Aztec Equity Management Pty Ltd v Palumbo Holdings Pty Ltd

[2007] WASC 237

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   AZTEC EQUITY MANAGEMENT PTY LTD -v- PALUMBO HOLDINGS PTY LTD [2007] WASC 237

CORAM:   ACTING MASTER CHAPMAN

HEARD:   21 & 22 AUGUST 2007

DELIVERED          :   18 OCTOBER 2007

FILE NO/S:   CIV 1471 of 2007

BETWEEN:   AZTEC EQUITY MANAGEMENT PTY LTD (ACN 104 772 303)

Plaintiff

AND

PALUMBO HOLDINGS PTY LTD (ACN 059 625 320) AS TRUSTEE FOR THE PALUMBO FAMILY TRUST
First Defendant

DOMENICK TONY PALUMBO
Second Defendant

SHARRON ROSE PALUMBO
Third Defendant

PALUMBO HOLDINGS PTY LTD (ACN 059 625 320)
Fourth Defendant

Catchwords:

Practice and procedure - Summary judgment - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 14

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr P B O'Neal

First Defendant              :     Mr R J Price

Second Defendant         :     Mr R J Price

Third Defendant            :     Mr R J Price

Fourth Defendant           :     Mr R J Price

Solicitors:

Plaintiff:     Karp Steedman Ross-Adjie

First Defendant              :     Bruce Havilah & Associates

Second Defendant         :     Bruce Havilah & Associates

Third Defendant            :     Bruce Havilah & Associates

Fourth Defendant           :     Bruce Havilah & Associates

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

Evans v Bartlam [1937] AC 473

Farm Forestry Finance Pty Ltd v English (Unreported, WASC, Library No 970540, 22 October 1997)

Suburban Homes Pty Ltd v Ward [1928] VLR 267

ACTING MASTER CHAPMAN: 

The application

1. The plaintiff, by way of chamber summons filed on 8 June 2007, seeks judgment against the defendants.

The issues

1. Counsel for the plaintiff submits that two substantive issues have been raised by the defendants, namely (1) they say that what is owing is not in effect the full amount owing to the National Australia Bank, but rather it is a lesser amount being the costs that the plaintiff incurred in taking the assignment from the bank; (2) it is said that certain shares in respect of two companies in the parties' tavern business which were ultimately acquired by the plaintiff were provided by the defendants to the plaintiff not in an outright sale, but rather as security for the original transaction.

2. In relation to the first issue, the defendants filed a defence and counterclaim before the application for summary judgment was filed.  At par 6 of the defence and counterclaim, par 8 of the statement of claim is admitted.  At par 16(d)(i) and (iv) of the defence and counterclaim, the following, excluding the particulars, is pleaded:

   (d)further, say as follows:

   (i)At the time of entry by the Plaintiff and the Defendants into the Deed of Assignment it was the intention of both the Plaintiff and the Defendants that the Deed of Assignment should provide or have the effect that, as between the Plaintiff and the Defendants, the Defendants would be liable to the Plaintiff in respect of the subject matter of the Deed of Assignment and the Securities only in the amount of the consideration payable by the Plaintiff to NAB under the Deed of Assignment ('NAB Amount') together with the amount of the interest and costs incurred by the Plaintiff in borrowing the funds needed by it to pay the NAB Amount.

   …

   (iv)Pursuant to, or by reason of, the Deed of Assignment as rectified, the Plaintiff is precluded from enforcing the Securities against the Defendants or seeking to recover from the Defendants anything in excess of the sum of:

   (A)the NAB Amount together with the amount of the interest and costs incurred by the Plaintiff in borrowing the funds needed by it to pay the NAB Amount; less

   (B)amounts already paid by or on behalf of the Defendants, to the Plaintiff, on account of the sums the subject of sub‑paragraph (A) above.

3. At the hearing the defendants referred to a further draft minute of proposed amended defence and counterclaim dated 20 August 2007.  A similar plea is to be found at par 17 of that document.

4. Counsel for the plaintiff now concedes that the material provided by the defendants raises a triable issue in relation to the plaintiff's claim for the full amount owing to the National Australia Bank.  It is conceded the plaintiff does not now seek by way of summary judgment any amount greater than would be owed if the facts pleaded in par 16(d) of the defence and counterclaim were correct.

5. The question is whether or not summary judgment should be entered in relation to part of the claim, or at all.

The position of the parties

1. Counsel for the defendants objected to a number of affidavits filed by the plaintiff and further submits that the admissible affidavit evidence filed by the plaintiff does not adequately verify the facts on which the claim is made. Whilst I accept that no encouragement is to be given to any applicant to do anything other than comply with O 14, in the end the question is whether the defendants have a bona fide defence: Farm Forestry Finance Pty Ltd v English (Unreported, WASC, Library No 970540, 22 October 1997). I further accept that until the plaintiff's affidavits do comply with O 14, the defendants have no obligation to satisfy the court that they have a good defence to the action on the merits: Suburban Homes Pty Ltd v Ward [1928] VLR 267, 269.

2. However, given the concession made by counsel for the plaintiff, the claim now made by the plaintiff in relation to the first issue is not in issue on the pleadings as filed save to say the pleadings do not specify an amount.  As counsel for the plaintiff correctly pointed out, evidence will need to be led to enable that amount to be ascertained.

3. In this regard, the plaintiff has attached to the responsive submissions in support of an application for summary judgment a schedule titled 'Schedule of Interest and Costs Claimed'.  According to that schedule, the total claimed as at 21 August 2007 was $441,286.92 and the plaintiff seeks judgment in that sum.

4. Assuming the arithmetical calculations contained in the schedule are correct, has the plaintiff established this represents the amount the defendants plead is their liability to the plaintiff in par 16(d) of the defence and counterclaim?

5. In examining the schedule, counsel for the defendants took issue with the plaintiff's entitlement to some costs, a number of the figures and the percentage used in the calculations.  In support of the calculations in the schedule, an affidavit by Mr Corcoran sworn on 17 August 2007 has been filed by the plaintiff.  There is an issue of whether or not I should allow the plaintiff to rely upon it.  Should I be so inclined, I question whether the affidavit properly establishes the borrowing and discharge costs incurred.  Further, whilst I understand the basis of the percentage used to pro rata these amounts, I am not satisfied the plaintiff has established a proper basis for the application of this percentage.  Accordingly, I am not satisfied that the sum the plaintiff claims has been properly established.

6. As to the remaining issue between the parties, I do not consider it necessary to deal with each of the objections taken in relation to the affidavits save to say that in general I agree with them.  Having said that, the plaintiff has obviously put some emphasis on the letter from Mr Kelly to the solicitors for the defendants dated 11 December 2006.  It is annexure DP20 to the affidavit of the second defendant sworn on 5 July 2007.  The deponent simply annexes the copy letter, but does not, to the extent that he could, verify its contents, and Mr Kelly has not sworn an affidavit.  The observation which counsel for the defendants makes about this letter seems to be sound.  I am not prepared to draw the inferences from the letter the plaintiff would wish.

7. I am of the view that even if the affidavits filed by the plaintiff were entered into evidence in their entirety, the result would be there would exist a conflict of evidence which should not be disposed of summarily.  It was never intended when the facts are in dispute that actions should be disposed of summarily, nor to dispose of the factual merits on a conflict of affidavits:  Evans v Bartlam [1937] AC 473, 489. Further, I consider the issues raised between the parties are such that there are questions which should be tried. Whilst one may have doubts about where the truth lies, on the affidavits filed I do not consider the version of events put forward by the defendants is inherently incredible.

Conclusion

1. On what is before me, I am not persuaded that the plaintiff has established the amount which it is claiming by way of summary judgment.  Further, I consider there is a conflict on the evidence surrounding the shares.  In any event, there are issues surrounding this transaction which should properly be explored at trial.  I would therefore dismiss the application.