Crossing out references to a guarantee on his company’s credit application with supplier Sika (NZ) Ltd meant company director Gavin Lawry was not personally liable to pay $244,100 owed by his company.
The High Court was told Mr Lawry’s Canterbury company Pegasus Engineering Ltd used Sika (NZ)’s product for fire retardant coatings on steel installed at a Lincoln University site. About $244,100 of the bill was left unpaid. There was an unresolved dispute over on-site application of the product. Sika sued.
In the High Court, Associate judge Paulsen ruled terms of the supply contract required Pegasus Engineering pay the agreed contract price on time and in full. Any disputed set-off claim had to be sorted out after full payment.
Sika also argued Mr Lawry was personally liable as guarantor. Evidence was given of Sika’s standard term supply contract: a two page document combining both a credit application and a guarantee. Mr Lawry had signed the credit application on behalf of his company Pegasus Engineering next to the notation director. He deleted the word ‘guarantor’ when he signed and he also crossed out in the body of the credit application some, but not all, references to the word guarantee. Mr Lawry told the court he does not give personal guarantees on his company’s credit applications and that is why he amended the document.
Judge Paulsen dismissed summary judgment against Mr Lawry on the guarantee. It was clear no guarantee was intended, he said. A full court hearing is needed if Sika wants to pursue a detailed claim arguing the document’s amended wording meant a valid guarantee still existed.
Sika (NZ) Ltd v. Lawry – High Court (19.04.23)
23.050