Liability on a personal guarantee all depended on interpretation of a dangling pronoun; did ‘you’ refer to a director or to his company?
When Charles Borlase’s company Command Aviation Ltd went into liquidation in 2020 following an aircraft accident, he was sued by creditor Robertson Engineering Ltd for Command’s unpaid helicopter lease commitments.
In 2018, Mr Borlase had sent an email to Robertson Engineering’s director Maurice Wooster giving ‘an unconditional Personal Guarantee in regards any moneys owed by [Command] to you.’
When sued by Robertson Engineering on the guarantee for some $82,500 Mr Borlase said the wording only covered debts owed by Command Aviation to Mr Wooster personally and Command did not owe Mr Wooster anything; its debt was owed to Robertson Engineering.
There was potentially some ambiguity in wording of the guarantee, Justice Churchman said. Left dangling, the pronoun ‘you’ could apply to either Mr Wooster or his company. Any ambiguous wording is resolved against the party who wrote it, he ruled.
Given the context in which Mr Borlase as director of Command Aviation was writing to Mr Wooster as director of Robertson Engineering, the debt Mr Borlase was guaranteeing personally was the $82,500 debt Command owed to Robertson Engineering, Justice Churchman ruled.
There was never any debt owed by Command to Mr Wooster. Giving a guarantee for a non-existent debt made no commercial sense.
Borlase v. Robertson Engineering Ltd – High Court (4.10.22)
22.173