Teras Australia Pty Ltd v Blue Ore Pty Ltd

[2015] WADC 40

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   TERAS AUSTRALIA PTY LTD -v- BLUE ORE PTY LTD [2015] WADC 40

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   2 APRIL 2015

DELIVERED          :   21 APRIL 2015

FILE NO/S:   CIV 878 of 2014

BETWEEN:   TERAS AUSTRALIA PTY LTD

Plaintiff

AND

BLUE ORE PTY LTD
First Defendant

JUSTIN HEATH RIDLEY
Second Defendant

Catchwords:

Practice and procedure - Summary judgment - Voluntary liquidation of First Defendant - Whether Second Defendant could rely on an agreement entered between the parties settling the claim - Preference

Legislation:

Nil

Result:

Summary judgment granted

Representation:

Counsel:

Plaintiff:     Mr Lin

First Defendant            :     Mr Williams

Second Defendant        :     Mr Williams

Solicitors:

Plaintiff:     Jackson McDonald

First Defendant            :     WHL Legal Pty Ltd

Second Defendant        :     WHL Legal Pty Ltd

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

1. DEPUTY REGISTRAR HEWITT:  This action was commenced by a writ filed 21 March 2014 in which the plaintiff pursued a cause of action against Blue Orr Pty Ltd and Justin Heath Ridley.  The cause of action against the company arises under the terms of an equipment hire agreement dated 14 August 2010 in which it is alleged there was default and the plaintiff pursues monies said to be due under the terms of the agreement. 

2. The action against the second defendant is under the terms of the guarantee provided by him in which he guaranteed the due and punctual payment of the monies payable by the company to the plaintiff.

3. By chamber summons filed 16 January 2015 the plaintiff seeks summary judgment against the second defendant.  The first defendant is a company in liquidation.

4. In my view the materials filed by the plaintiff establish the existence of the relevant contract, the guarantee, the default by the company and the guarantee upon which the plaintiff relies in this action against the second defendant.  It is therefore necessary for me to evaluate the defence which is advanced by the second defendant to see if there is any material produced by the second defendant which would provide a triable issue and allow this matter to proceed to a trial in the usual way.  The defence advanced by the first defendant relates to a written contract entered between the plaintiff and the first and second defendants.  That contract was described as a deed and signed as such by the various parties to it.  The document was created on 8 April 2014, sometime after this writ was initiated and prior to the first defendant entering voluntary liquidation.  The first defendant was placed into voluntary liquidation on 28 May 2014 following a resolution at a general meeting of the members of the company on that day that it would be wound up.  That information is contained in the affidavit of Jennifer Rose Cass sworn 12 February 2015.  A copy of the agreement upon which the second defendant relies also appears in that affidavit.  In broad terms the agreement contains a number of terms:

   (1)That the first and second defendants would commission a machine called the Red Wolf Extreme wash unit, in Darwin.

   (2)That the plaintiff would cover certain expenses which would be incurred by the defendants in attending to the commissioning of the machine.

   (3)That a sum of $182,628.49 be paid into an interest bearing account and held in escrow pending the commissioning of the unit or within 7 days of the parties being satisfied that the unit was operational.

   (a)The funds held in the interest bearing account will be paid to the plaintiff.

   (b)The parties will cause their lawyers to file a minute of consent orders discontinuing the proceedings commenced by the plaintiff against the defendants with no order as to costs.

5. Although not apparently dated the second defendant states under oath that the agreement was entered on 8 April 2014 subsequent to the plaintiff commencing the present action.  It is to be noted that the second defendant is the sole director/shareholder and secretary of the first defendant.  I therefore conclude that it was his action which placed the first defendant in voluntary administration. 

6. Subsequent to the appointment of a liquidator, that liquidator formed the view that the arrangements which were contained in the agreement constituted a preference to the plaintiff which in the exercise of his functions as liquidator he required to be repaid to the first defendant to form part of the assets to be distributed on the liquidation.  Following the demand and after some argument the money was remitted as requested by the liquidator.  The argument advanced by the second defendant is that the arrangements contained in the document created on 8 April 2014 constitute a defence to the claim made against him as guarantor.  It is contended that the payment was not properly a preference and that the plaintiff should have resisted the claim by the liquidator.  The argument advanced by the plaintiff is that the liquidator sits in the place of the board and that the repayment was not to him but to the company of which he was the liquidator. 

7. Moving from that point it is suggested by the plaintiff, although not articulated in precisely these terms, that the agreement has been frustrated because the first defendant although depositing the monies in a trust account frustrated the agreement by calling for the return of the monies which was ultimately done.  Once the monies had been returned the agreement proceeded no further.

8. I think it clear that the first defendant conducted itself in such a way that it evinced an intention not to be bound by the contract and in doing so repudiated the contract and brought it to an end.  The fact that the decision to be behave in that way was made by a liquidator and not by the board of the company does not strike me as relevant.  By his actions the second defendant had passed control of the first defendant to the liquidator who was then empowered to act in the name of the first defendant and did so in regard to requiring the deposit of monies to be refunded.  That seems to me to be a clear repudiation of the agreement between the parties and upon which the second defendant relies.  In those circumstances the repudiation would rob the plaintiff of the benefit of the contract and in my view was no longer required to continue with the other terms which it might contain.  For those reasons I am of the view that the second defendant does not make out an arguable defence to the plaintiff's summary judgment application and the accordingly I grant summary judgment in terms of the application dated 16 January 2015.