Hampton Bay Pty Ltd v TRACKVIEW Investments Pty Ltd - [2001] WASC 135

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HAMPTON BAY PTY LTD -v- TRACKVIEW INVESTMENTS PTY LTD [2001] WASC 135

CORAM: HASLUCK J

HEARD: 18 MAY 2001

DELIVERED : 1 JUNE 2001

FILE NO/S: CIV 1075 of 2001

BETWEEN: HAMPTON BAY PTY LTD (ACN 009 432 400)
Plaintiff
AND
TRACKVIEW INVESTMENTS PTY LTD (ACN 086 531 526)
Defendant

Catchwords:

Application for summary judgment - Licence agreement to occupy farming property - Breach of agreement - Claim to recover possession of land and debt due to plaintiff - Summary judgment granted to plaintiff - Turns on own facts

Legislation:

Supreme Court Rules, O 14 r 1, r 2, r 3

Result:

Application allowed

Representation:

Counsel:

Plaintiff: Ms E McCloskey
Defendant: No appearance

Solicitors:

Plaintiff: Brickhill Banaszak
Defendant: No appearance

Case(s) referred to in judgment(s):

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 85
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Prime Holdings Pty Ltd v Kanemaru (1992) 7 WAR 308
Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd (1990) 3 WAR 71

Case(s) also cited:

Nil

HASLUCK J: The plaintiff in this matter has applied for summary judgment pursuant to O 14 r 1 of the Supreme Court Rules. The plaintiff has also sought leave to bring the application outside the time allowed by the rules and it therefore becomes necessary to examine the procedural history of the proceedings.
The proceedings were commenced by a writ of summons filed 19 January 2001 to which was attached the plaintiff's statement of claim. Solicitors for the defendant company, Wojtowicz Kelly, entered an appearance on behalf of the defendant on 2 February 2001.
The nature of the plaintiff's claim is reflected in the statement of claim and in the various affidavits filed on behalf of the plaintiff, including the affidavit of Ong Tatt Poh sworn 29 January 2001 ("the first Ong affidavit"), the affidavit of Ong Tatt Poh sworn 24 April 2001 ("the second Ong affidavit"), the affidavit of Ah Kong Lee sworn 24 April 2001, the affidavit of Grace Ong sworn 12 February 2001 and the affidavit of Lance James Bartlett sworn 1 March 2001. The plaintiff also relies upon various affidavits verifying the service of documents.
The plaintiff company is the registered proprietor of land at Muchea known as Bethel Farm. The subject matter of the present dispute arises out of negotiations and dealings conducted by Mr Ong on behalf of the plaintiff and by Mr Sacca in his capacity as a director of the defendant company.
By an agreement in writing dated 20 April 1999, the plaintiff granted a licence to the defendant for the use of Bethel Farm as a collection centre for its cattle export business.
Pursuant to the terms of the Licence Agreement, the defendant agreed to pay yearly in advance a licence fee of $40,000 by no later than 15 April each year and to provide access to accounts and records of transactions held by the defendant. By cl 6.1, as soon as practicable after the execution of the Licence Agreement, the defendant was to allot and issue to the plaintiff one share to be subscribed by the plaintiff at par for cash. Further, the plaintiff was to be entitled to subscribe for shares in the defendant not exceeding 30 per cent of the total paid up capital of that company at a premium to be determined by the defendant's auditors.
The Licence Agreement contained various undertakings by the defendant designed to keep Bethel Farm and the cattle upon it in good condition.
By cl 10.1 of the Licence Agreement, if the defendant failed to observe any of the terms and conditions, the plaintiff was entitled to serve a written notice requiring the defaults to be remedied and if the defendant failed to remedy the same within 10 days, then the plaintiff was to be at liberty to re‑enter the land whereupon the licence would be determined.
It seems that the defendant commenced to occupy Bethel Farm in early April 1999 and paid the licence fee for the first year.
During the course of 1999, the parties orally agreed that in lieu of payment of the licence fee for the year ending 31 March 2001, the defendant would issue 40,000 ordinary shares of $1 each to the plaintiff. On 26 November 1999, Mr Ong attended a meeting of the defendant's directors at 32 Carolyn Place, Forrestfield, as a result of which the plaintiff proceeded to invest the sum of $50,000 on the understanding that it would acquire 50,000 shares. The plaintiff's cheque for $50,000 in favour of the defendant company was handed over on 12 February 2000.
On or about 28 March 2000, the plaintiff invested a further sum of $10,000 on the understanding that the plaintiff would be issued a further 10,000 shares in the defendant. The plaintiff's cheque for $10,000 is dated 28 March 2000.
I pause here to note that soon after the entry of an appearance for the defendant, an affidavit by Mr Sacca sworn 26 February 2001 was filed in support of an application for an interim injunction and forms part of the materials on the court file. In the event, the application for an injunction by the defendant did not proceed, but it is apparent from the Sacca affidavit and the evidentiary materials mentioned earlier that numerous exchanges took place between the parties concerning the issuing of a share to the plaintiff pursuant to cl 6.1 of the Licence Agreement and the allotment of shares to the plaintiff by the defendant in response to the discussions and payments mentioned earlier.
The plaintiff's stance, as reflected in par 11 to par 17 of the statement of claim, is that the defendant has not paid the licence fee of $40,000 for the year ending 31 March 2001, it has not issued to the plaintiff 40,000 shares in lieu of such a payment, it has not issued one share to the plaintiff pursuant to cl 6.1 of the Licence Agreement, it has failed to issue to the plaintiff 60,000 shares paid for by the plaintiff in two instalments. The plaintiff says, further, and in any event, that consideration for the payment of the said sum of $60,000 has wholly failed and the defendant has had and received the said sum of $60,000 to the use of the plaintiff.
The affidavits relied upon by the plaintiff contain persuasive evidence to the effect that, although certain forms and share certificates were brought into existence during the course of the various exchanges, the required shares were not issued or allotted to the plaintiff in compliance with the Licence Agreement and related agreements entered into by the parties and the sum of $60,000 paid to the defendant in cash has not been returned to the plaintiff. It is material to note from an exhibit to the affidavit of Ah Kong Lee that a search of the defendant obtained from the Australian Securities & Investments Commission as at 19 April 2001 does not show any shares in the name of the plaintiff.
It is also material to note that Mr Sacca in his affidavit is not able to point to any document establishing conclusively that any of the proposed shares have been vested in the plaintiff. He refers to a dispute with the defendant's accountant, Mr Lombardo, concerning the latter's professional fees as being an explanation for the failure to complete the paperwork. Mr Sacca says in par 10 of his affidavit that he has been informed by Mr Lombardo and believes that, subject to resolving the dispute concerning payment of fees, he will immediately proceed to issue the 100,000 shares to the plaintiff. This seems to be a tacit acknowledgment that the parcel of shares in question has not actually been issued.
It seems that towards the end of the year 2000, the plaintiff took steps to recover a debt of $100,000 allegedly due to it, being the $60,000 paid to the defendant in cash and the alleged $40,000 due for the annual licence fee for Bethel Farm.
The statutory demand gave rise to legal proceedings in which an affidavit by Mr Sacca sworn 22 December 2000 was filed. A copy of that affidavit has been exhibited to the first affidavit of Mr Ong in the present proceedings and it contains a passage again to the effect that according to Mr Lombardo the disputed 100,000 shares "have not yet been formally issued".
It seems that a question arose in regard to the statutory demand matter as to the authority of Mr Sacca and it was the delay associated with the resolution of that issue that led to the plaintiff not taking steps promptly within the prescribed period of 21 days in respect of the present application for summary judgment.
The plaintiff pleads in the statement of claim in the present proceedings that, by a notice of demand dated 10 November 2000, the plaintiff asserted that the defendant was in default under the Licence Agreement in that it had failed to, first, pay the rental payment of $40,000 which was due on or before 15 April 2000 and, second, allot shares to the plaintiff in accordance with cl 6 of the Licence Agreement. The plaintiff says that the defendant's failure to comply with the notice of demand and to remedy the breaches of the Licence Agreement specified within 10 days led to the Licence Agreement being determined by the plaintiff on or about 2 December 2000 when the plaintiff entered Bethel Farm and took possession of the same by changing the locks.
The plaintiff pleads, further, that the defendant has wrongfully sought to assert possession of Bethel Farm in that subsequent to the locks being changed on 2 December 2000, the defendant substituted its own locks and has refused, and continues to refuse, possession of the farm to the plaintiff or its representatives.
The plaintiff, by its claim, goes on to assert that in breach of the provisions of the Licence Agreement, the defendant has wrongfully taken possession of goods belonging to the plaintiff and converted the same to its own use. The plaintiff also complains of other breaches of the Licence Agreement which are said to have given rise to loss and damage.
The defendant's solicitors filed and served a statement of defence and counterclaim dated 22 February 2001. The defendant by its pleading admits the making of the Licence Agreement, but denies that the alleged notice of demand was valid and/or in accordance with the terms of the Licence Agreement on the grounds that it was not properly served, it was unreasonable, and failed to properly particularise the conduct required by the defendant to remedy the alleged default. The defendant also pleads that it was not in breach of the Licence Agreement as alleged in the notice of demand.
The defendant, by its counterclaim, pleads that by reason of the plaintiff wrongfully purporting to terminate the Licence Agreement and enter into possess of Bethel Farm, the defendant has suffered loss and damage. The defendant seeks also a declaration that the Licence Agreement is valid and subsisting and an injunction to restrain the plaintiff from interfering with the defendant's possession of the property.
The plaintiff has filed a reply and defence to counterclaim in which it joins issue with the defendant as to various matters raised by the defendant's pleading and denies that the defendant is entitled to relief as claimed, or any relief.
It is against this procedural background that the plaintiff has brought on its application for summary judgment. The position is complicated to a further degree in that by an order dated 18 April 2001 the defendant's solicitors, Wojtowicz Kelly, obtained an order that they cease to be the solicitors on record for the defendant in this action.
The plaintiff's application for summary judgment was dated 1 May 2001 and was served upon the defendant with a view to securing the defendant's attendance on the return date before a Judge in Chambers on Friday, 11 May 2001. There was no appearance for the defendant on that date and, thus, the Judge in Chambers ordered that the application and supporting affidavits be served upon the defendant at its registered office, being the offices of Lombardo & Co, Level 1, 243 Hay Street, Subiaco.
Service was effected at this office on Friday, 11 May 2001 with copies of the documents and a covering letter giving notice that the matter would be brought before a Judge in Chambers on Friday, 18 May 2001. These documents were sent also to the defendant at 32 Carolyn Place, Forrestfield by registered mail. In fact, there was no appearance on the defendant's side when the matter was brought before me in Chambers on Friday, 18 May 2001, notwithstanding service of the relevant documents in the manner I have just described as verified by an affidavit of service.
Order 14 r 1 provides that where a statement of claim has been served on a defendant and that defendant has entered an appearance, the plaintiff may, on the ground that that defendant has no defence to a claim included in the writ, or has no defence to such a claim or part except as to the amount of any damages claimed, within 21 days after appearance, or at any later time by leave of the court, apply to the court for judgment against that defendant.
By O 14 r 2, an application is to be supported by an affidavit verifying the facts on which the claim is based and stating that in the deponent's belief that is no defence to that claim or no defence except as to the amount of any damages claimed. I pause to note that, in the present case, the required assertion that the defendant has no defence to the action appears in the second affidavit of Mr Ong. It is said also in that affidavit that the application for summary judgment was not filed earlier because the question of Mr Sacca's authority had only recently been determined in COR 368 of 2000. Furthermore, the application to set aside the statutory demand determined whether there was any genuine dispute in relation to the sum of money claimed by the plaintiff in these proceedings.
In the circumstances of the present case, and having regard to the history of the matter, and the affidavit evidence of Mr Ong, I consider that a satisfactory explanation has been provided for the delay in applying for summary judgment, with the result that I am prepared to grant leave for the application to be brought out of time.
Order 14 r 3 provides that on the hearing of an application for summary judgment, unless the court dismisses the application, or the defendant satisfies the Court with respect to the claim that there is an issue or question in dispute which ought to be tried, or that there ought, for some other reason, to be a trial of that claim or part, the Court may give such judgment for the plaintiff against the defendant on that claim or part thereof as may be just, having regard to the nature of the remedy or relief claimed.
Seaman's Civil Procedure summarises the rules bearing upon the grant of judgment at par 14.3.1 to par 14.3.5. It is clear that the applicant for summary judgment assumes the burden of persuading the Court that the claim made 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 power to order summary judgment should be exercised with great care and should never be exercised unless it is clear there is no real question to be tried. Even if the facts which are established are inconclusive, if it is not possible to say without doubt on the whole of the material that there is no question to be tried, there should be leave to defend: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 85 at 99.
These principles are reflected in Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd (1990) 3 WAR 71 where Murray J confirmed that the jurisdiction to order summary judgment should be exercised sparingly. It is for the applicant to satisfy the Court that there is a prima facie case for summary judgment. That being done, the onus will shift to the other party to satisfy the Court that it should be given leave to defend. The relevant affidavits from both sides must condescend upon particulars if they are to be of assistance to the Court: Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109.
I note that in Prime Holdings Pty Ltd v Kanemaru (1992) 7 WAR 308 the principles just mentioned continued to apply notwithstanding that the defendant had raised various issues in a statement of defence filed prior to the application for summary judgment.
In the present case, the application for summary judgment is expressed in these terms; namely, that there be judgment for the plaintiff in terms of the relief claimed in pars A, B, C, D and E of the statement of claim, with damages for conversion and mesne profits to be assessed, together with interest thereon and such other orders as the Court deems appropriate.
This brings me to the plaintiff's prayer for relief in its statement of claim which is expressed in these terms:
"A.An injunction restraining the Defendant its agents and or servants from remaining on or entering the property situate at Lot 1909 Great Northern Highway, Muchea, being more particularly describes as Lot M1909 the subject of Diagram 11298 and being the whole of the land in Certificate of Title Volume 1378 Folio 574;
B.$100,000
C.Mesne profits;
D.Damages for conversion;
E.Interest on any sums awarded pursuant to section 32 of the Supreme Court Act, as amended;
F.Further or other relief."
Against this background, I turn now to the merits of the application for summary judgment. It is apparent from the narrative that a Licence Agreement was entered into between the parties. The plaintiff has provided cogent evidence that the defendant was in breach of the terms of the Licence Agreement in two significant respects; namely, being the defaults set out in the notice of demand dated 10 November 2000 which was served upon the defendant. The plaintiff's case is that the defendant failed to pay the rental payment of $40,000 due on or before 15 April 2000 and failed to allot shares to the licensee in accordance with cl 6 of the agreement.
The evidentiary materials before me establish that these were actual and continuing defaults and they were not remedied within the prescribed time of 10 days, with the result that the agreement was determined in the manner contended for by the plaintiff. There is evidence before me at par 50 of the first Ong affidavit that the notice of demand was served upon the defendant at 32 Carolyn Place, Forrestfield as its place of business in the manner prescribed by the Licence Agreement.
Accordingly, the plaintiff has satisfied me on the balance of probabilities that the agreement was brought to an end and that the plaintiff is presently entitled to possession of the subject property known as Bethel Farm. Accordingly, it follows that the plaintiff is entitled to injunctive relief pursuant to par A of its prayer for relief as an important aspect of the application for summary judgment.
When I turn to the plaintiff's claim for $100,000, it is apparent from the evidentiary materials that the sum of $60,000 was paid to the defendant in cash by the plaintiff and that arrangements were made for the yearly rental payment of $40,000 to be added to the amount paid in cash as consideration for an allotment of 100,000 shares. The evidentiary materials relied upon by the plaintiff establish that the shares were not allotted to the plaintiff, with the result that there has been a total failure of consideration. The rule is that a payment made for a consideration that has wholly failed is recoverable in full by an action for restitution: Cheshire and Fifoot "Law of Contract" (7th Aust Ed) par 25.5. Accordingly, I am persuaded that the defendant is presently indebted to the plaintiff in the sum of $100,000 and the defendant does not have a good defence to the plaintiff's claim in that regard. Accordingly, I consider that the plaintiff is entitled to summary judgment in respect of the sum in question.

When I turn to that part of the application for summary relief concerning mesne profits, it follows from my earlier analysis that, following upon the termination of the Licence Agreement on 2 December 2000, the defendant has been wrongfully in possession of the subject property since that date, with the result that it is obliged to account to the plaintiff for mesne profits. Accordingly, the application for summary judgment in that respect will be granted.
There is evidence before me that the defendant has converted certain items of property to its own use. In that regard, I refer to the affidavit of Mr Bartlett sworn 1 March 2001 and to the affidavit of Grace Ong sworn 12 February 2001 in which she refers to a conversation with Mr Sacca in which he conceded that certain items of equipment and machinery had been taken from Bethel Farm. There may be a dispute as to the reliability of the equipment in question and whether the items were of significant value. That, however, is a matter to be addressed upon an assessment of damages which is a matter allowed for by the application for summary judgment which provides that damages for conversion and mesne profits are to be assessed, together with interest thereon. Accordingly, in the absence of any evidentiary material suggesting that the defendant has an answer to the plaintiff's claim in damages, summary judgment will be allowed to the plaintiff in that respect also.
The plaintiff has applied for an order that the defendant pay the plaintiff's costs of the application and the action, including any reserved costs, to be taxed. The award of costs lies in the discretion of the Court, but in the exercise of that discretion, the Court will usually taken account of the precept that costs should be allowed to the successful party. Accordingly, an order for costs will be made in favour of the plaintiff in the terms proposed.
In summary then, the orders will be made in terms of pars 1, 2 and 4 of the plaintiff's chamber summons for summary judgment dated 1 May 2001. I will hear from counsel as to whether any further orders are required.