JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MCMAHON -v- WOODWARD [2022] WADC 29
CORAM: RUSSELL DCJ
HEARD: 29-30 NOVEMBER & 1 & 6 DECEMBER 2021
DELIVERED : 25 MARCH 2022
FILE NO/S: CIV 3415 of 2019
BETWEEN: JOHN DOUGLAS MCMAHON
Plaintiff
AND
GAVIN JOHN WOODWARD
Defendant
Catchwords:
Debt - Loan agreement - Dispute as to terms and amount of loan - Whether interest payable under terms of loan agreement - Whether defendant can rely on defences not pleaded - Purpose of pleadings - Whether agreement invalid and unenforceable because it is undated - Litigant in person - Turns on own facts
Legislation:
Supreme Court Act 1935 (WA), s 32
Result:
Judgment for the plaintiff
Representation:
Counsel:
| Plaintiff | : | Ms P A Honey |
| Defendant | : | In person (by video link) |
Solicitors:
| Plaintiff | : | Fletcher Law |
| Defendant | : | Not applicable |
Case(s) referred to in decision(s):
Agricultural and Rural Finance v Gardiner [2008] 238 CLR 570
Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Cardaci v Filippo Primo Cardaci as Executor of the Estate of Marco Antonio Cardaci, dec [No 4] [2020] WASC 159
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, (2009) 76 NSWLR 603
Glew v Frank Jasper Pty Ltd [2010] WASCA 87
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
L'Estrange v F Graucob Ltd [1934] 2 KB 394
Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
MTI v SUL [No 2] [2010] WASCA 58
Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197
Smart v Prisoner Review Board (WA) [2012] WASC 48
Srecko Juric-Kacunic v Stan Vaupotic [2013] NSWSC 41
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 51; (2004) 219 CLR 165
Warner Bros Feature Productions Pty Ltd v Kennedy Miller Mitchell Films Pty Ltd [2018] NSWCA 81
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
RUSSELL DCJ:
Introduction
In 2012, the plaintiff, John Douglas McMahon, and the defendant, Gavin John Woodward, who had been friends for over 40 years, established two unit trusts, the Winthrop Unit Trust and the Bagot Road Unit Trust, through which they conducted three property development projects developing residential units in Nedlands, Subiaco and Shenton Park.
The dispute between the parties in this action arises out of a claim made by Mr McMahon against Mr Woodward for repayment of $98,708 plus interest in respect of a personal…
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- AGLC
- McMahon v Woodward [2022] WADC 29
- Case
- [2022] WADC 29
- Decision Date
CaseChat Overview and Summary
The court held that the Loan Agreement must be construed objectively based on the understanding of a reasonable person in the position of the parties, by reference to the contract as a whole, its text, context, and purpose or objects. The court found that the Loan Agreement was valid and enforceable, as the terms were clear and Mr Woodward had acknowledged withdrawing the amounts specified in the agreement. Furthermore, the court held that post-contractual statements made by Mr Woodward acknowledging the debt or his intention to repay it were not evidence of the terms of the agreement and were not determinative of his liability. The court also held that Mr Woodward could not rely on defences that were not pleaded, as the purpose of pleadings is to provide fair notice of the case to be met and to avoid unnecessary and potentially prejudicial surprises at trial.
The court ordered that Mr Woodward pay the outstanding loan amount of $100,000 to Mr McMahon, together with interest at the rate of 8% per annum from the date of the judgment until the date of satisfaction. The court also ordered that Mr Woodward pay Mr McMahon's costs of the proceeding, to be taxed on an indemnity basis if not agreed. The court dismissed Mr Woodward's cross-claim as it was considered an abuse of process.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The Loan Agreement, as for any contract of that nature, is to be construed objectively based on the understanding of a reasonable person in the position of the parties by reference to the contract as a whole, to its text, context and its purpose or objects: Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd;[89] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd;[90] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2].[91][89] Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].[90] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [53].[91] JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] - [72] and the authorities referred to. Mr McMahon relies on the following emails in which it is submitted that Mr Woodward acknowledged the Loan Agreement and did not, at that time, raise any of the 'vitiating factors' he now seeks to rely on or dispute the loan or the validity of the Loan Agreement:[92][92] Plaintiff's oral closing submissions, ts 416 - ts 419. 1.An email from Mr Woodward to Mr McMahon dated 26 June 2019[93] (relating to finalising the accounts and the lodgment of documents relating to the Winthrop Unit Trust with the ATO) in which, amongst the other things stated, Mr Woodward said to Mr McMahon:[93] Exhibit 26.…Also there is no reference in these documents to our Loan Agreement of approx. $100,000.…As previously advised in my earlier email to you, it is my intention and desire to repay the debt I have with you. I just need time!…I repeat … it is my desire and intention to repay the debt to you.…2.An email from Mr Woodward to Tehani Krestelica, copied to Mr McMahon dated 27 June 2019,[94] in which (amongst other matters), Mr Woodward said:…Also, your schedules do not acknowledge and therefore address the loan of approx. $100K between John and myself.…[94] Exhibit 27. Consistent with the objective theory of contract, statements made or other conduct which post-dates a contract cannot be used to establish construction of a contract or its terms or what the parties intended at the time of the contract. A post‑contractual statement made acknowledging an agreement or a term of an agreement may be admissible as evidence probative of the surrounding circumstances at the time the agreement was made.[95][95] Agricultural and Rural Finance v Gardiner [2008] 238 CLR 570 [35] (Gummow, Hayne & Kiefel JJ). See also Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, (2009) 76 NSWLR 603 [6] - [13] (Allsop P); [314] - [327] (Campbell JA). Any post‑contractual acknowledgment of a debt or statement by Mr Woodward of his intention to pay Mr McMahon is not evidence of the terms of the agreement and is not determinative of his liability to repay the loan. In any event, the terms of the Loan Agreement are clear:1.By cl 2.1, Mr Woodward has acknowledged that he withdrew the amounts specified in Schedule 2 on the dates specified.2.By (the first) cl 2.2, Mr Woodward agreed that the loan, being the amount specified in Item 1 of Schedule 1 to the Loan Agreement (the Loan), represents moneys properly owing to Mr McMahon and not to the Winthrop Unit Trust.3.By cl 3.1, Mr Woodward agreed to and is required to repay the Loan on the Repayment Date. That is, within 30 days of a written request for payment being made in writing by Mr McMahon to Mr Woodward.