Palandri Wines Ltd v O'Donnell
[2002] WASC 123
PALANDRI WINES LTD -v- O'DONNELL [2002] WASC 123
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 123 | |
| Case No: | CIV:2848/2001 | 3 MAY 2002 | |
| Coram: | MASTER BREDMEYER | 24/05/02 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | PALANDRI WINES LTD RHONDA O'DONNELL |
Catchwords: | Summary judgment Contractual debt |
Legislation: | Nil |
Case References: | Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492 Australian Can Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 Clayton Robard Management Ltd v Siu (1988) 6 ACLC 57 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Custom Credit Corporation Ltd v Lynch [1993] 2 VR 469 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Garnac Grain Co Inc v H M F Faure & Fairclough Ltd & Bunge Corporation [1968] AC 1130 Hebb's Case (1867) LR4Eq 9 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Hyde v Wrench (1840) 3 Beav 334 Kennedy v Thomassen [1929] 1 Ch 426 Lintrose Nominees v King [1995] 1 VR 574 Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270 Webster v Lampard (1993) 177 CLR 598 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
RHONDA O'DONNELL
Defendant
Catchwords:
Summary judgment - Contractual debt
Legislation:
Nil
Result:
Application dismissed
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M C Hotchkin
Defendant : Mr R Randall
Solicitors:
Plaintiff : Hotchkin Hanly
Defendant : Paterson & Dowding
Case(s) referred to in judgment(s):
Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492
Case(s) also cited:
Australian Can Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Clayton Robard Management Ltd v Siu (1988) 6 ACLC 57
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Custom Credit Corporation Ltd v Lynch [1993] 2 VR 469
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Garnac Grain Co Inc v H M F Faure & Fairclough Ltd & Bunge Corporation [1968] AC 1130
Hebb's Case (1867) 4 LR Eq 9
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Hyde v Wrench (1840) 3 Beav 334
Kennedy v Thomassen [1929] 1 Ch 426
Lintrose Nominees v King [1995] 1 VR 574
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270
Webster v Lampard (1993) 177 CLR 598
(Page 3)
1 MASTER BREDMEYER: This is an application by the plaintiff for summary judgment for contractual debts totally $474,210. The plaintiff relies on the affidavit of Jamie Michael Cann sworn 13 February 2002 which annexes many of the relevant documents, an affidavit of William Thomas Ian Cutler sworn 13 February 2002, an affidavit of Michael Hotchkin and of Renae White both sworn 13 February 2002. The defendant relies on her affidavit of 27 March 2002 and an affidavit of Paul Munster sworn 16 April 2002. This is a case in which the facts are not really in dispute. The dispute is over the legal interpretation of those facts.
2 This application needs leave. It should have been brought within 21 days of the defendant's appearance which was filed on 7 January 2002. The application was brought on 14 February, 17 days late. It was brought before the defence was filed. The reason for the lateness was a shortage of legal staff in the plaintiff's solicitor's office over the January period. The defendant filed a defence and counterclaim on 18 February, just outside that 17 day period but no doubt worked on it within the 17 day period. That is a prejudice it suffered because of the late application. Nevertheless, it is one which could be overcome by a suitable costs order. As stated above, this is a contract case turning on documents and well suited to a summary judgment application. I propose to give leave to bring it out of time.
3 The plaintiff's case is as follows. On 29 January 2001 the plaintiff issued a prospectus headed "Prospectus 2000 Second Offering". The prospectus invited people to apply for Stapled Securities, Shares and Interests in the plaintiff company. Those terms are defined in the prospectus. A "Stapled Security" comprised of one "Interest" and 400 shares. An "Interest" means a New Member's rights to benefits produced by the Wine Business pursuant to the Constitution and a Lease and Management Agreement over one Second Stage Vineyard Lot. The "Wine Business" means the managed investment scheme known as Margaret River Wine Business managed by Palandri Wines. The "Shares" means full paid ordinary shares in Margaret River Wine Production Ltd (MRWP).
4 The prospectus contained at cl 19.1 and following, "Application Form and Power of Attorney". That was a six page document which at 19.4 sets out certain conditions relating to the application under the heading "Acknowledgement and Agreement". The form for appointing the plaintiff as the investor's attorney was also followed at cl 19.5 by the powers and terms of the Power of Attorney.
(Page 4)
5 The defendant, Mrs O'Donnell, is Melbourne-based and she was at all times advised on this investment by Peter Holt who was a member, or authorised representative, of Holt Norman & Co, Holt Norman Ashman Pty Ltd and the Ralton Group Ltd (previously known as Foster Streader Black Ltd).
6 On 29 May 2001 Mrs O'Donnell went to see Mr Peter Holt in his offices in Melbourne. He had previously given her the plaintiff's prospectus. He asked her why she had not completed it. (She had, in fact, signed the Application Form on 23 April 2001). He said to her that it would be a great tax-effective investment given her situation, and she was persuaded by this and he assisted her to complete the Application Form. She applied for 30 Stapled Securities at $13,000 each totalling $390,000. The Application Form was a fairly simply one which requires a few boxes to be completed. Under the heading "Payment Method" appear four boxes. They are not numbered but the first one says "Cheque enclosed….". The second one refers to Credit Card and provides spaces for details of the card. The third and fourth boxes I reproduce:
"ٱ Finance applied for / to be applied for
OR
ٱ Subject to finance (The application will not be accepted until the Palandri Wines receive notification that finance has been approved. The last day applications may be accepted is 14 June 2001)."
7 Mrs O'Donnell ticked the third of those boxes namely "Finance applied for / to be applied for" rather than the fourth one, "Subject to finance…". She also signed the Power of Attorney form which gave the plaintiff power to sign on her behalf the lease and management agreement in respect of the interest which she had applied for with Palandri Wines. In completing the form Mrs O'Donnell needed to give a mailing address which she gave as care of PO Box 2115, Kew 3101 and a business phone number 03 9859 7090. The box number and the phone number was that of the Ralton Group Ltd (the Ralton Group). In addition, Mrs O'Donnell completed the Power of Attorney form. She also completed an Application for Finance addressed to Palandri Finance Ltd which company has the same address 3/76 Kings Park Road, Perth, 6005 as the plaintiff. She proposed to borrow all the money. The Application for Finance form gave Mrs O'Donnell's private address under the heading
(Page 5)
- "Residential Address" but under the heading "Postal Address" gave PO Box 2115, Kew, 3103, that is the Ralton Group's address.
8 All forms were sent off with a covering letter from Ms Samantha Zafiropoulos of the Ralton Group to Mr Bill Cutler, Palandri Wines, on 29 May 2001. Mrs O'Donnell's application was one of about 30-40 applications submitted to the plaintiff through the Ralton Group. Ms Zafiropoulos was the one who witnessed Mrs O'Donnell's signature on the Application Form, the Power of Attorney and the Application for Finance form.
9 The Application for Stapled Security should be seen as an offer to purchase Stapled Securities in the plaintiff. I say that because par 19.4 of the prospectus, which is the page after the Application Form, and is headed "Acknowledgement and Agreement", contains a number of terms governing the application and they include:
"• 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; [emphasis mine]
• 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 Applicant's application in whole or in part; and [emphasis mine]
• upon acceptance of the Application Form to be bound by the Constitution of MRWP."
(Page 6)
10 So both Palandri Wines and MRWP (ie Margaret River Wine Production Ltd) had the right to accept or reject the application.
11 The plaintiff issued a tax invoice to Mrs Rhonda McDonnell care of PO Box 2115, Kew, Victoria 3103 - which is the address of Ralton Group as has been noted above - on 31 July 2001. The invoice itself is undated. I reproduce that tax invoice - See Annexure "A" attached.
12 Mr Peter Holt was not happy with that form of invoice. Sometime in September 2000 he asked for the re-issue of tax invoices for all his clients of Palandri to show the acceptance date. He thought that important for tax purposes. The plaintiff complied with that request and according to the plaintiff's Miss White. sometime in October she re-issued the invoices. The invoices in the defendant's case was in the identical form but with the addition of the words:
"Acceptance Date: 31-May-2001"
13 Those words came after the words:
"TAX INVOICE
Application # INV 212561"
14 The plaintiff's counsel says that the defendant's application of 29 May 2001 for 30 Stapled Securities in the plaintiff was accepted on 31 May 2001, but, because that acceptance was not communicated to the defendant prior to 31 July 2001, she could have withdrawn her offer at any time prior to 31 July 2001.
15 The Constitution of MRWP is the Replacement Constitution of The Margaret River Wine Business of 2 June 2000 which is annexed to Mr Cann's affidavit. Under that Constitution at cl 1.1 "Date of Commencement means with respect to each specific Member, the date on which the Member's application was accepted by the Responsible Entity." The Responsible Entity in this case is the plaintiff.
16 Clause 13.1 of the Constitution provides:
"Each Lease and Management Agreement shall:
(a) specify the vineyard lot or vineyard lots (as the case requires) as determined by the Responsible Entity in its absolute discretion;
(Page 7)
- (b) be completed in accordance with the details specified in the relevant application; and
(c) commence on the Date of Commencement."
17 The plaintiff says that it was most important for the defendant's taxation benefit that the defendant's offer should be accepted before 30 June 2001 because, according to Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492 at 506, a tax deduction is available in respect of an expense "incurred" in gaining or producing accessible income in the year in which that expense was "incurred", which is an obligation where the taxpayer is definitely committed, although there has been no actual disbursement. Thus an acceptance date of 31 May benefited Mrs O'Donnell in that she was unconditionally committed to that expense even though the expenditure might not be actually incurred until after 30 June.
18 The defendant did not withdraw her offer for Stapled Securities in the plaintiff, or attempt to do so, at any time prior to 31 July 2001. Correspondence ensued until September 2001 regarding the granting of a loan. Eventually a loan was offered on 14 September 2001 and Palandri Finance prepared a Letter of Offer, Loan Deeds for execution, Direct Debit Authorities etc and sent them to the defendant care of the Ralton Group, for signature. On 27 September 2001 Mrs O'Donnell advised the Ralton Group by telephone that she did not wish to proceed with the loan and would not be signing the documents. This was communication to her agent. It was not communication to the plaintiff.
19 According to the plaintiff's case, the defendant offered to purchase the Stapled Securities on 29 May. That offer was accepted, at least for taxation purposes, on 31 May. The offer was accepted, in the normal contractual sense, by the plaintiff's tax invoice sent to the defendant's agent on 31 July. The defendant's offer was not withdrawn at any time prior to that date. The contract is therefore binding and the plaintiff is entitled to summary judgment.
20 I now turn to the defences offered. The first defence offered is that the defendant's offer had to be accepted by 14 June 2001. This was not done, so the offer lapsed. I quote from page 3 of the prospectus:
"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."
(Page 8)
21 I also quote cl 16.1:
"16.1 OFFER PERIOD
Applications will be open for the duration of this Prospectus or until over subscription has been reached, which ever is the earlier. However, applications for Stapled Securities, Shares and/or Interests will not be accepted before 8 February 2001 or after 14 June 2001."
22 Reading these two extracts together and giving them a sensible commercial interpretation I consider they mean that no application for Stapled Securities, Shares and/or Interests will be received by the plaintiff prior to 8 February or after 14 June 2001.
23 The Directors were not required under the terms of the prospectus to accept any application. See for example, par 16.2:
"16.2 ALLOTMENT
The Directors may allot Stapled Securities, Shares and Interests in full on any application, or allot any lesser number, or decline to accept any application in their sole discretion…"
- I have already quoted from cl 19.4 which are the conditions attached to the Application Form:
"• that Palandri Wines has the right to accept or reject the Applicant's application in whole or in part."
I see no warrant for the defendant's interpretation that the application for securities, had to be accepted by the plaintiff, in a contractual sense, before 14 June. Certainly, the prospectus expired on that date but the acceptance of the application lodged on or before 14 June, could come later.
24 The defendant's second argument is that its application for securities in the plaintiff was subject to finance; that that was a pre-condition for the application. The condition was not met, the finance was not obtained, and so the offer lapsed.
25 I have already noted that the defendant ticked the third box on the Application Form indicating that the application for securities was:
"Finance applied for / to be applied for."
(Page 9)
- At the same time the defendant completed an application for finance to Palandri Finance Ltd, to fund the acquisition. For this argument the defendant relies on cl 11.1 and cl 11.4 of the Constitution which I quote:
"11.1 Application for Lease and Management Agreement
(a) Applications to enter into a Lease and Management Agreement must be:
(i) in a form attached to the Prospectus or when a Prospectus is not required, in such other form as the Responsible Entity may for the time being require or approve;
(ii) signed by or on behalf of the Applicant and lodged at the Office or such other place as the Responsible Entity nominates from time to time;
(iii) accompanied by a properly signed Power of Attorney; and
(iv) accompanied by such other information or evidence as the Responsible Entity may require.
(b) The amount payable on application may be a deposit being a percentage determined by the Responsible Entity of the Application Price. If a deposit is paid, the balance of the Application Price becomes due and payable on or before the date and in the manner specified by the Responsible Entity.
(c) In the event that the Applicant does not note on the application that the application is conditional upon the provision of finance the application is capable of acceptance by the Responsible Entity and the Application Price become due and payable on or before the date and in the manner specified by the Responsible Entity.
…
(Page 10)
- 11.4 Finance Arrangements
(a) Notwithstanding any other provision of this Constitution, if it is noted in an application that finance is requested, then:-
(i) the application shall be capable of acceptance by the Responsible Entity subject to the condition that a lending institution agrees to lend that amount of money for which finance is requested by the Applicant; and
(ii) this is not to be taken to be a warranty, undertaking, covenant or agreement on the part of the Responsible Entity that such finance will be provided or procured.
(b) If the Responsible Entity or the Application is not notified in writing, within 3 months after the date of lodgment of the application or within such lesser period as the Prospectus specifies, of the agreement by the lending institution to lend, then either party not notified may by notice in writing to the other withdraw or cancel the application and the Responsible Entity shall cause to be refunded to the Applicant any part of the Application Price so paid in respect of the application."
(Page 11)
- was conditional upon the provision of finance and thus the application fee became due and payable on acceptance of the application.
27 I turn now to cl 11.4. The defendant ticked the third box of the Application Form and that is an indication that finance was requested. Clause 11.4(a) provides that, where it is noted in an application that finance is requested, then the application shall be capable of acceptance by the Responsible Entity (which is the plaintiff) subject to the condition that a lending institution agrees to lend that amount of money for which the finance is requested by the Applicant. In other words, although the defendant's application was not marked conditional on the grant of finance, the plaintiff could have accepted the defendant's application conditional on the grant of finance. That was not done in this case. I consider that cl 11.4(b) has to be read with cl 11.4(a). That is, where the plaintiff has notified the Applicant that the Application for Securities is conditional upon a lending institution agreeing to lend the money to the Applicant, then, unless the plaintiff is notified in writing within three months after the date of lodgment of the application, that the loan has been approved, either party may withdraw from the contract and any money paid shall be refunded.
28 The defendant says that it was not notified within three months of 29 May that her application for finance to Palandri Finance Ltd had been accepted and hence she was entitled to withdraw from the contract. I do not consider that cl 11.4(b) applies at all on the facts of this case because the plaintiff's acceptance of the defendant's offer for securities was not made conditional on the grant of finance. I do not consider this defence arguable.
29 The next defence offered is that the defendant's offer to buy the securities was withdrawn before it was ever accepted. I have set out above the tax invoice which issued to the defendant via her agent on 31 July 2001. I repeat that it did not have the words on it "Acceptance Date: 31 May 2001". Is that invoice an acceptance of the defendant's application (in legal terms the defendant's "offer") to buy Stapled Securities in the plaintiff? The answer is not too clear. The application was to buy 30 Stapled Securities in the plaintiff for $390,000. I have already quoted the definition of these terms in the prospectus. Each Stapled Security comprised one Interest giving the applicant a new member's right to the benefits produced by the wine business pursuant to the Constitution and the lease and the management agreement over one Second Stage Vineyard Lot. The wine business was the Managed Investment Scheme known as the Margaret River Wine Business operated
(Page 12)
- by Palandri Wines. In addition each Stapled Security entitled the applicant to 400 shares in the company MRWP. I have also quoted from cl 19.4 of the prospectus, the terms which immediately followed the Application Form, which provide in summary that both Palandri Wines and MRWP had the right to accept or reject the application in whole or in part. So I conclude that a valid acceptance document had to inform the defendant that her application had been accepted by Palandri Wines and by MRWP.
30 I note that the tax invoice as it issued on 31 July 2001 does not expressly inform the defendant that her application has been accepted. It may, however, amount to an implied acceptance. I note that the tax invoice is under the names of Palandri Wines Ltd and Palandri Production Ltd. There is no mention of the company MRWP. I note that the tax invoice refers to:
"Investment: 30 - Wine Interest
Vineyard Lot: S4079 - S4108"
31 That tells Mrs O'Donnell that she has 30 Wine Interests in the Margaret River Scheme and that she has 30 Vineyard Lots numbered S4079 to S4108. "S" may stand for Second Stage. The fact that she has been invoiced lease and management fees of $330,000 for her 30 Vineyard Lots implies that her application has been successful in relation to her 30 Vineyard Lots. That is why she is asked to pay the $330,000. Her offer was to buy 30 Stapled Securities. There is no mention of Stapled Securities on the form but as Stapled Securities consisted of two parts - Interests and Shares - it could be argued that this invoice informs her that she has been given the 30 Wine Lots.
32 There is no mention in the invoice of shares. She was supposed to get 400 shares in MRWP for each Interest, ie 30 x 400 = 12,000 shares in that company. The invoice does not inform her of that, and, as I have stated above, it does not purport to be a document coming from MRWP. The name of that company does not appear on the document. If she had been successful in getting both the 30 Vineyard Lots and the shares she would have had to pay $390,000. In summary, this tax invoice as an acceptance document, informing Mrs O'Donnell that her application for the investment has been accepted, has a number of inadequacies. For the purposes of this summary judgment application I am not satisfied that this document amounts to an acceptance of the defendant's offer.
(Page 13)
33 Ms Renae Stacey White is the Accounts Administrator for the plaintiff based in Perth. Her affidavit of 13 February 2001 deposes to the plaintiff's procedure of receiving applications lodged pursuant to the prospectus. She said that it was her practice to date stamp an Application for Securities. This was done in this case. The date stamp is 31 May. All applications accompanied by an Application for Finance were handed to Karen Mort of Palandri Finance Ltd for processing. All applications which were not marked "Subject to Finance" were entered into the plaintiff's information data base and the applications were accepted unless the relevant managed investment scheme was over subscribed. Ms White was responsible for the generation and mailing of Notices of Acceptance and the tax invoices to Applicants whose applications were accepted. As I understand her evidence, she sent out the taxed invoice quoted above without the words "Acceptance Date: 31-May-2001". She sent out that initial tax invoice on 31 July 2001 but did not keep any copies. The defendant's Application for Securities was one of 30-40 Applications for Interests in the plaintiff's Margaret River Wine Business Managed Investment Schemes from clients of the Ralton Group. That Group had its own particular requirements concerning the issue of Notices of Acceptance and tax invoices, and it subsequently insisted that the Notices and Acceptance and tax invoices be issued in a particular way. This required the re-issue of the Notices of Acceptance and tax invoices to the clients of the Ralton Group. They were was re-issued "sometime in October 2001". They were was sent to the plaintiff's manager in Victoria, Mr Lance Pitt, for delivery to the Ralton Group. Mr Pitt telephoned Ms White the next day saying that he had personally delivered the re-issued tax invoices to the Ralton Group's office.
34 I think it arguable that the tax invoice as issued in October 2001, is an acceptance of the plaintiff's offer. The words "Acceptance Date: 31 May 2001" indicate that the defendant's offer for securities has been accepted. These are still problems with the invoice. It does not mention the 12,000 shares in MRWP, which had been applied for. It makes no reference to MRWP which needed also to accept the plaintiff's offer. Nevertheless, the addition of the words "Acceptance Date: 31 May 2001" strengthens the plaintiff's case that this invoice was the acceptance of the defendant's offer.
35 I consider that that tax invoice issued sometime in October 2001 is arguably, the communication to the defendant of the acceptance of the defendant's Application for Securities in the plaintiff. Did the defendant withdraw its offer to the plaintiff prior to communication of that acceptance? Before answering that question, I say that I have no doubt
(Page 14)
- that communication of that acceptance to the Ralton Group was communication to the defendant. The Ralton Group was the defendant's agent. She gave the Ralton Group's PO Box address as her mailing address, so communication to that group was communication to her. At par 21 and par 22 of her affidavit she states:
"21. On 27 September I telephoned Peter Holt. I spoke to Samantha or Cheryl at his office. She told me that Peter Holt was at Palandri in Perth.
22. I told her I would not be signing the documents forwarded to me. She said to me that Peter Holt would telephone me. He did not."
"The offer of finance will remain open until September 26, so we will need to have the executed documents back well before that date. This will ensure that Mrs O'Donnell is eligible for participation in wine sales distribution for sales in the period 30/6/01."
- That letter and the enclosed loan offer which is a two page letter, are both signed by Bill Cutler, General Manager. He is the General Manager of Palandri Finance Ltd.
37 I consider that the Ralton Group was the defendant's agent and was not also the plaintiff's agent so that telephone call of 27 September was not a communication to the plaintiff or to Palandri Finance of her rejection of the loan offer.
38 According to Mrs O'Donnell's affidavit at par 24:
"24. I am informed by my husband and verily believe that approximately 5.30 pm on 4 October 2001 he telephoned Bill Cutler and said to him that I was not proceeding with the investment. Bill Cutler asked my husband if Peter Holt was aware of that situation. My husband replied that he was."
(Page 15)
39 I quote also from par 26 and par 27 of the defendant's affidavit:
"26. Subsequently, on 26 October 2001 Peter Holt telephoned me and said to me that he did not want me to invest in something I was uncomfortable with and that he would sought it out while he was in Perth. We arranged to meet on his return.
27. On Tuesday 30 October 2001 I met with Peter Holt. Peter again explained to me what a great investment Palandri was and asked me to reconsider. However, he did not wish to make me feel pressured. He said to me that while he was in Perth he had spoken to the Palandri people and that it was not an issue with the business people, however the finance person was a little upset. At this point I gave Peter the termination letter (annexure RO'D4) and said I was unhappy with the way this had been handled and that the investment would not be included in my 2001 tax return. I said I was not happy with his failure to properly explain the total commitment, which I would have been undertaking if I had not withdrawn from the investment. Peter said to me that he understood my position and said that he would still like to act as my tax accountant and would send any further investment opportunities to me for consideration…"
40 The letter RO'D4 of 30 October 2001 was sent by Mrs O'Donnell to Peter Holt of Holt Norman Ashman, Suite 6, 1401 Bourke Road, Kew East, 3102. I quote from parts of it:
"TERMINATION OF CLIENT - ADVISER RELATIONSHIP
I refer to recent discussions concerning your recommendation of the Palandri Stapled Securities as an investment.
I am concerned about what I consider may have been an inadequate explanation of the terms and commitment involved in such a considerable investment, and subsequent attempts to have me commit to it.
I am sure you will appreciate that in light of these concerns it would be inappropriate for me to continue my relationship with Holt Norman Ashman.
(Page 16)
- As such, I hereby advise you of the termination of our client/adviser relationship, effective immediately.
I would also be pleased if you could forthwith provide from my file a copy of all correspondence, authorities signed by me and investment summaries.
Thank you for your past advice. I wish you and Holt Norman Ashman all the best in the future."
41 A note in handwriting on that letter states "Gave to Peter at meeting on 31/10/2001".
42 I consider that Mr O'Donnell's phone call to Bill Cutler on 4 October 2001 that the defendant "was not proceeding with the investment" amounts to a withdrawal of her offer. I summarise the legal position as I see it for the purposes of this application. The defendant's offer to purchase 30 Stapled Securities for $390,000 in the plaintiff was made on the Application Form on 29 May. That application was not made subject to finance which would have made the application conditional on the grant of finance. That option was open to the defendant but the defendant failed to choose it. The application was sent to the plaintiff by letter on 29 May. It was received by the plaintiff on 31 May. On 31 July 2001 the plaintiff sent a taxed invoice to the defendant. It did not contain any reference to the word "accepted" or "acceptance". It called on the defendant to pay the management fees and the rent for 30 Units totalling $330,000. It is arguable that it is an implied acceptance of the defendant's offer. What would be the point in asking for the defendant to pay these sums unless her application for those 30 Units had been successful. However, as explained above, there are a number of deficiencies in that invoice as an acceptance document. It does not mention the shares she had applied for and it does not mention MRWP which also had to accept the application. For the purposes of a summary judgment application, it is arguable that that invoice was not an acceptance of the defendant's offer.
43 That tax invoice was re-issued "sometime in October 2001" at Peter Holt's request and the re-issued form arguably amounted to an acceptance of the defendant's offer because of the additional words:
"Acceptance Date: 31 May 2001"
- However, on 4 October 2001 Mr O'Donnell, acting as Mrs O'Donnell's agent, phoned Bill Cutler and said to him that Mrs O'Donnell was "not proceeding with the investment". Mr Cutler is the Manager of Palandri
(Page 17)
- Finance Ltd. Nevertheless, I think it arguable that this phone call was a communication to the plaintiff that Mrs O'Donnell was not proceeding with the investment. In other words, she was withdrawing or rescinding her offer. I note that Palandri Wines and Palandri Finance both operated out of the same offices in Perth and I note too from the correspondence that at times Palandri Finance used Palandri Wines letterhead. Also I consider that for the purposes of this application Bill Cutler could be regarded as an agent of Palandri Wines, and that the words "not proceeding with the investment" should be taken to relate to the whole investment rather than just the loan.
44 In summary, I think it arguable that the defendant's offer of 29 May to purchase 30 Stapled Securities in the plaintiff was not accepted in a contractual sense until "sometime in October 2001". Because the precise date is unknown, it is arguable that the defendant, in her husband's phone call of 4 October 2001, withdrew the offer prior to communication of that acceptance. I therefore consider that the defendant has an arguable defence to this application.
45 In view of this finding it is not necessary for me to consider the defendant's other defences.
46 This application will be dismissed.
(Page 18)
(Page 19)
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