August 2018

An electronic signature will not always bind the signing party …

Mr Crocker was a director of IDH Modular Pty Ltd, a company that supplied building modules. Williams Group Australia Pty Ltd supplied building materials to IDH. As part of his contract arrangement IDH required personal guarantees from each of the three directors.

Mr Crocker’s guarantee had an electronic signature affixed to it. He was sued for more than $800,000 on the guarantee after IDH went into liquidation. His defence was that he did not authorise the signature and was therefore not bound by the guarantee. He was successful and Williams appealed. On 22 September 2016 the NSW Court of Appeal dismissed the appeal by Williams.

Williams had argued that Mr Crocker was bound by ostensible authority. The court rejected that by saying that there was no representation of authority by Mr Crocker of some other person to affix the signature. The court also found that there was no evidence that Mr Crocker had ratified the electronic signature that had been put on the guarantee.

There is no doubt that electronic signatures are useful but extreme care must be taken to ensure that if you intend it to be your signature you make it clear that is the case.

Depositing the certificate of title with the lender’s solicitor can create an equitable mortgage …

In these circumstances the Supreme Court can order the sale of the property to repay the debt.

In May 2013 Mr Hartala and Mr Daniel lent Graglee Pastoral Company Pty Ltd $300,000. The husband of the sole director of the borrower company deposited the certificate of title of its Sutton Forest property as security with the solicitor for the lender, Mr Silk. The borrower defaulted on the loan and the lenders sued. They claimed that by depositing the certificate of title an equitable mortgage was created and they were entitled to ask the court to appoint a receiver to sell the property and recover the money owing to them.

The evidence was that Mr Silk, the solicitor, told the husband, Mr Coady that the certificate of title for the Suttons Forest property would be held as security for the loan. The loan agreement prepared by the solicitor says that the certificate of title was to be held as security. In his judgment Justice Darke referred to earlier cases and said that an equitable mortgage can be created by lodging the certificate of title even if there is no writing. The one difficulty that the lender had was that the sole director of the borrower company was the wife of the gentleman that the lenders and the solicitor dealt with. His Honour was satisfied that there was sufficient evidence that Mr Coady was acting with the knowledge and consent of his wife.

His Honour made a declaration that there was an equitable mortgage and he ordered that a receiver should be appointed to sell the property.

A brother and sister argue in court about the ownership of a property in a Sydney suburb …

Livy Szeto claimed that her brother, Liming Situ , held the property at Carlton in his name for both of them in equal shares. Livy said that before her brother purchased the property they agreed that that she would be a co borrower but the property would be registered in Liming’s name.

She made her claim for an interest in the property on two bases: the first was that the agreement between them created a common intention trust and the second was that her financial contribution of at least 50% of the purchase price created a resulting trust. Either of these trusts would require Liming to hold the property on trust for both of them.

Judge Lindsay did not accept that the agreement claimed by Livy was made and further that Livy did not contribute any of her own money to the purchase price.

His Honour found that Livy had no interest in the Carlton property.