Edensilk Pty Ltd v Retail STYSTEMS Pty Ltd
[2012] WADC 171
•7 DECEMBER 2012
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: EDENSILK PTY LTD -v- RETAIL STYSTEMS PTY LTD [2012] WADC 171
CORAM: REGISTRAR KINGSLEY
HEARD: 26 JUNE 2012
DELIVERED : 7 DECEMBER 2012
FILE NO/S: CIV 1020 of 2012
BETWEEN: EDENSILK PTY LTD
Plaintiff
AND
RETAIL STYSTEMS PTY LTD
Defendant
Catchwords:
Summary judgment - Series of agreements - Turns on own facts
Legislation:
Nil
Result:
Leave to defend on part of claim
Judgment given on balance of claim
Representation:
Counsel:
Plaintiff: Mr P D Wright
Defendant: Mr C E Chenu
Solicitors:
Plaintiff: Patrick Wright
Defendant: Bennett & Co
Case(s) referred to in judgment(s):
Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Morgan v Pallister [2004] WASC 188
The Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Watson v Foxman & Ors (1995) 49 NSWLR 315
Webster v Lampard (1993) 177 CLR 598
REGISTRAR KINGSLEY: The plaintiff, Edensilk Pty Ltd (Edensilk) is a provider of consultancy services. Edensilk pleads it entered into a series of agreements with the defendant Retail Systems Pty Ltd (Retail Systems).
Edensilk pleads five agreements with Retail Systems:
1An Assignment Agreement made 27 May 2010 (the Assignment Agreement),
2An Option and Service Agreement made 25 June 2010 (the Service Agreement),
3An oral agreement whereby Retail Systems agreed to pay Edensilk the cost of the registration of domain names (the First oral Agreement),
4An oral agreement whereby Retail Systems agreed to repay Edensilk the cost of incurring 121 matched reports on a number of potential recruits for the defendant at a rate of $500 plus GST (the second oral agreement),
5An oral agreement whereby Retail Systems agreed to repay the cost incurred by Edensilk in making available the MultiCOACH Success Factors online application to be used by personnel of Retail Systems. Edensilk pleads that pursuant to this oral agreement, Edensilk purchased a 12 month subscription to Multi‑Coach Success Factors for Retail Systems (the third oral agreement).
Edensilk goes on to plead, that through Paul Curtis (Curtis), it provided the services detailed in the five agreements to Retail Systems and the amount owing for these services totals $117,130.35. Edensilk pleads Retail Systems has refused to pay that sum. Edensilk has brought a chamber summons dated 26 April 2012 pursuant to O 14 Rules of the Supreme Court 1971. That application is supported by the affidavit of Curtis sworn 24 April (Curtis' first affidavit) objection has been taken to certain paragraphs by counsel for Retail Systems. Retail Systems opposes the O 14 application and has filed an affidavit of Peter Noel Martin sworn 14 May 2012 (Martin's affidavit). A responsive affidavit by Curtis sworn 29 May 2012 has been filed (Curtis' second affidavit), which also has been objected to by counsel for Retail Systems.
The objections to Curtis' first affidavit
Counsel for Retail Systems objects to pars 6 and 7 of Curtis' first affidavit. The objection by Retail Systems counsel is that pars 6 and 7 state matters of conclusion in relation to issues which it is for the court to decide. The objection is that pars 6 and 7 and 8 state the meaning and effect of the various agreements the subject of this application.
Edensilk's counsel submits that pars 6, 7 and 8 are stating, as a matter of fact, the contents of the assignment agreement and option and service agreements.
Having read again pars 6, 7 and 8 of Curtis' first affidavit I am of the opinion that these paragraphs are simply stating the facts upon which Edensilk invites the court to draw a conclusion that accords with those facts. I am of the opinion that pars 6, 7 and 8 of Curtis' first affidavit are unobjectionable.
The objections to Curtis' second affidavit
Paragraph 6 is objected from the second sentence to but not including the penultimate sentence. The basis of the objection is that what Curtis says was the purpose of the agreement is simply irrelevant. A court is concerned with the objective intention of the parties and a party's subjective interpretation of the agreement is irrelevant. Edensilk's counsel submits that par 6 is simply stating facts and is unobjectionable.
In my opinion, Retail Systems counsel's submissions have merit. Curtis is irrelevantly stating the purpose of particular provisions of the agreement. I will strike out those sentences.
Paragraph 7 of Curtis' second affidavit is objected to on the basis that it is a matter of submission. Edensilk's counsel submits that Martin, in his affidavit at pars 21 and 22, suggests what the state of agreement between the parties was. Curtis, in his supplementary affidavit, is reiterating that the agreement had two aspects, an option to purchase and an agreement of the provision of services. In my opinion, par 7 of Curtis' second affidavit is unobjectionable.
Retail Systems' counsel objects to par 9 of Curtis' affidavit on the basis that the statement by Curtis that Retail Systems had no right of termination arising from the Service Agreement is irrelevant and it is for the court to determine the effect of the agreement.
Again in my opinion, Curtis is stating his belief that pursuant to the Service Agreement, Retail Systems did not have a right of termination, otherwise then as provided in cl 9.2. I will not strike par 9.
In par 10 of Curtis' affidavit, Curtis deposes that Martin knew about the services provided by Edensilk because Curtis had provided the service reports referred to in a later paragraph of his affidavit. Retail Systems' counsel objects to this statement on the basis that Curtis cannot give evidence as to the actual state of mind of another person.
I agree with that objection and that the second sentence of par 10 is struck. For the same reason, par 12 from the word 'and' after Martin's affidavit to the first full stop is struck.
Paragraph 13 of Curtis' second affidavit sets out a table purporting to be his analysis of the time expended for Retail Systems both off and on the premises. Retail Systems' counsel objects to the table on the basis that there is no source document or source provided for that table. Edensilk's counsel submits that par 12 annexes the service report and the analysis is clearly derived from the service report or can reasonably be inferred.
In my opinion, par 13 ought to be struck. There is no reference in that paragraph as to how the analysis of time extended was undertaken and what documents were referred to in undertaking that analysis. It is not for the court to infer that the analysis was undertaken on the basis of particular documents.
Paragraph 16 is objected to on the basis that it is in a conclusionary form: that Curtis deposes the reason given to him was not that the work had not been carried out but that the defendant was not in a financial position to pay. Martin in his affidavit at pars 31 and 32, had deposed that he said to Curtis Retail Systems was not profitable enough at the moment to afford to engage the various services. Martin's understanding of Curtis' response was that Retail Systems did not have to pay the invoices until such time as Retail Systems could afford to pay the invoice and after Edensilk had exercised its option to purchase a share in the business. In my opinion par 16 is simply stating a fact and is not struck.
Paragraph 17 is objected to on the basis that it appears to be a new matter not arising from anything which was said by Martin in his affidavit. I agree with that submission. Paragraph 17 does not arise in reply to Martin's affidavit but introduces new matters which Retail Systems have not had an opportunity to reply. I will strike par 17.
Principles in relation to O 14 application
It is well established that the power to order summary judgments should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99. Great care must be exercised to ensure that under the guise of achieving expeditious finality a party is not improperly deprived of its opportunity for the trial of the case in the appointed manner by the court: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129, 130.
The burden of persuasion in this judgment application was considered by Pullin J in Morgan v Pallister [2004] WASC 188 [4] in the following terms:
The plaintiff carries the burden of persuading the court that the claim is a good one, that there is no defence to it, that leave to defend should not be granted, and that judgment should be given for the plaintiff. The party showing cause against the application assumes an evidentiary burden but the overall legal burden of persuasion remains on the applicant. The power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried. It is clear however, that the procedure is not confined to cases which are immediately plain and obvious and the fact that a transaction is intricate does not disentitle the plaintiff to relief in a clear case. It was never intended that when the facts are in dispute, an action should be disposed of summarily. If a defendant's affidavit reveals inconsistencies which might in a trial persuade a court not to believe the defendant's evidence, this will not necessarily lead to judgment for the plaintiff. It is not necessary to cite authority for these propositions.
Where there are disputed facts, and in the absence of cross-examination, the application is to be determined on the basis that the defendant's version of the facts, assuming that it is not inherently incredible, would ultimately be accepted at the trial of the action: Webster v Lampard (1993) 177 CLR 598, 608. In the same case, members of the High Court had previously commented that: 'The issue before the learned Master on the application for summary judgment was whether the material before the Master demonstrated that the action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail' (602).
If, after argument, there remains real uncertainties to the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused: Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 [28]; The Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332, 335.
Context of the Assignment and Service agreements
Martin deposes that Curtis had been providing consultancy services to Retail Systems on a piecemeal basis. In 2009, Martin deposes that Curtis introduced the idea that he may be interested in taking an equity position in Retail Systems. Discussions continued in May 2010, and after those discussions Martin deposes that a new strategic business plan for Retail Systems was developed based on Curtis being a director of Retail Systems. There was discussion about the value of Retail Systems and that Curtis would like to buy a 50% share of Retail Systems.
The Assignment Agreement was entered into on 27 May 2010. The Agreement provides for preparation, liaison, travel and discussion relating to shared ownership arrangements and the usual hourly cost of $500 of that work was reduced by 50% on the basis of a possible shared ownership. The Assignment Agreement also provides for a 121 Match behavioural assessment/profile report (Product cost only).
Under the heading 'Background' in the Service Agreement, it is stated that Retail Systems has requested assistance of Edensilk to improve the overall governance and performance and valuation of Retail Systems. Further, Edensilk and Retail Systems have expressed a mutual wish that Edensilk share in the reward for risk equation of the business, and to that end Retail Systems has agreed to engage the services of Edensilk on a consistent basis and Edensilk has agreed to provide such services in return for payment in the form of both fees and shares in Retail Systems.
Thereafter the Service Agreement provides for Edensilk making Curtis available for minimum hours, Retail Systems committing to pay for the minimum hours, granting to Edensilk the option to purchase shares in Retail Systems at the option share price, and the grant to Edensilk of the right to appoint at least one director to the board of Retail Systems. The Service Agreement went on to provide that Edensilk could exercise its option to purchase the shares at a time of Edensilk's choosing.
On 27 July 2012 Curtis was appointed a director of Retail Systems. Martin deposes that at all times he was under the impression that Edensilk would, not might, be purchasing shares in Retail Systems. Martin deposes (par 37 Martin's affidavit) that he was led to form the impression that Curtis would be taking an equity share in Retail Systems having regard to the discussions with Curtis leading up to the signing of the Service Agreement, the fact that Curtis stayed on as a director (par 38 Martin's affidavit). Further, although described as an option, Martin deposes that his impression was that Edensilk would be purchasing shares in Retail Systems, given the words stated in the Background to the Service Agreement (par 39 Martin's affidavit).
Martin goes on to depose at par 43 (Martin's affidavit) that if Edensilk had not been buying shares in Retail Systems, Retail Systems would never have entered into the agreement with Edensilk or would have terminated the services immediately once it found out that Edensilk would not be buying the shares.
It would appear from the statement made in pars 37 to 43 of Martin's affidavit that Martin is suggesting a defence of misrepresentation.
At par 27 of Martin's affidavit, Martin deposes that there is nothing provided to him or to Retail Systems to give any indication what were the services that the invoices claimed by Curtis that Edensilk was providing. Martin deposes that Curtis was usually present at the company's office for two to three hours on a Friday, during which time he conducted sales and management meetings with various members of the staff. At par 27 Martin then particularises a series of allocated tasks given to Curtis and deposes that these tasks were not completed by Curtis. However, at par 41, Martin deposes that he and Curtis had weekly meetings up until May 2011 and at those meetings, apart from the fact that Curtis would be buying a share in the company, the parties discussed distributor agreement with third parties, future trade shows, sales and marketing, email bursts, new webpage and other matters of planning for the company's future.
Discussion
At the outset I am of the opinion that Edensilk should have judgment in relation to the 121 matched behavioural assessment reports the subject of the Assignment Agreement and the second oral agreement, the MultiCOACH Success Factors subscription, and the domain names registration. Edensilk has shown a prima facie case in relation to these matters and Martin's affidavit does not dispel that prima facie case. There are no facts, or any other cause, raised by Martin to suggest there is a defence to those claims. Accordingly, there will be judgment for Edensilk on those amounts.
The Assignment Agreement provided that Edensilk would provide a consultant for the preparation, liaison, travel and discussion in relation to shared ownership. The agreement provides that there be a 50% discount on the basis of possible shared benefit in outcomes from the, presumably, shared ownership arrangement.
The assignment order was made 27 May 2010. Invoice 3425 (page 14 Martin's affidavit) refers to the assignment order. The assignment order number on the invoice shown at page 14 corresponds with the assignment order signed by Martin for Retail Systems. Martin, in his affidavit at par 26, deposes that he does not know what services are described in Invoice 3425, and was not aware of Curtis carrying out any due diligence for Retail Systems. Martin deposes at par 26 that he did not request Curtis to carry out any due diligence within the scope of the Service Agreement.
However, Invoice 3425 arises under the Assignment Agreement. Martin has not particularised any facts to persuade me that there is a defence to this claim.
It would appear that Martin is perhaps putting forward a defence of misrepresentation in relation to the Service Agreement. Martin deposes that if Edensilk had not been buying shares in Retail Systems he would never have entered into the Service Agreement or would have terminated the Service Agreement immediately.
Given that the Service Agreement provides for payment to Edensilk of both fees and shares, and the fact that, with regard to the option share purchase, the option to purchase is at the discretion of Edensilk and at a time to suit Edensilk, the words suggested of being attributable to Curtis in Martin's affidavit lack the necessary degree of precision to sustain a plea of misrepresentation (see Watson v Foxman & Ors (1995) 49 NSWLR 315).
Whilst I have doubts about the defence of misrepresentation raised, and the lack of knowledge of Martin as to what services were provided, I am mindful that this is an application pursuant to O 14 Rules of the Supreme Court. There may well be an arguable issue on the Service Agreement, and as to what was the understanding of Martin when he entered into that agreement. As I am not entirely satisfied that it would be appropriate to enter judgment on the option agreement, I will give leave to defend on the Service Agreement.
Conclusion
For these reasons I am of the opinion that Edensilk have judgment against Retail Systems on the Assignment agreement, and the oral contracts. Retail Systems has leave to defend on the Service agreement.
I have given consideration as to whether conditions ought to be imposed on the leave to defend in relation to the Service Agreement. In the end, I am of the opinion leave to defend should be unconditional. The issue is narrow; the number of witnesses is small, as well as the amount of documentation. Accordingly this matter can be listed for trial reasonably promptly.
I will hear counsel on the amount for which judgement should be entered, the issue of costs on the application, and to make directions for an early hearing of this matter.
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