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  • Unreported Judgment

Van Rowe v On the Path Investments Pty Ltd

 

[2005] QCA 133

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

DC No 2491 of 2003

Court of Appeal

PROCEEDING:

Application for Extension of Time s 118 DCA (Civil)

ORIGINATING COURT:

DELIVERED ON:

29 April 2005

DELIVERED AT:

Brisbane

HEARING DATE:

14 April 2005

JUDGES:

McPherson and Jerrard JJA and Helman J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

  1. Application for leave to appeal against judgment refused
  2. Applicant defendants to pay the respondent plaintiff’s costs of and incidental to the application for leave to appeal

CATCHWORDS:

PROCEDURE – COURTS – QUEENSLAND – SUMMARY JUDGMENT – plaintiff sold business to defendant company – plaintiff sued to recover amounts under bill of sale or contract – summary judgment for plaintiff – defendants refused leave to appeal against judgment – contract largely discharged by performance – possibility of counterclaim insufficiently precise to be set off – defence not demonstrated

Gray v Morris [2004] 2 Qd R 118; [2004] QCA 005, distinguished

COUNSEL:

A F Maher for the applicant

S Nguyen for the respondent

SOLICITORS:

Martinez Quadrio Lawyers for the applicant

Butts & Barkley Solicitors for the respondent

[1]  McPHERSON JA: The plaintiff Ms Van Rowe owned and conducted a sewing business at Sumner Park in tenanted premises where she manufactured clothing using machines and equipment, and employing operators to do the work. In February 2002 she contracted to sell the business, machines and equipment to the first defendant company On The Path Investments Pty Ltd, of which the second defendants Mr and Mrs Mavronicholas are the principals. The agreed purchase price was $85,000, of which $40,000 was payable on settlement. By cl 2(b) of the special conditions of contract, the balance of $45,000 was to be paid on the earlier of: (i) 20 July 2002, provided the turnover from settlement date until 20 July 2002 was $65,000 or more; and (ii) 20 September 2002.

[2]  The contract was settled on 20 February 2002. To secure the obligation in cl 2(b) the contract provided for the provision of a bill of sale over the business assets and chattels and for personal guarantees from Mr & Mrs Mavronicholas. The bill of sale, which was duly executed by both the first defendant company and the second defendants Mr & Mrs Mavronicholas, is dated 28 February 2002. Clause 4 of it repeats the terms of special condition 2(b) of the contract requiring payment at latest by 20 September of the amount of the unpaid balance of purchase moneys totalling $45,000.

[3]  The plaintiff started proceedings in the District Court against the defendants to recover amounts under the bill of sale or the contract. Her statement of claim filed on 30 July 2003 alleges that, from the date of settlement on 20 February 2002 until 20 July 2002, the business turnover exceeded the amount of $65,000 mentioned in cl 2(b) of the contract. This is disputed by the defendants, but what is clear is that, after a demand was made by the plaintiff, the defendants paid a further $5,000 leaving an amount of $40,000 due and payable on 20 September 2002. The plaintiff sued for that sum, as well as a further amount of $14,223.80 claimed as owing to the plaintiff as agreed remuneration for work she did for the defendants in assisting them in the business after settlement. There is a dispute about the amount, if any, owing on this account; but for present purposes the details do not matter because it forms no part of the amount in issue before this Court. It is limited to the sum of $40,000 payable by the defendant under the bill of sale.

[4]  On application by the plaintiff, Robin DCJ gave summary judgment for the sum of $40,000, leaving the balance claimed to go to trial. What is now before us is an application by the defendants for leave to appeal against that judgment, leave being needed under s 118(3) of the District Court of Queensland Act 1967 because judgment was given for an amount less than $50,000 as to which an appeal is available as of right. In addition, the defendants were late in filing their application, so that they also require an extension of the time for that purpose.

[5]  His Honour was satisfied that under the terms of the bill of sale the amount of $40,000 became due and payable at latest on 20 September 2002. He also considered that the bill of sale was sufficiently proved and that the amount in question was owing and unpaid by the defendants. In these respects his Honour was clearly correct. Ms Van Rowe deposed to and exhibited a copy of the bill of sale and there are allegations in para 2(a) and 2(b) of the defendants’ defence and counterclaim which show that they admit to having executed a document identified as a bill of sale.  However, para 2 of their defence and counterclaim contains allegations: (a) that the bill of sale signed by the second defendants Mr & Mrs Mavronicholas was “void and of no force or effect” against them and obliged only the first defendant company to pay money to the plaintiff “on the terms set out in paragraph 10.5”; and (b) that the bill of sale was “collateral to the contract for purchase of the business” and “that contract, at Item G, shows that there were no guarantors of the terms of the contract”.

[6]  This is all rather mystifying, and Mr Maher of counsel, who now appears for the defendants, has been unable to elucidate these allegations in the pleading. The reference in para 2(d) of the defence to “the terms set out in para 10.5” appears to be directed to para 10.5 of the statement of claim, which sets out the terms on which the balance payment of $45,000 (now reduced to $40,000) was payable by 20 September 2002. There is nothing at all to explain why the bill of sale is “void and of no force or effect” against the second defendants. The allegation in para 2(e) about the bill of sale being “collateral” to the contract and there being no guarantors of the terms of the contract is, for present purposes, legally irrelevant. The second defendants Mrs & Mrs Mavronicholas together with the first defendant company executed the bill of sale as “the Grantor”, a word which is defined in para 19(b) of that instrument to include “Grantors”. All of the defendants having executed it, they are bound by its terms, which include the obligation in cl 4 of the bill of sale to pay the whole of the monies secured ($45,000, less $5,000 paid) by 20 September 2002. It may have been convenient to speak in the contract of Mr & Mrs Mavronicholas as “guarantors”, but in law they with the defendant company became and are parties to the bill of sale and liable to the plaintiff as principals or primary obligors and not simply secondarily as guarantors. The contract was settled on the basis of that security, and, except to the extent that it imposes continuing obligations, the contract has now been discharged by performance.

[7]  Beyond this point, interpretation of the defence and counterclaim becomes a matter of uninformed guesswork. It may be inferred that, from the time of the defendants’ taking it over, the business has not been successful. One matter of contention relates to performance of the contractual provision obliging the plaintiff to provide after settlement a period of assistance to the defendants in conducting the business, which it is alleged she failed to do. In some way, this appears to be alleged in para 28(e)(i) to have produced a loss of business causing damages amounting to $13,750.00. Confidence in such an interpretation of the pleading is, however, shaken by the fact that the first defendant company counterclaims a total of $58,750.00 for damages for breach of contract or misrepresentation alleged to flow from the allegations in paragraphs 22 and 23.  Paragraphs 22 and 23 do indeed allege that the plaintiff supplied incorrect or exaggerated trading figures; that she did not have a reliable “gang” of contract workers in place; and that the “cultural barriers” between the first defendant and the contract workers were so great that, “as the plaintiff would have known”, the first defendant could not conduct the business profitably. A claim under the Fair Trading Act is also advanced; but Mr Maher said it was no longer being pursued.

[8]  Conceivably in all this there is a germ of a counterclaim that might lead to damages for misrepresentation. As a defence by way of set-off, it is far too imprecise to impeach the claim for $40,000. For example, we were informed that the amount of $58,750 claimed in para 30 of the counterclaim was the addition of the $45,000 already received by the plaintiff under the contract or bill of sale and the figure of $13,750 in para 28(e)(i). Mathematically that seems to be so, but the defendants have not elected to rescind the contract of purchase or (if they can) the bill of sale, and they have, so far as the material goes, remained and remain in possession of the business and its assets which they acquired as long ago as February 2002.

[9]  The defendants’ allegations of misrepresentation are expressed in the most general terms, and, as the learned judge remarked, they fail to condescend to particularity in any respect. The facts that go to constitute the allegations, as distinct from the allegations themselves, are not sworn to by any person whether or not professing to know what they are. Much was sought to be made of the decision in Gray v Morris [2004] 2 Qd R 118; but it was a case in which facts, events and particular conversations were deposed to in detail, so as to enable the court to see for itself that there were matters in dispute between the parties calling for a trial in the ordinary way. That has not been done in the present case. Instead, we are left to depend simply on the defendants’ bare assurance that what they allege is so.  This is far from sufficient to demonstrate that there are matters answering the claim for $40,000 that ought to be tried.

[10]  The defendants have failed to demonstrate what their defence is to the plaintiff's claim for $40,000, which is due under an instrument expressed to be an indenture and to have been signed, sealed and delivered by each of them.  If they have a proper basis for claiming damages for breach of contract or misrepresentation, they remain entitled to pursue it on their counterclaim once it is amended to satisfy the rules of law and pleading. On occasions in the past, summary judgment has been granted to a plaintiff, but with a stay of execution pending trial or determination of a counterclaim arising out of the same transaction: see, for example, Logan v Lyons [1955] QWN 78; and Caltex Oil (Australia) Pty Ltd v Miles [1958] QWN 7. The learned judge was not asked to adopt that course here; but he remarked that nothing helpful to the defendants had been shown that would lead him to grant a stay of the judgment. His Honour has not been shown to have erred in reaching that conclusion or in deciding that this was a case in which the plaintiff was entitled to summary judgment for the amount of $40,000 owing to her on the instrument on which she relies.

[11]  I would refuse the application for leave to appeal against the judgment. The applicant defendants must pay the respondent plaintiff’s costs of and incidental to the application for leave to appeal.

[12]  JERRARD JA: In this application I have read and respectfully agree with the reasons for judgment and order proposed by McPherson JA.  I add that the second applicants, the second defendants to the statement of claim, did execute the document described as an indenture on 28 February 2002 as directors of the first defendant, all defendants being described therein by the title of “the Grantor”.  As McPherson JA remarks, clause 19(b) provides that unless the interpretation “shall be excluded or be repugnant to the context”, where more than one Grantor is a party to the indenture the word “Grantor” whenever the same is used should be read as “Grantors”.  Use of “Grantor” in the plural would be repugnant in clause 1 of the indenture, whereby the Grantor assigned to the Grantee all of the rights, title, interests, property, claim, and demand of the Grantor in the personal property, goods, chattels, effects, and things set forth in the schedule accompanying the bill of sale.  The repugnancy arises because the identical schedule forms part of the contract whereby the first defendant/first applicant, On the Path Investments Pty Ltd, purchased the plaintiff respondent’s business and the plant and equipment described in that schedule.  Only the first defendant would have a title as Grantor to assign to the Grantee. 

[13]  The contract provided that the purchaser (the first defendant) and its directors would sign a bill of sale in favour of the vendor; and also that the second defendants would provide personal guarantees to that bill of sale.  It appears the second defendants did sign the bill of sale, but did not comply with the obligation to provide the personal guarantees.  That could not assist them on the application for summary judgment on the bill of sale.

[14]  That is because it is not repugnant to the context of clause 4 of the bill of sale, read with the contract which required its execution, to read the term “the Grantor” as including all the defendants named in the indenture as the Grantor.  Presumably the contention of the second defendants that the term “the Grantor” in clause 1 could refer only to the first defendant explained the portion of the pleading in the defence and counter claim, in which the second defendants pleaded that they signed the indenture as guarantors but had no capacity to grant the bill of sale.  As McPherson JA observes, they executed the document not as guarantors but as the Grantor, and the term “Guarantor” does not appear in that indenture.  They are accordingly bound as the Grantor by the promise to pay the $45,000.

[15]  It is true that the plaintiff’s claim described the relief sought against the second defendants as $40,000 being monies due and owing from those second defendants pursuant to “personal guarantees under a bill of sale”, but the words “personal guarantees under” were irrelevant to the liability established by the documents and pleadings.  I agree with McPherson JA that while it may have been convenient for everyone to speak of the second defendants as guarantors, in law they and the first defendants were party to that bill of sale and liable as principals.

[16]  I also agree that the second defendants simply failed in their pleading to show grounds for a stay of execution pending trial and determination of the counter claim.  Had they done so a stay would have accorded with the practice described in Morgan & Son, Ld v S Martin Johnson & Co., Ld [1949] 1 KB 107 at 108, discussed and considered in United Dominions Corp Ltd v Jaybe Homes Pty Ltd [1978] Qd R 111.

[17]  HELMAN J: I agree with the orders proposed by McPherson J.A. and with his reasons.

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Editorial Notes

  • Published Case Name:

    Van Rowe v On the Path Investments P/L & Ors

  • Shortened Case Name:

    Van Rowe v On the Path Investments Pty Ltd

  • MNC:

    [2005] QCA 133

  • Court:

    QCA

  • Judge(s):

    McPherson JA, Jerrard JA, Helman J

  • Date:

    29 Apr 2005

Litigation History

No Litigation History

Appeal Status

No Status