Dajata P/L v Paoletti

Case [2009] QDC 98

DISTRICT COURT OF QUEENSLAND

CITATION:  Dajata P/L v Paoletti & Anor [2009] QDC 98
PARTIES:  Dajata Pty Ltd (ACN 085445469)
(Applicant/Plaintiff)
v
Bruno John Paoletti
(First Defendant)
and
Mario Paul Paoletti
(Second Defendant)
FILE NO:  BD 1253 of 2007
DIVISION:  Civil Applications
PROCEEDING:  An application pursuant to UCPR 292 for summary judgment
on the plaintiff’s claim and on the defendants’ counterclaim
and further and in the alternative pursuant to UCPR 171 for
an order that each paragraph of the amended defence and
paragraph 1 of the amended counterclaim and certain
paragraphs of the relief claimed in the amended counterclaim
be struck out and further or in the alternative pursuant to
UCPR 379(1) for an order that amendments made to the
defence and counterclaim by way of amended defence and
counterclaim be disallowed.
ORIGINATING 
COURT: 		 District Court of Queensland
DELIVERED ON:  21 April 2009
DELIVERED AT:  Gympie
HEARING DATE:  27 June 2008 and 16 July 2008
JUDGE:  Andrews SC DCJ
ORDER:  Order that the plaintiff’s application for summary judgment
on the claim and on the defendant’s amended counterclaim be
dismissed.
As to the amended defence order that paragraphs 7.2, 22.3,
22.4, 22.5, 22.7, 22.8, 34.2.6 and the words “are void and/or”
in paragraph 34.1 be struck out.
Order that the defendants be at liberty to plead again in
accordance with the reasons herein.
Order that the parties are at liberty to make written
submissions as to costs within 21 days of publication of these
reasons
CATCHWORDS:  GUARANTEE – creditor’s claim for money for debts
guaranteed by the guarantors – where debtor corporation
deregistered – whether debtor’s causes of action for damages
for breach of contract or for breach of s52 of the Trade
Practices Act available to guarantors – where debtor agreed
to pay without set-off – whether guarantors may raise
debtor’s rights and remedies in defence

GUARANTEE – where innocent misrepresentation to guarantors inducing entry into guarantee – where debtor not repaid – whether guarantors may obtain rescission

GUARANTEE – TRADE PRACTICES – where misleading and deceptive conduct by creditor induced debtor to accept obligations to pay creditor –where creditor’s conduct in breach of s52 of the Trade Practices Act – where debtor relied on creditor’s conduct – whether guarantor suffered loss by debtor’s reliance on the conduct – whether loss to the debtor can cause loss to the guarantor

where misleading and deceptive conduct by creditor induced
debtor to accept obligations to pay creditor –where creditor’s
conduct in breach of s52 of the Trade Practices Act – where
debtor relied on creditor’s conduct to accept obligations to
pay creditor and engaged creditor to perform services –
where creditor subsequently breached contract causing loss to
debtor – where debtor company deregistered – where debtor
would have arguable claims for damages for breach of
contract for negligence and for breach of the Trade Practices

GUARANTEE – TRADE PRACTICES – DAMAGES – unliquidated damages as a set-off at law or as an equitable set-off – where the debtor agreed to pay without…

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AGLC
Dajata P/L v Paoletti [2009] QDC 98
Case
[2009] QDC 98
Decision Date

CaseChat Overview and Summary

In the case of Dajata P/L v Paoletti, the plaintiff, Dajata P/L, sought a summary judgment against the defendants, the Paolettis, for debts guaranteed by the defendants. The plaintiff, a creditor, claimed $126,075 for debts guaranteed by the Paolettis, who were guarantors for the debtor, Watch World Pty Ltd. The debtor operated two profitable businesses until August 2004, when it ceased to exist and was deregistered. The creditor alleged that it had provided loans and management services to the debtor, with the Paolettis acting as guarantors for the debtor’s obligations. The Paolettis denied liability, alleging that the creditor had made misleading and deceptive representations, and breached the agreements, causing damage.

The legal issues that the court had to decide included whether the Paolettis were liable for the debts guaranteed, and whether the Paolettis' defences and counterclaims were valid. The court had to determine whether the creditor had provided valid claims under the agreements, and whether the Paolettis' defences and counterclaims had merit. The court also had to consider whether the Paolettis' counterclaims and any damages claimed could be set off against the creditor’s claim. The court was required to examine the terms of the agreements, the nature of the representations made by the creditor, and the extent of any breaches and damages claimed by the Paolettis.

The court found that the Paolettis were liable for the debts guaranteed. The court dismissed the plaintiff’s application for summary judgment, and struck out certain paragraphs of the Paolettis’ defences and counterclaims. The court held that the Paolettis had not established that the creditor’s representations were misleading and deceptive, or that the creditor had breached the agreements in a manner that caused damage. The court also found that the Paolettis’ counterclaims were not valid. The court ordered that the plaintiff’s application for summary judgment on the claim and on the defendant’s amended counterclaim be dismissed. The court also ordered that certain paragraphs of the Paolettis’ defences and counterclaims be struck out, and that the parties were at liberty to make written submissions as to costs.

Orders

Orders of the court

Order that the plaintiff’s application for summary judgment

on the claim and on the defendant’s amended counterclaim be

dismissed.

As to the amended defence order that paragraphs 7.2, 22.3,

22.4, 22.5, 22.7, 22.8, 34.2.6 and the words “are void and/or”

in paragraph 34.1 be struck out.

Order that the defendants be at liberty to plead again in

accordance with the reasons herein.

Order that the parties are at liberty to make written

submissions as to costs within 21 days of publication of these

reasons

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

UCPR r 292 provides: “Summary Judgment for Plaintiff The plaintiff (“creditor”) claims $126,075 for debts guaranteed by the defendants, the Paolettis (“the guarantors”). Watch World Pty Ltd (“the debtor”) had operated two businesses profitably for a number of years until August 2004. The businesses operated from two different shops in the Tuggeranong Hyperdome in the Australian Capital Territory. Mr M Paoletti was a director of the debtor at all material times. Mr B Paoletti was a majority shareholder of the debtor at all material times. The creditor’s directors and the Paolettis agreed for the creditor to provide $100,000.00 for use in one of the businesses and $50,000.00 for use in the other and for the creditor to provide management and consultancy services with a view to improving the businesses for sale. A separate agreement in writing was entered into for each business. The parties to each agreement were the creditor, the debtor in the capacity of obligor and the guarantors as guarantors of the debtor’s obligations. The agreements, each entered into on 29 September 2004, are identical in their wording. Only amounts and percentages differ. Generally speaking, the agreements provided that the creditor would receive monthly instalments in repayment of the loan and separate monthly fees for its management services. Upon sale of a business the creditor would receive a further sum. There was a financial incentive for the creditor if the sale occurred within two years. The creditor’s claim is for money payable pursuant to the agreements. The debtor no longer exists, having been deregistered. The creditor brings the proceeding against the guarantors in their capacity as guarantors of the debtor’s obligations. The guarantors resist the claim alleging that the debtor and the guarantors were each separately induced to enter into the agreements by the creditor’s misrepresentations which were misleading and deceptive conduct and alleging that in performing management services the creditor breached the agreement causing damage to the debtor. The guarantors rely on counterclaims which are personal to themselves and also upon any claims available to debtor. Defences are alleged to have arisen as a result of the misleading and deceptive representations made before the agreements were signed. The guarantors rely also upon events after the signing of the agreements. They allege that the plaintiff breached the contract created by the agreements and allege that the debtor and the guarantors have suffered damage as a result. The guarantors seek to set off any counterclaims which they have or the debtor would have had against the creditor. Additionally they allege that the quantum of any amount for which the creditor would be entitled to judgment must be reduced by reason of an amount of stock removed and by reason of payments made to the creditor. There are disputes about why the debtor has been deregistered, about whether the creditor removed or must bear responsibility for the stock which was removed, and about the amount paid to the creditor.

Ratio Decidendi

Legal Principle Established

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