| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : MACNISH -v- O'REILLY [2013] WADC 86 CORAM : STEVENSON DCJ HEARD : 22 MARCH 2013 DELIVERED : 7 JUNE 2013 FILE NO/S : APP 79 of 2012 BETWEEN : STEPHEN COOPER MACNISH Appellant
AND
SEAN DAMIAN O'REILLY
First respondent
MELISSA LOUISE O'REILLY
Second respondent
MY KHIET PHAM
Third respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA Coram : MAGISTRATE MAUGHAN File No : PE 10317 of 2010 (Page 2)
Catchwords: Contract - Acknowledgement of debt - Whether written notice valid compliance with notice requirement in parties' agreement - Form and content of condition precedent notice - Construction of notice provision - Turns on own facts Legislation: Magistrates Court (Civil Proceedings) Act 2004 s 40 Result: Appeal dismissed
Representation: Counsel:
Appellant : Mr B W Ashdown
First respondent : In person
Second respondent : In person
Third respondent : In person
Solicitors:
Appellant : Holborn Lenhoff Massey
First respondent : Not applicable
Second respondent : Not applicable
Third respondent : Not applicable
Case(s) referred to in judgment(s):
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Burton v Arcus (2006) 32 WAR 366
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Irving v Commissioner of Titles [1963] WAR 67
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579
McMillan v McMillan (1891) 17 VLR 33
Owen v Carrington Confirmers Pty Ltd (in liq) (Unreported, Federal Court of Australia, Library No BC9507768, 28 April 1995)
Regan v Gibson [2010] WADC 144
Reilly v Jessop [2012] WADC 93
(Page 3)
Introduction 1 This appeal concerns the issue of whether the respondents gave the appellant a valid and effective notice in writing of their election to call up a debt owed to them by the appellant. 2 In my opinion, for the reasons which follow, this appeal from the decision of his Honour Magistrate Maughan dated 3 October 2012 must be dismissed.
Deed of acknowledgment of debt 3 On 1 November 2007, the parties executed a deed of acknowledgement of debt dated 25 October 2007 (the deed). The deed acknowledged that Media Merge Pty Ltd and Stephen Cooper Macnish (the debtors) owed the sum of $60,000 to Sean Damian O'Reilly and Melissa Louise O'Reilly, as trustee for the WWJD Development Trust, and My Khiet Pham, as trustee for the Pham and Bui Family Trust (the lenders). As noted in the recitals of the deed, the lenders, at the request of the debtors, agreed to accept payment of the debt upon the terms of the deed. 4 It is common ground that the appellant is a debtor who, subject to the terms and conditions of the deed, is liable to repay the debt of $60,000 to the respondents. Media Merge Pty Ltd (now deregistered) is not a party to the appeal, although they were sued by the respondents initially in the proceedings below. 5 It is also common ground that the $60,000 was advanced by the respondents to enable Media Merge Pty Ltd to pursue an equity capital raising for the conduct of its business. 6 Clause 3 and cl 4 of the deed are relevant for present purposes and provide: 3. Conditions Precedent The parties ACKNOWLEDGE and AGREE that the obligation of the Debtor to repay the Debt is subject to and conditional upon the Lender providing written notice to the Debtor confirming its decision not to proceed with the Investment provided however that such written notice will have no effect subsequent to the parties having entered into the Shareholders Agreement. (Page 4)
4. Repayment Date The Debtor must pay to the Lender the Debt on or before the day that is six (6) months following the date the Debtor receives written notice from the Lender confirming it does not wish to proceed with the Investment ('Repayment Date'). 7 Clause 3 of the deed gives the respondents the option to call up the debt, thereby making the appellant liable to repay the debt, provided the respondents gave notice in writing of their 'decision not to proceed with the Investment'. Any such election, by the express terms of the clause, is required to be made before the parties enter into 'the Shareholders Agreement'. 8 The meaning of the defined terms is set out in cl 1 of the deed which relevantly provides: (a) 'Investment' means the investment in the Company being contemplated by the Lender under the terms of the Mandate; (b) 'Mandate' means the mandate to equity capital raising entered into by the parties hereto and marked Annexure 'A' for identification purposes; (c) 'Shareholders Agreement' means the shareholders agreement to be entered into by the parties hereto and the Company to provide for the rights and obligations between the shareholders in the Company in accordance with the terms and conditions of the Mandate. 9 Finally, cl 11 provides as follows in relation to notices: The issue for determination 10 The pleadings in the Magistrates Court, arguably, give rise to a number of non-issues. However, the parties accept, for the purpose of the appeal, that the only critical issue is whether the notice in writing relied upon by the respondents as compliance with the condition precedent in cl 3 of the deed is sufficient 'written notice' to the appellant to cause the debt to become due and payable on the 'Repayment Date', namely six months after the appellant received the written notice. (Page 5)
11 I note the appellant himself in his affidavit dated 14 August 2012 in the Magistrates Court crystallised the issue as 'my defence is in essence that the claimants did not provide the notice required by the express terms of the relevant Deed of Acknowledgement and Debt'. 12 Therefore, the reason why the investment by the parties in Media Merge Pty Ltd did not proceed, as contemplated by them when the debt was created, is irrelevant. 13 The parties have not joined issue and no claim is based on a breach of any obligations that might have existed between them arising out of the mandate. It is common ground that no shareholders' agreement was entered into by the parties and as a result, prima facie, the respondents are able, if they wish, to give written notice to the debtor pursuant to cl 3 of the deed.
The respondents' written notice dated 14 March 2009 14 Putting aside reference to the background and context of the communications between the parties at the time, the respondents purported to give written notice pursuant to cl 3 of the deed to the appellant by letter dated 14 March 2008 (the notice). The notice was signed by Mr Sean O'Reilly and addressed to Media Merge Pty Ltd and Mr Stephen Macnish. 15 The notice is in the following terms: 14th March 2008 Media Merge Pty Ltd and Stephen Macnish PO Box 8217, Angelo St South Perth WA 6151 Dear Sir, As per the Deed of Acknowledgement of Debt please return the monies loaned to you immediately. You have not advanced forward after receiving the monies from us and have advised us that the offer of shares is no longer on the table. Accordingly the monies should be returned immediately. We would like to keep this matter from becoming legal, but this is dependent upon us receiving the monies due to us. Amount $60,000 ($30,000 Sean and $30,000 Vincent) (Page 6)
16 Thereafter, the respondents conducted their affairs on the basis that the letter dated 14 March 2008 (the written notice) complied with the requirements of cl 3 of the deed. They assumed, accordingly, that the six-month period until the appellant became liable to repay the debt had commenced. On this basis, arguably, the debt became due and owing by the appellant to the respondents on 17 September 2008 (being six months after the date of service of the written notice allowing for the ordinary course of mail). 17 There is no evidence of rejection, at any material time, of the written notice by the debtors as being anything other than a notice in accordance with cl 3 of the deed. There is no estoppel claim based on the appellant's subsequent conduct (or lack of conduct) after receipt of the notice. It was, on the basis of the communications between the parties (both oral and in writing) immediately before 14 March 2008, totally expected by the appellant. It is plain commercial trust and the relationship between the parties had broken down. 18 The debt was not repaid by the appellant in accordance with cl 4 of the deed. As a result, the respondents commenced proceedings against the appellant in the Magistrates Court on 6 July 2010.
The Magistrates Court judgment 19 After a trial before learned Magistrate Maughan in the Perth Magistrates Court on 24 September 2012, his Honour published his reasons for decision on 3 October 2012. 20 Relevantly, for the purpose of this appeal, his Honour held: (Page 7)
I am satisfied on the balance of probabilities that the claimants have discharged their burden of proof. The letter dated 14 March 2008 was 'notice' appropriately given and received in accordance with the terms of the Deed. In accordance with that Deed of Acknowledgment of Debt the sum of $60,000.00 fell due and owing by the Defendant to the claimants on the 17 September 2008 (being 6 months after the date of service of the notice would take effect in the ordinary course of mail). 21 Having formed this view, the learned magistrate indicated in his judgment that he would award judgment in the following terms: The pleadings in the Magistrates Court 22 The respondents commenced proceedings in the Magistrates Court by general procedure claim on 6 July 2010. They described their claim as follows: 1. By Deed of Acknowledgement of Debt dated 25 October 2007 made between the Claimants and the Defendants ('Deed') the Claimants agreed to lend the sum of $60,000.00 to the Defendants repayable within six (6) months following the date the Defendants received written notice from the Claimants confirming they did not wish to proceed with the Investment ('Agreement'). 2. On or about 14 March 2008 the Claimant provided written notice pursuant to Clause 3 of the Deed, confirming that the Claimant no longer wished to proceed with the Investment thereby terminating the Agreement. 3. On or about 14 September 2008, pursuant to Clause 4 of the Deed, the sum of $60,000.00 became due and payable by. 23 On 19 September 2011, the respondents filed a statement of general procedure claim which summarised the facts relevant to the claim as follows: (Page 8)
3. The claimants then paid $60,000 by way of 2 cheques to Media Merge Pty Ltd, handed directly to Stephen Macnish on or about the 1st week of November 2007. 4. The defendants then failed to perform any of the contract entered into. 5. The claimants advised the defendants that they were outside the terms of the contract and requested the funds be returned. 6. The defendants had failed to return the funds. 24 On 3 October 2011, the appellant filed a statement of defence which was amended by leave of the court on 6 June 2012. The statement of defence summarised the facts relevant to the appellant's defence as follows: 1. As to paragraph 1 of the statement of claim the second named defendant: 1.1 admits that he signed the Deed of Acknowledgment of Debt ('the Deed') referred to in this paragraph; 1.2 says that there were express terms of the Deed that the obligation to repay the debt was subject to and conditional upon the claimants providing written notice ('the Notice') that they did not wish to proceed with an investment and further that the repayment only had to be made 6 months following the date of receipt of the Notice; 1.3 otherwise denies this paragraph; 1.4 says in any event that the Deed was executed not in relation to any existing debt in that the $60,000 was paid by the claimants to the first named defendant as an investment and was not a loan to the defendants or either of them. 2. The second named defendant denies paragraph 2 of the statement of claim. 3. The second named defendant admits paragraph 3 of the statement of claim. 4. The second named defendant says that the Claimants did not provide the Notice referred to in paragraph 1.2 herein. Consequently the second named defendant denies paragraphs 4 to 6 of the statement of claim. (Page 9)
25 As mentioned, it was not necessary for the learned magistrate to determine some of the issues raised in the Magistrates Court proceedings for the purpose of reaching his decision. 26 The appellant was legally represented at trial. After a short adjournment at the conclusion of the respondents' case, his counsel informed the court that the appellant did not wish to adduce any evidence. Accordingly, the appellant did not himself give evidence in relation to the issues before the court. The respondents appeared in person, and still do. 27 The Magistrates Court file contains a statement of intended evidence by the appellant dated 18 April 2012. As mentioned, the appellant did not adduce evidence at trial but the statement is contained in the Magistrates Court file provided to this court for the purpose of the appeal. I do not rely upon the statement because the evidence was not given, but it does contain a useful factual summary of the context and background of the commercial relationship between the parties. I do not understand the facts contained in the statement to be controverted by the actual evidence at trial or to be now demurred from by the appellant. The factual matters set out below are consistent with the magistrate's findings, having heard the evidence. None of the matters mentioned, in any event, are relied upon for the determination of this appeal. Even if it was relied upon, in addition to the evidence adduced before the Magistrates Court, it would not change the outcome of the appeal. The proposed evidence of the appellant, if he had given evidence, was stated as follows: … 7. At that time, the first named claimant, Sean O'Reilly ('Sean') and the third named claimant My Kheit Pham ('Pham') were acquaintances of Kurt. 8. Kurt spoke with Sean and Pham and told them that Media Merge was in need of capital. Sean and Pham expressed to Kurt that they may be interested in investing in Media Merge. 9. Kurt and I arranged to meet with Sean and Pham to discuss whether they would be interested in investing $500,000.00 to Media Merge. Kurt was present at the initial meeting with Sean, Pham and I. However, Kurt did not attend any subsequent meetings with Sean and Pham. 10. Following the initial meeting, I met with Sean and Pham on a number of occasions to discuss the investment. All of my subsequent written correspondence with the claimants was with Sean. (Page 10)
… 15. Due to the urgent nature in which Media Merge required the funding, the Claimants agreed to pay the initial $60,000.00 tranche before a shareholder's agreement had been drafted and entered into. 16. As the claimants did not have a shareholder's agreement at that stage, Media Merge agreed to provide them with an acknowledgement of debt for the first $60,000.00 tranche on the understanding that once the shareholder's agreement was entered into, that $60,000.00 would form part of the $500,000.00 investment. 17. The deed of acknowledgment of debt was intended to be an interim document to cover the Claimants until the shareholders agreement was entered into and they had contributed the balance of the $500,000.00. 18. On 25 October 2007, I signed a deed of acknowledgement of debt with the Claimants … 19. It was a term of the Deed that Media Merge was to repay the Lender the Debt on or before the day that is 6 months following the date that it received written notice from the Claimants confirming that the Claimants did not wish to proceed with the investment. 20. It was also a term of the Deed that all Notices made pursuant to the Deed shall be addressed to the relevant party at the address included in the Deed or in any case to such address as any party may designate as its address by notice to other parties. The address given for both Media Merge and myself was PO Box 8217, Angelo Street, South Perth 6151. 21. In early November 2007, I received two cheques from the claimants in favour of Media Merge. The total amount of those two cheques was $60,000.00. 22. I received no personal benefit from the initial $60,000.00 tranche. … 28. On 28 February 2008, I received an email from Sean stating that he requested the funds be returned to him within 7 days and threatening legal action if I did not comply … 29. On 10 March 2008, I telephoned Sean and we discussed the matter. … (Page 11)
31. In an email to Sean, I told him that if the Claimants did not wish to proceed with the investment, that they should give Media Merge and me proper written notice as is required under the Deed. 32. However, neither Media Merge nor I have ever received the proper Notice from the claimants confirming that they did not wish to proceed with the investment as is required by the Deed. 33. Further, as the claimants have not ever provided the sufficient written Notice as required under the Deed, the period of six months following notice has not expired. For this reason, the amount claimed by the claimants has never become due and payable. 28 In his reasons for decision, the learned magistrate made the following findings (page 4): Much of the evidence which I am required to determine in this trial is not contentious. Testimony was given by Shaun Damian O'Reilly and My Khiet Pham. Both Mr O'Reilly and Mr Pham testified that the Deed of Acknowledgement of Debt, which was tendered into evidence and became Exhibit 2 in the Trial, was executed by the parties at a South Perth Pharmacy on the 1 November 2007 ('the Deed'). The Deed bears the date of 25 October 2007. In my view nothing turns on the question of the date of the execution of the Deed. It is not disputed that the Deed records the agreement between the parties and that the parties had each executed the Deed before an independent witness. 29 The learned magistrate correctly held that the pleaded position of the respondents, to the effect that the appellant was a guarantor, was wrong. The appellant is a named debtor in the deed. His Honour was satisfied as to service of the notice, accepting the evidence of Mr O'Reilly that he posted it to the appellant in the ordinary course of mail on 14 March 2008. The appellant does not contest this finding of fact, so the method and manner of service is not in issue between the parties. 30 The ground of appeal relied upon by the appellant is an attack on the learned magistrate's finding, that the respondents complied with the condition precedent in cl 3 of the deed by giving written notice of their decision not to proceed with the investment. In effect, he held the notice was valid performance of the requirement in cl 3 of the deed. 31 It is necessary to set out the learned magistrate's reasons for his findings in this regard. They are: The Defendant disputes that the letter is a notice in accordance with Clauses 3 and 4 of the Deed in the following particulars: (Page 12)
1) The letter does not confirm that the complainants had decided not to proceed with the Investment; and 2) The letter required the Defendant to repay funds immediately and not within 6 months after the receipt of the letter. No issue was taken at the trial by the Defendant that only Shaun O'Reilly signed the letter. I am however satisfied he had authority of the WWID Development Trust to give notice pursuant to the Deed. I am satisfied that in discussions re the Investment he had authority to speak/deal on behalf of the Third Claimant. Mr Pham testified to this effect. I am urged by the Counsel for the Defendant to strictly read the terms of the Deed of Acknowledgment of Debt applying what is said by him to be dicta of Lord Hoffman's decision in Mannai Ltd v Eagle Star Ass. Co. Ltd [1997] AC 749 at 776: 'If the clauses said that the notice had to be on blue paper, it would have been on good serving it on pink paper, however clear it might have been …' That to my reading of the decision is an incorrect assessment of His Lordship's decision. At page 771 of the same decision Ld Steyn said, and I take this to be the decision of the Court: 'In determining the meaning of the language of a commercial contract, and unilateral contractual notices, [my emphasis], the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.' The question of the proper approach to the construction of commercial agreements was considered by the WA Court of Appeal in Home Building Society Ltd v Pourzand [2005] WASCA 242. Having considered the relevant decisions of the High Court, McLure JA concluded: 'The implications in the above statements of principle is that surrounding circumstances can be used in interpretation of contracts whether or not ambiguity is found to exist.' Justice McLure's reasons found support from the New South Wales Court of Appeal in Franklins Pty Ltd v Metcash Trading Ltd (2009) 246 ALR 15. The following principles can be extracted from tat head notes of that judgment: i) Construction of a written contract should be undertaken by examination of the text of the document in the contest of the surrounding circumstances known to the parties, or that can be (Page 13)
reasonably assumed was known to the parties, at the time of the contract's execution. ii) It is not necessary to find ambiguity in the words of a written contract before the court can look at the surrounding circumstances as an aid to construction. iii) There is a close connection between the requirement to construe commercial agreements in a way that does not flout business commonsense, and the principles by reference to which the surrounding circumstances are admissible as an aid to construction. The nature and extent of the commercial aims and purposes of the agreement are part of the surrounding circumstances. The need for a businesslike construction also directs the approach to be taken to the ascription of meaning to the words used by the parties. To be admissible, the evidence of surrounding circumstances must be relevant to the fact in issue and probative of the surrounding circumstances known to the parties, or of the purpose or object of the transaction. Relevant to the surrounding circumstances leading to the letter of the 14 March 2008 being sent to the Defendant is the following, which can be established on the basis of the evidence given by Mr Shaun O'Reilly and documents tendered by him without objection from the Defendant; i) He caused an email to be sent to Stephen MacNish on 28 February 2008 at 3.46 pm, being part of Exhibit 10, in the following terms: ii) He caused an email to be sent to Stephen MacNish on Wednesday, 12 March 2008 at 9.41 pm being part of Exhibit 9: (Page 14)
Please confirm immediately.' iii) He received an email from Stephen MacNish dated 13 March 2008 2.32 pm being part of Exhibit 6: 'Hi Sean Further to our discussion on Monday, I can confirm that Media Merge has recently entered an agreement with Watershed Corporate to complete its series A round of funding. Watershed are specialised in providing management services to start up companies and have a successful track record in relation to raising funds from 'concept to capital'. The Directors of Watershed have indicated a three to six month timeframe to complete the full funding process with the intention of drawing down smaller tranches in the interim to drive the initial launch of Skiirrel in July. The commitment from Watershed to raising the full capital require is significant, with an undertaking from the Directors to achieve that outcome based on the success-fee that provides Equity for Service. Incidentally, this option was put forward by the Directors based on their evaluation of the opportunity. As mentioned during our meeting, the debt of $60,000 is itemised in our accounts as an outstanding creditor and is being properly disclosed to third parties such as Watershed that my have both interest in evaluating the investment opportunity. Hence we fully acknowledge the debt and propose to meet our obligations under the terms of the Deed by proceeding with the commercialisation of Skiirrel as indicated above. In reply to your request for additional consideration over and above the terms of the Deed, I will, on an entirely without prejudice basis, agree to increasing the amount owed to you from $60,000 to a total not exceeding $63,000 in full and final satisfaction of the debt on or before the Repayment date stipulated in the Deed. However, we would respectfully ask that you provide written notice in accordance with the terms of the Deed and addressed to the address included in the Deed. I trust this meets with your approval and I look forward to receiving your reply.' It is against this background that Mr O'Reilly has stated that he posted the letter dated 14 March 20008 to Mr MacNish. Mr O'Reilly has testified that he considers the letter as being notice given in accordance with the Deed. I accept Mr O'Reilly to be a witness of the truth and his evidence was not shaken in my view under cross-examination or as a consequence of any contradictory evidence being led by the defendants. (Page 15)
32 On this basis, the learned magistrate held that the letter of 14 March 2008 was written notice to the appellant in compliance with the condition precedent in cl 3 of the deed, and, accordingly, the debt of $60,000 became due and payable to the respondents pursuant to cl 4 of the deed on the expiry of the six-month period.
The notice of appeal 33 By an appeal notice dated 8 October 2012 the appellant appeals against the learned magistrate's decision dated 3 October 2012. 34 The appellant, quite properly, did not seek to pursue some of the grounds set out in the notice of appeal. No further reference to those matters is necessary for the determination of the appeal. 35 The appellant accepts that appeal ground (d) encapsulates the issue he seeks to agitate in the appeal. Appeal ground (d) contends: [T]he Learned Magistrate erred in fact and law in holding that the written notice given by the claimants to repay the debt was notice appropriately given in accordance with the Deed.
The nature of this appeal 36 The appeal is brought pursuant to s 40 of the Magistrates Court (Civil Proceedings) Act 2004, which provides the appeal must be conducted in accordance with the rules of court made by the District Court. The appeal must be determined by reference to the material and evidence that was before the Magistrates Court - and any other evidence that this court gives leave to be admitted. Neither party sought to rely on any further evidence in the appeal. 37 Commissioner Gething summarised the principles which apply to the determination of an appeal to the District Court from a decision of the Magistrates Court in Reilly v Jessop [2012] WADC 93 [34]. The appeal is by way of re-hearing and involves a 'reconsideration of the evidence' that was before the Magistrates Court. 38 Ordinarily, a court entertaining an appeal by re-hearing can only exercise its appellate powers if it is satisfied that there was an error on the part of the primary decision-maker. Thus, it is necessary for the appellant to demonstrate an error on the part of the court below which materially affected the decision made: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 [14]; (Page 16)
(2000) 203 CLR 194, 203 - 204; Allesch v Maunz [2000] HCA 40 [23]; (2000) 203 CLR 172, 180 - 181; Regan v Gibson [2010] WADC 144 [8].
The appellant's submissions 39 The appellant's contention is that the notice of 14 March 2008 is 'not a demand which met the requirements of cl 3 of the deed as a condition precedent' and, in any event, 'failed to meet the legal requirements for a valid demand in the circumstances of the case'. Accordingly, the appellant says the notice is invalid and ineffectual to give rise to the obligation on the appellant to make payment pursuant to the deed. 40 I accept the appellant's submission that the burden of proof is on the respondents to establish that the notice of 14 March 2008 satisfied the condition precedent in cl 3 of the deed, namely that it constituted a valid written notice to the appellant confirming their decision not to proceed with the investment. 41 The appellant takes issue with the form of the notice by reason that it was only signed by 'Sean O'Reilly'. The appellant also makes the submission that where multiple parties are lenders, all are required to act and make demand jointly and that a demand by only one of several lenders is of no effect: Owen v Carrington Confirmers Pty Ltd (in liq) (Unreported, Federal Court of Australia, Keiffel J, 28 April 1995, Library No BC9507768, pages 2 - 4); Burton v Arcus (2006) 32 WAR 366, 401 [134]. 42 Each of these cases is concerned with the liability of land title mortgagees and the strict regime which applies in the public interest (for good reason) with respect to such matters. In contradistinction, this is a simple commercial contract made by the parties for their own singular purpose, namely, to record in writing the commercial relationship between them. It is a private contract with limited scope, if any, for other parties to be affected or to have any interest in the matter. 43 The appellant's proposition is not, in my view, directly apposite to the issue raised. It poses the question of whether the notice of 14 March 2008 can be construed as a demand by one party only. Arising out of this issue is the question of whether the respondents are required to act severally, that is separately or jointly for the purpose of giving any notice under cl 3. (Page 17)
44 It should be observed that the deed appears to have been prepared by the parties themselves. It does not disclose that it has been prepared by lawyers. It appears the way 'Lender' is defined in the singular after reference to both respondents, and having regard to the obligation in cl 3 on 'the Lender' to give the written notice, that the parties agreed that the respondents would be required to act in concert or together in order to invoke cl 3. This is certainly consistent with the way they conducted their affairs with respect to the appellant during negotiations. 45 The deed itself defines the 'Debt' as a single sum of $60,000 and does not provide for any apportionment between the respondents as the lenders. The notice of 14 March 2008 is consistent, and understandable in its terms, when regard is had to these matters. It refers to a single amount of $60,000, even though the apportionment between the respondents is stated to be in equal shares. 46 The notice of 14 March 2008 is, of course, a single notice. It is arguably a demand by a single lender in circumstances where all lenders are required to act and make demand jointly. The notice is plainly not a demand by one respondent acting alone. This is confirmed by reference to cl 3 of the deed itself, and also the surrounding circumstances which were taken into account by the learned magistrate. There is no evidence that at any material time the appellant was under any misapprehension or misunderstanding that the notice of 14 March 2008 was anything but a confirmation of the respondents' decision, for the purposes of cl 3 of the deed to activate the repayment date set out in cl 4. 47 I am not persuaded that the demand by its express terms, or by reference to the surrounding context and circumstantial evidence, can properly be construed as a demand by the first respondent in person only. It is, of course, true that the demand does not refer to the three named parties as lenders in their capacity as trustee for their respective trusts. In my opinion, this is not fatal to the notice being a valid demand for the purpose of cl 3. There is no evidence to suggest that the respondents did not have the authority or power to give the notice on behalf of their respective trusts. The plain construction and legal effect of the notice is that it is a notice for the purpose of cl 3 of the deed. 48 It is not suggested by any part of the evidence that the respondents have not acted in unison at all material times, including in the contract formation stage and entry into the deed which preceded the advancement of the monies which constitute the debt. (Page 18)
49 In McCann v Switzerland Insurance Australia Ltd& Ors (2000) 203 CLR 579 Gleeson CJ said [22]: Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure. 50 The appellant says the respondents, as trustees, cannot delegate the exercise of their decision-making power, and all trustees have a duty to act personally: McMillan v McMillan (1891) 17 VLR 33, 38 - 39. There is no suggestion that, in giving the purported notice of 14 March 2008, the respondents were not acting on any basis other than in accordance with their actual decision-making power as trustees for their respective trusts. This is in contradistinction to a circumstance where the respondents purport to act otherwise than in unison and without actual authority. There is no obligation, by reason of the single requirement that they act together for the purpose of giving notice as 'Lender', that they are not acting in concert and in unison. 51 In my view, the proper construction and interpretation of the notice of 14 March 2008 is that it is a single notice on behalf of the respondents in their capacity as the 'Lender' under the deed, as that term is defined in the deed. The fact that reference in the notice is not made directly to their respective family trusts, and that they are acting in the capacity as trustees for those trusts, is not fatal to the notice being valid for the purpose of cl 3. The true legal effect of the notice, as a matter of construction, is not corrupted by any of the reasons alleged by the appellant. 52 The fact that a lawyer might have drafted the notice more formally, and by direct reference to the issues raised by the appellant, is not to the point. The question is whether, on its proper construction, the notice of 14 March 2008 is a proper notice by the respondents to the appellant confirming their decision not to proceed with the investment. In my opinion, the plain and unambiguous terms of the notice do not, as a matter of legal construction, admit to any other meaning. It is common ground that the respondents were entitled to give the notice on 14 March 2008 because, for whatever reason, the proposed shareholders' agreement was not entered into by the parties. 53 The appellant also contends that only a single demand was issued. The appellant relies on Irving v Commissioner of Titles [1963] WAR 67 for the proposition, that if there is more than one person at a given address, a separate notice must be posted and directed (by virtue of the way it is addressed) to each separate person or entity. It must be (Page 19)
immediately observed that this case is not concerned with a notice under the Transfer of Land Act 1893 (WA). The only persons potentially affected by the notice are the parties to the deed, and the appellant and Media Merge Pty Ltd have the same address for the purpose of the deed and do not reside at different places. 54 In my view, given the terms of the deed and the way in which the parties are defined, even allowing for the fact that Media Merge Pty Ltd and Mr Macnish are each defined as the 'Debtor', it would be a nonsense in the circumstances of this case to hold that the notice of 14 March 2008 is invalid because only one notice was sent to the debtors who have a common address in the deed. 55 At all material times the appellant was the alter ego of Media Merge Pty Ltd. It was the vehicle used by him for his business venture. In the circumstances of this case, if the appellant's submission held force, then logically the notice of 14 March 2008 should be regarded as a sufficient notice for one of the debtors (but which one?). It would be, with respect, a nonsense to suggest that because only one copy of the notice was sent to both debtors at the same address, then that single notice had no validity with respect to both of them. 56 The appellant's written submissions addressed the proposition that the respondents were not entitled to issue the notice of 14 March 2008 by reason of their delay or default. This argument does not appear to have been advanced below and there is no evidence, or no sufficient evidence, of why the proposed shareholders agreement did not proceed between the parties. In any event, as I understand it, the appellant does not seek to maintain his appeal on this basis. 57 The appellant's written submissions deal with the law concerning the interpretation of written contracts. In my view there is no ambiguity in cl 3. The plain and common intention of the parties to the deed was that the respondents would be entitled to give the appellant notice in writing of their decision not to proceed with the investment at any time preceding the entry by the parties into the proposed shareholders' agreement. That is precisely what happened. 58 I accept the submission that the subjective belief of the respondents that the notice complied with the deed (whether as to its execution, content or delivery), cannot override the requirement for compliance with the condition precedent as set out in cl 3, or is in anyway determinative of the matter. To the extent the learned magistrate may have thought (Page 20)
otherwise, it does not, in my view, displace the core decision by him, that the notice of 14 March 2008 was a sufficient notice for the purpose of cl 3. 59 In my opinion, on any objective view of the notice of 14 March 2008, it is plainly a written notice to the appellant in accordance with the condition precedent as required by cl 3 of the deed to give such notice to trigger the commencement of the six-month period before the debt becomes due and payable by the appellant.
Conclusion 60 The appellant submits the respondents' notice of 14 March 2008 does not comply with the obligation set out in cl 3 of the deed to give 'written notice' of a decision to call up the debt and, as a result, contends the notice is invalid and of no effect. There is no construction issue arising directly out of the requirements of cl 3 of the deed itself. The relevant condition precedent is the obligation on the respondents to give a notice in writing to the appellant of their decision. 61 The learned magistrate was required to determine if the respondents' notice dated 14 March 2008 lawfully satisfied the condition precedent in cl 3 by informing the appellant in writing that the obligation to make repayment of the debt in accordance with cl 4 of the deed was triggered. This question involves the proper legal construction of the notice itself. 62 Depending on the context and circumstances of the case, there may be strict legal requirements for the giving of a valid notice under a contract. The requirements may depend on the nature of the notice, the parties' agreement as to the prescribed form or manner of giving notice, and whether any factual pre-conditions have been met or satisfied before the notice can validly be given by one party to the other. 63 The notice, albeit under the signature of the first respondent only, is plainly, by its express terms and expression in the plural, a notice by the respondents in unison in singular form as contemplated by cl 3 of the deed. It does not admit to any other construction or purpose. This is the case irrespective of whether a strict literal interpretation or purposive approach is adopted to determine the proper construction of the notice. In my view, to hold otherwise would, in the circumstances of this case, be a commercial and legal absurdity. No other outcome would meet the intention of the parties in the commercial context that existed between the parties at all relevant times. (Page 21)
64 In my opinion, the notice given by the respondents by letter of 14 March 2008 constitutes strict compliance with the obligation contained in cl 3, namely to give written notice to the appellant that the debt is repayable within six months as expressly provided for by cl 4 of the deed. 65 For these reasons, I am not persuaded by the appellant that there is any proper basis to interfere with the learned magistrate's findings or the orders made. Accordingly, the appeal must be dismissed. 66 I will hear the parties as to the appropriate form of orders to be made dismissing the appeal.
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