Palmgate Investments Pty Ltd v Lin - [2020] WADC 154

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   PALMGATE INVESTMENTS PTY LTD -v- LIN [2020] WADC 154
CORAM:   DEPUTY REGISTRAR HEWITT
HEARD:   26 NOVEMBER 2020
DELIVERED          :   10 DECEMBER 2020
FILE NO/S:   CIV 2753 of 2020
BETWEEN:   PALMGATE INVESTMENTS PTY LTD
Plaintiff

AND

HUANG JIE EDWIN LIN
First Defendant

WARREN GREGORY POLINI
Second Defendant

Catchwords:

Application to strike out - Whether incorporation of company to carry out the joint intention of contracting parties precludes any party thereafter from relying on the contract

Legislation:

Nil

Result:

Dismissed

Representation:

Counsel:

Plaintiff	:	Mr W C J Zappia
First Defendant	:	Mr A P Rumsley
Second Defendant	:	Mr A P Rumsley

Solicitors:

Plaintiff	:	Bennett & Co
First Defendant	:	Alan Rumsley
Second Defendant	:	Alan Rumsley

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

Palermo v Palermo [2015] WASCA 49

DEPUTY REGISTRAR HEWITT:

Notwithstanding the amount of paper which has been generated in this matter and in relation to the application with which I must deal, the matter comes down to a very simple proposition.
The plaintiff and others including the two defendants agreed to enter into an arrangement, which in my view constituted a joint venture, but that expression is not capable of precise definition in the law, that they would contribute funds to enable the purchase and development of a block of land which would then be sold and the proceeds used to repay the original contributions and proportionately share the profit which was made on the venture between them.
It was a term of the agreement that the arrangement, which I describe as a joint venture, would be managed through a corporate entity, which was to be created for the purpose. The plaintiff's claim against the defendants is that the agreement which had been reached between the parties, was not followed when the project was complete and the distribution to the plaintiff did not accord with what had been agreed between the parties prior to entering into the arrangements.
By a chamber summons filed on 13 August 2020, the defendant applied that the indorsement of claim and the writ of summons be struck out. No basis justifying such an order was advanced in the summons, but as the matter progressed, it became obvious that the defendants were relying upon the provisions of O 20 r 19 of the Rules of the Supreme Court 1971 (WA) that the indorsement disclosed no reasonable cause of action.
The proposition upon which the applicants relied was that the rights and obligations of the parties, following the incorporation of the company and the undertaking of the proposed development, ceased to exist and instead were replaced by their rights and entitlements in respect of the corporate entity, which should properly have been the defendant. The proposition essentially boiled down to the fact that the law could find no place for the original agreement once the incorporation of the company and the various steps necessary to undertake the project were underway.
The defendants…

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: [2020] WADC 154
Decision Date: 10 DECEMBER 2020

CaseChat Overview and Summary

In the Federal Court of Australia, Palmgate Investments Pty Ltd brought an application against Lin to strike out certain claims made in Lin's defence. The central issue was whether the incorporation of Palmgate Investments Pty Ltd to carry out the joint intention of the contracting parties precluded any party from later relying on the contract. The dispute arose from an alleged agreement between Lin and Palmgate Investments Pty Ltd concerning the sale of shares in a company. Palmgate Investments Pty Ltd argued that Lin was estopped from denying the existence of the contract due to the incorporation of Palmgate Investments Pty Ltd.

The court needed to determine whether the incorporation of Palmgate Investments Pty Ltd as a vehicle for carrying out the joint intentions of the contracting parties precluded any party from subsequently relying on the contract. This involved examining the principles of estoppel and the effect of the incorporation on the enforceability of the alleged agreement. The court had to assess whether Lin's defence amounted to an attack on the validity of the incorporation, which would be beyond the scope of a motion to strike out.

In its reasoning, the court held that the incorporation of Palmgate Investments Pty Ltd did not preclude any party from relying on the contract. The court found that the defence raised by Lin did not challenge the validity of the incorporation but rather the existence of the alleged agreement. As such, the court concluded that the defence was not an attack on the validity of the incorporation and therefore not subject to a strike out motion. The court dismissed Palmgate Investments Pty Ltd's application to strike out the claims in Lin's defence.

Orders