[1] The respondent is a roading contractor. It successfully tendered for work on a subdivision at Leigh being carried out by Island View Estates Ltd (IVE). The appellant was one of IVE’s directors.
[2] In June 2004 IVE and the respondent entered into a deed of settlement which compromised various disputes which had arisen over the sum owed for the respondent’s contract work. An outstanding amount of $950,000 was agreed, as was a timetable for repayment.
[3] In April 2005, as a result of apparent difficulties being experienced by IVE in adhering to the agreed timetable for repayment, there were further discussions. A new agreement was reached. It was envisaged that the appellant would personally guarantee IVE’s future payments. We shall turn to the details of these new arrangements shortly.
[4] In April 2006 IVE went into voluntary liquidation. The respondent sued the appellant under his guarantee claiming both the unpaid sum of $750,000 and agreed interest on a portion of that sum. The respondent sought a summary judgment.
[5] The appellant for his part resisted the summary judgment application alleging that there was no concluded agreement for him to guarantee IVE’s debt.
[6] In December 2007 Associate Judge Christiansen entered judgment against the appellant. This appeal challenges that result.

Relevant Contractual Documents

[7] On 13 April 2005 the respondent’s financial controller, Mr Gibbons, met the appellant. Clearly the appellant had outlined financial difficulties IVE was experiencing.
[8] On 14 April 2005 the respondent wrote to the appellant and his wife. The letter was headed “Re: Island View Estates Ltd”. It set out an amended repayment proposal which comprised four tranches between April 2005 and the end of March 2006.
[9] The letter included the sentence:

As part of the proposal personal guarantees are required from both of you.

[10] The letter asked the appellant and his wife to show their acceptance by signing an attached copy of the letter and returning it with a cheque for the first tranche of $50,000.
[11] At the foot of the letter, underneath Mr Gibbons’ signature, are the words:

We the undersigned agree to the repayment proposal above and give our personal guarantees in the event that Island View Estates Ltd defaults on any of the payments [above]

Underneath those words were typed the names of the appellant and his wife “for & on behalf of Island View Estates Ltd” with places for a witness’ signature and a date.

[12] The letter was posted to the appellant and his wife on 14 April. They did not, however, receive it for another four or five days when they cleared their post office box.
[13] Before he received the letter, the appellant wrote to Mr Gibbons on IVE letterhead. The letter, dated 17 April, referred to the parties’ meeting on 13 April. It set out a repayment proposal involving four tranches, similar but not identical to the proposal contained in the respondent’s 14 April letter.
[14] Importantly the letter stated that the appellant’s wife was unable to offer a personal guarantee. The letter concluded:

However Simon Buxton who is now a director of Island View Estates Ltd is prepared to offer a personal guarantee.

The appellant signed the letter.

[15] IVE’s 17 April letter was received by the respondent on 19 April. Mr Gibbons replied that day on the respondent’s behalf. Again this letter was addressed, not to IVE, but to the appellant. The letter stated that the “new proposal” was acceptable to the respondent’s directors. The respondent requested a cheque for $50,000 and the appellant’s personal guarantee in respect of the remaining tranches.
[16] The respondent’s copy of its 19 April letter contains a handwritten note by Mr Gibbons dated 20 April:

Simon rang to confirm arrangement – Will send cheque & personal guarantee.

[17] The appellant received the respondent’s 19 April letter two or three days later.
[18] On 26 April 2005 the respondent received from the appellant the 14 April 2005 letter. The sentence relating to personal guarantees from both Mr and Mrs Buxton (above [9]) was deleted. The appellant had signed the document at its foot on 20 April. His signature had been witnessed by his father.
[19] The next day, 27 April, the first agreed tranche of $50,000 was paid.
[20] A further letter from IVE to the respondent dated 14 October 2005 is relevant. By October IVE was clearly in further difficulties and had fallen behind with its payments. The letter, signed by the appellant, refers to an absence of excess funds from a sale “to pay to Wharehines as part of the agreement made on the 14th Aril (sic) 2005”.

Discussion

[21] In submissions to us, as in the High Court, there was considerable discussion about the contractual consequences of the correspondence. Was the proposal contained in the respondent’s 14 April letter ever accepted? If not, what was the purport and effect of the appellant signing that letter as guarantor, having his signature witnessed, and returning the letter to the respondent? If the appellant’s 17 April letter was an offer, which the respondent accepted in its 19 April letter, were the somewhat equivocal words of the appellant on 17 April that he was “prepared to offer a personal guarantee” an offer to guarantee which the respondent accepted? If, as the appellant submitted, the 17 April offer fell short of being an offer to guarantee, then why and with what effect did the appellant return the 14 April letter with his signature as guarantor witnessed? Was the return of that letter, so far as the guarantee was concerned, a counter-offer (Mr McCartney’s submission) which the respondent never accepted?
[22] The Judge had no difficulty cutting a path through this thicket of issues. In the context of the parties’ negotiations he saw the June 2004 deed of settlement as important. The purpose of the April 2005 discussions was to negotiate a personal guarantee in consideration of allowing IVE further time for payment. Otherwise the discussions would have been pointless. The Judge saw the 20 April telephone conversation between Messrs Gibbons and Buxton (above [16]) as concluding an agreement that the guarantee of the appellant alone (instead of guarantees from the appellant and his wife) would be acceptable to the respondent. The Judge considered it was a reasonable inference that the 14 April letter had been signed and returned by the appellant after he had communicated he was willing to be a guarantor.
[23] The Judge concluded that when the appellant signed the 14 April letter on 20 April he did so intending to bind himself as a guarantor of IVE’s obligations. There was thus no available defence to the respondent’s claim under the guarantee.
[24] We consider the Judge was correct in the view he reached. The respondent’s statement of claim, in respect of which summary judgment was sought, pleads that the provision of the appellant’s personal guarantee was a term of the amended repayment proposal into which IVE entered on 14 April 2005.
[25] The appellant’s 17 April letter indicates his willingness to be a guarantor. On 20 April the appellant confirmed to Mr Gibbons, in the wake of the 17 April/19 April exchange, that he would be a guarantor. On the same day his signature was witnessed as guarantor and returned to the respondent. (We interpolate that the submission that the appellant only signed the 14 April letter on behalf of the company has no merit.) That signed guarantee was received by the respondent on 26 April. The next day IVE paid $50,000 being the first tranche contemplated by the 14 April letter.
[26] In short, the concluded contract is evidenced by the appellant sending back the 14 April letter to IVE with its amendments and the respondent accepting that amended letter when it banked the $50,000 cheque on 27 April.
[27] Finally the letter written by the appellant of 14 October 2005 (above [20]) puts beyond doubt that he considered the obligations contained in the 14 April letter to be operative.

Result

[28] We are satisfied that the Judge correctly entered summary judgment against the appellant. The appeal is thus dismissed.

Costs

[29] The appellant is ordered to pay the respondent’s costs as for a standard appeal, band A, together with the usual disbursements.

Solicitors:
Macky Robertson, Auckland for Appellant
Gaze Burt, Auckland for Respondent

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