Bellaire Pty Ltd v Roselink Enterprises Pty Ltd - [2014] WASC 142

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BELLAIRE PTY LTD -v- ROSELINK ENTERPRISES PTY LTD [2014] WASC 142

CORAM: MASTER SANDERSON

HEARD: 27 FEBRUARY 2014

DELIVERED : 22 APRIL 2014

FILE NO/S: CIV 2483 of 2013

BETWEEN: BELLAIRE PTY LTD (ACN 146 621 258)
First Plaintiff
CASEY SHANE MINSON as Trustee for the MINSON FAMILY TRUST
Second Plaintiff
AND
ROSELINK ENTERPRISES PTY LTD as Trustee for the ICE NEMESIS UNIT TRUST (ACN 141 530 378)
First Defendant
KAREN MARIE LOWICK & BRENDAN JOHN LOWICK as Trustee for the LOWICK UNIT TRUST
Second Defendant
ANDREW CHRISTOPHER BRUSKE as Trustee for the BRUSKE FAMILY TRUST
Third Defendant
DONALD ALEXANDER MACLELLAN & RAE MACLELLAN as Trustees for the MACLELLAN FAMILY TRUST
Fourth Defendant
DWIGHT ALEXANDER WILLIAMS as Trustee for the DWIGHT WILLIAMS FAMILY TRUST
Fifth Defendant

Catchwords:

Service of notice - Notice served by email when requirement notice be 'in writing' - Whether proper service effected

Legislation:

Nil

Result:

Notice properly served

Category: A

Representation:

Counsel:

First Plaintiff                :     Mr A F Carles
Second Plaintiff            :     Mr A F Carles
First Defendant             :     Mr B G Grubb
Second Defendant         :     Mr B G Grubb
Third Defendant           :     Mr B G Grubb
Fourth Defendant          :     Mr B G Grubb
Fifth Defendant            :     Mr B G Grubb

Solicitors:

First Plaintiff                :     Carles Solicitors
Second Plaintiff            :     Carles Solicitors
First Defendant             :     Metaxas & Hager
Second Defendant         :     Metaxas & Hager
Third Defendant           :     Metaxas & Hager
Fourth Defendant          :     Metaxas & Hager
Fifth Defendant            :     Metaxas & Hager

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

Nil

MASTER SANDERSON: By originating summons issued 2 October 2013 the plaintiffs sought relevantly the following orders:
1.The first defendant, Roselink Pty Ltd as trustee for the Ice Nemesis Unit Trust do within 7 days of the date of this order cause the first plaintiff, Bellaire Pty Ltd, to be registered as the holder of 200 units and 200 special units in the register of unit holders of the Ice Nemesis Unit Trust.
2.The first defendant, Roselink Pty Ltd as trustee for the Ice Nemesis Unit Trust do within 7 days of the date of this order issue and deliver to the first plaintiff, Bellaire Pty Ltd, unit certificates evidencing that the plaintiff, Bellaire Pty Ltd, is the holder of 200 units and 200 special units in the Ice Nemesis Unit Trust.
The application was supported by an affidavit of Casey Shane Minson sworn 2 October 2013, an affidavit of Aaron Grant Caratti sworn 2 October 2013 and an affidavit of Alan Francois Carles sworn 19 December 2013. None of the defendants filed any evidence. There was no dispute as to the relevant facts and they can be summarised as follows.
The second plaintiff as trustee for the Minson Family Trust is the holder of 200 units and 200 special units in the Ice Nemesis Unit Trust. The first defendant, Roselink Enterprises Pty Ltd, is trustee of the Unit Trust. The second to fifth defendants are the other unit holders in the Unit Trust and in each case hold an equivalent number of units and special units to the second plaintiff.
The second plaintiff wished to dispose of his units and special units in the Unit Trust and executed a Notice of Transfer of units to that effect on 11 June 2013. This Notice of Transfer is attachment CSM 3 to Mr Minson's affidavit. The execution of the Notice of Transfer was, the plaintiffs say, in accordance with the transfer procedures set out in the Unit Trust Deed. That Deed appears as attachment CSM 1 to Mr Minson's affidavit.
The transfer procedure is set out in cl 5.9(b) of the Unit Trust Deed. It is in the following terms:
[N]o transfer of Units shall be permitted unless the following procedure is followed:
(i)(A)    a Unit Holder proposing to transfer any Units (called the 'Transferor') shall give notice in writing to the Trustee (called a 'Transfer Notice') that the Transferor desires to transfer the Units specified in the notice at the price per Unit specified in the notice (the 'Transfer Price');
(B)a transfer Notice shall not be revocable without the consent of the Trustee;
(ii)a Transfer Notice may include several Units or parcels of Units and in such case shall operate as if it were a separate notice in respect of each parcel but a separate Transfer Notice shall be served in respect of Units of each class;
(iii)the service of a Transfer Notice shall constitute the Trustee as agent of the Transferor for a period of 60 days for the purpose of selling the Units to a buyer in accordance with this sub-clause 5.9;
(iv)Units comprised in a Transfer Notice shall first be offered by the Trustee by notice in writing to all other Unit Holders as nearly as may be in proportion to their respective holdings of a Unit of the same class;
(v)the offer to Unit Holders shall state that:
(A)if the offer is not accepted in whole or in part within 21 days from its receipt it shall be deemed to be declined; and
(B)any Unit holder who desires to purchase Units in excess of its entitlement is required to state how many additional Units the Unit Holder requires;
(vi)any Units so offered and not accepted shall be used for satisfying any request for additional Units from existing Unit Holders and on a pro-rata basis if there are insufficient to satisfy in full all requests for additional Units PROVIDED THAT no Unit Holder shall be bound to take more additional Units than those the Unit Holder has offered to purchase;
(vii)any Unit comprised in the Transfer Notice which has not been transferred to an existing Unit Holder in accordance with sub‑clauses 5.9(b)(iv) and (vi) may be offered by the Trustee to any Unit Holder or other person selected by the Trustee as one whom it is desirable in the interests of the Trust to admit as a Unit Holder and who is willing to purchase the Unit at the Transfer Price;
(viii)within 30 days after being served with a Transfer Notice the Trustee shall by notice in writing to the Transferor nominate the buyer or buyers as the case may be who wish to purchase all or any of the Units comprised in the Transfer Notice and the Transferor shall be bound upon payment of the Transfer Price to transfer the Units to the buyer or buyers as set out in the notice in writing;
(ix)(A)    if in any case the Transferor shall make default in transferring any Units the Trustee may receive the purchase money and cause the name of the buyer to be entered in the Register as the Unit Holder and shall hold the purchase money in trust for the Transferor;
(B)the receipt of the Trustee for the purchase money shall be a good discharge to the buyer and after the buyer's name has been entered in the Register the validity of the proceedings shall not be questioned by any person;
(x)if at the expiration of 30 days after the Transfer Notice the Trustee shall not have found a Unit Holder (or other person) willing to purchase any Units mentioned in the Transfer Notice shall be entitled at any time within 3 months after the expiration of the said period of 30 days to sell and transfer those Units to any person at a price not less than the Transfer Price;
(xi)the Trustee may with the unanimous consent of all the Unit Holders vary the procedure set out in this sub-clause 5.9(b) to meet the circumstances of any particular case and in particular may give any person or persons a preferential right to acquire any Units;
(xii)(A)    if any Unit Holder without the consent of the Trustee executes a mortgage of Units or if any Unit Holder executes a deed of trust or other disposition of Units in favour of any person other than a person who is a permitted transferee pursuant to sub‑clause 5.8 that Unit Holder shall be deemed to have served a Transfer Notice in respect of those Units on the date on which the Trustee became aware of such mortgage, deed of trust or other disposition and to have fixed as the Transfer Price an amount to be determined by:
(A)the auditor of the Trust; and
(B)if there is no auditor, by an independent chartered accountant to be selected by the Trustee,
and such auditor or other person in making a determination shall be deemed to be acting as an expert and not as an arbitrator and the provisions of the Commercial Arbitration Act shall not apply;
(B)the costs of obtaining the determination shall be borne by the Unit Holder in default and may be deducted from the proceeds of sale.
The effect of this clause is that an existing unit holder who wishes to dispose of their units has to offer first opportunity to buy the units to other unit holders for a certain price before the units can be sold to an outsider. In other words, the existing unit holders have a right of first refusal.
The Notice of Transfer was addressed to the first defendant as trustee of the Unit Trust and provided that the second plaintiff wished to transfer his units at the price of $1,250 per unit and his special units at a price of $1.00 per unit. The second plaintiff says:
Julie served the transfer notice on the first defendant by email on 12 July 2013 and then by hand delivery on 15 July 2013.
It is the alleged service of this Notice of Transfer which is the point of departure between the parties. Before dealing with that issue I will round out the picture by completing the narrative.
The second plaintiff received no response from the first defendant to the Notice of Transfer and then by Deed dated 13 August 2013 agreed to sell all his units and special units in the Unit Trust to the first plaintiff. On 13 August 2013 a transfer of units was signed by the second plaintiff to transfer his units and special units to the first plaintiff in accordance with the Deed. On the same day the second plaintiff wrote to the first defendant notifying that he had transferred his units and special units in the Unit Trust to the first plaintiff. He requested that the first defendant enter the first plaintiff in the register of unit holders as the unit holder of those units and special units.
Correspondence was then exchanged between solicitors for the parties. In summary, the correspondence from the solicitors for the defendants indicated that the first defendant was not prepared to register the first plaintiff as the holder of the units and special units which were held by the second plaintiff without evidence of payment of the $250,200 purchase price for the transfer of the units and special units being provided.
It is the position of both plaintiffs the second plaintiff has done everything required to be done by him in accordance with the unit transfer procedure set out in cl 5.9 of the Unit Trust Deed. It was further submitted cl 5.9(b)(x) does not require the full purchase price to be paid in cash or for evidence of that payment to be provided to the trustee of the Unit Trust before units can be transferred. It was said there was no legal basis upon which the trustee could demand evidence of the payment of the purchase price.
This issue as to the purchase price was referred to by the defendants in their written submissions. However, it was not developed in oral submissions. Some evidence of the purchase arrangements were contained in the various affidavits filed on behalf of the plaintiffs. Although what might be referred to as the 'purchase price issue' appears to have fallen away I will deal with it in these reasons just for the sake of completeness.
The defendants' position may be summarised as follows. The registered office of the first defendant is Caffarelli & Associates, Level 1, 38 Richardson Street, West Perth. That is the address given for the Trust in the Deed. No email address for services of notices upon any party is specified in the Trust Deed. The second plaintiff says he hand delivered the Notice of Transfer to Caffarelli & Associates - that is to the Trust - on 15 July 2013. Thirty days from 15 July 2013 is 15 August 2013. The second plaintiff executed the Deed transferring the units to the first plaintiff on 13 August 2013. The defendants say the transfer of the units to the first plaintiff was invalid by operation of cl 5.9(b)(x) of the Trust - 30 days had not expired since the delivery of the Notice of Transfer.
Clause 16 of the Trust Deed deals with notices. For present purposes cl 16.1 and cl 16.2 are relevant. They are in the following terms:
16.1A notice may be given by the Trustee to any Unit Holder either personally or by sending it by post to the Unit Holder at its registered address or to the address (if any) supplied by the Unit Holder to the Trustee and recorded in the Register for the giving of notices. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice and to have been effected in the case of a notice of a meeting on the day after the date of its positing and in any other case at the time at which the letter would be delivered in the ordinary course of post.
16.2If the Trustee shall so determine a notice may be given by means of facsimile and service of such notice shall be deemed to be effected if the facsimile is properly addressed and lodged for transmission and to have been effected at the time at which the facsimile was transmitted.
There was no evidence the trustee had ever determined that notice could be given by facsimile and in any event the notice upon which the plaintiffs rely was served by email. Furthermore cl 16.1 is not relevant because it speaks of notices 'given by the trustee'. The requirement found in cl 5.9(b)(i)(A) is that the notice be given in writing. The Deed is silent as to how the Notice of Transfer is to be served.
Two preliminary observations can be made about the plaintiffs' claim of effective service by email. First, there is no evidence to suggest the first defendant did not actually receive the email which attached the Notice of Transfer. It is true the email was addressed to various unit holders and 'Pina Caffarelli'. But Ms Caffarelli is the principal of Caffarelli & Associates and, as I have indicated above, her office is at the same address as the office of the Trust. Given the instant nature of email communication and the absence of any evidence from the defendants, it can be assumed the email was duly received and properly considered.
The second point to make is an electronic communication of this nature cannot be regarded as being 'in writing'. It might be different had the email and the accompanying notice been printed out. There is no evidence that was done. It seems clear then the notice in writing was not given and prima facie the plaintiffs did not comply with the terms of the Deed. The remaining question is whether the plaintiffs mode of giving notice is saved by the Electronic Transactions Act 2011 (WA) (the Act).
In considering the relevance of the Act to the present situation it is convenient to begin with s 3. It is in the following terms:
Object
The object of this Act is to provide a regulatory framework that -
(a)recognises the importance of the electronic communication of information to the future economic and social prosperity of Western Australia; and
(b)facilitates the use of electronic communication as a way of entering into transactions; and
(c)promotes business and community confidence in the use of electronic communication as a way of entering into transactions; and
(d)enables business and the community to use electronic communication in their dealings with government.
It is perhaps worthy of note sub‑sections (b) and (c) both refer to 'entering into transactions'. The use of that phrase suggests the Act relates to the formation of contracts and the conclusion of transactions rather than dealing with the giving of notices. Nonetheless, it is the wording of relevant sections which is important.
Section 4 is headed 'Simplified outline'. Sub‑section (2) is in the following terms:
This Act provides -
(a)that, with certain exceptions, a transaction is not invalid for the purposes of a law of the State because it took place by electronic communication;
(b)that things that can or have to be done under a law of the State in relation to any of the following matters can generally be done by electronic communication -
(i)giving information in writing;
(ii)providing a signature;
(iii)producing a document;
(iv)recording information;
(v)retaining a document;
(c)for determining the time and place of the dispatch and receipt of an electronic communication for the purposes of a law of the State;
(d)that the purported originator of an electronic communication is bound by it for the purposes of a law of the State only if the communication was sent by the purported originator or with the authority of the purported originator.
There can be no doubt s 4(2)(b)(i) is relevant in the present circumstances. What the plaintiffs were required to do was give notice in writing. They provided that notice in an electronic form. That falls squarely within the sub‑section.
Part 2, div 1 of the Act deals with the validity of transactions. By s 8(1) the giving of this notice by email is not invalid because it was done by electronic communication. However, that general rule is qualified by sub‑section (2) which makes it subject to other provisions in pt 2 of the Act.
For present purposes it is s 9(1) that is important. It is in the following terms:
(1)If, under a law of this jurisdiction, a person is required to give information in writing, that requirement is taken to have been met if the person gives the information by means of an electronic communication, where -
(a)at the time the information was given, it was reasonable to expect that the information would be readily accessible so as to be useable for subsequent reference; and
(b)the person to whom the information is required to be given consents to the information being given by means of an electronic communication.
It is clear the provisions of s 9(1)(a) have been satisfied. The question is whether or not the Trust has consented to the information being given by electronic means. It is clear no actual consent has been given. The issue is whether such consent can be implied.
Section 5(1) of the Act deals with definitions including the definition of 'consent'. It is in the following terms:
consent includes consent that can reasonably be inferred from the conduct of the person concerned, but does not include consent given subject to conditions unless the conditions are complied with;
So the ultimate question then is whether consent can be reasonably inferred from, in this case, the inaction of the trustee and the directors of the trustee. In my view it can. The defendants filed no evidence. When the email was received at Caffarelli & Associates no‑one contacted the plaintiffs to point out the deficiencies in the notice. Indeed, the first time any defect in the notice was suggested was when counsel for the defendants filed his submissions. Counsel for the plaintiffs in filing his submissions had not dealt with the issue. If, after receiving the email, the first defendant or someone associated with the Trust had contacted the plaintiffs pointing out the requirement the notice be in writing the position may well have been different. In this case, the fact of silence speaks volumes.
In reaching this conclusion I have borne in mind the objects of the Act. The pedantic insistence on a notice being in writing is entirely inconsistent with commerce being conducted as it is today. There may, in some circumstances, be good reason why written notice has to be given and an electronic form will not suffice. But no such reason exists in this case. To accept the defendants' argument would be to ignore the realities of the world of commerce in this day and age.

Finally, I should deal briefly with the submission the second plaintiff has not actually sold the units for full value. Appearing as attachment CSM 5 to Mr Minson's affidavit is a copy of the agreement for sale between the first and second plaintiffs. Clause 6 of that agreement deals with 'settlement'. It anticipates the first plaintiff will pay for the units by bank cheque 'or in such other manner as may be agreed between the parties'. The purchase price is defined in cl 1 to be $250,200. In my view, the agreement makes it clear the second plaintiff is selling the units at the price specified in the Notice of Transfer. There is no validity in the argument the second plaintiff is selling for some lesser amount than that specified in the Notice of Transfer. Nor is there any material which suggests the transaction is a sham. At the hearing of the matter no such submission was put by counsel for the defendants.
Subject to hearing from counsel I will make orders in terms of the originating summons.