PIONEER INSURANCE COMPANY LIMITED V WHITE HERON MOTOR LODGE LIMITED HC NAP CIV 2007-441-1014

PIONEER INSURANCE COMPANY LIMITED V WHITE HERON MOTOR LODGE LIMITED HC NAP CIV 2007-441-1014 21 April 2008IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY CIV 2007-441-1014IN THE MATTER OF Section 290 of the Companies Act 1993 BETWEEN PIONEER INSURANCE COMPANY LIMITED Applicant AND WHITE HERON MOTOR LODGE LIMITED Respondent Hearing: 9 April 2008 Appearances: K.J. Crossland - Counsel for Applicant M. Gilbert - Counsel for Respondent Judgment: 21 April 2008 at 4.00 pmJUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLThis judgment was delivered by Associate Judge Gendall on 21 April 2008 at 4.00 p.m. pursuant to r 540(4) of the High Court Rules 1985.Solicitors: Stace Hammond, Barristers & Solicitors, PO Box 19-101, Hamilton Gilbert Walker, PO Box 1595, Shortland Street, AucklandIntroduction[1] This is an application to set aside a statutory demand under s 290 of theCompanies Act 1993.[2] On 21 December 2007 the respondent issued a statutory demand against the applicant claiming the sum of $1 million (plus interest), representing a guarantee of a loan made by the respondent to Policy Factoring Limited ("PFL") in November 2006. Repayment of this loan was due on 14 November 2007 and it remains unpaid. PFL was placed into receivership on 2 November 2007. [3] PFL has not repaid the loan and the applicant now seeks to avoid liability under its guarantee. [4] The application to set aside the statutory demand is opposed by the respondent.Background Facts[5] The applicant company was incorporated on 8 August 2002. Its directors were Mr Alan Anderson and Mr Robert Elvidge. Its shareholders were: (a) Mr Timothy Twist and Mr Lawrence Willis (partners in the law firm Willis Toomey). (b) Mr Anderson. (c) Ms Sue Allen and Mr John Richard Gifford (personally and through their Family Trust with Mr Howard Padman as the third trustee). (d) Mr Elvidge and his wife Elizabeth Elvidge (personally and through their family trust with Mr Graham Pedlar as the third trustee) and Mr Blair Fitzsimons. [6] It appears that a significant part of the insurance business operation run by the applicant was to offer insurance policies under which premiums were paid monthly. This apparently created cash flow risks for the applicant in terms of itsability to meet future claims. A solution was reached whereby PFL was to be incorporated to purchase the rights to those monthly premiums from the applicant and to pay to it the sum of $1 million for this purpose. [7] Mr Anderson arranged for his company, the respondent, of whom he was the sole director, to advance on loan to PFL the $1 million necessary to enable it to complete that purchase. A condition of this loan advance was that the respondent would only make the loan available if it was guaranteed by the applicant and various other parties. [8] The respondent company was incorporated in 1994. Mr Anderson is its sole director and he holds one share in the capital of the company. The balance share capital is held by Mr Timothy Twist and Mr Lawrence Willis. [9] The key documents prepared for the $1 million loan transaction were: (a) A Term Loan Agreement ("the Loan Agreement") between PFL as borrower, the respondent as lender and a range of other parties including the applicant as "Guarantors". (b) A separate (all obligations) guarantee and indemnity ("the Guarantee Agreement") said to be entered into by the applicant and a range of other parties in favour of the respondent. (c) A shareholders resolution of the applicant ("the Shareholders Resolution") which refers to an unsigned directors resolution ("the Directors Resolution"). [10] I turn now to consider each of those three key documents.The Loan Agreement[11] The Loan Agreement is a standard form document drafted to record arrangements reached between parties described as "Lender", "Borrower","Guarantor" and "Covenantor". [12] In the present case the respondent is described as the lender and PFL as the borrower. In the schedule to the Loan Agreement is a list of parties described as"the Guarantors". These Guarantors are the applicant, the Gifford Family Trust, the R & EA Elvidge Settlement Trust, Mr Blair Fitzsimons, Mr John Gifford, Ms Sue- Allen Gifford, Ms Elizabeth Elvidge and Mr Robert Elvidge – that is, the applicant company and all of its shareholders individually (other than the two partners of Willis Toomey, Mr Twist and Mr Willis). [13] The operative clause of this Loan Agreement provides:Agreement to RepayYou agree that: (a) you will repay all amounts that you borrow from us together with interest charges, fees, other charges and any default interest at the times and in the manner set out in the Annexure Schedule; and (b) the terms and conditions contained in the Loan Conditions apply to all loans that we make to you under this agreement.[14] "You" is defined to include:"all persons executing this contract regardless of how they may be described in this contract and the covenants contained and implied in this contract will bind each of you jointly and severally as the principal party in this contract."[15] The "You" clause is the mechanism by which Guarantors become liable for the loan as principal debtors. It should be noted that there are separate provisions relating to the obligations of any Covenantors or Trustees, but none for Guarantors. [16] The Loan Agreement specifies the conditions required to be satisfied before an advance is made. These include the requirement, at (c), that all guarantors "must have signed a deed of guarantee and indemnity in the form required by us." This was in addition to the "You" clause mechanism in the Loan Agreement by which guarantors could become liable as principal debtors.The Guarantee Agreement[17] The form of guarantee required by the respondent was an all obligations guarantee extending to all "Guaranteed Monies" – which is defined (at part 6, clause 1.1) to include:"all monies advanced, credited or lent and all other banking accommodation provided by the Lender directly or indirectly to the Borrower or to any other person on behalf of or at the request of the Borrower in any way before, upon or after the execution of this Deed".[18] The operative clause of the Guarantee Agreement states:"The Guarantor unconditionally and irrevocably guarantees to the Lender repayment of the Guaranteed Monies and the due and punctual observance or performance of all the Borrower's obligations contained in any Financing Document."[19] The parties to the Guarantee Agreement are defined in Part 6. The Lender is defined as the respondent company and the borrower as PFL. The Guarantors were, again, the applicant company and all of its shareholders individually (other than Mr Twist and Mr Willis). [20] It is clear therefore that, pursuant to the Guarantee Agreement, the applicant company has guaranteed the repayment of the monies advanced to PFL under the Loan Agreement. [21] In addition, Part 5 of the Guarantee Agreement contains an indemnity which is specified to be a "separate and additional liability and undertaking to the Guarantee". This provides:"The Guarantor as an indemnifier agrees to indemnify and keep indemnified, the Lender against any loss, damage, cost, charge, or expense whatever in connection with or as a consequence of the Borrower failing to perform and comply with its obligations under any Financing Document or to duly and punctually pay the Guaranteed Monies for any reason whatever".[22] Again, the indemnity clearly covers the monies owing to the respondent company by PFL under the Loan Agreement. [23] The Guarantee Agreement specifies the consideration in return for which the guarantee is given at Recital B:"This Guarantee and Indemnity is given in consideration of the Lender: (a) Now or in the future extending financial services and accommodation to the Borrower; and (b) Forbearing immediately to demand and sue for the payment of any existing indebtedness of the Borrower to the Lender."[24] Lastly, it needs to be noted that in Part 3 of the Guarantee Agreement any Guarantor which is an incorporated Company represents and warrants to the lender that it has obtained the necessary or appropriate authorizations for it to enter into, execute and perform the Guarantee Agreement and that it has notified the Lender of any qualification or limitations affecting those authorizations.The Shareholders Resolution[25] A Shareholders Resolution was made because the Guarantee brought into play the Companies Act 1993 requirements relating to transactions in which directors have interests (ss 139 and 107) and major transactions (s 129). [26] Mr Anderson – being a director of the respondent company, the lender and other party to the transaction – was interested in the transaction pursuant to s 139 of the Companies Act 1993. Therefore, s 140 would normally require Mr Anderson to disclose this interest to the board of the applicant company and to enter it into the company's interest register. Under s 141, the transaction may be avoided "at any time before the expiration of 3 months after the transaction is disclosed to all the shareholders" unless the company received fair value. However, the effect of s 107(3) is that ss 140 and 141 do not apply if all the shareholders agree to or concur in a company entering into a transaction in which a director is interested. It is also relevant to note that even if s 140 does apply, a director's failure to comply with the disclosure requirements does not affect the validity of the transaction: s 140(3).[27] Section 129 provides that a company must not enter into a major transaction unless the transaction is approved by special resolution (ie. 75% of all shareholders). However, failure to comply with s 129 will not invalidate a transaction unless the other party was aware, or ought to have been aware, of the irregularity by virtue of that party's position with, or relationship to, the company (s 18(1)). [28] The Shareholders Resolution notes that executing the guarantee was a major transaction and that one or more of the directors was interested in the transaction. It states (at (e)):"The shareholders agree to the Company entering into the transactions set out in the Directors Resolution notwithstanding that the transactions may not be in the best interests of the Company or provide a direct corporate benefit to the Company."[29] The "Directors Resolution" referred to was a draft resolution, which was never signed. It was stated to be in relation to:"an all obligations guaranteein favour of White Heron Motor Lodge Limitedin respect of all obligations of Policy Factoring Limitedto the Lender including all obligations pursuant to the Term Loan Agreement providing for a facility of $1,000,000(clause 1)." [30] The Directors Resolution resolved that the applicant company execute the Loan Agreement as guarantor; that the applicant execute all other supporting documentation to implement the Guarantee Agreement; and that:"all documentation to be executed by the Company be executed by any two Directors of the Company."Execution of the key documents[31] The Loan Agreement, Guarantee Agreement and Shareholders Resolution are all dated as being executed on 10 November 2006. [32] The Loan Agreement document provided one large space for the signatures of the guarantors, as compared to individual spaces for each guarantor in theGuarantee Agreement. Mr Elvidge, Ms Elvidge and Ms Gifford signed the Loan Agreement once (with no notation as to the capacity in which they signed). This was despite each being a party in multiple capacities – as a guarantor personally and as a trustee. Mr Elvidge was also a guarantor in a third capacity, as a Director of the applicant company. Mr Anderson did not sign as a director of the applicant company. [33] With respect to the Guarantee Agreement, Mr Pedlar originally signed on behalf of Mr and Ms Elvidge (as their attorney), in both Ms Elvidge's capacities (personally and as trustee) and in all three of Mr Elvidge's capacities (personally, as trustee and as a director of the applicant company). However, all these signatures were later crossed out and Mr and Ms Elvidge both signed the document in two spaces (as guarantor personally and as a trustee). But Mr Elvidge did not sign in the space provided for the signature of the applicant's directors. Mr Elvidge explained this as being an "oversight" and said that he did in fact at the time assent to the applicant company providing the guarantee (Affidavit of Mr R Elvidge dated 29 January 2008 at [8]). Mr Anderson's signature does appear in the space for the applicant company's directors and it is witnessed. [34] All of the shareholders signed the Shareholders Resolution except that Mr Pedlar signed as attorney for Mr and Ms Elvidge, in relation to both their personal and trustee shareholdings. [35] In summary, therefore, the shareholders and directors of the applicant company signed the Loan Agreement, Guarantee Agreement and Shareholders Resolution as follows:Name Capacity Shareholders Resolution Loan Agreement Guarantee AgreementMr Twist Shareholder: Trustee of Anderson Family Trust * Yes n/a n/a Mr Willis Shareholder: Trustee of Anderson Family Trust * Yes n/a n/aMr Gifford Shareholder: Trustee of Gifford Family Trust Yes Yes Yes Ms Gifford Shareholder: Trustee of Gifford Family Trust Yes Yes # Yes Mr Padman Shareholder: Trustee of Gifford Family Trust Yes Yes Yes Mr Elvidge Shareholder: Trustee of R and EA Elvidge Re- Settlement Trust By Mr Pedlar as his attorney Yes # Yes Ms Elvidge Shareholder: Trustee of R and EA Elvidge Re- Settlement Trust By Mr Pedlar as her attorney Yes # Yes Mr Pedlar Shareholder: Trustee of R and EA Elvidge Re- Settlement Trust Yes Yes Yes Mr Fitzsimmons Shareholder Yes Yes Yes Mr Gifford Shareholder Yes Yes Yes Ms Gifford Shareholder Yes Yes # Yes Ms Elvidge Shareholder By Mr Pedlar as her attorney Yes # Yes Mr Elvidge Shareholder By Mr Pedlar as his attorney Yes # Yes Mr Anderson Shareholder * Yes n/a n/a Mr Elvidge Director Pioneer n/a Yes # Mr Anderson Director Pioneer n/a Yes * Not guarantors # One signature only, no notation as to capacity.Subsequent events[36] On 14 November 2006, four days after these documents were executed, the respondents advanced $1 million to PFL. [37] In June 2007, the parties discovered that Mr Fitzsimmons (who was also the applicant company's General Manager) had stolen $3.4 million from the applicant's business. The New Zealand Association of Credit Unions ("NZACU") offered the applicant company a rescue package, and this was accepted. NZACU's nomineecompany, C U Securities Limited, acquired all of the shares in the applicant company and replaced the two directors. [38] NZACU put PFL into receivership on 2 November 2007. Subsequently, PFL failed to repay the loan to the respondent company under the Loan Agreement and on 20 November 2007 the respondent made demand on the applicant under the guarantee. The applicant disputed liability under the guarantee and refused to satisfy the demand. [39] This led the respondent to issue its statutory demand, which claims:"payment of the sum of $1,000,399.38 together with interest @ $684.83 per day from 20 November 2007 until the date of payment being the principal sum of $1,000,000.00 guaranteed pursuant to the Guarantee dated 10 November 2006 guaranteeing the obligations of Policy Factoring Limited (in receivership) pursuant to the Term Loan Agreement dated 10 November 2006 together with costs and penalty interest at the rate of 25% per annum".Counsels' Arguments and My Decision[40] Pursuant to s 290(4)(a) of the Companies Act, the Court may grant an application to set aside a statutory demand if it is satisfied that there is a substantial dispute as to whether or not the debt is owing or is due. Whether there is a "substantial dispute" is a question of fact to be determined in light of all the relevant circumstances: see Brookers' Company and Securities Law - Commentary at CA290.03(3). [41] "The onus is on the applicant to show a fairly arguable basis upon which it is not liable for the amount claimed" (per Master Venning in Eastgate Real Estate Ltd v Walker (2001) 15 PRNZ 308 at [30]; Queen City Residential Limited v Patterson Co-Partners Architect Limited (No 2) (1995) 7 NZCLC 260 at 936). The test is akin to that which applies when a party seeks to resist an application for summary judgment: Queen City Residential Limited v Patterson Co-Partners Architect Limited (No 2); United Homes (1988) Ltd v Workman [2001] 3 NZLR 447 (CA) at [34].[42] In other words, the onus is on the applicant to show that there is a genuine and substantial dispute as to the existence of the debt, and further that it would be unfair to allow that dispute to be resolved through the liquidation provisions of theCompanies Act 1993 rather than by actions in the usual way – Taxi Trucks Limited v Nicholson [1989] 2 NZLR 297 and Pink Pages Publications Limited v Team Communications Limited (1986) 3 NZCLC 99, 764. [43] The applicant company argues that it is not liable to guarantee the loan to PFL because the Guarantee Agreement was not properly executed. The applicant submits that the Guarantee Agreement was a deed and so s 180(1)(a) of theCompanies Act 1993 applies to require that it be executed by two directors. The applicant says that this did not occur. [44] In the alternative – if the Guarantee Agreement is not a deed and s 180(1)(b) applies – the applicant says that Mr Anderson, acting alone, did not have either express or implied authority to execute the Guarantee Agreement. According to the applicant, there was no express authority because the Shareholders Resolution was not properly executed. Moreover, the applicant submits that the attempt in the Shareholders Resolution to provide authority for two directors to execute the Guarantee Agreement precludes implying authority for Mr Anderson to execute the guarantee alone. [45] The applicant says that the flaws are not merely about form, or an accidental slip. It submits that the improperly executed documents provide the evidential basis for a substantial dispute as to whether the debt is owing. [46] Lastly, the applicant says that this is not a case where an innocent lender would be prejudiced by a failure of form. Instead, the applicant stresses, the lender and purported guarantor (the applicant) have (or more accurately, had) a common director and shareholder, Mr Anderson. Thus, the applicant says that the respondent company cannot rely on s 18(1)(a) of the Companies Act to prevent the applicant asserting the breach of s 180(1)(a) or lack of authority against them. [47] Conversely, the respondent does not agree that the Guarantee Agreement is a deed and says that s 180(1)(a) does not apply. Nor does the respondent accept that Mr Anderson lacked authority to execute the Guarantee Agreement. The respondentsays that it is clear that all of the shareholders assented to the guarantee transaction and that the Shareholders Resolution does not limit the directors' authority.Method of contracting – s 180(1) of the Companies Act[48] Section 180(1) of the Companies Act establishes the form in which companies may enter into contracts or obligations. It provides:"180 Method of Contracting(1) A contract or other enforceable obligation may be entered into by a company as follows: (a) An obligation which, if entered into by a natural person, would, by law, be required to be by deed, may be entered into on behalf of the company in writing signed under the name of the company by — (i) 2 or more directors of the company; or (ii) If there is only one director, by that director whose signature must be witnessed; or (iii) If the constitution of the company so provides, a director, or other person or class of persons whose signature or signatures must be witnessed; or (iv) 1 or more attorneys appointed by the company in accordance with section 181 of this Act: (b) An obligation which, if entered into by a natural person, is, by law, required to be in writing, may be entered into on behalf of the company in writing by a person acting under the company's express or implied authority: (c) An obligation which, if entered into by a natural person, is not, by law, required to be in writing, may be entered into on behalf of the company in writing or orally by a person acting under the company's express or implied authority".[49] The applicant argues that the Guarantee Agreement was in deed form, and therefore s 180(1)(a) applied to require the signatures of both directors. Theapplicant cites Carline v Wallwork HC AK AP 154-SW00 13 March 2001 in support of the proposition that, where there are two directors (and s 180(1)(a)(iii) and (iv) do not apply), both directors must execute a deed for it to be enforceable. The applicant also refers to Professor Watts' statement in Morrison Companies & Securities LawVol 2 at para 25.5 that:"Section 180(1)(a) is, by its terms, limited to the case where the law requires a deed, but it would be anomalous if the same provision did not apply to all deeds executed by companies."[50] The respondent counters that neither the Loan Agreement nor the Guarantee Agreement were in deed form, nor did they need to be. It says that the Guarantee Agreement was supported by consideration – namely, the respondent's present and future provision of financial services and accommodation to PFL and its forbearance to demand and sue for the payment of any existing indebtedness of PFL to the respondent – as recorded in Recital B. As such, the respondent says that s 180(1)(b) applies and the execution of the Guarantee Agreement by one director (Mr Anderson) was sufficient to bind the applicant to that agreement, provided Mr Anderson was authorised by the applicant to do so. [51] I note that Carline v Wallwork was concerned with a deed of lease and so there was no possibility of the document being binding as a simple contract. Similarly, Professor Watts does not address the possibility that, where a deed is not required, the document might be valid as a simple contract rendering s 180(1)(a) irrelevant. This is distinguishable from, for example, Fletcher Steel Ltd v Trigg[2003] DCR 81(at [35] to [36]) where Judge Barber held that the guarantee there was a deed but went on to say that there was valid consideration for the guarantee and so it would have been legally binding even had it not been. [52] As a matter of general law, there is no general requirement that guarantees be in the form of a deed; they are only required to be in writing: s 2 of the Contracts Enforcement Act 1956 (see also s 27(2)(a) of the Property Law Act 2007). The question is therefore whether the Guarantee Agreement is enforceable as a contract, irrespective of whether it would constitute a deed.[53] It is well established that a lender's agreement to supply further goods to the debtor and forbearance to sue can constitute valid consideration to render a guarantee contract legally binding: see, for example, Fletcher Steel Ltd v Trigg at [35] to [36]. I am therefore satisfied that there is proper consideration such that the Guarantee Agreement is capable of being binding as a contract. [54] Therefore, I find that s 180(1)(b) applies to the Guarantee Agreement and that it could be executed in writing on the applicant's behalf by a person acting under the applicant's express or implied authority. (I also note, for the sake of completeness, that in any event s 180(1)(c) would apply to the separate indemnity in Part 5 of the Guarantee Agreement, as a contract not required to be in writing, (see Burrows, Finn & Todd, Law of Contract in New Zealand (3.ed 2007) at para 9.3.1) such that it could be entered into on behalf of the applicant in writing or orally by a person acting under the applicant's express or implied authority.)Authority to execute the Guarantee Agreement[55] If, as I have found, s 180(1)(b) applies, the applicant goes on to argue that the authority of the applicant's directors was restricted for the purposes of executing the Guarantee Agreement such that they could only bind the company to the transaction by acting together. [56] First, the applicant says that the Shareholders Resolution was not properly executed and that Mr Anderson thus lacked any express authority to execute the guarantee. [57] The applicant says that the Shareholders Resolution was not signed by all of the shareholders – namely, that Mr and Mrs Elvidge did not sign it. Instead, the applicant points out that Mr Pedlar signed the Shareholders Resolution as their attorney (both with respect to their personal shareholdings and those they held on trust). The applicant says that this power of attorney has not been produced in evidence. Moreover, the applicant says that the proviso to s 31 of the Trustee Act 1956 precludes a person who is the only other co-trustee, from being appointed an attorney for a trustee.[58] Therefore, the Shareholders Resolution being ineffective, the applicant says that the Directors Resolution – which, in any event, was never signed – was likewise ineffective. [59] Secondly, the applicant says that Mr Anderson, acting alone, did not have implied authority to execute the guarantee either. It is said that this is precluded by the existence of the express agreement, or attempted express agreement, that the applicant company would only be bound if two directors executed the documents. [60] In response, the respondent says that there can be no doubt that the directors were authorised to enter into the guarantee – that both directors and all of the shareholders agreed to the transaction. The respondent says that the directors were therefore acting with actual authority. [61] The respondent refutes the suggestion that the reference in the Shareholders Resolution to the Directors Resolution was meant to limit or qualify the shareholders' approval of the company entering into the guarantee. It submits that the approval was not made conditional upon the signature of two directors. The respondent contends that the reference to "any two Directors" in the Directors Resolution appears to be the result of using a standard form precedent. It says that the shareholders and directors cannot have paid any attention to this clause because it does not make sense in the applicant company's situation, it only having two directors. [62] It is true that no evidence was adduced with respect to Mr Pedlar's power of attorney. There is also some question whether the proviso to s 31 of the Trustee Act applies. It provides that "a person being the only other co-trustee shall not be appointed to be an attorney" of a trustee (my emphasis). Here, there were three trustees, but it could be said that two trustees appointed the only other co-trustee as attorney. On the other hand, I note that s 31(6) provides that any instrument executed by the attorney shall be valid and effectual, notwithstanding that the power never came into operation, unless the person dealing with the attorney had at that time actual notice that the power had never come into operation. In any event, I find it unnecessary to decide these points.[63] I find that, irrespective of whether the Shareholders Resolution was properly executed, it is abundantly clear that Mr Anderson had actual authority from all of the shareholders to enter into the Guarantee Agreement. As the table above shows, every person interested in the applicant company signed at least one of the documents establishing the applicant's liability to guarantee the loan to PFL. [64] Moreover, for the sake of completeness, I am satisfied that the Companies Act 1993 requirements with respect to major transactions and interested directors were met. I note that, even if not properly executed by Mr and Ms Elvidge, the Shareholders Resolution was nevertheless approved by shareholders holding more than 75% of the shares in the company (per s 129). Mr and Mrs Elvidge (personally and through the trust) owned less than 5% of the shares (280,000 of 6,500,000). In addition, I am satisfied that, even if all of the shareholders did not formally execute the agreement, they did all "concur" in the company entering into the transaction in terms of the s 107 requirement. [65] Nor do I consider that the reference to "the transactions set out in the Directors Resolution" imposed any qualifications on the shareholders' approval of the transaction. No condition was expressed and I do not find it reasonable to imply one by virtue of the clause in the draft Directors Resolution. [66] As such, I find that Mr Anderson had actual authority to execute the Guarantee Agreement on behalf of the applicant company. [67] This is not a case where a rogue director or agent of a company has acted without actual authority and it becomes necessary to consider whether the company nevertheless is bound by the indoor management rule (now codified as a statutory estoppel in s18 of the Companies Act 1993). Here, in my view, there is no doubt that all shareholders approved the transaction. [68] I therefore find it unnecessary to consider the further point as to whether Mr Elvidge signed the Guarantee Agreement in a dual capacity – ie. as a director of the applicant as well as in his personal and trustee capacities – pursuant to authorities such as Chiswick Investments v Pevats [1990] 1 NZLR 169 and Trotter v Avonmore Holdings Ltd (2005) 8 NZBLC 101,646.The Respondent Company's Knowledge[69] Given my findings under the first two issues, it is not necessary to consider the extent of the respondent's knowledge of any breach of the Companies Act 1993or lack of authority.Indemnity and Loan Agreement[70] In addition, I find that, the Guarantee Agreement having been properly executed, the applicant company is also liable under the separate indemnity in Part 5 which is enforceable as a contract. [71] Lastly, I find that the applicant company is also liable to guarantee the loan made to PFL as both a guarantor and principal debtor under the Loan Agreement. [72] I agree with the respondent that there was ample consideration in the Loan Agreement and that it is in a standard form, widely used, which is plainly enforceable as a contract. [73] I am satisfied that Mr Elvidge had actual authority to, and did in fact, execute the Loan Agreement on the applicant's behalf.Conclusion[74] The applicant does not deny that the money was advanced to PFL under the loan and paid to the applicant company and that the applicant received a benefit in return for granting the guarantee. Nor does it deny effectively that the applicant intended at the time to be bound by the guarantee. Rather, it has endeavoured to argue that the documents recording the guarantee were "improperly executed" because they were not signed by both directors of the applicant and, accordingly, there is a substantial dispute as to whether the debt is owing. I reject these contentions. [75] I find that the Guarantee Agreement was sufficiently executed to bind the applicant company and the applicant cannot deny liability for the guaranteed sum. I therefore decline to set aside the respondent's statutory demand.[76] With respect to costs, the respondent has been successful and in my view is entitled to costs in the normal way. Costs are therefore awarded on this application on a Category 2B basis together with disbursements as fixed by the Registrar.'Associate Judge D.I. Gendall'