LN Media Pty Ltd as Trustee for the LN Media Unit Trust v Hounsom
[2019] WADC 23
•5 MARCH 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: LN MEDIA PTY LTD as Trustee for the LN MEDIA UNIT TRUST -v- HOUNSOM [2019] WADC 23
CORAM: REGISTRAR KINGSLEY
HEARD: 31 JULY 2018
DELIVERED : 5 MARCH 2019
FILE NO/S: CIV 532 of 2018
BETWEEN: LN MEDIA PTY LTD as Trustee for the LN MEDIA UNIT TRUST
First Plaintiff
DICEY PARMENTER PROPERTY PTY LTD as Trustee for the MY WORLD GROUP TRUST
Second Plaintiff
MY WORLD CHILD DEVELOPMENT (WAIKIKI) PTY LTD as Trustee for MY WORLD GROUP TRUST
Third Plaintiff
AND
WAYNE GARETH HOUNSOM
First Defendant
WAYNE GARETH HOUNSOM AND CHARLENE BRIDGETTE HOUNSOM as Trustee for the HOUNSOM FAMILY TRUST
Second Defendant
WAYNE GARETH HOUNSOM
WAYNE GARETH AND CHARLE BRIDGETTE HOUNSOM as Trustee for the HOUNSOM FAMILY TRUST
Plaintiff by counterclaim
LN MEDIA PTY LTD as Trustee for THE LN MEDIA UNIT TRUST
DICEY PARMENTER PROPERTY PTY LTD as Trustee for COMMERCIAL SUPERANNUATION FUND
MY WORLD CHILD DEVELOPMENT (WAIKIKI) PTY LTD
Defendant by counterclaim
Catchwords:
Practice - Order 14 Rules of the Supreme Court 1971 - No new principles
Legislation:
Nil
Result:
Judgment for the plaintiff subject to orders being made
Representation:
Counsel:
| First Plaintiff | : | Mr R J Moss |
| Second Plaintiff | : | Mr R J Moss |
| Third Plaintiff | : | Mr R J Moss |
| First Defendant | : | In person |
| Second Defendant | : | In person |
| Plaintiff by counterclaim | : | In person |
| Defendant by counterclaim | : | Mr R J Moss |
Solicitors:
| First Plaintiff | : | Origen Legal |
| Second Plaintiff | : | Origen Legal |
| Third Plaintiff | : | Origen Legal |
| First Defendant | : | Not applicable |
| Second Defendant | : | Not applicable |
| Plaintiff by counterclaim | : | Not applicable |
| Defendant by counterclaim | : | Origen Legal |
Case(s) referred to in decision(s):
Nil
REGISTRAR KINGSLEY:
The plaintiffs bring an application dated 16 April 2018 for orders that:
1.The plaintiffs have leave to amend the writ of summons to correct the name of the second plaintiff.
2.The plaintiffs have leave to join Sharleen Bridgett Hounsom as third defendant.
3.An extension of time within which to bring an application pursuant to O 14 Rules of the Supreme Court 1971 (RSC), and an application pursuant O 16 against the plaintiffs by counterclaim.
In their statement of claim dated 20 March 2018 the plaintiffs plead between 17 June 2016 and 10 August 2017 the first defendant was a director of the first plaintiff and holds 20 Ordinary Class shares of the issued share capital of the first plaintiffs. The statement of claim goes on to plead that since 1 July 2016 the second defendant has held a legal interest in 24 Ordinary Units and 24 Special Units in LM Media Trust in its capacity as Trustee for the Hounsom Family Trust. The statement of claim goes onto plead that since 23 March 2016 the first defendant has been a member of the Commercial Superannuation Fund of which the second plaintiff acts as trustee.
All these pleas admitted by the defendants.
The statement claim goes onto to plead that on or about 23 October 2017 the plaintiffs and the defendants entered into an agreement to compromise the first defendant's indebtedness to the first plaintiff in the sum of $25,623. The agreement comprises a without prejudice letter from the plaintiffs' solicitor dated 14 October 2017 sent to the first and second defendants by email on 14 October 2017 and an exchange of email communications between 19 October 2017 and 23 October 2017 between the plaintiffs solicitor and the defendants. As to this plea the defendants say, without providing particulars, that the agreement was induced by misrepresentation.
The express terms of the agreement were that the first plaintiff will buy back 100% of the ordinary shares issued to the first and second defendants for the sum of $25,623 to set off the indebtedness of the first and second defendants. In addition the first and second defendants agreed to restrictive covenants not to solicit clients of the first plaintiff and to return the first plaintiffs intellectual property. In addition the first and second defendants would cease membership of the second plaintiff, whereupon the moneys held by the second plaintiff would be rolled over. The defendants, whilst admitting some terms of the agreement, deny the agreement on the basis of the purported misrepresentation.
The plaintiff further pleads that a term is implied in the settlement agreement that the defendant would perform their obligations within a reasonable time and in breach of the implied term the defendants have failed or refused to perform their obligations under the settlement agreement. The defendants denied these paragraphs again on the basis of misrepresentation.
The plaintiffs' prayer for relief seeks a declaration that the defendants entered into the agreement and seeks specific performance of the settlement agreement. In addition to or in lieu of specific performance equitable damages are sought.
The defendants have brought a counterclaim in essence pleading that the settlement agreement was brought about by misrepresentation. The misrepresentation is to the amount in which the defendants are indebted to the plaintiff. At par 10 of the counterclaim the defendants claim that all or substantially all of the funds are linked to the defendant by way of payment made by the plaintiffs to the defendant based on commissions for the defendants services.
The plaintiff's application pursuant to O 14 and O 16 RSC are supported by the affidavits of Ryan John Moss sworn 16 April 2018 and Robert Richard David Dicey sworn 2 July 2018. The defendants oppose both applications and Wayne Gareth Hounsom has filed an affidavit sworn 6 June 2018.
The authorities on summary judgment are well known. The onus on an applicant for summary judgment is set at a high threshold, and their needs to be great caution exercised by a court before depriving a party of their right to a trial.
Offer
By letter dated 14 October 2017 to Wayne Gareth Hounsom the plaintiff's solicitor detailed the offer to Mr Hounsom for him to discharge his debt. In essence:
(a)The plaintiff L N Media Pty Ltd would reclaim 100% of the ordinary shares issued to Hounsom by purchasing them for $25,623 –thereby setting off the amount owing.
(b)There would be a transfer of the shares by Hounsom, and his wife, to the third plaintiff.
(c)There be a restrictive covenant on the part of Hounsom and his wife not to solicit customers of the first defendant.
(d)Hounsom and his wife to formally cease membership of the commercial super fund will roll over funds accumulated by Hounsom and his wife.
It is this reference to Hounsom's wife, Sharlee Bridgette Hounsom, that prompts the application to join her as a defendant. The basis of the joinder is that Sharlee Hounsom is a co-trustee of the Hounsom Family Trust, the second defendant, and in her individual capacity was a party to the agreement referred to in [4] above.
The purpose of the application for joinder is to ensure that all parties to the transaction are before the court, so their rights may be determined in the one proceeding.
By email dated 16 October 2017 the defendants accountants sought information from the plaintiffs' accountant. The defendants' accountant states in the email that he has been engaged to provide an audit/review of the financial position and policies and procedures for the first plaintiff and details the type and nature of documents required from the first plaintiff so that the review could be completed. The plaintiffs' accountant responded on 16 October 2017 by advising that they were happy to provide the information but would need $1,650 retainer paid immediately to cover the cost of estimated fees. It would appear that the fee was not paid.
On 19 October 2017 the first defendant emailed the director of the first plaintiff and third plaintiff advising that both defendants had time to reflect and would like to accept the offer and close the chapter.
The plaintiffs' solicitor responded on 23 October 2017 (sent 9:23am) noting that the offer had technically lapsed for acceptance at 5pm Monday 16 October 2017. However, the plaintiffs' solicitor then makes the offer again with an amendment to the restrictive covenant so as not to include two specific clients. The first defendant responded on 23 October 2017 (sent 9:48am) saying:
Thank you for the email. Please take this reply as acceptance of the offer.
In my opinion at this point there is a concluded agreement between the plaintiffs and the defendants. The defendants say they were induced to enter into the settlement agreement through misrepresentation.
The principles applicable to misrepresentation are clear. The representation is a statement made by one party to the other before or at the time of contracting about some existing state of affairs or to some past event which is one of the factors that induces another to enter into the contract. A misrepresentation is a representation that is not true and leads the other party into error.
The elements of a misrepresentation are that the plaintiffs made positive statement or engaged in some conduct that does not accord with the true facts. The defendants have not adduced any evidence of conduct on the part of the plaintiffs, or statements conveying a representation which induced the defendants to enter into the agreement. There are no particular in the defendant's defence, nor evidence of any specific statement or conduct conveying representation by the plaintiff.
Accordingly, I find there is was no basis for the defendants contention that they were induced to enter into the agreement. Accordingly there will be judgment for the plaintiffs.
For the same reasons, in my opinion, the defendants counterclaim is untenable and judgment will be entered for the plaintiffs on the O 16 application.
The amendment to the writ to summons is to correct the name of the second defendant. Leave is not necessary to amend the writ and the only order necessary is that the minute of proposed amended writ do stand as the amended writ of summons.
As for the joinder of a party it is clear from the context of the proceeding that the joinder of Sharlee Bridgette Hounsom is necessary to ensure that all parties are necessarily before the court. Leave is given to join the third defendant.
Of course Sharlee Bridgett Hounsom is not a party to the plaintiff's application and has a right to be heard. Service of the amended writ may bring about further interlocutory applications.
Thus, whilst judgment has been given to the plaintiffs against the current defendants, the precise form of orders will need to be considered. I will hear counsel on the form of orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
KT
Court Person5 MARCH 2019
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