Kao San Pty Ltd v Kanitsajee Deewised

[2018] WADC 42

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   KAO SAN PTY LTD -v- KANITSAJEE DEEWISED [2018] WADC 42

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   16 MARCH 2018

DELIVERED          :   10 APRIL 2018

FILE NO/S:   CIV 3929 of 2017

BETWEEN:   NATATORN A-NANTA

First Plaintiffs

KAO SAN PTY LTD

Second Plaintiff

AND

KANITSAJEE DEEWISED

Defendants

Catchwords:

Practice and procedure - Defendant's summary judgment application - Turns on its own facts

Legislation:

Nil

Result:

Action struck out

Representation:

Counsel:

First Plaintiffs	:	Mr G Metaxas
Second Plaintiff	:	Mr G Metaxax
Defendants	:	Ms G Nofal

Solicitors:

First Plaintiffs	:	Metaxas & Hager
Second Plaintiff	:	Metaxas & Hager
Defendants	:	Valenti Lawyers

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

Nil

DEPUTY REGISTRAR HEWITT:

1. This action was commenced by a writ which was filed on 27 October 2017.  The defendants filed a memorandum of appearance on 3 November 2017 and brought a chamber summons seeking summary judgment on 17 November 2017 and it is that application with which I am required to deal.

2. The statement of claim alleges that each of the plaintiffs were directors of the second plaintiff and the second plaintiff carried on business as a café and restaurant at shop 13, Shafto Lane in Perth, trading as Kao San Café, premises leased from the owner Ranchwood Holdings Pty Ltd.  A contract purporting to sell the business as a going concern was the subject of a written agreement dated 7 April 2016.  That agreement was executed by the first plaintiffs who in the agreement were described as the seller and there was no mention in the agreement of the second plaintiff, namely Kao San Pty Ltd which was the owner of the business which the agreement purported to sell.  The action by the first plaintiffs is pursued on the basis that correctly understood the contract required them to procure the transfer of the business to the defendants and as such were entitled to enter a contract in the terms which I have described and to enforce that contract.  The immediate difficulty which I perceive is that the damages which have been sought by the first plaintiffs arise from the breach of the agreement by way of the failure to pay the agreed purchase price, interest payable on that price in the event of default and costs and losses arising upon determination of the agreement and the resale of the business to another purchaser all of which would be losses of the second plaintiff.

3. At par 3.7 and 3.8 of the statement of claim there is a reference to the general conditions for the sale in which the first plaintiffs' warranted that they were the sole legal owner and beneficial owners of the business and its assets and had full right title and interest in the business and its assets and those assets were free from security or third party interest.  The plaintiffs seek to rectify those conditions on the basis that they were not provided with a copy of the general conditions and signed the document in ignorance of the existence of those terms.  It is to be noted that the document was prepared by an agent engaged by the first plaintiffs to handle the sale of the business.

4. Notwithstanding that the second plaintiff, the owner of the business, is named as a party, there is nonetheless no pleading that gives it any entitlement to damages against the defendants.  It is difficult therefore to understand why the second plaintiff is a party to the action.  The situation appears to me to be that the first plaintiffs regarded the business as their own without any regard to the fact that the business was in fact owned by a separate legal entity, namely Kao San Café Pty Ltd.

5. If those complications were not enough, there are complications on the defendants' side as well.  To start with, the three defendants are named as follows:

6. Kanitsajee Deewised, Hathaikarn Siriphraiwan and Anutra Tadsanaprasittipol of Little Mamas Pty Ltd – 85 Sheffield Road, Wattle Grove, WA, 6107.  The word 'of' is part of the printed form upon which this information was entered and there has been argument as to whether or not Little Mamas Pty Ltd – 85 Sheffield Road, Wattle Grove, WA, 6107 is intended to be the address of the three named defendants or whether Little Mamas Pty Ltd was intended to be a purchaser.

7. It is alleged by the defendants in the affidavit filed in support of the application that the intended purchaser of the business was the company Little Mamas Pty Ltd.  Support is forthcoming for that proposition, apart from the sworn testimony of the deponent of the affidavit, appear in a document which is called Vendor Finance of Kao San Café – Restaurant which is dated 6 April which refers to the vendor as being Kao San Pty Ltd, the purchaser as being Little Mamas Pty Ltd and the proposed guarantors to that agreement being the three defendants to the action.  That document has been executed by all of the natural persons to these agreements who comprise the full suite of directors of both companies.  In the agreement they are so described.  Additionally in an answering affidavit filed by the second named of the first plaintiffs and at par 10 of that affidavit, the deponent states as follows, referring to the agreement for sale:

   The contract was prepared by the selling agent and for reasons I did not question the document named the defendants as the buyer and the first plaintiffs as the seller rather than Little Mamas Pty Ltd as buyer and the second plaintiff as seller.  I am advised by my lawyer and verily believe the proper construction of the contract is that the first plaintiffs would cause the second plaintiff to transfer the business to the defendants or their nominees, namely Little Mamas Pty Ltd.

8. It is hard to imagine a more muddled situation.  A vendor purporting to be the owner of the business has sold the business to another and seeks damages for the breach of that contract notwithstanding the fact that there is no evidence that those plaintiffs have in fact suffered any loss.  Additionally, both parties appear to be in agreement that the intended transaction was between the two companies not between the individuals personally.  The second plaintiff appears to have no claim which is supported by the statement of claim and it appears to be probable that the agreement for sale, if it is taken literally, includes Little Mamas Pty Ltd as a purchaser.  The first plaintiffs therefore seek to rectify the contract by removing their warranty that they have good title to the property sold and will deliver it up free of encumbrance which strike me as rather fundamental clauses in any contract for the sale of an asset and hardly those which can be deleted in part of the process of rectification.  On my understanding of the law rectification is only available when a written contract fails to reflect the agreement reached between parties.  That is hardly the case here in regard to the proposed rectification.

9. In truth the situation appears to be that the intended vendor was Kao San Café Pty Ltd and the intended purchaser was Little Mamas Pty Ltd and the writ simply does not reflect the contract which was intended to be entered. 

10. The question therefore becomes what should be done with this mess and can the plaintiff's action be salvaged by amendment, rectification or any other means?  In my view the action is irredeemably flawed and whilst there is no doubt a claim between the proper parties and possibly even a claim in respect of a guarantee might exist, none of those causes of action are articulated in the writ of summons which has been filed.  As a consequence, in my view, the action should not be allowed to continue in its present form.  However, I am reluctant to dismiss the action because of the fact that that dismissal may stand in the way of the proper plaintiff issuing a proper writ against the correct defendants and I therefore think that in the circumstances which prevail in this case, the best order to make is to strike out the writ and that is the order I propose.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

JC
COURT OFFICER

10 APRIL 2018