HESSELSON v Duckworth

[2009] WASC 163

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HESSELSON -v- DUCKWORTH [2009] WASC 163

CORAM:   MASTER SANDERSON

HEARD:   8 APRIL 2009

DELIVERED          :   8 APRIL 2009

PUBLISHED           :  12 JUNE 2009

FILE NO/S:   CIV 2624 of 2008

BETWEEN:   GRAHAM DAVID HESSELSON

First Plaintiff

HESSELSON FAMILY INVESTMENTS PTY LTD (ACN 106 810 119)
Second Plaintiff

AND

NEIL JAMES DUCKWORTH
First Defendant

GLEN IRIS DEVELOPMENTS LTD (ACN 121 379 842)
Second Defendant

NORTHBRIDGE PROPERTIES PTY LTD (ACN 119 196 548)
Third Defendant

Catchwords:

Practice and procedure - Application to adjourn summary judgment application - Adjournment refused - Judgment entered - Turns on own facts

Legislation:

Nil

Result:

Judgment entered for first and second plaintiffs against first defendant

Category:    B

Representation:

Counsel:

First Plaintiff                  :     Mr D H Solomon

Second Plaintiff             :     Mr D H Solomon

First Defendant              :     No appearance

Second Defendant         :     No appearance

Third Defendant            :     No appearance

Solicitors:

First Plaintiff                  :     Solomon Brothers

Second Plaintiff             :     Solomon Brothers

First Defendant              :     No appearance

Second Defendant         :     No appearance

Third Defendant            :     No appearance

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

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457

1. MASTER SANDERSON:  This was the plaintiffs' application for summary judgment.  At the hearing, judgment was sought in terms of an amended chamber summons filed 1 April 2009.  At the time of entering judgment, I indicated that I would publish reasons which in the main dealt with my refusal of an application made on behalf of the first defendant for an adjournment of the application.  It is to be noted the amended application sought judgment on behalf of the first and second plaintiffs against the first defendant and it is in relation to these parties judgment was entered.

2. The application for summary judgment was originally filed on 23 January 2009.  It was returned in chambers on 3 February 2009.  A memorandum of appearance has been lodged by solicitors on behalf of all defendants on 2 January 2009.  On the return date the first defendant was represented by counsel instructed by those solicitors. 

3. Orders were made by consent.  Those orders were:

   1.The first defendant do file and serve any affidavit in opposition by 17 February 2009.

   2.The plaintiffs do file and serve any affidavit in reply by 3 March 2009.

   3.The plaintiffs do file and serve an outline by 10 March 2009.

   4.The first defendant do file and serve an outline in reply by 20 March 2009.

   5.The application be adjourned to a special appointment.

   6.The estimated time of hearing is approximately two hours.

4. The minute of agreed orders went on to specify the unavailable dates for both parties and included a costs order.  The minute was signed by the solicitors for the plaintiffs and counsel for the first defendant.  The matter was listed for 31 March 2009 - a date which, based upon the unavailable dates contained in the minute of consent orders, was convenient to both parties.  The parties were notified by the court by letter dated 4 February 2009 of the listing.

5. The matter duly came on before Acting Master Chapman on 31 March.  A solicitor, Mr Gavin Wells who was not on record, appeared for the first defendant and sought an adjournment.  Over the strong objection of counsel for the plaintiffs the Acting Master adjourned the matter to 8 April at 2.15 pm.  He also extended the time for filing of an affidavit by the first defendant to 4.00 pm on 6 April.  He further extended the time for the first defendant to file its submissions to the same date.  A reading of the Acting Master's comments made to the first defendant's solicitor makes it clear that the Acting Master adjourned the matter only with the greatest reluctance.  Furthermore, the first defendant's solicitor could have been in no doubt that no further adjournment would be granted.

6. By the time the matter came on for hearing on 8 April no affidavit on behalf of the first defendant had been filed.  At 5.00 pm on 7 April 2009 an affidavit of one Stephen Geoffrey Gascoigne was faxed to my Associate.  At 8.30 am on 8 April 2009 an affidavit of the first defendant was faxed to my Associate.  At the same time, a memorandum of appearance was also faxed to my Associate.

7. There are a number of points to make about these faxed materials.  First, as I have said, they were faxed through to my Associate.  They did not comply with the regime for filing documents by fax mandated by the Rules of the Supreme Court 1971 (WA). Second, Mr Wells, the solicitor who sent through all of these documents, should have filed a notice of change of solicitor. An appearance had already been entered. Third, there had been no compliance with the orders of Acting Master Chapman. Apart from the failure to file the affidavits there were no submissions in opposition to the plaintiffs' application.

8. When the matter was called on for hearing, Mr Wells purported to appear for the first defendant.  When it was pointed out to him that he was not on record he sought leave to appear on behalf of the first defendant on his undertaking to file a notice of change of solicitor.  He also sought an adjournment of the application on a number of grounds.  His main submission was that he had not had adequate time to prepare the first defendant's case.  He submitted on behalf of the first defendant that not to grant an adjournment would be a substantial injustice.  Moreover, there was no disadvantage to the second plaintiff if the matter was adjourned.  It was submitted there was no urgency in having the summary judgment application heard and determined.  Further, Mr Wells said that he would not seek to rely on the affidavit of the first defendant because it contained 'errors'.  What would be required was a re‑drafted affidavit which would properly represent the first defendant's position. 

9. After hearing argument I refused to grant the adjournment.  It is never an easy matter to shut out from the processes of the court a party to proceedings with the result that his position is unexplained.  The basic guiding principle is and must always be that a party is entitled to a fair hearing and to have his or her claim decided on the merits.  But this case represents yet again a failure of a party to comply with agreed directions.  The programming orders were made by consent.  They were by no means draconian - the first defendant had ample time to marshal his case and put the relevant facts before the court.  If for whatever reason - including personal circumstances - the first defendant was unable to comply with the timetable then an application for an extension of time can be made.  Provided the application is not spurious and is supported by some evidence, the time limit will be extended.  No such application was made in this case.

10. Moreover, when the matter came on before Acting Master Chapman the first defendant, through Mr Wells, must have been aware of the urgency of the position.  A cursory reading of the affidavit which was sent through by fax makes it plain that the first defendant's evidence is not so detailed or complex that an affidavit could not have been prepared in the time that was made available.  If a party chooses not to avail himself of an indulgence provided by the court so as to put his case then he must accept the consequences.

11. Having been unsuccessful in his application for an adjournment, Mr Wells understandably felt that he should withdraw.  He did so.  I then considered the application on its merits.  I should state briefly why the application succeeded. 

12. This being a summary judgment application it is necessary for the plaintiff to verify the facts on which the claim is based.  The deponent must also state that it is their belief that there is no defence to the claim.  In this case that has been done by an affidavit of the first plaintiff sworn 23 January 2009.  Once the requirements of O 14 r 2 are satisfied, it is for the defendant to satisfy the court that it has an arguable defence.  Given that the first defendant has tendered no evidence in this matter, the second plaintiff is prima facie entitled to judgment.  However, to ensure that there is no issue which ought to be tried or some other reason why judgment ought not be entered it is necessary to examine the plaintiffs' claim.  The summary of the facts which follows is taken from the first plaintiff's affidavit. 

13. There are a number of claims pleaded in the amended statement of claim filed 23 January 2009.  The second plaintiff, as trustee of the Rengray Trust, claims repayment of a loan of $130,000 made to the first defendant and the second defendant on or about 13 February 2006.  This is referred to in the statement of claim as 'Loan Agreement A'.  The second plaintiff also claims repayment of a loan of $100,000 made to the first defendant in or about early April 2007.  This is referred to as 'Loan Agreement B'.  The second plaintiff also claims repayment of a loan of $450,000 made to the first and third defendants in or about early June 2007.  This is referred to as 'Loan Agreement C'.  The second plaintiff claims repayment of a loan of $200,000 made to the first defendant in or about early June 2007.  This is referred to as 'Loan Agreement D'.

14. The first plaintiff claims repayment of $100,000 of unapplied deposits paid to the first defendant for two blocks in Sunset Estate, Lancelin.  The first plaintiff also claims damages and/or restitution totalling $550,000 for the first defendant's alleged breach of an oral agreement made in or about early to mid June 2007 for the cancellation of five contracts to purchase blocks in the Sunset Estate, repayment of deposits of $150,000 paid to the first defendant for five blocks and payment of $400,000 on account of an agreed appreciation in capital value of the blocks while the contracts for the blocks were on foot.  The first plaintiff also claims damages in respect of his purchase of shares in the second defendant based upon misrepresentations he says were made to him by the first defendant and which induced him to purchase those shares.

15. This application only relates to some of the pleaded claims.  In particular it relates to Loan Agreement A, Loan Agreement B and Loan Agreement D so far as the second plaintiff is concerned.  With respect to the first plaintiff judgment is not sought in relation to the damages for the purchase of the shares in the third defendant.  Judgment is sought in relation to the first plaintiffs other two claims. 

16. The first plaintiff and the first defendant developed a close business relationship and a friendship after the first plaintiff purchased some blocks in a property development being undertaken by the first defendant in Lancelin and known as the Sunset Estate.  This occurred in mid 2005.  The first plaintiff says that the first defendant held himself out to be a successful property developer.  He offered the first plaintiff opportunities to invest in apparently lucrative property developments at discounted rates.  Enticed by the possibility of earning significant profits in a booming property market through his association with the first defendant, the first plaintiff loaned capital to the first defendant to assist him with his projects and made other significant investments in the first defendant's projects.  Because of the nature of the relationship, the first plaintiff invariably did not insist upon the loans and other arrangements made by him with the first defendant being formally documented.

17. In July 2005 the first plaintiff signed contracts to purchase Lots 313 and 325 in the Sunset Estate for $200,000 each and paid deposits of $20,000 for each block.  In September 2005 the first plaintiff signed contracts to purchase Lots 357, 358, 359, 367 and 368 in the Sunset Estate.  The purchase price of each of these lots was $170,000 and a deposit of $34,000 was paid on each of Lots 357, 358 and 359.  The contracts for Lots 367 and 368 were in substitution for the contracts for Lots 313 and 325.  Settlement of the first plaintiff's purchase of these five lots occurred on or about 22 March 2007.

18. Between 3 November 2005 and 16 December 2005 the first plaintiff signed contracts to purchase five blocks in the Sunset Estate - two at $170,000 each and three at $220,000 each.  Lots 322, 350, 351, 371 and 374 were later assigned to these contracts.  Settlement of these further five contracts has never taken place and the deposits paid have never been repaid.  In all, the first plaintiff paid $100,000 as deposits for two of the further five contracts and $150,000 for three of the further five contracts.

19. On 13 February 2006 the plaintiffs loaned the first defendant an amount of $130,000.  The agreement was partly oral and partly written.  The terms of the agreement required repayment within 12 months and interest to be paid at the rate of 30% per annum. 

20. In April 2007 the second plaintiff loaned the first defendant $100,000.  This agreement was oral and the terms of the agreement are somewhat uncertain.  The interest rate does not seem to have been discussed.  Presumably based upon his previous dealings with the first defendant, the first plaintiff says that he assumed that the interest rate would be the same as on the earlier loan. 

21. In mid June 2007 the second plaintiff loaned the first defendant $200,000.  This loan agreement was oral but is evidenced by a letter from the first defendant to the first plaintiff dated 18 June 2007 and signed by the first defendant.  A copy of this letter appears as annexure GDH24 to the first plaintiff's affidavit.  Apart from confirming Loan Agreement D, that letter also confirms Loan Agreements A and B.  With respect to Loan Agreement D, the plaintiffs accept that an amount of $59,323.59 was repaid in or about August 2007.  That is why summary judgment is sought by the second plaintiff only for an amount of $140,676.41. 

22. The first plaintiff says in his affidavit that the parties agreed in or about June 2007 to cancel the contracts for the further five blocks in the Sunset Estate for which the first plaintiff had paid deposits totally $250,000.  The agreement for cancellation of the contracts was confirmed in writing in annexure GDH24.  On behalf of the first plaintiff, it was submitted that the first defendant was not entitled to forfeit the deposits as the contracts were not terminated by him for breach:  see McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 476 ‑ 477 (Dixon J). The contracts for Lots 371 and 374 were cancelled by mutual consent and the first plaintiff is therefore entitled to restitution of the deposits paid pursuant to the contracts on the basis that there has been a total failure of consideration and the first defendant would be unjustly enriched by the retention of the deposits.

23. The first plaintiff agreed to cancel the contracts for Lots 322, 350, 351, 371 and 374 on the basis that the first defendant would repay the deposits totalling $150,000 which had been assigned to those contracts together with $80,000 per block (representing the agreed appreciation in value of the blocks while the contracts had been on foot) by the issue of equity in Northbridge Properties Pty Ltd.  The conversation during which the agreement was made is described in pars 56 and 57 of the first plaintiff's affidavit.  Again, the agreement was confirmed in writing in annexure GDH24. 

24. The first defendant never issued any shares in the third defendant to the first plaintiff.  The first plaintiff terminated the agreement.  The contracts for Lots 322, 350, 351, 371 and 374, having been cancelled by mutual agreement in June 2007, the first plaintiff is entitled to restitution of the deposits which were assigned to the contracts.  Further, the agreement for the deposits and the agreed appreciation to be paid by way of equity in the third defendant, having been terminated by the first plaintiff for breach, the agreed appreciation in value of the blocks while the contracts remained on foot constitute a loss suffered by the first plaintiff.  The first defendant has been unjustly enriched by the same amount by reason of cancellation of the contract.  The first plaintiff is therefore entitled to damages of $400,000, alternatively restitution of $400,000.  On this basis then, the claims for which summary judgment have been made were made out.  Accordingly, I entered judgment for the plaintiffs on the application.