A-Nanta v Deewised - [2018] WADC 154

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   A-NANTA -v- DEEWISED [2018] WADC 154
CORAM:   LONSDALE DCJ
HEARD:   26 SEPTEMBER 2018
DELIVERED          :   14 NOVEMBER 2018
FILE NO/S:   CIV 3929 of 2017
BETWEEN:   NATATORN A-NANTA
First-named First Plaintiff
KAO SAN PTY LTD
Second-named First Plaintiff
PARADEE PARNPRADITKUL
Second Plaintiff
SATIT PARNPRADITKUL
Third Plaintiff
AND
KANITSAJEE DEEWISED
First-named Defendant
ANUTRA TADSANAPRASITTIPOL
Second-named Defendant
HATHAIKARN SIRIPHRAIWAN
Third-named Defendant

Catchwords:

Application for summary judgment by defendant - Failure to identify correct parties - Whether adequate foundation to strike out a writ

Legislation:

Corporations Act 2001 (Cth), s 127
Rules of the Supreme Court 1971, O 16 r 1

Result:

Appeal allowed

Representation:

Counsel:

First-named First Plaintiff	:	Mr G E Metaxas
Second-named First Plaintiff	:	Mr G Metaxas
Second Plaintiff	:	Mr G E Metaxas
Third Plaintiff	:	Mr G E Metaxas
First-named Defendant	:	Mr M J Keating
Second-named Defendant	:	Mr M J Keating
Third-named Defendant	:	Mr M J Keating

Solicitors:

First-named First Plaintiff	:	Metaxas Legal
Second-named First Plaintiff	:	Metaxas Legal
Second Plaintiff	:	Metaxas Legal
Third Plaintiff	:	Metaxas Legal
First-named Defendant	:	Valenti Lawyers
Second-named Defendant	:	Valenti Lawyers
Third-named Defendant	:	Valenti Lawyers

Case(s) referred to in decision(s):

Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429; (2009) 77 NSWLR 299
Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
Anderson v Effexseven (1998) 10 ANZ Ins Cas 61–424
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2015] NSWSC 354
Kao San Pty Ltd v Kanitsajee Deewised [2018] WADC 42
Knights Capital Group Ltd v Bajada and Associates Pty Ltd [2016] WASC 69
Lederberger (as executors of the deceased estate of Lederberger) v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509
Palaniappan v Westpac Banking Corporation [2016] WASCA 72
Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154
SAS Global Forrestdale 2 Ltd v Claycorp Investments Pty Ltd (as Trustee for Claycorp Investment Trust) [2010] WASC 114
Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79
Tomko v Palasty [2007] NSWCA 258

LONSDALE DCJ:

Introduction

On 27 October 2017 the plaintiffs commenced an action against the defendants for breach of an agreement for the sale of a restaurant business trading under the name 'Kao San Café'. The statement of claim endorsed on the writ asserted that the defendants breached the agreement by failing to pay an instalment of $40,000 towards the purchase price.
On 17 November 2017 the defendants filed a chamber summons seeking summary judgment pursuant to O 16 r 1 of the Rules of the Supreme Court 1971 (WA) which reads:
(1)Any defendant to an action may within 21 days after appearance or at any later time by leave of the Court, apply to the Court for summary judgment, and the Court, if satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily or without pleadings, may order —
(a)that judgment be entered for the defendant with or without costs; or
(b)that the plaintiff shall proceed to trial without pleadings,
or if all parties consent, may dispose of the action finally and without appeal in a summary manner.
The matter came on for hearing before Deputy Registrar Hewitt on 16 March 2018. On 10 April 2018, his Honour struck out the writ, thereby giving summary judgment for the defendants. The plaintiffs have appealed that order. For ease of understanding, I will refer to the appellants as the plaintiffs and the respondents as the defendants.

Outline of action

A summary of the outline of the action is conveniently set out by the learned registrar at [2] of his decision[1] which reads as follows:
2The statement of claim alleges that each of the plaintiffs were directors of the second plaintiff and the second plaintiff carried on business as a café and restaurant at shop 13, Shafto Lane in Perth, trading as Kao San Café, premises leased from the owner Ranchwood Holdings Pty Ltd. A contract purporting to sell the business as a going concern was the subject of a written agreement dated 7 April 2016. That agreement was executed by the first plaintiffs who in the agreement were described as the seller and there was no mention in the agreement of the second plaintiff, namely Kao San Pty Ltd which was the owner of the business which the agreement purported to sell. The action by the first plaintiffs is pursued on the basis that correctly understood the contract required them to procure the transfer of the business to the defendants and as such were entitled to enter a contract in the terms which I have described and to enforce that contract.
[1] Kao San Pty Ltd v Kanitsajee Deewised [2018] WADC 42.
In arriving at a conclusion that the writ be struck out, the learned registrar found that there was a cause of action but that the parties had not been correctly identified. His Honour's reasons were as follows:
2.The immediate difficulty which I perceive is that the damages which have been sought by the first plaintiffs arise from the breach of the agreement by way of the failure to pay the agreed purchase price, interest payable on that price in the event of default and costs and losses arising upon determination of the agreement and the resale of the business to another purchaser all of which would be losses of the second plaintiff.
3.At par 3.7 and 3.8 of the statement of claim there is a reference to the general conditions for the sale in which the first plaintiffs' warranted that they were the sole legal owner and beneficial owners of the business and its assets and had full right title and interest in the business and its assets and those assets were free from security or third party interest. The plaintiffs seek to rectify those conditions on the basis that they were not provided with a copy of the general conditions and signed the document in ignorance of the existence of those terms. It is to be noted that the document was prepared by an agent engaged by the first plaintiffs to handle the sale of the business.
4.Notwithstanding that the second plaintiff, the owner of the business, is named as a party, there is nonetheless no pleading that gives it any entitlement to damages against the defendants. It is difficult therefore to understand why the second plaintiff is a party to the action. The situation appears to me to be that the first plaintiffs regarded the business as their own without any regard to the fact that the business was in fact owned by a separate legal entity, namely Kao San Café Pty Ltd.
5.If those complications were not enough, there are complications on the defendants' side as well. To start with, the three defendants are named as follows:
6.Kanitsajee Deewised, Hathaikarn Siriphraiwan and Anutra Tadsanaprasittipol of Little Mamas Pty Ltd – 85 Sheffield Road, Wattle Grove, WA, 6107. The word 'of' is part of the printed form upon which this information was entered and there has been argument as to whether or not Little Mamas Pty Ltd – 85 Sheffield Road, Wattle Grove, WA, 6107 is intended to be the address of the three named defendants or whether Little Mamas Pty Ltd was intended to be a purchaser.
7.It is alleged by the defendants in the affidavit filed in support of the application that the intended purchaser of the business was the company Little Mamas Pty Ltd. Support is forthcoming for that proposition, apart from the sworn testimony of the deponent of the affidavit, appear in a document which is called Vendor Finance of Kao San Café – Restaurant which is dated 6 April which refers to the vendor as being Kao San Pty Ltd, the purchaser as being Little Mamas Pty Ltd and the proposed guarantors to that agreement being the three defendants to the action. That document has been executed by all of the natural persons to these agreements who comprise the full suite of directors of both companies. In the agreement they are so described. Additionally in an answering affidavit filed by the second named of the first plaintiffs and at par 10 of that affidavit, the deponent states as follows, referring to the agreement for sale:
The contract was prepared by the selling agent and for reasons I did not question the document named the defendants as the buyer and the first plaintiffs as the seller rather than Little Mamas Pty Ltd as buyer and the second plaintiff as seller. I am advised by my lawyer and verily believe the proper construction of the contract is that the first plaintiffs would cause the second plaintiff to transfer the business to the defendants or their nominees, namely Little Mamas Pty Ltd.
Essentially, the learned registrar accepted that there was an enforceable agreement but that the parties had not been correctly identified. His Honour held that to have been a sufficient basis to strike out the writ.

The issue on this appeal

The plaintiffs submit that it is at least arguable that the named parties were parties to an enforceable agreement for the sale of the business to the defendants. The plaintiffs assert that, on its proper construction, the agreement required the first plaintiffs to transfer the business (the title of which was held by the second plaintiff) to the three defendants or their nominee – namely Little Mamas Pty Ltd (LMPL).
The plaintiffs submit that, even if the proper parties have not been correctly identified, there is a serious question to be tried on the cause of action as presently pleaded. In those circumstances the plaintiffs submit that there was no basis for the striking out of the writ.
The defendants' position is that LMPL was the entity that entered into an agreement with the plaintiffs to purchase the business and not the three named defendants. Consequently, the defendants submit, they do not have any legal obligation to the plaintiffs in their personal capacities and the learned registrar was justified in striking out the writ.
The present dispute between the parties raises a question of the proper construction of the agreement and the identification of the parties to it. The question of how a written agreement should be construed was considered in Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79 [91] – [92] where Buss JA said:
The construction of a written agreement involves ascertaining what a reasonable person would have understood the parties to the agreement to mean. The rights and liabilities of the parties under a provision of the agreement are to be determined objectively. Consideration should ordinarily be given not only to the language of the agreement, but also to the apparent purpose and object of any transaction created by or evidenced in the agreement. (citations omitted)
The words of a clause in a written agreement are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the agreement with a view to achieving harmony among them. (citations omitted)
Buss JA made similar observations in Palaniappan v Westpac Banking Corporation [2016] WASCA 72 [92]:
It is necessary, in determining the meaning of the provisions of a commercial contract, to ask what a reasonable businessperson would have understood those provisions to mean. That inquiry will require consideration of the language of the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. See Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35] (French CJ, Hayne, Crennan & Kiefel JJ). (citations omitted)
A situation similar to that present in this case arose in SAS Global Forrestdale 2 Ltd v Claycorp Investments Pty Ltd (as Trustee for Claycorp Investment Trust) [2010] WASC 114. In that case the plaintiff argued that the defendant incorrectly identified a party to an agreement where the seller (under a contract for the sale of property) was not the party who possessed the title to the relevant lots. The plaintiff filed an application for summary judgment against the defendant on the grounds that there could be no cause of action against the named defendant. Beech J at [67] held that situation to have been 'an inadequate foundation for summary judgment on this point of construction'.
The question of how the correct parties are to be identified where there is ambiguity in the terms of a written agreement was considered in Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429; (2009) 77 NSWLR 299 [28]. In that case, Allsop P and Handley AJA in a joint judgment (Hodgson JA agreeing) said the following:
The identity of the contracting party is to be determined looking at the matter objectively, examining and construing any relevant documents in the factual matrix in which they were created and ascertaining between whom the parties objectively intended to contract. This is, to a point, a process of construction similar to the task of identifying whether a clearly contractual document (such as a bill of lading) is made with one party or another (such as a shipowner or time charterer): Homburg Houtimport BV v Agrosin Private (at 770) and the cases considered in M Wilford, T Coghlin and J D Kimball, Time Charters 5th ed (2003) London, Lloyds of London Press, Ch 21. Where the documents are silent or ambiguous, but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances (citations omitted).
In Lederberger (as executors of the deceased estate of Lederberger) v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509 at [19] the Victorian court of appeal said:
Identification of the parties to a contract must be in accordance with the objective theory of contract. That is the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had. The process of construction requires consideration of not only the text of the documents, but also the surrounding circumstances known to the parties and the purpose and object of the transaction. This, in turn, presupposes knowledge of the genesis of the transaction, the background, and the context in which the parties are operating.
In Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2015] NSWSC 354, the plaintiff sued the defendant for breach of contract. In that case, one issue for determination was whether the defendant (Karellas Investments Pty Ltd) or an entity known as Karellas Group was the proper party to the contract upon which the plaintiff sued.
The contract in question (which was a written lease agreement) referred to both Karellas Investments and Karellas Group but did not specifically name the party or use the words 'Propriety Limited'.
The plaintiff argued that the proper party to the contract was Karellas Investments or, in the alternative, Karellas Group.
In determining the question of whether Karellas Investments or Karellas Group was a party to the contract, the learned trial judge gave consideration to a number of documents, including a draft agreement (which made provision for Karellas Investments to be nominated as a party), a 'heads of agreement' document and a draft lease. The learned trial judge referred to the difficulty in identifying the correct party. At [102] ‑ [103] the learned trial judge said:
The difficulty between choosing Karellas Investments or Karellas Group, as the one contracting party, is that arguments of relatively equivalent strength can be made in favour of each possibility. As to Karellas Investments, that company was consistently proposed as being the ultimate tenant, and the actions that were taken to implement the heads of agreement were consistent with Karellas Investments being the party to the agreement. On the other hand, it is difficult to ignore the frequent use of the expression 'Karellas Group', and the fact that Karellas Group Pty Ltd is mentioned in the document.
With some hesitation I have concluded that the better view is that Karellas Investments was the Karellas party to the heads of agreement, assuming that it constituted a final and binding contract. It was that company which was identified in the draft documents that were circulated before the date of the heads of agreement. Karellas Investments, or its nominee, was identified as the proposed tenant. While it is by no means unknown to commerce that company A will enter into an agreement with company B to procure that company C will enter into a lease with company B of that company's property, it is an unusual arrangement. The court should not readily conclude that an arrangement of this nature was intended by the parties, in the absence of evidence of circumstances known to the parties that would establish the commercial rationale for one company being liable to procure another company to enter into a lease. There is no evidence of such circumstances in the present case. Although it may not invariably be the case, normally people in commerce would take it for granted that the company that intended to become the tenant, and operate the business from the demised premises, would be the company that entered into any agreement intended to lead to the lease being granted. That way the proposed tenant would have a contractual right to secure the desired lease. Expenses incurred in procuring the lease would be the deductible expenses of the tenant. I have also been influenced in favour of this conclusion, without this factor being in any way decisive, by the fact that, after the date of the heads of agreement, the parties proceeded in a way, as if it was taken for granted, that Karellas Investments had the right to participate in the settlement of all necessary documents. The reference to Karellas Group Pty Ltd in clause 18 of the heads of agreement, concerning the operation of the parking area, is not of great significance because, as I have observed above, there is no reason to think that Karellas intended that Karellas Investments would be the tenant, and Karellas Group would separately operate the car park. As to the frequent use of the expression 'Karellas Group', I have concluded that that was inconclusive, and simply reflected a lax approach by Karellas that ignored the importance of identifying individual companies for the purpose of the proper implementation of transactions.
It is apparent from the various authorities I have referred to that many factors may be relevant to the identification of the correct parties to an agreement where the terms of the written agreement are ambiguous. Such factors include the terms of the documents, the intention of the parties, the commercial rationale for the agreement, the conduct of the parties, the use of the different names for associated entities and the parties named in the heads of agreement.
Such questions require the making of findings of fact which require the calling of evidence. In my view, provided there is a serious question to be tried, the determination of factual issues (such as which parties may have obligations under a written agreement) are best left to the trial judge to determine after the hearing of evidence.
In my view, for the following reasons advanced by the plaintiffs, it is at least arguable that the agreement the subject of these proceedings correctly identifies the plaintiffs and the defendants as the proper parties to the agreement.

Firstly, in the written agreement the term 'seller' is defined to mean 'the party named and described as the 'seller' in the agreement'.[2] The seller is then collectively described as 'Kao San Café/Restaurant Director Paradee Parnpraditkul, Natatorn A‑Nanta, Satit Parnpraditkul' (the three plaintiffs).[3]
[2] Page 2 of the general conditions of sale; page 88 of the affidavit of the defendants dated 19 January 2018.
[3] Page 3 of the general conditions of sale; page 89 of the affidavits of the defendants dated 19 January 2018.
Secondly, the three named defendants (and not LMPL) are named collectively as 'the buyer'. The only reference to LMPL in the agreement appears on the first page of the agreement.[4]
[4] Paragraph 100 of the agreement.
Thirdly, although the use of the singular 'buyer' may support an interpretation that there was intended to be only one buyer, namely LMPL (being the entity of which they are each directors), it is at least arguable that there was more than one buyer ie: the three defendants.
Irrespective of which entity owned the business, or to which entity it was intended the business be transferred, is at least arguable in my view that the agreement is between the plaintiffs and the defendants. This is because the first plaintiffs are each directors of the second plaintiff and arguably have the authority to effect the transfer from the second plaintiff to the entity LPML of which the three defendants are directors.
Fourthly, on 23 July 2016 the second defendant sent an email to both the selling agent and the second named plaintiff on behalf of himself and the other defendants in which he referred to the three defendants as 'we, the buyer'. In my view, it is at least arguable that the reference to 'we' is a reference to each of the three named defendants and constitutes an acknowledgment that they were, collectively, the buyer.
Fifthly, each of the three named defendants executed the agreement by signing in their own names.
In Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168 [49], Edelman J said as follows:
In contrast, the presence of a signature is a relevant circumstance in ascertaining whether there is an objective or manifest intention to be legally bound. The act of signing is a formal act 'which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents'.
I regard the fact that the defendants signed the contract in their own names as tending to indicate an acknowledgement that they were bound by the contract in their personal capacities (although the failure to use the company seal is not necessarily determinative of that issue).[5]
[5] s 127 Corporations Act 2001 (Cth).
Sixthly, evidence of post‑contractual conduct may be admissible on the question of whether a contract is formed and that may extend to the question of whether it was formed between particular parties. See: Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 [2]; (Basten JA); [59] (Campbell JA & Beazley JA agreeing) [59] following Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, 163 – 164. Further, subsequent communications may amount to admissions as to whether a particular person was a party to a contract: Tomko v Palasty [2007] NSWCA 258 [63] – [68] (Einstein J, Mason P agreeing).
The conduct of the defendants following the execution of the agreement arguably demonstrates an acknowledgement that they intended to be bound by the agreement. In this regard, it is significant that on 14 April 2016, the defendants (and not the entity LPML) arranged for $10,000 to be transferred to the selling agent's trust account.[6]
[6] Pages 6 and 7 of the affidavit of Gregory Emerson Metaxas sworn 6 July 2018.

The defendants' contentions

The defendants submit that the terms of the agreement are not impugned by the conduct of the defendants and nor does the act of signing in their own names because the agreement clearly identifies the entities that are to be bound by the agreement. They refer to the fact that, on the same date as the agreement for the sale of the business was signed, the parties executed a vendor finance agreement which named Kao San Pty Ltd as the vendor and LMPL as the purchaser.
The vendor finance agreement was described by counsel for the defendants at the hearing of this appeal as 'the balance of the agreement'. In that document, each of the defendants is named as a 'guarantor' and the agreement is signed by the first and second plaintiffs and the three defendants. The defendants submit that the signature of the defendants which states 'SIGNED for and on behalf of the buyer/seller' (emphasis added) only supports a conclusion that the defendants had signed on behalf of the entity LMPL and not in their personal capacities.
The defendants submit that the use of the word 'of' in this context is merely a reference to the fact that the defendants are directors of LPML and that the agreement read as a whole lends itself to only one interpretation – namely that the correct parties to the agreement are the second plaintiff (Kao San Pty Ltd) and the entity LPML.
In an application to strike out a writ, the legal onus is on the defendant to show that there is not a serious question to be tried: Anderson v Effexseven (1998) 10 ANZ Ins Cas 61–424 at 74, 756, 74, 757 and Knights Capital Group Ltd v Bajada and Associates Pty Ltd [2016] WASC 69 [42].

Conclusion

For the reasons I have given above, it is at least arguable in my view that the first plaintiffs and each of the named defendants were parties to an agreement, the proper construction of which would compel the first plaintiffs to transfer the business in question to the defendants or their nominee, namely, LMPL.
I do not accept the defendants' submission that the disputed provisions should be construed contra proferentem due to the injustice that would result to the defendants. It is difficult to see what injustice would arise for the defendants as, on any view of the matter, they were each actively involved in the negotiation of the agreement and in the signing of the various documents relating to it.
I have not formed a concluded view as to who the correct parties should be. At this stage that is not a question which I am required to answer. The defendants may ultimately prove to be correct. However, for the reasons I have given, I am of the view that there is a serious question to be tried on the statement of claim as it presently stands. In in this regard, I find that the learned registrar erred.
To borrow the language of Beech J in SAS Global Forrestdale, the fact that it is arguable that the parties have not been correctly identified 'is an inadequate foundation for summary judgment on this point of construction'.
In the circumstances, I would uphold the appeal against the order of Deputy Registrar Hewitt on 10 April 2018.

Orders

1.The appeal be allowed.
2.The order made by Deputy Registrar Hewitt on 10 April 2018 be set aside.
3.Costs of the application dated 17 November 2017 be in the cause.
4.Cost of this appeal be in the cause

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
IG
ASSOCIATE TO JUDGE LONSDALE
14 NOVEMBER 2018