Treadgold v Norfolk Ridge Pty Ltd
[2007] WADC 193
•6 NOVEMBER 2007
TREADGOLD -v- NORFOLK RIDGE PTY LTD [2007] WADC 193
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 193 | |
| Case No: | CIV:545/2007 | 29 OCTOBER 2007 | |
| Coram: | O'BRIEN DCJ | 5/11/07 | |
| PERTH | |||
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| PDF Version |
| Parties: | ANTHONY ASHBOURNE TREADGOLD NORFOLK RIDGE PTY LTD (ACN 081 502 650) |
Catchwords: | Appeal against Registrar's decision granting summary judgment to plaintiff Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 |
Case References: | Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 Wedge v Service Finance Corp Ltd [2004] WASCA 54 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
NORFOLK RIDGE PTY LTD (ACN 081 502 650)
Defendant
Catchwords:
Appeal against Registrar's decision granting summary judgment to plaintiff - Turns on own facts
Legislation:
Rules of the Supreme Court 1971
Result:
Appeal allowed
(Page 2)
Representation:
Counsel:
Plaintiff : Mr C P Stokes
Defendant : Mr P J Hannan
Solicitors:
Plaintiff : Chris Stokes & Associates
Defendant : Arns & Associates
Case(s) referred to in judgment(s):
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251
Wedge v Service Finance Corp Ltd [2004] WASCA 54
(Page 3)
1 O'BRIEN DCJ: This is an appeal against the decision of Registrar Kingsley made on 22 August 2007 granting summary judgment for the plaintiff for part of his claim against the defendant.
The plaintiff's claim
2 On 23 March 2007 the plaintiff commenced proceedings by the issue of a writ of summons with an endorsed statement of claim.
3 The plaintiff's claim is that on 30 June 2005 he entered into a contract of employment with the defendant whereby he would be employed by the defendant from 1 July 2005.
4 The contract was in writing under the hand of the defendant's company secretary, Rhonda Joy McCarroll, and signed by the plaintiff ("the letter").
5 The terms of the plaintiff's employment set out in the letter include that the defendant would pay the plaintiff a base salary of $84,000 per annum, monthly in arrears, with four weeks annual leave per annum.
6 The plaintiff claims that he worked for the defendant from 1 July 2005 to 20 January 2006 and was therefore entitled to be paid salary plus holiday pay and superannuation particularised as totalling $55,097.
7 The plaintiff has since abandoned his claim in relation to superannuation payments on the ground that he has no standing to sue.
8 The plaintiff claims the defendant has breached the agreement as it has not paid him the claimed sum.
9 A second part of the plaintiff's claim relates to payment of director's fees but the Registrar granted the defendant leave to defend that part of the action and ordered that it be transferred to the Perth Registry of the Magistrates Court pursuant to s 74 of the District Court of Western Australia Act 1969.
The defence
10 In its defence, the defendant pleads a general denial of all aspects of the statement of claim. The defendant says that at no time was the plaintiff employed by the defendant.
(Page 4)
Materials considered
11 I have considered the following materials filed by the parties.
Affidavits filed on behalf of the plaintiff
• Affidavits of the plaintiff sworn 27 April 2007; 26 June 2007; and 10 October 2007.
• Affidavit of Rhonda Joy McCarroll sworn 10 October 2007.
Affidavits filed on behalf of the defendant
• Affidavits of Peter Alexander Nicholas Hodge sworn on 1 June 2007 and 2 October 2007.
• Affidavit of Michael John Chenoweth sworn 1 June 2007.
- Written submissions filed by counsel before the Registrar and written submissions filed in relation to the appeal.
Background
12 Between 1 March 2000 and 22 June 2006 the defendant's name was Norfolk Ridge Ltd. The defendant's name is now Norfolk Ridge Pty Ltd (since 23 June 2006).
13 The plaintiff was a director of the defendant from 3 February 1998 until either 25 August 2006 or 23 December 2006. The end date is disputed but is not relevant for the purposes of this appeal.
14 The plaintiff was also a secretary of the defendant from 3 February 1998 until 23 December 2006.
15 Ms McCarroll was also a secretary of the defendant from 10 October 2001 until 2 May 2006.
16 The directors of the defendant as at June 2005 were the plaintiff, Peter Schoonens and Mr Chenoweth. It would appear that they were also directors of Norfolk Ridge Vineyards Ltd.
17 Mr Hodge became a director of the defendant on 5 December 2006.
18 All shares in the defendant are now held by Scalawag Wines Pty Ltd ("Scalawag").
19 Scalawag was incorporated on 24 July 2000 as Norfolk Ridge Wines Ltd. Previous corporate names of Scalawag include Norfolk Ridge Wines Pty Ltd (from 24 April 2003 until 10 April 2006).
(Page 5)
20 The defendant owns a vineyard in Mount Barker. The vineyard was the principal asset in a management investment scheme ("scheme").
21 Norfolk Ridge Vineyards Pty Ltd was the scheme manager.
22 The plaintiff has been a director and secretary of Norfolk Ridge Vineyards Pty Ltd from 5 December 1997 to the present.
23 The scheme was terminated on 20 June 2005. From about October 2005, the plaintiff conducted negotiations with a group of investors which ultimately led to Scalawag purchasing all of the shares in the defendant.
24 On 30 June 2005 the Boards of Norfolk Ridge Ltd and Norfolk Ridge Vineyards Pty Ltd met.
25 Present at the meeting were the plaintiff, Mr Schoonens (the chairman) and Mr Chenoweth.
26 The plaintiff prepared the agenda for the meeting of directors. Item 5 on the agenda read "Transfer of Staff, NRVL to NRL – Employment Terms".
27 The minutes of the meeting record in Item 5 the following:
"(a) …
(b) The transfer of Tony Treadgold from NRVL to NRL (as an employee) was approved by PS and MC also with the proviso that his costs may properly be charged back to NRVL."
28 The plaintiff relies on the Board resolution in Item 5(b) and the letter as evidencing the contract of employment.
29 The letter reads as follows (omitting formal parts):
"TRANSFER OF EMPLOYMENT
The Norfolk Ridge Vineyards Management Investment Scheme was terminated on 20 June 2005, at the direction of Grower Investors.
Norfolk Ridge Vineyards Ltd (NRVL) will cease to manage vineyard operations shortly. The owner of the vineyard, Norfolk Ridge Ltd (NRL), will assume the day to day running of the vineyards.
(Page 6)
- It is therefore appropriate that we transfer your employment to NRL. NRL and NRVL are associated companies and we regard your employment as an internal intra-group transfer.
Terms and conditions of employment with NRL will be the same as NRVL's, with four weeks annual leave and reasonable sick leave. Please accept this transfer.
Your base salary will be $84,000 PA and will be paid monthly in arrears.
…."
30 The plaintiff deposed that he drafted the letter and authorised Ms McCarroll to execute it and issue it to him.
31 There is no evidence of any discussions between representatives of the defendant and the plaintiff concerning terms and conditions of his claimed employment.
The plaintiff's position
32 The plaintiff admits that his company, Naralpa Pty Ltd (Naralpa), provided management services to Norfolk Ridge Vineyards Ltd until 30 June 2005. It does not appear to be in dispute that the management fee was in the region of $84,000 PA.
33 Further, the plaintiff admits that during this period of employment with the defendant he supplied his services to other companies.
34 The plaintiff deposed that he provided "significant time and expertise in managing the day-to-day affairs of Norfolk Ridge Ltd". The plaintiff deposed that he has not been paid any salary pursuant to the claimed contract of employment and that the defendant has no defence to the action.
35 Ms McCarroll deposed that she commenced accruing salary for the plaintiff in Norfolk Ridge Ltd's QuickPayroll and QuickBooks accounts from the fortnight ended 6 July 2006. She was mistaken as to the actual amount but otherwise her evidence is consistent with the plaintiff being an employee of the defendant at that time.
36 Ms McCarroll also deposed that she was present at a meeting of Norfolk Ridge Wines Pty Ltd on 11 October 2005 where she was appointed company secretary, taking over from the plaintiff.
(Page 7)
37 The minutes of the meeting record:
"Mr Treadgold is currently an employee of NRL. Should NRW's bid for NRL succeed he will then effectively become an employee of NRW. The question of his remuneration for managing NRL and the scheme would therefore fall to the NRW Board to decide."
38 Those minutes appear to support the plaintiff's claim that he was an employee of the defendant.
39 Mr Hodge was present at that meeting. He would therefore have been aware of the discussions related in the minutes as outlined. He did not dispute their accuracy or veracity and there is no record of any dissent by him.
The defendant's position
40 The principal affidavits relied on by the defendant are those sworn by Mr Hodge.
41 In his affidavit sworn on 1 June 2007, Mr Hodge deposed as follows:
• He denied that there was an employment agreement between the plaintiff and the defendant as claimed;
• He had not seen the letter until approximately August 2006;
• He has not seen any resolution of the defendant's Board approving or authorising the offer of employment to the plaintiff;
• He does not accept that Ms McCarroll had the requisite authority to commit the defendant to an employment contract with the plaintiff;
• He believed, based on statements made by the plaintiff in negotiations (not particularised) preceding the sale of the defendant's shares that all employee contracts with the defendant had been terminated as at 7 October 2005;
• That the defendant would not have proceeded with the purchase of the vineyard and associated assets had it been made aware that the plaintiff intended to claim substantial ongoing wages from the company;
• At the time of the purchase of assets in October 2005 the vineyard was in debt with no immediate cash flow and was in serious financial problems;
(Page 8)
- • That the defendant could not afford to pay a salary to the plaintiff and did not agree to any such arrangement;
• That the plaintiff was involved in other ventures and denied that the plaintiff worked for the defendant from July 2005 to 20 January 2006.
42 In his affidavit sworn on 2 October 2007, Mr Hodge deposed as follows:
• That he did not have the opportunity of responding to the matters outlined in the affidavit of the plaintiff sworn on 26 June 2007 as he was overseas at the relevant time;
• He outlined the relationship between Naralpa and the defendant in the 2004/2005 financial year;
• His belief that in the 2004/2005 financial year the plaintiff was not employed by Norfolk Ridge Vineyards Ltd and was never employed by the defendant. This belief was based on a letter from the plaintiff dated 19 April 2006, wherein he refers to taking "a pay cut by packaging his contract fee of $84,000 a year into a reduced salary of $77,000 PA plus $7,000 living expenses while in Perth" and a "transaction detail document" which apparently outlines management fees paid to Naralpa with monthly sums of around $7,000.
43 He stated his (unsubstantiated) belief that the plaintiff decided "without the consent of the [defendant's] Board that he would cease providing management services to [Norfolk Ridge Vineyards Ltd] through Naralpa, and would instead become an employee of [the defendant]".
44 Mr Hodge further deposed in his affidavit sworn on 2 October 2007 that in the course of conducting due diligence for the purchase of the defendant's shares by Scalawag, the plaintiff provided him with a "labour estimate" (Att 4). That shows accrued "base" [salary] of $78,000 for the plaintiff and budgeted base [salary] for 2005/2006 of $50,000.
45 Mr Hodge deposed that he did not appreciate that the labour estimate referred to a salary of $50,000 and thought that the labour estimate simply took into account negotiations which he knew were ensuing between the directors of Scalawag and the plaintiff as to whether the plaintiff would be employed by the defendant or provide services through Naralpa. In effect Mr Hodge cannot explain the true meaning of the figures in the labour estimate and provides a speculative explanation.
(Page 9)
46 Mr Hodge also referred to a document described as "the liabilities document" (Att 5) provided to him by the plaintiff on or about 11 October 2005. That document contains under the heading "Employee Liabilities" the following:
"Mr Treadgold, unpaid salary for the period of 1 July 2005 to 11 October 2005, $14,770."
47 Mr Hodge postulates that this entry equates with a salary of $50,000 referred to in the labour estimate.
48 However, the "liabilities document" records the total employee liabilities including superannuation and "ATO" as amounting to $30,752.28 for that period. There is no evidence to explain the total amount other than Mr Hodge's belief as to the $14,770.
49 Mr Hodge deposed further that believes that if the plaintiff had total control over the defendant's bank accounts in 2005/2006 financial year he would have paid "his wage along with all of the other employees of [the defendant] as it accrued".
50 Mr Hodge refers to the gross amount listed in the reconciliation report attached to the defendant's PAYG payment summaries which document the plaintiff's unpaid salary as $55,860.
51 In effect, the defendant refers to these alleged anomalies as casting doubt on the plaintiff's claim that the defendant contracted to pay him a salary of $84,000 and submits that these are issues which should be explored and determined at trial.
52 He also referred to payment summaries signed by the plaintiff and on the basis of those expressed his belief that all persons employed by the defendant in 2005/2006 financial year were paid in full as their salary accrued.
53 He also expresses his belief that the plaintiff falsely created various pay reports and payslips which were prepared by Ms McCarroll. There is absolutely no evidence to support those contentions.
(Page 10)
The law
54 O 14 r 3(10 of the Supreme Court Rules (WA) provides that on an application for summary judgment:
"… Unless the court dismisses the application, or the defendant satisfies the court with respect to the claim, or the part of the claim, to which the application relates that there is an issue or question in dispute which ought to be tried, or that there ought for some reason to be a trial of that claim or part, the court may give such judgment for the plaintiff against the defendant on that claim or part thereof as may be just, having regard to the nature of the remedy or relief claimed."
55 The principles in relation to applications for summary judgments are well settled. The High Court outlined the over-arching principle as outlined in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at [99]:
"The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: see Clarke v Union Bank of Australia Ltd; Jones v Stone; Jacobs v Booth Distillery Co."
56 There have been numerous elaborations and examples of this rule in the cases. In Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Dixon J said, at [91]:
"A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury … Once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous or vexatious and an abuse of process."
57 In Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 at 256 Kirby J said that it is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests:
(Page 11)
- "An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment; … If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts … "
58 In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ summarised the principles applicable to a court's power to terminate an action summarily. At p 129 he said:
"… The plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action – if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal – is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'; 'so to speak apparent at a glance'."
59 Although the latter two cases were decided in the context of a defendant's application for summary judgment, the principles expressed apply equally to a plaintiff's applications.
60 As to the criterion for summary judgment that "there ought to be some other reason to be a trial of that claim", the following passage from
(Page 12)
- "Civil Procedure Victoria" (Williams) p 3377 was quoted with approval by Wallwork J in Wedge v Service Finance Corp Ltd [2004] WASCA 54 at [24]:
"The words are invoked if the defendant cannot point to a specific issue which ought to be tried, but nevertheless satisfies the court that there are circumstances that ought to be investigated: ... The court can give leave to defend for a reason other than that there is a question to be tried: Bank Fur Gemeinwirtschaft v City of London Garages Ltd [1971] 1 All ER 541. In that case Cairns LJ said at 548, that the only reported case in which that provision has been applied is Miles v Bull [1969] 1 QB 258; [1969] 3 All ER 632. Megarry J there gave leave to defend because the documents on which the claim was based had some appearance of a sham. It is not difficult to think of other circumstances where it might be reasonable to give leave to defend, although no defence is shown, e.g. if the defendant was unable to get in touch with some material witness who might be able to provide him with material for defence; or if a claim were of a highly complicated or technical nature which could only properly be understood if oral evidence were given; or if the plaintiff's case tended to show that he had acted harshly and unconscionably and it was thought desirable that if he was to get judgment at all, it should be in the full light of publicity."
"If the defendant cannot point to a specific issue which ought to be tried but nevertheless satisfies the court that there are circumstances that ought to be investigated, then I think that those concluding words are invoked. There are cases when the plaintiff ought to be put to strict proof of his claim, and exposed to the full investigation possible at a trial; and in such cases it would, in my judgment, be wrong to enter summary judgment for the plaintiff."
62 It is clear from this summary of relevant authority that caution should be exercised before granting an application for summary judgment.
(Page 13)
Is there an issue to be tried?
63 The defendant contends that there is confusion as to whether Item 5(b) in the Board minutes meeting on 30 June 2005 referred to the plaintiff's company, Naralpa or the plaintiff.
64 On the face of the Board minutes there does not appear to be any confusion. There is no mention of Naralpa in the Board minutes.
65 The defendant submits that the letter implicitly "recites" that as at 30 June 2005 the plaintiff was employed by Norfolk Ridge Vineyards Ltd. Further, par 5(b) of the minutes refers to the "transfer" of the plaintiff from Norfolk Ridge Vineyards Ltd to the defendant "as employee". The defendant points to an alleged inconsistency in the plaintiff's position by reference to the plaintiff's denial that he was ever personally employed by Norfolk Ridge Vineyards Ltd (par 3.1 of plaintiff's affidavit sworn 10 October 2007). The plaintiff admits that Naralpa provided his services to the defendant, relevantly, in 2004/2005.
66 In effect, the defendant contends that this inconsistency should be resolved at trial.
67 However, there may well be an argument that there is no necessary inconsistency. The plaintiff admits that his company Naralpa provided his services to the defendant, relevantly, the 2004/2005 financial year. The minutes of the Board in Item 5(b) refer to the transfer of the plaintiff from Norfolk Ridge Vineyards Ltd to the defendant "as employee". In conjunction with the letter and the plaintiff's affidavits the Board resolution is unequivocal. Mr Hodge was not at the meeting and was not a director at that time. Mr Chenoweth, who was also present at the meeting and was a director of the defendant, deposed that to the best of his recollection the plaintiff was only ever a consultant to the defendant. He did not otherwise shed any light on the discussions of the Board meeting on 30 June 2005.
68 The defendant contends that there was little or nothing for the plaintiff to do as an employee of the defendant. The defendant outlines reasons for this at par 53 of the written outline of submissions filed 26 October 2007. However, the same might well be said of the Board resolution if it related to the engagement of Naralpa rather than the plaintiff personally.
(Page 14)
69 The defendant also contends that Ms McCarroll had no authority to bind the defendant, she was simply a company secretary. The status of the letter as a document binding the defendant is in issue.
70 The defendant contends that even if (which is denied) the plaintiff was an employee of the defendant for the relevant period, it is arguable that he did not perform the necessary work to earn the remuneration claimed. The defendant's counsel foreshadowed an amendment to the defence along those lines.
71 Paragraph 59 and par 60 of the defendant's outline of written submissions filed on 26 October 2007 summarise the plaintiff's other business activities. The defendant contends that a trial is necessary to work out what the plaintiff actually did for the defendant.
72 Mr Chenoweth was a director of the defendant at all relevant times and is uniquely placed to testify as to that issue and does not do so.
73 The affidavit evidence of the plaintiff is that he worked full-time for the defendant over the relevant period. The "labour estimate" and "liabilities document" referred to above arguably cast doubt on that.
74 The plaintiff submitted that at no time does the defendant dispute the accuracy of the defendant's Board minutes of 30 June 2005 nor the authenticity of the letter.
75 In my view, the defendant's affidavit evidence raises issues which are at least arguable as a defence. In particular, the terms of the Board minutes in Item 5(b) and the letter from which an inference may be open to be drawn that the plaintiff was employed by the defendant in 2004/2005 but which the plaintiff denies; the documents provided by the plaintiff to Mr Hodge regarding the defendant's liabilities which could suggest that the plaintiff's salary was not $84,000 (even if he were an employee); the affidavit evidence relating to the financial position of the defendant which both Mr Hodge and Mr Chenoweth claim support a finding that the Board would not have agreed to a salary of $84,000; whether the plaintiff actually worked full-time with defendant; the circumstances surrounding the draft of the letter; the fixing of the terms and conditions set out in the letter as to which there is no evidence from the plaintiff; whenever (even if there was a context of employment) such contracts were terminated in October 2005.
(Page 15)
76 Although the resolution of these issues in the defendant's favour may not constitute a watertight defence to the plaintiff's claim, they are issues which, in my view, are triable issues, albeit rather weak and tenuous.
77 I would therefore uphold the appeal and set aside the Registrar's orders.
0
7
1