APN Funds Management Ltd v Australian Property Investments Strategic Pty Ltd

[2011] VSC 555

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2011 06778

APN FUNDS MANAGEMENT LTD	Plaintiff
v
AUSTRALIAN PROPERTY INVESTMENTS STRATEGIC PTY LTD	Defendant

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JUDGE:	BELL J
WHERE HELD:	Melbourne
DATE OF HEARING:	28 October 2011
DATE OF JUDGMENT:	28 October 2011
CASE MAY BE CITED AS:	APN Funds Management Ltd v Australian Property Investments Strategic Pty Ltd
MEDIUM NEUTRAL CITATION:	[2011] VSC 555

APPEAL – plaintiff’s application for summary judgement against defendant – refused by associate judge – hearing de novo –  proper interpretation of provisions of unit subscription and put option deed – whether defendant’s defence had no real prospects of success – provisions of deed prescribed a put option procedure - plaintiff called on defendant to buy units in trust – call received by defendant before date of deemed service in deed – according to the procedure, plaintiff sought settlement on basis of deemed service date – whether that date applied when date of actual receipt was earlier – provisions of deed silent on this question – whether or not defendant’s interpretation was fanciful – Civil Procedure Act 2010, s 61, Supreme Court (General Civil Procedure) Rules 2006, r 77.06(1)

APPEARANCES:	Counsel	Solicitors
For the plaintiff	Mr S Senathirajah	Hall & Wilcox Lawyers
For the defendant	Mr H Stowe	Shanahan Tudhope Lawyers

HIS HONOUR:

1. The parties entered into a unit subscription and put option deed dated 2 April 2009.  By a prescribed procedure, the deed allowed the plaintiff to call on the defendant to purchase units in a trust.  The plaintiff contends that it validly exercised its right to put that call but the defendant failed to settle the purchase and pay the sum of $4,698,808 which was due.  It issued proceedings in this court for that sum and then sought summary judgment against the defendant.

1. The plaintiff’s application for summary judgment was refused by Randall AsJ.[1] The plaintiff now appeals from that judgment under r 77.06(1) of the Supreme Court (General Civil Procedure) Rules 2005. Under r 77.06(7), the appeal is to be conducted by way of a hearing de novo. 

   [1]APN Funds Management Ltd v Australian Property Investments Strategic Pty Ltd [2011] VSC 515.

1. The judgment of the associate judge contains a full account of the relevant provisions of the deed and the undisputed facts.  I adopt with gratitude that account. 

1. Under s 61 of the Civil Procedure Act 2010, in a plaintiff’s application for summary judgment the question is whether the defendant’s defence has no real prospects of success.  As was held by J Forrest J in Matthews v SPI Electricity (Ruling No 2)[2] and by Dixon J in Ottedin Investments v Portbury Developments,[3] the defendant will have no real prospects of success if those prospects are no more than fanciful.

   [2][2011] VSC 168 [22].

   [3][2011] VSC 222 [18].

1. The plaintiff submits this is a straightforward case of the enforcement of the clear provisions of a deed.  If that were correct, there should be summary judgment for the plaintiff.  But it is not.  The terms of the deed leave open to a barely but sufficient extent what legal consequences are to follow from the events which happened.

1. Those events are not in dispute.  The plaintiff posted its notice of exercise dated 18 October 2010 to the defendant by pre-paid post on that day.  It was actually delivered to the defendant on the next day.

1. Relying on the deemed service provision in cl 16.1(b) of the deed, the plaintiff attended at the defendant’s premises on 5 November 2010 for settlement of the purchase of the units.  By that provision, service was deemed to have occurred on 21 October 2010, being three business days after 18 October 2010.  The definition of ‘completion date for exercise’ in cl 1.1 specified a settlement date of 10 days later, being 5 November 2010.

1. However, the notice of exercise was actually received by the defendant on 19 October 2010.  The provisions of the deed do not expressly deal with what is to happen when the date of actual receipt of the notice of exercise is before the date of deemed service.  The parties are in dispute about the proper interpretation and application of the provisions of the deed in that eventuality.  On the argument of the plaintiff, which I consider to be relatively strong but not invincible, the deemed service provision applies in all cases whatsoever, whether or when the notice of exercise was actually served.  On the argument of the defendant, which I consider to be relatively weak but not fanciful, the deemed service provision does not apply where the date of actual receipt was earlier than the date of deemed service.

1. The submissions of the parties, and especially the defendant, ranged widely over the provisions of the deed and the factual circumstances of the case.  Given the silence of the provisions of the deed on the key question, the plaintiff sought to make too light of what I think is not a fanciful interpretation of the deed as put by the defendant.  The defendant sought to strengthen its case by piling up point upon point, many of them even weaker than the one I accept as being just sufficient for present purposes.  Although I have considered all of these points, I need not here go into the details.  It is enough for me to determine that the defendant has one defence which is not fanciful.  Therefore it cannot be said that that defence has no prospects of success.

1. Having considered the issues for myself, I support the associate judge’s reasoning on the deemed service point and conclude his Honour was right to dismiss the application for summary judgment.

1. The parties relied on various authorities in relation to the interpretation of deeming provisions in instruments.  None were on point.  Surprisingly, the resolution of the actual issue of interpretation which is raised here appears to be free of authority.   In the circumstances, it would not be appropriate to decide that issue authoritatively for the first time in a summary judgment application.  In my view, the defence in this case can only be properly evaluated upon a full consideration of the provisions of the deed at trial.  While the plaintiff’s case seems strong on the law and indeed on the merits, there is a material risk that the court would do a serious injustice to the defendant by giving summary judgment against it.

1. I have some sympathy for the position of the plaintiff.  Having apparently exercised its rights as the provisions of the deed required, it was been met with a procedural defence.  On that defence, like the associate judge, I am more inclined in favour of the plaintiff’s than the defendant’s interpretation of the deed. But that is upon a consideration of the issues in this summary judgment application which cannot do complete justice to the defendant’s case.     

1. Late in the day of the hearing of the appeal, the plaintiff made an alternative submission that the defendant should have leave to defend only on payment of the disputed funds into court.  In an appropriate case, the court unquestionably has power to dismiss a summary judgment application on this condition.[4]  On the material before the court in this case, there is absolutely no justification for doing so.

   [4]Banicic v Beach [2008] VSCA 35 [17], [22] (Redlich JA and Coghlan AJA).

1. There is no opposition to a minor amendment to the amended statement of claim dated 13 January 2011.  Leave will be granted to the plaintiff to amend that statement of claim in the terms of paragraph 11 of the draft in exhibit ‘PJM1’ of the affidavit of Peter John Morrissey dated 17 May 2011.

1. The appeal will be dismissed.  The plaintiff’s summons for summary judgment dated 17 May 2011 will be dismissed.  The plaintiff will have leave to amend its amended statement of claim.  The plaintiff will pay the defendant’s costs of the summary judgment proceedings before the associate judge and of the appeal.  There will be orders accordingly.

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