Exit Distraction Free Reading Mode
- Unreported Judgment
- Padarath v Queensland Vedic Cultural Centre Pty Ltd[2023] QCAT 221
- Add to List
Padarath v Queensland Vedic Cultural Centre Pty Ltd[2023] QCAT 221
Padarath v Queensland Vedic Cultural Centre Pty Ltd[2023] QCAT 221
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Padarath & Anor v Queensland Vedic Cultural Centre Pty Ltd & Ors [2023] QCAT 221 |
PARTIES: | RAJNISH PADARATH THE ESTATE OF THE LATE RAM PADARATH (applicants) v QUEENSLAND VEDIC CULTURAL CENTRE PTY LTD SUKHVIR SINGH THE ESTATE OF THE LATE RAM PADARATH MRS RAJ PADARATH (respondents) |
APPLICATION NO: | MCDO60589/20 |
MATTER TYPE: | Other minor civil dispute matter |
DELIVERED ON: | 31 May 2023 |
HEARING DATE: | 22 November 2022 |
HEARD AT: | Brisbane |
DECISION OF: | Adjudicator LeMass Adjudicator Scott-Mackenzie |
ORDERS: |
|
CATCHWORDS: | MINOR CIVIL DISPUTE – action for debt – where monies advanced to voluntary association – whether advances to purchase shares in voluntary association and loans or donations – whether director had authority of board of voluntary association to raise monies as he did and enter share and loan agreements – whether share and loan agreements enforceable Corporations Act 2001 (Cth), s 126, s 127 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 11, schedule 3 Pal v Queensland Vedic Cultural Centre Pty Ltd & Anor (MCDO 60617/20) Padarath & Anor v Queensland Vedic Cultural Centre Pty Ltd (MCDO 60610/20) Deo v Sukhvir & Anor (MCDO 524/21) Prasad v Singh & Anor (MCDO 523/21) Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd (2014) 120 SASR 532 Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2016] FCA 764 Boz One Pty Ltd v McLellan (2015) 105 ACSR 325 Martin v New South Wales [2011] NSWLEC 50 Junker v Hepburn [2010] NSWSC 88 Singh v Queensland Vedic Cultural Centre Pty Ltd (number MCDO 907/20) Prasad v Queensland Vedic Cultural Centre Pty Ltd & Ors [2022] QCATA 174 Hill v Berghofer [2011] QCATA 34 Ziegeler t/a Ziegco Pty Ltd v Recochem Incorporated [2010] QCATA 78 Spain v Union Steamship Co. of New Zealand Ltd (1923) 32 CLR 138 |
APPEARANCES & REPRESENTATION: | |
First applicant: | Self-represented |
Second applicant: | First applicant |
First respondent: | Mr Sukarm Singh |
Second respondent: | Self-represented |
REASONS FOR DECISION
Introduction
- [1]This proceeding, and four other proceedings arising out of similar facts, were heard by this Tribunal on 22, 23 and 24 November 2022.[1] The decision in each proceeding should be read together.
- [2]The decision of the Tribunal in this proceeding is as follows:
- (a)the first respondent, Queensland Vedic Cultural Centre Pty Ltd (QVCC), pay to the first applicant, Mr Rajnish Padarath (Mr Padarath), $8,345.50, $3,000.00 the principal sum paid by him to QVCC for three shares in QVCC not issued to him, $5,000.00 repayment of monies lent by him to QVCC and $345.50 the fee on filing the application in the proceeding, within 14 days of this order; and
- (b)QVCC pay to the second applicant, the Estate of the late Ram Padarath (Estate), $5,000.00 repayment of monies lent by Mr Ram Padarath to QVCC within 14 days of this order.
Application
- [3]On 26 July 2020 Mr Padarath made application to the Tribunal for an order that QVCC and the second respondent, its director Dr Singh, pay to him $13,700.00 together with the filing fee on the application of $345.80, a total loss of $14,045.80 (application). The application contains the following explanation for the order sought:
In 2014 the directors of Queensland Vedic Cultural Centre Pty Ltd (QVCC) ACN: 600692279 or ABN: 27 600 692 279 raised funds through the issue of shares to buy a property at 198 Learoyd Road Willawong Q 4110. I had contributed $3,000 for 3 shares and made monthly payments of $30 totalling about $700 for additional shares. No shares have been received to date. In February 2018 my late father (Mr Ram Padarath) and I each gave an interest free loan not [sic.] of $5,000 each to the directors of QVCC to complete the construction of building at above property. This interest free loan was to be repaid within two years (by February 2020) but no money has been repaid. Total money owed Rajinish Padarath Loan $5000, Shares $3,700 and Late Ram Padarath Loan $5,000 (As trustee and joint beneficiary estate).
- [4]The following documents were filed with the application:
- (a)letter applicant and others to the first respondent dated 8 May 2008;
- (b)a share agreement dated 10 November 2014 between QVCC, its directors Mr Jitendra Deo (Mr Deo), Mr Dick Sen, the second respondent, Dr Sukhvir Singh (Dr Singh) and Mr Sunil Dutt and Arya Pratinidhi Sabha of Queensland (APSQ) and Mr Padarath (Mr Padarath’s share agreement). The share agreement is signed by Mr Deo and Mr Padarath. It is not signed by Mr Sen, Dr Singh, Mr Dutt or on behalf of APSQ;
- (c)a loan agreement between Mr and Mrs Rajnish Padarath as lenders and Mr Deo for QVCC as borrower (undated) (Mr and Mrs Padarath’s loan agreement). The loan agreement is not signed by Mr or Mrs Padarath;
- (d)a loan agreement between Mr and Mrs Ram Padarath as lenders and Mr Deo for QVCC as borrower dated 25 February 2018 (Estate’s loan agreement). The loan agreement is signed by Mr Ram Padarath and Mr Deo. It is not signed by Mrs Ram Padarath;
- (e)a letter applicant to QVCC dated 7 June 2020; and
- (f)emails sent by the applicant to QVCC on 7 and 12 June 2020.
- [5]The Estate was joined to the proceeding as second applicant. Mrs Padarath was joined as fourth respondent.[2]
Response
- [6]On 17 August 2020 QVCC and Dr Singh filed a response to the application (response). In paragraph 1 of part D, the orders sought by them, it is said:
1. That the relief sought is a declaration that would need to be heard in another jurisdiction. Corporate governance related issues are outside the jurisdiction of this Hon’ble Court. 2. The matter of claim and relief sought is subject of proceeding in The District Court of Queensland, Brisbane wide Registry No. 610/2020. 3. Mr Jitendra Deo did not have the authority to enter into to the purported “Share Agreement” or “Loan Agreement” on behalf of the company. Directors of the company neither gave any authority to Mr Jitendra Deo to enter into or sign any agreement on behalf of the company nor considered any proposal to issue shares or take loans from any source for the company. 4. In the alternative any funds provided by the applicant were DONATIONS, which he is now trying to portray and claim as a debt in connivance with Mr Jitendra Deo, whose malefic intentions towards QVCC are well known. 5. That the applicant has not provided any document or evidence, worth relying on.
- [7]Attached to the response, in a separate document, are reasons for the orders sought. In summary, QVCC and Dr Singh assert:
- (a)members of QVCC have donated money to QVCC in the past and continue to do so;
- (b)the sum of $13,700.00 paid by Mr Padarath was a donation; and
- (c)Mr Deo did not have authority to enter the loan or share agreements for QVCC.
- [8]QVCC and Dr Singh, it is to be observed, do not dispute payment of $13,700.00 by Mr Padarath and Mr Ram Padarath to it. Instead, they contend:
- (a)the monies paid by Mr Padarath and Mr Ram Padarath to QVCC were donations;
- (b)Mr Deo did not have authority to enter the loan or share agreements for QVCC; and
- (c)the agreements are unenforceable.
Statement of defence
- [9]QVCC, on 28 June 2021, filed a letter addressed to the Tribunal and described in the opening paragraph as, “... our statement of defense [sic.] to facilitate your understanding of our side of the case ...” (statement of defence). A significant part of the document is devoted to attacking the character and honesty of Mr Deo. To the extent it addresses the issues in the proceeding, it again asserts the monies paid by Mr Padarath and the Estate to QVCC were donations, said to be established by exhibit J to the letter, a list of the members making contributions towards “the project”, the acquisition of land for a community centre. At best, the document is equivocal.
- [10]The letter again asserts Mr Deo was without authority to enter the loan or share agreements for QVCC.
Order of 19 July 2021
- [11]On 19 July 2021 the Tribunal made orders for the filing of documents by the parties. QVCC and Dr Singh filed the documents required by the order on 29 July 2021. The documents included documents filed in a proceeding commenced by Mr Deo and JD Electrical and Communications Pty Ltd as trustee for The Deo Family Trust in the District Court of Queensland against QVCC.
- [12]Mr Padarath and the Estate filed documents on 2 August 2021. The documents included documents said to evidence payment of the monies by Mr Padarath and Mr Ram Padarath to QVCC. They also included copies of the following documents:
- (a)email sent by Mr Deo to members of QVCC on 25 February 2018. The email, in part, reads as follows:
The interest free loan of $100K which was requested from members has reached $90K since and after further request made last week Thursday 22. Sabha needed from the members loan of $100K, Interest free for two years.
The following members have committed loan and some have already paid.
Mr & Mrs Vijendra Rai $10K, Mr & Mrs Lalta Prasad $10K, Mr & Mrs Murrari Lal $10K, Mr & Mrs Sandeep Kumar $10K, Mr & Mrs Jitendra Deo $10, Mr & Mrs Rakesh Singh $5K, Anonymous $SK, Mr & Mrs Ram Padarath $SK, Mr & Mrs Manoj Sharma $5K, Anonymous $5K, Anonymous $5K, Mr & Mrs Hari Chand $5K and Mrs & Mrs Pranesh Pal $5K.
As you can see the target is almost met, just need another two members to help us out contributing loan of $5K.
(Emphasis added);
- (b)QVCC’s financial statements for the years ended 30 June 2016, 30 June 2017, and 30 June 2018. In the financial statements, the notes to the liability of QVCC described as “Share Agreements – Loans”, list Mr Padarath with amounts for 2016, 2017 and 2018;
- (c)minutes of the meeting of the directors of QVCC (undated). Present at the meeting were Mr Deo, Dr Singh, and Mr Dick Sen. The minutes record QVCC’s bank will not agree to the issue of further shares and share certificates should be issued as soon as possible;
- (d)letter Mr Padarath to QVCC dated 7 June 2020. The letter demands repayment of the monies claimed in the proceeding;
- (e)letter and email Mr Sukarm Singh (Mr Singh) (Mr Singh appeared on behalf of QVCC and is not to be confused with Dr Singh) to QVCC dated 8 November 2018 and 9 November 2018 respectively demanding repayment of monies paid by him to QVCC;
- (f)paid receipt number 031 QVCC to Mr and Mrs Padarath dated 9 August 2014. The receipt is referred to below[3]; and
- (g)bank statements said to evidence payment of monies by Mr Padarath to QVCC.
- [13]Also filed in the Tribunal is a lengthy letter from Mr Padarath to the Tribunal dated 29 July 2021 responding to the orders and the statement of defence.
Further statement of defence
- [14]On 9 September 2021 QVCC and Dr Singh filed a letter addressed to the Tribunal and dated 6 September 2021 responding to the letter from Mr Padarath to the Tribunal dated 29 July 2021. Reference is made to the decision of the Tribunal in Singh v Queensland Vedic Cultural Centre Pty Ltd[4], and sections 124 – 130 of the Corporations Act 2001 (Cth).
Order of 19 July 2022
- [15]The Tribunal, on 19 July 2022, made orders for the parties filing affidavits deposing to facts and evidence on which they will rely at the hearing of the proceeding. Mr Padarath filed an affidavit on 8 August 2022, affirmed by him that day (Mr Padarath’s affidavit). He deposes at length to what he describes the share dispute (parts A and B), the loan dispute (parts C and D) and other information ordered by the Tribunal (part E). The claims by Mr Padarath and the Estate, it is said, total $14,785.80, calculated as follows:
Mr Padarath
Shares not allocated$ 4,440.00
Loan not repaid$ 5,000.00
Estate
Loan not repaid$ 5,000.00
Application fee$ 345.80
$14,785.80
- [16]
- [17]On 29 August 2022 QVCC and Dr Singh filed an affidavit, affirmed that day by Mr Singh (Mr Singh’s affidavit). The contents of the affidavit are discussed below, under the subheading Mr Singh’s affidavit[6].
Further submission by QVCC and Dr Singh
- [18]QVCC and Dr Singh, on 8 December 2022, after the hearing of the proceeding, filed further submissions. They did so without the leave of the Tribunal and without serving the submissions on Mr Padarath or the Estate.
- [19]The opening paragraph of the submissions reads:
This is in reference to the decision taken by the Tribunal on 24th November 2022 in response the objection raised by the Respondent about the fairness of the proceedings in the light of the Tribunal Order dated 19 July 2022, in the subject matter of Brisbane Claim 0000523/21 Lalta Prasad vs QVCC. The objection related to all claims heard by the Adjudicators. The adjudicator considered the points raised by the respondent and made the decision as communicated to the respondent through email dated 24 November 2022. Though this act does not alleviate the disadvantage caused to Respondent, however, as per the decision of the Tribunal the Respondent (QVCC) hereby submits the following facts for consideration before the Tribunal gives its decision in the matter of applicant’s claim.
- [20]As been said, on 5 August 2022 Mr Padarath and the Estate filed Mr Padarath’s affidavit. The affidavit was not served on QVCC or Dr Singh as required by the order of the Tribunal. Notwithstanding, the Tribunal allowed Mr Padarath and the Estate to rely on the affidavit. It did so because Mr Padarath and the Estate had outlined their claims, in detail, in earlier material[7] and QVCC and Dr Singh had responded to them on several occasions[8].
- [21]QVCC and Dr Singh were given an opportunity to read the affidavit.
- [22]We are satisfied QVCC and Dr Singh understood the case they had to meet. It was not prejudiced by Mr Padarath and the Estate not serving the affidavit on them.
- [23]QVCC and Dr Singh also complain about Mr Deo giving evidence without them being provided with a statement of evidence as required by the order. It was given notice he would be called as a witness. The time to object because they were not given a statement was either before or during the hearing. They did not do so.
- [24]There have been several cases arising out of share and loan agreements entered by QVCC, both in the Tribunal and the courts. Mr Deo had already given evidence in other proceedings about the agreements and his evidence in this proceeding cannot have come as a surprise. If it did, QVCC and Dr Singh might have applied to the Tribunal for an adjournment to afford them an opportunity to meet the surprise. They did not do so.
- [25]Mr Singh cross-examined Mr Deo. We are satisfied QVCC and Dr Singh were not prejudiced by not having a statement of evidence.
- [26]Otherwise, nothing in the submission is evidence not available to QVCC and Dr Singh at the time of the hearing. The submissions will be put to one side.
Hearing
- [27]The proceeding was heard by the Tribunal on 22 November 2022. Mr Padarath appeared in person and on behalf of the Estate. Dr Sing appear in person and with Mr Singh on behalf of QVCC.
- [28]Mr Padarath and Mr Singh addressed the Tribunal and made closing submissions.
Evidence
Mr Padarath’s affidavit
- [29]On 12 August 2014, Mr Padarath affirms, he received an email from Mr Deo[9] to which was attached a letter on QVCC’s letterhead[10] and invoice number 031 QVCC to Mr and Mrs Padarath dated 9 August 2014 for $3,000.00[11]. The details of the invoice read, “To purchase shares in Queensland Vedic Cultural Centre Pty Ltd 3 shares @ 1000.00 - $3000.00 Contribution paid for shares till August 2015 @ $30 per month - $360.00”
- [30]The invoice names as chairperson of QVCC Mr Deo, secretary Mr Hari Chand and directors Mr Mul Chand, Mr Singh, Dr Singh, Mr Dick Sen and Mr Sunil Dutt.
- [31]On 12 August 2014 Mr Padarath paid $3,360.00 to QVCC, $3,000.00 for the shares and $360.00 for monthly contributions.[12] The payment was acknowledged by email from Mr Deo on 17 August 2014 to which was attached a receipt from QVCC reading, “To purchase share in Queensland Vedic Cultural Centre Pty Ltd 3 shares @ $1000.00 Contributions paid for shares till August 2015 at $30 per month”.[13]
- [32]On 10 November 2014, Mr Padarath affirms, he signed the share agreement.[14] It was signed by Mr Deo for QVCC.
- [33]
- [34]Mr Padarath also annexes to his affidavit minutes of a meeting of the directors of QVCC held on 6 October 2014.[16] The directors present were Mr Deo, Dr Singh, and Mr Dick Sen. Also present as observers were Mr Singh, Mr Mul Chand, Mr Hari Chand, Mr Padarath, Mr Rakesh Singh, and Mr Vijendra Ray. The matters discussed included:
- Issue of share certificates: Due to banks condition, we are unable to issue certificates without their concern. Secretary to write letter requesting the banks consent to issue shares.
- …
- Directors are working closely with that the members to raise funds for repayments.
- Directors have been advised that repayments towards the loan is flowing in, and share certificates should be issue as soon as possible.
- It was also discussed that by issuing members with share certificates will promote consistent income which will help repay the loan.
- …
- [35]Mr Padarath claims $4,400, $3,000.00 the principal sum paid by him for the shares in QVCC not issued to him and $1,400.00 for monthly contributions paid up by him to QVCC.
- [36]
- [37]Mr Padarath also annexes to his affidavit two emails sent by Mr Deo to members of QVCC, the first on 23 February 2019 and the second on 25 February 2018.[19] The opening sentence of the second paragraph of the first email reads, “You may be aware that E.C approved that we request for interest free loan from the members for two years, and we pay them back within that period.” The email then goes on to discuss the monies raised and asks for further loans of $5,000.00.
- [38]The opening paragraph of the second email reads, “I am so glad and feeling blessed working with such a wonderful Souls and this email is a update of loan commitments from members.” It later names the members who have “… committed loan and some have already paid …”
- [39]Mr Ram Padarath, on 23 February 2018, Mr Padarath affirms, lent to QVCC an interest free loan of $5,000.00 for two years.[20] Mr Padarath annexes to the affidavit as annexure 16 bank documents said to evidence the payment.
- [40]On 25 February 2018 Mr Ram Padarath as lender and Mr Deo for QVCC as borrower signed the Estate’s loan agreement.[21]
- [41]Mr Ram Padarath died on 25 September 2019.[22]
Mr Singh’s affidavit
- [42]Mr Singh affirms donations were collected to purchase the Willawong property.[23] The invoices issued to members, and the draft of the share agreement circulated, by Mr Deo, “... was not approved and adopted by QVCC directors ...”[24]. The monies were paid into the company’s account. They were donations, not loans.
- [43]Mr Deo, Mr Singh affirms, was without authority to sign the share and loan agreements. The minutes produced are not the correct minutes. Different minutes, he affirms, were filed in a proceeding in the Supreme Court of Queensland.
- [44]Mr Singh, in his affidavit, attacks the integrity of Mr Deo, and continues the monies paid under the share agreement were, “... a contribution/Donation ...”[25]
- [45]Once again, reference is made to the decision of the Tribunal in Singh v Queensland Vedic Cultural Centre Pty Ltd[26]. The decision, it is said, “... explains in succinct details why this purported “Share Agreement” is not within the jurisdiction of QCAT and explains that, even if it was not the case, the purported agreement provided by Applicant is not a valid the agreement ...” The affidavit, once again, asserts Mr Deo did not have authority to enter the loan agreements for QVCC.[27]
- [46]The late Mr Ram Padarath did not pay any monies to the first respondent. The affidavit continues, “However, we have learned through the witness, Mr Hari Chand, of the purported “Loan Agreement” in the name of Late Mr Ram Padarath that money paid by him to APSQ was a donation ...”[28]
Mr Deo’s evidence
- [47]Mr Deo was called by Mr Padarath and the Estate to give evidence. He stated he had the authority of the directors of QVCC to raise money for QVCC by means of the issue of shares and interest free loans for two years. The money was to service a bank loan.
- [48]He added he had the full authority of the committee to send the emails to members. They were sent to all members.
- [49]Mr Sukarm Singh cross-examined Mr Deo.
Exhibits
- [50]Six exhibits were tendered and accepted in evidence by the Tribunal. They are:
- (a)exhibit A: An email sent by Mr Singh to Mr Hari Chand on 9 September 2018, asking for a copy of the share register and Mr Chand’s reply sent on 10 September 2018, stating he does not keep or maintain the register;
- (b)exhibit B: Notes to the financial statements of the first respondent for the year ended 30 June 2018. The notes are headed, “Share Agreement Loan” and list Mr and Mrs Padarath for $3,360.00 in 2017 and $10,565.00 in 2018;
- (c)exhibit C: Minutes of the meeting of the executive committee of APSQ held on 4 February 2018. The persons present at the meeting included Mr Deo, Dr Singh, and Mr Singh. The minutes, under the heading “QVCC Hall Project Update”, in part, read:
President requested members who are able to, to provide a loan of $10,000.00 to QVCC for a period of one or two years with interest free so that the Samaj can meet the construction costs. The following members volunteered to provide the loan - Mr Jitendra Deo $10,000.00 for two years, Mr Lalta Prasad $10,000.00 for one year and Mrs Nrmala Ray $10,000.00 for two years.
(Emphasis added)
- (d)exhibit D: Email sent by Mr Deo to members of QVCC on 9 February 2019. Relevantly, the email reads:
As you all are aware that the construction work has begun, and we urgently require funding. Most of the pledges are paid, but few members will have to catch up.
There is still a shortfall, and due to provision for two storey building there are extra costs.
In the last executive meeting we have decided to raise funds quickly so the building construction keeps progressing. With the available funds we have completed the BA (building application) and have enough to pay for all framing (trusses & walls), and aluminium doors and window which needs to be ordered now so it is ready in time for installation.
We need quick funding therefore it was suggested that we raise $100,000 through interest free loans from members and we can pay them back in two years time. As you know the funds are still coming through but at its pace, so we cannot wait for that to come and hold off building.
If you are able to contribute and provide the loan for 24 months interest free up to $10,000 it will be very much appreciated. So far we have myself, Mr & Mrs Vijendra Rai and Mr & Mrs Lalta Prasad. We need 7 more members help.
(Emphasis added)
- (e)exhibit E: Minutes of the meeting of the directors of QVCC held on 9 December 2018. Present at the meeting were Mr Deo, Mr Singh, Mr Dick Sen, and Mr Sunil Dutt. Mr Singh is recorded as having asked why shares were not issued as originally planned. Mr Deo is recorded as having responded to the effect QVCC’s bank will not agree to the issue of further shares; and
- (f)exhibit F: Letter Dr Singh to Mr Dev (undated). Dr Singh refers to the issue of shares and the failure to do so. He further complains about not receiving a copy of the share register.
Discussion
Issues
- [51]The issues raised for determination by the Tribunal may be summarised in the following terms:
- (a)does the Tribunal have jurisdiction to hear and decide the proceeding;
- (b)were the monies paid by Mr and Mrs Padarath and Mr Ram Padarath to QVCC to purchase shares in QVCC and loans, or donations;
- (c)did Mr Deo have the authority of QVCC to enter the share and loan agreements; and
- (d)are the share and loan agreements enforceable?
Share agreement
- [52]The share agreement recites QVCC in conjunction with APSQ has purchased the Willawong property and intends constructing a multi-purpose community centre for religious and cultural events and educational purposes.[29] The recitals then continue the member agrees to pay $3,000.00 for three shares in QVCC.[30] Share certificates will issue following the release of director guarantees for a bank loan.[31]
- [53]
- [54]Clauses 6 and 7, in the context of the proceeding before the Tribunal, are important. They provide:
- 6.THE MEMBER MAY TERMINATE THIS AGREEMENT AT ANY TIME DURING THE TERM OF THE LOAN WHICH IS 25 YEARS PROVIDED THE MEMBER GIVES NOTICE AT LEAST 30 DAYS IN ADVANCE OF HIS/HER INTENTION TO TERMINATE THIS AGREEMENT.
- 7.ON TERMINATION OF THIS AGREEMENT BY THE MEMBER, THE VALUE OF THE INITIAL SHARES MADE BY THE MEMBER WILL REVERT TO APSQ INC. SHAREHOLDING. THE MEMBER MAY ASK FOR THE REFUND OF HIS INITIAL SHARE/S VALUE AND THE REPAYMENT AND SUCH PAYMENT WILL BE MADE TO MEMBER WITHIN 90 DAYS PERIOD. ALTERNATIVELY, THE MEMBER MAY RESELL HIS SHARES/S TO ANOTHER MEMBER.
Loan agreements
- [55]The parties to the loan agreements are described in clause 1 in the following terms:
The Lender is an individual member of Arya Pratinidhi Sabha of Queensland (APSQ) and the Borrower is Queensland Vedic Cultural Centre Pty Ltd. The Director and Secretary is authorised to represent the Borrower in executing this Agreement.
- [56]Importantly, clauses 2 and 3 of the loan agreements provide:
Loan Amount and Interest
- 2.The Lender promises to loan $5,000 AUD to the Borrower and the Borrower promises to repay this principal amount to the Lender without any interest.
Payment
- 3.The loan shall be paid to the lender by 2 years’ time from the date the full amount of $5,000 is transferred into the Borrowers nominated account.
- [57]The effect of the agreements is clear. The lender, here Mr and Mrs Padarath and Mr Ram Padarath, promise to loan $5,000.00 to QVCC interest free. QVCC promises to repay the loan within two years.
- [58]The copy of the agreement filed with the application and annexure 14 to Mr Padarath’s affidavit has been signed by Mr Deo for QVCC as borrower but not Mr or Mrs Padarath. The annexure includes a statutory declaration by Mr Deo, made 17 October 2021, to the effect he signed the loan agreement. We accept he did so. There is no evidence either Mr or Mrs Padarath also signed the agreement.
- [59]Mr and Mrs Ram Padarath’s loan agreement filed with the application and annexure 17 to Mr Padarath’s affidavit is signed by Mr Ram Padarath as lender and by Mr Deo for QVCC as borrower, but not by Mrs Ram Padarath.
Jurisdiction
- [60]QVCC asserts the Tribunal is without jurisdiction to hear and decide the proceeding. It relies on the ex-tempore decision of the Tribunal in Singh v Queensland Vedic Cultural Centre Pty Ltd[34]. There, on the evidence available to it, the Tribunal decided the share agreement was invalid. Whilst there was discussion about jurisdiction in the context of a claim under the Corporations Act, the Tribunal did not decide it was without jurisdiction.
- [61]The Tribunal has jurisdiction to hear and decide a minor civil dispute.[35] Minor civil dispute is defined in the dictionary in schedule 3 to the QCAT Act. Relevantly, it includes a claim to recover a debt or liquidated demand of money of up to the prescribed amount. In Hill v Berghofer[36], Alan Wilson J, then President of the Tribunal, said:
A ‘debt or liquidated demand’ is, as the Deputy President explained in Ziegeler t/a Ziegco Pty Ltd v Recochem Incorporated[37], one where the amount is determined and, in effect, beyond dispute as to how it is calculated.[38] If the amount depends upon assessment by the court or tribunal, it is not liquidated.
- [62]The prescribed amount is $25,000.00.[39]
- [63]The claims by Mr Padarath and the Estate, in our opinion, falls within the definition of minor civil dispute. The assertion is rejected.
Were the monies paid by Mr and Mrs Padarath and Mr Ram Padarath to QVCC to purchase shares in QVCC and loans, or donations?
- [64]QVCC maintained, throughout the long history of the proceeding, the monies were donations. The evidence, however, only supports the view the monies were paid by them for the purposes deposed to by Mr Padarath. The evidence includes the documents filed in the Tribunal and annexed to Mr Padarath’s affidavit, the sworn evidence of Mr Padarath and Mr Deo and the exhibits accepted in evidence by the Tribunal. Apart from pointing to other members of QVCC having made donations, QVCC and Dr Singh were unable to provide evidence the monies paid were donations.
- [65]We accept the evidence of Mr Padarath and Mr Deo and find the monies paid were so paid by Mr Padarath and Mr Ram Padarath to QVCC for the purposes affirmed.
- [66]It is clear from the evidence, both written and oral, the means for raising monies to service the bank loan to purchase the Willawong property and construct the community centre were discussed and agreed at meetings of the executive committee and board of directors of QVCC. The agreement to raise monies to service the bank loan for the purchase of the Willawong property by the issue of shares in QVCC, and Mr Padarath subscribing for three shares, is evidenced by annexes 1 – 6 to Mr Padarath’s affidavit, the share agreement (annexure 7 to the affidavit) and the evidence of Mr Padarath and Mr Deo. The evidence is accepted.
- [67]Again, the evidence filed in the Tribunal, including annexure 13 to Mr Padarath’s affidavit, Mr and Mrs Padarath’s loan agreement (annexures 14 to the affidavit), annexures 15 and 16 to the affidavit, Mr Ram Padarath’s loan agreement (annexure 17 to the affidavit), annexures 18 and 19 to the affidavit, exhibits B, C and D and the evidence of Mr Padarath and Mr Deo is only consistent with the monies paid being loans, not donations. Other members may have made donations or gifted monies paid for shares and loans. Mr Padarath and Mr Ram Padarath did not do so.
Did Mr Deo have the authority of QVCC to enter the share and loan agreements?
- [68]The answer to the question turns on whether Mr Deo, as agent for QVCC, had the actual, either express or implied, or apparent authority to enter the share and loan agreements for QVCC.
- [69]Sections 126 and 127 of the Corporations Act relevantly provide:
Agent exercising a company's power to make contracts and execute documents (including deeds)
- (1)A company's power to make, vary, ratify or discharge a contract, or execute a document (including a deed), may be exercised by an individual acting with the company's express or implied authority and on behalf of the company.
Note 1: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(3) for dealings in relation to the company.
Note 2: For provisions about technology neutral signing, see Division 1 of Part 1.2AA.
- (2) - (4)...
- (5)In exercising the company's powers in accordance with subsection (1), the individual may execute a document as a deed if the document is expressed to be executed as a deed.
- (6)In exercising the company’s powers in accordance with subsection (1), the individual may execute a document as a deed:
- (a)without that execution being witnessed; and
- (b)regardless of whether the document signed by the individual is in physical form or electronic form.
...
- (7) and (8)...
Execution of documents (including deeds) by the company itself
Executing a document without a common seal
- (1)A company may execute a document without using a common seal if the document is signed by:
- (a)2 directors of the company; or
- (b)a director and a company secretary of the company; or
- (c)for a proprietary company that has a sole director--that director, if:
- (i)the director is also the sole company secretary; or
- (ii)the company does not have a company secretary.
...
Executing a document with a common seal
- (2)...
Executing a document as a deed
- (3)A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2).
...
- (3A)A company may execute a document as a deed in accordance with subsection (1):
- (a)without that execution being witnessed; and
- (b)regardless of whether the document signed by the director or company secretary of the company, as applicable, is in physical form or electronic form.
...
- (3B)...
Other ways of executing documents not limited
- (4)This section does not limit the ways in which a company may execute a document (including a deed).
...
- [70]Execution of a document by an agent on behalf of a company is provided for in section 126 of the Corporations Act.[40] Section 127(4) preserves all legal bases on which a company may execute a document, including a deed, irrespective of whether those bases are to be found in another statute, the common law, the company’s constitution or otherwise.[41] The benefit of a company executing a document in accordance with section 127(1) or (2) is a person may then rely on the assumptions in sections 129(5) or (6) of the Corporations Act.[42] However, as section 127(4) makes clear, section 127 does not require a company to execute a document in one of the ways specified in sections 127(1) or (2). It follows execution of a document otherwise does not render the document ineffective in law.[43]
- [71]The principles applicable to determining whether an agent has authority are set out by Hammerschlag J in Junker v Hepburn[44]:
39 The authority of an agent may be:
aactual (either express or implied) where it results from a manifestation of consent that the agent should represent or act for the principal expressly or impliedly made by the principal to himself; or
bapparent, where it results from such a manifestation made by the principal to third parties.
40 The rules concerning actual and apparent authority apply where the principal is a company. They are supplemented by provisions of the Act where companies are concerned. The usual starting point in any consideration of a director’s actual authority is the constitution of the company, which invariably provides for directors’ powers. Express actual authority of a director usually derives from the constitution of the company or from some antecedent act such as a resolution of the board of directors.
41 Implied actual authority is the authority which the law regards as having been given to an agent because of the interpretation put by the law on the relationship and dealings of the two parties. The Court’s inquiry concerns the intention of the principal in conferring authority on the agent.
42 Ordinarily, where a company has more than one director, a single director does not have authority to bind it. A director’s normal power is to bind the company only by joining with other directors in a collective resolution of the board of directors.
43 An implied grant of actual authority can result from acquiescence in the course of behaviour by persons who have actual authority to delegate. For example, if directors as a board stand by whilst a single director enters into transactions outside his or her authority, the board’s acquiescence in that course of dealing can constitute the grant, by implication, of actual authority to enter into those transactions.
44 In Equiticorp Finance Limited (in liq) v Bank of New Zealand, Clarke JA and Cripps JA said in relation to implied actual authority:
A recent example of the application of the principle in Australia is to be found in Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd where the Appeal Division of the Supreme Court of Victoria applied Hely-Hutchinson v Brayhead Ltd. In the joint judgment there was a finding of implied actual authority in relation to one Goldberg to manage the business and to hold out a person as secretary who was in fact not the secretary. The facts and circumstances there relied upon to justify such a finding included the following: Goldberg had actual control over the group of companies and invariably asserted control over each of the companies in the group; Goldberg was known as the alter ego of group companies; Goldberg made decisions for the group companies; there was no evidence that he found it necessary to refer to any board to seek approval for the course of action he proposed; the boards in question had never previously attempted to interfere with his action; Goldberg had obtained board approval of transactions to which he had already committed Brick and Pipe without first seeking authorisation from the board; and that individual directors in evidence confirmed the acquiescence of board members in the activity of Goldberg which culminated in completed transactions for which the board gave no prior approval. One final and, perhaps, decisive element in the scope of the authority the court was prepared to find vested in Goldberg, was that: “... in most, if not all, cases, the transactions committed assets of Brick and Pipe or its subsidiaries as security for borrowings by other Goldberg companies”. Whether authority is to be implied and, if so, the scope of the authority implied is, in our view, to be found in a close analysis of the evidence before the court which is relied upon to support the implication of actual authority.
45 The authors of Company Directors: Principles of Law and Corporate Governance, citing Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd opine that to confer implied actual authority there would have to be not only the acquiescence of the individual board members but evidence of communication by word or conduct of their respective consents to one another and to the agent.
46 Apparent or ostensible authority is conferred where a principal represents that another has authority. The principal will be bound as against a third party by the acts of that other person within the authority which that person appears to have, though the principal had not in fact given that person such authority or had limited the authority by instructions not made known to the third party.
47 Ostensible authority often coincides with, but sometimes exceeds, actual authority. For instance, when a board appoints a managing director, they may expressly limit his authority, but his ostensible authority will include all the usual authority of a managing director. The company is bound by his ostensible authority in his dealings with those who do not know of the limitation.
48 An ordinary individual director of a company does not have ostensible authority to bind it. Directors can act only collectively as a board and the function of an individual director is to participate in decisions of the board. In the absence of some representation made by the company, a director has no ostensible authority to bind it.
(Citations omitted)
- [72]The principles were cited by Moshinsky J in Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd[45]. His Honour then continues:
In Northside Developments Proprietary Limited v Registrar-General (1990) 170 CLR 146, Dawson J (with whom Toohey J agreed) said at 205:
Nor does an ordinary, individual director of a company have any ostensible authority to bind the company. A managing director may have wide powers, actual or ostensible. In Freeman and Lockyer v. Buckhurst Park Properties (Mangal) Ltd. it was held that a person who had assumed the powers of a managing director of a property company with the company’s approval had apparent authority to engage architects on the company’s behalf, this being within the ordinary ambit of the authority of a managing director of a company of that kind. And even ordinary directors may have quite significant functions entrusted to them by the company, although usually these are of a more or less formal nature, such as affixing the company seal to documents which the company requires to be executed: see Lennard’s Carrying Company Limited v. Asiatic Petroleum Company Limited. But the position of director does not carry with it any ostensible authority to act on behalf of the company. Directors can act only collectively as a board and the function of an individual director is to participate in decisions of the board. In the absence of some representation made by the company, a director has no ostensible authority to bind it.
(Footnote omitted.)
- [73]Mr Deo, at the relevant times, was the chairperson and a director and secretary of QVCC. He was the driving force behind the project. As he said in evidence, it was his “baby”.
- [74]The positions held by Mr Deo in QVCC, without more, did not cloak him with authority to bind the company. However, as the evidence shows, the means for raising funds to service the bank loan to acquire the Willawong property by the sale of shares in QVCC with monthly contributions and the construction of the community centre by interest free loans for two years were discussed and agreed at meetings of the executive committee and board of directors of QVCC. The invitation to subscribe for shares and lend monies were sent to all members, including the directors. The monies raised and the need for further monies, once again, were discussed and agreed at meetings of the executive committee and board of directors and sought in further emails sent to members, including the directors. The monies collected by QVCC were used for the purposes stated. Ultimately, the transactions were documented in the share and loan agreements and reported in the financial statements of the company.
- [75]The constitution of QVCC is not in evidence in this proceeding but is in evidence in Pal v Queensland Vedic Cultural Centre Pty Ltd & Anor[46]. QVCC did not suggest there is a limit on the powers of directors, whether in the constitution or by resolution of the directors.
- [76]The authority given Mr Deo was to perfect the arrangements discussed and agreed by the executive committee and board of directors. He did so openly and in the manner agree by the directors.
- [77]It follows, the Tribunal finds, Mr Deo had the express actual authority of the board of directors of QVCC to raise monies as he did for the purposes stated and to enter the share and loan agreements. Alternatively, the directors as a board, stood by whilst Mr Deo entered the agreements with the consequence it granted, by implication, actual authority to enter the agreements.
Are the share and loan agreements enforceable?
- [78]The share agreement provides it may be terminated.[47] It was terminated by Mr Padarath. It follows, by virtue of the clause 7, he is entitled to a refund of the initial shares’ value, $3,000.00, but not the monthly contributions. The loans were repayable without interest within two years.[48] They were not paid within the time stipulated or at all, despite demand.
- [79]Even if we are wrong and the agreements are unenforceable, there is more than sufficient evidence of the purposes for which the monies were advanced and the terms on which they are repayable. The invalidity of the agreements does not render the monies donations and they are recoverable by Mr Padarath and the Estate in accordance with the terms agreed between the parties.
Earlier decisions
- [80]QVCC relies on the decision in Singh v Queensland Vedic Cultural Centre Pty Ltd[49]. The decision, it is said by Mr Singh, “... explains in succinct details why this purported “Share Agreement” is not within the jurisdiction of QCAT and explains that, even if it was not the case, the purported agreement provided by Applicant is not a valid agreement …”.[50] The transcript of the hearing of the proceeding is annexure E to Mr Singh’s affidavit.
- [81]There, during discussion with the parties, the learned adjudicator said Mr Deo did not have authority to enter the share agreement the subject of the claim and the agreement is invalid, there was no evidence of the agreement being terminated and the agreement was entered by Mr Deo without the knowledge of the other directors. It is readily apparent from the transcript the findings, if they be findings, were made on the evidence before the Tribunal. Here, as we have found, the evidence shows the monies were raised for the purposes stated, and agreements were entered with the knowledge and agreement of the executive committee and board of directors.
- [82]Further, and in any case, the decision is not binding on this Tribunal.
- [83]A decision arising out of similar facts to the facts in this proceeding also of some relevance is that of the Appeal Tribunal in Prasad v Queensland Vedic Cultural Centre Pty Ltd & Ors[51]. The tribunal at first instance dismissed the application. Its principal reason for doing so, it is said, was because the applicant did not produce the alleged loan agreement. He was unable to establish an appealable error and leave to appeal was refused.
- [84]The decision is distinguishable from the facts in this proceeding.
Summary of findings
- [85]In summary, taking into consideration the whole of the evidence before it, including the material filed by the parties, the oral evidence, and the submissions by the parties, the Tribunal finds as follows:
- (a)the Tribunal has jurisdiction to hear and decide the proceeding;
- (b)the executive committee and board of directors of QVCC agreed to offer members shares in QVCC to fund repayment of a bank loan and interest on the loan and to borrow monies from member interest free for a term of two years to fund the construction of the community centre;
- (c)on 12 August 2014 Mr Padarath paid to QVCC $3,360.00, $3,000.00 for three shares in QVCC and $360.00 for monthly contributions;
- (d)on 10 November 2014 Mr Padarath and Mr Deo for QVCC signed the share agreement;
- (e)on 23 March 2018 Mr Padarath lent to QVCC $5,000.00 interest free for two years;
- (f)Mr Deo for QVCC as borrower signed Mr and Mrs Padarath’s loan agreement;
- (g)Mr Ram Padarath, on 23 February 2018, lent to QVCC $5,000.00 interest free for two years;
- (h)on 25 February 2018 Mr Ram Padarath as lender and Mr Deo for QVCC as borrower signed the Estate’s loan agreement;
- (i)the monies paid by Mr Padarath and Mr Ram Padarath to QVCC were paid for the purposes stated by Mr Padarath; they were not donations;
- (j)Mr Deo had the express actual authority of the board of directors of QVCC to enter the share and loan agreements. Alternatively, the directors, as a board, stood by while Mr Deo entered the agreements with the consequence it granted, by implication, actual authority to enter the agreements; and
- (k)Mr Padarath was entitled to ask for repayment of the principal sum paid for the shares not issued to him and did so. The principal sum was not repaid within ninety days or at all. The term of the loans has ended. They have not been repaid, despite demand.
- [86]It follows Mr Padarath is entitled to the order sought by him in respect of the principal sum paid to QVCC for the shares in QVCC not issued to him and Mr Padarath and the Estate are entitled to the orders sought by them in respect of the monies lent to QVCC.
Decision
- [87]The decision of that the Tribunal is as follows:
- (a)the first respondent, Queensland Vedic Cultural Centre Pty Ltd (QVCC), pay to the first applicant, Mr Rajnish Padarath, $8,345.50, $3,000.00 the principal sum paid by him to QVCC for three shares in QVCC not issued to him, $5,000.00 repayment of monies lent by him to QVCC and $345.50 the fee on filing the application in the proceeding, within 14 days of this order; and
- (b)QVCC pay to the second applicant, the Estate of the late Ram Padarath, $5,000.00 repayment of monies lent by Mr Ram Padarath to QVCC within 14 days of this order.
Footnotes
[1] Pal v Queensland Vedic Cultural Centre Pty Ltd & Anor (MCDO 60617/20); Padarath & Anor v Queensland Vedic Cultural Centre Pty Ltd (MCDO 60610/20); Deo v Sukhvir & Anor (MCDO 524/21); Prasad v Singh & Anor (MCDO 523/21).
[2] Order of the Tribunal made 19 July 2021.
[3] See paragraph [31].
[4] (MCDO 970/20, decided on 18 May 2021).
[5] Paragraphs [29] – [42] of these reasons for decision.
[6] Paragraphs [43] – [47] of these reasons for decision.
[7] See paragraph [3], [4] and [13] of these reasons for decision.
[8] See paragraphs [6], [7], [9], [10] and [14] of these reasons for decision.
[9] Annexure 1 to Mr Padarath’s affidavit.
[10] Annexure 2 to Mr Padarath’s affidavit.
[11] Annexure 3 to Mr Padarath’s affidavit.
[12] Paragraph 2 of Mr Padarath’s affidavit and annexures 4 and 5.
[13] Annexure 6 to Mr Padarath’s affidavit.
[14] Paragraph 3 of Mr Padarath’s affidavit and annexure 7.
[15] Paragraph 4 of Mr Padarath’s affidavit and annexures 8 - 11.
[16] Annexure 12 to Mr Padarath’s affidavit.
[17] Paragraph 9 of Mr Padarath’s affidavit.
[18] Paragraph 13 of Mr Padarath’s affidavit.
[19] Annexure 15 to Mr Padarath’s affidavit.
[20] Paragraph 14 of Mr Padarath’s affidavit.
[21] Paragraph 16 of Mr Padarath’s and annexure 17 and 19.
[22] Paragraph 18 of Mr Padarath’s affidavit.
[23] Paragraph 5 of Mr Singh’s affidavit.
[24] paragraph 6 of Mr Singh’s affidavit.
[25] Paragraph 5 of Mr Singh’s affidavit.
[26] (supra)
[27] Paragraph 8 of Mr Singh’s affidavit.
[28] Paragraph 19 of Mr Singh’s affidavit.
[29] Recitals 1 and 2 of the share agreement.
[30] Recital 3 of the share agreement.
[31] Recital 8 of the share agreement.
[32] Clause 1 of the share agreement.
[33] Clause 3 of the share agreement.
[34] (supra)
[35] Section 11 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
[36] [2011] QCATA 34, at [7]
[37] [2010] QCATA 78
[38] Spain v Union Steamship Co. of New Zealand Ltd (1923) 32 CLR 138.
[39] Prescribed amount is defined in the dictionary in schedule 3 to the QCAT Act.
[40] See Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd (2014) 120 SASR 532, per Blue J (Sulan and Parker JJ agreeing), at [80]. See also Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2016] FCA 764, at [281].
[41] Boz One Pty Ltd v McLellan (2015) 105 ACSR 325, per Whelan, Santamaria and Kyrou JJ, at [205] - [209].
[42] Martin v New South Wales [2011] NSWLEC 50.
[43] Martin v New South Wales (supra), at [118] - [120].
[44] [2010] NSWSC 88, at [39] – [48].
[45] (supra), at [279].
[46] (supra), at [12].
[47] Clause 6 of the share agreement.
[48] Clauses 2 and 3 of the loan agreements.
[49] (supra)
[50] Paragraph 8 of Mr Singh’s affidavit.
[51] [2022] QCATA 174.