Australian Copper Holdings Pty Ltd v Mining Resource Development Corporation Pty Ltd
[2023] WADC 152
•21 DECEMBER 2023
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: AUSTRALIAN COPPER HOLDINGS PTY LTD -v- MINING RESOURCE DEVELOPMENT CORPORATION PTY LTD [2023] WADC 152
CORAM: STAUDE DCJ
HEARD: 28 NOVEMBER 2023
DELIVERED : 21 DECEMBER 2023
FILE NO/S: CIV 3234 of 2022
BETWEEN: AUSTRALIAN COPPER HOLDINGS PTY LTD
Plaintiff
AND
MINING RESOURCE DEVELOPMENT CORPORATION PTY LTD
Defendant
Catchwords:
Appeal from registrar - Defendant's application for summary judgment pursuant to Rules of the Supreme Court 1971 (WA) O 16 r 1 - Action for contractual debts - Whether claim is statute barred
Legislation:
Limitation Act 2005 (WA), s 13, s 47
Rules of the Supreme Court 1971 (WA), O 16 r 1
Result:
Application for summary judgment granted. Plaintiff’s claim dismissed
Representation:
Counsel:
| Plaintiff | : | Mr T M Clavey |
| Defendant | : | Mr D Banda |
Solicitors:
| Plaintiff | : | Leading Edge Legal |
| Defendant | : | Bennett |
Case(s) referred to in decision(s):
Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2022] WASCA 69
Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415; (2000) 23 WAR 159
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Zaghloul v Bayly [2021] WASCA 125
STAUDE DCJ:
Introduction
This is an appeal from a decision of a deputy registrar refusing the defendant's application for summary judgment and alternative application to strike out parts of the statement of claim. The learned deputy registrar dismissed the application with costs on 17 August 2023 giving short ex tempore reasons for doing so.
The appeal is of right and is in effect a hearing de novo. The defendant does not have to show error on the part of the registrar. On the appeal it is for the court to consider the application afresh: Hazart Pty Ltd v Rademaker (1993) 11 WAR 26.
At the hearing of the appeal counsel for the defendant indicated that the defendant would not press the alternative application to strike out parts of the statement of claim. The appeal thus concerns only the refusal of summary judgment.
Counsel for the defendant also pointed out that no issue had been taken at first instance with respect to the defendant's application for leave, the application having been lodged two days after the expiration of the 21 day period prescribed by O 16 r 1(1). The plaintiff did not oppose leave. The delay was short and the appeal has merit. Accordingly, leave is granted.
The plaintiff's claim is for $450,000 plus interest. The relevant facts are not contentious. The only issue in the appeal is whether the claim is statute barred.
The documents pleaded in the statement of claim that give rise to the defendant's obligation to pay the debt and that otherwise evidence the relationship between the parties are annexed to the affidavits of Bidinia Listy Campbell-McPherson affirmed 4 May 2023 for the defendant and Andrej Kazimierz Karpinski sworn 18 July 2023 for the plaintiff.
The claim
The plaintiff's action is to recover a debt due pursuant to a written agreement between the parties dated 2 November 2015, referred to in the statement of claim as the subscription agreement.
The subscription agreement was entered into pursuant to a settlement of Wardens Court proceedings wherein the defendant sought forfeiture of exploration licences held by Australian Copper Pty Ltd, a subsidiary of Korab Resources Ltd. A settlement agreement was made by those parties on 18 September 2015 pursuant to which the plaintiff was incorporated on 30 October 2015. The same parties entered a Deed of Restated Settlement Agreement (restated settlement agreement) on 2 November 2015 which provided that the defendant would subscribe to 1,200,000 shares in the plaintiff for a total price of $500,000 payable as to $50,000 upon issue of the shares, $200,000 by 31 January 2016 and $250,000 by 30 June 2016.
On 2 November 2015 in accordance with the subscription agreement the defendant paid the initial call of $50,000 whereupon the shares were issued to the defendant. It is not in dispute that the defendant has failed to make the balance of $450,000.
Contractual obligation
Clause 5.1 of the subscription agreement required the plaintiff to make calls for the balance of the price of the shares, being $200,000 on 31 January 2016 and $250,000 on 30 June 2016. By cl 5.2 of the subscription agreement, upon a call being made by the plaintiff the defendant was to immediately pay the amount of the call by effecting an electronic funds transfer into the plaintiff's bank account.
By cl 7.2.6 of the subscription agreement the defendant warranted that it has or can obtain the funds to make the payments under cl 4 and cl 5 as and when they fall due.
By cl 12.1 any variation of any term of the agreement was to be in writing and signed by the parties.
Clause 12.2 provides:
Waiver
12.2.1Waiver of any right, power, authority, discretion or remedy arising upon default under this agreement must be in writing and signed by the party granting the waiver.
12.2.2A failure or delay in the exercise, or partial exercise, of a right, power, authority, discretion or remedy created or arising upon default under this agreement, does not result in a waiver of that right.
12.2.3A party is not entitled to rely on a delay in the exercise or non‑exercise of a right, power, authority, discretion or remedy arising from a breach of this agreement or on a default under this agreement as constituting a waiver of that right, power, authority, discretion or remedy.
12.2.4A party may not rely on any conduct of another party as a defence to exercise of a right, power, authority, discretion or remedy by that other party.
Clause 12.6 of the subscription agreement provides that time is of the essence in respect of any date or period determined under the agreement.
Clause 12.7 of the subscription agreement provides:
Entire agreement
This agreement, together with settlement agreement and the shareholders agreement (once executed):
12.7.1express and incorporate the entire agreement between the parties in relation to the subscription; and
12.7.2supersede and exclude any prior or collateral negotiation, representation, understanding, communication or agreement by or between the parties in relation to the subscription.
The parties agree and acknowledge that the settlement agreement has been varied by:
12.7.3the shareholders agreement; and
12.7.4this agreement,
but otherwise remains a full force and effect.
The subscription agreement incorporated a further written agreement referred to as a shareholders agreement being Annexure A to the subscription agreement. The shareholders agreement provided for the rights and obligations of shareholders in relation to the ownership and management of the plaintiff.
The shareholders agreement also incorporated the constitution of the plaintiff which provides by article 18 that:
Any sum that by the terms of issue of a share becomes payable on allotment or at a fixed date shall be deemed to be a call duly made and payable on the date by which the terms of the issue the sum becomes payable.
Article 21 provides that the directors may at any time after a default in payment of a call serve a notice on the shareholder requiring payment of the unpaid amount of the call. Article 22(2) provides that such a notice (requiring payment of the unpaid amount of the call) will state a date not less than 14 days after the service of the notice on which or before payment required by the notice is to be made and state that if payment is not made before the appointed date of the shares will be liable to be forfeited.
Article 24 provides that a person whose shares had been forfeited ceases to be a member in respect of the forfeited shares but remains liable to pay the money that at the date of the forfeiture was payable in respect of the shares plus interest.
Defendant's defaults
It is not in dispute that the defendant failed to pay the sums of $200,000 and $250,000 respectively in response to calls made on 31 January 2016 and 30 June 2016. (There is an issue on the pleadings as to whether as a matter of fact and law such calls were made, but the hearing proceeded on the basis that such calls were either made or deemed to have been made.) Each default created a debt.
By letter of 19 July 2016 the plaintiff gave formal notice to the defendant that it was in default of its obligations to pay the calls made on 31 January 2016 and 30 June 2016 and that if the sum of $450,000 was not paid by 5.00 pm on 3 August 2016 the shares were liable to be forfeited. The letter reserved the plaintiff's right to interest pursuant to the constitution and otherwise reserved the plaintiff's contractual rights.
The shares were in due course forfeited and cancelled.
The merits
A cause of action arises when all of the facts have occurred that the plaintiff must prove in order to succeed: Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234; Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415; (2000) 23 WAR 159.
It is not in issue that the writ of summons was issued on 2 August 2022.
Section 13 of the Limitation Act 2005 (WA) relevantly provides that an action on any cause of action cannot be commenced if six years have elapsed since the cause of action accrued.
Counsel for the plaintiff accepted at the hearing of the appeal that the causes of action with respect to the component sums of $200,000 and $250,000 arose when the respective calls were made, being 31 January 2016 and 30 June 2016: see also plaintiff's submissions dated 16 August 2023, par 49.
Thus, the writ of summons was issued more than six years after the cause of action with respect to each of the two debts in question accrued.
The plaintiff does not contend that the court has any power to extend the time to commence the action as is provided with respect to other cases by div 3 of the Act. Nor does the plaintiff contend that any agreement has been made to extend the limitation period pursuant to s 45 of the Act or that there has been an extension of a limitation period by confirmation pursuant to the provisions contained in div 5 of the Act.
On what basis then does the plaintiff contend that the action is not statute barred?
The plaintiff contends that the notice given in its letter of 19 July 2016 constituted a waiver of a right to payment before 3 August 2016 such that time did not begin to run with respect to either debt until that date. The writ being issued on 2 August 2022 was thus issued within the limitation period.
The plaintiff's position in this respect is inconsistent with counsel's unambiguous acceptance at the hearing of the proposition that the sums payable under the subscription agreement became due on the dates on which the calls were made or deemed to have been made.
Nevertheless, counsel maintained that the plaintiff was entitled not to treat the non-payment of each call as a breach of the subscription agreement and to 'waive' the defendant's obligation to pay each sum until 3 August 2016 when, according to the notice contained in its letter on 19 July 2016, the shares were liable to be forfeited.
Counsel submitted that whether time ran from 31 January 2016 and 30 June 2016 respectively turned on the construction of the contractual documents as a whole, that is, the restated settlement agreement, the subscription agreement, the shareholders agreement and the constitution. Counsel could not, however, point to any provision that would render ambiguous the obligation imposed on the defendant by cl 5.2 of the subscription agreement to pay a call immediately.
Having considered counsel's submissions I am unable to see any 'constructional choices' that would admit an argument that the calls did not become payable until 3 August 2016.
What permitted the plaintiff to give notice of forfeiture under article 21 of the constitution was the defendant's defaults in payment. It follows that the plaintiff's contention that the defendant did not come under an obligation to pay until 3 August 2016 is baseless. I do not accept therefore the submission that by giving the defendant until 3 August 2016 to pay the calls the plaintiff 'waived the breach of the payment time stipulation and set a new time for performance': plaintiff's submissions dated 16 August 2023, par 79.
The plaintiff says, curiously, that it was entitled to waive the requirement of immediate payment without waiving the right to payment itself, as if allowing time for payment postponed the accrual of the cause of action. A party to a contract may of course waive timely performance of an obligation by another, but forbearance does not stop the clock.
The plaintiff's reliance on the doctrine of election is misplaced. An election is a choice made between inconsistent contractual rights and usually arises where there is a choice to be made between terminating a contract for breach or treating the contract as ongoing. The principles are summarised in Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2022] WASCA 69, [450] ‑ [472] (Buss P and Murphy JA). They are not applicable in this case.
No election was made between alternative inconsistent rights. The subscription agreement obligated the defendant to make payments on the two prescribed dates. The defendant defaulted on each occasion. Stipulating a time for payment after which time the shares would be liable to forfeiture in accordance with the plaintiff's constitution does not have the effect of postponing the defendant's obligation to pay.
The proper approach to the determination of an application for summary judgment is set out in Zaghloul v Bayly [2021] WASCA 125 [116]. It must be clear that there is no real issue to be tried. It is 'only in the clearest of cases where there is a high degree of certainty about the outcome if the proceeding were allowed to go to trial that summary judgment ought properly be granted'.
I am satisfied that the causes of action pleaded in the statement of claim accrued on 31 January 2016 and 30 June 2016 respectively are barred by operation of s 13 of the Limitation Act such that the defendant has a complete defence.
The appeal is allowed. The plaintiff's claim must be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
DC
Associate to Judge Staude
15 DECEMBER 2023
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