Hayakawa v Tampoe & Ors
[2009] QDC 21
•24 February 2009
DISTRICT COURT OF QUEENSLAND
CITATION:
Hayakawa v Tampoe & Ors [2009] QDC 21
PARTIES:
HISAO HAYAKAWA
(plaintiff/respondent)v
ROBIN CARL TAMPOE
(first defendant)and
PHILLIP LOUIS CHARTERS CARMAN
(second defendant/applicant)
and
ESTATE OF MASAYASU TOMIKAWA
(third defendant)
FILE NO/S:
D436/06
PROCEEDING:
Application
ORIGINATING COURT:
District Court Southport
DELIVERED ON:
24 February 2009
DELIVERED AT:
Southport
HEARING DATE:
17 February 2009
JUDGE:
Newton DCJ
ORDER:
Application dismissed. Second defendant/applicant to pay the plaintiff/respondent’s costs on the standard basis.
LEGISLATION:
Uniform Civil Procedure Rules 1999. Rules 171, 292 and 293
Fair Trading Act 1989, Section 38
Trade Practices Act 1974, Section 52CASES:
Deputy Commissioner of Taxationv Salcedo [2005] 2 Qd. R. 232
AGAR v Hyde (2000) 201 CLR. 552
Rich v CGU Insurance Ltd(2005) 79 ALJR 856.CATCHWORDS:
Procedure - inferior court - Queensland - procedure under rules of court - dismissal of claim and striking out pleading.
COUNSEL:
Mr J.A. Griffin QC for the second defendant/applicant
Ms C. Heyworth-Smith for the plaintiff/respondent
SOLICITORS:
PCF Law for the second defendant/applicant
Hynes Lawyers for the plaintiff/respondent
Mr Carman, the second defendant in this action, seeks an order for summary judgment pursuant to rule 293 of the Uniform Civil Procedure Rules 1999 (UCPR). That rule provides as follows:
“[r.293] Summary judgment for defendant
293 (1) A defendant may, at any time after filing a notice of intention to defend[1], apply to the court under this part for judgment against a plaintiff.
(2) If the court is satisfied –
(a) the plaintiff has no real prospect of succeeding on all or a part of the plaintiff’s claim; and
(b) there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”
[1] The notice of intention to defend of the second defendant was filed on 23 October 2006.
In the alternative Mr Carman seeks an order striking out the amended statement of claim in respect of the second defendant pursuant to rule 171 of the UCPR. That rule provides as follows:
“[r.171] Striking out pleading
171 (1) This rule applies if a pleading or part of a pleading –
(a) discloses no reasonable cause of action or defence; or
(b) has a tendency to prejudice or delay the fair trial of the proceeding; or
(c) is unnecessary or scandalous; or
(d) is frivolous or vexatious; or
(e) is otherwise an abuse of the process of the court.(2) The court, at any stage of the proceeding, may strike out all or part of the proceeding and order the costs of the application to be paid by a party calculated on the indemnity basis.
(3) On the hearing of the application under sub rule (2), the court is not limited to receiving evidence about the pleading.”
The amended statement of claim[2] alleges that the first and second defendants at all material times[3] were practising as solicitors in partnership under the firm name Hoolihans Lawyers and were directors of Freedom First Realty.
[2] Filed 31 October 2007.
[3] The “material times” are not identified.
The third defendant was a licensed real estate agent who passed away on 1 August 2006.[4]
[4] The only means of communication between the plaintiff and the first defendant was apparently through the third defendant as the first defendant could not speak Japanese and the plaintiff could not speak English.
The amended statement of claim alleges that certain representations were made by the first defendant and the third defendant[5] that:
[5] Para 4B amended statement of claim.
(a) the plaintiff should enter into contracts to purchase units at the “Salt” Resort in New South Wales as the re-sale of the units would be complete prior to settlement being required and the plaintiff would not be required to settle any contract to purchase.
(b) the first and third defendants were to commence a real estate agency business on the Gold Coast under the name “Freedom First Realty”.
(c) the first and third defendants, as Freedom First Realty:
(i) would have 14 branches on the Gold Coast;
(ii) would promote the re-sale of the units;
(iii) would not charge any commission for its efforts in selling the units;
(iv) would conduct extensive television advertising but not at the plaintiff’s expense;
(d) the resale of units was likely to result in a profit of 20% to 30%.
(e) the first defendant would use his personal network in South East Asia to sell the properties.
(f) the first defendant would never let the plaintiff lose any money.
(g) the plaintiff would only make a little profit on one property so he should sign several contracts to make a larger profit.
The plaintiff alleges[6] that in reliance upon the representations and induced by them, he signed four contracts for the purchase of four units at the Salt Resort. Pursuant to the contracts the plaintiff provided a bank guarantee for $240,000.00 in respect of the deposits to the vendor.[7] On or about 25 January 2006 the bank guarantee was called upon by the vendor and the $240,000.00 was obtained by it.[8]
[6] Ibid at Para 7.
[7] Ibid at Paras 8 and 9.
[8] Ibid at Para 9.
The plaintiff alleges that in or about April or early May 2004 and prior to 4 May 2004 he retained the first and second defendants to act as his solicitors in relation to the contracts.[9] It was an implied term of the retainer and/or it was the duty of the first and second defendants at law that they would:
[9] Ibid at Para 10.
(a) exercise all due care, skill, diligence and competence while acting for the plaintiff;
(b) advise the plaintiff on all matters relevant to the retainer so far as may be reasonably necessary;
(c) protect the plaintiff’s interests; and
(d) not allow a conflict between their own interests and those of the plaintiff to arise.[10]
[10] Ibid at Para 11.
The representations, it is pleaded, were false.[11]
[11] Ibid at Para 16.
The plaintiff alleges that the units the subject of the contracts were not re-sold prior to settlement under the contract.[12] On or about 23 December 2005 the vendor of the units issued a notice to complete requiring completion of the contracts on or before 6 January 2006.[13] The plaintiff was unable to complete the contracts by this date and as a result the vendor forfeited the deposits.[14]
[12] Ibid at Para 17.
[13] Ibid at Para 18.
[14] Ibid at Paras 19 and 20.
Breaches of section 38 of the Fair Trading Act 1989 and section 52 of the Trade Practices Act 1974 are alleged in respect of the first defendant.[15]
[15] Ibid at Para 21.
Negligence or breach of a contract of retainer is alleged in respect of the first and second defendants in that they:
(a) failed to advise the plaintiff that he should not enter into contracts to purchase units at the Salt Resort unless he was in a position to settle the contracts should the units not be re-sold prior to the date for settlement;
(b) failed to advise the plaintiff that it could not be guaranteed that the units would be re-sold before settlement;
(c) failed to advise the plaintiff that, whilst he would make a larger profit if he entered into several contracts if the units sold for a greater sum before settlement than if he entered into only one contract, he would also make a greater loss if the units were not able to be re-sold before settlement and he was unable to complete the purchases;
(d) failed to explain the meaning and the effects of the contracts to the plaintiff;
(e) allowed a conflict of their own interests with those of the plaintiff to arise namely that:
(i) Freedom First Realty was entitled to a commission from the vendor of the units on the entry into the contracts and, as shareholders of that company, they would benefit from the same;
(ii) they stood to gain from the promotion of Freedom First Realty through the re-sale of the units.
(f) in the circumstances of those conflicts, failed to advise the plaintiff that he should obtain independent legal advice prior to entering into the contracts.[16]
[16] Ibid at Para 23.
The date at which Mr Carman became a partner in the firm of Hoolihans is clearly a matter of some importance. In this regard the plaintiff relies upon an affidavit of James Nickless, a solicitor with Hynes Lawyers[17], who deposes to having caused a business name search of Hoolihans Lawyers to be conducted. The business name search demonstrates that:
[17] Hynes Lawyers are the plaintiff’s solicitors. Mr Nickless has carriage of the matter, subject to the supervision of the partners of that firm. See para 1 of the affidavit of Mr Nickless filed 12 March 2008.
1. the business name “Hoolihans Lawyers” was registered on 7 August 1995 and was cancelled on 7 December 2007;
2. Robin Carl Tampoe commenced carrying on the business on 30 June 2000 and ceased carrying on the business on 7 December 2007; and
3. Philip Lewis Charters Carman commenced carrying on the business on 1 July 2004 and ceased carrying on the business on 7 December 2007.[18]
[18] Para 10 of the affidavit of Mr Nickless filed 12 March 2008.
I accept that this is some evidence as to when the second defendant became a partner in Hoolihans and for present purposes the date of 1 July 2004 may be said to be the relevant date in this regard. However, I do note that the first defendant has asserted that Mr Carman was not a partner in the firm and was not involved in any of the transactions with the plaintiff in any capacity. Furthermore, the defendant asserts that the statement of change of particulars, lodged with the Office of Fair Trading, only included Mr Carman for the purpose of releasing a former guarantor from the office lease and that Mr Carman did not become a partner of the firm until March 2007.[19]
[19] Affidavit of Robin Carl Tampoe filed 10 January 2008 para 13.
Counsel for the plaintiff, Ms Heyworth-Smith, was critical of the lack of evidence from the second defendant as to when Mr Carman became a partner of Hoolihans. Counsel identified a number of documents that may reasonably be expected to fix the relevant date. These included the partnership agreement, copies of partnership accounts, bank records showing transfers of money from the firm account to Mr Carman’s personal account by way of dividends from the partnership, tax returns, partnership tax returns and profit and loss statements.[20]
[20] Transcript p 1-10 lines 40-50.
In any event, Senior Counsel for the second defendant, Mr Griffin QC, was apparently prepared to proceed with the application on the basis that there is some evidence that Mr Carman became a partner of Hoolihans on 1 July 2004.
Senior Counsel for the second defendant adopted the written submissions of Mr Carmen’s former Counsel.[21] Those submissions include an assertion that there is no evidence, in any of the material, linking Mr Carman by way of agency or otherwise with the firm Hoolihans Lawyers as being a responsible party, ever having made representations to the plaintiff, ever having entered into an independent contract, ever having been responsible (either directly or indirectly) for any conduct of the affairs of the plaintiff.[22]
[21] Mr R J Clutterbuck.
[22] Written submissions of Mr R J Clutterbuck, counsel for the second defendant 13 June 2008, para 25.
Mr Griffin QC advanced the written submissions on behalf of Mr Carman by emphasising that the second defendant could not be liable for anything done before he became a partner in Hoolihans.[23]
[23] Transcript p 1-9 lines 25-30.
Ms Heyworth-Smith, on the other hand, submits that it is not material that Mr Carman may not have been in partnership with the first defendant at the time that the oral representations were made, nor at the time that the retainer was entered into. The duties owed to the plaintiff, it is contended, continued after the second defendant became a partner and for every moment subsequent that the plaintiff laboured under the misrepresentations made by the first defendant, Mr Carman was liable.[24]
[24] Written submissions by Ms Heyworth-Smith 16 June 2008 para 11(f).
In support of his submission Mr Griffin QC referred to a passage in The Law of Partnership in Australia by Keith L Fletcher:
“LIABILITIES OF INCOMING AND OUTGOING PARTNERS
1. A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before the person became a partner.
2. A partner who retires from a firm does not thereby seek to be liable for partnership debts and obligations incurred before the partner’s retirement.
3. A retiring partner may be discharged from any existing liability by an agreement to that effect between the partner and the members of the firm as newly constituted and the creditors, and this agreement may be either expressed or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.
[6.135] This section provides a formal reminder that, while the business may continue, any change in the composition of the partnership marks the end of one relationship and the creation of a new partnership. The rights and liabilities of members of the separate firms are separate and distinct. Members of the original firm are responsible for contractual obligations incurred before the termination date, even if quantified after that date, and newly admitted partners are not liable for those obligations unless they expressly or by conduct accept that obligation.”[25]
[25] Footnotes omitted. Ninth Edition THOMPSON Lawbook Co p 219.
It becomes unnecessary, however, to determine the liability of Mr Carman for any representations made by the first defendant prior to his becoming a partner of the firm of Hoolihans Lawyers if that did indeed occur on 1 July 2004. On 15 August 2005 the first defendant and the former third defendant (Mr Masayasu Tomikawa) allegedly signed a document entitled “Confirmation” which provided as follows:
“We Robin C Tampoe and M Tomikawa confirmed following condition regarding purchase of 4 units (206, 422, 423, 427) Peppers Resort @ Salt by Mr H Hayakawa.
We explain to Mr. Hayakawa the following condition·These property will be promote to sale by Freedom First Realty Branch which are expected to open 14 branch in Gold Coast, Mr Tampoe’s connection in wold wide and TV advertisement, and to be sold before settlement.
·Next to SALT resort were already sold out and gain 20 to 30% profit, This SALT resort is four start= resort.
·Regarding sales of this 4 units Freedom First will not charge a sale commission.
This property sales is priority and will not ask to Mr. Hayakawa for settlement
We keep our promise and concentrate to sell above property as soon as possible.
(signed)
Robin C TAMPOE
(signed)
Masayasu TOMIKAWA”[26]
[26] Errors appear in original document and are not transcription errors.
Counsel for the plaintiff notes that this document was dated almost a year and a half after the original representations were made and more than one year after Mr Carman had become a partner (assuming that occurred on 1 July 2004). It cannot be right, submitted Ms Heyworth-Smith, that the second defendant never owed a duty to give right advice to the plaintiff after becoming a partner. The advice that he was actually given was that he did not have to settle the contract. Mr Carman, as a director of Freedom First and a partner in the law firm acting for the plaintiff, has placed himself in direct conflict between his own interests and those of his client.[27]
[27] Transcript p 1-14 lines 1-40.
In Deputy Commissioner of Taxationv Salcedo[28] the construction of UCPR rule 292 and rule 293 was considered by the Court of Appeal. McMurdo P. stated that:
[28] [2005] 2 Qd.R. 232
“[2] UCPR r.292 and r.293 should be applied using their clear and unambiguous language and keeping in mind the purpose of the UCPR to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense”[29]
[29] Ibid at p 233
Her Honour continued by referring to AGAR v Hyde[30] in which Gaudron, McHugh, Gummow and Hayne JJ. stated:
“…Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage interlocutory processes. The test to be applied has been expressed in various ways, but all of the formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to trial in the ordinary way”[31]
McMurdo P. noted that these remarks had recently been cited with approval by Gleeson C.J., McHugh and Gummow JJ. in Rich v CGU Insurance Ltd[32]
[30] (2000) 201 CLR. 552
[31] Ibid at pp 575-576
[32] (2005) 79 ALJR 856 at p 859 [18] – [19].
In my view the circumstances of this action with respect to the second defendant do not permit of a high degree of certainty about its ultimate outcome if allowed to proceed to trial. Similarly, I conclude that no basis presently exists to order the pleadings in respect of the second defendant be struck out. I am unable to hold that the statement of claim discloses no reasonable cause of action. However, it does appear that the statement of claim will have to be redrafted to include reference to the document entitled “Confirmation”. I do not understand the plaintiff’s counsel to contend otherwise.
The application is therefore dismissed. The second defendant is to pay the plaintiff’s costs of the application on the standard basis.
As I have not heard submissions on behalf of the first defendant with respect to costs incurred up to 21 April 2008, at which time the first defendant withdrew from this application, I order that costs with respect to that part of the application concerning the first defendant are to be reserved.
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