MID Australia Pty Ltd v Aleckson
[2004] QDC 514
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- Unreported Judgment
- MID Australia Pty Ltd v Aleckson[2004] QDC 514
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MID Australia Pty Ltd v Aleckson[2004] QDC 514
MID Australia Pty Ltd v Aleckson[2004] QDC 514
DISTRICT COURT OF QUEENSLAND
CITATION: | MID Australia Pty Ltd v Aleckson & Anor [2004] QDC 514 |
PARTIES: | MID AUSTRALIA PTY LTD Plaintiff/Respondent and TYRONE ALECKSON First Defendant/Applicant and WARREN LESLIE MANDER Second Defendant/Applicant |
FILE NO: | 398/2004 |
PROCEEDING: | Application for summary judgment |
ORIGINATING COURT: | District Court Southport |
DELIVERED ON: | 2 December 2004 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 15 November 2004 |
JUDGE: | Newton DCJ |
ORDER: | Application dismissed |
CATCHWORDS: | PRACTICE – SUMMARY JUDGMENT FOR THE DEFENDANT – r 293 – whether plaintiff’s claim is hopeless or bound to fail. Corporations Act section 558M – whether company has incurred a debt where there is a total failure of consideration Uniform Civil Procedure Rules Corporations Act Cases cited: Gray v Morris [2004] QCA 5 Shephard & Ors v ANZ Banking Corporation Ltd & Anor (1997) 41 NSWLR 431 Woodgate v Davis (2002) 55 NSWLR 222 |
COUNSEL: | Mr R G Walters (Solicitor) – applicants Mr P Dunning - respondent |
SOLICITORS: | Walters & Co, Solicitors – applicants Minter Ellison – respondent |
- [1]The applicants have applied to the court for the following orders:
- (1)Summary judgment for the defendants on the whole of the claim pursuant to Rule 293(2) of the Uniform Civil Procedure Rules; and
- (2)In the alternative, an order that the claim pursuant to s 588M of the Corporations Act and paragraphs 21-28 of the statement of claim be struck out pursuant to Rule 293(2).
- [2]At the hearing of the application I was informed by Mr Walters that the applicants concede that a triable issue exists in respect of the claims brought in relation to deceit, negligent mis-statement and s 52 of the Trade Practices Act. The application is maintained solely in respect of the claim under s 588M of the Corporations Act.
- [3]The claim, as relevant, alleges that:
“7. On or about 2 December 2003 Aleckson represented to Walters [the Asset Manager of the plaintiff] that the Company then had in its possession the required air-conditioning units and could immediately provide them to MID.
Particulars
The conversation was by telephone [Confirm]. Walters said words to the effect I understand from George Muscat’s comments to me that you have the correct number of air-conditioning units required for the works in the Spacewalker tenancy that are detailed in the Tender Specification. Aleckson replied with words to the effect yes we have the units but you will have to give me an order for them now to ensure you get them, otherwise they will go to somebody else. At this time of year there are certain stocks of units left over and an order could come in at any time and they will go.
8. On or about 5 December 2003 Aleckson represented to Walters that to secure the required air-conditioning units that the Company had in its possession it would be necessary that MID actually pay for them at that time. (Together with the representations pleaded in the previous paragraph, hereinafter referred to as ‘the Representations’).
Particulars
The conversation was by telephone [Confirm]. Aleckson said words to the effect that MID would have to actually pay the money for the units in addition to giving the purchase order if it wanted to ensure the units were set aside for it.
9. In reliance upon the Representations MID on 16 December 2003 caused to be deposited into the Company’s bank account an amount of $81,708, being the full purchase price of the required air-conditioning units.
10. In fact at no time up to and including the time of payment by MID to the Company did the Company have the required air-conditioning units in its possession.”
- [4]The claim in respect of contravention of s 588M of the Corporations Act alleges that:
“21. By reason of the matters pleaded in paragraphs 7-10 above the Company incurred a debt on 16 December 2003 because by its acts and/or omissions as pleaded therein the Company became exposed to a present monetary obligation to repay the sum of $81,708 paid by MID (‘the Debt’).
- The Company was insolvent on 16 December 2003, or alternatively became insolvent by incurring the Debt.
- As at 16 December 2003 there were reasonable grounds for suspecting that the Company was insolvent or would so become insolvent.
- In the premises both Aleckson and Mander contravened s 588G of the Corporations Act by:
- (a)being aware of the matters pleaded in paragraph 23 above; or
- (b)a reasonable person [sic] in a like position in a company in the Company’s circumstances would be so aware.
- By reason of the matters pleaded above MID has suffered loss or damage in relation to the Debt because of the Company’s insolvency.
- The Debt was wholly unsecured when the loss or damage was suffered.
- By facsimile correspondence dated 13 July 2004 the liquidators of the Company gave their consent in writing to MID, pursuant to sub-s 588R(1) of the Corporations Act, to it bringing proceedings under s 588M of the Corporations Act.
- MID is, by reason of the matters pleaded above, entitled to recover from each of Aleckson and Mander the Debt pursuant to s 588M of the Corporations Act.”
- [5]The plaintiff claims against each of the first defendant and second defendant compensation pursuant to s 588M of the Corporations Act in the sum of $81,708.
- [6]Mr Walters, on behalf of the first and second defendants (the applicants), submits that the company did not in the circumstances alleged in the pleadings incur a debt and as such, the plaintiff (respondent) does not have a valid claim pursuant to s 588M of the Corporations Act. For the purpose of this application to have paragraphs 21-28 of the claim struck out together with the claim in respect of s 588M of the Corporations Act pursuant to Rule 293(2) of the Uniform Civil Procedure Rules, this is the only matter relied on by the applicants.
- [7]Rule 293 of the Uniform Civil Procedure Rules provides as follows:
“[r 293] Summary judgment for defendant
293 (1) A defendant may, at any time after filing a notice of intention to defend, apply to the court under this part for judgment against a plaintiff.
- (2)If the court is satisfied-
(a) the plaintiff has no real prospect of succeeding on all or a part of the plaintiff’s claim; and
(b) there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”
- [8]An application of this nature seeking summary judgment cannot be upheld unless the plaintiff (respondent) has no real prospects of success. This approach has recently been restated in Gray v Morris [2004] QCA 5 where Chesterman J at [23] stated:
“In my opinion summary judgment is not to be given, either to defendant or plaintiff, except where it is just to do so and it will not be just to deprive a party of a trial unless it can be seen that their case is hopeless, or bound to fail. Unless that can be said of it, the conclusion cannot be reached that a claim or defence has no ‘real’ prospects of success.”
In the same case P D McMurdo J at [46] emphasised the necessity of keeping in mind why the interests of justice usually require the issued to be investigated at a trial. His Honour said:
“In the application of the plain words of rules 292 and 293, and in particular the consideration of whether there is a need for a trial, a court must keep in mind why the interests of justice usually require the issues to be investigated at a trial. In my view it surely remains the case, as Mason, Murphy, Wilson, Deane and Dawson JJ said in Fancourt at 99, that ‘The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no question to be tried’. That remains a forceful and authoritative guidance and is in no way in tension with the application of these rules according to their own terms.”
- [9]I turn to consider the concept of incurring a debt. In Woodgate v Davis (2002) 55 NSWLR 222 at 226 Barrett J stated:
“That concept, as relevant to this context, has been considered in a number of cases. In Hawkins v Bank of China (1992) 26 NSWLR 562 at 572, Gleeson CJ regarded the word ‘incurs’ in a predecessor provision of the companies legislation as ‘apt to describe, in an appropriate case, the undertaking of an engagement to pay a sum of money at a future time’. Kirby P (at 576) said: ‘The act of ‘incurring’ happens when the corporation so acts as to expose itself contractually to an obligation to make a future payment of a sum of money as a debt’.
The concept was further elucidated by Hodgson CJ in Eq in Standard Chartered Bank of Australia Ltd v Antico (1995) 38 NSWLR 290, particularly in the following passage (at 314):
‘In my opinion, a company incurs a debt when, by its choice, it does or omits something which, as a matter of substance and commercial reality, renders it liable for a debt for which it otherwise would not have been liable. This formulation has three aspects which could cause difficulty in particular cases: first, as to whether the company has a choice whether to do (or omit) the act or not; secondly, as to whether it is the act or omission, or something else, which renders the company liable for the debt; and thirdly, as to whether the company would otherwise (in any event) have been liable for the debt.’
These approaches, while they may present difficulties in particular cases, are clear. ‘Incurring’ is the act or omission of the company through which exposure of it to a monetary obligation arises.”
- [10]The applicants place some reliance on the decision in Shephard & Ors v ANZ Banking Corporation Ltd & Anor (1997) 41 NSWLR 431 where it was held that where amounts were prepaid by way of deposit under a contract with a company for the supply and erection of kit homes, where the kit homes were not supplied or not supplied and erected within reasonable times or at all, the company did not “incur a debt” for the purposes of s 556(1) of the Companies (New South Wales) Code either: (a) at the date of the acceptance of the deposits under the contract; or (b) at the expiration of a reasonable time for performance of the contracts; or (c) at the time of appointment of a provisional liquidator.
- [11]Having observed that the legislature deliberately restricted the category of cases in which directors attract civil and criminal liability for the financial obligations of the company to the incurring of debts, that is liquidated sums, Abadee A-JA at 445 stated:
“It seems to strain the language of the section to include within the scope of the incurring of debts a situation where a company does an act which could conceivably result in it owing an obligation of a debt on the basis of a claim in restitution but which primarily exposes it to an obligation to render performance or in lieu thereof pay unliquidated damages under contract. Such a result could extend civil and criminal liability to a potentially wide range of trading activities, and certainly well beyond the conventional example of trade creditors who can be characterised as purchasers.
It is important to keep in mind that the obligation incurred must be a debt. The identification of the time when the debt was incurred is central to the operation of s 556, because that is the time by reference to which the relevant expectations as to the company’s financial capacity are to be judged.”
- [12]It should be noted that in Shephard’s case a deposit was paid for the construction of a dwelling but no time had been stipulated for completion which therefore had to be within a reasonable time. Thus no crystallised cause of action for monies had and received at the time of the payment of the deposit arose. In the present case, however, on the plaintiff’s case, the cause of action crystallised immediately upon the payment of the money for the air-conditioning units because there was at that time a total failure of consideration in that, contrary to what the plaintiff had been told, the defendants did not, in fact, have the air-conditioning units in stock. The decision in Shephard is distinguishable on this basis.
- [13]If the plaintiff (respondent) is able to establish that the payment over of the money on 16 December 2003 (see para 9 of statement of claim) occurred in circumstances where the consideration for it was the securing by purchase of presently existing units (statement of claim paras 2(b) 7-10), it may successfully argue that there would have been an action for monies had and received arising immediately on the basis of a total failure of consideration, which is an action in debt.
- [14]In these circumstances it cannot be said, in my view, that the plaintiff’s case that its claim involves an act or omission of the company through which exposure of it to a monetary obligation arises is hopeless or bound to fail. I am, therefore, not prepared to grant summary judgment in respect of the plaintiff’s claim under s 588M of the Corporations Act. The application must be refused. I will hear submissions with respect to costs, if required, in due course.