Ravensdown Fertiliser Co-operative Limited v Eveleigh HC Palmerston North CIV-2010-454-831, 30 June 2011
- Court
- High Court
- Judgment
- 30 June 2011
- Neutral
- RAVENSDOWN FERTILISER CO-OPERATIVE LIMITED V MC EVELEIGH HC PMN CIV-2010-454-831 30 June 2011
Areas of law
Judgment analysis
AI-generated summary
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Facts
Between 2002 and 2009, the plaintiff supplied fertiliser and other products to the defendants' company, Eveleigh Farming Company Limited, on credit. In November 2005, the defendants signed a document titled 'Application for Super Plan Extend' (the Extended Credit Agreement), which contained a guarantee clause. On 7 July 2010, the Company was placed into receivership, owing the plaintiff significant amounts for goods, penalty interest, and costs. The plaintiff seeks to recover these amounts from the defendants personally, alleging their signatures on the 2005 agreement constituted personal guarantees. The defendants oppose the application, arguing they signed the document only in their capacity as directors on behalf of the Company, not in their personal capacities as guarantors. The quantum of the debt is not in dispute.
Held
- The plaintiff has not satisfied the onus to show the defendants have no arguable defence for the purpose of a summary judgment application.
- Where a standard form credit agreement containing a guarantee clause has a confusing and incorrectly completed execution section, it is arguable that the directors' signatures bound only the company and not the directors personally.
- The presumption that a person signing on behalf of a company signs only in that capacity may not be displaced where the wording of the document itself is confusing and there is no clear extrinsic evidence to the contrary.
- The question of whether the defendants signed in a dual capacity requires a full examination at trial of all circumstances leading to and surrounding the execution of the agreement.
Orders
The present application for summary judgment is dismissed. Costs are reserved pending final determination of this proceeding. The Registrar is directed to list this matter for call for time tabling directions to be made towards trial.
Key passages5
On a summary judgment application, the question is whether the defendant has no defence to the claim, meaning there is no real question to be tried. The Court must be left without any real doubt or uncertainty.
“The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty.”
To be enforceable, a guarantee must be in writing and signed by the guarantor or their authorised agent.
“It is clear that to be enforceable a guarantee must be in writing and signed by the guarantor or a person authorised by the guarantor – ss 2(1)(d) and 2(2) Contracts Enforcement Act 1956 (the applicable Act at the time the guarantee was provided in 2005).”
A guarantee does not need a particular form or words but must clearly show the alleged guarantor is binding himself to answer for the principal debtor's default.
“Further, although a guarantee need not be in any particular form nor use any particular words, it must show clearly that the alleged guarantor is binding himself to answer for the default of the principal debtor – Gibbons v Summers, HC, Rotorua, 28 September 2007, CIV-2007-463-202.”
A person is able to sign a contract once but in a dual capacity.
“On these aspects, it is well established that a person is able to sign a contract once but in a dual capacity – Chiswick Investments v Pevats [1990] 1 NZLR 169 at 174.”
There is a presumption that if a person purports to sign on behalf of a company, they are signing only in that capacity. This presumption can be displaced by clear words in the contract or by extrinsic evidence of the signer's intention.
“No one disputes that it is possible for a person to sign a contract once but in a dual capacity. But there is a presumption that, if the signer purports to sign on behalf of a company or another, he or she is signing only in that capacity. Such presumption may be displaced by clear words within the contract or by extrinsic evidence from which it may be inferred the signer’s intention when affixing his or her signature.”
Cases mentioned in judgment
Legislation mentioned
- High Court Rules, r 12.2, r 12.2(1), r 11.5
- Contracts Enforcement Act 1956, s 2(1)(d), s 2(2)