Woodcock v Kersting
[2019] WADC 46
•5 APRIL 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: WOODCOCK -v- KERSTING [2019] WADC 46
CORAM: STAUDE DCJ
HEARD: 20 MARCH 2019
DELIVERED : 5 APRIL 2019
FILE NO/S: CIV 1311 of 2018
BETWEEN: DONALD WOODCOCK
Plaintiff
AND
RODNEY KERSTING
Defendant
Catchwords:
Appeal - Appeal from registrar's decision granting summary judgment - Whether the plaintiff's failure to plead and prove an advance gives rise to an arguable defence to the claim for payment of a loan - Turns on own facts
Legislation:
Nil
Result:
Appeal allowed - Leave to defend granted
Representation:
Counsel:
| Plaintiff | : | Mr J C Yeldon |
| Defendant | : | Mr P G McGowan |
Solicitors:
| Plaintiff | : | Pacer Legal |
| Defendant | : | DTS Legal |
Case(s) referred to in decision(s):
TSW Pty Ltd v University of Western Australia [2017] WASCA 67
STAUDE DCJ:
This appeal is from a decision of a registrar granting summary judgment to the plaintiff. The judgment was ordered to be stayed pending the expeditious filing of the defendant's counterclaim. The appeal is in effect a hearing de novo of the summary judgment application. The pleaded grounds of appeal are superfluous.
The claim
The claim, as pleaded in the amended statement of claim dated 8 November 2018, is for $150,000, being the amount of a contractual debt, together with interest and legal costs.
The debt corresponds to the agreed price for a share, being one of two issued shares, in a company then called Southsea Logistics WA Pty Ltd (Southsea WA), now Akuna Marine Services Pty Ltd, of which the plaintiff and the defendant are directors.
The two issued shares in that company were owned by Kilcairn Holdings Pty Ltd, a company controlled by the plaintiff, and Boldlink Investments Pty Ltd, a company controlled by the defendant.
By a letter to the plaintiff dated 11 July 2017 (annexure DW‑2 to the affidavit of Mr Woodcock sworn 6 September 2018) the defendant proposed that the plaintiff finance the acquisition by Boldlink of Kilcairn's share.
According to Mr Woodcock's affidavit, an agreement in writing (annexure DW‑3), called a vendor loan agreement, was prepared by the defendant and signed by the parties on 14 July 2017. By this agreement the vendor, being the plaintiff, promised to loan $150,000 to the borrower, the defendant, and the borrower promised to repay the principal with interest on certain terms.
Clause 5 of the agreement reads:
Vendor finance is for complete ownership of Southsea Logistics WA Pty Ltd. Currently as the company is structured, Rodney Kersting (Boldlink Investments) owns 50% and Donald Woodcock (Kilcairn Holdings) owns 50%. Once this agreement is signed, complete 100% ownership and shares gets transferred directly to Rodney Kersting (Boldlink Investments) with confirmation from ASIC dated as of 14 July 2017.
It is not in issue that Kincairn duly transferred its share to Boldlink as agreed. The ASIC current and historical organisation extract in relation to Southsea WA is annexure DW‑1 to Mr Woodcock's affidavit. It shows that from 14 July 2017, the date of the loan agreement, the two shares in Southsea WA, were owned by Boldlink.
It is the plaintiff's position that the transfer of Kilcairn's share gave effect to the arrangement described in cl 5: Kilcairn's share in Southsea WA was sold to Boldlink for $150,000, that sum being loaned by the plaintiff to the defendant, clearly, at least in a de facto sense, as a form of vendor finance.
However, by their written agreement, the parties created legal confusion by identifying themselves with the companies in which they had interests, thus, as it seems to me, enabling the defendant who proposed the agreement, to take issue with the claim arising from it.
The application
The application for summary judgment was heard and determined by the learned registrar on 27 November 2018. The application was supported by an affidavit by Mr Woodcock who deposed (in essence) to the above facts and also to the fact that the debt had not been repaid wholly or in part and further that the defendant had no defence to the claim.
The application was also supported by an affidavit by Matthew David Priestly, solicitor, who deposed to the circumstances in which the application was brought out of time without conferral.
The defendant, Mr Kersting, swore an affidavit in opposition to the application on 5 October 2018. He stated that he never received the loan amount for the plaintiff and on that basis contended that he is not indebted to him. He stated that the agreement never took effect. If it had, he stated in par 12, it was Boldlink that acquired the share, not he.
Mr Kersting also stated in his affidavit that if he were personally liable for the claim, then he would seek to set-off a counterclaim for damages.
The affidavit annexes a draft defence and counterclaim that contends that the defendant is not indebted pursuant to the agreement and, further, by way of counterclaim, that the defendant (not Boldlink) has suffered loss and damage by reason of deceptive and misleading conduct on the part of the plaintiff in failing to disclose payments made by Southsea WA to another company, Southsea Logistics Pty Ltd, a company of which the plaintiff was a director. This conduct is said to amount to a misrepresentation as to the financial affairs of Southsea WA upon which the defendant relied when he entered into the agreement.
On 25 January 2019 the defendant by its solicitors, DTS Legal, lodged a document entitled 'Substituted Counterclaim (Pursuant to Order Registrar Kingsley made 21 December 2018)'. This pleading claims damages for misleading and deceptive conduct, alternatively a compensation order, and a set-off against the defendant's liability for the loan debt.
Determination
No real issue is taken with the extension of time sought by the plaintiff. The issue is whether there is an arguable defence.
The court is bound to be circumspect. In this regard I refer to the dicta of Mitchell JA in TSW Pty Ltd v University of Western Australia [2017] WASCA 67 [86] – [88]. Only in this clearest of cases will it be appropriate for the court to determine a contested claim summarily. In other cases the court should employ its case management procedures to bring about a prompt trial, thereby avoiding the expenditure of the time and resources of the court and the parties on determinations as to what is arguable.
It is not difficult to see what the parties intended with respect to the share transfer from Kilcairn to Boldlink. The defendant's proposal of 11 July 2017 and the vendor loan agreement of 14 July 2017 both provided, in effect, that the agreed consideration of $150,000 would become a debt repayable with interest to the plaintiff by the defendant. But neither the plaintiff nor the defendant was a party to the sale of Kilcairn's share in Southsea WA.
The uncontested facts before me do not establish that the plaintiff advanced the sum of $150,000 to Kilcairn or to the defendant, notwithstanding the fact that the sale of the share was completed.
It is a technical defence, and it may well be disingenuous as the plaintiff submits, but it is available.
As for the counterclaim, I am unable to see on the papers how it can arise between the defendant and the plaintiff personally, but it does point up the legal difficulty the parties have created by expressing their agreement to between themselves rather than the companies in which they have interests. As the defendant has observed there is no claim pleaded for rectification of the contract, and no other basis has been pleaded for identifying the parties with their companies.
I would allow the appeal. The defendant has leave to defend.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AO
Acting Associate to Judge Staude3 APRIL 2019
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