Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 4] - [2020] WASC 25

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   NU-FORTUNE GOLD LTD -v- ROXBURY TRADING PTY LTD [No 4] [2020] WASC 25
CORAM:   ALLANSON J
HEARD:   14 JANUARY 2020
DELIVERED          :   7 FEBRUARY 2020
FILE NO/S:   CIV 2354 of 2019
BETWEEN:   NU-FORTUNE GOLD LTD
First Plaintiff
ECO MINERALS RESEARCH LTD
Second Plaintiff
AND
ROXBURY TRADING PTY LTD
First Defendant
PAUL JAMES KENNEDY
Second Defendant

Catchwords:

Practice and procedure - Summary judgment - Whether serious question to be tried - Turns on own facts

Legislation:

Nil

Result:

Application dismissed
Unconditional leave to defend the counterclaim

Category: B

Representation:

Counsel:

First Plaintiff	:	I R Gillon
Second Plaintiff	:	I R Gillon
First Defendant	:	M McKenna
Second Defendant	:	M McKenna

Solicitors:

First Plaintiff	:	Lawton Gillon
Second Plaintiff	:	Lawton Gillon
First Defendant	:	Gilbert + Tobin
Second Defendant	:	Gilbert + Tobin

Case(s) referred to in decision(s):

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 592
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd [1988] 14 NSWLR 523
Henderson v Curtis [2008] WASC 283
Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44
Nu‑Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 3] [2019] WASC 469
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

ALLANSON J:

Roxbury Trading Pty Ltd (Roxbury) and Paul James Kennedy, the plaintiffs by counterclaim, apply for summary judgment against Nu‑Fortune Gold Ltd (Nu‑Fortune), the first defendant by counterclaim, on part of the counterclaim.
In these reasons, which are concerned solely with the counterclaim, I will refer to Roxbury and Mr Kennedy collectively as the plaintiffs, and individually by name.
The application was brought by chamber summons, filed 10 October 2019. Consistently with how the matter was then pleaded, the plaintiffs sought the following orders:
1.There be judgment for the first plaintiff by counterclaim against the first defendant by counterclaim in the sum of $137,500.00 together with interest thereon pursuant to section 32 of the Supreme Court Act 1932 at the rate prescribed by section 8(1)(a) of the Civil Judgments Enforcement Act 2004, presently 6% per annum as from and including the respective dates the same fell due for payment until payment.
2.In the alternative to paragraph 1 there be judgment for the second plaintiff by counterclaim against the first defendant by counterclaim in the sum of $125,000.00 together with interest thereon pursuant to section 32 of the Supreme Court Act 1932 at the rate prescribed by section 8(1)(a) of the Civil Judgments Enforcement Act 2004, presently 6% per annum as from and including the respective dates the same fell due for payment until payment.
The application was based on the plea in [18] of the amended re‑amended defence and counterclaim, filed 9 October 2019. The plaintiffs plead an agreement (the heads of agreement) made between Roxbury, Mr Kennedy, Paul Richard Hanna, Nu-Fortune, and Roslyn May Kennedy, on or about 2 March 2016. In [18(c)] they plead that by cl 6 of the heads of agreement, it was agreed that 'Nu-Fortune engage Kennedy as therein specified for an annual salary of $150,000 and reimburse him for all reasonable personal expenses incurred by him in the course of his engagement'.
By [18.2] and [18.3], the plaintiffs plead that the salary payable by cl 6 was payable by calendar monthly instalments in arrears, either as an implied term, or as a term to be inferred from the conduct of Nu‑Fortune and Mr Kennedy.
By [27], the plaintiffs plead a Variation to the agreement, partly by conduct and partly in writing, by which Mr Kennedy's services under the heads of agreement were to be provided by Roxbury.
At the time of the hearing of the application, the plaintiffs pleaded, in [54]:
In breach of the heads of agreement:
(a)Nu-Fortune stopped paying Roxbury pursuant to the Variation, alternatively Kennedy pursuant to clause 6 of the heads of agreement after October 2018;
(b)Nu-Fortune stopped paying Kennedy’s expenses pursuant to clause 6 of the heads of agreement after October 2018.
At the hearing of the application, the plaintiffs sought judgment in terms of proposed order 1 only, that is, for amounts owing to Roxbury pursuant to the variation.
Following the hearing, Nu‑Fortune filed a fourth amended defence and counterclaim which amended [54] to [57]. In written submissions filed with the amended pleading, the plaintiffs sought summary judgment on the basis of the amended plea.
In [54] and [55], as amended, the plaintiffs plead that Mr Kennedy provided the services pursuant to cl 6 the heads of agreement from February 2016 to December 2016, and Roxbury provided the services, through Mr Kennedy, from December 2016 to date. The plaintiffs rely on the services set out in 10 invoices in the particulars to [55].
The amendments to [56] and [57] delete the claim by Mr Kennedy for 'salary', with the plaintiffs now claiming only for services provided by Roxbury, 'through Kennedy', pursuant to the Variation.
The prayer for relief is similarly amended to delete the alternative claim by Mr Kennedy.
The response by Nu‑Fortune to the application for summary judgment had two limbs. First, it filed an affidavit of Mr Hanna setting out a factual response to the summary judgment application. Second, it sought to invoke the arbitration clause in the heads of agreement and applied for a stay (or partial stay) of proceedings.
On 20 December 2019, after a short hearing on 17 December 2019, I dismissed the application to refer the parties to arbitration and to stay the proceedings.[1] The summary judgment application was programmed through to a hearing.
[1] See Nu‑Fortune Gold Ltd v Roxbury Trading Pty Ltd [No 3] [2019] WASC 469.

The evidence

The plaintiffs rely on two affidavits in support of the application, sworn by Paul James Kennedy on 8 October 2019, and by Roslyn May Kennedy, on 9 October 2019. They refer also to the heads of agreement, which were put before the court in an affidavit of Paul Richard Hanna, sworn 12 August 2019.
The heads of agreement was made between Mr Hanna, Mr Kennedy, Mrs Kennedy, Nu‑Fortune and Robert Allan Jacobs (the administrator of Roxbury, which was then in external administration). It provided that the parties had agreed to work together on the basis there set out.
In summary, Nu‑Fortune was to provide funds for 'due diligence' to ascertain whether it wished to commence mining operations on two named tenements, Oakley Mavis and Called Back. If satisfied with the results of due diligence, Nu‑Fortune was to provide funds to enable the administrator of Roxbury to enable Roxbury to be returned to the control of the Kennedys, to purchase key drilling plant, and for working capital.
By cl 6:
(a)[Nu-Fortune] will commence Mining Operations at the Called Back Tenement and/or the Oakley Mavis Tenement as soon as practicable expected to be June and July 2016.
(b)Paul Kennedy will be engaged from 17 February 2016 to carry out the Exploration Operations and Mining Operations on behalf of [Nu-Fortune] and will use plant and equipment (whether or not that is the Key Drilling Plant) and such other resources as are made available to him from [Nu-Fortune] from time to time.
(c)The terms of Paul Kennedy carrying out the Exploration Operations and Mining Operations set out in clause 6(b) above will be reviewed every 12 months and include:
(i)he will be paid an annual salary of $150,000 or equivalent;
(ii)he will be reimbursed all reasonable personal expenses incurred by him in carrying out such tasks including but not limited to motor vehicle, remote living, telephone and computing costs; and
(iii)will contain such terms and conditions as are usual in an employment document of such nature.
(iv)recognition for additional prospecting on any lease that provides [Nu-Fortune] with greater value.
By cl 13, the parties acknowledged that the heads of agreement was 'a preliminary document only' and further documents may be prepared. The heads of agreement was, however, to be binding.[2]
[2] Heads of Agreement cl 14.
Mr Kennedy deposed that he has performed his obligations under the heads of agreement, that he has never been advised that his employment with Nu-Fortune has been reviewed or terminated, and that he believes Nu-Fortune has no defence to Roxbury's claim for unpaid invoices in the sum of $137,500, alternatively to his claim for unpaid wages in the sum of $125,000.[3]
[3] The amount claimed calculates as the fee for services plus GST in the invoices set out in [55] of the statement of claim. It does not include the expenses which are also set out.
Mrs Kennedy deposed that she manages all of the paperwork for Mr Kennedy and for Roxbury.
The first payment for Mr Kennedy's services was in March 2016. Invoices for Mr Kennedy's services were then issued out of Arrinooka Pty Ltd (a company owned by the Kennedys).[4]
[4] Affidavit of Roslyn Kennedy sworn 9 October 2019, RMK 1.
Mrs Kennedy deposed that, while the invoices were being issued by Arrinooka, she spoke to Mr Gourdis of Nu-Fortune about the invoices being for $12,500 plus GST and he agreed. It is not clear from when payments included GST, but emails from August 2016 are consistent with adjustments being made to include the payment of GST on Arrinooka invoices from March to June 2016.[5]
[5] Affidavit of Roslyn Kennedy sworn 9 October 2019, RMK 2.
For the payments from December 2016, Mrs Kennedy refers to an email attached to her affidavit in which she proposed a change:
Hi Dean
I have invoiced this month's activities through Roxbury Trading as this is the entity that has workers compensation cover for Paul.[6]
[6] Affidavit of Roslyn Kennedy sworn 9 October 2019, RMK 3.
Mrs Kennedy could not recall specifically discussing the change with Mr Gourdis. Nu-Fortune paid invoices issued by Roxbury up to October 2018, the last invoice being paid in February 2019.
On 18 April 2019, Mr Kennedy wrote to the other parties to the heads of agreement with a notice to convene a meeting. The notice referred specifically to cl 6 under which he was to receive a salary and reasonable expenses for exploration and mining activities on two named tenements.[7]
[7] Affidavit of Roslyn Kennedy sworn 9 October 2019, RMK 6.
In a responding email, Mr Hanna agreed to meet and referred issues raised in 'numerous emails'.[8]
[8] Affidavit of Roslyn Kennedy sworn 9 October 2019, RMK 7.
On 1 May 2019, Mr Hanna wrote to Mrs Kennedy and said:
As we are in dispute with a range of matters including your Roxbury invoices, return of assets, and our perception you are trying to undermine the company, we will not be paying for anything that is not company owned. We have lost all trust and whist [sic] the settlement is still outstanding and you seem to have no interest in meeting to discuss (even though it was you/PK who asked for a settlement in the first instance) that remains our position. Also, we again confirm Roxbury are not required to perform any duties on behalf of the company and therefore please refrain from forwarding any more invoices as we have no contractual obligation. ie Roxbury.[9]
[9] Affidavit of Roslyn Kennedy sworn 9 October 2019, RMK 7.
Mrs Kennedy also deposed to her belief that Nu‑Fortune has no defence to Roxbury's claim for $125,000 plus GST, alternatively to Mr Kennedy's claim for unpaid wages in the sum of $125,000 to the end of August 2019.
In his affidavit in response, sworn 24 October 2019, Mr Hanna deposed to representations made to him by Mr Kennedy before the making of the heads of agreement, including that he had the skill and expertise to organise mining and treatment of gold bearing ore, and had access to other tenement holders who would have their order treated through the Menzies State Battery. Mr Hanna stated that Mr Kennedy told him that positive cash flow could be achieved within six months of commencing operations.
Mr Hanna said the heads of agreement did not include all of the agreed terms. Mr Hanna said that Mr Kennedy wanted a salary of $150,000 and he told Mr Kennedy that Nu‑Fortune would have limited capital 'and would only be able to pay that amount to him from its capital for a limited time'. He said, in effect, that there was an agreement, not included in the written heads of agreement, that the payment to Mr Kennedy would only continue beyond the amount budgeted if the company was, at that time, generating profits from the treatment of ore.
Mr Hanna deposed that in about February 2019, Mr Kennedy ceased to provide his services to Nu‑Fortune, and commenced taking steps that were detrimental to the company's interests.
In about March 2019, Mr Kennedy sent an email in these terms:
Due to the fractures that have developed between us, what are your thoughts on ending this relationship amicably?
We clearly have to work on an exit strategy, so what will it take and how do you propose we proceed?
Mr Hanna denied that Nu-Fortune was indebted to Mr Kennedy or Roxbury as alleged.
Finally, Mr Hanna foreshadowed a counterclaim that Nu-Fortune had suffered loss as a result of misleading or deceptive conduct by Mr Kennedy or Roxbury.

The principles

The principles to be applied in an application for summary judgment are well settled. As stated by Beech J in Henderson v Curtis:
The principles relevant to the grant of summary judgement are not in doubt. Summary judgment will be granted only when there is no real question to be tried. Conflicts of evidence on affidavit are not to be determined in the context of an application for summary judgment. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate course of the proceedings if it went to trial that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].[10]
[10] Henderson v Curtis [2008] WASC 283 [2].
In Agar v Hyde, the plurality (Gaudron, McHugh, Gummow and Hayne JJ) said:
The test to be applied has been expressed in various ways, but all the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial in the ordinary way.[11]
[11] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 592 [57].
In Webster v Lampard on an appeal arising out of the entry of summary judgment for a defendent, Mason CJ, Dean and Dawson JJ said:
Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact.[12]
[12] Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 603.
The court must proceed on the assumption that the evidence of the party resisting summary judgment, if not inherently incredible, would ultimately be accepted if the matter were to proceed to trial in the ordinary course.

The submissions of the parties

The plaintiffs submitted, in effect, that their claim is based on a written agreement, and Nu‑Fortune is seeking to construe the heads of agreement by reference to inadmissible evidence about negotiations and subjective intentions. They submitted that the evidence of Mr Hanna is not admissible to add to or contradict the terms of the written heads of agreement.
The plaintiffs further submitted that there is no evidence of any purported termination or review of the terms of Mr Kennedy's employment. They submitted that the proposed oral agreement was legally inconsistent with the written agreement: an agreement to pay a salary only to the amount budgeted is inconsistent with an employment relationship. In response to the claim of misleading or deceptive conduct, the plaintiffs disputed the claims, and also that any damages could be set off against the claim by Mr Kennedy for wages.
Nu‑Fortune submitted that there is an initial uncertainty as to who is the correct claimant, resulting in the alternative claims by Mr Kennedy and Roxbury, with different amounts claimed by each. While the plaintiffs elected at the hearing of the application to pursue Roxbury's claim, the pleading of the alternative claims and the application for summary judgment in the alternative, illustrates the lack of certainty in the plaintiffs' claim.
Nu-Fortune further submitted that, on the affidavit of Mr Hanna, the written heads of agreement was not the entire agreement between the parties, and their agreement included written and oral terms. It submitted that the court will need to hear evidence from the parties as to the precise terms of the agreement.
Nu‑Fortune submitted that it has an arguable claim for a set off, and not simply a counterclaim for damages.

Events after the hearing

At the hearing of the application, I raised with counsel for the plaintiffs whether, on the claim they were pursuing, it was necessary for the plaintiffs to plead that Roxbury had provided the services for which it had invoiced Nu-Fortune. I gave the parties liberty to file further submissions confined to that issue.
The plaintiffs filed a further submission in which they argued that the pleading without amendment was not defective. They also filed the fourth amended defence and counterclaim to plead that Mr Kennedy provided the services pursuant to clause 6 of the heads of agreement to Nu-Fortune from February 2016 to December 2016, and Roxbury provided the services from December 2016.
In a responsive submission, Nu‑Fortune contended:
(1)Roxbury relies on the variation pleaded at [27] of the Counterclaim, but does not plead that Roxbury is a party to the variation.
(2)The plaintiffs had not previously pleaded that Roxbury provided services to Nu-Fortune.
(3)The terms of the new arrangement leading to any entitlement for payment by Roxbury from Nu-Fortune are not set out.

Consideration

The plaintiffs' position on the summary judgment application reflected the change in legal representation between the filing and the hearing of the application.
The plaintiffs no longer rely on the terms of the written heads of agreement. The plaintiffs' submissions and pleading speak of a Variation to the heads of agreement, but it appears, in substance, to be a different agreement. On the evidence adduced by the plaintiffs, Mr Kennedy was not an employee and his relationship with Nu‑Fortune had not been one of employer and employee from, at the latest, when Arrinooka issued invoices including GST for Mr Kennedy's services.
The plaintiffs now rely on an agreement for provision of services by Roxbury. They do not plead the terms of the agreement between Roxbury and Nu‑Fortune. The plaintiffs' pleaded case is that it was agreed between Mrs Kennedy and Nu‑Fortune (by Mr Gourdis) 'in effect that Kennedy's services under the heads of agreement be provided by Roxbury'.[13]
[13] Amended Re‑Amended Defence and Counterclaim [27] – [28] (unchanged in the Fourth Amended Defence and Counterclaim).
Nu‑Fortune submitted that, on the evidence, Roxbury was not a party to any variation of the heads of agreement. Nor was it pleaded that she was acting for Roxbury. To the extent the plaintiffs contend the Variation was in writing, the submission is correct. The plaintiffs, however, also rely on the conduct pleaded in [28] of the counterclaim, that is, that Nu‑Fortune paid Roxbury at the rate specified, in monthly instalments, until October 2018.
There is no doubt that a contract can be inferred from the conduct of the parties where, viewed in the light of the surrounding circumstances, that conduct shows a tacit understanding or agreement. The conduct relied on must point to the existence of the particular contract in the terms alleged in the proceedings.[14] While the payments point to an agreement, there is no evidence of the terms of agreement under which Roxbury provided services and, in particular, when and how it might be terminated. And on the evidence adduced by the plaintiffs, Mr Kennedy deposed that his employment had not been reviewed or terminated, and he was claiming an entitlement to salary as late as April 2019.
[14] Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd [1988] 14 NSWLR 523, 535; Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 [5], [9].

Further, while Mr Kennedy deposed that he has performed his services under the heads of agreement, Mr Hanna's evidence was that, in or about February 2019, Mr Kennedy ceased to provide services to Nu‑Fortune. On 1 May 2019, Mr Hanna wrote to confirm Roxbury were no longer required to perform any duties on behalf of the company and requested that it cease sending invoices.
The case is not as clear and certain as the plaintiffs contend. I am satisfied that there are issues in dispute that ought to be tried.
The application for summary judgment will be dismissed, and the defendants will have unconditional leave to defend the counterclaim.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson
7 FEBRUARY 2020