JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EDEN ENERGY LTD -v- DRIVETRAIN USA INC [2012] WASC 192
CORAM: CORBOY J
HEARD: 1 JULY 2011
DELIVERED : 8 JUNE 2012
FILE NO/S: CIV 1543 of 2011
BETWEEN: EDEN ENERGY LTD
Plaintiff
AND
DRIVETRAIN USA INC
First DefendantENGENCO LTD
Second Defendant
Catchwords:
Practice and procedure - Application for summary judgment - Whether issues to be tried on authority of a director of the defendants to execute agreement and the knowledge of suspicion of the plaintiff regarding the director's authority - Whether issue to be tried on possible entitlement of defendants to equitable compensation for plaintiff's knowing participation in an alleged breach of duty by a director of the defendants
Corporations - Plaintiff's entitlement to make the assumptions referred to in s 129 Corporations Act 2001 (Cth) - Knowledge or suspicion of plaintiff that director not authorised to execute agreement - Whether director in position of conflict in negotiating transaction for purchase of shares and in executing agreement
Legal practitioners - Whether firm of solicitors should be restrained from acting where partners are directors of and shareholders in plaintiff and where partners are alleged to know that a director of defendant was acting in breach of a fiduciary duty in a dealing between the plaintiff and the defendants
Legislation:
Corporations Act 2001 (Cth), s 128, s 129 and s 195
Result:
Plaintiff's application for summary judgment dismissed
Defendant's application to restrain plaintiff's solicitors from appearing for the plaintiff allowed
Category: B
Representation:
Counsel:
Plaintiff: Mr C S Williams
First Defendant : Mr B Dharmananda SC
Second Defendant : Mr B Dharmananda SC
Solicitors:
Plaintiff: Solomon Brothers
First Defendant : Cocks Macnish
Second Defendant : Cocks Macnish
Case(s) referred to in judgment(s):
Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1992] 4 All ER 161; [1993] 1 WLR 509
Barclays Finance Holdings Ltd v Sturgess (1985) 3 ACLC 662
Barnes v Addy (1874) LR 9 Ch App 244
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; 39 WAR 1
Briginshaw v Briginshaw (1938) 60 CLR 336
Brockway v Pando [2000] WASCA 192; 22 WAR 405
Clay v Karlson (1997) 17 WAR 493
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Errichetti Holdings Pty Ltd v Western Plaza Hotel Corporation Pty Ltd [2006] WASC 113
Farah Constructions Pty Ltd v Say‑Dee Pty Ltd [2007] HCA 22; 230 CLR 89
Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143
Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6
Holborow v Macdonald Rudder [2002] WASC 265
Horizon Star Pty Ltd v Carina Holdings Pty Ltd [2003] WASCA 94
Jones v Dunkel (1959) 101 CLR 298
Kallinicos v Hunt [2005] NSWSC 1181; 64 NSWLR 561
Newman v Phillips Fox [1999] WASC 171; 21 WAR 309
Northside…
Keep reading for free
Create a free CaseChat account to read Eden Energy Ltd v Drivetrain USA Inc and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2012] WASC 192
- Decision Date
CaseChat Overview and Summary
The court held that the defendants had not discharged their evidentiary burden of adducing evidence capable of establishing that Mr. Coote and Mr. Patterson were not, in fact, authorised to execute the variation deed on behalf of Coote Energy, Engenco and/or Drivetrain. The court noted that the defendants had not produced any evidence that Mr. Coote and Mr. Patterson were not authorised to execute the variation deed on behalf of Coote Energy, Engenco and/or Drivetrain. The court held that the defendants' knowledge or suspicion was not sufficient to discharge their evidentiary burden. The court held that the law since Royal British Bank v Turquand (1856) 6 EL & BL 327; 119 ER 886 has been that a party who knows of a requirement to get approval and is presented with a signed document which could only be validly signed and presented if the approval has been obtained, is entitled to draw the inference that the approval had, in fact, been obtained. The court held that the defendants had not produced any evidence to rebut this inference.
The court held that Eden Energy was entitled to make the assumptions referred to in section 129 of the Corporations Act 2001 (Cth). The court held that the knowledge that Eden Energy possessed, through Mr. G Solomon and Ms. Hawksley, was merely knowledge of a requirement to obtain board approval. The court held that the defendants did not allege that Eden Energy had knowledge of, or suspected, an actual failure to obtain approval. The court held that the defendants' knowledge or suspicion was not sufficient to discharge their evidentiary burden. The court held that the defendants' contentions were not sufficient to establish that Eden Energy knew or suspected that Mr. Coote was not authorised by Engenco to enter into the variation deed.
The court granted Eden Energy's application for summary judgment. The court held that the defendants were not entitled to make the assumptions referred to in section 129 of the Corporations Act 2001 (Cth). The court held that the defendants had not discharged their evidentiary burden of adducing evidence capable of establishing that Mr. Coote and Mr. Patterson were not, in fact, authorised to execute the variation deed on behalf of Coote Energy, Engenco and/or Drivetrain. The court held that the knowledge that Eden Energy possessed, through Mr. G Solomon and Ms. Hawksley, was merely knowledge of a requirement to obtain board approval. The court held that the defendants did not allege that Eden Energy had knowledge of, or suspected, an actual failure to obtain approval. The court held that the defendants' knowledge or suspicion was not sufficient to discharge their evidentiary burden. The court held that the defendants' contentions were not sufficient to establish that Eden Energy knew or suspected that Mr. Coote was not authorised by Engenco to enter into the variation deed.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Further, in drawing an inference of subjective knowledge or suspicion:(a)The court may take into account the conclusions that a hypothetical reasonable person in the same position would have drawn from the facts known and then presume that the actual person relying on the assumptions in s 129 would have reached the same conclusions. However, the court's view of what a reasonable person would know cannot be conclusively attributed to a person as actual knowledge is required. Persons invoking the assumptions under s 129 can deny that they knew or suspected that the assumptions were incorrect and it is then a question of whether the court believes them: Ford's Principles of Corporations Law [13.300].(b)Arguably, a court is entitled to approach the matter in two stages (Ford's Principles of Corporation Law [13.300]):Where opportunities for knowledge on the part of the particular person are proved and there is nothing to indicate that there are obstacles to the particular person acquiring the relevant knowledge, there is some evidence from which the court can conclude that such a person has the knowledge. However, this conclusion may be easily overturned by a denial on his part of the knowledge which the court accepts, or by a demonstration that he is properly excused from giving evidence of his actual knowledge. (RCA Corporation v Custom Cleared Sales Pty Ltd (1978) 19 ALR 123, 126). The defendants contended that Eden Energy, particularly through Solomon Brothers, knew or suspected that Mr Coote was not authorised by Engenco to enter into the variation deed. Its knowledge or suspicion was to be inferred from the following matters (defendant's submissions in opposition to summary judgment, pars 26, 27 and 57):(a)Mr Coote's position of 'invidious' conflict;(b)the deletion in the variation deed of the requirement for board approval notwithstanding that Engenco assumed a liability as guarantor under the agreement;(c)Mr Coote advised that board approval for the variation deed would be sought but neither Eden Energy nor Solomon Brothers was ever informed that approval had, in fact, been obtained. In answer to those contentions, Eden Energy argued that (plaintiff's responsive submissions, pars 3 ‑ 7):(a)The defendants had not discharged their evidentiary burden of adducing evidence capable of establishing that Mr Coote and Mr Patterson were not, in fact, authorised to execute the variation deed on behalf of Coote Energy, Engenco and/or Drivetrain.(b)The knowledge that Eden Energy possessed, through Mr G Solomon and Ms Hawksley, was merely knowledge of a requirement to obtain board approval. The defendants did not allege that Eden Energy had knowledge of, or suspected, an actual failure to obtain approval.(c)The law since Royal British Bank v Turquand (1856) 6 EL & BL 327; 119 ER 886 has been that:A party who knows of a requirement to get approval and is presented with a signed document which could only be validly signed and presented if the approval has been obtained, is entitled to draw the inference that the approval had, in fact, been obtained.