Onecard Australia P/L v Clift - [2006] QSC 224

SUPREME COURT OF QUEENSLAND

CITATION:

Onecard Australia P/L v Clift [2006] QSC 224

PARTIES:

ONECARD AUSTRALIA PTY LTD (ACN 102 366 692)
(applicant)
and
JOHN LAWRENCE CLIFT
(respondent)

FILE NO:

BS4741 of 2006

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

21 August 2006

DELIVERED AT:

Brisbane

HEARING DATE:

8 August 2006

JUDGE:

Mackenzie J

ORDER:

That the application, in so far as it relies on clause 1.1 as a basis for summary judgment, is refused.

That the respondent commence proceedings for relief under s 87 of the Trade Practices Act or s 12GM of the Australian Securities and Investment Commission Act and such other relief as he may be advised, within one month of the delivery of these reasons.

That Order 2 shall not apply if, and only if, an order is made under r 14 UCPR with respect to the present proceedings or, before the expiry of the one month, the applicant commences proceedings by claim with respect to the alleged debts under the subscription agreement and/or the deed, (without any obligation on the applicant to seek such order or commence such proceedings).

That except to the extent that the application has been refused, the application be adjourned to a date to be fixed.

That there be liberty to apply.

That costs be reserved.

CATCHWORDS:

GUARANTEE AND INDEMNITY – ACTIONS AGAINST SURETY – GENERALLY – OTHER CASES – Right of debtor to set-off – Where deed unconditionally and irrevocably acknowledges indebtedness “free from all set-offs, counterclaims and deductions” – Whether right to set-off or counterclaim can be excluded by agreement - Whether deed related to validity of debt or existing indebtedness

Trade Practices Act 1974 (Cth) s 87
Australian Securities and Investment Commission Act 2001 (Cth) s 12GM

Capital Finance Australia Ltd v Airstar Aviation Pty Ltd [2004] 1 QdR 122, followed
Coca-Cola Financial Corporation v Finsat Internation Ltd (1998) QB 43, considered
Daewoo Australia Pty Ltd v Porter Crane Imports Pty Ltd [2000] QSC 050, considered
The Fedora (1986) 2 LILR 441, considered
The Society of Lloyds v Leighs & Ors (1997 ) CLC 1398, considered

COUNSEL:

P A Freeburn SC for the applicant

P H Morrison QC and M Burns for the respondent

SOLICITORS:

Phillips Fox Solicitors for the applicant

Deacons Lawyers for the respondent

MACKENZIE J: The applicant seeks a declaration that the respondent is indebted to the applicant in the sum of $1,000,000 pursuant to:

(a)a subscription agreement entered into between the applicant and the respondent and/or
(b)a deed entered into between the applicant and the respondent on 17 November 2005.

Judgment in the sum of $1,000,000 against the respondent is also sought. Further or alternatively an order for specific performance of the subscription agreement and/or the deed is sought. It is common ground that the debt is now $900,000 because of payments made.

According to the respondent’s affidavit, he discussed financial involvement in the applicant with Mr O’Kelly, who appears to be a director of the applicant, from…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] QSC 224
Decision Date: 21 August 2006

CaseChat Overview and Summary

Onecard Australia P/L brought an application against Clift, seeking a declaration that Clift was indebted to Onecard Australia P/L in the sum of $1,000,000. The dispute arose from transactions involving the allotment of shares in Onecard Australia P/L. The court was tasked with determining whether Clift could set off or counterclaim against the amount claimed by Onecard Australia P/L and whether the right to set-off or counterclaim could be excluded by agreement. The court also had to decide if the deed related to the validity of the debt or an existing indebtedness.

The court found that Clift could not set off or counterclaim against the amount claimed by Onecard Australia P/L. The court held that the deed in question unconditionally and irrevocably acknowledged the indebtedness, free from all set-offs, counterclaims, and deductions. The court found that the deed related to the validity of the debt, not an existing indebtedness. The court further held that the right to set-off or counterclaim could be excluded by agreement. The court refused the application, in so far as it relied on clause 1.1 as a basis for summary judgment. The court ordered Clift to commence proceedings for relief under s 87 of the Trade Practices Act or s 12GM of the Australian Securities and Investment Commission Act and such other relief as he may be advised, within one month of the delivery of these reasons. The application was adjourned to a date to be fixed. The court reserved costs.

Orders

Orders of the court

1. That the application, in so far as it relies on clause 1.1 as a basis for summary judgment, is refused.

2. That the respondent commence proceedings for relief under s 87 of the Trade Practices Act or s 12GM of the Australian Securities and Investment Commission Act and such other relief as he may be advised, within one month of the delivery of these reasons.

3. That Order 2 shall not apply if, and only if, an order is made under r 14 UCPR with respect to the present proceedings or, before the expiry of the one month, the applicant commences proceedings by claim with respect to the alleged debts under the subscription agreement and/or the deed, (without any obligation on the applicant to seek such order or commence such proceedings).

4. That except to the extent that the application has been refused, the application be adjourned to a date to be fixed.

5. That there be liberty to apply.

6. That costs be reserved.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

That the application, in so far as it relies on clause 1.1 as a basis for summary judgment, is refused. That the respondent commence proceedings for relief under s 87 of the Trade Practices Act or s 12GM of the Australian Securities and Investment Commission Act and such other relief as he may be advised, within one month of the delivery of these reasons. That Order 2 shall not apply if, and only if, an order is made under r 14 UCPR with respect to the present proceedings or, before the expiry of the one month, the applicant commences proceedings by claim with respect to the alleged debts under the subscription agreement and/or the deed, (without any obligation on the applicant to seek such order or commence such proceedings). That except to the extent that the application has been refused, the application be adjourned to a date to be fixed. That there be liberty to apply. That costs be reserved. MACKENZIE J: The applicant seeks a declaration that the respondent is indebted to the applicant in the sum of $1,000,000 pursuant to: According to the respondent’s affidavit, he discussed financial involvement in the applicant with Mr O’Kelly, who appears to be a director of the applicant, from mid 2003 onwards. By 1 June 2005 matters had progressed to the point where Mr O’Kelly offered to sell to the respondent 10% of the applicant, by allotment of shares, for $250,000. On 17 June 2005 a memorandum of understanding was signed and payment of $250,000 for 1,000,000 shares was made on 27 July 2005. These transactions occurred without the respondent having legal representation. Without going into detail, his affidavit is at pains to stress his reliance on what he was told by Mr O’Kelly. Attempts by him to obtain independent timely verification of anything he was told seem to have been minimal. On 3 October 2005, the respondent signed a subscription agreement under which shares in the applicant were to be taken up at a cost of $3,000,000 to be paid in three tranches. $500,000 was to be paid on signing the subscription agreement, a further $1,500,000 by 7 October 2005 and the remaining $1,000,000 by 7 November 2005. The first payment was made in accordance with the agreement. With respect to the second tranche, the respondent arranged with Westpac, prior to signing the subscription agreement, for Westpac to make available the $1.5m by banker’s undertaking under which the applicant could draw upon it to a maximum of $1.5m. He says he signed the agreement with Westpac only after obtaining a promise from Mr O’Kelly to the effect that the funds from the subscription agreement would be used to pay for the national expansion of the applicant’s business and that they would only be drawn as and when required. The respondent had also been in contact prior to signing the subscription agreement with another man (“the interested party”) who wished to buy shares in the applicant. On about 6 October 2005 the respondent agreed to sell him shares for $1.5m with settlement being no later than 30 November 2005. He made Westpac aware of this by way of comfort.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Onecard Australia P/L v Clift [2006] QSC 224
PARTIES:	ONECARD AUSTRALIA PTY LTD (ACN 102 366 692) (applicant) and JOHN LAWRENCE CLIFT (respondent)
FILE NO:	BS4741 of 2006
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court
DELIVERED ON:	21 August 2006
DELIVERED AT:	Brisbane
HEARING DATE:	8 August 2006
JUDGE:	Mackenzie J
ORDER:	That the application, in so far as it relies on clause 1.1 as a basis for summary judgment, is refused. That the respondent commence proceedings for relief under s 87 of the Trade Practices Act or s 12GM of the Australian Securities and Investment Commission Act and such other relief as he may be advised, within one month of the delivery of these reasons. That Order 2 shall not apply if, and only if, an order is made under r 14 UCPR with respect to the present proceedings or, before the expiry of the one month, the applicant commences proceedings by claim with respect to the alleged debts under the subscription agreement and/or the deed, (without any obligation on the applicant to seek such order or commence such proceedings). That except to the extent that the application has been refused, the application be adjourned to a date to be fixed. That there be liberty to apply. That costs be reserved.
CATCHWORDS:	GUARANTEE AND INDEMNITY – ACTIONS AGAINST SURETY – GENERALLY – OTHER CASES – Right of debtor to set-off – Where deed unconditionally and irrevocably acknowledges indebtedness “free from all set-offs, counterclaims and deductions” – Whether right to set-off or counterclaim can be excluded by agreement - Whether deed related to validity of debt or existing indebtedness Trade Practices Act 1974 (Cth) s 87 Australian Securities and Investment Commission Act 2001 (Cth) s 12GM Capital Finance Australia Ltd v Airstar Aviation Pty Ltd [2004] 1 QdR 122, followed Coca-Cola Financial Corporation v Finsat Internation Ltd (1998) QB 43, considered Daewoo Australia Pty Ltd v Porter Crane Imports Pty Ltd [2000] QSC 050, considered The Fedora (1986) 2 LILR 441, considered The Society of Lloyds v Leighs & Ors (1997 ) CLC 1398, considered
COUNSEL:	P A Freeburn SC for the applicant P H Morrison QC and M Burns for the respondent
SOLICITORS:	Phillips Fox Solicitors for the applicant Deacons Lawyers for the respondent