Palandri Wines Ltd v O'Donnell
[2002] WASC 123 (S)
•24 MAY 2002
PALANDRI WINES LTD -v- O'DONNELL [2002] WASC 123 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 123 (S) | |
| Case No: | CIV:2848/2001 | 3, 24 MAY, 19 JUNE 2002 | |
| Coram: | MASTER BREDMEYER | 24/05/02 | |
| 27/06/02 | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Summary judgment granted | ||
| B | |||
| PDF Version |
| Parties: | PALANDRI WINES LTD RHONDA O'DONNELL |
Catchwords: | Summary judgment Purchase of wine lots in managed investment scheme Reopening of argument after decision given based on Master's mistake Master's mistake to decide a matter not referred to by counsel in argument |
Legislation: | Corporations Law, s 724(1) and (2) |
Case References: | Lintrose Nominees Pty Ltd & Ors v King [1995] 1 VR 574 Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) FCA 1558 Palandri Wines Ltd v O'Donnell [2002] WASC 123 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
DECISION : 27 JUNE 2002 FILE NO/S : CIV 2848 of 2001 BETWEEN : PALANDRI WINES LTD
- Plaintiff
AND
RHONDA O'DONNELL
Defendant
Catchwords:
Summary judgment - Purchase of wine lots in managed investment scheme - Reopening of argument after decision given based on Master's mistake - Master's mistake to decide a matter not referred to by counsel in argument
Legislation:
Corporations Law, s 724(1) and (2)
Result:
Summary judgment granted
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M C Hotchkin
Defendant : Mr R S Randall
Solicitors:
Plaintiff : Hotchkin Hanly
Defendant : Paterson & Dowding
Case(s) referred to in judgment(s):
Lintrose Nominees Pty Ltd & Ors v King [1995] 1 VR 574
Monaco v Arnedo Pty Ltd (1994) 13 WAR 522
NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) FCA 1558
Palandri Wines Ltd v O'Donnell [2002] WASC 123
Case(s) also cited:
Nil
(Page 3)
1 MASTER BREDMEYER: This is an application by the plaintiff for a summary judgment for contractual debts totalling $474,210. I heard the application initially on 3 May and delivered reasons for my judgment on 24 May which I published as Palandri Wines Ltd v O'Donnell [2002] WASC 123. On that day I made the following orders:
1. I give leave to the plaintiff to bring the application out of time.
2. I dismissed the application.
3. Costs of the application are in the cause.
2 On the same day, 24 May, Mr Hotchkin, counsel for the plaintiff, faxed me a letter in these terms:
"We have had an opportunity to read the Master's Reasons. Unfortunately, it appears that the Master has based his decision on a misunderstanding of the facts, insofar as he has found that 'there are a number of deficiencies' in the invoice, in that 'it does not mention the shares she has applied for and it does not mention MRWP which also had to accept the application', both of which appear in paragraph 42 and appear to be the reason for the Master finding that there was an arguable defence.
As that apparent defect in the invoice was not a matter raised by the Master or by Counsel in argument prior to the Master's decision, we did not have an opportunity to make submissions as to the correctness of that assertion. Given that there is no tight of appeal from granting unconditional leave to defend, and given the Court's inherent jurisdiction to recall or vary orders if it is clear that a mistake has been made (see Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 and paragraph 63.0.9 of the Supreme Court Rules), we request that the matter be re-listed for the orders to be recalled and for further submissions to be made on that issue, in order for the Master to review the correctness of his decision.
Our submissions are as follows:
1. A Stapled Security is defined in Section 17 of the Prospectus as comprising 'one interest and 400 shares'.
2. When an investor applies for a Stapled Security, they are applying for an interest (which may or may [sic not] be accepted by the Plaintiff) and for shares (which may or
(Page 4)
- may not be accepted by Margaret River Wine Production Limited ('MRWP')).
- 3. Section 5.1 of the Prospectus provides that 'an investor who acquires one or more Stapled Securities may deal with the Interests and Shares separately'.
4. In Section 19.4 of the Prospectus, the Applicant acknowledges that both Palandri Wines and MRWP have the right to accept or reject the Applicant's application in whole or in part. That condition appears again in Section 5.2 and 16.2 of the Prospectus.
5. As the, Prospectus expired on 14 June 2001, it was not possible for MRWP to accept the Defendant's application for shares, as she had to pay for the shares prior to 14 June. If MRWP had accepted the application, it would have had to issue the shares to the Defendant, but it was not in a position to issue shares until it had been paid.
6. However, in relation to interests under the Managed Investments Scheme, the Plaintiff was entitled to accept an application for interests and execute the Lease and Management Agreement, even though payment had not been received. The Defendant is contractually bound to pay rent and management fees by virtue of the provisions of the various documents forming the agreement pleaded in the Statement of Claim.
7. In this action, as the Master has found that the invoice constitutes sufficient notification of acceptance by the Plaintiff of the Defendant's application for an interest, and any reference to MRWP or shares is irrelevant because the Defendant did not proffer payment for shares in MRWP prior to 14 June, then it appears to us that with respect, the Defendant does not have any defence based on the Master's reasons set out in paragraphs 29 to 32 and 42 of the reasons published earlier today.
We request that the matter be re-listed for the orders to be recalled and for the parties to be heard on the above submissions and the matter dealt with afresh. We are able to attend Supreme Court Chambers next Friday, 31 May 2002 or
(Page 5)
- either of 5 and 6 June 2002. We request that the Court does not seal the orders until our application has been heard."
- A copy of that letter was sent to the solicitors for the defendant. In view of that letter, the orders were not extracted and that remains the position.
3 In order to consider Mr Hotchkin's points made in his faxed letter, I reconvened the court on 19 June and heard counsel on this contested application. Mr Hotchkin appeared before me in person and Mr R S Randall, the Melbourne-based counsel for the defendant, appeared before me through a video linkup. The plaintiff's application to reopen the argument was opposed.
4 I consider that I have jurisdiction to reopen the hearing. The law on this is discussed in Seaman, Civil Procedure Western Australia [63.0.9] and in Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 at 524. I quote a short passage from the judgment of Malcolm CJ, with whom Kennedy J agreed:
"At all events the Court does have an inherent jurisdiction to rectify situations of injustice as I said in Esther Investments Pty Ltd v Markalinga Pty Ltd (1982) 8 WAR 400 at 407. See also Gould v Vaggelas (1985) 157 CLR 215; L Shaddock & Associates v Parramatta City Council (No 2) (1982) 151 CLR 590 and Commonwealth v McCormack (1984) 155 CLR 273. Those cases are authority for the proposition that if an order of the Court is made or not made which turns out to be incorrect as a result of the inadvertence of counsel or, I would add, a mistake being made by a Judge which is not corrected by counsel, there is an inherent jurisdiction, quite apart from the slip rule, to rectify the orders to avoid injustice."
5 I should add that in opposition to the plaintiff's application to reopen, the Melbourne solicitor for the defendant, Mr Paul Munster, swore an affidavit of 17 June 2002, which I have considered. I should clarify one matter raised in that affidavit at the outset. At par 6 of that affidavit, Mr Munster said that he has compared the invoice which is exhibit JMC3 to the affidavit of Jamie Michael Cann sworn 13 February 2002 with the invoice annexed to my reasons for decision. He says that the two exhibits are not the same and he attaches to his affidavit as PM4 a true copy of exhibit JMC3 found at page 129 of Mr Cann's affidavit. The difference between the invoice annexed to Mr Cann's affidavit and the invoice I annexed to my earlier reasons is as follows. According to the affidavit of Renae Stacey White, sworn 13 February 2002, and filed on behalf of the
(Page 6)
- plaintiff, she sent out a tax invoice to Mrs Rhonda O'Donnell, C/- PO Box 2115Q, Victoria, 3101, on 31 July 2001. It was one of about 30 to 40 tax invoices sent out to successful applications who were clients of the Ralton Group. Copies of those invoices were not retained on the plaintiff's file. The tax invoice sent to Mrs O'Donnell did not have the words on it "acceptance date 31 May 2001". In about September 2001, Peter Holt requested the plaintiff's general manager to reissue tax invoices showing "the acceptance date". So, in response to that request, Ms White reissued the tax invoices which had previously been sent to the Ralton Group's clients, but showing an acceptance date. It is the reissued invoice which is RSW2 to Ms White's affidavit and which is JMC3, found at page 129 to Mr Cann's affidavit. The invoice annexed to my earlier reasons purports to be a copy of the invoice which issued on 31 July 2001. It is in identical terms to the reissued invoice of October 2001, except for the deletion of the words "acceptance date 31 May 2001". I explained this in par 33 of my earlier reasons.
6 To return to Mr Hotchkin's submissions in his letter of 24 May, which were repeated to me in oral argument, I consider those submissions are correct. I ruled that the plaintiff's invoice of 31 July 2001 was not an acceptance of the defendant's application for Stapled Securities because it made no mention of her application for shares in Margaret River Wine Production Ltd. That was not a matter which was argued before me. I did not invite submissions on it. It was something which occurred to me in the preparation of my reasons and I regret I did not seek the benefit of the assistance of both counsel. Secondly, I agree with Mr Hotchkin that I was in error in thinking that the failure to mention the shares in this invoice, which was said to be an acceptance of the defendant's offer, was wrong. The plaintiff had the legal right to accept the offer to purchase Interests, but to reject the defendant's offer to purchase shares. In the circumstances that I made a mistake in the judgment in deciding a point on which I had not sought the assistance of counsel, it is appropriate that I reopen argument.
7 I will elaborate on my reasons for thinking Mr Hotchkin's submission is correct and in so doing will consider the defendant's counter-arguments.
8 Mrs O'Donnell filled in the application form at the back of the prospectus. It is found at pages 123 and following of Mr Cann's affidavit. Her application was addressed to two entities, Palandri Wines Ltd and Margaret River Wine Production Ltd, both of PO Box 1781, West Perth, WA, 6872. At page 124, she applied for 30 Stapled Securities. The form
(Page 7)
- states this was 30 Stapled Securities for an "Up Front Payment $13,000 x 30 = $390,000". As mentioned in the prospectus at page 9 of Mr Cann's affidavit, and as mentioned in my earlier reasons, a Stapled Security comprised one Interest and 400 shares. An "Interest" means a new member's rights to the benefits produced by the wine business pursuant to the Constitution and a Lease and Management Agreement over one Second Stage Vineyard Lot, and the "Shares" means fully-paid ordinary shares in Margaret River Wine Production Ltd (MRWP). So, the "Interests", meaning, in effect, the wine lots were to be given by Palandri Wines and the shares were to be allotted by MRWP. So, the application for 30 Stapled Interests was, in effect, an application to two companies for both Interests (or wine lots) and 12,000 shares.
9 The prospectus very clearly said, in a number of places, that the directors of Palandri Wines and MRWP could accept one part of the application and not the other, in whole or in part. That is, the directors of Palandri Wines could accept the application for 30 Interests (or wine lots) or for a lesser number. Similarly, Palandri Wines could accept the application for 12,000 shares in the company, or for a lesser number. Paragraph 5.2 of the prospectus at page 23 of Mr Cann's affidavit states:
"5.2 PRIORITY ALLOCATION
The Directors of MRWP and Palandri Wines will afford priority to applications for Stapled Securities over applications solely for Shares.
However, Directors reserve the right to reject any application and/or to allot a lesser number of Shares and/or Interests than applied for."
10 Immediately after the application form - which is cl 19.3 of the prospectus - comes cl 19.4. It is headed "Signing the Application Form" and the heading and words immediately under that is as follows:
"A. Acknowledgement and Agreement
By completing and signing this application form the Applicant acknowledges and agrees that:
the Applicant has read this form to which this form is attached and declares that all details in the application form are true and correct
(Page 8)
- …
In relation to Applicants who have applied for either Stapled Securities or Interests the applicant acknowledges and agrees:
• that the Applicant has sought appropriate financial planning advice before signing this application form … ;
• that the Applicant hereby offers to enter into a Lease and Management Agreement and acknowledges that the Applicant has inspected or is aware of and agrees to be bound by the terms of the Constitution summarised in Section 15.1;
• that Palandri Wines has the right to accept or reject the Applicant's application in whole or in part;
• upon acceptance of the application form to be bound by the Lease and Management Agreement executed by Palandri Wines as the Applicant's attorney; and
• to pay the annual contributions in accordance with the Lease and Management Agreement entered into by the Applicant,
in relation to Applicants who have applied for either Stapled Securities or Shares the Applicant acknowledges and agrees:
• that MRWP has the right to accept or reject the Applicants application in whole or in part; and
• upon acceptance of the application form to be bound by the Constitution of MRWP." [Emphasis mine]
11 It is crystal clear from these terms that the defendant's application for 30 Stapled Securities was divisible, in effect. By that I mean that Palandri Wines could accept or reject the defendant's application for 30 Interests or wine lots and the MRWP could accept or reject in whole or in part the defendant's application for 12,000 shares in MRWP. I was wrong to see these two things as indivisible and to say that the invoice of 31 July failed to amount to a proper acceptance of the plaintiff's offer because it was silent on the question of her application for Shares in MRWP.
12 Mrs O'Donnell's application for shares failed. Page 9 of Mr Cann's affidavit, quoting from the third or fourth page of the prospectus stated:
(Page 9)
- "No securities will be allotted, issued or sold on the basis of this Prospectus after the expiry date of this Prospectus, 14 June 2001. Applications for Stapled Securities, Shares and Interests will not be accepted prior to 8 February 2001."
13 The money for the shares was not paid by the defendant prior to 14 June 2001 and no shares were allotted to her by that date. Clearly, her application for shares was never accepted.
14 My mistake is obvious from the statement of claim. The plaintiff's summary judgment application must be limited to the cause or causes of action as pleaded in the statement of claim and, in setting out the terms of the contract relied upon, the statement of claim does not refer to Stapled Securities (which we have seen includes Interests plus shares) or to shares. I quote from pars 2, 3 and 4 of the statement of claim:
"2. On or about 31 May 2001, the Defendant and the Plaintiff entered into an agreement ('the Agreement') to enter into a Lease and Management Agreement ('the Lease and Management Agreement') in respect of an interest in a registered managed investment scheme known as the Margaret River Wine Business (ARSN 086 241 198) ('Wine Business').
PARTICULARS
- The Agreement was in writing and was constituted by the following documents:
- (a) Prospectus issued by the Plaintiff dated 29 January 2001 with a summary of the material terms of the proposed Lease and Management Agreement included;
(b) An Application Form signed by the Defendant on or about 23 April 2001;
(c) Notification of Acceptance and Tax Invoice issued by the Plaintiff and dated 31 May 2001; and
(d) The Replacement Constitution of the Wine Business.
(Page 10)
- 3. The Agreement contained the following material express terms:
(a) The Plaintiff agreed to issue to the Defendant 30 units or interests in the Wine Business in respect of Vineyard Lots S4079-S4108;
(b) The Defendant irrevocably authorised the Plaintiff to execute the Lease and Management Agreement on her behalf, and
(c) The Defendant had to pay the Plaintiff the sum of $330,000.00 by 30 June 2001, in consideration of the Plaintiff providing specified services in Item 11 of the Schedule to the Lease and Management Agreement.
The Plaintiff will rely on all the terms of the Agreement for their full force and effect at trial.
15 Mr Randall, for the defendant, referred me to much correspondence from the Palandri Group to show that the plaintiff expected the defendant to pay for interests and shares. He referred me to memos annexed to Mr Cutler's affidavit dated 21 June, 19 July, 7 August, 27 August and 14 September 2001 (pages 20, 22, 30, 34, 40 and 41) referring to Stapled Securities. This correspondence is all to do with arranging finance for Mrs O'Donnell. Any loan contract is distinct from the purchase contract. He also referred me to a letter of 8 November 2001 from Mr Jamie Cann, the plaintiff's legal counsel, to Mrs O'Donnell, found at page 229 of Mr Cann's affidavit. It is a letter of demand for money owing on the interests and shares totalling $474,210. I think the letter wrong in its demand for payment of shares. Be that as it may, the summary judgment application is prescribed by the statement of claim and there is no claim in that for payment of shares.
16 I consider Mr Hotchkin's answer to this argument is correct. This correspondence between Bill Cutler and the Ralton Group relates to Mrs O'Donnell's application for finance from Palandri Finance Ltd. Although at time, Mr Cutler was not too careful about the letterhead he
(Page 11)
- used, and at times the letterhead was that of the Palandri Group, which included five Palandri companies, including Palandri Wines Ltd, Margaret Wine Production Ltd and Palandri Finance Ltd, basically the correspondence relates to the application for loan finance. That is a different contract from the one which is the concern of this action between the plaintiff and the defendant to purchase the Interests or wine lots.
17 In my previous reasons, I considered a number of defences and rejected them, but, in view of the successful defence, that the defendant had withdrawn her offer to buy the Stapled Securities prior to notification of the acceptance, I said at par 45 that it was not necessary for me to consider the defendant's other defences. In view of my reconsideration of the invoices, it is necessary for me to consider more fully the defences raised.
18 One of the defences raised turns on the role of Mr Peter Holt and the Ralton Group Ltd. The defendant's counsel said that Mr Holt was clearly her agent, but at the same time he was also the agent for Palandri Wines. He was to receive a commission of up to 10 per cent for introducing Mrs O'Donnell to this plaintiff. He was, in that sense, a dual agent. The invoice sent on 31 July, on which the plaintiff relies, was sent to Mrs O'Donnell care of PO Box 2115 Kew, Victoria, 3103, which was to the Ralton Group's office. Mrs O'Donnell has deposed in her affidavit, at par 13, that she never saw this invoice until the affidavits were produced for this summary judgment application. Because of this, the defendant says that this invoice, said by the plaintiff to be an acceptance or a communication of the plaintiff's acceptance of the offer, was never communicated to her. The defendant said the letter was only sent to the Ralton Group and that was not communication to her. The defendant argued that the Ralton Group was a dual agent, getting a commission for its selling efforts. I was referred to a fax sent by Bill Cutler of the Palandri Group to Peter Holt or Danielle of the Ralton Group on 27 August 2001, found at page 34 of Mr Cutler's affidavit. That letter begins:
"In an effort to provide the maximum support to your marketing efforts we will agree to finance the full 30 Stapled Securities for Mrs O'Donnell along the following lines … "
19 I was also referred to Lintrose Nominees Pty Ltd & Ors v King [1995] 1 VR 574, a decision of the appeal division of the court. In that case, a purchaser bought a property from a vendor on the advice of an agent. The purchaser paid the agent a fee for the advice. Unknown to the
(Page 12)
- purchaser, the agent had been retained by the vendor to market the property. Two directors of the vendor company, who were related to the principal of the agent company, had also recommended to the purchaser that he buy the property, without disclosing their interest in it. The purchaser sued for rescission of the contract of sale. Hayne J ordered rescission on the ground that the directors and the vendor had breached fiduciary duties they owed to the purchaser. That decision was upheld on appeal. Tadgell and Fullagar JJ said, and I quote from the headnote:
"A vendor of property could not properly sell the property through an agent, knowing that the agent was retained to advise the purchaser of the purchase, without knowing also that the dual allegiance of the agent was disclosed to the purchaser. A vendor who colluded with the agent to keep the purchaser ignorant of the agent's dual allegiance was as much implicated as the agent in the non-disclosure and was therefore liable to have the sale avoided."
21 Peter Holt was the authorised agent of the defendant, his actions, or inactions, are binding on the defendant. There is no evidence that the plaintiff appointed Peter Holt or the Ralton Group Ltd or Holt Norman Ashman Pty Ltd, as its agent. The payment of commission by one person to another, without more, does not by itself make the second person the agent of the first person. At the very most, Peter Holt and his group was "the introducer of business", as that term is used in NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) FCA 1558, 10 November 2000. Peter Holt and the Ralton Group were the holders of a dealer's licence. It is highly likely that he or his group got a commission from the sale of the interests, as permitted by cl 16.8 of the prospectus. That does not make Peter Holt or his group the agent of the plaintiff.
(Page 13)
22 I do not consider that this argument amounts to an arguable defence. Section 724(1) of the Corporations Law, as it then was, provides that:
"(1) If a person offers securities under a disclosure document and:
(c) the person becomes aware that:
(i) the disclosure document contains a misleading or deceptive statement; or
(ii) …
- that it is materially adverse from the point of view of an investor …
the person must deal under subsection (2) with any application."
24 Section 52 of the Trade Practices Act 1974 is well known.
25 The defendant says that if the payment method provisions are to be interpreted as contended for by the plaintiff, then the prospectus document is clearly misleading. The defendant says that irrespective of the box ticked by the defendant on the application form found at page 118 of Cann's affidavit, the parties have conducted themselves by convention on the basis that finance has been applied for and was to be approved; ie, the deal was conditional on the supply of finance. That is reinforced by Palandri Finance at one stage offering to finance 20 rather than 30 Stapled Securities.
26 I do not agree with those submissions. The two applications - the one for Staples Securities or interests or shares, and the application for finance to a different company, Palandri Finance Ltd - are distinct legally. If the defendant wanted the benefit of having her contract with the plaintiff made "subject to finance", she should have ticked box 4 instead of box 3. By ticking box 3, it is clear from the application form that her application could be accepted - and thereby binding - before receiving notification that finance had been approved.
(Page 14)
27 I agree generally with the plaintiff's written submissions and consider that the defendant has raised no arguable defences.
28 I am aware that summary judgment should be exercised with great care and should never be exercised unless it is clear there is no real question of law or fact to be tried. I consider that the plaintiff's application meets these tests and that the defendant has raised no arguable defence. I propose to give summary judgment for the plaintiff.
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