A national champion basketballer has challenged the validity of a personal guarantee signed by his co-player attorney because it omitted any reference to the power of attorney instrument under which the signer was authorised to act.
Basketball legend and Sydney Kings coach, Shane Heal held a general power of attorney executed in Western Australia to conduct transactions on behalf of fellow “Boomer”, Matt Nielsen.
Heal signed the personal guarantee to Capital Finance for the three guarantors: himself, Nielsen and their holding company. He did so adjacent to the three execution blocks, each naming the separate guarantors.
The transaction concerns a chattel lease debt for plant and equipment at the Victoria Point Café in Queensland.
While Heal’s appointment was in general terms – “to do anything on Nielsen’s behalf that Nielsen could lawfully do by an attorney” – and he was authorised to conduct business for his colleague, Nielsen – the younger of the two champions – claimed no knowledge of the transaction and did not authorise the signing of the particular document.
He disputed the guarantee was binding upon him because of non-compliance with s 69 (2) of the Powers of Attorney Act (Qld) that specifies:-
an instrument executed by an attorney must be executed in a way showing that the attorney executes it as attorney for the principal.
The Brisbane District Court agreed: Capital could not rely on s 69 to establish valid execution of the document by the attorney.
Capital then launched a second charge, asserting that by signing next to Nielsen’s name, Heal left no doubt of his intention such that the guarantor was therefore bound under the common law rules of “agency”.
The court concluded that the context demanded an inference of an intention by Heal, within the scope of his agency, to create a contract between Nielsen and Capital.
The signature was held to be sufficiently binding at common law regardless of the Powers of Attorney Act non-compliance: “the function of s69 (2), is to set the precondition to statutory validity of the execution, not to invalidate a signature by an attorney that does not comply with that pre-condition”, the court said.
Judgment was entered in favour of Capital Finance.