Think Commodities Pty Ltd v Think Industries Pty Ltd
[2013] VSC 206
•7 March 2013
£
| Send for Reporting | ||
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2012 00830
| THINK COMMODITIES PTY LTD (ACN 149 987 664) AND ORS (according to schedule attached) | Plaintiffs |
| v | |
| THINK INDUSTRIES PTY LTD (ACN 137 606 798) AND ORS (according to schedule attached) | Defendants |
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JUDGE: | DERHAM AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 March 2013 | |
DATE OF JUDGMENT: | 7 March 2013 | |
CASE MAY BE CITED AS: | Think Commodities Pty Ltd v Think Industries Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 206 | 30 April 2013: revised reasons for ex tempore judgment delivered 7 March 2013 |
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PRACTICE AND PROCEDURE – Summary judgment – Sections 61 and 63 Civil Procedure Act 2010 (Vic) – Whether defence has more than a fanciful prospect of success –
Butt v McDonald (1896) QLJ 70 – Implied terms – Putative shareholders’ agreement – Loan deed – Matter to be investigated – Application for summary judgment refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G Maloney | Leem Lawyers |
| For the First and Second Defendants | Mr Paul Shannon in person | Francis Lim |
HIS HONOUR:
What follows is a revision of an extempore judgment given at the end of argument in this matter.
The plaintiff applied by amended summons dated 7 November 2012 for summary judgment against the first and second defendants (the third defendant having been deregistered) pursuant to ss 61 and 63 of the Civil Procedure Act 2010. Under those sections the question is whether the defence disclosed by the defendants has no real prospects of success. For present purposes, it is sufficient to note that in deciding the question, what is required is a practical judgment as to whether the defence disclosed, either in the pleading or in the affidavit in opposition, has more than a fanciful prospect of success.[1] The application was supported by four affidavits sworn by or on behalf of the plaintiffs. There was one affidavit in opposition.
[1]See Matthews v SPI Electricity Pty Ltd [2011] VSC 168, [22]; Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd [2011] VSC 222, [18].
The plaintiff has, by its affidavit material, established what I have called a strong prima facie case that it is entitled to judgment for the debt the subject of the Loan Deed, which has been referred to in the course of discussions and has been exhibited to the affidavit of the second plaintiff (“Mr Pan Snr”) of 18 October 2012. The affidavit material that has been put forward by the second defendant, Mr Paul Shannon, in his affidavit sworn on 26 November 2012, shows that about the time of entry into the Loan Deed, possibly beforehand, a so called ‘Circular Resolution’ of the Board of the plaintiff was signed by Mr Pan Snr, the third plaintiff (“Mr Pan Jnr”) and Mr Paul Shannon. This Circular Resolution purports to record what could constitute an agreement in the nature of a shareholders agreement between the participants.
The Circular Resolution is headed “Think Commodities Pty Ltd (ACN 149 987 664)” and is entitled “Minutes of Circular Resolution of the Borad (sic) of Directors”. This Circular Resolution reveals that it was the intention of Mr Pan Snr, Mr Pan Jnr, and Mr Shannon to establish Think Commodities as a vehicle for undertaking a venture of exporting recycled plastics to China. Think Commodities Pty Ltd is the first plaintiff (“Think Commodities”).
The Circular Resolution is dated, under Mr Shannon’s signature, 12 April 2011, and also bears the typewritten date of April 2011. Under it, Mr Shannon is to be responsible for Think Industries products and manufacturing and also guarantees the supply of goods on schedule and of the quality and in the quantities acceptable to Think Commodities. Mr Pan Jnr is said to be in charge of the company’s overall sales, and Mr Pan Snr is to coordinate all aspects “of works”.
There are other provisions for:
(a) Mr Pan Jnr assigning a sales manager from China to take charge of the sales, with provision for a monthly salary;
(b) financial control to be managed by an accountant company, and for Mr Pan Jnr to be in charge of routine financial management work;
(c) profit distribution, which provides that any profit generated by Think Commodities shall be used to pay back first the company’s loan from Mr Pan Snr and Mr Pan Jnr, and after that loan is fully repaid, any profit remaining is to be distributed in accordance with share ratio; and
(d) a share ratio (in clause 1). That ratio is that Mr Pan Jnr is to have 55%, Mr Pan Snr 25% and Mr Shannon 20% of the shares in Think Commodities.
Mr Shannon has given a good deal of evidence about the circumstances of this Circular Resolution, or shareholders agreement if that is indeed what it is, coming to be executed and the fact that Think Commodities was, in his understanding, to be another company called Think Plastics Pty Ltd but renamed as Think Commodities. Whether that actually leads anywhere in terms of giving rise to any defence or counterclaim, is not clear to me.
But what is tolerably clear, is that for the supply of the recycled plastic materials pursuant to the Loan Deed to be possible, that is the supply by Think Industries Pty Ltd, the first defendant (“Think Industries”) to Think Commodities, it was necessary for Mr Pan Snr to be involved in coordinating that process in order for those products to be exported to China, as appears to have been intended by all the parties. Mr Shannon complains, in effect, that he was frustrated in his efforts to supply recycled plastics to the plaintiff because all of the arrangements necessary to export the plastics to China were in the hands of Mr Pan Snr, or his appointees or agents, and that there was no cooperation from Mr Pan to enable that exercise, namely, exporting products to China, to be effected.
It seems to me that, even though the implied terms that are pleaded by the first and second defendants in their defence give rise to considerable difficulty as terms to be implied in the Loan Deed, as Mr Maloney submitted (that is, it is very hard to see that they could be found to be implied having regard to the requirements for the implication of such terms),[2] nevertheless there could be implied into the Circular Resolution, when viewed as a shareholders agreement, and/or in the Loan Deed, a term of the kind explained by Griffith CJ in Butt v McDonald:[3]
…that each party agrees, by implication, to do all such things as are necessary on his part to enable other party to have benefit of the contract.
[2]See BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283; Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 49 CLR 337, 347 & 404; Bytan Pty Ltd v BB Australia Pty Ltd [2012] VSC 17 at fn 31.
[3](1896) 7 QLJ 70-71.
In Secured Income Real Estate (Australia) Ltd v St MartinsInvestments Pty Ltd,[4] Mason J (as he then was) stated the matter differently, as follows:
Where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectively be done unless both concur in doing it, the construction of the contract is that each person agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.
[4](1979) 144 CLR 596 at 607.
The supply of recycled plastic materials by Think Industries to Think Commodities in accordance with the Loan Deed and Circular Resolution, assuming the latter is an agreement, and the export of that material to China, depended on the coordination by Mr Pan Snr of the “works”. If, as the defendants contend, such ‘works’ did not take place, then it seems to me that if a term were implied into the Circular Resolution and/or the Loan Deed, in terms of the Butt v McDonald term, or the Secured Income term, then it is open for the defendants to claim that such terms were breached by the plaintiff, in the case of the Loan Deed, and in the case of the Circular Resolution, by Mr Pan Snr. I note that the terms sought to be implied into the Loan Deed[5] go some way to identifying the “things as are necessary on his [Mr Pan Snr’s] part to enable other party [the defendants] to have benefit of the contract”.
[5]See the defence dated 17 April 2012 paragraph 9 b.
The breach or breaches may give rise to a claim, or claims, for damages which, as the current defence of the defendants seeks to raise, are of sufficient amount to offset, either in whole or in part, the plaintiffs’ claim. The damages will, however, need to be properly quantified. They are presently at large.
So for the purposes of enabling the first and second defendants to reformulate their defence along the lines that I have suggested, and indeed incorporating any other proper defence, and counterclaim, I am persuaded to give those defendants the opportunity to raise this claim, and if it is sustainable and viable, to take it to trial. I do so because it seems to me there is a matter to be investigated arising out of the signing of the Circular Resolution.
I have not done justice to Mr Maloney’s written and oral submissions. What I propose to do is to leave the written submissions on the Court file, because they demonstrate, as I have said, a strong prima facie case for the recovery of the loan debt.
The only other thing that I have not explored with the parties, is a mode of proceeding which used to be undertaken before the Rules enabled set-offs to be answers to claims.[6] That process was that the plaintiff, in circumstances like this, may have been given judgment for the debt, with a stay pending the trial of the counterclaim, providing the counterclaim was advanced and prosecuted with due expedition. In this case, it is not entirely clear that there will be no defence to the money claim, because a breach of the Loan Deed or Circular Resolution, as outlined, may give rise to an equitable set-off.
[6]Supreme Court (General Civil Procedure) Rules 2005, Chapter 1, r 13.14.
Having regard to-
(a) the fact that the defendants have not pleaded to the plaintiffs’ Further Amended Writ and Statement of Claim dated 7 December 2012; and
(b) the only defence filed lacking a good many particulars, as well as being susceptible to be struck out,
it will be important, as I indicated in the course of argument, for the defendants to obtain skilled legal assistance and for any amended defence and counterclaim to be properly particularised and to raise a viable defence and/or counterclaim. Failing this being done properly, the plaintiff will be justified in applying to strike out the amended defence and counterclaim. I note for future reference that the defendants have been granted an indulgence, and this is recognised in the order made for the costs of the plaintiffs’ summons.
For these reasons I refuse the plaintiffs’ application for summary judgment and make orders and directions for the future conduct of the proceeding.
SCHEDULE OF PARTIES
| THINK COMMODITIES PTY LTD | First Plaintiff |
| QING PING PAN | Second Plaintiff |
| SHENG ZNOG PAN | Third Plaintiff |
| THINK INDUSTRIES PTY LTD | First Defendant |
| PAUL SHANNON | Second Defendant |
| ANG MANAGEMENT PTY LTD | Third Defendant |
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