Crawley Investments Pty Ltd v Elman
[2014] WASC 233
•30 JUNE 2014
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | CRAWLEY INVESTMENTS PTY LTD -v- ELMAN [2014] WASC 233 |
| CORAM | : EDELMAN J | ||
| HEARD |
| ||
| DELIVERED |
| ||
| FILE NO/S |
| ||
| BETWEEN |
|
AND
RICHARD SAMUEL ELMAN
First Defendant
NOBLE GROUP LTD
Second Defendant
PAWAY LTD
Third Defendant
CRAWLEY RESOURCES LTD
Fourth Defendant
Catchwords:
Practice and procedure - Long arm jurisdiction - Application to set aside issue and service of writ - Test to be applied - Whether plaintiff has any prospects of establishing that the first defendant was a party to agreements - Issue and service of writ set aside
[2014] WASC 233
Legislation:
Foreign Acquisitions and Takeovers Act 1975 (Cth)
Rules of the Supreme Court 1971(WA)
Supreme Court Rules 1970 (NSW)
Result:
Issue of writ and service outside jurisdiction set aside against first defendant
Category: A
Representation:
Counsel:
| Plaintiff | : | Mr D Ryan SC & Mr S Lemonis |
| First Defendant | : | Mr J H Karkar QC & Mr R Pintos-Lopez |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Lemonis & Tantiprasut Lawyers |
| First Defendant | : | Clayton Utz |
| Second Defendant | : | Clayton Utz |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | Hotchkin Hanly |
Cases referred to in judgment:
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
ATCO Controls Pty Ltd v Newtronics Pty Ltd [2009] VSCA 238; (2009) 25 VR
411
Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1
AC 251
Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
[2014] WASC 233
Brambles Holdings Pty Ltd v Bathurst City Council [2000] NSWCA 61; (2001)
53 NSWLR 153
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24;
(1982) 149 CLR 337
Druin Pty Ltd v Corbin [2014] NSWSC 510
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002)
209 CLR 95
Foxeden Pty Ltd v IOOF Building Society Ltd [2003] VSC 356
Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68
Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 328
Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd [2003] VSC 291; (2003) 9 VR
171
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014]
WASC 162
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC
886
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR
181
O'Brien v Dawson [1942] HCA 8; (1942) 66 CLR 18
Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA
217; (1999) 21 WAR 350
Said v Butt [1920] 3 KB 497
Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd
[1979] HCA 51; (1979) 144 CLR 596
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR
165
Text(s) cited:
Briggs A and Rees P, Civil Jurisdiction and Judgments (5th ed, 2009)
Briggs A, The Conflict of Laws (3rd ed, 2013)
Seddon N C, Bigwood R, and Ellinghaus M P, Cheshire and Fifoot's Law of
Contract (10th ed, 2012)
[2014] WASC 233
EDELMAN J
Contents
Introduction ................................................................................................................................ 5
The parties and protagonists ....................................................................................................... 6
The draft statement of claim ....................................................................................................... 6
The two alleged oral agreements ............................................................................................ 7
Partial implementation of the Agreement ............................................................................... 9
Variation of the Agreement .................................................................................................... 9
Partial implementation of the variation ................................................................................ 10
Deloitte's proposed 'implementation' .................................................................................... 10
The alleged breaches and the pleaded loss ........................................................................... 13
The absence of a plea of causation ....................................................................................... 13
The test for whether the issue of the writ and its service should be set aside .......................... 14
Mr Elman could obtain summary judgment on the claim that he was a party ......................... 17
Mr Elman's submissions ....................................................................................................... 17
Crawley Investments' submissions ....................................................................................... 19
Legal principles concerning when a person is a party to an agreement ............................... 20
The reasons why summary judgment would be granted ...................................................... 21
Conclusion ................................................................................................................................ 31
[2014] WASC 233
EDELMAN J
EDELMAN J:
Introduction
1 This is an application by the first defendant to set aside the issue of a
writ and its service out of the jurisdiction. The central individuals involved in this application are Mr Elman and Mr Kiernan. Mr Elman is first defendant to these proceedings. He lives in Hong Kong. He was a director of Noble Group, a listed company with a paid up capital of HK$1.6 billion. Mr Kiernan was a director of the plaintiff, Crawley Investments.
2 On 12 November 2013, Crawley Investments applied for, and
obtained, ex parte leave to issue and serve a writ of summons outside the jurisdiction against Mr Elman, Noble Group and Paway.[1] Mr Elman now seeks to set aside the writ and service of the writ upon him.[2]
3 The application was argued by both counsel over a full day with
great skill, and in considerable detail. Their arguments concerned a number of difficult, and unresolved legal issues. But at the heart of the application was a short point. Does Crawley Investments have any prospect of successfully establishing that Mr Elman, in a telephone conversation with Mr Kiernan, created a contract to which Mr Elman was a party personally? For the purposes of this application, senior counsel for Mr Elman did not dispute that it was arguable that there was a contract formed in that conversation between other parties including Noble Group and Crawley Investments.
4 Crawley Investments says that it has prospects of successfully
establishing that Mr Elman manifested an intention to become a party to the contract. But Mr Elman did not expressly undertake to be a party. Nor was it pleaded that he had any express obligations under the contract. Nor was there evidence that he made any express promises on his own behalf. Nevertheless, Crawley Investments says that Mr Elman became a party either by inference or by implication and that his obligations were those that he impliedly undertook, to use his powers to cause the other defendants to these proceedings to carry the agreement into effect and enter subsequent transactions related to it.
[2014] WASC 233
EDELMAN J
5 On the evidence before the Court for the purposes of this application,
Crawley Investments has no prospect of successfully establishing that Mr Elman undertook in that conversation to become a party to the contract.
The parties and protagonists
The parties and protagonists in this proceeding, and a very broad outline of their relationships, are as follows.
7 In the first 'camp' is the plaintiff, Crawley Investments. At relevant
times, Mr Kiernan was a director of Crawley Investments. He described it
as his 'family company'.[3]8 In the second 'camp' is (1) the second defendant, Noble Group, (2) its
wholly owned subsidiary, the third defendant, Paway, and (3) Mr Elman,
the first defendant, who was a director of Noble Group at relevant times.
The fourth defendant, Crawley Resources, is the investment vehicle which is jointly owned by Crawley Investments and Noble Group.
The draft statement of claim
The matters pleaded in the draft statement of claim are, in broad summary, as follows.[4]
11 On 1 December 2006, Crawley Investments, Noble Resources, and
Crawley Resources entered into a Shareholders' Deed. The stated purpose of the Shareholders' Deed was for Crawley Investments and Noble Resources to subscribe for shares in an investment vehicle, Crawley Resources, and to regulate their relationship as shareholders of Crawley Resources.[5]
It was agreed in the Shareholders' Deed that shares in Crawley Resources would be held in the following proportions.[6]
(1) Crawley Investments 30%.
(2) Noble Resources or its nominee 70%.
[2014] WASC 233
EDELMAN J
The shares were issued on 12 January 2007.
14 In December 2007, the two key assets held by Crawley Resources
were shares in companies described as Matilda Minerals (Matilda) (7.55 million shares) and Territory Resources (Territory) (just over 60 million shares).[7]
The two alleged oral agreements
15 In December 2007, an oral agreement was reached between (1)
Mr Elman, acting on his own behalf and on behalf of Noble Group, Paway, and Crawley Resources, and (2) Mr Kiernan, acting on behalf of Crawley Investments and Crawley Resources. The draft statement of claim defines it as the Agreement.[8]
16 The Agreement was reached on 5 December 2007 in a telephone
conversation between Mr Kiernan in Western Australia and Mr Elman in Hong Kong. Mr Elman said to Mr Kiernan that Noble Group and Paway (which was its wholly owned subsidiary)[9] did not want to proceed with a public listing of Crawley Resources and that they wanted to unwind Crawley Resources.[10]
Mr Elman proposed the following express oral terms, to which Mr Kiernan agreed.[11]
(1) Crawley Resources transfer to Noble Group or its nominee 70% of
the Existing Territory Shares (ie just over 42 million shares).(2) Crawley Investments would be entitled to the remaining 30% of
the Existing Territory Shares (ie just over 18 million shares).(3) Noble Group forgive 30% of the total existing loans from it to
Crawley Resources over a four year period.(4)
Noble Group cancel or set off the remaining 70% of the total existing loans to Crawley Resources in exchange for the transfer in (1).
(5)
Apart from effecting (1) to (4) above, Crawley Resources would 'cease the Business' (defined in the Shareholders' Deed as the
[2014] WASC 233
EDELMAN J
business of share investment and other activities as the shareholders determine)[12] and 'would not be used as vehicle' for Crawley Investments, Noble Group, and Paway to pursue further investment opportunities.
Crawley Investments then pleads implied terms as follows.[13]
(1) Noble Group would seek Foreign Investment Review Board
approval for the transfer to it of the 70% of the Territory shares.(2) Mr Elman would use his powers as a controlling director, alternatively a director, of Noble Group and Paway to have them carry the Agreement into effect. (3) Mr Elman would use his powers as Chairperson of Crawley Resources to cause Crawley Resources to effect the transactions the subject of the Agreement. (4) Noble Group would use its powers as the controlling shareholder of Paway to cause it to effect the transactions the subject of the Agreement. (5) Paway would use its powers as a shareholder of Crawley Resources to cause it to effect the transactions the subject of the Agreement. (6) Crawley Investments would use its powers as a shareholder of Crawley Resources to cause it to effect the transactions the subject of the Agreement. 19 In December 2007, after the Agreement, Mr Elman and Mr Kiernan
'supplemented the Agreement' by making another agreement.[14] In oral submissions, senior counsel for Crawley Investments accepted that this meant that the Agreement was varied to include the additional 'supplemented' terms.[15]
20 The supplementary terms to the Agreement were again agreed in a
telephone conversation between Mr Kiernan in West Perth and Mr Elman
in Hong Kong.[16] They were as follows.[17]
[2014] WASC 233
EDELMAN J
(1) Crawley Resources would subscribe for an additional 9,986,975
shares in Territory (the Additional Territory Shares);(2) Crawley Resources would sell its shares in Matilda to fund, in
part, its acquisition of the Additional Territory Shares;(3) When Crawley Resources had acquired the Additional Territory
Shares, it would transfer them to the Noble Group or its nominee;(4) The Noble Group would advance to Crawley Resources, as an interest free loan, the balance of the money required to purchase the Additional Territory Shares (the Further Loan). (5) The Noble Group would cancel or set off the Further Loan in exchange for the transfer by Crawley Resources to the Noble Group, or its nominee, of the Additional Territory Shares. 21 Crawley Investments then pleads an implied term that the Noble
Group would seek approval from the Foreign Investment Review Board for the transfer to it or its nominee of the Additional Territory Shares.[18]
Partial implementation of the Agreement
On 18 December 2007, Crawley Resources sold 3.335 million of its 7.55 million Matilda shares.
23 On 19 December 2007, Noble Group and Crawley Resources entered
a Debt Forgiveness and Share Transfer Deed. In that deed, Noble Group agreed to forgive part of a debt owed to it by Crawley Resources. In exchange, Crawley Resources agreed to transfer 70% of its shares in Territory to Noble Group as well as the Additional Territory Shares.
On 19 December 2007, Noble Group paid $6,010,000 to Crawley
Resources.
Variation of the Agreement
25 By 21 December 2007, Mr Kiernan became aware that the
Agreement had to be varied. Legal restraints on related party acquisitions meant that the remaining Matilda shares held by Crawley Resources could not be sold without approval of the Territory shareholders.[19]
[2014] WASC 233
EDELMAN J
26 So, on 27 December 2007, Mr Elman and Mr Kiernan varied the
Agreement. Again, (1) Mr Elman was acting on his own behalf and on behalf of Noble Group, Paway, and Crawley Resources, and (2) Mr Kiernan was acting on behalf of Crawley Investments and Crawley Resources.[20]
The variation was effectively as follows.
(1)
The remaining Matilda shares would not be sold but instead Noble Group would lend a further $2,500,000 to Crawley Resources to fund the acquisition of the Additional Territory Shares.
(2)
Noble Group would cancel or set off this loan in exchange for transfer of the Additional Territory Shares, which would be transferred when approval was obtained from the Foreign Investments Review Board.
(3)
When the approval of Territory shareholders was no longer required then Crawley Resources would sell its remaining Matilda shares and pay the proceeds to Noble Group.
Partial implementation of the variation
On 28 December 2007, Noble Group paid $2,500,000 to Crawley
Resources.[21]
29 Crawley Resources subscribed for the Additional Territory Shares
using the proceeds of sale of 3.335 million of its Matilda shares and the
combined loan funds amounting to $8,510,000 lent from Noble Group.[22]
Deloitte's proposed 'implementation'
30 In January 2008, Mr Elman, with Mr Kiernan's knowledge and
consent, instructed the accountants for Noble Group, Deloitte, to advise
on the tax consequences to Noble Group of the varied transaction.31 Deloitte proposed a plan to 'implement' the varied Agreement. The
proposed plan involved substantially different terms concerning the manner in which the ultimate objective of the varied Agreement would be realised. Several examples can be given.[23]
[2014] WASC 233
EDELMAN J
(1) The Additional Territory Shares were to be transferred to the Noble Group for $9.9 million to be offset against $39.1 million that had been lent from Noble Group to Crawley Resources. But under the varied Agreement the consideration in relation to the Additional Territory shares was only the $2.5 million loan. (2) Another 42,003,500 Territory shares were to be transferred to
Noble Group which was not provided under the Agreement.(3) Crawley Resources would buy back from Noble Group the shares that Noble Group held in Crawley Resources. Again, there was no such provision for this in the Agreement. 32 On 13 June 2008, Mr Elman emailed Mr Sundavadra, copied to
Mr Kiernan, saying that he understood that the deal with Noble Group, Paway, and Crawley Resources was complete and that he wanted it closed out.[24]
As Mr Sundavadra had foreshadowed in email correspondence,[25] Clayton Utz solicitors circulated documents to various persons including Messrs Sundavadra and Beringer for Noble Group, Paway, and Crawley Resources.[26] The documents were not sent to Mr Elman.[27] The documents were a Share Transfer and Debt Offset Deed, a Buy-Back and Debt Offset Deed, a Deed of Termination of the 2007 Deed, a share transfer form for 9,986,975 Territory shares (the Additional Territory Shares) to Noble Group, a share transfer form for 42,003,500 Territory shares to Noble Group. They were to implement the Deloitte proposal.[28]
34 The transaction documents to implement the Deloitte proposal
involved various conditions precedent. For instance, the Buy Back and Debt Offset Deed required a resolution of the shareholders of Crawley Resources,[29] and the satisfaction of various matters under the Foreign Acquisitions and Takeovers Act 1975 (Cth).[30]
On 26 June 2008, Messrs Kiernan and Simpson executed the transaction documents on behalf of Crawley Resources.[31]
[2014] WASC 233
EDELMAN J
36 On 30 June 2008, Mr Kiernan and his son met in Hong Kong with
Mr Elman and Mr Sundavadra. At that meeting Mr Kiernan was said to be acting on behalf of Crawley Investments and as a director of Crawley Resources. The pleading is confused about who was acting for Noble Group and Paway. Crawley Investments pleads that Noble Group was acting for itself, Paway, and Crawley Resources and acting as a director of Crawley Resources.[32] It may be that this is an error and the intended plea is that Mr Elman was acting on behalf of Noble Group, Paway, and Crawley Resources, and that Mr Elman was acting as a director of Crawley Resources. This possible error was not raised in oral submissions. In the absence of submissions on this point, and in light of the conclusion that I reach on this application, it suffices to proceed on the basis that the plea involves a material error by referring to Noble Group instead of Mr Elman in this important paragraph.
37 Subject to this assumed error, Crawley Investments pleads that
Mr Elman and Mr Kiernan confirmed that the Agreement was to be effected by execution of the transaction documents.[33] Crawley Investments says that this confirmation, and the matters preceding it described above, amounted to a Further Agreement 'in terms of the [unexecuted] documents'.[34]
The terms of the Further Agreement are pleaded to include terms
that:[35]
(1) Mr Elman would use his powers as a controlling director, or director, of Noble Group and Paway to have them execute the transaction documents to which they were parties; and (2) Mr Elman would use his powers as Chairperson of Crawley
Resources to cause Crawley Resources to effect the transactions.39 There is no plea concerning whether these terms are express or
implied. If they are express terms, there is no pleading of any fact from which such express terms could be derived. If they are to be implied, there is no plea concerning why such an implication should be made or the basis in fact for the implication.
[2014] WASC 233
EDELMAN J
The alleged breaches and the pleaded loss
The breaches alleged against Mr Elman in relation to the Agreement are as follows.[36]
(1) That he did not exercise his powers as a controlling director, or director, of Noble Group or Paway, and Chairperson of Crawley Resources, to cause them to carry the Agreement and the Further Agreement into effect. (2) That he did not cause Crawley Resources to cease the Business
(referring back to par 16.4 of the statement of claim).41 As to (2), there is, however, no plea in par 16.4 of the statement of
claim that Mr Elman owed an express duty to cause Crawley Resources to cease the Business. The plea in that par 16.4 is that Crawley Resources 'would cease the Business and would not be used as [a] vehicle for [the defendants] to pursue further investment opportunities'. The only obligation which Mr Elman is said to have owed to ensure this result was an implied obligation to 'use his powers as Chairperson of [Crawley Resources] to cause [Crawley Resources] to effect the transactions the subject of the Agreement' (par 16.7).
42 Crawley Investments then pleads that if the defendants had signed
the Buy Back and Debt Offset Deed then the conditions precedent would have been satisfied.[37] The effect of the transactions would have been that Crawley Investments would have been the sole shareholder of Crawley Resources which would have held 18 million Territory shares with various liabilities.[38] The failure to obtain this result is pleaded as loss and damage to Crawley Investments.[39]
The absence of a plea of causation
43 There is no express plea of causation of loss against Mr Elman.
There is effectively a plea that Mr Elman did not exercise his powers, and that the loss occurred because the transaction did not take place. But there is no plea that but for Mr Elman's failure to exercise his powers the loss and damage would not have been suffered. In other words, the statement of claim is silent on the question of whether the transaction might have failed even if Mr Elman had exercised his powers as a director of Noble
[2014] WASC 233
EDELMAN J
Group because, for example, other directors or shareholders of Noble
Group might have prevented approval of the transaction.44 The absence of this plea of causation was not a matter raised in
submissions by senior counsel for Mr Elman. If it had been raised it might have invited consideration of whether, and when, causation of loss in this 'but for' sense must be proved for a breach of contract. Senior counsel for Mr Elman focussed instead on the absence of evidence of Mr Elman's control over Noble Group for his submission that Mr Elman was not a party to the Agreement or the Further Agreement.
The test for whether the issue of the writ and its service should be set aside
45 Both senior counsel devoted considerable time to the question of the
appropriate test to apply to the question of whether the writ and order for service should be set aside. Much of the argument concerned the scope and effect of the decision of the High Court of Australia in Agar v Hyde.[40] Ultimately, by the conclusion of oral argument, the position of the parties was extremely close. Nevertheless, the basis upon which I proceed is as follows.
(1)
The decision in Agar v Hyde does not directly address the issue before me. That case involved the meaning of Pt 10 of the Supreme Court Rules 1970 (NSW). The joint judgment of Gaudron, McHugh, Gummow and Hayne JJ observed that those rules stand in 'sharp contrast' with rules derived from Chancery practice.[41] The Western Australian rule derives from the Chancery practice. The New South Wales rule derives from the different common law practice.[42] Their Honours said that '[l]earning that has developed in connection with [the Chancery] rules cannot automatically be applied to the Rules which govern the proceedings which are the subject of the present appeals'.[43]
(2)
In contrast with the common law practice that did not require leave to serve an originating process out of the jurisdiction, the Western Australian, Chancery-derived rules, require a plaintiff to obtain leave for the writ to issue (O 5 r 9 and O 5 r 6 of the Rules of the Supreme Court 1971 (WA)) and to satisfy two limbs, which are
[2014] WASC 233
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(i) its case falls within one of the pigeonholes of O 10 r 1(1) of the Rules of the Supreme Court (described by senior counsel on this application as 'jurisdictional conditions'), and
(ii) the Court should exercise discretion ('the Court may grant leave') to grant leave.
(3)
As to the test to be applied to determine whether a case falls within the first limb, ie the pigeonholes, the Chancery approach, as adopted in the older English Rules of Court, was that an applicant show 'no more than that it should be made sufficiently to appear to the court that the case was a proper one for service out of the jurisdiction'.[44] The English approach has generally been to adopt a standard of 'good arguable case' that the matter falls within a pigeonhole, not a good arguable case as to the merits of the case.[45] It is not necessary to consider whether Australian jurisdictions which employ the Chancery rule permit an approach of 'serious issue' (a potentially lower threshold if there is any difference), or require an approach of 'prima facie case' (potentially higher threshold if there is any difference). Both parties accepted that the standard was one of good arguable case.[46]
(4) In relation to this first limb, the pigeonholes in the Rules of the
Supreme Court relied upon by Crawley Investments are
(i)
O 10 r 1(e) (which includes an action to recover damages in respect of the breach of a contract which by its terms or implications is governed by the law of Western Australia),
(ii)
O 10 r 1(f) (which includes an action brought for breaches of an agreement committed within Western Australia), and
(iii)
O 10 r 1(h) (which includes Mr Elman being a proper party to an action being brought against Crawley Resources).
The matter in dispute in relation to each of these pigeonholes is whether there is a good arguable case that there was a contract to which Mr Elman was a party.
[2014] WASC 233
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(5) As to the second limb - the exercise of discretion by the Court - there may be various reasons why discretion would be exercised. One reason, not relevant in this case, is if the Court is an inappropriate forum for the trial of the proceeding. Another reason concerns the prospects of success of the action. In relation to prospects of success, the English approach (under the Chancery model) had been to ask whether there is a 'serious issue to be tried' on the merits.[47] That does not correspond with the approach taken by the High Court of Australia in Agar v Hyde in considering the New South Wales Rules (which were based on the common law model). Although the decision in Agar cannot be transplanted automatically to Rules of Court in States like Western Australia which are based on the Chancery model, I would apply that same approach to the exercise of discretion in this case. As a matter of principle, if a foreign defendant could obtain summary judgment after service and entry of an appearance, then it is very difficult to justify putting the foreign defendant to the time, expense, and trouble of entering an appearance in a foreign jurisdiction only to then grant summary judgment in its favour. As Professor Briggs has said, 'why should a claimant who wishes to serve out be called upon to demonstrate a higher apparent chance of success than the claimant who can effect service within the jurisdiction?'[48] And if a lower apparent chance of success were to be required then 'what is the criterion to be applied' that could offer 'useful guidance for those judicial officers who would have to apply the test and who would have to do so, often enough, in a busy practice list'?[49] For these reasons of principle, I would apply the same approach as the joint judgment in Agar v Hyde,50 that the same test should be applied in deciding whether originating process served outside Australia makes claims which have such poor prospects of success that the proceeding should not go to trial as is applied in an application for summary judgment by a defendant served locally.
(6)
The test for summary judgment in the Supreme Court of Western Australia is well established. I set out those principles and the authorities in Lampson (Australia) Pty Ltd v Fortescue Metals
[2014] WASC 233
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Group Ltd [No 3].[51] I adopt that summary although I reiterate that despite the significant onus required to satisfy this Court of summary judgment it may be that argument, even extensive argument, is necessary to demonstrate that the plaintiff's case is so clearly untenable that it cannot succeed.
(7) As senior counsel for Crawley Investments properly accepted,[52] Crawley Investments bears the onus of proof to show 'jurisdiction' or satisfaction of one of the pigeonholes in both the ex parte application as well as the inter partes hearing to set aside the writ and service. But, the onus is borne by the applicant in relation to the second limb where an applicant seeks an exercise of the Court's discretion to set aside the writ and service on the basis that the plaintiff's case would be liable to fail at the hurdle of summary judgment. This is consistent with the principle that an applicant generally bears the onus of proof. It is also consistent with the treatment of an applicant to set aside a writ and service in the same manner as a local application for summary judgment.[53] 46 This summary of principles reflects the substantial submissions from
the parties on this point. But, ultimately, little of substance turns on these principles in this case. The manner in which the application was argued essentially concerned whether Crawley Investments' claim that Mr Elman was a party to the Agreement was so hopeless that summary judgment would be granted. I accept that Mr Elman has satisfied his onus of showing that on consideration of all the evidence before the Court, summary judgment would be granted against Crawley Investments in relation to its claim against Mr Elman.
Mr Elman could obtain summary judgment on the claim that he was a party
Mr Elman's submissions
47 In written submissions, Mr Elman placed some emphasis upon an
argument that the evidence did not support the Agreement being made at all with either Mr Elman or the other defendants. A central plank of this argument was an alleged inconsistency between the 19 December 2007 Debt Forgiveness and Share Transfer Deed and the Agreement. But during oral exchange at the hearing senior counsel said that this submission that no Agreement arose with the other defendants was not
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pressed for the purposes of this application.[54] In these circumstances, it is not necessary to consider this separate written submission. It is enough to observe that Crawley Investments was not a party to the Debt Forgiveness and Share Transfer Deed. Nor did the Debt Forgiveness and Share Transfer Deed contain an entire agreement clause or any clause that said that it comprised the entirety of the obligations, between the parties to it, or other parties, related to its subject matter.
48 Senior counsel for Mr Elman made two central submissions
concerning why Crawley Investments had no prospects of succeeding against Mr Elman (in the sense I have described above concerning summary judgment).[55]
49 The first submission concerned Crawley Investments' lack of any
prospect of showing that Mr Elman was a party to the Agreement or the
Further Agreement.50 The second submission concerned the alleged implied obligations of
Mr Elman. In Codelfa Construction Pty Ltd v State Rail Authority of NSW[56] the five requirements set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings[57] were described by Mason J (with whom Stephen and Wilson JJ agreed) as necessary conditions for implication of a term. The term
(1) must be reasonable and equitable; (2) must be necessary to give business efficacy to the contract so that
no term will be implied if the contract is effective without it;(3) must be so obvious that 'it goes without saying'; (4) must be capable of clear expression; and (5) must not contradict any express terms of the contract. 51 These two submissions are not independent. The central basis for the
assertion that Mr Elman was a party was that he owed the implied obligations. If those obligations could not be implied then the pleaded basis for alleging that he was a party to the agreements would be
[2014] WASC 233
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removed. Equally, if Mr Elman was not a party to the agreements then he could not owe the implied obligations. The ultimate issue for this application is whether, within the principles concerning summary judgment, Crawley Investments has any prospect of successfully showing at trial that Mr Elman was a party to the agreements.
Crawley Investments' submissions
52 Senior counsel for Crawley Investments focused almost exclusively
in submissions on whether Mr Elman was a party to the Agreement, rather than whether he was a party to the Further Agreement. This approach was understandable. Even if it is assumed that there is a material error in the critical paragraph of the pleading (see above [36]), the Further Agreement was dependent upon the Agreement. The pleading (par 35) described how the alleged parties 'confirmed the Agreement was to be effected by execution of the documents'. If there is no reasonably arguable case that Mr Elman was a party to the Agreement then, in light of the evidence about the Further Agreement, there could not be a case that he was a party to the Further Agreement that confirmed how the Agreement was to be effected. The very limited evidence about the Further Agreement, which was not referred to at the hearing, concerned the conversation on 30 June 2008. Mr Kiernan said the following.[58]
My son James and I travelled to Hong Kong to finalise the transaction with [Noble Group], [Paway] and [Crawley Investments]. We met with Mr Elman in his office in Hong Kong on or about 30 June 2008. I believe [Noble Group's] counsel, Mr Sundavadra was also at the meeting although he may have been coming in and out of the room. At the meeting, my son James and I signed further copies of the share transfer forms effecting the transfer of the Territory Resources shares to [Noble Group]. I cannot recall why it was necessary to sign further copies of the transfer forms as they had already been signed in Perth and posted to Hong Kong by my secretary Juliet Morrin. Either James or I asked Mr Elman for the transaction documents executed by [Noble Group] and [Paway]. Mr Elman said words the substance of which were one of the people who needs to sign the documents isn't here. Just leave them with me and I'll get it sorted out and send them to you.
53 This evidence does not support Mr Elman being a party to the
Further Agreement. Mr Elman's comment was that he could not unilaterally sign the documents. His undertaking to 'sort the matter out' could not be sufficient to make him a party to the Further Agreement if he was not a party to the Agreement.
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Legal principles concerning when a person is a party to an agreement
In Ermogenous v Greek Orthodox Community of SA Inc,[59] Gaudron, McHugh, Hayne and Callinan JJ said the following about the process of characterising whether a person has intention to create legal relations.
Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
55 The same must be true when the question concerns whether a person
is a party to an agreement. Whether a person is a party to an agreement involves the same issue of whether that person has objectively conveyed an intention to create legal relations as a party to an agreement.
56 In Ermogenous, the joint judgment did not suggest that there was any requirement for ambiguity before the circumstances could be considered in determining whether any intention to create legal relations was manifested. As Robb J has explained, if 'there is an antecedent inquiry as to whether there is a contract at all, it seems to be logically necessary to permit reference to all objective circumstances that may bear upon the existence of the necessary intention'.[60]
57 There are controversial legal questions concerning the relevant
background information to consider in construing a contract.[61] The same difficult questions arise in determining relevant background information for the purpose of whether a contract exists.
| 58 | There are also conflicting authorities concerning whether post- contractual conduct can be relied upon in the interpretation of a contract.[62] |
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In Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd,63 Malcolm CJ, Ipp and Wallwork JJ agreeing, found that those authorities that admitted post-contractual conduct 'can be explained as applications of one or other of the exceptions', such as to explain technical expressions, identify the subject matter of the agreement, or resolve a latent ambiguity.64 However, there is authority that evidence of post-contractual conduct is admissible for the purpose of determining whether a contract existed.65
59 In this case, it is not necessary to determine the extent to which relevant background information is admissible, or the extent to which post-contractual conduct is admissible to determine whether a contract existed. For the reasons I explain below, the background information and post-contractual conduct cannot establish that a contract existed with Mr Elman. It suffices to say that one significant basis upon which Crawley Investments seemed to rely upon post-contractual communications between Mr Elman and Mr Kiernan is doubtful. Crawley Investments effectively sought to rely upon those later communications between Mr Elman and Mr Kiernan to demonstrate that Mr Elman had unilateral power to effect the transactions the subject of the Agreement and that this was a background fact that was reasonably knowable by Mr Kiernan at the earlier time of the Agreement for the purpose of establishing that there was objectively an intention for Mr Elman to be a party.
The reasons why summary judgment would be granted
60 In the 5 December 2007 telephone conversation, there was no
express comment by either Mr Elman or Mr Kiernan that Mr Elman was a party to the Agreement. If Mr Elman were to be a party to the Agreement then he could only become one by inference or by implication from the words used and circumstances, including background facts. In this application, I proceed on the basis that all the relevant information before the Court was information that was reasonably available to both parties,66 and was information that can be taken into account in assessing whether
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there is any prospect of successfully establishing at trial that, on the
construction of the Agreement, Mr Elman was a party to it.61 There are seven reasons why a consideration of all the material
before the Court points inevitably to the conclusion that summary judgment would be granted in favour of Mr Elman if he were a local defendant.
62 First, there is no indication in the 'substance' of any of the words allegedly used by Mr Elman in the Agreement that provides any foundation for him to be a party to the Agreement in order for any inference of implication of a term that he would personally cause the defendants to implement the Agreement and carry it into effect. I reiterate the entirety of the evidence concerning the 'substance' of what was allegedly said in the 5 December 2007 telephone conversation.67
Noble [Group] does not want to proceed with a public listing of Crawley Resources and we want to unwind the company. I propose that Noble [Group] takes 70% of the Territory shares in lieu of 70% of the Noble loans. The balance of the loans can then be written off over a 4 year period, and Crawley Investments can have 30% of the Territory shares.
Mr Elman also said words the substance of which were that he needed to have a deed signed effecting this by the end of December 2007 and that we would need to get advice from Deloittes as to the most tax effective way for both parties to do the deal. I knew December 2007 to be the year end for the Noble Group.
I was surprised that Mr Elman wanted to unwind Noble Group's association with Crawley Resources and I was also surprised by the proposal. I said to Mr Elman words the substance of which were, this is a surprise, and the deal is amazing. I agree to do it.
63 Senior counsel for Crawley Investments seized upon the words 'I
propose' as a foundation for the implication that Mr Elman was a party to the Agreement and bound by the implied terms.68 In other words, senior counsel's submission was effectively that Mr Elman was saying the following (with the omitted words, that he did not use, italicised): 'I propose that Noble Group and myself enter into a transaction, by which Noble Group undertakes, and I agree to procure that ....' The language of the other words of the conversation militates against this submission. The words immediately preceding 'I propose' involve a reference to the desires of Noble Group and the desire that we had to unwind the company. In the
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paragraph which followed Mr Elman essentially referred to the deal being done by both parties (ie Noble Group and Crawley Investments). These are not words describing an agreement by both parties and Mr Elman which would be implemented by Mr Elman procuring Noble Group to enter the subsequent transactions.
64 A more natural reading of the evidence concerning the effect of the
conversation might involve Mr Elman proposing, with authority, the manner in which the desires of those in control of the Noble Group who want to unwind the company might be fulfilled, rather than Mr Elman impliedly, or by inference, undertaking to be a party and to procure personally that the proposal be brought into effect by the other parties.
65 Secondly, on the evidence before the Court, even including the later correspondence, a reasonable person in the position of the parties on 5 December 2007 could not have known whether Mr Elman had the power unilaterally to bind Noble Group and Paway to the terms by which the implementation of the Agreement ('the most tax effective way for both parties') would be undertaken. This militates against any construction of the 5 December 2007 conversation that Mr Elman manifested an intention to be a party and to be bound by implied terms that he would use his powers to carry the Agreement into effect.
66 Senior counsel for Crawley Investments initially submitted that
Mr Elman might be bound by such an obligation even if he did not have the power to perform it.69 It is possible that a person might expressly undertake to carry an Agreement into effect even if he had no power to fulfil that undertaking. But it is fanciful that such an undertaking would be implied as a 'reasonable and equitable' term requiring a person to be under a duty that he had no power to perform or might have no power to perform.
67 However, as senior counsel for Crawley Investments effectively
submitted, the issue must be assessed by reference to the evidence of matters about which a reasonable person in the position of the parties could reasonably have known, or based on information which the parties knew. The evidence in relation to this is limited. The evidence might be capable of establishing an arguable case that a reasonable person in the position of the parties could have known that Mr Elman had some power in relation to Noble Group, such as to convey an offer for effecting the desire of those in control of Noble Group. But the evidence falls short of establishing an arguable case that a reasonable person in the position of
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the parties, and with the knowledge reasonably available to both of them, would have considered that Mr Elman unilaterally had the power to commit Noble Group or Paway to implement the transactions by whichever manner was determined appropriate to Crawley Investments and him.
68 As senior counsel for Crawley Investments conceded, the affidavit
evidence in relation to Mr Elman's power is confined to the paragraphs involving (1) Mr Kiernan's description of the 5 December 2007 conversation, (2) the paragraphs that immediately preceded that description, and (3) evidence of subsequent transactions.70
I have discussed above the evidence concerning the 5 December 2007 conversation itself.
70 The evidence concerning matters known by Mr Kiernan prior to the 5 December 2007 conversation is even more limited. It is (with the conceded inadmissible words struck out) as follows.71
I [ie Mr Kiernan] first met ... Mr Elman in or about late 1998...In my dealings with Mr Elman from 1998 to 2008, he spoke for and bound [Noble Group] and its subsidiaries and I do not recall him saying to me words to the effect that he needed to take any particular matter to his board.
I refer to the conversations to which I was a participant referred to at paragraphs 15, 33 and 34 of the draft Statement of Claim.
...
71 Mr Kiernan does not say what his previous 'dealings' with Mr Elman
involved. He does not explain what he means by 'dealing'. He does not say whether any of those dealings involved entry into contracts or the financial value of those contracts. He does not say whether he would have expected that Mr Elman would have taken any of the previous 'dealings' to the Board of Noble Group. He does not say whether any of the 'dealings' bore any resemblance to the subject matter of the 5 December 2007 conversation involving Crawley Resources.
72 Mr Kiernan also does not say whether he knew how many directors
there were of Noble Group or the nature of their powers, although there is evidence that he could reasonably have known that Mr Elman was a director of Noble Resources who had authority, together with Ms Yim, to
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bind Noble Resources to the Shareholders' Deed.72 Senior counsel for Crawley Investments accepted that Noble Group was 'not a one man company'73 but there was no evidence of the structure of Noble Group or the power or authority (including any apparent authority) of its directors.
73 Further, as to Mr Kiernan's reference to par 15 of the draft statement
of claim, this is the paragraph giving the particulars of the 5 December 2007 conversation to which I have already referred. Initially, Mr Kiernan also relied on two other matters described in pars 33 and 34 of the statement of claim, concerning issues in June 2008. They were initially included apparently as 'dealings' upon which Mr Kiernan relied for his assertion about previous dealings in 2007. But an objection was made to those two references and senior counsel for Crawley Investments properly did not resist the objection.
74 In oral submissions, senior counsel for Crawley Investments also
referred to evidence of subsequent transactions which he submitted showed that 'Mr Elman is calling the shots, to use the vernacular, into the period into 2008 up to July and beyond'.74 But, as I explain below, this evidence of Mr Elman's subsequent conduct is also insufficient to establish an arguable case that a person in Mr Kiernan's position on 5 December 2007 would reasonably have believed that Mr Elman had unilateral power to implement the Agreement.
75 Thirdly, Noble Group is a listed company, on the Singapore Stock Exchange Mainboard since 14 March 1997, with paid up capital of HK$1.6 billion.75 A reasonable person in the position of the parties would not expect that Mr Elman, even if he had unilateral power to cause the transactions to be effected, would impliedly undertake a personal commitment to do so as a party to the transaction with the potential for personal liability separate from the liability of the large, listed commercial entity that he represents.
76 Although this conclusion is dependent upon the facts of this case, the
conclusion that Mr Elman did not contract as a party is unsurprising. Senior counsel for Crawley Investments was unable to point to any case where a sole director of a company (which is a good example of unilateral power, although not the circumstances of this case) had ever been held to have undertaken to be a party to an agreement involving the company for
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the purpose only of impliedly undertaking to procure the performance of the company's agreement. If it were the case that it could be generally 'reasonable and equitable' for an implication to be made that a director is a party to a contract for the purposes of implying a term that the director undertook to cause the performance of the company, then it might be expected that a director would also generally be liable when the director, within the scope of authority, causes the company to breach that contract. But it is well established that directors of a company do not commit the tort of inducing breach of contract even when, acting as directors, they cause their company to commit a breach of contract.76 The reason for this is because '[w]here the dealings are contractual, it is elementary that the outsider's rights are against the company, not the director who has represented it'.77
77 Fourthly, on Crawley Investments' case, the oral agreement reached between the parties involved Mr Elman being a party to the Agreement, but Mr Kiernan not being a party to the Agreement. Mr Kiernan was a director of Crawley Resources. He was also a director of Crawley Investments which was his family company.78 No reasonable person in the position of the parties could expect that Mr Elman was communicating an intention that he be a party to the Agreement for the purpose of causing the Agreement to be carried into effect irrespective of whether Mr Kiernan was obliged to do the same on behalf of his family company, Crawley Investments.
78 Senior counsel for Crawley Investments relied upon cl 4.3 of the
Shareholders' Deed.79 He submitted that Mr Elman was in a special position in relation to voting by the Board of Crawley Resources such that even if the other three directors (two of whom were 'Crawley nominees' and two of whom were 'Noble nominees') were all opposed to a proposition, Mr Elman as Chairman had a 'casting vote' which would cause the proposition to pass.80 Clause 4.3 provides
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Decisions on any matter set out in Schedule 1 must be made by the unanimous approval of all Directors failing which Mr Richard Elman shall have a casting vote whose decision will be final and binding.
Schedule 1 includes a number of items which would comprise the subject matter of the Agreement including the transfer of more than 50% of the assets of Crawley Resources (item 6), the sale of the whole or any part of the material undertaking of Crawley Resources (item 7), the cessation or substantial variation of the Business (item 18), entering any arrangement with a shareholder or related party to a shareholder (item 19), and entering any contract with a value of more than $100,000 for each Financial Year (item 20).
80 These matters might provide a reason for Mr Kiernan to be treated
differently from Mr Elman as a director of Crawley Resources but they do not provide a substantial reason to treat Mr Kiernan differently in his capacity as a director of his family company, Crawley Investments. In other words, why would a reasonable person in the position of the parties consider that, on the one hand, Mr Elman was contracting on behalf of all the defendants (of which he was a director) as well as himself, but on the other hand Mr Kiernan was contracting only for the plaintiff (his family company, of which he was a director) and not himself.
81 Fifthly, in determining whether there are any prospects of Crawley Investments establishing that Mr Elman objectively conveyed an intention to be bound by the Agreement it is relevant that on the terms of the alleged Agreement the companies would be bound by it. The companies would be required to perform even if Mr Elman did not use his powers to procure performance. As at 5 December 2007, a legally advised party would be aware that the effect of a binding Agreement concerning shares in a private company, Crawley Resources, is that an order for specific performance could generally be obtained. And if specific performance became impossible or inappropriate, or if it were not sought, then the companies would be liable for damages. The only commercial purpose of Mr Elman being a party to the transaction in order to impliedly procure the performance of the defendant companies would be for him to be additionally liable. But there was no evidence that the large, listed company, Noble Group, would not be able to meet any damages award.
82 Sixthly, Crawley Investments has no prospect of successfully establishing that the conditions for implication of a term are met. The following matters, some of which overlap with the points made above, establish that those conditions could not be met.
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83 (1) The first major obstacle to the proposed implied terms is the point made above that, at its highest, the evidence before the Court reveals that a reasonable person in the position of the parties on 5 December 2007 could not have known whether Mr Elman had the power unilaterally to bind Noble Group and Paway to implement the terms of the Agreement in the manner considered appropriate to Crawley Investments and himself.
84 (2) The second obstacle is that the purpose of the alleged implied term was for Mr Elman to use his powers to effect the transaction and perform the Agreement on behalf of the defendant companies. But, for the purpose of 'business efficacy', the Agreement would 'be effective without' such an implied term. As I have explained, on the assumption that there is a binding Agreement between the companies, the companies are required to perform, and potentially liable for damages for a failure to perform, even if Mr Elman did not use his powers to procure performance.
85 (3) As I have already explained, it also makes little commercial sense for a construction of the parties to the Agreement to involve Mr Elman acting both personally and on behalf of the defendants but Mr Kiernan acting only on behalf of the plaintiff, but not personally. Why would a reasonable person in the position of the parties construe Mr Elman's words as committing himself to the alleged implied undertakings on behalf of the defendants, but not requiring the same obligation from Mr Kiernan on behalf of the plaintiff?
86 (4) Both the pleaded Agreement and the pleaded Further Agreement were subject to conditions precedent of Foreign Investment Review Board approval. Mr Elman's alleged implied obligations would necessarily have to be subject to the same condition precedent. But this introduces further uncertainty to the alleged implied terms. How long would the approval process take? Would Mr Elman still owe those implied duties if approval were given but he were no longer a director of the relevant company, or no longer had sufficient control (if he ever had that control) to cause the transactions to be effected?
87 (5) The Deloitte proposal involved 'implementation' of the Agreement by terms that were, at least, substantial additional terms to those contained in the Agreement. For instance, under the Deloitte proposal the consideration payable by the Noble Group for the Additional Territory Shares was $9.9 million. Under the Agreement, as varied, the consideration in relation to the Additional Territory shares was only $2.5 million. Other matters in the transaction documents also went beyond the
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terms of the Agreement. For instance, the Termination Deed, as amended, contained a recital that the 19 December 2007 Debt Forgiveness and Share Transfer Deed had not been implemented or given effect to because Noble Group, Paway, and Crawley Resources had determined that it did not reflect the final agreed arrangements with respect to the subject matter of that 19 December 2007 Deed.
88 In oral submissions, senior counsel for Crawley Investments
eventually accepted that Noble Group and the other defendants were not bound by the Agreement to adopt the precise terms of the Deloitte proposal.81 He submitted that Mr Elman's obligation was to use his powers to cause the defendants to carry the Agreement into effect, by whatever means (ie whatever terms of the transaction).82 But it is far from obvious that such a term would be expected by a reasonable person in the position of the parties. How could such obligation - framed in absolute terms - operate if the terms of the transaction could not be agreed? In other words, it is conceivable that a future proposal for 'implementing' the Agreement, involving additional terms, might be a matter that Mr Elman might not consider to be in the best interests of Noble Group. Or it might involve terms that Mr Elman considered to be unduly favourable to Crawley Investments. It is neither 'obvious' nor 'reasonable and equitable' to expect that Mr Elman was nevertheless undertaking to use his powers to implement the Agreement in that way.
89 Seventhly, even if the subsequent correspondence were able to be taken into account in construing whether a reasonable person would have considered Mr Elman to be a party on 5 December 2007, that subsequent correspondence does not provide any real assistance to Crawley Investments' case on this point. Senior counsel for Crawley Investments relied upon several matters of subsequent correspondence which he said indicated that Mr Elman was a party.
(1)
One matter upon which senior counsel relied was an email sent on 8 July 2008 from Mr Kiernan to Mr Elman in response to the email that Noble Group would not be executing the Deloitte documents. In that email, Mr Kiernan said:83
Richard
I am in receipt of the following email from Bharat [Sundavadra, the legal counsel for Noble Group].
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In order to keep Monarch alive I [need] to sell some of my [Territory] shares and I was under the impression that you had indicated that these were "my" shares and I could sell them.
May I confirm that this is the case for without this ability I cannot refund Monarch Gold.
This email provides very little assistance in interpreting whether Mr Elman was a party to the Agreement. First, the email expresses a subjective view of Mr Kiernan about his 'impression'. As I have explained, the determination of whether a person is a party to the Agreement is an objective question. Secondly, even if Mr Kiernan's subjective impression on 8 July 2008 were somehow relevant to construction of the words spoken in the December 2007, in his email Mr Kiernan does not explain the matters upon which his 'impression' was based. Thirdly, Mr Kiernan does not explain whether those matters were known to Mr Elman rather than others such as Mr Sundavadra (from whom he received the email).
(2)
Mr Elman was involved in discussions with Deloitte.84 Crawley Investments rely upon the substance of those to suggest that Mr Elman had significant authority and a key role in furthering the transaction. For instance, senior counsel for Crawley Investments also pointed to particular emails in a chain of correspondence concerning the Deloitte proposal. One of those emails involved the Chief Operating Officer from the Noble Group writing to Mr Beringer and Mr Sundavadra from Noble Group saying that he had spoken to Mr Elman and it seemed that Mr Elman 'is actually waiting for us to revert with a better structure for him then to approach [Mr Kiernan] (I am sure that is not what we agreed, but anyway ....) As soon as you have a plan let him/me know'.85 Another email involves Mr Elman saying to Mr Sundavadra that 'we need to close out this deal' and Mr Sundavadra saying to Mr Kiernan that 'the agreements are essentially mechanical instruments which achieve the agreed commercial position by a process which has been signed off on by accountants on both sides'.86 This correspondence supports an argument that Mr Elman had authority, perhaps significant authority, in furthering the transaction. But that is still a different matter from whether Mr Elman had unilateral power to cause Noble Group to
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effect the transaction and whether, objectively, he was intended to be a party in the 5 December 2007 conversation. Indeed, read as a whole, the email correspondence appears to suggest that it is Noble Group that is the party, not Mr Elman. There is a conspicuous absence of any reference to any obligation upon Mr Elman to procure the transaction to occur on behalf of Noble Group. For instance, in an email on 1 August 2008, Mr Beringer writes to Mr Thring, without mention of Mr Elman, and describes how we set up Crawley Resources and refers to matters relating to Noble Group's desire concerning how they wish to act.87
Conclusion
90 For the seven reasons I have described, Crawley Investments has no
prospect of successfully establishing that Mr Elman was a party to the Agreement. The length and scope of the discussion above reflects the considerable detail in which senior counsel for both parties argued on this application. But, from whatever perspective the issue is viewed, everything points powerfully against Mr Elman being a party to the Agreement.
91 I am satisfied that, on the evidence before the Court, it can be seen
that, however the facts be found, there is no basis for the legal conclusion at trial that Mr Elman was a party to the Agreement or the Further Agreement.
92 I will list this matter for further directions on the first available date,
13 August 2014. If the parties are able to agree a minute of proposed orders following from this emailed decision then those orders may be able to be made administratively. Otherwise, I will hear from counsel on 13 August 2014.
[7] Draft statement of claim [14]. [8] Draft statement of claim [15]. [9] Draft statement of claim [5].
[30] Draft statement of claim [29.2] - [29.5].
[31] Draft statement of claim [32].
[33] Draft statement of claim [35].
[34] Draft statement of claim [37.1].
[35] Draft statement of claim [37.3] - [37.5].
[32] Draft statement of claim [35.2].
[37] Draft statement of claim [41].
[38] Draft statement of claim [42].
[39] Draft statement of claim [44].
[36] Draft statement of claim [38] - [39], [40].
[40] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552.
[41] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 572 [46].
[42] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 572 [46].
[43] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 569 [39].
[44] Rules of the Supreme Court 1971 (WA) O 10, r 4(2); Seaconsar Far East Ltd v Bank Markazi Jomhouri
Islami Iran [1994] 1 AC 438, 453 (Lord Goff; Lords Templeman, Griffiths, Browne-Wilkinson & Mustill
agreeing).
[45] Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 454 - 455, 457 (Lord Goff;
Lords Templeman, Griffiths, Browne-Wilkinson & Mustill agreeing).
[46] Summary of Legal Propositions for Elman [4]; ts 44 - 45.
[47] Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 457 (Lord Goff; Lords
Templeman, Griffiths, Browne-Wilkinson & Mustill agreeing).
[48] Briggs A, The Conflict of Laws (3rd ed, 2013) 130.
[49] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 576 [58]. 50 Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 576 [60].
[51] Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [44].
[52] ts 49.
[53] See also Briggs A and Rees P, Civil Jurisdiction and Judgments (5th ed, 2009) 537 [4.84].
[54] ts 26.
[55] ts 9.
[56] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 347. See
also Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144
CLR 596, 605 606 (Mason J).
[57] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283.
[60] Druin Pty Ltd v Corbin [2014] NSWSC 510 [32].
[58] Affidavit of Mr Kiernan, 29 October 2013, [17].
[59] Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95, 105 - 106 [25].
[61] Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 284 - 285, footnote 152.
[62] See the authorities cited in Seddon N C, Bigwood R, and Ellinghaus M P, Cheshire and Fifoot's Law of
| Contract (10th ed, 2012) 433. | 63 Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA 217; (1999) 21 WAR 350. 64 Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd [1999] WASCA 217; (1999) 21 WAR 350, |
| 362 [50] - [51]. 65 Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68, 77 (Griffith CJ); Barrier Wharfs Ltd v | |
| W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647, 668 - 669 (Griffith CJ) 672 (Isaacs J); ATCO | |
| Controls Pty Ltd v Newtronics Pty Ltd [2009] VSCA 238; (2009) 25 VR 411, 424 [44] (the Court); Brambles | |
| Holdings Pty Ltd v Bathurst City Council [2000] NSWCA 61; (2001) 53 NSWLR 153, 163 [25] (Heydon JA). 66 Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251, 272 [49] (Lord | |
| Hoffman); Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181, 188 [11] (Gleeson CJ, Gummow and Hayne JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, 179 [40] (the Court). | |
| 67 Affidavit of Mr Kiernan, 29 October 2013 [13] - [15]. | |
| 69 ts 54. | |
| 70 ts 60 - 61. | |
| 72 Affidavit of Mr Kiernan, 29 October 2013, MLJK 3, page 56. 73 ts 59. 74 ts 59. 75 Affidavit of Mr Kiernan, 29 October 2013, MJKL 36, page 243. | |
| 76 Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd [2003] VSC 291; (2003) 9 VR 171, 203 - 205 [112] - [118] | |
| (Redlich J); Foxeden Pty Ltd v IOOF Building Society Ltd [2003] VSC 356 [322] (Habersberger J) citing LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886 [79] (Barrett J), referring to Said v Butt [1920] 3 KB 497 and O'Brien v Dawson [1942] HCA 8; (1942) 66 CLR 18; Idoport Pty Ltd v National | |
| Australia Bank Ltd [2001] NSWSC 328 [22] (Einstein J); O'Brien v Dawson [1942] HCA 8; (1942) 66 CLR | |
| 18, 32 (Starke J), 34 (McTiernan J). 77 Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd [2003] VSC 291; (2003) 9 VR 171, 204 [114] (Redlich J); | |
| Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 328 [63] (Einstein J). | |
| 78 Affidavit of Mr Kiernan, 29 October 2013, MJKL 11, page 94. 79 Affidavit of Mr Kiernan, 29 October 2013, MJKL 3, page 46. 80 ts 56. | |
| 81 ts 73. 82 ts 74. 83 Affidavit of Mr Kiernan, 29 October 2013, MJKL 24, page 186. | |
| 84 ts 75. 85 Affidavit of Mr Kiernan, 29 October 2013, MJKL 11, page 97. 86 Affidavit of Mr Kiernan, 29 October 2013, MJKL 13, page 123. | |
| 87 Affidavit of Mr Kiernan, 29 October 2013, MJKL 11, page 99. |
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