Rescando Pty Ltd v Brogan
[2000] WASC 19
•8 FEBRUARY 2000
RESCANDO PTY LTD -v- BROGAN & ANOR [2000] WASC 19
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 19 | |
| Case No: | CIV:2138/1999 | 27 JANUARY 2000 | |
| Coram: | MASTER SANDERSON | 8/02/00 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Time extended Judgment for defendants | ||
| PDF Version |
| Parties: | RESCANDO PTY LTD WILLIAM BROGAN WARRAGO PTY LTD |
Catchwords: | Practice and procedure Application to extend time to allow defendants to apply for summary judgment Application for summary judgment Turns on its own facts |
Legislation: | Nil |
Case References: | Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 Michael v Nicholson, unreported; FCt SCt of WA; Library No 950660; 1 December 1995 Rescando Pty Ltd v Brogan [1999] WASC 204 Shevill v The Builders Licensing Board (1981) 149 CLR 620 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 Associated Newspapers Limited v Bancks (1951) 83 CLR 322 Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 Fancourt v Mercantile Credits (1983) 154 CLR 87 Foran v Wight (1989) 168 CLR 427 Forsayth NL v Northern Gold NL, unreported; FCt SCt of WA; Library No 940012; 20 January 1994 Larking v Great Western (Nepean) Gravel Ltd (1940) 64 CLR 221 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 63 Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 Quadling v Robinson (1976) 137 CLR 192 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
WILLIAM BROGAN
First Defendant
WARRAGO PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application to extend time to allow defendants to apply for summary judgment - Application for summary judgment - Turns on its own facts
Legislation:
Nil
Result:
Time extended
Judgment for defendants
(Page 2)
Representation:
Counsel:
Plaintiff : Mr L A Tsaknis
First Defendant : Mr C L Zelestis QC & Mr R M Edel
Second Defendant : Mr C L Zelestis QC & Mr R M Edel
Solicitors:
Plaintiff : Fiocco Hopkins Nash
First Defendant : Gadens Lawyers
Second Defendant : Gadens Lawyers
Case(s) referred to in judgment(s):
Carr v J A Berriman Pty Ltd (1953) 89 CLR 327
Michael v Nicholson, unreported; FCt SCt of WA; Library No 950660; 1 December 1995
Rescando Pty Ltd v Brogan [1999] WASC 204
Shevill v The Builders Licensing Board (1981) 149 CLR 620
Case(s) also cited:
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288
Associated Newspapers Limited v Bancks (1951) 83 CLR 322
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Fancourt v Mercantile Credits (1983) 154 CLR 87
Foran v Wight (1989) 168 CLR 427
Forsayth NL v Northern Gold NL, unreported; FCt SCt of WA; Library No 940012; 20 January 1994
Larking v Great Western (Nepean) Gravel Ltd (1940) 64 CLR 221
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 63
Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Quadling v Robinson (1976) 137 CLR 192
(Page 3)
United Australia Ltd v Barclays Bank Ltd [1941] AC 1
(Page 4)
1 MASTER SANDERSON: This is the defendants' application for summary judgment. The application is brought under O 16. As the application is brought more than 21 days after the entry of an appearance the defendants require leave to bring the application. The application for leave and the application for judgment were argued together. It will be convenient if I deal first with the merits of the application and then move to the question of whether or not leave ought be granted.
2 By its amended statement of claim the plaintiff pleads that the first and second defendants were entitled, pursuant to a licence, to conduct coral viewing operations in the Ningaloo Marine Park. The operation was based in Coral Bay and utilised two glass-bottom boats through which the coral could be viewed. On or about 20 May 1997 the plaintiff entered into an agreement with the defendants whereby the plaintiff chartered the two vessels and obtained the right to use the licence held by the owners (the "Agreement"). (The licence was issued to the first defendant. He in turn issued a sub-licence to the second defendant. Both defendants then were parties to the Agreement with the plaintiff and were properly joined as parties to this action. Nothing turns upon the licensing arrangement between the defendants. Nor was any issue taken as to the right of the plaintiff to sub-licence either the first defendant or the plaintiff. The parties did not canvass this issue.)
3 The Agreement between the plaintiff and the defendants was for a period of three years commencing 1 October 1996 and expiring on 30 September 1999. Clause 2.2 of the Agreement provided an option to the plaintiff to renew the term of the licence for a further three years on certain terms and conditions. It was a requirement of the Agreement that the plaintiff give the defendants notice of intention to renew the term. That was done on 26 May 1999. The defendants accept that the option was properly exercised. The defendants also accept that at the time the option was exercised the plaintiff was not in default of performing its obligations under the Agreement and was therefore entitled to exercise the option. However, around the time that the option was exercised the Department of Conservation and Land Management (the "Department"), the Government agency responsible for issuing the licence, indicated that the licence issued to the first defendant would not be renewed. It was the Department's intention to call for tenders in relation to coral viewing activities in the Ningaloo Marine Park and to issue a licence or licences to the successful tenderer or tenderers. The Department had indicated that they would however extend the first defendant's licence for six months after the licence expired. On 28 June 1999 the Department issued a licence valid for the period 1 July 1999 to 31 December 1999.
(Page 5)
4 It is appropriate to pause at this point to put the Agreement in context. The Agreement defines the licence issued by the Department to the first defendant as follows (cl 1.1 of the Agreement and item 8 of the Schedule thereto):
"Licence to enter upon and use land in order to conduct guided tours, instruction courses and leisure activities No HQ 67071 NMP issued by the Department of Conservation and Land Management pursuant to section 101 of the Act, expiring on 30 June 1999."
5 As I have indicated above, the Agreement between the plaintiff and the defendants covered the period commencing on 1 October 1996 and expiring on 30 September 1999. The expiry date of the Agreement was subsequent to the expiry date of the licence. The licence was not subject to any right of renewal. It is apparent then when the plaintiff and the defendants entered into the Agreement there was at least the prospect that after 1 July 1999 and for the remainder of the term of the Agreement the defendant would not have a licence from the Department and the Agreement would be ineffective. This possibility was covered by cl 17.5 of the Agreement. That clause reads as follows:
"The Charterer acknowledges and agrees that the continuance of this Agreement is subject to and conditional upon either the Owner or the Sub-Lessor being granted a renewal of the Licence and covenants in favour of each of the Owner and Sub-Lessor that the Charterer shall not, during the currency of this Agreement, do or neglect to do any act or thing which would prejudice or be likely to prejudice the Licence or the likelihood of the Licence being renewed."
6 The plain meaning of that clause is that if the licence was not renewed then the agreement would not continue to have force and effect. Furthermore, it must follow that if the option to extend had been validly exercised by the plaintiff but the licence was not renewed then the option would, in practical terms, be ineffective.
7 The importance of the licence to the arrangement is further emphasised by the provisions of cl 17.1. That clause is in the following terms:
"The Charterer acknowledges and agrees that the charter of the Vessel pursuant to the terms of this Agreement is dependent upon the continuance of the Licence in good standing. The
(Page 6)
- Charterer shall comply with all conditions and restrictions contained in the Licence or relating to any activity carried on pursuant to the Licence or this Agreement. The Charterer acknowledges that it has been provided with a copy of the Licence and has read and is familiar with the terms and conditions of the Licence."
8 It is apparent from the terms of this clause that both parties acknowledged that the Agreement between them would only remain on foot so long as the licence remained on foot. For instance, if the State Government amended the legislation dealing with marine parks so as to terminate existing licences such as the one issued to the first defendant with the effect that operations could no longer be carried on, then the Agreement would cease to have force and effect. There is no sense in which the Agreement can be construed as placing an obligation on the defendants which would continue in the absence of the licence. If the defendants took some action which resulted in the licence being cancelled then they would be in breach of the Agreement and the plaintiff would have the right to sue for damages. But by the terms of the Agreement the plaintiff did not undertake the impossible task of providing the plaintiff with a licence irrespective of the circumstances. In particular, the Agreement was to terminate if the licence was not renewed.
9 On 28 September 1999 the plaintiff's solicitors wrote to the first defendant in the following terms (Annexure "WFB7" to the affidavit of William Brogan dated 2 December 1999):
"We have been advised by our client that on 26 May 1999 it wrote to you exercising an option to renew the Agreement for a further term of three years in accordance with clause 2.2(1) of the Agreement executed on 20 May 1997 to commence on 10 October 1999, but to date have received no reply thereto. We understand from our client that the Department of Conservation and Land Management have now issued a document calling for 'Expressions of Interest' from suitably qualified individuals and organizations to develop and operate Marine Tourist operations at Coral Bay, within Bills Bay, at the Ningaloo Marine Park including Coral Viewing activities. In particular, we understand that under the Department of Conservation and Land Management's new licence issuing arrangements there will be only one licence for a glass-bottom viewing vessel and that that licence will only permit the use of one vessel. Accordingly, it will not be possible for you to
(Page 7)
- comply with your obligations under the Agreement to provide our client with a sub-licence to operate two glass-bottom viewing vessels when the Agreement expires on 30 September 1999, even assuming that you were successful in obtaining the available licence.
Our client has assumed this is the reason it has not received a response to it's letter of 26 May 1999. If our client is incorrect in it's assumption, please let us know immediately, and in any event by close of business on 30 September 1999.
As you are no doubt aware, our client has a substantial investment in the business which it has built up at Coral Bay and that business is inextricably linked to the availability of the licence which it now enjoys. In the light of the foregoing, and in order to protect its substantial investment and to minimise its losses our client has requested that we advise you that they will be applying for a Licence on 1st October 1999, that being the last day for applying for licence, subject to the conditions attaching thereto as contained in the document calling for 'Expressions of Interest'."
10 This letter drew an immediate response from the defendants' solicitors. The letter acknowledged the valid exercise of the option and pointed out that the Agreement would only continue in force and effect so long as the first defendant held the licence issued by the Department. It was acknowledged that this entitled the plaintiff to use the licence until it expired on 31 December 1999. The letter went on to point out that the Agreement prevented the plaintiff from applying to the Department for a licence. Reference was made to cl 17.8 of the Agreement which is in the following terms:
"17.8 In consideration of the Owner and the Sub-Lessor agreeing to enter into this Agreement, the Charterer covenants and agrees with each of the Owner and the Sub-Lessor that the Charterer shall not, during the currency of this Agreement apply for, hold or otherwise seek to obtain a licence (whether on its own account, as a shareholder in a company or as a member of a partnership or firm) or otherwise be involved in any enterprise having the benefit of or holding any rights under a licence, of the same or similar nature to the Licence within the Cruising Limits."
(Page 8)
11 The plaintiff's solicitors wrote back to the defendants' solicitors on 1 October 1999 (Annexure "WFB 9"). In part, the letter reads as follows:
" … The inability of your client to be ready, willing and able to renew the option on or before 30 September 1999, that being the last day for renewal of the option, constituted a repudiation of the Agreement."
12 The letter does not go on to say whether or not that repudiation of the Agreement is accepted. However, the plaintiff did reserve its rights. The defendants' solicitors responded by letter of 5 October 1999 (Annexure "WFB 10"). That letter reads, in part:
"We are instructed that on or about 1 October 1999 Rescando Pty Ltd ('Rescando') made an application for a licence to the Department of Conservation and Land Management to, inter alia, conduct guided tours, instruction courses and leisure activities within the cruising limits as defined in the Charter Agreement.
Such an application constitutes a breach of clause 17.8 of the Charter Agreement and also constitutes a breach of clauses 17.5 and 19.5 of the Charter Agreement.
Rescando's breaches of the Charter Agreement outlined above entitle our clients to terminate the Charter Agreement and accordingly our clients hereby terminate the Charter Agreement."
13 The plaintiff's solicitors wrote back to the defendants' solicitors on the same date. They rejected the view that the actions of the plaintiff in applying for a licence amounted to a repudiation of the Agreement by the plaintiff. Rather, they said the purported termination by the defendants of the Agreement amounted to a repudiation by the defendants of the Agreement. They then went on to say that they intended to seek specific performance of the agreement. Dealing with this issue, the letter reads in part (Annexure "WFB 10"):
"That is, our client requires you to extend the Agreement in accordance with a notice to renew given to your client pursuant to clause 2.2 of the Agreement by 31 December 1999. In the event that your client fails to do so our client reserves all its rights in relation to the Agreement including, in particular, its right to damages for breach of the Agreement."
(Page 9)
14 There followed a dispute between the parties as to the possession of the two glass-bottom vessels. The defendants argued that as they had terminated the Agreement with the plaintiff they were entitled to possession of these vessels. Eventually, after one false start, they actually obtained possession of both vessels. The plaintiffs maintained that the Agreement remained on foot and they were entitled to possession of the vessels pursuant to that Agreement. To this end, they sought an interlocutory injunction requiring the defendants to deliver up to the plaintiff the two glass-bottom boats which by then were in possession of the defendants. The injunction application came on before McKechnie J on 18 October 1999. His Honour, in a written decision (Rescando Pty Ltd v Brogan [1999] WASC 204) dismissed the application. His Honour concluded that the plaintiff had not raised a serious issue to be tried.
15 In its prayer for relief the plaintiff seeks three declarations against the first and second defendant. The relief sought is in the following terms:
"1. A declaration that the inability that the Second Defendant to be ready, willing and able to renew the Agreement on or before 30 September 1999 for a further period of three years, or alternatively, Second Defendant's failure to extend the Agreement for a further period of 3 years on or before 30 September 1999 constitutes a repudiation of the Agreement.
2. In the alternative to 1, a declaration that the termination of the Agreement by the First and Second Defendants on 5 October 1999 constituted a repudiation of the Agreement.
3. In the alternative to paragraphs 1 and 2, a declaration that the seizure of the vessels by the First and Second Defendants on 12 October 1999 constitutes a repudiation of the Agreement."
16 In my view, there is no prosect of the plaintiff succeeding in relation to the first of these declarations. The claim, as framed, completely misapprehends the nature of the Agreement between the plaintiff and the defendant. By the operation of cl 17.1 and cl 17.5 of the Agreement the renewal of the term and the length of the term when renewed were entirely dependent upon whether and for how long the Department renewed the licence. If the licence was renewed for three years, or indeed
(Page 10)
- for any term, up to three years from 1 October 1999 then the plaintiff was entitled to the benefit of the Agreement for that period. The entitlement then of the plaintiff was for the period up to 31 January 1999. The Agreement does not contain any obligations which would lead to a declaration as sought in terms of par 1 of the prayer for relief.
17 The second and third declarations turn on the question of whether the plaintiff's actions in applying for a licence contrary to the provisions of cl 17.8 amounted to a repudiatory breach of the Agreement which would justify termination by the defendants. Counsel for the defendants submitted that a tender for a licence by the plaintiffs potentially in conflict with the defendants struck at the very heart of the Agreement because it had the potential to destroy the substratum of the bargain between the plaintiff and the defendants. It was submitted that the relationship between them could not continue to exist if the defendants did not hold a licence in like terms to the one covered by the Agreement.
18 In Shevill v The Builders Licensing Board (1981) 149 CLR 620 the High Court dealt with the circumstances when a breach of contract could be regarded as repudiation. Gibbs CJ said, assuming there was a valid and enforceable contract between the parties, that (at 625 - 626):
"Such a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way. In such a case the innocent party is entitled to accept the repudiation, thereby discharging himself from further performance, and sue for damages.
… if one party, although wishing to perform the contract, proves himself unable to do so, his default in performance will give the other party a right to rescind the contract, if the breach goes 'so much to the root of the contract that it makes further commercial performance of the contract impossible'."
19 There are then two different ways in which a breach of contract can amount to a repudiation. The first case is dependent upon the intention of the party in breach. Is it the intention of that party no longer to be bound by the contract or only to observe such terms and conditions of the contract as it sees fit? Secondly, is it the case that there is breach of a term which is so fundamental to the contract that it must be treated as a
(Page 11)
- repudiation, irrespective of the intention of the party in breach? In the first of these instances, the intention of the party in breach is central to a determination of whether the breach amounts to a repudiation. In Shevill the court held that a party in breach who wanted to pay rent but was unable to do so, could not be said, without more, to have repudiated the contract. Covenants to pay rent in advance at specified times would not be a fundamental or essential term with the effect that a failure, however slight, to make payment at the specified times would entitle the lessor to terminate a lease. On the other hand, a failure to occupy a premises which were leased might amount to a breach of a fundamental term of a contract. Of course parties can, by agreement, render a term fundamental even though it would not otherwise be so. That is frequently done in leases. But in the Agreement there is no attempt to nominate fundamental terms.
20 The facts of this case clearly show that the plaintiff "evinced" an intention not to be bound by the contract: see Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 per Fullagar J at 351 - 352. It is the case that the plaintiff only evinced an intention not to be bound by cl 17.8 of the Agreement. But to say that much is to say that the plaintiff intended to be bound only by those terms of the Agreement that it saw fit to perform and not otherwise. The plaintiff demonstrated that it intended to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way.
21 Further, I am also satisfied that the agreement contained in cl 17.8 was a fundamental term of the Agreement. I accept counsel's submission that a breach of the clause attacked the underlying basis of the Arrangement between the plaintiff and the defendants - that is, the holding of a licence by the defendants. Without that licence the defendants did not have the capacity to earn income through the Agreement with the plaintiff. The parties were entitled to agree the defendants should be protected from competition for the licence and as part of the Agreement, that is what they had done. It is difficult to imagine anything more fundamental to the Agreement between the parties.
22 In all, I am satisfied that the plaintiff has no arguable case and no prospect of obtaining declarations in terms of par 1, par 2 and par 3 of the prayer for relief. I would be prepared to enter judgment for the defendants on that part of the plaintiff's claim relating to the declarations.
23 That then leaves the question of whether or not leave ought be granted to bring this application out of time. The defendants entered an appearance in this matter of 19 October 1999. They were then obliged to
(Page 12)
- bring an application for summary judgment pursuant to O 16 r 3 by 10 November 1999. The application was brought on 2 December 1999. Nowhere in the affidavits filed in support of the application is any attempt made to explain why this application was brought out of time. Without some explanation as to the reasons for the delay, leave should not be granted: see Michael v Nicholson, unreported; FCt SCt of WA; Library No 950660; 1 December 1995.
24 Subsequent to the hearing of this application and without leave the defendants sought to tender an affidavit of the first defendant explaining the delay in bringing this application. Essentially, the first defendant says that on advice from his solicitors he consulted senior counsel in relation to the prospect of applying for summary judgment. The time taken for the provisions of that advice and other matters meant that the application was not brought within the specified period. While the explanation for the delay is unexceptional it does indicate that the defendants were taking steps in the proceedings and were not standing idly by while the plaintiff pursued its action.
25 Subsequent to the receipt of the further affidavit of the first defendant, the plaintiff was provided with the opportunity to file any answering affidavit and to make submissions in relation to the extension of time generally. These submissions were in addition to the submissions filed by the plaintiff on this question prior to the hearing. The plaintiff did not file any further affidavit material. Essentially, the plaintiff objected to time being extended on the basis there had been no compliance by the defendants with the clear wording of the rules and the general prejudice which could be seen to affect the plaintiff by the mere failure to comply with the time limit.
26 In all the circumstances I am satisfied that time should be extended in this case. As I have indicated, the evidence shows that the defendants were not delaying the matter because it was not receiving their attention. Rather more, it was the case that the defendants wished to be sure of their position before making an application for summary judgment. In those circumstances and subject to any costs orders it may be appropriate to make to protect the plaintiff's position, I would be prepared to extend time for the making of this application.
27 I will hear the parties as to the precise form of orders and as to costs.
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