Onesteel Trading Pty Ltd v Ewing International Limited Partnership

[2011] SASCFC 18

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Application)

ONESTEEL TRADING PTY LTD v EWING INTERNATIONAL LIMITED PARTNERSHIP & ORS

[2011] SASCFC 18

Judgment of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice Vanstone and The Honourable Justice Peek)

25 March 2011

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - BY LEAVE OF COURT - GENERALLY

PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - SUMMARY JUDGMENT

Application for permission to appeal - applicant sued on a deed of settlement and release - whether appeal raises issues of general principle - whether applicant had to prove due execution of deed by all parties - whether paragraph of defence defective - whether incumbent on defendants to adduce evidence to show they were not bound by deed - whether Master was correct to refuse permission to re-open argument and to receive further evidence - whether necessary for a company to execute a deed under company seal - application for permission to appeal refused.

Supreme Court Civil Rules 2006 r 288(1), r 289(1)(a), r 290(1); Stamp Duties Act 1923 (SA); Partnership Act 1891 (SA) s 71B; Companies Act 1993 (NZ) s 180; Corporations Act 2001 (Cth) s 127, referred to.

ONESTEEL TRADING PTY LTD v EWING INTERNATIONAL LIMITED PARTNERSHIP & ORS
[2011] SASCFC 18

Full Court:  Doyle CJ, Vanstone and Peek JJ

1. DOYLE CJ:          Onesteel Trading Pty Ltd (Onesteel) sued the defendants in this action claiming $574,377.97 plus additional interest and costs (the latter two items can be ignored for present purposes).  The claim was made pursuant to a Deed of Settlement and Release to which Onesteel and the defendants were parties.  Onesteel applied for summary judgment against the defendants.  A Master refused the application, not being satisfied that there was no real question to be tried.  Onesteel appealed.  The Judge who heard the appeal dismissed it, agreeing with the Master’s reasoning.

2. Onesteel now applies for permission to appeal.  The Court heard full submissions on the application for permission.

3. For the reasons that follow I would refuse permission to appeal.

4. The case is one in which no outcome gives satisfaction.  Onesteel’s action has stood still for about 20 months now, while the issue of summary judgment has been litigated.  A trial on the merits could have taken place in this time.  The summary judgment application has been fought on the basis of issues and arguments raised by the defendants that can fairly be described as technical.  On the other hand, there is a substantial amount of money at stake.  The Master and the Judge have each agreed that Onesteel is not entitled to summary judgment.  The Full Court is now asked to consider the same submissions on either side for a third time.  There is no issue of principle at stake.  There is some force in the arguments advanced by Onesteel.  But in the end, I am not persuaded that the Master and the Judge were wrong, nor do I consider this to be an appropriate case for a grant of permission to appeal for a further examination of the same issues.

   Permission to appeal

5. Onesteel requires permission to appeal because the proposed appeal is an appeal against an interlocutory judgment given by a Judge: r 288(1) of the Supreme Court Civil Rules 2006.  As the Notice of Appeal included a request for permission, by r 289(1)(a) of the Rules permission should have been sought under r 290(1).  That was not done, and by oversight the appeal was set down for hearing and listed for hearing without a grant of permission to appeal.  In those circumstances the Court thought it best to hear the whole argument.

   The circumstances

6. Onesteel supplies steel.  A dispute arose over the supply of steel to Ewing International Limited Partnership (Ewing LP).  Ewing Construction Ltd (Ewing Construction) had guaranteed payment of sums due to Onesteel.  In late 2007 a deed was drawn up which was intended to resolve the dispute.  The Deed provides that Ewing LP and Ewing Construction will pay to Onesteel an agreed amount.  Provision is made for the payment of interest and costs.  Mr Ewing and Jermah Trustees Ltd (Jermah) guaranteed due payment to Onesteel.

7. Clause 8 of the Deed is central to the case.  It provides that the Deed “… will take effect from the time it is executed by the last of the parties to it…”.

8. The Deed was signed by various persons, purporting to act on behalf of the different parties, at some stage during November 2007.  Payments were not made to Onesteel as required.  Onesteel then sued all four of the other parties to the Deed. 

   The proceedings

9. The Statement of Claim is clear.  It sets out the background and, in para 12, pleads the Deed is the basis for its claim.  The defence is brief.  It admits the supply of goods by Onesteel to Ewing LP, and the guarantee by Ewing Construction, but denies any entitlement on the part of Onesteel pursuant to the Deed.  In relation to para 12 of the Statement of Claim, pleading the entry into the Deed, the Defence pleads as follows:

   12.Denied.  The defendants say there has been no settlement deed which has taken effect between the parties.

   That plea is repeated in the remaining paragraphs of the Defence.  The plaintiff made several requests for particulars of this plea, but none were forthcoming.  No application for an order for particulars was made.

10. The application for summary judgment was filed as early as 17 July 2009.  Written submissions in support of that application were filed on 28 August 2009.  On 1 December 2009 the Master fixed the hearing of the application for summary judgment on Monday 22 February 2010, and directed that the defendants file their submissions by Thursday 18 February 2010.  The parties filed various affidavits.  The defendants did not file their submissions until after 5.00 pm on Friday 19 February 2010.  In their submissions they submitted that Onesteel had to prove execution of the Deed by all parties, and that that had not been proved.  Some details in support of that submission were provided in the outline.  The submission also argued that the plaintiffs had not shown what system of law was the governing law, and that the Deed was unenforceable because it was not duly stamped under the Stamp Duties Act 1923 (SA).

11. On the Monday counsel for Onesteel filed written submissions in reply to those of the defendants.  Those submissions tackled the question of execution of the Deed.  Onesteel did not ask for an adjournment of the application.  The Master reserved his decision.

12. Two days later Onesteel applied for permission to re-open the hearing and to file further affidavit evidence, claiming that it had been unfairly taken by surprise by the argument that the Deed was not properly executed, and so not binding.  The Master refused the application.  The Master considered that the defendants had acted “unmeritoriously” in not replying to the requests for particulars of para 12 of the Defence, but said that it should have been apparent from that paragraph that there was an issue about the enforceability of the Deed.  He was influenced by the plaintiff’s decision to proceed with the application, and in any event was not persuaded that if admitted the affidavit would remove all of the obstacles that he found to the success of Onesteel’s application.

    The Master’s decision

13. In submissions to the Master a lot of attention was paid to the manner in which the Deed was signed or executed.  The defendant companies were incorporated or registered in New Zealand.  Ewing LP was registered in Victoria.  Evidence before the Master established that it had six individual partners, all of whom were limited partners.  Mr Ewing and Mr Heard were two of those partners.  Jermah was also a limited partner.  Gemahw Pty Ltd (Gemahw), incorporated in Victoria, was the general partner.  The material admitted by the Master contained no information about the officers of Gemahw.  In submissions the Master was referred to relevant New Zealand legislation relating to corporations (which is generally similar to Australian legislation) and to Australian legislation.

14. As to Ewing LP, the Master found that Gemahw was the general partner, and on that basis I assume he accepted that it had power to bind Ewing LP. In relation to Ewing LP the Deed purported to be signed for and on behalf of Ewing LP pursuant to s 71B of the Partnership Act 1891 (SA). Mr Heard and Mr Ewing have signed under the subscription clause, each describing himself as “Director” and each signing above the words “Signature of Authorised Person”. There was nothing before the Master to establish that either of them was a director of Gemahw, the general partner.

15. As to Ewing Construction, the Deed provided for the affixing of the common seal.  That was not done.  Beneath the subscription clause Mr Heard had signed as “Authorised Person”, describing himself as “General Manager”.  The absence of the seal has not been shown to be of any great significance.  But there was no evidence before the Master as to Mr Heard’s actual or ostensible authority as general manager. 

16. Mr Ewing executed the Deed in his own right, in the presence of a witness. 

17. In relation to Jermah, the Deed provided for the affixing of the common seal.  That was not done.  Below that subscription clause Mr Friend signed as “Authorised Person”, describing himself as “Accountant”.  Mr Duggan also signed as “Authorised Person”, describing himself as “Director”.  There was evidence before the Master that he was the sole director and shareholder of Jermah.

18. In relation to Ewing LP, the Master made the point that there was no indication that Mr Heard or Mr Ewing were directors of or were signing on behalf of Gemahw, the general member of Ewing LP.  As to Ewing Construction and Jermah, the Master considered s 180 of the New Zealand Companies Act 1993, which is similar to s 127 of the Corporations Act 2001 (Cth). The Master said at [50]:

    [50]The execution by Ewing Construction Ltd and Jermah Trustees Ltd of the Deed does not appear to comply with s 180(1)(a)(i) of the New Zealand Act.  Nor does it seem to comply with s 180(1)(a)(ii) as no signature is witnessed.  It does not appear to comply with s 180(1)(a)(iii) as again no signature is witnessed.  There is no evidence of any compliance with s 180(1)(a)(iv), nor is there any evidence that would satisfactorily remove any issue in relation to compliance with s 180(1)(b) or s 180(1)(c) assuming those provisions were to have any application.

    In relation to Jermah, the Master appears to have overlooked the circumstance that Mr Duggan was the sole director, and that a signature of a sole director witnessed by another person was sufficient to bind Jermah.  But his conclusion that the execution by Ewing Construction did not appear to comply with the New Zealand legislation is correct, subject to proof that the person who did sign had express or implied authority to do so.  The Master summarised his reasons as follows at [54]-[55]:

    [54]This action relies on the enforceability and legal validity of the Deed. In my view it is arguable, or there is a serious question to be tried, as to whether the Deed has been properly executed in accordance with the requirements of the South Australian (or Victorian) legislation on behalf of Ewing International LP. There are similar questions about the execution by Ewing Construction Ltd and Jermah Trustees Ltd. Compliance with the provisions of s 41 of the Law of Property Act 1936 (SA) is presently also open to serious question.

    [55]The defendants appear to have a reasonably arguable defence to the plaintiff’s case as presently framed.

19. The Master rejected a submission by the defendants based on the fact that the Deed was not stamped as required by the Stamp Duties Act 1923 (SA). The Master noted that the Deed did not, in terms, amount to an agreement to apply the laws of South Australia as the governing laws, but did no more than require that any dispute was to be submitted to the courts of this State. He apparently considered that it was reasonably arguable that the laws of South Australia did not apply, but it is not clear to me that it made any difference whether or not the applicable law was South Australian law or New Zealand law. The Master found that the claim for costs was arguable, but I am prepared to proceed on the basis that that part of the claim could be severed if it was appropriate to enter summary judgment in respect of other claims under the Deed.

    The Judge’s reasons

20. The Judge considered submissions on the same issues.  He dealt with them in some detail.  As to the execution of the Deed he said:

    [39]At first glance, it is not clear whether the deed has been executed by a member of the first respondent partnership. It has been signed by two directors, Mr Heard and Mr Ewing. The signatures do not specify as directors of what entity. It is argued by Mr Livesey that they signed as directors of the partnership’s general member Gemahw Pty Ltd. However, the ASIC search of Gemahw Pty Ltd is attached to the disputed affidavit FDN 22 and was therefore not before the master.

    [40]Mr Heard also signed for the second respondent New Zealand company as general manager. It was argued by Mr Livesey that Onesteel was entitled to assume that Mr Heard had authority to bind the company, and relied upon s 129(3) of the Corporations Act 2001 (Cth) and s 18(1)(c)(ii) of the Companies Act 1993 (NZ).  It is arguable whether a general manager would customarily exercise that kind of authority. Mr Livesey also relied on the fact that the sole director of the company, Mr Ewing, had elsewhere signed the execution page. However, Mr Ewing did not sign as director of the second respondent. The company secretary has not signed and no common seal has been affixed. It is arguable whether the requirements under either Australian law of [sic] New Zealand law have been satisfied.

    [41]Mr Ewing signed in his personal capacity as third respondent. His signature is witnessed. It is not disputed that Mr Ewing properly executed the deed.

    [42]Mr Paul Duggan, as sole director, signed the deed on behalf of the fourth respondent New Zealand company. Mr Andrew Friend’s signature as accountant appears to the left of Mr Duggan’s. Similar to execution for the second respondent, no common seal has been affixed and the company secretary has not signed. It is arguable whether Mr Friend witnessed Mr Duggan’s signing of the deed.

    The Judge agreed with the Master’s refusal to grant permission for the argument to be re-opened, and for further evidence to be received.  The Judge dismissed the appeal.

    Submissions on appeal

21. Mr Livesey QC submits that the appeal raises issues of general principle.  The first is what amounts to a reasonable basis for defending a claim, when that basis is neither clearly pleaded nor the subject of evidence.  I consider that the approach to be taken to a claim for summary judgment is clearly established in the authorities, and the asserted ground of principle is nothing more than a statement of the circumstances to which those principles must be applied in this case.

22. The second suggested issue of principle is whether there must be strict proof of due execution when a document is apparently signed by representatives of the parties and there is no evidence that those representatives were not authorised to sign.  Again, in my opinion, that is not an issue of principle but a statement of the circumstances giving rise to an issue of law in this case.

23. Mr Livesey submitted with some force and in detail that the plea in para 12 of the Defence was evasive and defective.  He complains that no particulars were given.  As to that, it was open to Onesteel to apply for an order for particulars.  I agree that the plea is not as clear as it might be, but in my opinion it sufficiently identified a challenge of the kind that was made.  I do not consider the plea to be defective.

24. Mr Livesey submits that the plaintiff was “ambushed” by the late filing of the defendants’ submissions.  The circumstances in which those submissions were filed at an embarrassingly late time are not before the Court.  Onesteel chose to proceed on the evidence before the Master on the Monday.  In those circumstances the complaint of an ambush is not sustainable.

25. The Master’s decision to refuse permission to re-open the argument, and to refuse to receive further evidence (which would have shown that Mr Ewing and Mr Heard were partners of Gemahw) reflects a strict application of the Rules.  But the plaintiff chose to proceed on the material before the Master on the Monday morning.  I am not persuaded that it was not open to the Master to decide as he did.

26. Mr Livesey further submits that the plea in para 12 of the Defence was deficient in the sense that it was incumbent on the defendants to adduce evidence to show that one or more of the defendants denied that they were bound by the signatures appearing in the relevant places in the Deed.  This seems to be another aspect of the argument that the plea is defective.  He submits that the defendants had to amend their pleading to entitle them to put the argument that was put.  He submits that an issue of due execution could arise only if the defendants denied that they were bound by, for example, adducing evidence that those who had signed lacked authority to bind the relevant defendant.  I do not accept that submission.  To my mind the submission is underpinned by an assumption that the Deed has been signed or executed in a manner apt to bind each defendant, and that being so, it is up to the relevant defendant to produce answering evidence to the submission that it is bound.  But in this case the issue is whether the signatures, as they appear, are apt to bind the defendants.  That is an argument that can be advanced under the Defence as it stands.

27. Mr Livesey submitted the reasoning of the Master and of the Judge to a careful and forceful criticism.  But in the end, in relation to Ewing Construction, he was driven to rely on a submission that Mr Heard as general manager had apparent or ostensible authority to bind the company.  But, as Ms Maharaj QC argued for the defendants, this is an issue that depends upon the nature and circumstances of the company, and arguably requires some evidence to support a submission of the kind that Mr Livesey put.  I am not persuaded that on the very limited evidence before the Master there was no reasonable argument that the manner in which the Deed was executed was not sufficient to bind Ewing Construction.  As to Ewing LP, I think that Mr Livesey in the end acknowledged that without the additional material relating to Gemahw, the material that the Master rejected, the argument could not succeed.  In any event, I again am not persuaded that on the evidence before the Master his conclusion was wrong.

28. I should add that I accept Mr Livesey’s general submission that it is not necessary for a company to execute a deed such as the one in question under company seal, or as a company.  A company can become bound through an authorised agent.  It can become bound by the signature of persons acting with actual or apparent authority of the company.  But actual authority was not established in this case.  It is reasonably arguable that in the circumstances it was necessary to show some basis for a conclusion that the relevant person acted with apparent or ostensible authority from the relevant company.

29. It is for those reasons that, having heard full argument on the matter, I am not persuaded that the Master and the Judge were wrong.  Nor am I persuaded that it is appropriate to grant permission to appeal when that leads to a third argument on the application of reasonably well settled principles to the facts, this being in the context of an application for summary judgment twice denied already.

1. As I said at the outset, neither of the possible outcomes in this case is one that gives any particular satisfaction.  I have the impression that the defendants have raised as many issues and doubts as they can, these issues and doubts being of a fairly technical nature.  It is unfortunate that the trial of the action has been deferred for some 20 months while arguments over summary judgment have been pursued, but there is nothing that the Court can do about that.  It remains important to bear in mind that summary judgment is reserved for clear cases, and that the Court must be cautious before denying a party the opportunity to put a defence.  At the same time, the Court must be mindful that the interests of justice require that defendants not be allowed to avoid judgment by raising arguments which it is evident will, in the end, fail.  This is a finely balanced case, but for the reasons I have indicated, I am not persuaded that permission to appeal should be granted.

2. VANSTONE J:     I agree that permission to appeal should be refused for the reasons given by the Chief Justice.

3. PEEK J:   I agree that permission to appeal should be refused for the reasons given by the Chief Justice.

4. I would simply add that I find the stance taken by the defendants somewhat disquieting and that if I had had to decide the matter at first instance, or on the appeal below, it may well be that I would have decided in favour of the plaintiff.  However, although I see it as a borderline case, I have finally come to the view that it is a step too far to grant permission for the issues to be argued once again in the Full Court in circumstances where there have been two considered findings that it was inappropriate to take the somewhat exceptional course of entering summary judgment and there is no real question of law or principle at issue.