Robinson v Tanners Timberworld Ltd CA301/90, 16 May 1991
- Court
- Court of Appeal
- Judgment
- 16 May 1991
Areas of law
Judgment analysis
AI-generated summary
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Facts
In 1988, Mr. Robinson, on behalf of his company Robinson Fox Builders Limited, agreed to open a trading account with the respondent. The respondent's general manager, Mr. McCann, asked him to complete a 'Credit Application' form. The form identified the company as the applicant but contained a clause at the bottom in heavier type stating: 'I agree to the above conditions and terms of trade and do hereby personally guarantee to pay the due payment of any moneys due.' Mr. Robinson signed his name below this clause. Subsequently, the company went into liquidation owing the respondent $78,481.90. The respondent sued Mr. Robinson personally on the guarantee. Mr. Robinson defended the claim, stating he signed on behalf of the company and had no knowledge of, or intention to enter into, a personal guarantee. Summary judgment was entered against him in the High Court, which he appealed.
Held
- The words 'I ... do hereby personally guarantee' are plain and unambiguous in their ordinary meaning and constitute a personal guarantee by the signatory.
- A change from the third person (referring to the applicant company) to the first person ('I') in the operative clause of a credit application is a significant indicator that the signatory is undertaking a personal obligation.
- Construing a clause as a company 'personally guaranteeing' its own debt is an unrealistic interpretation in a commercial document where personal guarantees for private companies are common.
- In the absence of ambiguity, the contra proferentem rule does not apply, and extrinsic evidence of the parties' subjective intentions is inadmissible.
- A person who signs a document containing a clear contractual commitment, such as a personal guarantee, is bound by it, even if they did not appreciate the commitment they were making.
The appeal is dismissed.
Key passages5
A document must be construed objectively.
“It is elementary that this document is to be construed objectively.”
The parties' intention is to be gathered from the words used in the document, given their ordinary meaning.
“The parties' intention is to be gathered from the words used, given their ordinary meaning.”
Subsequent declarations of the parties as to what they intended or understood are not admissible as an aid to construction.
“Subsequent declarations of the parties as to what they intended or understood are not admissible.”
The contra proferentem rule applies only where there is an ambiguity in the document.
“We see no ambiguity such as to bring the contra proferentem rule into play.”
For the sake of certainty in contractual dealings, people must in general be bound by what they have signed.
“But the law has always recognised that for the sake of certainty in contractual dealings people must in general be bound by what they have signed.”