Waters v Haayema
[2008] WADC 86
•2 MAY 2008
WATERS -v- HAAYEMA [2008] WADC 86
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WADC 86 | |
| Case No: | CIV:2454/2007 | 2 MAY 2008 | |
| Coram: | COMMISSIONER DERRICK | 2/05/08 | |
| PERTH | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | KIM SUZANNE WATERS DEREK RICHARD HAAYEMA |
Catchwords: | Summary judgment application General principles to be applied in determining summary judgment application Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 |
Case References: | Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18 Eng Mee Yong v Letchumanan (1980) AC 331 Evans v Bartlam (1937) AC 473 at 489 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Gillon v Kyle, unreported; SCt of WA; Library No 9123; 16 October 1991 Scaffidi Nominees Pty Ltd and Anor v Buswell, unreported; SCt of WA; Library No 960588; 11 October 1996 Webster v Lampard (1993) 177 CLR 598 White v Johnston (1886) 8 ALT 53 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
DEREK RICHARD HAAYEMA
Defendant
Catchwords:
Summary judgment application - General principles to be applied in determining summary judgment application - Turns on own facts
Legislation:
Rules of the Supreme Court 1971
Result:
Application dismissed
(Page 2)
Representation:
Counsel:
Plaintiff : Mr M Rynne
Defendant : Mr K Robson
Solicitors:
Plaintiff : Paiker & Overmeire
Defendant : Dean Richard Love Barrister & Solicitor
Case(s) referred to in judgment(s):
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
Eng Mee Yong v Letchumanan (1980) AC 331
Evans v Bartlam (1937) AC 473 at 489
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Gillon v Kyle, unreported; SCt of WA; Library No 9123; 16 October 1991
Scaffidi Nominees Pty Ltd and Anor v Buswell, unreported; SCt of WA; Library No 960588; 11 October 1996
Webster v Lampard (1993) 177 CLR 598
White v Johnston (1886) 8 ALT 53
(Page 3)
1 COMMISSIONER DERRICK: In December 2007, or thereabouts, the plaintiff commenced proceedings against the defendant. The plaintiff now makes an application by way of chamber summons dated 23 February 2008 for summary judgment pursuant to O 14 r 1 of the Rules of the Supreme Court 1971. The application is opposed by the defendant.
2 The application is supported by an affidavit sworn by the plaintiff on 22 February 2008. The defendant's opposition to the application is supported by an affidavit sworn by him on 1 April 2008.
3 Under O 14 r 1 an application for summary judgment must be made within 21 days after the defendant has entered an appearance or at any later time by leave of the Court.
4 In the present case the defendant entered his appearance to the plaintiff's writ on 18 December 2007. The plaintiff filed her statement of claim on 5 February 2008. She made her application for summary judgment on 25 February 2008. The application was therefore made outside of the 21 day period specified by O 14 r 1. Consequently, it is necessary for the Court to give leave for the application to be brought.
5 During the hearing of the application the defendant's counsel's instructing solicitor informed the Court that, to the best of his recollection, after the defendant had entered his appearance some communications took place between the legal representatives for each of the parties and that these communications may well have led to a delay in the filing of the plaintiff's statement of claim and ultimately the application for summary judgment. He therefore informed the Court, through the defendant's counsel, that the defendant did not oppose the oral application which had been made by the plaintiff's counsel for leave to bring the application outside of the 21 day period specified in O 14 r 1. In these circumstances I grant the leave that is sought.
6 The non-contentious factual background to the application is as follows: Quest South Perth Holdings Pty Ltd, which I will refer to as "the company", carries on, and at all material times carried on, the business of the operation of serviced apartments known as Quest on Arlington in South Perth.
7 On 30 June 2006 a company called Quest Business Developments Pty Ltd, which I will refer to as "QBD", was appointed the manager of the Quest on Arlington apartments. The plaintiff is, and was at all material times, the general manager of QBD.
(Page 4)
8 Some time after 30 June 2006 the plaintiff approached the defendant, who was well-known to her, and offered him the opportunity to manage the Quest on Arlington apartments. Ultimately, on 16 September 2006 the defendant was engaged as the manager of the Quest on Arlington apartments. He was directly employed by the company.
9 Some time prior to December 2006 the defendant decided that he wanted to become a franchisee of the Quest on Arlington apartments and to purchase the company and the business of Quest on Arlington apartments. On 5 December 2006 the defendant entered into a written agreement with the shareholders of the company to purchase all of the shares in the company. I will refer to that agreement as "the share purchase agreement". At the time there were four issued shares in the company. The share purchase agreement incorrectly referred to the vendors owning 20 shares in the company.
10 Also on 5 December 2006 the plaintiff and the defendant entered into a written agreement pursuant to which the defendant granted to the plaintiff an option to purchase 10 shares in the company. I will refer to that agreement as "the option agreement". The option agreement referred to 10 shares because at the time both the plaintiff and the defendant mistakenly believed that there were 20 issued shares in the company. The plaintiff and the defendant only became aware that there were only four shares in the company some time after the execution of the option agreement. However, nothing turns on this mistake because the defendant, in par 8 of his affidavit sworn in opposition to the application, admits and accepts that, notwithstanding the mistakes contained within the share purchase agreement and the option agreement, the substance of the option agreement was that the defendant, as owner of all of the shares in the company, granted to the plaintiff an option to purchase 50 per cent of those shares.
11 The express terms of the option agreement provided that:
(1) the plaintiff would pay $1 per share required;
(2) the plaintiff and the defendant would be bound by the share purchase agreement; and
(3) the option granted to the plaintiff expired on 30 June 2007.
12 So much is not in dispute. What is in dispute and what, according to both of the parties, is the heart of the dispute between them is whether the plaintiff exercised her option to purchase 50 per cent of the shares in the company prior to 30 June 2007.
(Page 5)
13 The plaintiff's version of events is that on 26 January 2007 at a meeting with the defendant at the Quest on Arlington apartments she orally advised the defendant that she was exercising the option under the option agreement and that the shares in the company were to be transferred to her or her nominated entity. She also asserts that at the meeting the defendant verbally confirmed to her the exercise of the option and agreed to transfer the shares in the company to her.
14 The defendant, on the other hand, denies that any meeting took place on 26 January 2007 or that the plaintiff at any time exercised the option to purchase 50 per cent of the shares in the company, orally or at all.
15 It is against this factual background that the plaintiff brings her application for summary judgment. Speaking in general terms, it is submitted on her behalf that events that occurred after the alleged exercise of the option on 26 January 2007 prove that the option was exercised as she alleges. It is submitted that the defendant's evidence in relation to these events is neither plausible nor rational. It is therefore submitted on her behalf that the Court can, on this application for summary judgment, determine that the plaintiff did exercise the option she alleges and that there is therefore no real issue to be tried. On this basis, she applies for an order for the specific performance of the option agreement.
16 I pause at this point to note that, by the terms of the summons for summary judgment, the plaintiff also seeks an order for rectification of the option agreement so as to reflect the fact that there were only four shares and not 20 shares in the company. However, as is apparent from the submissions filed on her behalf in support of the application, the claim for rectification is not, in light of the defendant's concession as to the substance of the option agreement, pressed by the plaintiff.
17 The defendant disagrees with the submissions of the plaintiff. He asserts, in effect, that the Court cannot possibly be satisfied on a summary judgment application that the events relied upon by the plaintiff prove that she exercised the option as she alleges.
18 The net result is that it is necessary, in order to determine this application, to refer to the relevant events that occurred after the alleged exercise of the option agreement and the specific arguments put forward by the parties in relation thereto. Before doing that, however, it is convenient and necessary to briefly state the well-established legal principles that govern the determination of applications of this type.
(Page 6)
- There is no dispute between the parties as to what the relevant legal principles are.
19 The power to order summary judgment must be exercised with great care and should never be exercised unless it is clear that there is no real issue to be tried, Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87. The need for caution is nowhere more important than where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact, Webster v Lampard (1993) 177 CLR 598.
20 O 14 r 1 is not intended to facilitate the disposal of actions when facts are legitimately in dispute, White v Johnston (1886) 8 ALT 53. Accordingly, the Court should not, on applications for summary judgment, make determinations of fact on the basis of conflicting affidavits or because the affidavit of a party is arguably inconsistent with documentary evidence adduced by the other party, Evans v Bartlam (1937) AC 473 at 489, Gillon v Kyle, unreported; SCt of WA; Library No 9123; 16 October 1991.
21 If a version of the facts is put forward by a party which is not inherently incredible, then in the absence of any opportunity of cross-examination it is incumbent upon the Court to proceed on the basis that that version of events will ultimately be accepted at the trial of the action, Webster v Lampard (supra). However, the Court is not bound to accept uncritically as raising a disputed fact calling for further investigation every statement in an affidavit however equivocal, lacking in precision or inconsistent with undisputed contemporary documents or other statements made by the same deponent, Eng Mee Yong v Letchumanan(1980) AC 331 at 341.
22 It is this latter statement of principle that the plaintiff in the present application places considerable reliance on. The plaintiff in her submissions also refers to a number of decisions that are authority for the proposition that once the plaintiff discharges the initial onus of satisfying the Court in respect of its claim that it would, upon the evidence adduced by it, be entitled to judgment, there is an evidentiary onus on the defendant to satisfy the Court that there is a triable issue or dispute or that there ought to be trial. The authorities cited by the plaintiff are Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd(1997) 143 FLR 18 at 23 and Scaffidi Nominees Pty Ltd and Anor v Buswell, unreported; SCt of WA; Library No 960588; 11 October 1996.
(Page 7)
23 I return then to the specific arguments of the parties. As I have already said, the plaintiff points to certain events and conduct of the defendant, which occurred after the date on which she alleges that she exercised the option, as evidence capable of conclusively establishing that she did in fact exercise the option as alleged. The relevant conduct and events are set out in par 13 of the plaintiff's statement of claim and also in pars 24 to 29 of her affidavit sworn in support of the application.
24 The first of the relevant events concerns an email that the defendant sent to the plaintiff on 7 March 2007. In the email the defendant set out the cost of installing Foxtel into the Quest on Arlington apartments and effectively recommended the installation of Foxtel. Furthermore, after setting out the cost of installing Foxtel the defendant said in the penultimate paragraph of his email:
"I understand that we wish to pay off the loan, but this will bring other big clients like Australian Federal Police, as they use Sky News and services like Fox for various things and would choose to stay with us (big picture), hence better clients, more money, better occupants that pay on time, stronger selling points for the property."
25 I note that, in quoting from the email, I have ignored and corrected some obvious typographical errors.
26 The plaintiff submits that the reference by the defendant in the email to the loan is a reference to a bank loan made to the company which the defendant, as a director of the company, had guaranteed and that the use of the word "we" in this email is a reference to the plaintiff and the defendant.
27 It is submitted on her behalf that the use of the word "we" reveals that the defendant regarded the plaintiff as a shareholder in the company and is therefore clear evidence of the fact that the plaintiff had, to the defendant's knowledge, exercised the option granted to her pursuant to the option agreement. The argument is that if the defendant had not regarded the plaintiff as having exercised the option and thereby having become a shareholder, he would not have said that he understood that "we wish to pay off the loan". If the plaintiff was not a shareholder she would have no responsibility for paying off the loan.
28 The defendant makes two apparently inconsistent responses to these submissions. In this regard, I refer to pars 14 and 15 of his affidavit. His first response is that in using the term "we" in the email, he was referring
(Page 8)
- to himself and his wife, who he says also shared the liabilities that he had assumed in giving a director's guarantee. He asserts in this regard that the plaintiff was never prepared to assume her share of this liability by providing a director's guarantee herself.
29 The defendant's second response is that his use of the word "we" is used "in the context of the company as it is used in the same context as the words 'our clients' has been used in the subsequent paragraph". He asserts that the terminology in emails is often loose and should not be read as conclusive of any matter, given the nature of the dispute.
30 As to the defendant's assertion that his use of the word "we" was intended to be a reference to himself and his wife, the plaintiff says that this cannot possibly be true when the email is read in context.
31 For my part, I have some difficulty with the defendant's contention that his use of the word "we" was a reference to himself and his wife. To my mind it does not make sense for the defendant to have referred to his understanding if he was talking about the wishes of himself and his wife as opposed to the wishes of himself and the plaintiff. However, his second assertion to the effect that the word "we" is a reference to the company and not the shareholders of the company, being himself and the plaintiff, is on the face of it slightly more plausible.
32 The next event relied upon by the plaintiff as conclusively demonstrating that she exercised the option to purchase half of the shares in the company is that on 10 May 2007 the defendant sent to her an email dealing with the subject of the BankWest loan and the payment of the company's tax, in which he stated:
"Arlington company tax will first be paid by us on 15 May and then reimbursed by Hans and Justin in or around 22 May. Hans is meeting with me on 22 May at Arlington at 2 pm to go over loose ends, I presume."
33 Again, the submission put forward on behalf of the plaintiff is that the reference by the defendant to the tax being first "paid by us" is consistent only with the proposition that, at the time, the defendant believed that the plaintiff was a shareholder in the company by reason of having exercised the option under the option agreement. If she was not, the argument runs, there would have been no reason for the defendant to assert that the company's tax would be "paid by us"; that is, the plaintiff and the defendant.
(Page 9)
34 In par 16 of his affidavit, the defendant says in relation to this email that the word "us" refers to "the directors as they stood appointed at that time; that is, the plaintiff and the defendant". It is effectively asserted on his behalf that the fact that the directors were to pay company tax is not indicative of the fact that the plaintiff was a shareholder in the company.
35 Again, I have some difficulty with this proposition. The question I ask myself is why would the plaintiff, as a director but not a shareholder of the company, be in any way responsible for meeting the company's tax obligations?
36 The next event which the plaintiff relies upon in support of her argument that the Court should conclude that the option granted to her under the option agreement was exercised is the payment to her and the defendant in June and July of 2007 of what she alleges to have been dividends. It is argued on her behalf that if she had not been a shareholder in the company by reason of having exercised the option under the option agreement, there would have been no basis to pay her a dividend.
37 There is no dispute between the parties that on 8 June 2007 the company paid $10,000 to the defendant and that on 9 July 2007 the company paid $10,000 to the plaintiff. This much is revealed by the company's bank statements. What is in dispute, however, is whether these payments were dividends in the true sense of the word.
38 The plaintiff points to a number of documents as being conclusive evidence of the fact that the payments were dividends. The first is an email sent by the defendant to the plaintiff on 6 July 2007. In the body of the email the defendant responds to a number of matters raised by the plaintiff in an email that she sent to the defendant on 4 July 2007 and by which she called a directors' meeting for 9 July 2007. However, it is the penultimate and final paragraph of the defendant's email dated 6 July 2007 which the plaintiff in this context places particular reliance upon. In these paragraphs the defendant stated:
"Whilst we are spending the time to have a directors' meeting, I would like to also add to the agenda BankWest loan changeover, which I will bring along all associated documentation, ASIC share transfer, share dividends process in writing. I feel these issues are pertinent and require attention before you take leave of absence from Australia."
39 During submissions the plaintiff's counsel did not place any particular reliance on the defendant's reference in the email to "ASIC
(Page 10)
- share transfer". He acknowledged that those words could be construed as referring to either the transfer of all of the shares in the company to the defendant pursuant to the share purchase agreement or the transfer of 50 per cent of the shares in the company from the defendant to the plaintiff pursuant to the option agreement. However, he placed considerable reliance on the defendant's reference to the share dividend process. He submitted that this clearly indicated that the defendant knew that the payment of $10,000 which was to be made to the plaintiff, and which was ultimately made to the plaintiff on 9 July 2007, was a dividend. He submitted that the defendant's acknowledgment of this payment as a dividend in turn revealed his understanding that the plaintiff was a shareholder in the company by reason of having exercised the option under the option agreement. If she was not a shareholder there would have been no basis to pay a dividend to her.
40 The next document upon which the plaintiff relies in support of her contention that the two $10,000 payments were dividends consists of the handwritten minutes of the directors' meeting which took place on 9 July 2007. A copy of those minutes, which according to the defendant were prepared by the plaintiff, is annexure DH1 to the affidavit of the defendant. The fourth and final entry to those minutes reads:
"Each quarter $10K dividends as agreed D and K that business has in excess of obligations and any extra payments to B-West alone."
41 The reference to "D and K" in the minutes is clearly a reference to Derek and Kim; that is, the defendant and plaintiff respectively.
42 The final document which the plaintiff points to as showing that the payments of $10,000 were dividend payments is the company's balance sheet as of June 2007. This document is annexure KW13 to the plaintiff's affidavit. The balance sheet records the payment of dividends of $10,000 to both the plaintiff and the defendant.
43 The defendant's response to the submission that the $10,000 payments to the plaintiff and the defendant were dividends and that payment of such a dividend to the plaintiff is conclusive evidence that she was a shareholder in the company is that the term "dividend" as used in the various documents to which I have referred was not used in its strict sense and that the payments made to himself and the plaintiff were in fact a director's fee and not a dividend. At par 17 of his affidavit the defendant states:
(Page 11)
- "The contents of paragraph 26 of the plaintiff's affidavit are admitted except for the fact that the payments were made as a director's fee and not a dividend as had been alleged by the plaintiff. It is admitted that the said payments were indeed made to both the directors, but this occurred because at that time no-one in the company ever queried the plaintiff's demands for payment from the company, nor did anyone realise that the plaintiff was not entitled to any payment that might be properly characterised as a dividend to a shareholder."
44 In relation to this issue the defendant's counsel submitted that it was apparent from the documentation before the Court that the defendant was not particularly sophisticated or knowledgeable when it came to the operation and working of companies and that therefore his use of the term "dividend" in his email dated 6 July 2007 and the use of that word in the balance sheets should not be relied upon to conclude that the payments made were in fact dividends.
45 I note in addition that the defendant also says in par 20 of his affidavit that none of the matters that he had specified in his email dated 6 July 2007 as worthy of discussion at the 9 July 2007 directors' meeting were in fact discussed at that meeting. He says they were not discussed because the plaintiff became offended as a result of the defendant having hired an external bookkeeper to independently comment on the company's accounts. He says that if they had been discussed and resolved at the meeting they would have most certainly been mentioned in the minutes of the meeting which were drafted by the plaintiff.
46 As I have already indicated, the quarterly payment of a $10,000 dividend to both the plaintiff and the defendant was in fact mentioned in the minutes drafted by the plaintiff. It was item number 4 in those minutes.
47 What I have said thus far deals with the specific arguments made by the plaintiff, and the defendant's responses thereto, in support of her submission that the Court should find on this application that she did on 26 January 2007 verbally exercise the option that was granted to her under the option agreement. However, in addition to his responses to the plaintiff's specific arguments, the defendant raises a number of arguments of a more general nature in support of his submission that the Court cannot possibly be satisfied that the option was exercised as alleged by the plaintiff, in the absence of having the benefit of seeing the plaintiff and the defendant give evidence in relation to this critical issue.
(Page 12)
48 The first of the more general arguments put forward by the defendant is that it is clear from the material before the Court that the parties had for some considerable time been in conflict. It is submitted that it is therefore ridiculous to suggest that the plaintiff would have exercised her option so casually on a public holiday. It is submitted that one would expect the option to have been exercised in writing or at least that any verbal exercise of the option would have been later confirmed in writing.
49 The only observation I make about this submission is that it does not seem from the material before the Court that the relationship between the plaintiff and the defendant really started to sour until sometime after May 007. Nonetheless, the submission, to the extent that it asserts that it is unrealistic to think that the option would have been exercised in the informal way in which the plaintiff alleges that it was exercised, still stands.
50 It is also submitted on behalf of the defendant that, as the plaintiff's allegation is that the option was exercised orally, it is imperative for the Court to see the parties give evidence in relation to this issue.
51 The defendant also submits that it was at all times clear that the plaintiff was, in return for half of the shares in the company, supposed to provide financial support to the company in the form of a director's guarantee for a refinanced loan to the company. It is said that the evidence before the Court demonstrates that the plaintiff did not want to, and did not, provide any such financial assistance and that this failure on her part goes to prove that she never exercised the option; that is, because the provision of financial support to the company was understood to be a precondition to the exercise of the option, the fact that she did not provide such support demonstrates that she did not exercise the option.
52 In par 21 of his affidavit the defendant refers to an email sent to him by the plaintiff dated 4 July 2007 as evidence of the plaintiff's reluctance and disinclination to provide a director's guarantee.
53 It is further submitted that the plaintiff's dismissive attitude towards a representative of the company's bank during a telephone call on 12 July 2007 in relation to the issue of providing a director's guarantee is inconsistent with the plaintiff having had a shareholder's interest in the company. The conference call in question is deposed to by the defendant in par 12 of his affidavit.
54 Finally, the defendant contends that the failure by the plaintiff to refer expressly to the exercise of the option in any of her post 30 June
(Page 13)
- 2007 email communications with the defendant is telling. It is submitted that if she had exercised the option she would have made some express reference to having done so in the email communications which took place between her and the defendant from July 2007 through to the middle of August 2007, particularly given that the relationship between she and the defendant had by this time started to break down.
55 In particular, it is said that, given that it is apparent from the terms of the plaintiff's email dated 4 July 2007 that she was at this time, to use counsel's words, "getting hot under the collar", one would reasonably expect that she would have taken the opportunity to raise the issue of the failure by the defendant to transfer to her the shares in the company pursuant to her alleged exercise of the option agreement.
56 The defendant also points to the fact that the plaintiff apparently did not raise the issue of the exercise of the option at the directors' meeting on 9 July 2007. He says that the fact that she did not do so is clear from the absence of any reference to this issue in the minutes which she prepared.
57 They are the competing arguments. I return then to the question that I must ask myself. That question may, I think, consistently with the authorities to which I have already referred, be put in the following terms: are the various explanations, arguments and propositions put forward by the defendant in relation to the post 26 January 2007 events and documents relied upon by the plaintiff so inherently incredible, so lacking in precision or so inconsistent with the proved documents and events that I am able to conclude, in the absence of the plaintiff and the defendant giving evidence and being subjected to cross-examination, that the plaintiff did exercise the option on 26 January 2007 in the manner that she alleges?
58 I think that a number of the documents relied upon by the plaintiff to which I have referred are supportive - indeed, strongly supportive - of the plaintiff's version of events. Furthermore, as is apparent from the comments that I have made, I consider that some of the explanations put forward by the defendant in relation to the terminology used in these documents are, at best, problematic and at worst unconvincing. Nonetheless, when I take into account not only the defendant's specific responses to the plaintiff's arguments but also the more general arguments put forward on his behalf - that is, the arguments not related to the specific documents relied upon by the plaintiff - I am unable to conclude that the defendant's explanations for the terminology used in these documents is so implausible or so incredible that they can be disregarded in the absence
(Page 14)
- of cross-examination of the plaintiff's and defendant's respective version of events as to the issue of whether the option was exercised.
59 To put it another way, I am not persuaded on the basis of the material before the Court and the submissions made to me that there is no real issue to be tried in relation to whether or not the option was exercised as the plaintiff alleges. I therefore dismiss the application.
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