Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VicLawRp 47; [1947] VLR 332

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18

Eng Mee Yong v Letchumanan [1980] AC 331

Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87

Harry Davies & Co Pty Ltd v East [1925] VicLawRp 79; [1925] VLR 681

McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457

Reynolds v Fury [1921] VicLawRp 3; [1921] VLR 14

Ruddenklau v Charlesworth [1925] NZLR 161

Scaffidi Nominees Pty Ltd & Anor v Buswell, unreported; FCt SCt of WA; Library No 960588; 11 October 1996

Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245

ANZ Executors & Trustees Ltd v Humes Ltd [1990] VicRp 54; [1990] VR 615

Coulls v Bagot's Executor & Trustee Co Ltd [1967] HCA 3; (1967) 119 CLR 460

Evans v Bartlam [1937] 2 All ER 646

Jacobs v Booth's Distillery Co (1901) 85 LT 262

Lang v Morrison & Co Ltd [1911] HCA 49; (1911) 13 CLR 1

Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571

Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

White v Johnston (1886) 8 ALT 53

1 MASTER NEWNES: This is an application by the plaintiff for summary judgment. The plaintiff claims that by a written agreement dated 25 July 2005 it was agreed, among other things, that the plaintiff would sell 650 shares in Optum ES Pty Ltd ("Optum ES") to the defendant for the sum of $800,000. Settlement of the purchase was to occur on 25 August 2005. By a further written agreement, dated 14 September 2005, the parties agreed to defer the settlement date to 21 September 2005. The plaintiff pleads that it has at all material times been ready, willing and able to settle, but that the defendant failed to settle on 21 September 2005 and has failed or refused to settle since. The plaintiff claims the sum of $800,000, plus interest on that sum.

2 The defendant, on the other hand, denies there was any agreement between the plaintiff and the defendant and, in the alternative, says that it was subject to the defendant obtaining finance, which the defendant was unable to do so. The agreement has therefore failed.

3 On 4 April 2003, the plaintiff (then known as Optum Health Ltd), the defendant and Optum ES entered into a shareholders' agreement pursuant to which the plaintiff and the defendant agreed, among other things, to subscribe for 800 shares and 200 shares respectively in Optum ES at a price of one cent per share. It appears from the recitals to the agreement that Optum ES had been formed to develop and commercialise a unique water purification technology. The agreement provided, among other things, that the plaintiff was responsible for the funding of the commercialisation and development of the technology and that if an amount less than $2 million, but more than $1 million, had been spent by the plaintiff within two years of the date of the agreement, half of the shareholding of the plaintiff would be transferred to the defendant.

4 The defendant alleges that, as at April 2005, the plaintiff had spent only $1.272 million and accordingly the defendant became entitled to half of the plaintiff's shares in Optum ES, that is to 400 shares, giving the defendant 600 shares and leaving the plaintiff with 400 shares. The defendant says it has a "counterclaim" against the plaintiff for those 400 shares.

5 How all that relates to the agreement of 25 July 2005, which is the subject of the claim by the plaintiff in this action, was never made clear, although the agreement is expressed to be without prejudice to the defendant's rights under the shareholders agreement.

6 The agreement of 25 July 2005 is in the form of a letter on the letterhead of the defendant and has been signed by both parties. It provides, in essence, that in consideration of payment of the sum of $800,000 the plaintiff will transfer 650 shares in Optum ES to the defendant. Payment is to be made within 30 days. The payment of $800,000 will be in full and final settlement of any claims that the plaintiff, Optum ES or the defendant "may have or have had against each other at any time during their relationship with each other." Under the agreement, a royalty is to be paid by the defendant to the plaintiff and the plaintiff accepts that, apart from its rights as a shareholder, it will have no further rights in respect of the assets of Optum ES, including the water purification technology. Upon execution of the agreement the plaintiff is to give up any engineering or marketing work on behalf of Optum ES and upon payment of the sum of $800,000 the directors who represent the plaintiff will resign from the board of Optum ES.

7 It was not in issue that the defendant has not paid the sum of $800,000 under the agreement of 25 July 2005 and that the shares have not been transferred to the defendant. The defendant says that there is no enforceable agreement.

8 It is necessary, in order to make clear how the defendant says its case arises, to go to the terms of the correspondence between the parties, so far as it appears in the evidence. I should say that it seems the correspondence in evidence is not complete.

9 It appears, however, that on or about 22 July 2005, Mr Jermyn, on behalf of the plaintiff, wrote by email to Mr Fridlender, on behalf of the defendant, setting out the terms on which the plaintiff would sell 650 shares in Optum ES to the defendant. The proposal was framed as an offer to be made by the defendant to the plaintiff. The terms, with one exception, are to the same effect as, although not in all respects identical to, the terms of the agreement on which the plaintiff sues. The exception is the inclusion in the draft of a provision to the following effect:

"Wavtech undertakes to provide within 7 days (either directly or through its legal or financial advisors), [the plaintiff] with satisfactory evidence of its financial ability to complete and settle this offer."

10 It seems there were then further discussions between Mr Jermyn and Mr Fridlender and, on 22 July 2005, Mr Jermyn sent to Mr Fridlender what was described as the "amended Final Offer document" for retyping and signing. In the email Mr Jermyn said that the plaintiff is prepared to proceed on the basis of that document "but stresses that a demonstration of the financial ability to proceed is very important." It seems the express provision in the earlier draft that the defendant provide the plaintiff with satisfactory evidence of its financial ability to complete had been omitted from the document by this stage. How or why that had come about remained unexplained.

11 What is described as an "ammended [sic] agreement for signing" was sent by Mr Fridlender to Mr Jermyn by email on 25 July 2005. That was apparently the agreement ultimately executed by the parties. Mr Jermyn responded by email, accepting the defendant's offer. In that email Mr Jermyn said, among other things:

"Optum repeats, however, its requirement that Wavtech must reasonably satisfy Optum as to Wavtech's (or its financier's) ability to perform according to the financial and timetable obligations of the offer. Given that the offer has now been accepted we ask that this condition is satisfied with some urgency. I advise that I will be in Perth this Friday. If not provided before that time Optum respectfully requests Wavtech undertakes to so provide the relevant disclosure on that day."

12 The signed agreement is dated 25 July 2005, although it is not clear whether it was actually signed on that day. It was signed by Mr Fridlender on behalf of the defendant and by Mr Jermyn on behalf of the plaintiff. There is no reference in it to the defendant's financial capacity.

13 On 1 September 2005, Mr Fridlender wrote to Mr Jermyn by email saying that the defendant was "waiting for the bank to complete its fund allocation date". Mr Fridlender apologised for the delay but said the bank had had "a short staff" due to flu.

14 Mr Jermyn replied by email the following day. He said, among other things:

"... your email re Bank Progress is not what I thought we had agreed you would provide. You were to re-confirm that:

(a) the bank (Westpac) have already verbally advised of approval for the funding and that you were only waiting for a funds clearance date,

(b) an indication of that date and that,

(c) the offer to purchase made by Wavtech is unconditional.

Charles I cannot stress strongly enough the need for you to do this urgently. Your previous two emails on this point are, with due respect, quite meaningless. We might all understand that banks take time and appreciate that people get the flu but that is not Optum's concern. The offer, as accepted, was never made subject to finance or that people would not get ill.

The timing outlined in your offer was for a period 30 days from acceptance. That time has now passed and accordingly Wavtech are in breach."

15 There is no evidence to suggest that the defendant responded to that email or took issue with any of the statements in it.

16 According to Mr Fridlender, on about 6 or 7 September he received a telephone call from Mr Jermyn. Mr Jermyn said that he wanted to finalise the agreement. Mr Fridlender told him that the defendant was waiting for finance confirmation. Mr Jermyn said he wanted the matter finalised as he wanted to report to the Australian Stock Exchange ("ASX"). Mr Fridlender says he informed him that the defendant's financing was not complete.

17 On 8 September 2005, Mr Jermyn sent to Mr Fridlender by email a proposed announcement to the ASX regarding the sale and asking for confirmation of the contents of the proposed announcement. The proposed announcement did not refer to the contract being subject to finance. Mr Fridlender responded by facsimile the same day in which he said:

"I have no problem with the content of this ASX announcement, subject to the bank completing their financing."

18 It appears that an announcement, in the terms of the proposed announcement, was made to the ASX by the plaintiff on 12 September 2005.

19 On 14 September 2005, the parties entered into a further agreement, extending the time for completion of the contract of 25 July 2005 to 5 pm on 21 September 2005. The recitals to the agreement are significant. They are, so far as relevant, in the following terms:

"1) On 25 July 2005, Wavtech made a written offer to purchase 650 shares (six hundred and fifty shares) in Optum ES Pty Ltd from OPM. ('the Offer')

2. On that same date OPM accepted the Offer in writing and agreed to sell 650 shares in Optum ES Pty Ltd to Wavtech. ('the Acceptance')

3. The terms of the purchase by Wavtech were set out in the Offer

4. Included in those terms were inter alia the purchase price and the date on which that purchase price would be paid ('the Settlement Date')

5. The Settlement Date was the 24 August 2005 [sic], being the date 30 days from the acceptance of the Offer.

...

6. The Offer was not subject to the obtaining of finance and the Settlement Date was not conditional upon the occurrence or non occurrence of any event.

...

9. Wavtech did not complete and settle on the Settlement Date.

10. OPM notified Wavtech of the breach both verbally and in writing and requested that Wavtech immediately remedy the default.

11. Wavtech have admitted the breach but have requested that OPM extend the Settlement Date until 5.00PM (WST) on 21 September 2005.

12. OPM have consented to that extension."

20 Mr Fridlender, on behalf of the defendant, says that Mr Jermyn "required" him to sign the agreement.

21 As I have said, it was not in dispute that the defendant did not settle on 21 September 2005 and has not since settled. The defendant did not contest the assertion that the plaintiff has at all material times been ready, willing and able to settle.

22 It was argued on behalf of the defendant that there was no contract between the parties, the plaintiff's stipulation in its email of 25 July 2005 as to the defendant's financial capacity being a counter-offer to the plaintiff's offer of 25 July 2005. That counter-offer had not been accepted. Alternatively, it was submitted that the contract was subject to a condition that the defendant be able to obtain finance to complete it and, the defendant being unable to do so, the contract had failed by reason of non-fulfilment of that condition.

23 It was submitted on behalf of the plaintiff that the defendant's contention that the contract was subject to the defendant obtaining finance to complete the contract was simply untenable. The contract of 25 July 2005 was not expressed to be subject to finance and such a contention was contrary to the express terms of the recitals to the agreement of 14 September 2005. In any event, if there was such a condition it was plainly for the benefit of the plaintiff and could be, and clearly had been, waived. In the circumstances, there was no arguable defence to the plaintiff's claim.

24 After argument on the application I raised with the parties whether, if it were otherwise entitled to judgment, the plaintiff was entitled to judgment in the sum of $800,000 or only to an order for specific performance or damages. I invited further submissions on that issue. I heard further argument on 10 August 2006.

25 The plaintiff submitted that under the contract the payment of the sum of $800,000 and the transfer of the shares were not required to be contemporaneous events. In the alternative, the plaintiff submitted that there should be judgment for specific performance. The plaintiff did not, however, seek to amend the writ, on which the statement of claim is indorsed, to claim that relief. The plaintiff's current claim is for the sum of $800,000 plus interest.

26 The defendant submitted that the payment of the purchase price and the transfer of the shares were concurrent or contemporaneous requirements. There was therefore currently no debt owing by the defendant to the plaintiff.

27 The principles applicable to an application of this sort are well known. The overall legal burden of persuading the Court that the claim is a good one and that the plaintiff is entitled to judgment rests throughout on the plaintiff. But once the plaintiff discharges the initial onus of satisfying the Court that in respect of its claim it would, upon the evidence adduced by it, be entitled to judgment, there is an evidentiary onus on the defendant to satisfy the Court that there is a triable issue or dispute or there ought to be a trial: Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18 at 23; Scaffidi Nominees Pty Ltd & Anor v Buswell, unreported; FCt SCt of WA; Library No 960588; 11 October 1996.

28 It is clear that the power to order summary judgment must be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87. If after argument there remains real uncertainty as to the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused: Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VicLawRp 47; [1947] VLR 332 at 335. But the Court is not bound to accept uncritically as raising a dispute of fact calling for further investigation every statement in an affidavit, however equivocal, lacking in precision or inconsistent with contemporary documents or other statements by the deponent: Eng Mee Yong v Letchumanan [1980] AC 331 at 341.

29 There are two substantive issues on this application, first, whether a debt of $800,000 payable by the defendant to the plaintiff arose on the settlement date separately from the transfer of the shares and, secondly, if it did, whether the contract was subject to a condition that the defendant was able to obtain finance to enable it to settle. I should say that there seems to me to be no substance in the defendant's alternative contention that there was never any concluded agreement between the parties. That contention cannot be maintained in light of the signed agreements of 25 July 2005 and 14 September 2005, and the correspondence.

30 I do not consider that there is any arguable defence that the contract of 25 July 2005 was subject to the defendant obtaining finance to enable it to settle. It appears that the plaintiff, for its own reasons, was concerned that the defendant demonstrated that it had the financial capacity to complete the contract, but there is nothing before me which is capable of establishing that the contract was subject to a condition, to which the defendant was entitled to the benefit, that the defendant be able to obtain finance to meet the contract sum of $800,000. If there was any doubt about that, it was laid to rest by the terms of the recitals to the agreement of 14 September 2005. The defendant has not offered any satisfactory explanation as to how, consistent with its present case, it came to execute that agreement containing those recitals. The recitals plainly contradict the defence on which the defendant now seeks to rely.

31 The question then is whether the plaintiff is entitled to the relief it seeks, that is, judgment for the sum of $800,000 as a debt due and owing by the defendant under the contract of 25 July 2005.

32 In McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, Dixon J (at 475 - 476) cited with approval the following passage in the judgment of Sir John Salmond in Ruddenklau v Charlesworth [1925] NZLR 161 at 164:

"As a general rule, on the failure or refusal of a purchaser to complete an executory contract for the purchase of land the vendor is not entitled to sue for the purchase money as a debt. He is entitled merely to sue for specific performance or for damages for the loss of his bargain. It is only when the contract has been completed by the execution and acceptance of a conveyance that unpaid purchase money may become a debt and can be recovered accordingly. ... The sale of land is in this respect similar to the sale of goods. In the case of goods sold and delivered, and of goods bargained and sold, the property in each case having passed to the buyer, the seller's remedy is to sue for the price. But if under any executory contract the buyer wrongfully refuses to accept the goods the seller's only remedy is an action for damages. The general rule, however, that in an executory contract for the sale of land the vendor cannot sue for the price is excluded whenever a contrary intention is shown by the express terms of the contract. And it seems established by authority that a contrary intention is sufficiently shown in all cases in which by the express terms of the contract the purchase money or any part thereof is made payable on a fixed day, not being the agreed day for the completion of the contract by conveyance. In all such cases the purchase money or such part thereof becomes, on the day so fixed for its payment, a debt immediately recoverable by the vendor irrespective of the question whether a conveyance has been executed and notwithstanding the fact that the purchaser may have repudiated his contract. Notwithstanding such repudiation the vendor is not bound to sue for damages or specific performance, but may recover the agreed purchase money".

33 In Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245, the parties had entered into a contract for the sale of a home unit. The purchaser paid a deposit of 10 per cent and the balance of the purchase price was payable "upon settlement". The purchaser subsequently sought to avoid the contract and the vendor successfully sued for specific performance. The purchaser failed to comply with the order whereupon the vendor sued the guarantors and judgment was given against the guarantors for the balance of the purchase price, interest and certain expenses. The judgment against the guarantors was set aside. The High Court held that as the balance of the purchase price was payable "upon settlement", and as settlement had not taken place and there had been no conveyance, the balance of the purchase price had not become a debt payable by the purchaser. As no liability had accrued on the part of the purchaser to make the payment the guarantors, who had promised that the purchaser would perform its obligations including the payment of all money payable under the contract, were not liable to pay an amount equivalent to the balance of the purchase price.

34 There is nothing, in my view, which would distinguish an executory contract for the sale of land or goods and, as in this case, a contract for the sale of shares. The same principles are applicable.

35 But the general rule, that where there is an executory contract the vendor cannot sue for the price, is excluded whenever a contrary intention is shown by the express terms of the contract. A contrary intention is sufficiently shown where by the express terms of the contract the purchase money, or any part of it, is made payable on a fixed day which is not the agreed day for the completion of the contract.

36 In Reynolds v Fury [1921] VicLawRp 3; [1921] VLR 14, a contract for the sale of land provided for payment of the contract price by an instalment of £150 on the signing of the contract, instalments of £100 on 22 April in each of the years 1920, 1921, 1922 and 1923, and the final balance of £642 on 22 April 1924, when the title was to be transferred. Interest was payable on the unpaid purchase price. The plaintiff sued for the instalment of £100 which had not been paid on the due date of 22 April 1920, and interest. The defendant contended that as there had been no conveyance or transfer the plaintiff was not entitled to claim the £100 as a liquidated sum. The Full Court rejected that contention. It held that instalments of purchase money, which, by the conditions of a contract of sale of land are payable fixed times before conveyance, become immediately recoverable as a debt or liquidated demand, notwithstanding that the sale has not yet been completed by conveyance. The rule that until conveyance a claim cannot be made for a sum payable under a contract for the sale of land was restricted to cases where the conveyance was a condition precedent to or concurrent with the payment. In that respect, the Full Court observed that its decision would, or might, not extend to the final instalment payable in 1924.

37 In Harry Davies & Co Pty Ltd v East [1925] VicLawRp 79; [1925] VLR 681, Cussen J (who had delivered the judgment of the Full Court in Reynolds v Fury (supra)) reiterated that Reynolds v Fury (supra) did not deal with the situation where the payment was concurrent or contemporaneous with the completion of the purchase and the execution of the conveyance. In such situations, the plaintiff could not claim the money as no conveyance had been executed.

38 In my view, having regard to the terms of the contract of 25 July 2005, it is at least arguable that the sum of $800,000 is payable concurrently with the transfer of the shares. It is therefore arguable that the sum of $800,000 is not a debt now due and owing by the defendant to the plaintiff and that the plaintiff's relief is limited to a claim for specific performance or for damages.

39 I would not accede to the plaintiff's submission that, in the event of such a finding, there should simply be judgment for the plaintiff for specific performance. That is not the relief currently claimed by the plaintiff in the action and that is not the basis on which the application was argued. The proposal that judgment might be entered for specific performance was first raised by the plaintiff in the argument on 10 August 2006 and, as I have said, the plaintiff did not seek to amend the relief claimed to seek that relief in the alternative. Moreover, it is not self-evident that precisely the same issues would arise on a claim for specific performance, as that is a discretionary remedy.

40 In the circumstances, I am inclined simply to dismiss the application and leave it to the plaintiff, if it wishes to seek summary judgment for specific performance, to apply for leave to do so following the necessary amendments to its claim. I will, however, hear the parties on the course that should be taken and on costs.