| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : PARK -v- MANIA [2005] WADC 222 CORAM : WAGER DCJ HEARD : 31 OCTOBER 2005 DELIVERED : 25 NOVEMBER 2005 FILE NO/S : CIV 2887 of 2004 BETWEEN : RONALD KENNETH PARK Plaintiff
AND
STANISLAW HENDRIK MANIA
Defendant
Catchwords: Practice and procedure - Appeal against summary judgment - Turns on its own facts
Legislation: Fair Trading Act 1987
Rules of the Supreme Court
Result: Appeal allowed
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Representation:
Counsel:
Plaintiff : Mr D K Barker
Defendant : Mr A P Hershowitz
Solicitors:
Plaintiff : Chalmers & Partners
Defendant : Bruce Havilah & Associates
Case(s) referred to in judgment(s):
Fancourt v Mercantile Credits Limited (1983) 154 CLR 87
General Credits (Finance) Pty Ltd v Shipton Holdings Ltd, unreported; SCt of WA; Library No 2054; 19 May 1977
Theseus Exploration NL v Foyster (1972) 126 CLR 507
Case(s) also cited:
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
Lewkowski v Bergadin Pty Ltd; unreported; FCt SCt of WA; Library No 7675; 26 May 1989
McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689
Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25
Prenn v Simmonds [1971] 1 WLR 138
Shurmur v Young (1889) 5 TLR 155
State Bank of Victoria v Parry [1989] WAR 240
Supalux Paint Co Pty Ltd v Vyse [1999] WASC 78
Sweeney v Fitzhardinge & Ors (1906) 4 CLR 716
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 2 TPR 48
Webster v Lampard (1993) 177 CLR 598
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1 WAGER DCJ: This is an appeal by the defendant against an order granting summary judgment in favour of the plaintiff made on 18 March 2005.
The plaintiff's case 2 The plaintiff filed a statement of claim and an application for summary judgment on 27 January 2005. The plaintiff and the defendant had purchased a boat in 2002 that was the subject of a Deed of Agreement in which they agreed to own the boat in equal shares as tenants in common. On an unknown date in February 2004, it was agreed that the plaintiff would sell the defendant his interest in the boat for $100,000 to be paid by way of a bank cheque for $50,000 on or before the date of execution of the agreement and by a second bank cheque for $50,000 on or before 31 August 2004. The defendant took possession of the boat and paid the first sum in February 2004; however, the defendant failed to pay the second sum of $50,000 by 31 August 2004. This outstanding amount is the subject of the plaintiff's claim.
The defendant's case 3 The defendant opposed the plaintiff's application and, by affidavit dated 21 February 2005, deposed that he was not indebted to the plaintiff in the sum claimed because the sale of the boat was inextricably linked to other dealings that he had had with the plaintiff and that the plaintiff's conduct was misleading and deceptive and in breach of the Trade Practices Act and/or Fair Trading Act and was unconscionable.
The background 4 The defendant was the principal of Mania National, a plumbing manufacturing business trading as Kaddle Pty Ltd. Prior to November 2003, the business was jointly owned by the defendant's family and the plaintiff's family in a ratio of 10 to 1 in favour of the defendant's family. The plaintiff and the defendant had run the business together and the boat was purchased from business cashflow. 5 In August 2003, the plaintiff indicated that he was unhappy with the direction of the business and wished to sell his share of the business and his share of the boat. He indicated that:
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(c) he and his wife proposed acquiring a service station in the south west of Australia. 6 After negotiations, the plaintiff's interest in the business was sold to the defendant and others by an Agreement for Sale of Units and Share dated 14 November 2003. The defendant deposes that, as part of the defendant's exit strategy, the plaintiff was to sever all ties with him and he therefore agreed to purchase the plaintiff's share of the boat. After the plaintiff left the business in November 2003, the defendant became aware that he had breached the agreement dated 14 November 2003 by passing on confidential information and trade secrets. In 2004, the business commenced proceedings against the plaintiff in relation to these allegations. Interlocutory orders in favour of Kaddle Pty Ltd restraining the plaintiff followed. 7 The defendant deposes that he only agreed to purchase the boat from the plaintiff for $100,000 because of the representations made by the plaintiff and that, had he known that the plaintiff intended to work for the competition and sabotage the business, he would not have entered into any agreement with him including the agreement to purchase the boat. The defendant deposes, by way of counterclaim, that contrary to an agreement whereby each party paid for the fuel consumed when that party used the boat, the plaintiff had failed to pay for fuel on two occasions.
Order 6 r 11 District Court Rules 8 Order 6 r 11 of the District Court Rules states: "11(1) A person affected by a judgment, order or decision of the registrar may appeal therefrom to a judge in chambers." 9 The appeal is a complete review de novo.
Summary judgment – Order 14 of the Rules of the Supreme Court 10 Order 14 r 1(i) states: "Where in an action to which this order applies the statement of claim has been served on a defendant and that defendant has entered an appearance the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ or to a particular part of such claim, or has no defence to such a claim or part except as to the amount of any damages claimed, within twenty one days after appearance or at any later time by leave
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of the court, apply to the court for judgment against that defendant." 11 The summary judgment procedure is designed to deal with cases that are not fit for trial. 12 In Fancourt v Mercantile Credits Limited (1983) 154 CLR 87 at 99, it was the judgment of the court that: "the power to order summary or final judgment is one which should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried." 13 When there is a serious point of law raised by a defendant, the judge in chambers ought not to decide it but ought to give unconditional leave to defend (Theseus Exploration NL v Foyster (1972) 126 CLR 507 at 515). 14 Even where a defendant cannot show any issue which ought to be tried, he may be able to satisfy the court that the circumstances ought to be investigated (General Credits (Finance) Pty Ltd v Shipton Holdings Ltd, unreported; SCt of WA; Library No 2054; 19 May 1977).
Does the defendant have a real question to be tried? 15 It is submitted by the defendant that although he is not personally a party in the Supreme Court action in which interlocutory orders have been made, those proceedings and the present matter are factually so closely interconnected that an arguable defence arises. 16 It is submitted that it was because the plaintiff made representations such as that he was leaving the industry and moving to the south west of Australia that the plaintiff, relying on those representations, signed the agreement in November 2004. Had the defendant not accepted the representations and had he known that the plaintiff would engage in deceptive conduct, he would not have agreed to purchase the boat at the time and in the manner agreed. If he had agreed to purchase the boat with knowledge of the plaintiff's conduct, then he would only have agreed to pay 10 per cent of the boats value, being a sum of approximately $20,000 rather than the agreed $100,000. 17 Section 10 of The Fair Trading Act 1987 states: "Section 10 – Misleading or Deceptive Conduct (TPA s 52):
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1. a person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." 18 Section 77(1) of The Fair Trading Act 1987 provides that: "(1) without limiting the generality of s 74 and s 75 if, in a proceeding instituted under this part, or for an offence against this Act, the Supreme Court or the District Court is satisfied that a person has suffered, or is likely to suffer, loss or damage by reason of conduct of another person that contravened a provision of this Act, the court, whether or not an injunction under this part or any other relief is granted or any other order is made in those proceedings, may make such order or orders as the court thinks appropriate against the person who engaged in the conduct or a person who is involved in the contravention for the purpose of compensating the first mentioned person wholly or in part for the loss or damage or of preventing or reducing the extent of the loss or damage." 19 The defendant submits that the boat had been used as part of the business and its sale was, therefore, made in a business context even if, in fact, it was sold privately. 20 The defendant submits that this means that the sale falls within an extended definition of "trade or commerce" for the purposes of the Fair Trading Act. If the Fair Trading Act applies,then the defendant submits that a possible interpretation of two letters annexed to the plaintiff's affidavit dated 21 February 2005 in relation to the sale of the boat and other assets is that the plaintiff's conduct was misleading or deceptive at the relevant time. 21 The plaintiff submits that there is no ambiguity in relation to the original purchase and the subsequent sale of the boat because the allegations of misconduct on the part of the plaintiff did not arise until after the date of the agreement to sell. The plaintiff submits that the sale of the boat could not be described as "trade and commerce" for the purposes of the Fair Trading Act and denies that the defendant has suffered any damage. The two positions are very different and each party is asking the court for an interpretation of the relevant document and the conduct of the parties. This means that the following circumstances remain unresolved and ought to be investigated:
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(a) whether the sale of the boat was sufficiently closely interconnected to the representations of the plaintiff to raise a defence; (b) whether the sale of the boat could be defined as "trade or commerce" for the purpose of the Fair Trading Act; (c) the precise nature of the plaintiff's alleged misconduct and whether the conduct, if established, was "misleading or deceptive" for the purposes of the Fair Trading Act; (d) whether the defendant suffered loss and damage as a result of his reliance on the plaintiff's representations.
The date of the agreement for sale 22 In par 2 of the statement of claim, the plaintiff refers to the agreement for sale as being "undated but entered into on or about 2 February 2004". 23 The correspondence annexed to the plaintiff's affidavit sworn 21 February 2005 refers to negotiations in respect of the sale occurring on 9 and 10 February 2004 respectively. The defendant submits that the affidavit in support must verify the essential elements of the cause of action upon which a default judgment application is based, and if it does not, leave is not always given to supplement it (Seaman "Civil Procedure Western Australia" 1425). 24 While this is a correct statement of the law, in this case the date of the agreement has not been specifically pleaded. I do not consider that this point has any merit.
Defendant's counter-claim 25 The counter-claim relates to the plaintiff's failure to pay for petrol on two occasions. Given the nature and value of the claim it would not, on its own, provide a basis for the plaintiff's application for summary judgment to be dismissed.
Conclusion 26 This is a case where there may be issues to be tried. The circumstances ought to be investigated. Accordingly, I make the following orders:
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1. The appeal is allowed. 2. The plaintiff's application for summary judgment is dismissed. 3. The defendant has leave to defend the action. 4. The costs of the summary judgment application and this appeal be costs in the cause.
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