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Discharge Ground 1: Material change in the JVA due to the execution of the SJVA
Discharge Ground 1: Material change in the JVA due to the execution of the SJVA
The Defendant alleges that insofar as there was a guarantee in the JVA, it was discharged by the agreement in the SJVA to increase the amount of Mr Dunn’s loan. The Defendant complains that the SJVA does not mention the guarantee or that it is extended to cover this additional obligation.
I do not agree with the Defendant’s argument that the guarantee was discharged on this basis for the following reasons:
The SJVA was signed by Mr Kazolides’ authorised attorney and he is bound by its terms.
The terms of the SJVA operated to vary the terms of Mr Dunn’s loan to the Company as contained in the JVA. Mr Kazolides consented to that variation.
Both parties accept that the guarantee obligation was a “see to it” guarantee; the guarantors had guaranteed that the Company would “perform all of its obligations” contained in the JVA.
If the Company’s obligations were altered by agreement of all parties, as I find that they were, then the guarantee remains in place. Under the rule in Holme v Brunskill, the discharge of the guarantee only arises when the guarantor does not consent.
- Heading
- I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic Introduction
- The Parties and other relevant persons
- The Land
- The Contractual Arrangements
- General Observations on the Evidence The oral witness evidence
- The recollection of witnesses generally
- The central issues for determination
- The Construction Issues
- The profit sharing arrangements under the JVA
- The payment waterfall under the JVA
- The Guarantee Validity Issues
- Validity Issue 1: Did Mr Kazolides provide a guarantee under the JVA?
- The argument that the joint venture was intended to be a 50/50 arrangement and the guarantee is inconsistent with that arrangement
- The failure to name Mr Kazolides expressly and the Statute of Frauds
- Whether Mr Michael had authority to enter the guarantee
- Validity Issue 2: Should clause 18 be rectified to name Mr Kazolides as the Guarantor?
- The Limitation Issues
- Limitation Issue 1: Is the Limitation Period 6 or 12 years?
- Limitation Issue 2: What is the test for insolvency under clause 5(c)?
- Limitation Issue 3: Was the Company in default more than 6 / 12 years before the issue of the claim?
- The expert evidence on valuation of the Property
- The Liabilities of the Company in March and December 2010
- The solvency of the Company in early March 2010
- Cashflow insolvency
- Legal Principles
- Variation of the contract between creditor and debtor
- Agreement between creditor and debtor to give debtor additional time to pay
- Breach by the creditor
- Grounds for Discharge
- Discharge Ground 1: Material change in the JVA due to the execution of the SJVA
- Discharge Ground 2: Mr Dunn giving an extension of time for payment by the Company
- Discharge Ground 3: Breaches of or a departure from the terms of the JVA in relation to the timing of the sale of the villas and other matters relating to the joint venture
- Discharge Ground 4: An oral agreement between Mr Dunn and Mr Kazolides
- Other matters
- Conclusions