Lenoel Pty Ltd v Gavin
[2020] WASC 141
•6 MAY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: LENOEL PTY LTD -v- GAVIN [2020] WASC 141
CORAM: MASTER SANDERSON
HEARD: ON THE PAPERS
DELIVERED : 6 MAY 2020
PUBLISHED : 6 MAY 2020
FILE NO/S: CIV 2301 of 2019
BETWEEN: LENOEL PTY LTD
First Plaintiff
AIMEE OLIVE ARMSTRONG
Second Plaintiff
DESTHARM PTY LTD
Third Plaintiff
SHIRLEY BLOCH
Fourth Plaintiff
VINCENT MICHAEL DEBONO
Fifth Plaintiff
JOSEF ECSERI
Sixth Plaintiff
JOHANNA ECSERI
Seventh Plaintiff
GARY ALAN HERMAN
Eighth Plaintiff
GLORIA RUTH HERMAN
Ninth Plaintiff
JOSHRICH PTY LTD
Tenth Plaintiff
ISTVAN PETER LUTTER
Eleventh Plaintiff
KRISZTINA TOROK
Twelfth Plaintiff
JAMES ARTHUR MATTHEWS
Thirteenth Plaintiff
COLLEEN MARGARET MATTHEWS
Fourteenth Plaintiff
KEITH ROYCROFT PHIPPS
Fifteenth Plaintiff
MARGARET DAWN PHIPPS
Sixteenth Plaintiff
TOLEEN NOMINEES PTY LTD
Seventeenth Plaintiff
TRISHA MARIA WEBSTER
Eighteenth Plaintiff
NAOUMIS CHRISTOS VELLIOS
Nineteenth Plaintiff
VASILIKI VELLIOS
Twentieth Plaintiff
AND
SEAN MATTHEW GAVIN
First Defendant
GAVIN CORPORATION PTY LTD
Second Defendant
(ORIGINAL ACTION)
SEAN MATTHEW GAVIN
First Plaintiff by Counterclaim
GAVIN CORPORATION PTY LTD
Second Plaintiff by Counterclaim
AND
LENOEL PTY LTD
First Defendant by Counterclaim
AIMEE OLIVE ARMSTRONG
Second Defendant by Counterclaim
DESTHARM PTY LTD
Third Defendant by Counterclaim
SHIRLEY BLOCH
Fourth Defendant by Counterclaim
VINCENT MICHAEL DEBONO
Fifth Defendant by Counterclaim
JOSEF ECSERI
Sixth Defendant by Counterclaim
JOHANNA ECSERI
Seventh Defendant by Counterclaim
GARY ALAN HERMAN
Eighth Defendant by Counterclaim
GLORIA RUTH HERMAN
Ninth Defendant by Counterclaim
JOSHRICH PTY LTD
Tenth Defendant by Counterclaim
ISTVAN PETER LUTTER
Eleventh Defendant by Counterclaim
KRISZTINA TOROK
Twelfth Defendant by Counterclaim
JAMES ARTHUR MATTHEWS
Thirteenth Defendant by Counterclaim
COLLEEN MARGARET MATTHEWS
Fourteenth Defendant by Counterclaim
KEITH ROYCROFT PHIPPS
Fifteenth Defendant by Counterclaim
MARGARET DAWN PHIPPS
Sixteenth Defendant by Counterclaim
TOLEEN NOMINEES PTY LTD
Seventeenth Defendant by Counterclaim
TRISHA MARIA WEBSTER
Eighteenth Defendant by Counterclaim
NAOUMIS CHRISTOS VELLIOS
Nineteenth Defendant by Counterclaim
VASILIKI VELLIOS
Twentieth Defendant by Counterclaim
(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Application to strike out amended defence - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Original Action
Counsel:
| First Plaintiff | : | No appearance |
| Second Plaintiff | : | No appearance |
| Third Plaintiff | : | No appearance |
| Fourth Plaintiff | : | No appearance |
| Fifth Plaintiff | : | No appearance |
| Sixth Plaintiff | : | No appearance |
| Seventh Plaintiff | : | No appearance |
| Eighth Plaintiff | : | No appearance |
| Ninth Plaintiff | : | No appearance |
| Tenth Plaintiff | : | No appearance |
| Eleventh Plaintiff | : | No appearance |
| Twelfth Plaintiff | : | No appearance |
| Thirteenth Plaintiff | : | No appearance |
| Fourteenth Plaintiff | : | No appearance |
| Fifteenth Plaintiff | : | No appearance |
| Sixteenth Plaintiff | : | No appearance |
| Seventeenth Plaintiff | : | No appearance |
| Eighteenth Plaintiff | : | No appearance |
| Nineteenth Plaintiff | : | No appearance |
| Twentieth Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
Solicitors:
| First Plaintiff | : | Valenti Lawyers |
| Second Plaintiff | : | Valenti Lawyers |
| Third Plaintiff | : | Valenti Lawyers |
| Fourth Plaintiff | : | Valenti Lawyers |
| Fifth Plaintiff | : | Valenti Lawyers |
| Sixth Plaintiff | : | Valenti Lawyers |
| Seventh Plaintiff | : | Valenti Lawyers |
| Eighth Plaintiff | : | Valenti Lawyers |
| Ninth Plaintiff | : | Valenti Lawyers |
| Tenth Plaintiff | : | Valenti Lawyers |
| Eleventh Plaintiff | : | Valenti Lawyers |
| Twelfth Plaintiff | : | Valenti Lawyers |
| Thirteenth Plaintiff | : | Valenti Lawyers |
| Fourteenth Plaintiff | : | Valenti Lawyers |
| Fifteenth Plaintiff | : | Valenti Lawyers |
| Sixteenth Plaintiff | : | Valenti Lawyers |
| Seventeenth Plaintiff | : | Valenti Lawyers |
| Eighteenth Plaintiff | : | Valenti Lawyers |
| Nineteenth Plaintiff | : | Valenti Lawyers |
| Twentieth Plaintiff | : | Valenti Lawyers |
| First Defendant | : | Danaghers |
| Second Defendant | : | Danaghers |
Counterclaim
Counsel:
| First Plaintiff by Counterclaim | : | No appearance |
| Second Plaintiff by Counterclaim | : | No appearance |
| First Defendant by Counterclaim | : | No appearance |
| Second Defendant by Counterclaim | : | No appearance |
| Third Defendant by Counterclaim | : | No appearance |
| Fourth Defendant by Counterclaim | : | No appearance |
| Fifth Defendant by Counterclaim | : | No appearance |
| Sixth Defendant by Counterclaim | : | No appearance |
| Seventh Defendant by Counterclaim | : | No apperance |
| Eighth Defendant by Counterclaim | : | No appearance |
| Ninth Defendant by Counterclaim | : | No apperance |
| Tenth Defendant by Counterclaim | : | No appearance |
| Eleventh Defendant by Counterclaim | : | No appearance |
| Twelfth Defendant by Counterclaim | : | No appearance |
| Thirteenth Defendant by Counterclaim | : | No appearance |
| Fourteenth Defendant by Counterclaim | : | No apperance |
| Fifteenth Defendant by Counterclaim | : | No apperance |
| Sixteenth Defendant by Counterclaim | : | No appearance |
| Seventeenth Defendant by Counterclaim | : | No apperance |
| Eighteenth Defendant by Counterclaim | : | No appearance |
| Nineteenth Defendant by Counterclaim | : | No appearance |
| Twentieth Defendant by Counterclaim | : | No apperance |
Solicitors:
| First Plaintiff by Counterclaim | : | Danaghers |
| Second Plaintiff by Counterclaim | : | Danaghers |
| First Defendant by Counterclaim | : | Valenti Lawyers |
| Second Defendant by Counterclaim | : | Valenti Lawyers |
| Third Defendant by Counterclaim | : | Valenti Lawyers |
| Fourth Defendant by Counterclaim | : | Valenti Lawyers |
| Fifth Defendant by Counterclaim | : | Valenti Lawyers |
| Sixth Defendant by Counterclaim | : | Valenti Lawyers |
| Seventh Defendant by Counterclaim | : | Valenti Lawyers |
| Eighth Defendant by Counterclaim | : | Valenti Lawyers |
| Ninth Defendant by Counterclaim | : | Valenti Lawyers |
| Tenth Defendant by Counterclaim | : | Valenti Lawyers |
| Eleventh Defendant by Counterclaim | : | Valenti Lawyers |
| Twelfth Defendant by Counterclaim | : | Valenti Lawyers |
| Thirteenth Defendant by Counterclaim | : | Valenti Lawyers |
| Fourteenth Defendant by Counterclaim | : | Valenti Lawyers |
| Fifteenth Defendant by Counterclaim | : | Valenti Lawyers |
| Sixteenth Defendant by Counterclaim | : | Valenti Lawyers |
| Seventeenth Defendant by Counterclaim | : | Valenti Lawyers |
| Eighteenth Defendant by Counterclaim | : | Valenti Lawyers |
| Nineteenth Defendant by Counterclaim | : | Valenti Lawyers |
| Twentieth Defendant by Counterclaim | : | Valenti Lawyers |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
By chamber summons filed 6 February 2020 the plaintiff sought the following orders:
1.The time for the Plaintiffs to bring an application under Order 20 Rule 19 be extended to 3 February 2020.
2. The amended defence of the First Defendant by Original Action filed 5 December 2019 be struck out in its entirety.
3. The defence of the Second Defendant by Original Action filed 6 December 2019 be struck out in its entirety.
4. Judgment in the Original Action be entered in favour of the Plaintiffs by Original Action:
(a) against the First Defendant by Original Action for possession of the First Defendant's interest in the land situated at and known as 63 Melville Beach Road, Applecross in the State of Western Australia, being Lot 82 on Deposited Plan 34763 and being the whole of the land comprised in Certificate of Title Volume 2528 Folio 289; and
(b) against each of the First Defendant and Second Defendant by Original Action for:
(i) the amount of $334,326.88, being the amount outstanding under the Mortgage;
(ii) interest at the rate of 11.95% per annum, from judgment until payment in full; and
(iii) the costs of the Original Action, to be assessed on a solicitor and own client basis.
5. The amended counterclaim of the First Plaintiff by Counterclaim filed 5 December 2019 be struck out in its entirety.
6. The counterclaim of the Second Plaintiff by Counterclaim filed 6 December 2019 be struck out in its entirety.
7. The counterclaim action of the First Plaintiff by Counterclaim (First Counterclaim) be dismissed and the First Plaintiff by Counterclaim pay the Defendants by Counterclaim's costs of the First Counterclaim.
8. The counterclaim action of the Second Plaintiff by Counterclaim (Second Counterclaim) be dismissed and the Second Plaintiff by Counterclaim pay the Defendants by Counterclaim's costs of the Second Counterclaim.
The writ of summons in this matter was issued on 25 July 2019. At that time the present named first defendant was the sole defendant. On 24 October 2019 the writ of summons was amended by adding the present named second defendant as a party to the proceedings. There were consequential amendments to the statement of claim. An amended defence and counterclaim of the first defendant was filed 5 December 2019. A defence and counterclaim of the second defendant was filed 6 December 2019. An amended reply to the amended defence of the first defendant was filed 18 December 2019. An amended defence to the counterclaim of the first defendant was filed 18 December 2019. Around the same time the plaintiff also filed a reply to the second defendant's defence and a defence to counterclaim. Given that the defence and counterclaim were filed in early December 2019 and a strike out application as brought in early February 2020 the plaintiffs require an extension of approximately four weeks to bring this application. Before dealing with the application for the extension of time it is convenient to consider the nature of the strike out application.
In written submissions lodged 28 February 2020 counsel for the plaintiffs summarises the nature of the claim as follows:
4. In January 2014, the Plaintiffs advanced funds to the Second Defendant pursuant to a loan agreement entered into on 20 January 2014 (Loan Agreement).
5. As security for the loan, the Plaintiffs took a mortgage (Attadale Mortgage) over the property at 554 Canning Highway, Attadale (Attadale Property), of which the Second Defendant was the registered proprietor.
6. The First Defendant is the sole director of the Second Defendant.
7. As further security, the Plaintiffs also took a mortgage (Applecross Mortgage) over the First Defendant's interest in the property at 63 Melville Beach Road, Applecross (Applecross Property), of which the First Defendant is the registered proprietor as joint tenant with his wife.
8. It was a term of each of the Applecross Mortgage and Attadale Mortgage, at clause 55, that the First and Second Defendants, as guarantors of each mortgage, agreed to:
[I]ndemnif[y] the [Plaintiffs] and to keep the [Plaintiffs] indemnified from and against all loss, damage, costs and expenses suffered or incurred by the [Plaintiffs] by reason of any breach or non-performance by the Mortgagor or Covenantor under this Mortgage of any such terms and conditions on the part of the Mortgagor and the Covenantor to be observed and performed and from and against all actions claims and demands which may be instituted or made against the Mortgagee in any way consequent upon or arising out of or incidental to this Mortgage[…]
9. Following a default under the Attadale Mortgage, the Plaintiffs took possession of the Attadale Property on 9 October 2018 and sought to exercise their power of sale.
10. The Plaintiffs claim the Property was marketed from 19 December 2018 to 3 March 2019, through both online and print media.
11. On 5 March 2019, the Plaintiffs accepted an offer to sell the Attadale Property for $2,400,000 plus GST. The Plaintiffs did not receive any other offers prior to the accepted offer.
12. The Defendants have not disputed the Plaintiffs were entitled to exercise their power of sale over the Attadale Property.
13. The proceeds of sale of the Attadale Property did not fully discharge the debt owed to the Plaintiffs, and so the Plaintiffs have sought to enforce the Applecross Mortgage.
Proceedings
14. The substance of the Plaintiffs' underlying action is to seek possession of the First Defendant's interest in the Applecross Property, and for judgment against the First and Second Defendants for the outstanding debt owing under the Loan Agreement.
15. The Defendants have lodged a defence and counterclaim, in which they assert that:
(a)the Plaintiffs breached section 420A of the Corporations Act 2001 by failing to take reasonable care to sell the Attadale Property for market value; and
(b) the Attadale Property was in fact sold for less than its market value, being at least $3,000,000.
16. The Defendants have pleaded that they intend to rely on an expert report to be provided prior to trial, in establishing the market value of the Attadale Property was at least $3,000,000.
17. Although it is not necessary in establishing a breach of section 420A that the property was actually sold for less than market value, that is central to the Defendants' claim for set-off and equitable compensation.
18. If there had been a breach of section 420A, but despite that breach (by luck, for example) the market value of the Attadale Property was attained, the Defendants would have suffered no loss and would not be entitled to any equitable set-off or compensation as claimed.
The plaintiffs say that discovery was provided by the defendants on 15 November 2019. The documents discovered by the defendants did not contain any evidence to support the defendants' claim the market value of the Attadale property at the time of the sale was at least $3 million.[1] The plaintiffs felt this was a glaring omission. They therefore corresponded with the defendants' solicitors seeking a copy of any expert report and in particular the expert report referred to in the pleadings.[2] When no report was forthcoming they took out this chamber summons.
[1] Plaintiffs' outline of submissions filed 28 February 2020 [20].
[2] Plaintiffs' outline of submissions filed 28 February 2020 [21] – [22].
Clearly this is not a case where it is appropriate to strike out the defences of the defendants and enter judgment for the plaintiffs. At some point there will be an order for the exchange of expert reports. The defendants will either be able to produce an expert report which supports their position or they will not. It is on that very simple point this case turns. Paragraph 29(e) and (f) of the defence and counterclaim filed 6 December 2019 refer to an expert report. Those paragraphs do not say in terms that the defendants actually have the report. If it did then the report would have to be produced because it would be regarded as part of the pleading. As matters stand the defendants will only have to produce an expert report pursuant to an order made by the court.
There is no substance in the plaintiffs' application and there is no point in extending the time for bringing this application. However for the avoidance of doubt I would extend the time to make the application and I would then dismiss the application. The costs of the application ought be paid by the plaintiffs.
Accordingly, I make the following orders:
(1)The time for the plaintiffs to bring an application under Order 20 rule 19 of the Rules of the Supreme Court 1971 (WA) be extended to 3 February 2020.
(2)The plaintiffs' application to strike out defence and counterclaim be dismissed.
(3)The plaintiffs pay the defendants' costs of the application, to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IW
Associate to Master Sanderson6 MAY 2020
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