| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : THEGINGE PTY LTD -v- WINTER EQUIPMENT (WA) PTY LTD [2013] WADC 69 CORAM : DEPUTY REGISTRAR HOGAN HEARD : 27 MARCH & 3 APRIL 2013 DELIVERED : 2 MAY 2013 FILE NO/S : CIV 2588 of 2012 BETWEEN : THEGINGE PTY LTD Plaintiff
AND
WINTER EQUIPMENT (WA) PTY LTD
Defendant
Catchwords: Practice and procedure - Plaintiff's application for summary judgment - Application out of time - Whether extension should be granted - Delay caused by solicitors - Consideration of prima facie merits of application - Application refused Legislation: Nil Result: Application refused
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</Order> Representation: Counsel:
Plaintiff : Mr J R Birman
Defendant : Mr J Garas
Solicitors:
Plaintiff : Birman & Ride
Defendant : Middletons
Case(s) referred to in judgment(s):
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Baltic Shipping Co v Dillon (1993) 176 CLR 344
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Deputy Commissioner of Taxation v Heaton (1997) 35 ATR 450
Evans v Bartlam [1937] AC 473
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Harbeck v Vasse Dozer Hire Pty Ltd [2009] WADC 48
Morgan v Pallister [2004] WASC 188
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Negoescu v Reeh (Unreported, WASC, Library No 950576, 20 October 1995)
Payton v Harvard Nominees Pty Ltd (Unreported, WASC, Library No 930132, 12 March 1993)
Permanent Custodians Ltd v Archer [2009] WASC 363
Smith v Town & Country Bank (Unreported, WASCA, Library No 970716, 18 December 1997)
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Zurich Bay Holdings Pty Ltd v Burton [1999] WASC 161
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1 DEPUTY REGISTRAR HOGAN: This is an interlocutory application, brought by way of chamber summons dated 20 February 2013, in which the plaintiff applies for orders that:
2 The plaintiff filed four affidavits in support of the application: (i) the affidavit of Nigel Jerome Siegwart sworn 20 February 2013; (ii) the affidavit of Nigel Jerome Siegwart sworn 27 March 2013; (iii) the affidavit of Paul James Cahill sworn 21 February 2013; and (iv) the affidavit of Jodie Avins sworn 25 March 2013; 3 In opposition to the application, the third defendant filed: Should the plaintiff be granted leave to make its application out of time 4 The plaintiff's application filed on 20 February 2013 is 'out of time' by approximately five months. 5 There are no firm laws as to when an extension ought to be granted as this is a matter for the court's discretion upon a consideration of all the circumstances of the case. The defendant must show that there was some particular prejudice occasioned by delay. The policy question of what costs may have been incurred as a result of the plaintiff's delay in bringing (Page 4)
the application can be balanced by an award of costs: Deputy Commissioner of Taxation v Heaton (1997) 35 ATR 450. 6 The plaintiff submitted that the court should favourably consider the circumstances of the case and exercise its discretion to grant leave. 7 The plaintiff relied upon the explanation contained in the affidavit of Paul James Cahill, sworn 21 February 2013, that the delay in applying for summary judgment was occasioned by the failure of the plaintiff's previous solicitors to advise whether or not the plaintiff should apply for summary judgment. The plaintiff submitted that there is no defence to its claims and it is in the interests of all parties to obviate the costs of the matter going to trial. The plaintiff submitted that the affidavits of Victoria Winter sworn 14 and 26 March 2013 did not disclose evidence of any prejudice. 8 The third defendant argued that the burden is on the plaintiff to show that the delay is justifiable in all of the circumstances: Smith v Town & Country Bank (Unreported, WASCA, Library No 970716, 18 December 1997). 9 As a general rule a party to litigation will be bound by the acts or omissions of his solicitor acting in the matter. Where there is a failure to act in time it is the litigant's failure which must be satisfactorily explained, however where the client is blameless and solicitor properly instructed is responsible for the delay that may be accepted by the court as a sufficient explanation for the failure to take action within time: Negoescu v Reeh (Unreported, WASC, Library No 950576, 20 October 1995). 10 The third defendant argued that the affidavit of the plaintiff does not disclose the nature of the instructions and what the solicitor said in relation to the prosecution of the claim. In that regard the affidavit is deficient. 11 'Save where the delay is insubstantial, it seems to me that some consideration should also be directed to the prima face merits of the applicant's argument': Negoescu v Reeh. 12 In this case the delay is substantial enough to require consideration of the merits of the application prior to consideration of the application to grant leave to make an application out of time. (Page 5)
General principles regarding summary judgments 13 It is well established that the power to order summary judgments should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99. 14 The burden of persuasion in this judgment application was described by Pullin J in Morgan v Pallister [2004] WASC 188 in the following terms: The plaintiff carries the burden of persuading the court that the claim is a good one, that there is no defence to it, that leave to defend should not be granted, and that judgment should be given to the plaintiff. The party showing cause against the application assumes an evidentiary burden but the overall legal burden of persuasion remains on the applicant. The power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried. It is clear however, that the procedure is not confined to cases which are immediately plain and obvious and the fact that a transaction is intricate does not disentitle the plaintiff to relief in a clear case. It was never intended that when the facts were in dispute, an action should be disposed of summarily. If a defendant's affidavit reveals inconsistencies which might in a trial persuade a court not to believe the defendant's evidence, this will not necessarily lead to judgment for the plaintiff. 15 Where a plaintiff has satisfied the requirements of O 14 of the Rules of the Supreme Court it has the prima facie right to an order in terms asked and the burden shifts to the defendant to satisfy the court why a judgment should not be given: Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109; Harbeck v Vasse Dozer Hire Pty Ltd [2009] WADC 48 [13]. 16 To avoid judgment being entered the defendant must satisfy the court 'with respect to the claim, that there is an issue or question in dispute which ought to be tried or that there ought, for some other reason to be a trial of the claim': Rules of the Supreme Court O 14 r 3(1). 17 In doing so the defendant must 'condescend upon particulars'. It is not enough to merely say that there is a dispute or to raise bare allegations unsupported by material facts. Permanent Custodians Ltd v Archer [2009] WASC 363 [6]. 18 The court is not bound to accept uncritically as raising a dispute of fact calling for further investigation every statement of fact in an affidavit, (Page 6)
however equivocal, lacking in precision, or inconsistent with undisputed contemporary documents or other statements by the same deponent or inherently improbable in itself it may be. The court may scrutinise affidavits to see that they pass the threshold of credibility: Zurich Bay Holdings Pty Ltd v Burton [1999] WASC 161 [8]; Payton v Harvard Nominees Pty Ltd (Unreported, WASC, Library No 930132, 12 March 1993). 19 The court does not dispose of the factual merits on a conflict of affidavits: Evans v Bartlam [1937] AC 473, 489. 20 The defendant is not required to establish its defence at this point but only that there is a real case to be investigated either in fact or in law. If there is real uncertainty without argument or full investigation of the facts, then the power to award summary judgment should not be exercised: Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332.
The plaintiff's claim 21 The plaintiff relied upon the affidavit of Paul James Cahill sworn 21 February 2013 to verify as true the following facts: I. By an agreement in writing dated on or about 1 November 2011 (loan agreement) between the plaintiff as 'Lender' and the first defendant (Winter Equipment (WA) Pty Ltd) as 'Borrower' and the second defendant (Winter Enterprises (AUS) Pty Ltd) and third defendant (Victoria Winter) collectively as 'Guarantor': II. There were express terms of the loan agreement that: a. the first defendant would repay the principle sum by weekly instalments of $3,750 from 1 December 2011; b. the first defendant would pay interest on the outstanding principle sum calculated at the rate of 8.75% per annum commencing on 8 November 2011; and c. the first defendant would be liable to pay the outstanding balance of the principle sum and interest without any (Page 7)
22 In my view, on the evidence before me, the plaintiff has satisfied the requirements of O 14. 23 The plaintiff objected to the admissibility of the evidence contained in the affidavit of Victoria Winter sworn 14 March 2013, on the basis, inter alia, that the loan agreement referred to in the affidavit is a dutiable instrument under the Duties Act 2008 and may not be used in these proceedings unless duty has been paid, in respect thereof. The third defendant argued that par 6(b) of the affidavit of Victoria Winter sworn 14 March 2013 was relied upon only to evidence the loan agreement. The third defendant argued that it was not an instrument recording a sale of assets, it was an instrument relating to a loan from the vendor to the borrower for the purpose of purchasing those assets and therefore is not dutiable. 24 Regarding the admissibility of the loan document in the third defendant's affidavit, the third defendant merely exhibited the same document that the plaintiff put into evidence. 25 I accept the argument of the third defendant and find the evidence contained in the affidavit of Victoria Winter sworn 14 March 2013 is admissible. 26 The plaintiff argued that the matters to which Victoria Winter deposed in her affidavit sworn 14 March 2013 do not amount to an arguable defence as she has neither condescended upon the particulars in any meaningful way nor particularised any loss the defendant has suffered. The plaintiff argued that there was no evidence of the oral terms relied upon for the conclusions in par 19. 27 The plaintiff argued that Victoria Winter's affidavit sworn 14 March 2013 was internally inconsistent in that it was contradictory and that if the (Page 8)
court were to find there is a defence that it could be regarded as no more than a shadowy defence. 28 In support of the position that there it was not plausible for the defendant to argue that she guaranteed the loan agreement on the basis of misrepresentation or deceptive conduct the plaintiff noted that, prior to signing the agreement: a. on 30 July 2011 the third defendant was aware that the hot box was rented for use in the business; b. on 15 August 2011 the second defendant took possession of the business and the plant and equipment: affidavit of Jodie Avins sworn 25 March 2013, par 7.1; affidavit of Victoria Winter sworn 14 March 2013, page 20; c. on or about 1 September 2011 the second defendant was put on notice that Caterall Equipment Hire owned the fryer, hot box and range burner: affidavit of Victoria Winter sworn 14 March 2013, pages 54 – 57; d. in late November, or early December the third defendant reviewed the loan agreement, and on or about 5 December 2011 the third defendant entered into the loan agreement as guarantor. 29 The plaintiff argued that the defences set-offs and counterclaims raised by the third defendant that: a. the 'plant and equipment' was not in good condition and was out- dated; b. improvement notices were issued by the City of Fremantle in December 2011; and c. the plaintiffs could not give good title to various goods because they were hired; are not relevant to the terms of the loan agreement. 30 According to the plaintiff, the third defendant was aware that some of the plant and equipment was subject to equipment hire and that this was evidenced by notices rendered to the third defendant, referred to in her affidavit sworn 14 March 2013 at pages 58 - 60. (Page 9)
31 The defendant claimed in a letter from K & L Gates to Birman & Ride dated 6 March 2013, that there is a substantial defect in the writ and statement of claim on the basis that the plaintiff is the trustee of the trust however the plaintiff argued, and I accept, that it is entitled to bring the action in its own capacity. 32 Whilst the defendant claimed (letter from K & L Gates to Birman & Ride dated 6 March 2013) that the agreement was void for uncertainty as neither the loan agreement nor the agreement for the sale of the business specified the items of plant and equipment, the plaintiff argued and I accept, there is no legal requirement for the loan agreement to specify the purpose for which the loan is advanced and it cannot be said that its terms are so obscure and so incapable of any definite or precise meaning that the court is unable to attribute any particular contractual intention: Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429, 437. 33 Whilst the third defendant argued there was a total failure of consideration in this case I do not accept this argument as the second defendant received the benefit of the loan and it was agreed by the third defendant that the defendants had received the benefit of the plant and equipment, albeit in poor condition (affidavit of Victoria Winter sworn 14 March 2013, pars 27 – 28). 34 There is no total failure of consideration where a party received any part of the benefit bargained for under the contract: Baltic Shipping Co v Dillon (1993) 176 CLR 344, 351; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. 35 The plaintiff argued that the third defendant has not disclosed an arguable defence as the third defendant has failed to condescend upon the particulars in any meaningful way and in particular as to any loss that the defendants have suffered. 36 It was conceded by the plaintiff that 'if Ms Winter can satisfy the court that there's a serious question as to whether she was deceived or misled when she entered into the loan agreement by Theginge Pty Ltd then she may have a case against Theginge' (transcript 27 March 2013, page 9).
The position of the defendant 37 The affidavit of Victoria Winter sworn 14 March 2013 deposes that the loan agreement, the subject of the plaintiff's claim, was part of a (Page 10)
broader transaction involving the purchase of a restaurant business (The View, Fremantle) and that the third defendant's entry into the loan agreement as guarantor was induced by misleading or deceptive conduct and that the guarantee is liable to be set aside. 38 The third defendant claims (affidavit of Victoria Winter 14 March 2013) that in the course of discussions with Ms Jodie Avins, then manager of The View Restaurant, Ms Avins appeared to be authorised to make representations on behalf of the vendors and represented to the third defendant (affidavit of Victoria Winter 26 March 2013) words to the effect that the business made over $600,000 in profit each year and that the profitability would continue and with some effort could be increased. The affidavit of Victoria Winter (14 March 2013) further deposes that Ms Avins proposed the sale price which was accepted by the first defendant. 39 The third defendant claimed that representations were made with respect to ownership of the plant equipment and their condition (equipment representations) and that these representations were false. 40 The third defendant argued that the affidavit of Paul James Cahill, sworn 21 February 2013, in support of the chamber summons, was defective in that the plaintiff failed to adduce evidence of its corporate structure and entitlement to sue. 41 The corporate structure of the plaintiff was admitted in the defence and is not, in my view, an issue in this application. 42 The third defendant noted that in the defence to counterclaim filed on 29 October 2012 the pleading in par 10 of the defence and counterclaim filed 10 October 2012, that the relevant sale agreement was comprised of the sale agreement and loan agreement, was admitted. 43 The third defendant argued that the plaintiff's attack upon the evidence in the affidavits of Victoria Winter was in the nature of submission and argument as to the truthfulness of the third defendant's evidence. The third defendant argued that the interlocutory application was not the forum for findings of fact and credibility to be assessed. I agree with the third defendant's submission. 44 The third defendant submitted that it is not open to the plaintiff to argue that the affidavit of Jodie Avins sworn 25 March 2013 is any more than an attempt to contradict the express statements made by the third defendant, 'I deny that I told Ms Winter'. (Page 11)
45 Whilst the plaintiff argued that Ms Avins was not authorised to make representations on behalf of the vendors, it is not disputed that Ms Avins was the only person with whom the third defendant, Victoria Winter, dealt in negotiating the sale, including the vendor finance agreement. 46 It is not necessary for the third defendant to prove that Ms Avins had any authority on behalf of the vendors at this juncture. That is a matter for trial. 47 The assertions made by the plaintiff from the bar table that no reasonable person would believe that a business generating $600,000 in profit a year would be sold for $950,000 is a submission for trial in assessing whether misleading conduct has caused loss or damage. 48 The third defendant argued that separate to her rights as the guarantor, the third defendant has rights directly and may also be able to rely upon the defences that relevantly the second defendant has against the plaintiff. 49 Finally, as a matter of legal construction, the third defendant argued that the plaintiff may face a finding that it is not able to enforce the charge because there is nothing in the agreement to say that the money shall become payable immediately. The third defendant argued that the plaintiff may be able to enforce the charge but be otherwise precluded from obtaining judgment for the full amount of the original loan because the repayments have not actually fallen due or the only repayments that have fallen due are those successive several payments that have fallen due each week since the time of default and not the full amount as claimed by the plaintiff in the summary judgment application. The appropriate interpretation of the wording of the agreement is one for a trial judge with the benefit of argument.
Determination 50 In this case I am unable to say that there is no real question to be tried and in the circumstances the orders sought in the chamber summons dated 20 February 2013 are refused. 51 It was submitted by the plaintiff that, were I minded to grant leave to defend, it should only be on the condition that Ms Winter make a payment into court of the full amount. The third defendant argued that the submission was not raised in the written submissions and that the third defendant has not had an opportunity to provide evidence as to her ability to meet such a condition. I accept the submission of counsel for the third (Page 12)
defendant and find that there is no evidence before me to justly impose such a condition. 52 I will hear the parties on the final orders to be made having regard to these reasons.
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