Southern Wine Corporation Ltd (in Liq) v Frankland River Olive Co Ltd
[2006] WASC 292
SOUTHERN WINE CORPORATION LTD (IN LIQ) -v- FRANKLAND RIVER OLIVE CO LTD & ANOR [2006] WASC 292
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 292 | |
| Case No: | CIV:1852/2004 | 30 OCTOBER 2006 | |
| Coram: | MASTER SANDERSON | 19/12/06 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Judgment refused | ||
| B | |||
| PDF Version |
| Parties: | SOUTHERN WINE CORPORATION LTD (IN LIQ) FRANKLAND RIVER OLIVE CO LTD SOUTHERN OLIVE MANAGEMENT PTY LTD |
Catchwords: | Summary judgment Application by plaintiff Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 601GA |
Case References: | Bernardus Hubertus Van Stokkum and The People Named in Schedule A & Ors v The Finance Brokers Supervisory Board [2003] WASC 204 Southern Wine Corporation Ltd (In Liq) v Frankland River Olive Co Ltd & Anor [2004] WASC 276 Southern Wine Corporation Pty Ltd (In Liq) v Frankland River Olive Co Ltd & Anor [2005] WASCA 236 The Finance Brokers Supervisory Board v Van Stokkum [2006] WASCA 97 Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2006] WASC 70 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 Australian Broadcasting Corp v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Beach Petroleum NL v Johnson (1993) 43 FCR 1 Breen v Williams (1996) 186 CLR 71 Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Dering v Earl of Winchelsea [17751802] All ER Rep 140 Elkhoury v Farrow Mortgage Services Pty Ltd (in liq) (1993) 114 ALR 541 Freeman v Fairlie (1817) 3 Mer 24 Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539 James v Commonwealth Bank of Australia (1992) 37 FCR 445 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 Lewis v Nortex Pty Ltd (In Liq) (2004) 214 ALR 634 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 Meyers v Casey (1913) 17 CLR 90 Moffett v Dillon [1999] 2 VR 480 Muschinski v Dodds (1985) 160 CLR 583 P & V Industries Pty Ltd v Porto [2006] VSC 131 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1989] Ch 32 Romano v Chapple [1993] 1 Qd R 461 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 Tiger v Barclays Bank Ltd [1951] 2 KB 556 United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
FRANKLAND RIVER OLIVE CO LTD
First Defendant
SOUTHERN OLIVE MANAGEMENT PTY LTD
Second Defendant
Catchwords:
Summary judgment - Application by plaintiff - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 601GA
Result:
Judgment refused
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M H Zilko SC
First Defendant : Mr M N Solomon
Second Defendant : Mr M N Solomon
Solicitors:
Plaintiff : Christensen Vaughan
First Defendant : Hickslaw Pty Ltd
Second Defendant : Hickslaw Pty Ltd
Case(s) referred to in judgment(s):
Bernardus Hubertus Van Stokkum and The People Named in Schedule A & Ors v The Finance Brokers Supervisory Board [2003] WASC 204
Southern Wine Corporation Ltd (In Liq) v Frankland River Olive Co Ltd & Anor [2004] WASC 276
Southern Wine Corporation Pty Ltd (In Liq) v Frankland River Olive Co Ltd & Anor [2005] WASCA 236
The Finance Brokers Supervisory Board v Van Stokkum [2006] WASCA 97
Case(s) also cited:
Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2006] WASC 70
Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191
Australian Broadcasting Corp v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Beach Petroleum NL v Johnson (1993) 43 FCR 1
Breen v Williams (1996) 186 CLR 71
Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382
(Page 3)
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Dering v Earl of Winchelsea [17751802] All ER Rep 140
Elkhoury v Farrow Mortgage Services Pty Ltd (in liq) (1993) 114 ALR 541
Freeman v Fairlie (1817) 3 Mer 24
Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539
James v Commonwealth Bank of Australia (1992) 37 FCR 445
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413
Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265
Lewis v Nortex Pty Ltd (In Liq) (2004) 214 ALR 634
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Meyers v Casey (1913) 17 CLR 90
Moffett v Dillon [1999] 2 VR 480
Muschinski v Dodds (1985) 160 CLR 583
P & V Industries Pty Ltd v Porto [2006] VSC 131
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165
Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1989] Ch 32
Romano v Chapple [1993] 1 Qd R 461
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289
Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584
Tiger v Barclays Bank Ltd [1951] 2 KB 556
United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1
(Page 4)
1 MASTER SANDERSON: This matter has quite a history. This latest hearing represented an attempt to resolve issues between the parties without the need for a full trial. In fact, no resolution has been reached. It is problematical whether the incremental approach to this litigation has led to a saving in time or costs for the parties.
2 In November 2004 the plaintiff sought leave to amend its statement of claim. It wished to raise an allegation that it had an equitable lien over certain money held by the defendants. I refused leave on the basis I was not satisfied on the pleaded facts an equitable charge arose: see Southern Wine Corporation Ltd (In Liq) v Frankland River Olive Co Ltd & Anor [2004] WASC 276. That decision was reversed on appeal: see Southern Wine Corporation Pty Ltd (In Liq) v Frankland River Olive Co Ltd & Anor [2005] WASCA 236. The Court of Appeal allowed the amendment to the statement of claim but stopped short of declaring that the plaintiff had the equitable charge as claimed. Their Honours took the view that there may be matters raised by the defendants which, when properly considered, could lead to the conclusion that there was no equitable charge.
3 The plaintiff then applied for summary judgment. It did not seek judgment for a specific amount. Rather, it sought a declaration that it was entitled to an equitable charge. After hearing argument, I indicated to the parties that I would grant summary judgment. However, I suggested that rather than make the declaration which would follow from the successful summary judgment application and have the matter held up while that decision was appealed, there might be some merit in determining the quantum of the claim. It was the defendants' position that even if the plaintiff had an equitable charge over money held by the defendants, the plaintiff was not entitled to any sum. In other words, it was the defendants' position that the charge, even if it existed, was worthless. The defendants said they had a range of arguments to support that proposition.
4 The plaintiff was adamant that it had an entitlement to an amount of money and there was no basis at all upon which the first and second defendants could deny it its entitlement. Counsel submitted that even assuming a version of the facts most favourable to the defendants, there was a contractual entitlement on the part of the plaintiff to be paid the amount it claimed and that was the end of the matter.
5 Given the way the battle lines were drawn and with some reluctance on the part of the defendants, I suggested the matter be approached in this way. The parties should agree a statement of facts. They should then
(Page 5)
- agree a statement of issues. The statement of issues would reflect the defendants' claim that the plaintiff was not owed anything or at least not the amount that it claimed. For its part, the plaintiff could show why none of the matters raised by the defendants was an answer to its claim. The end result of this process was that if the plaintiff could knock out each of the defendants' contentions, it would be entitled to judgment in the amount it claimed. But if it could not do so, then the whole matter would have to go off to a trial with pleadings, discovery and all the other interlocutory processes which accompany litigation in this Court.
6 Not surprisingly, the parties could not agree on a statement of facts and they could not agree on a statement of issues. Each of the parties filed their variation of both documents. When the defendants filed their submissions, it emerged that they had six broad grounds upon which they said the plaintiff was not entitled to any amount of money.
7 Given the conclusion that I have reached in this matter, it is not really necessary for me to go into the facts in any detail. However, to put this decision in context, I will set out the facts as they appear in the plaintiff's draft statement of facts. The defendants would include more facts which they say are relevant to the dispute. But, for the purpose of explaining my decision, the plaintiff's draft statement of facts is sufficient.
"1. Each of the plaintiff and the defendants is a company duly incorporated under the Corporations Act 2001.
2. The first and second defendants have had common directors at all material times since 3 March 2000.
3. The Plaintiff was the responsible entity of the registered managed investment scheme, registered and known as the SWC Managed Investment Scheme (ARSN 085 622 377) ('Scheme') at all material times during the period 15 December 1998 to 21 July 2003.
4. The Scheme was registered with the Australian Securities and Investments Commission ('ASIC') on 15 December 1998.
5. At all material times the object of the Scheme was and is the growing of wine grapes upon certain land (owned by another), known collectively as the Preston Vale Vineyard.
(Page 6)
- 6. Pursuant to the Scheme and as contemplated thereby the plaintiff in its capacity as the responsible entity of the Scheme entered into a separate agreement in writing styled Licence and Management Agreement with each member of the Scheme ('Investor') (collectively the 'Licence and Management Agreements').
7. In or about December 1998 the plaintiff executed a deed styled the SWC MIS Constitution ('the Constitution').
8. By an agreement in writing made between the plaintiff and the second defendant dated 30 October 2002 the plaintiff delegated alternatively subcontracted to the second defendant the plaintiff's obligation to manage certain Licensed Areas (as that term is defined in the Licence and Managements Agreements).
9. The second defendant carried out that obligation.
10. The plaintiff was entitled to receive licence and management fees under the Licence and Management Agreements for the year ending 30 June 2003.
11. The gross income generated from the Licensed Areas managed by the plaintiff for the financial year ending 30 June 2003 was insufficient to pay the fees due to the Plaintiff for that year, there being a shortfall of $2,239,650.59.
12. The plaintiff received $491,090.08 in reduction of those outstanding fees since 30 June 2003.
13. The plaintiff has an equitable charge over the gross income of the Licensed Areas for the financial year ending 30 June 2004 and each financial year thereafter until the sum of $1,748,560.51 is paid to the plaintiff.
14. The plaintiff holds an equitable charge over the Scheme Property and each financial year thereafter until the sum of $1,748,560.51 is paid to the plaintiff.
15. The first defendant replaced the plaintiff as the responsible entity of the Scheme with effect from 21 July 2003.
(Page 7)
- 16. By an agreement in writing made between the defendants dated 18 November 2003 the first defendant appointed the second defendant to manage the Preston Vale Vineyard on its behalf.
17. The second defendant was entitled to receive the gross income of the Preston Vale Vineyard for the financial year ending 30 June 2004 under that agreement.
18. The first defendant knew or ought to have known of the terms of the Licence and Management Agreements and the Constitution and thereby the existence of the plaintiff's charge referred to in paragraph 13 further and in the alternative the plaintiff's charge referred to in paragraph 14 at all times after 21 July 2003.
19. The second defendant knew or ought to have known of those matters at all times after 21 July 2003."
8 In answer to the plaintiff's claim, the defendants refer to s 601GA(2)(b) of the Corporations Act 2001 (Cth). This section is to the effect that the plaintiff is only entitled to be indemnified out of the scheme property for its fees and entitlements "in relation to the proper performance of its duties". The plaintiff is seeking the indemnity in relation to its entitlements under the License and Management Agreement ("LAMA"). It is at least arguable by the defendants that the plaintiff did not perform its duties under the LAMA. Even if some of those duties were performed by the plaintiff, that included only a portion of the duties under the LAMA and it was only for a portion of the relevant year. On the defendants' case then, the plaintiff cannot be entitled to the amount it seeks - at least not without some deduction being made.
9 On behalf of the plaintiff it was argued that, properly construed, s 601GA sets out the minimum requirements for the constitution of a registered managed investment scheme. Subsection (2) then does no more than specify where provisions governing the responsible entity's fees are to be located, and imposes a mandatory requirement that there be a connection between the work performed and the fees payable for that work. It was submitted that both these conditions were met by the constitution. Furthermore, it was said the fact that ASIC determined that the requirements of the section were satisfied by the constitution as evidenced by its registering the scheme.
(Page 8)
10 It might be thought that there is a straight-forward legal argument on this point. That is to say no further findings of fact need to be made before the operation of s 601GA could be considered in the context of this case. At the very least, a decision on that point might eliminate one of the issues between the parties.
11 That was an approach I adopted in Bernardus Hubertus Van Stokkum and The People Named in Schedule A & Ors v The Finance Brokers Supervisory Board [2003] WASC 204. I assumed that one of the issues raised on a strike out application could be determined in isolation. The Court of Appeal determined that was an error: The Finance Brokers Supervisory Board v Van Stokkum [2006] WASCA 97. I have no wish to repeat the error here. The matter must accordingly await a full trial.
12 How this matter is to proceed from this point now needs to be carefully considered. I will hear from the parties on that question and as to costs.
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