Perre Bros Lock 4 P/L v Molinara - [2013] SADC 116

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PERRE BROS LOCK 4 P/L v MOLINARA
[2013] SADC 116
Judgment of His Honour Judge Soulio
26 August 2013
CONTRACTS
Plaintiff entered into an agreement to loan money to company providing finance - defendant had been a principal of finance company - finance company failed to make interest payments to plaintiff - defendant induced plaintiff to roll the loan over - finance company failed to repay loan amount - plaintiff seeks damages
Australian Securities and Investments Commission Act 2001 (Cth) s 12; Misrepresentation Act 1971 (SA) s 7, referred to.
Marks & Ors v GIO Australia Ltd & Ors (1998) 196 CLR 484; Jones v Dunkel (1959) 101 CLR 298; Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; Henjo Investments Pty Ltd & Ors v Collins-Marrickville Pty Ltd (No.1) (1988) 39 FCR 546; Residues Treatment & Trading Co Ltd & Anor v Southern Resources Ltd & Ors (1989) 52 SASR 54; Enzed Holdings Pty Ltd v Wynthea Pty Ltd (1984) 57 ALR 167; Johnson & Ors v Perez (1988) 166 CLR 351; Sellars v Adelaide Petroleum & Ors (1994) 179 CLR 322, considered.

PERRE BROS LOCK 4 P/L v MOLINARA
[2013] SADC 116
Introduction

In 2003 the plaintiff company loaned $125,000 to a finance company, First Pacific Capital Pty Ltd (‘First Pacific’), for one year, and subsequently rolled the loan over from time to time. The defendant, Mr Molinara, was a director of First Pacific. First Pacific failed to make interest payments on the third such loan.
The plaintiff says it was induced into rolling over into a fourth loan (the final loan) by the defendant’s silence as to certain issues, and positive representations as to the ability of First Pacific to ultimately meet its obligations.
The representations were made during the course of discussions at a meeting in mid to late 2006, at which representatives of the plaintiff, and a Mr Nick Sandercock, another director of First Pacific, were present.
The silence, and the representations, are said by the plaintiff, to constitute an actionable misrepresentation. First Pacific failed to repay the final loan and the plaintiff seeks to recover the amount of the loan from the defendant.
Allegations on the Pleadings
Much of what was alleged by the plaintiff was not disputed by the defendant.
The first loan agreement between the plaintiff and First Pacific was entered into on 12 June 2003 and was for the sum of $125,000, for a period of 12 months at an annual interest rate of 10 per cent. A second loan agreement was entered into on 16 June 2004 at an annual interest rate of 10 per cent. On 16 June 2005 a third loan agreement was entered into, again for 12 months, but at an increased interest rate of 14 per cent.
Representatives of the plaintiff had apparently become concerned, during the period of the third loan, that interest payments were not being paid by…

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: [2013] SADC 116
Decision Date: 26 August 2013

CaseChat Overview and Summary

Perre Bros Lock 4 P/L commenced proceedings in the District Court of South Australia against Mr Molinara, a former director of First Pacific Capital Pty Ltd, seeking to recover the sum of $125,000, being the principal of a loan made by the plaintiff to First Pacific. The plaintiff alleged that the defendant engaged in misleading and deceptive conduct in relation to financial services, and that the defendant was a person involved in the contravention of sections 12CA(1) and 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth). The plaintiff further alleged that the defendant engaged in misleading and deceptive conduct by making representations to the plaintiff which induced it to enter into the final loan agreement, and that the defendant’s silence as to certain matters was misleading and deceptive. The plaintiff sought damages pursuant to section 12GF of the ASIC Act, and damages pursuant to the Misrepresentation Act 1971 (SA). The court was required to determine whether the defendant engaged in misleading and deceptive conduct, whether the plaintiff suffered loss as a result of the defendant’s conduct, and whether the plaintiff was entitled to damages. The court found that the defendant engaged in misleading and deceptive conduct by making false and misleading representations to the plaintiff, and by remaining silent about critical matters. The court found that the plaintiff suffered loss as a result of the defendant’s conduct, and that the plaintiff was entitled to damages in the sum of $112,500, being the principal of the loan less the amounts repaid by the defendant. The court found in favour of the plaintiff and ordered judgment in its favour in the sum of $112,500, together with interest and costs.

Orders