Arwon Finance Pty Ltd v Smith [No 2] - [2020] WASC 56

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   ARWON FINANCE PTY LTD -v- SMITH [No 2] [2020] WASC 56
CORAM:   KENNETH MARTIN J
HEARD:   5 & 6 NOVEMBER 2019
DELIVERED          :   27 FEBRUARY 2020
FILE NO/S:   CIV 2226 of 2017
BETWEEN:   ARWON FINANCE PTY LTD
Plaintiff
AND
TRAVIS ROYCE SMITH
Defendant

FILE NO/S: CIV 1827 of 2018
BETWEEN: ARWON FINANCE PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED)
Plaintiff
AND
TRAVIS ROYCE SMITH in his own right and as trustee for the SMITH INVESTMENT TRUST
Defendant

Catchwords:

Loan - Recovery and enforcement action - Assertions of promissory estoppel - Pleaded (mis)representation as to investor's future right to sell back acquired plantation assets at SGARA values - Pleaded further (mis)representation as to inhibition of personal recourse to borrower without first foreclosing on assets to reduce debt - Express terms of loan agreement to the contrary of both representatives - Representations not established - No position of reliance or detriment established in any event

Legislation:

Nil

Result:

Judgment for the plaintiff

Category: B

Representation:

CIV 2226 of 2017

Counsel:

Plaintiff	:	Mr S K Dharmananda SC & Mr V N Ghosh
Defendant	:	Mr M Douglas

Solicitors:

Plaintiff	:	Allens
Defendant	:	Tottle Partners

CIV 1827 of 2018

Counsel:

Plaintiff	:	Mr S K Dharmananda SC & Mr V N Ghosh
Defendant	:	Mr M Douglas

Solicitors:

Plaintiff	:	Allens
Defendant	:	Tottle Partners

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

Arwon Finance Pty Ltd v Smith [2019] WASC 245
Arwon Finance Pty Ltd v Wilson [2019] WASC 244
Bell Group Ltd (in liquidation) v Westpac Banking Group [No 9] [2008] WASC 239; (2008) 39 WAR 1
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1
Jones v Dunkel (1959) 101 CLR 298
Low v Bouverie [1891] 3 Ch 82

KENNETH MARTIN J:

Introduction

History of proceedings

This decision is the sequel to my earlier preliminary issue determination concerning the defendant's (Mr Smith's) counterclaim, as negatively evaluated under my reasons: Arwon Finance Pty Ltd v Smith [2019] WASC 245 delivered 5 July 2019 (Arwon v Smith). As I had explained under [4] - [9] of those reasons, the full trial which had been set down to commence in early May 2019 could not for various reasons proceed at that time. However, I was able to proceed then to finally resolve whether a deed of company arrangement (DOCA) of 29 June 2019, which followed upon the plaintiff (Arwon) being placed into administration, along with receivers and managers appointed in January 2018, effectively barred the attempted counterclaim of Mr Smith.
In the end, I concluded it did and so, Mr Smith's counterclaim was then dismissed.
The balance of the litigation, however, was not then concluded and so, required future resolution. Hence, the trial that followed.

The debts

On 6 May 2019, to the end of resolving all the remaining trial issues, the parties agreed to consent orders in respect of Arwon's remaining…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] WASC 56
Decision Date: 27 FEBRUARY 2020

CaseChat Overview and Summary

In the matter of Arwon Finance Pty Ltd v Smith, the respondent, David Smith, had made an assertion of promissory estoppel against the appellant, Arwon Finance Pty Ltd. Smith sought to rely on alleged misrepresentations made by Arwon Finance in the course of negotiations for a loan to acquire plantation assets. The dispute reached the court following Smith's challenge to Arwon Finance's recovery and enforcement action. The primary legal issues for determination were whether Smith had established the requisite elements for promissory estoppel and whether the alleged misrepresentations were accurate representations of the future rights of the investor, as well as the personal recourse to the borrower.

The court found that Smith had failed to establish the necessary elements for promissory estoppel. Firstly, the court determined that the alleged misrepresentations regarding the future right to sell back the acquired plantation assets at SGARA values were not substantiated. Furthermore, Smith could not demonstrate that the representations concerning the inhibition of personal recourse without first foreclosing on the assets to reduce the debt were accurate. The court noted that the express terms of the loan agreement were to the contrary of both alleged representations. Additionally, Smith could not establish a position of reliance or detriment as a result of these alleged misrepresentations. Consequently, Smith's assertion of promissory estoppel was unsuccessful.

In light of the findings, the court dismissed Smith's challenge to Arwon Finance's recovery and enforcement action. The court ruled that Arwon Finance was entitled to pursue its legal remedies to recover the outstanding debt. The court's decision effectively upheld the contractual rights of the parties as outlined in the loan agreement, and rejected Smith's claims of promissory estoppel based on the misrepresentations.

Orders