Liddle v Burford
[2019] WADC 18
•8 FEBRUARY 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: LIDDLE -v- BURFORD [2019] WADC 18
CORAM: REGISTRAR KINGSLEY
HEARD: 16 NOVEMBER 2018
DELIVERED : 8 FEBRUARY 2019
FILE NO/S: CIV 1497 of 2018
BETWEEN: KIM LIDDLE
Plaintiff
AND
GILLIANE BURFORD
First Defendant
PAUL WILLIAM FARRER
Second Defendant
Catchwords:
Practice - Order 14 Rules of the Supreme Court 1971 - Turns on own facts - No new principles
Legislation:
Nil
Result:
Application dismissed
Representation:
Counsel:
| Plaintiff | : | Mr G Cridland |
| First Defendant | : | Mr C S Gough |
| Second Defendant | : | Mr C S Gough |
Solicitors:
| Plaintiff | : | Munro Doig |
| First Defendant | : | Mills Oakley |
| Second Defendant | : | Mills Oakley |
Case(s) referred to in decision(s):
Axelsen v O'Brien (1949) 80 CLR 219
Brocx v Hughes [2010] WASCA 57
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
REGISTRAR KINGSLEY:
The plaintiff (Liddle) has brought an application for summary judgment pursuant to O 14 Rules of the Supreme Court 1971. Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 remains the leading authority for the proposition that the onus confronted by an applicant who seeks summary judgment in their favour is set at a high threshold and summary judgment should never be exercised unless it is clear there is no real question to be tried and a high degree of certainty about the ultimate outcome of the proceeding if it went to trial.
The application is supported by two affidavits sworn by Liddle ‑ the first on 29 May 2018 and the second on 8 August 2018. The defendants Burford and Farrer oppose the application, and both have filed, separate affidavit's sworn 25 July 2018.
Burford and Farrer were at all material time's directors and shareholders of Parapharm Pty Ltd (Parapharm). In June 2016 Liddle acquired 59,375 shares in Parapharm for the sum of $250,000. Liddle deposes that he borrowed that sum to acquire the shares.
The evidence shows that by November 2017 Parapharm was suffering some financial distress. In July 2017 Parapharm entered into a convertible note or loan agreement with Pragmatic Training Pty Ltd (Pragmatic) of approximately $350,000. The loan was not repaid in October 2017 and Pragmatic agreed to extend the deadline for repayment to 13 November 2017.
Burford deposes Parapharm was unable to pay the convertible loan in November 2017, and she commenced discussions with the CEO of the Universal Institute of Technology, and Pragmatic, about sale of shares in Parapharm.
The CEO of Universal, in an email dated 30 November 2017 (sent 3:03pm) advised Burford that he would pay $25,000 to him (meaning Liddle) and provide working capital to Paramount. By email dated 30 November 2017 (sent 3:08 pm) with copies sent to Marion Volk (Liddle's wife) and Farrer, Burford states 'It is a token from UIT, but Paul and I undertake to repay you both'.
In his 29 May 2018 affidavit Liddle deposes that he had told Burford, on several occasions before 14 December 2017, that he did not want to sell his shares (par 14).
On 13 December 2017 at 5:12 pm Liddle emails Burford, with a copy to Farrer and Volk, stating, inter alia,
As discussed we are happy to sell our 10% share for the original purchase price and the compounded interest.
Liddle deposes that on 13 and 14 December 2017 Burford had said to him words to the effect that, if Liddle changed his position and sold his shares to the purchaser then, Burford and Farrer would repay Liddle's costs of the share allotment including compounded interest.
In response to Liddle's 13 December 2017 email, Burford emails Liddle, Farrer and Volk on 14 December 2017 at 7:56 am stating:
Dear Kim and Marion. Pragmatic had pushed back. Paul and I are prepared to undertake to repay you both ourselves if this could save the college. With the college saved we will have the capacity to do so.
Liddle deposes that he accepted the offer made by Burford in the 14 December 2017 email. As a consequence Liddle signed the terms of sale agreement and transferred his shares to Pragmatic. Liddle received $30,000 by way of consideration for that transfer. Liddle deposes that he relied on Burford's offer in the 14 December 2017 email and promise that Burford and Farrer would repay him the costs of his shares including the compound interest he had incurred.
Burford deposes that she did not have authority from Farrer to make significant financial decisions on his behalf without reference to an agreement from him.
Farrer deposes that Burford did not have authority to make significant financial decisions without reference to him first. Farrer deposes that whilst he read the relevant emails, he believed the emails of 13 and 14 December 2017 were consistent with discussions he and Burford had about helping Liddle and Volk financially in the future.
Burford denies that there were any oral discussions on 13 and 14 December 2017 with Liddle during which she said words to the effect that if Liddle would change his position and sell his shares then Farrer and she would repay the costs of his shares including compound interest.
In the context of the 14 December email Burford deposes that through 2017 she had conversations with Volk about Volk and Liddle's difficulties paying their mortgage and that Burford and Farrer were considering helping Liddle and Volk financially in the future if they were in a position to do so. Burford deposes that those conversations did not include any agreement to pay Liddle $220,000 or any other lump sum figure.
As an aside it is the defendant's submission that as Volk has not sworn any affidavit in support of a summary judgment application the court is entitled to draw an inference adverse to the plaintiff citing Brocx v Hughes [2010] WASCA 57 [98 – 99]. Having regard to the specific factual circumstances on which Brocx rests I am not prepared to find that it is authority for the general proposition submitted by the defendants.
Burford submits that she and Farrer had no need to offer to repay Liddle the costs of his shares, in order for Liddle to sell his shares. This is because Burford and Farrer had the benefit of drag along rights.
In essence, drag along rights refers to the position where, if the majority shareholders in an entity sell their shares, the majority can require the minority to sell their shares. There is no evidence that Burford or Farrer advised Liddle that they could exercise this right. The evidence suggest that Burford and Farrer were seeking to avoid that outcome.
Discussion
It is Liddle's case that around 7:16 am 14 December 2017 Burford and Farrer made the representation that they would repay Liddle the costs of the share allotment and Liddle accepted that offer.
Further, Liddle's case is that on its proper construction the agreement included the accrued and incurred interest on Liddle's share purchase loan. In effect Liddle is saying that, in all the circumstance, the only reasonable inference is that Burford and Farrer agreed to pay Liddle the purchase price plus accrued interest.
In the email exchanges Burford at least appears to conditionally make promises. In the 30 November 2017 email Burford uses the phrase 'Paul and I could undertake to repay you both'. In the 14 December 2017 email, said to be the acceptance of Liddle's offer of 14 December 2017, Burford uses the phrase 'Paul and I are prepared to undertake to repay you both ourselves if this could save the college'.
It is still the case that a contract is affected by uncertainty where the essential terms are uncertain or lacking (Axelsen v O'Brien (1949) 80 CLR 219). The essential terms of this purported contract are the capital sum and interest. There is no reference in the emails to these essential terms. There is no evidence, in or around November/December2017 when the contract is alleged to have been formed, that there was any quantification of the amount of interest owing by Liddle.
Liddle makes a formal demand for repayment on 23 January 2018 and on 24 January 2018 Burford emails Liddle stating '… our commitment to you and Marion to repay your share loss but it may just be to cover interest on your loan in the short-term.' Burford explains this email by saying that she did not intend to confirm any agreement to pay Liddle the money he had lost by reason of his investment on Parapharm as there was no such agreement. Further Burford deposes that she thought Farrer and she might be able to help Liddle and Volk pay their interest repayments with respect to their mortgage.
I am not entirely satisfied as to Burford and Farrer's explanation that they were considering assisting Liddle and Volk in relation to their personal financial circumstances. Burford is focussed on trying to maintain the financial viability of Parapharm and it is in that context the emails from Burford of 30 November 2017 and 14 December 2017 are sent.
However I am not satisfied that Liddle has made his case with such a high degree of certainty to warrant summary judgment being granted. In my opinion there is not the certainty in the essential terms of the agreement to warrant the conclusion, at a summary judgment, that a contract has been formed. Further the conversations in, or around, 13 and 14 December 2017, said by Liddle to form the basis for his change of position to sell the shares are denied by Burford. That being the case the plaintiff's application is dismissed.
I have given thought as to whether there should be conditions imposed upon the defendants on the dismissal of the application. The issue is narrow, the documentary evidence is concise and witnesses are limited in number. In my opinion the interests of justice are better served by an early mediation, and, if necessary, an early listing for trial.
I will hear counsel on the issue of costs, and programming orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
LF
Court Officer8 FEBRUARY 2019
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