Jenvale Pty Ltd v Renel Pty Ltd - [2004] WADC 178

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: JENVALE PTY LTD -v- RENEL PTY LTD [2004] WADC 178

CORAM: COMMISSIONER GREAVES

HEARD: 11 AUGUST 2004

DELIVERED : 27 AUGUST 2004

FILE NO/S: CIV 404 of 2004

BETWEEN: JENVALE PTY LTD (ACN 009 318 094)
Appellant (Second Defendant)
AND
RENEL PTY LTD (ACN 008 819 207)
Respondent (Plaintiff)

Catchwords:

Practice and procedure - Summary judgment - Appeal - Whether evidence discloses arguable defence - Turns on its own facts

Legislation:

Nil

Result:

Appeal allowed

Representation:

Counsel:

Appellant (Second Defendant) : Mr P Harris
Respondent (Plaintiff) : Mr J D Finlay

Solicitors:

Appellant (Second Defendant) : Ilberys
Respondent (Plaintiff) : JD Finlay & Co

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

Hazart Pty Ltd v Rademaker (1993) 11 WAR 26

Case(s) also cited:

Nil

COMMISSIONER GREAVES: This is an appeal from the decision of the acting Principal Registrar whereby he entered summary judgment for the plaintiff against the second defendant in the sum of $45,483. The second defendant now seeks unconditional leave to defend the action. The appeal is to be determined de novo. It appears the Principal Registrar gave no reasons for his decision.
The plaintiff entered into an agreement to invest in a residential development involving the second defendant in consideration for which the second defendant agreed to pay the plaintiff from the second defendant's profit from the development, interest on the sum invested by the plaintiff for the duration of the investment: See par 7 of the statement of claim. By par 13 of his first affidavit, a director of the second defendant, John Christian Mair, says that pursuant to an agreement for the payment of additional interest between the second defendant and the plaintiff, the sum of $45,843 is presently due to the plaintiff by way of an interim distribution. He said that sum is being held in trust by Werrington Pty Ltd pending the satisfactory completion of building, maintenance and repair works by Derwent Constructions Pty Ltd. In par 14 of that affidavit, Mr Mair stated the amount of the interest held on trust for the plaintiff is not $55,575. He says the sum of $55,575 was a projected distribution to the plaintiff based on an estimated profit of $242,459. He says the profit or surplus to date is in fact $195,740 and the distribution to the plaintiff was calculated by two payments comprising $34,382 and $11,461 being $45,483.
The plaintiff seeks summary judgment in the sum of $45,483.
Werrington Pty Ltd as trustee for the Westpark Unit Trust entered into a building contract with Derwent Constructions Pty Ltd dated 20 November 1997 to build apartments at 159‑163 Colin Street, West Perth. The building works were completed in 1998.
The second defendant now relies on the second affidavit of Mr Mair sworn 6 August 2004. That affidavit was not before the Principal Registrar. At par 4 of that affidavit, Mr Mair states that his intention in making par 13 of his first affidavit was to state the amount at issue in the proceedings, and not to admit that the plaintiff was entitled to payment of that amount from the second defendant. He goes on to depose to the fact that he has had an extensive business relationship with a director of the plaintiff and Derwent Constructions Pty Ltd, Mr Frederick Witting over 20 years. He says their respective spouses are first cousins. He says the plaintiff is the majority shareholder of Derwent Constructions Pty Ltd. He says Mr Frederick Witting was in day to day control of the affairs of both the plaintiff and Derwent Constructions Pty Ltd, and at all material times held himself out to have the full authority of the plaintiff and Derwent Constructions Pty Ltd to bind each of those companies.
On 13 March 2003, Mr Mair sent a facsimile letter to Mr Witting at Derwent Constructions Pty Ltd. At par 10 of his second affidavit, Mr Mair says his letter did not suggest that the money should be retained, but contained detailed complaints as to the remedial works that had not yet been completed by Derwent Constructions Pty Ltd.
Mr Witting replied to Mr Mair's letter on the same day in the following terms:
"DERWENT CONSTRUCTIONS PTY LTD
13th March 2003
Mr. J. Mair
Werrington Pty Ltd
C/o Mair & Co
1 His Majesty's Lane
PERTH WA 6000
Dear Mr. Mair,
Westpark Apartments
We are in receipt of your letter dated 13th March 2003 and will reply in detail to the various items raised. However, two issues need to be clarified.
1)Ground Slab – Basement Stores
It became evident after a detailed inspection of the underside of the ground floor slab (that revealed only small and sealed cracks) that a joint inspection with Mair & Co was essential to view any water seepage stains in the stores to determine the degree of remedial work.
We accept wall seepage as this is clearly evident but not soffit seepage.
2)Trust Settlement
Why you cannot wind up the trust is not understood. The monies owed to Renel Pty Ltd should remain in a trust account until this Company has completed the remedial work it is liable to do.
Yours faithfully,
F. WITTING
Manager"
At par 9 to par 16 of his second affidavit, Mr Mair then deposes to the following facts and opinions:
"9.When I received the letter from Derwent Constructions Pty Ltd to Mair & Co (JCM9) I believed that the letter constituted a bona fide instruction from Frederick Witting to hold the monies owed by Jenvale Pty Ltd to Renel Pty Ltd in trust until Derwent Constructions Pty Ltd had completed the remedial works it was obliged to do in respect of the Westpark project. I did not consider that the letterhead upon which the instruction came had any bearing on the quality or nature of the instruction. I further believed that Mr Witting intended that I receive the letter as a bona fide instruction from Renel Pty Ltd. The bases for these beliefs are contained in paragraphs 7 and 8 herein. From my previous course of dealings with Mr Witting I was accustomed to receiving his instructions in good faith notwithstanding any technicality arising from letterheads or the like. On the basis of the previous course of dealings and relationship it would have been a nonsense for Mr Witting to deny on 13 March 2003 that he, as the managing director of Renel Pty Ltd as well as being the managing director of Derwent Constructions Pty Ltd, did not intend me to retain the monies payable from Jenvale Pty Ltd to Renel Pty Ltd until '[Derwent Constructions Pty Ltd] has completed the remedial work it is liable to do.'
10.The letter from Derwent Constructions Pty Ltd to Mair & Co (JCM9) was received in response to my letter to Derwent Constructions Pty Ltd dated 13 March 2003 which had been sent by facsimile on that day. My letter did not suggest that the monies should be retained, but contained detailed complaints as to the remedial works that had not yet been completed by Derwent Constructions Pty Ltd. The fact that Mr Witting replied to my letter dated 13 March 2003 on the same date and in a letter addressed to Werrington Pty Ltd care of Mair & Co suggested to me that he was concerned to resolve the issues between our respective companies in a practical way and reinforced my belief that he was not concerned with formalities in the dealings between those companies, otherwise he would have written a letter addressed to Jenvale Pty Ltd.
11.Alternatively, the letter (JCM9) constituted a direction from Derwent Constructions Pty Ltd and Renel Pty Ltd to Werrington Pty Ltd to withhold any distribution to Jenvale Pty Ltd in so far as the distribution would be payable to Renel Pty Ltd.
12.Even after judgment was given in the matter by the Learned Acting Principal Registrar on 4 May 2004 after argument as to the authority of Mr Witting to bind Renel Pty Ltd by a letter on Derwent Constructions Pty Ltd letterhead Mr Witting sent a demand to me for payment of the monies as between Jenvale Pty Ltd and Renel Pty Ltd addressed to Werrington Pty Ltd and on Derwent Constructions Pty Ltd letterhead. A true copy of the letter is annexed hereto and marked 'A'. This letter further confirms my belief that the letter from Mr Witting dated 13 March 2003 (JCM9) was intended by Mr Witting to bind Renel Pty Ltd. To assert otherwise in light of our prior dealings and his further use of Derwent Constructions Pty Ltd letterhead to communicate on behalf of Renel Pty Ltd would be a nonsense.
13.As at 13 March 2003 there was no other monetary sums in issue between the companies associated with Mr Witting and myself. There was no potential for confusion at all in my mind as to the intention and effect of the instruction contained in the letter (JMC9). On receipt of the letter I considered that an agreement had been reached for either Werrington Pty Ltd or Jenvale Pty Ltd to hold the money payable as between Jenvale Pty Ltd and Renel Pty Ltd pending completion of remedial works on the Westpark project and that the agreement had been reached with the managing director of Renel Pty Ltd as its authorised, or ostensibly authorised agent notwithstanding the fact that he was communicating at the same time also as the managing director of Derwent Constructions Pty Ltd.
14.I am informed by my solicitors and verily believe that should the facts deposed to in the preceding paragraphs and in my Affidavit sworn 15 April 2004 be accepted the Plaintiff will be estopped from denying that Mr Witting had authority to bind the Plaintiff by sending the letter dated 13 March 2003 (JCM9) and the Second Defendant will have an arguable defence to the action on the basis that an agreement was reached between the Plaintiff and the Second Defendant and/or Werrington Pty Ltd for the retention of the monies in question pending the completion of matters as between separate but related entities. The entities are related in the sense that Werrington Pty Ltd has a contractual relationship with Derwent Constructions Pty Ltd, such contract being subject to a dispute. Jenvale Pty Ltd has a contractual relationship with Renel Pty Ltd. I am a director of both Werrington Pty Ltd and Jenvale Pty Ltd and the beneficial ownership of Renel Pty Ltd and Derwent Constructions Pty Ltd is common to Mr Witting and his spouse.
15.I confirm that at the date of swearing this Affidavit there is still an unresolved dispute as to whether or not Derwent Constructions Pty Ltd has completed remedial works on the Westpark project.
16.For these reasons I believe that the Second Defendant has an arguable defence to the action and should be allowed to defend the action."
Counsel for the second defendant submitted the second defendant has an arguable defence against the plaintiff's action on the basis of estoppel. He submitted the letter from Mr Witting to Mr Mair of 13 March 2003 constitutes a representation made to Mr Mair in his capacity as a director of Werrington Pty Ltd and Jenvale Pty Ltd. He submitted the representation was made by Mr Witting in his capacity as a director of Renel Pty Ltd and Derwent Constructions Pty Ltd. He submitted the fact that the representation was intended as such is borne out by the prior relationship between the parties and the prior course of dealings between the parties.
Counsel for the second defendant submitted the issue whether the letter of 13 March 2003 was sufficient to alter the pre‑existing legal relationships between each of the companies involved is a question of fact based on a determination of Mr Witting's actual or ostensible authority to act on behalf of the plaintiff and Derwent Constructions Pty Ltd. He submitted the evidence of Mr Mair in par 9 of his second affidavit raises an arguable issue whether the plaintiff intended the second defendant to retain the moneys payable to the plaintiff until Derwent Constructions Pty Ltd had completed the remedial work, as asserted by Mr Witting.
Counsel for the second defendant submitted if the second defendant is forced to pay the judgment sum to the plaintiff it will suffer the detriment of having to pay a sum which it has not received.
Counsel for the plaintiff submitted that the letter of 13 March 2003 from Mr Witting to Mr Mair was written on behalf of Derwent Constructions Pty Ltd to Werrington Pty Ltd. He submitted, therefore, the letter is not conduct of the plaintiff or representation on behalf of the plaintiff, and does not contain a representation of fact to the second defendant. I do not accept that submission. In my opinion, in view of the close inter‑relationship between the corporate entities including the parties to the action and the individual directors and share holders, the contrary is arguable. Counsel for the plaintiff further submitted the second defendant has not suffered any detriment of substance. He submitted that there is no evidence before the court to demonstrate that the second defendant has not been able to recover the moneys due to it other than the fact that Werrington Pty Ltd has retained those moneys. Counsel for the second defendant submitted that it is reasonable to infer, and I accept it is unlikely Werrington Pty Ltd will pay the second defendant until the remedial work is completed, given the inter‑relationship between the parties.
Counsel for the second defendant submitted in the alternative that the second defendant has an arguable defence against the plaintiff's claim in that it was an express or implied term of the agreement between the second defendant and the plaintiff that the second defendant would only be obliged to pay the sums to the plaintiff when it received those funds from Werrington Pty Ltd. Counsel for the plaintiff submitted the evidence on behalf of the second defendant does not establish facts from which it is arguable such an agreement is to be implied between all four companies. I do not accept that submission. In my opinion, the facts and opinions deposed to by Mr Mair in his second affidavit are sufficient to support the conclusion that the second defendant has an alternative arguable defence in contract.
At the commencement of the appeal, counsel for the plaintiff opposed the second defendant's application for leave to produce the second affidavit of Mr Mair. Counsel for the second defendant submitted the further evidence should be admitted unless the evidence is irrelevant or its admission would be unjust. He submitted to adopt a more restrictive approach would constitute an error. Both counsel agreed that the discretion of the court is governed by the decision of the Full Court in Hazart Pty Ltd v Rademaker (1993) 11 WAR 26. Counsel for the second defendant submitted the second affidavit of Mr Mair contains material that by its nature could not take the plaintiff by surprise and that it expands upon the material contained in Mr Mair's first affidavit. I ruled that the affidavit be admitted and reserved my reasons for that decision until final judgment. In my opinion, the evidence in the second affidavit of Mr Mair is plainly relevant to the application for summary judgment. I do not accept the submission on behalf of the plaintiff that Mr Mair seeks to resile from his admission in the first affidavit. More importantly, the second affidavit raises no facts new to the issues between the parties.
A defendant showing cause against an application for summary judgment must condescend to particularity in setting out the basis for the arguable defence. In my opinion, the second defendant has discharged the evidentiary onus upon it that it has an arguable defence on the facts in the circumstances deposed to by Mr Mair.
For these reasons, I am of the opinion that the appeal should be allowed, the decision of the acting Principal Registrar set aside, and the second defendant granted unconditional leave to defend.