and that Mr Battle “…must have been aware or should have been aware that Mr Amabile had not read the agreement”: T 7:10-14, CB130.

13. [80]

    The Magistrate’s reasoning proceeded upon the basis of an acceptance of the defendant’s account that he did not read the Guarantee with the proposition that that would have been apparent to Mr Battle. That proposition was not in terms put to Mr Battle. His Honour then concluded that on those bases Mr Battle became subject to a duty or an obligation to alert the defendant to the fact that he was signing or entering into a guarantee and also to a possible duty to advise the defendant to obtain legal advice.

14. [81]

    In my opinion, with respect, this form of reasoning does not reflect or accord with accepted principles for determining whether a person intended to enter into a legally binding contractual relationship. The learned Magistrate was required to look both at the agreement and to “all objective circumstances” as discussed in the caselaw authorities.

15. [82]

    The defendant’s evidence did not indicate why he signed the Guarantee. If it had been the case, as the defendant said, that he did not read the Guarantee that cannot in itself be determinative of the question as to whether he had an intention to enter into binding contractual relations with the plaintiff. In some circumstances the failure to read a contractual document may be explained by a number of circumstances. The defendant may not have taken time to read the Guarantee conditions simply because he was not prepared to make the effort to do so. Alternatively, he may, in the course of business, have become familiar with guarantees and for that reason concluded that he did not need to read the conditions.

16. [83]

    As noted above, the defendant placed his signature on the two parts of the Agreement and Guarantee document. He made no attempt to explain how or why he signed as director and guarantor.

17. [84]

    Additionally, the Magistrate’s ultimate finding as to there not having been a guarantee by the defendant, was, at least in part, premised upon the ground that some duty or obligation fell upon Mr Battle to draw the defendant’s attention to the terms and conditions of the Guarantee notwithstanding that they were set out and presented to the defendant in writing. The Magistrate did not identify any principle or legal basis for the proposition that Mr Battle was subject to a duty to inform, warn and/or advise the defendant, a “sophisticated” defendant experienced in the relevant field of business.

18. [85]

    This was not a case in which there was any suggestion that Mr Battle engaged in any form of sharp practice. Indeed the finding of the Magistrate indicates that the contrary was the position. Mr Battle, though unable to specifically recall the circumstances of the transaction, gave his evidence based upon, as he stated, his usual practice and experience in dealing with such matters.

19. [86]

    In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd, supra, French CJ (dissenting but not on this point) observed at [22]:

20. [87]

    In the present case, the defendant, as earlier stated, specifically signed the contractual documents in two capacities. The factual circumstances in Druin Pty Ltd v Corbin, supra, are very different to those in the present case. In Druin, the defendant was alleged to have entered a guarantee about which there was “confusion” by reason of the fact that the defendant did not sign the document as guarantor but signed it in that part of the document which related to “signature of witness”. The Court did not in that case accept that the affixation of the defendant’s signature on the guarantee within the application was a clear manifestation of an intention to be legally bound by the terms of the guarantee. In deciding that case, Robb J identified three specific factors which had created considerable uncertainty. They included the fact that the defendant did not sign in the space provided for the signature of the intended guarantor. His Honour noted that if he had signed “as guarantor”:

21. [88]

    Robb J also observed that that conclusion was reinforced by the fact that “no one signed in the place provided for the guarantor”: at [39].

22. [89]

    Further, his Honour observed, “…the name of the proposed guarantor was not inserted in the space provided in the imbedded guarantee…”: at [40].

Conclusions

1. [90]

   On an examination of the Magistrate’s reasons for judgment, and the submissions of the parties, I record the following conclusions:

   1. (1)

      The signature of the defendant, as guarantor, objectively manifested the fact that the defendant had understood and intended to be bound by the terms and conditions of the Guarantee as part of the transaction for a credit facility to be provided by the plaintiff;

   2. (2)

      There was no statement made by Mr Battle that disavowed that the parties were intending to enter into a binding contract of Guarantee;

   3. (3)

      A primary basis relied upon by the defendant in the proceedings was an alleged subjective state of mind. This was expressed in the submission on his behalf that had he known he was signing a guarantee then he would instead have opened a cash-on-delivery account or some other type of account;

   4. (4)

      The defendant admitted in cross-examination to knowing what a guarantee was: T 61:5-20;

   5. (5)

      The defendant knew that he had signed the Acknowledgement and Agreement and the Guarantee and that the signature on both documents was witnessed: T 68;

   6. (6)

      The fact that the defendant gave evidence that he did not read the terms and conditions of the Guarantee, if accepted, is a fact that is explicable on a number of possible bases. They include the fact that he did not care to take time to read the document or that he understood what a guarantee was and decided that he did not need to read it. The defendant did not explain why he did not read the Guarantee document;

   7. (7)

      The relevant objective circumstances in determining whether a binding contract was made include what the contracting parties said and did. In this case, the defendant, by his application to the plaintiff, was seeking a credit facility. He was handed the contractual documents. Whether he chose to read the terms and conditions of it was a matter for him. If, as he said in evidence, he did not read the document handed to him by Mr Battle, the failure to do so did not arise from anything said or done by Mr Battle;

   8. (8)

      The defendant was in fact given notice of the proposed contractual terms and conditions of the Guarantee by means of the document which set them out. The contract was expressed in clear and unambiguous terms. It was handed directly to him by Mr Battle;

   9. (9)

      There was in fact no evidence of objective circumstances that supported the contention that the defendant did not intend to enter into a contract of guarantee. Whilst the Magistrate referred at p 15-25 to “Objective evidence”, he did not in fact identify factual matters that constituted objective circumstances capable of supporting the defendant’s denial that he intended to contract by way of guaranteeing Twin Air’s contractual obligations;

   10. (10)

       The defendant does not have a defence of non est factum, on his evidence, as he was a party who failed to exercise care and read the document: Petelin v Cullin, supra, at 360.

   11. (11)

       In circumstances in which the document containing the Guarantee was handed to the defendant for him to read and sign, there was no evidence that he was deceived or tricked into believing that the document was other than as stated by its terms under the heading in bold “Guarantee”;

   12. (12)

       The Magistrate’s reliance upon Mr Battle’s silence as a basis for constructing or imputing a misrepresentation was without support either in evidence or in legal principle. In particular, there was no evidence of circumstances (and none identified by the Magistrate in his decision) that gave rise to a duty in Mr Battle to inform or advise the defendant. This was especially so given the defendant’s experience in business matters;

   13. (13)

       Further, there was no evidence identified, or that was capable of giving rise to a reasonable expectation that Mr Battle would inform him or advise him as to the proposed guarantee: Kimberley NZI Finance Limited v Torero Pty Ltd (1989) ATPR 46-054 at 53,195. There existed no contractual or fiduciary relationship between the defendant and the plaintiff or between the defendant and Mr Battle. There were no circumstances proved that were capable of establishing a duty based upon a relationship of proximity or a relationship otherwise attracting a duty upon the defendant or upon Mr Battle;

   14. (14)

       The Magistrate’s statements:

   15. (15)

       “…Mr Battle failed to bring to his attention…p 4 of the agreement…”

   16. (16)

       “Mr Battle failed to highlight or draw the defendant’s attention to any terms and conditions in the general conditions…”

   17. (17)

       “Mr Battle’s failure to highlight and draw the defendant’s attention…”

   18. (18)

       are all statements that assume a duty in Mr Battle and, upon that erroneous assumption, the Magistrate proceeded to find breaches or failures on Mr Battle’s part to fulfil the (assumed) duty. This line of reasoning as to the alleged “breaches” or “failures” of Mr Battle were without support or foundation in the evidence; and

   19. (19)

       The two statements attributed by the defendant to Mr Battle which were said to be representations, namely, “here is a credit application” and “just fill it out, this form, and we’ll get your account opened”, even if capable of amounting to some form of “representation” could not in terms be construed as “misrepresentations” in circumstances in which:

2. [91]

   For the reasons stated above, I have concluded that the Magistrate in finding, in effect, that the defendant did not intend to enter into a legal contract, namely a contract of guarantee, with the plaintiff, erred in law in making that finding.

3. [92]

   The decision of the Magistrate was vitiated by legal error in that:

   1. (1)

      His Honour failed to apply the proper test for determining whether the parties intended to create a binding and legally enforceable contract. Namely, to identify all objective circumstances that bear upon the existence of the necessary intention to contract.

   2. (2)

      His Honour did not identify any relevant objective surrounding circumstances referred to in (1) above.

   3. (3)

      There was no evidence that established objective surrounding circumstances (such as words or acts) that the defendant did not intend to be bound by the terms of the Guarantee signed by him.

4. [93]

   I am of the further opinion that, on the evidence, and for the reasons stated above, the plaintiff and the defendant did intend to enter into a legal contract, being a contract of Guarantee in the terms set out on page 4 of the Application, a copy of which was marked A to the affidavit of Ms Boutros.

Orders

1. [94]

   I make the following orders:

   1. (1)

      The verdict entered for the defendant in Local Court proceedings 2015/156001 on 5 February 2016, is set aside.

   2. (2)

      The order for costs in favour of the defendant made by the Local Court on 5 February 2016 is set aside.

   3. (3)

      Judgment is entered in favour of the plaintiff against the defendant in the amount of $38,853.38 together with interest at the rate prescribed by the Uniform Civil Procedure Rules 2005 from 12 August 2013.

2. [95]

   As the plaintiff is the successful party in the proceedings, in accordance with the rules of court, costs would normally follow the event. In the event that the defendant wishes to make submissions to a contrary form of costs order, then written submissions should be lodged with my Associate and served, within 14 days of the date of this judgment. In the event that the defendant does not wish to make an application to argue any other costs order, then costs are awarded to the plaintiff against the defendant on the ordinary basis.