KEN DAY PTY LTD v TTE PTY LTD & ANOR
Supreme Court of the Northern Territory of Australia Martin J.
20 March, 8 May 1989.

APPEAL - Practice and procedure - Appeal from judgrnent of Master - Nature of appeal - Supreme Court Rules, r. 77.05

PRACTICE & PROCEDURE - Summary judgrnent - Requirement of very clear case

Cases referred to:
Automatic Fire Sprinklers v Watson (1946) 72 CLR 435 Builders Licensing Board v Sperway Constructions (1976)
135 CLR 616
Commonwealth v Rutledge (1964) 111 CLR 1
Dare v Dietrich (1979) 26 ALR 18
Leipner v McLean (1909) 8 CLR 306
Phillips v Commonwealth (1964) 110 CLR 347
Thrifty Rent A Car v Darwin Marketing Services Martin J.
Supreme Court of the Northern Territory, unreported -
29 October 1987

Counsel for the appellant/defendant Solicitor for the appellant/defendant

Counsel for the respondent/plaintiff Solicitor for the respondent/plaintiff

A Wyvill
J Stirk
J Waters Waters James & O'Neil

mar890072

rnar890072
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA

No. 360 of 1988

BETWEEN:
KEN DAY PTY LTD
Appellant

AND:
TTE PTY LTD
First Respondent

AND:
OSTERMEYER NOMINEES PTY LTD
Second Respondent

CORAM:	MARTIN J.

REASONS FOR JUDGMENT
(Delivered 8 May 1989)

The defendant (appellant) being affected by a judgrnent given by the Master, appeals to a Judge of this Court (r. 77.05(1)).

Rule 77.05(7) provides that the appeal shall be by re-hearing de novo of the application to the Master, but each party may, subject to proper objections to admissibility -

rely on an affidavit used before the Master and on evidence given orally before him;

by special leave of the Judge, rely on an affidavit or oral evidence not used or given before the Master.

The express words of the rule make it abundantly clear that it is for the Judge to pronounce anew on the rights of the parties as disclosed by the evidence before him.	The appeal is not in any way limited to questions of fact or law.	In disposing of the appeal the Judge may determine any issue arising in relation to the matter just as the Master might have done in the first instance.	It is as if the application was before the Judge in the first instance, although there is a discretion to receive evidence which was not before the Master, this no doubt being to ensure, so far as possible, that a party to an application before the Master does not deliberately withhold available evidence.	The law to be applied is that as at the date of the hearing of the appeal.	(As to appeals by way of
re-hearing de novo see Commonwealth v Rutledge (1964) 111 CLR l; Phillips v Commonwealth (1964) 110 CLR 347; Builders
Licensing Board v Sperway Constructions (1976) 135 CLR 616;
Dare v Dietrich 26 ALR 18).

Provision is made for the giving of a notice of appeal with particulars as to whether the whole or a part of the decision of the Master is the subject of the appeal, the grounds relied upon and the judgment or order sought
(r. 77.06).	The purposes of this rule seem to me to encompass the means by which the respondent to the appeal might be fully acquainted with the scope of the appeal, and the basis upon which it is said the Master erred, thus defining the issue or issues to be dealt with by the Judge. None of that, however, detracts from the nature of the appeal, though it may limit the matters which are to be considered by the Judge to be taken into account with findings of fact and/or law made by the Master not called in question.

The application before the Master was made by the respondents, as plaintiffs, for summary judgrnent against the appellant, defendant, in proceedings commenced by the plaintiffs by writ.	The Master ordered accordingly and the appeal is brought by the defendant which seeks to have the Master's judgrnent and consequential order as to costs set aside.

The question arose as to which party should begin before me.	I ruled that the application having been brought by the respondents in the first instance, and the appeal being by way of re-hearing de novo, it was for them to

commence as if the matter was being argued for the first time.	I adhere to that view.

The respondents (who I will henceforth call "the plaintiffs") apply under r. 22.02 for judgment against the appellant (who I will henceforth call the "defendant") in the sum of $180,000 and costs upon the ground that the defendant has no defence to the whole of the claim included in the writ.	The Statement of Claim, endorsed upon the writ, asserts that -

pursuant to a memorandum of agreement dated 9 May 1987, the defendant, inter alia, agreed upon the request of the plaintiffs to purchase from them 200,000 shares, the property of the first plaintiff, and 160,000 shares, the property of the second plaintiff, in a certain company, for a total purchase price of $180,000, that is, 50c per share;

pursuant to the terms of the agreement the plaintiffs, by their solicitors and by a letter dated 3 March 1988, demanded, inter alia, that the defendant do purchase the aforementioned shares for the aforementioned sum within 14 days;

(cl	the defendant, despite subsequent request, failed to pay the aforementioned sum or at all, and

(d)		the plaintiff (sic) claims pursuant to the terms of the agreement, the sum of $180,000 and costs.

Judgment was first entered for the plaintiffs in default of appearance by the defendant, who then successfully sought to have it set aside.	One of the grounds of that application, as disclosed by the affidavit of Mr Day, a director of the defendant sworn on 5 July 1988, was that there was no agreement such as alleged in the Statement of Claim.	The defence later filed also contained such a denial.

The evidence of the plaintiffs, contained in an affidavit sworn by their solicitor, was that there was such an agreement.	A copy of the alleged agreement, apparently executed under the common seal of the defendant, was exhibited thereto.	The solicitor also deposed to negotiations between himself and the solicitor for the defendant as to the contents of the agreement, the formal exchange of counterparts, and as to discussions he had had with Mr Day including certain admissions made by Mr. Day.
That affidavit and one sworn by Mrs Ostermeyer, a director of each of the plaintiffs, verified the facts on which the claim was based, and stated that, in the belief of the deponents, there was no defence to the claim (r. 22-03(1)).

Having seen the copy of the agreement apparently bearing the common seal of the defendant, exhibited to the solicitor's affidavit, Mr Day swore a further affidavit in which he effectively denied that the common seal had been properly affixed to it.	He deposed that he had signed papers bearing the common seal which were left with a
Mr Connallin, who had authority to negotiate but not to
enter into the agreement, that there were a number of conditions relating to the agreement and another involving the plaintiffs and other parties which were to be negotiated, and that Mr Connallin had no authority to sign his name as a co-signatory to the affixing of the common seal.	He also pointed to certain causes of action which he said might be available against the plaintiffs, not arising directly from the agreement in question, but the other agreement to which the defendant was not a party.	Simply put, he says that the agreement sued upon (if it exists) was collateral to that other agreement, and that the alleged breach of the latter relieved the defendant from performance of the former.	He denied the substance of the admissions
alleged against him.

The general scheme of things, as it appears from the materials available to me, seems to have been as follows:

Nazjac Pty Ltd, a wholly owned subsidiary of Territory Resources N.L. (in Liquidation), agreed to purchase certain property and business of the plaintiffs (the "sale agreement").

Part of the consideration was the transfer of shares in Territory Resources by Nazjac to the plaintiffs (Mr Day seems to think that what was required was the issue of shares of Territory Resources to the plaintiffs).

The defendant agreed to purchase those shares from the plaintiffs upon being requested to do so within
18 months of 19 May 1987 at the price of 50c for each share (the "share agreement") •

19 May 1987 was the date of settlement of the sale agreement.

After the plaintiffs called upon the defendant to purchase the shares, Territory Resources N.L. went into liquidation.

The defendant did not purchase the shares prior to that event.

Mr Day alleges that certain warranties were given by the plaintiffs to Nazjac and him, going to the profitability of the business, the subject of the sale agreement, that those warranties were untrue, and that Nazjac did not obtain the whole of the benefits under the sale agreement.

The Master had before him the defence simply denying the existence of the share agreement.	As things developed it appeared that there was a document, apparently, under the common seal of the defendant, evidencing the agreement on the part of the defendant.	The defendant's response, through Mr Day, was that the document relied upon was not truly a document binding the defendant, and, if it did, it was collateral to the sale agreement which had been vitiated bv the breaches and defaults of the plaintiffs.
There was placed before me a proposed amended defence which -

raised the authority of Mr Connallin, and thus the validity of the document apparently under the common seal of the defendant;

asserted that if the defendant did enter into the share agreement, it failed for want of consideration;

(cl	called in question whether the plaintiffs' request to the defendant to purchase the shares was a valid request within the meaning of the agreement;

referred to the sale agreement and alleged the two agreements were collateral;

alleged that the plaintiffs were in breach of the sale agreement whereby Nazjac suffered loss and damage, whereby Nazjac has a claim for damages against the plaintiffs;

asserted that the plaintiffs were guilty of misrepresentation to the defendant whereby it was induced to enter into the share agreement, as a result of which that agreement is void, voidable or liable to be set aside.

By a counterclaim the defendant:

(al		alleged that the plaintiffs engaged in conduct that was misleading or deceptive within the meaning of
s. 52 of the Trade Practices Act (Commonwealth), and

(b)	sought a declaration accordingly and an order pursuant to s. 87 of that Act declaring the share agreement to be void ab initio.

During the course of argument before me the question was also raised as to whether the plaintiffs are entitled to the relief sought, that is, judgment for the sum which they say the defendant is obliged to pay for the shares upon request being made to it that it purchase the same, but the shares were not transferred to it.	I think that failure to pay does not constitute a debt as the plaintiffs allege, (the Writ is endorsed pursuant to
5.09(1)), but that it gives rise to a claim for unliquidated damages (see, for example, Automatic Fire Sprinklers v Watson (1946) 72 CLR 435 per Dixon J. at 463). Further, what effect, if any, does s. 368(1) of the Companies Code (as it is commonly called in the Territory) have upon the transaction contemplated?		That section relevantly provides that any transfer of shares of Territory Resources, made after the commencement of the winding up by the Court is, unless the Court otherwise orders, void.	The winding up is deemed to have commenced at the time of the filing of the application for the winding up (s. 365(2)). All that is before me is that the request for transfer of. the shares by the plaintiffs was made on 3 March 1988 or, on another view, 18 March 1988.	The order for winding up, it was agreed, was made on 10 June 1988.	When the application for winding up was made is not disclosed.		This potential issue is not raised by the proposed amended defence, but I do not think that I can ignore it, especially since it arises from a statute.

In his reasons for his decision the Master referred to the authorities setting out the test to be applied when deciding whether an application for summary judgment should be granted.	I need not refer to them again in detail, but in summary, the application should be dismissed and the defendant given leave to defend if he shows that there are facts, which if true, would constitute a defence, or if there are difficult and substantial questions of law which can not be determined without full argument.	A case must be very clear to justify summary judgment (for a review of some of the cases see my decision in Thrifty Rent-A-Car v Darwin Marketing Services, unreported, 29 October 1987).

The plaintiffs rely upon the document apparently executed under the common seal of the defendant and attested by Mr Day and Mr Connallin.	Apart from the attestation clause on the document there is no material before me to show that Mr Connallin was a director or secretary of the defendant.	Section 68A(l) of the Code provides that a person dealing with a company is entitled to make certain assumptions and, in any proceedings in relation to those dealings, any assertion by the company that the matters that the person is so entitled to assume were not correct, shall be disregarded.	The plaintiff says that the assertion that Mr Connallin was not authorised to attest to the fixing of the common seal should be disregarded and relies on
68A(3)(e) which provides, inter alia, that a person

dealing with a company is entitled to assume that a document has been duly sealed by a company if it bears what appears to be an impression of the seal of the company, and the sealing appears to be attested by two persons who by virtue of paragraphs (b) and (c) may be assumed to be director or a director and secretary of the company.	Paragraph (b) does not apply since there is no evidence before me of returns lodged with the Registrar of Companies.		Paragraph (c) refers to a person who is held out by the company to be an officer or agent of the company.	Apart from the signature on the document there is not before me any evidence of any such holding out.	To the contrary, Mr Day expressly denies Mr Connallin's authority.	I do not think it can be said that the mere fact that a person has signed a document on behalf of a company adjacent to words in an attestation clause indicating he is a Director or Secretary, amounts to a holding out by the company within the meaning of
s. 68A(3)(cl such as to enable a person to make the assumption referred to in paragraph (e).	That is an arguable question of law.	There may be other evidence which would help to answer the question.

What assistance might be derived from the discussions between the solicitor for the plaintiffs and
Mr Day is not clear, but the question of credibility clearly arises.	Neither of them were cross-examined before me.

The Statement of Claim alleges that the plaintiffs demanded that the defendant purchase the shares by their solicitor's letter of 3 March 1988.	In that letter, after outlining some background material, the solicitor's wrote "Our client accordingly received as consideration for the sale a total of 520,000 shares, 160,000 shares of which have been transferred into the name of Ostermeyer Nominees Pty Ltd and the balance of 360,000 are in the name of TTE Pty Ltd.	Pursuant to the provisions of the Agreement aforementioned we formally request on behalf of our clients that you complete the purchase of the aforesaid shares within 14 days from the date hereof".	They went on to say that they held the share script and transfers duly executed. The defendant argues, and asserts in its draft amended defence, that that was not a valid request.	The share agreement appears to limit the quantity of shares which the plaintiffs may request the defendant to purchase to not more that 200,000 in the case of TTE Pty Ltd and not more than 160,000 in the case of Ostermeyer Nominees Pty Ltd.	The quantity requested in respect of TTE Pty Ltd is in excess of the quantity provided for in the agreement.	On 18 March 1988 those solicitors wrote to Mr Ken Day, Ken Day Pty Ltd, concluding, "To avoid any further proceedings at this stage, please confirm that you will be meeting our client's claim for payment within the time required of an amount of
$180,000 for the 360,000 shares referred to in the Agreement

of 19th May 1987".	The plaintiffs have not so far

specifically pleaded that that letter either taken alone or in conjunction with the earlier letter constituted the request to the defendant to purchase the shares.	In any event it seems to me that the defendant has an arguable case that it had not received a valid request, at least in so far as the plaintiff, TTE Pty Ltd is concerned.

Whether the sale agreement and the share agreement are collateral, and if so, the results which flow are matters of law which will require careful consideration.
The share agreement commences with recitals regarding the plaintiffs' entitlement to the shares upon settlement of the sale agreement and the defendant's agreement to purchase the same, subject to the conditions thereinafter appearing.		The consideration is expressed to be "these presents and for no other".	The first recital arguably shows that the share agreement stood side by side with the sale agreement.	The fact that the defendant was not a party to the sale agreement is not conclusive on this issue.	Examples of the "curiously named tri-partite collateral contract" are given at para 112 Cheshire & Fifoot's Law of Contract, 5th Australian Edition and see also the example given by Griffiths C.J. in Leipner v McLean (1909) 8 CLR 306 at 314. The defendant's allegations as to breach of warranty by the plaintiffs and failure to perform the terms of the sale agreement were outlined in Mr Day's affidavit of 10 August which was before both the Master and myself.

. .

Objection was taken by counsel for the plaintiffs that he had only received the draft amended defence just prior to the hearing of the appeal.	I do not think it is necessary for such a draft to be made available although it no doubt assists the Master or Judge to focus on the prospective grounds of defence.	It is the sworn evidence of the defendant which is most important.

For the reasons given I do not think it necessary that I strictly rule on each of the grounds of appeal raised against the Master.	This is a re-hearing de novo of the respondent plaintiffs' application for summary judgment.	I consider that the defendant has shown that there are facts, which if true, would constitute a defence and that there are difficult and substantial questions of law which should not be dealt with in a summary way.	The plaintiffs' case is not clear enough to justify summary judgment.

The appeal is allowed and the application is dismissed and the defendant is given leave to defend.

Certified fit for counsel. Costs are reserved.