Greenedge Visions Pty Ltd as trustee for the Stellar Family Trust v Drewsen Pty Ltd as trustee for Drewsen Family Trust
[2019] WADC 6
•24 JANUARY 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: GREENEDGE VISIONS PTY LTD AS TRUSTEE FOR THE STELLAR FAMILY TRUST -v- DREWSEN PTY LTD AS TRUSTEE FOR DREWSEN FAMILY TRUST [2019] WADC 6
CORAM: DEPUTY REGISTRAR HEWITT
HEARD: 10 JANUARY 2019
DELIVERED : 24 JANUARY 2019
FILE NO/S: CIV 2679 of 2018
BETWEEN: GREENEDGE VISIONS PTY LTD AS TRUSTEE FOR THE STELLAR FAMILY TRUST
Plaintiff
AND
DREWSEN PTY LTD AS TRUSTEE FOR DREWSEN FAMILY TRUST
First Defendant
DARREN DREWSEN
Second Defendant
Catchwords:
Practice and procedure - Summary judgment application - Turns on its own facts
Legislation:
Nil
Result:
Application dismissed
Representation:
Counsel:
| Plaintiff | : | Ms K S Cheong |
| First Defendant | : | Mr S J Brown |
| Second Defendant | : | Mr S J Brown |
Solicitors:
| Plaintiff | : | Aherns Lawyers |
| First Defendant | : | Lynn & Brown Lawyers |
| Second Defendant | : | Lynn & Brown Lawyers |
Case(s) referred to in decision(s):
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
DEPUTY REGISTRAR HEWITT:
This action was commenced by a writ which was issued on 19 July 2018 to which a memorandum of appearance was filed on 10 August 2018. Although well out of time the defendant consented to allowing the plaintiff to file and serve an application for summary judgment on or before 22 October 2018. In fact the summary judgment application with which I am required to deal was filed on 23 October 2018 but I am of the view that the lateness is not of great moment and am prepared to deal with the application on its merits.
The plaintiff's sues under the terms a contract between itself and the defendants which although described as a licence is in fact more appropriately described as a franchise agreement the first defendant being the franchisee and the second defendant being a guarantor under the terms of that agreement. It is alleged that the first defendant failed to remit to the plaintiff monies due to it under the terms of the franchise agreement being a proportion of monies received from persons for whom services were performed and as a consequence of that the plaintiff terminated the franchise agreement. In essence the plaintiff sues for monies which it alleges should have been remitted to it during the course of the franchise agreement and for various other breaches which might be summarised as breach of a restraint of trade clause contained within the franchise agreement.
I shall not recite the relevant cases as they are well known but suffice it to say summary judgment will only be awarded in the clearest of cases where the court is satisfied that there is no real issue to be tired between the litigating parties.
The plaintiff's claim comprises of a number of parts and I shall deal with them separately. In the first instance the plaintiff claims for monies which it says are demonstrated to be due by the evidence presented and it seeks a money judgment for those monies. It also seeks interest in respect of those monies but that point is somewhat difficult because in my view the interest which might be claimed could only run from the date upon which the money should have been remitted to the plaintiff and no information on that score is available. Additionally the plaintiff seeks a judgment for damages to be assessed for the various other aspects of the claim.
Whilst there is a written franchise agreement in relation to building inspections, there is no such written agreement in relation to termite inspections that being a line of work which was undertaken by the first defendant subsequent to the original franchise agreement being entered into. There is disagreement between the parties as to whether or not that part of the relationship which related to the termite agreement was governed by the franchise agreement or whether it was not.
As there is no written documentation to that effect and the incorporation of the termite agreement (if indeed it was incorporated) must have been by way of implication or alternatively by way of express agreement. There is a dispute between the parties as to whether there was any such express agreement the contention of the plaintiff being that there was such an agreement and the defendant saying there was no such agreement. It is apparent from the materials that the plaintiff prepared a written document incorporating the termite services within the franchise arrangement but the first defendant declined to execute that document. Therefore insofar as the plaintiff seeks to enforce the terms of the termite agreement relying on the terms of the franchise it seems to me that there is a clear triable issue, that issue being whether in fact that agreement was under the umbrella of the franchise agreement and whether the terms upon which the plaintiff relies are relevant to that aspect of the relationship. I am of the view that comprises a triable issue insofar as claims are made which rely on the proposition that the franchise agreement covered the termite agreement.
In analysing the basis of the plaintiff's claim the touchstone is in my view the statement of claim which has been filed. That document identifies the losses for which the plaintiff makes claim as follows, $18,141.30 being in effect monies which should have been paid to the plaintiff representing the agreed proportion of inspection fees for work undertaken by the defendant as the franchisee of the plaintiff together with fees lost as a result of the alleged breaches of the licence agreement, such damages to be assessed. At this point the plaintiff encounters an immediate obstacle. Damages can only be assessed in regard to a breach which the court has found to have occurred. The assessment of damages cannot be an investigation to see if the defendants were in breach and if so the extent of compensation which they should be required to pay. In my view the process would be more properly undertaken by way of an accounting namely that the court determine whether the defendant had engaged in conduct which was a contractual breach and should be required to give an account which would form the basis of calculation of any sum which was due to the plaintiff. Additionally although some complaints are made in the statement of claim about the defendant's continuing to use trademarks, logos and things of that kind subsequent to the termination of the franchise agreement there is nothing that I can see in the statement of claim which gives any hint as to the impact that behaviour may have had on the plaintiff nor any basis for assessing damages in relation to it.
Another issue which arises in the context of this case is the effectiveness of the restraint of trade clause which is contained in the franchise agreement. Prima facie such a clause is void but may be upheld if the plaintiff can satisfy the court that the restraint is reasonable in the circumstances. In Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169, her Honour McLure JA (with Buss JA agreeing at [6] and following) said:
[6]The test to be applied in determining the validity of a restraint of trade was stated by Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at 565 in a passage that has been cited with approval in many cases. Lord Macnaghten said:
'All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.'
[7]The validity of the restraint must be decided as at the date of the contract: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 318 per Walsh J. However, subsequent developments may be looked at, not to determine whether the agreement was reasonable as between the parties but to determine whether it was a reasonable one to make at the relevant time, having in mind the best estimate they could make for the future: Putsman v Taylor [1927] 1 KB 637 at 643.
[8]A restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection: Brightman v Lamson Paragon Ltd (1914) 18 CLR 331 at 337 per Isaacs J; Buckley v Tutty (1971) 125 CLR 353 at 376.
Firstly there is an argument that the terms of the franchise agreement had nothing to do with the termite agreement and secondly there is an argument that the restraint of trade conditions were unreasonably broad and as a consequence unenforceable. It is impossible for me on the information which is presented make any sensible assessment as to whether the period of restraint and areas of restraint are reasonable. What I am able to see is that there is a very significant area from which the defendant is to be excluded from operations which extends to a maximum of 100 km from an area defined as the centre of the area of exclusivity. Although precisely how such a point is to be determined when the area of exclusivity is simply defined by postcodes is not clear. There is a gradation of restraint of trade ranging from three years from the area of exclusivity through two years for an area within a radius of 50 km of the centre of the area of exclusivity and as I have earlier mentioned 100 km from the centre of the area of exclusivity as a restraint of one year. As I have said on the evidence before me I cannot make any comment other than to say that it appears to me that the plaintiff has not led any evidence to discharge its onus.
Another issue which was raised in the course of argument arises from the fact that following the termination of the franchise agreement between the plaintiff and defendant the plaintiff was excluded from access to certain email account which contained information relevant to this case and the claim being brought against the defendants. Control of the relevant email account is exclusively in the plaintiff and as a consequence it is in possession of information which is denied to the defendant and which may well have a bearing on the defendant's liability to the plaintiff. A summary judgment may be refused in circumstances where there is a good reason to do so and in some instances circumstances which preclude a defendant from properly preparing a defence without the benefit of court processes can constitute such a reason.
A proposed defence raised by the defendants is a potential Consumer Law point said to be due to the fact that a disclosure statement provided to the defendants recorded that no director of the plaintiff company was or had been bankrupt in the previous 10 years. The defendant alleges that Mr P P Antonelli was a director of the company and was bankrupt from 16 April 2013. In fact Mr Antonelli was the general manager of the company at the relevant time, not a director, and the point is weak and its prospects of success doubtful. A further point made by the defendant concerns the fact that he did not have the benefit of advice from a solicitor prior to entering into the contract. The second defendant alleges he did not appreciate the fact that by signing the guarantee he would make himself personally liable to the plaintiff in the event of default. In essence, the second defendant alleges that his background did not give him an ability to properly understand the impact of the guarantee and such advice as he did take was from an accountant and not a lawyer.
The second defendant was a school teacher for a number of years and from that I conclude he can read and write English fluently. I have read the guarantee and have concluded that any literate person of reasonable intelligence who took the trouble to read the document would understand that by signing it he would undertake personal liability for the due performance of the contract by the first defendant. Additionally, the defendant did engage an accountant to advise in relation to the proposed contract, thinking that person to be a lawyer. In my view, the plaintiff cannot be held to account for this failure of the defendant to engage a properly qualified person.
The final point for which I shall consider is the fact that the defendant has raised a counterclaim and made allegations that it was underpaid in regard to certain termite inspections in a manner which was not consistent with the agreement which the plaintiff propounds to be existed between them. The defendant says that it cannot quantify the amount of that claim but it has a counterclaim for over $8,000 for invoiced accounts to the plaintiff which have not been satisfied. In my view such a claim is clearly able to be pleaded as a set‑off and whilst the defendant is not able to particularise the amount which may be due under the termite agreement the allegations are clear enough that there must be some money owing and that likewise could be pleaded as a defence. In summary therefore:
1.I am not prepared to give a judgment for the money sum which is claimed by the plaintiff because of potential defences which may be raised against that claim by way of set‑off which are in part unquantified and cannot be quantified until the defendant gets access to information held by the plaintiff.
2.It is not appropriate to make an order for damages to be assessed until each of the individual claims which are raised by the plaintiff are considered or either upheld or rejected. To do otherwise will be in effect to make a finding of fact that the money is due without actually considering the facts.
3.The claim regarding the use of logos and so forth contains nothing that I can see which would entitle the plaintiff to more than nominal damages since no loss or detriment is identified by virtue of the breach.
4.In so far as the plaintiff seeks to rely on the restraint of trade clause it has not even attempted to discharge its onus to show it was necessary and reasonable.
For these reasons I am of the view that the plaintiff's application for summary judgment should not succeed and this matter needs to proceed to a trial. As I have earlier mentioned it seems to me that the possible outcome of the trial would be to require an account to be taken and that is a matter which deserves some consideration.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AC
Court Officer23 JANUARY 2019
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