BLENKINSOP -v- BLENKINSOP NOMINEES PTY LTD AS TRUSTEE OF THE BLENKINSOP FAMILY TRUST [2015] WASC 254 (20 July 2015)

4 By that amendment, the plaintiff specifically pleads two loans that are part only of the total amount claimed: see par 5AA and par 6AA. The plaintiff pleads that, despite demand, neither of these loans has been repaid. She seeks summary judgment on that part of her claim.

5 The progress of this application has been hampered because Lavan Legal, the solicitors then on the record for the two defendants, ceased to act. On 13 February 2015, I made orders to remove Lavan Legal from the record in each matter. On the same day, I made orders programming the summary judgment application through to hearing on 20 March 2015, allowing time for the defendants to secure new legal representation prior to the hearing.

6 The defendants engaged new solicitors, Minter Ellison, but a notice of appointment was not filed until 17 March 2015. In the days leading up to the hearing of the application, both the plaintiff and the defendants filed affidavits outside the times set in the programming orders: two affidavits of Christine Marion Thurtell, the first on 17 March 2015, and the second on 20 March 2015, on behalf of the plaintiff; and two affidavits of Scott Frederick Blenkinsop, the first on 17 March 2015, and the second on 18 March 2015, on behalf of the defendants. I granted leave for the affidavits to be referred to.

7 Following the hearing of the application, the matter was again delayed at the request of the parties, who advised the court they were negotiating and asked for judgment to be deferred.

8 The principles which I should apply are not in dispute. In Henderson v Curtis [2008] WASC 283 [2], Beech J summarised them in this way:

Summary judgment will be granted only when there is no real question to be tried. Conflicts of evidence on affidavit are not to be determined in the context of an application for summary judgment. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].

On a date presently unknown in the 1985/1986 financial year, the Plaintiff and Mr Blenkinsop [William Frederick Blenkinsop, the plaintiff's late husband] lent $600,121.90 and $44,806.87 respectively to the First defendant as trustee for the Blenkinsop Family Trust.

Particulars

The loans arose and are to be inferred from a transfer of the assets of, and the Plaintiff's and Mr Blenkinsop's share in, the Blenkinsop Ten Pin Bowls partnership, valued at around $611,240.55 (Plaintiff's share) and $55,455.48 (Mr Blenkinsop's share, less a repayment in the form of drawings from the Trust No 1 of $11,119 each. Insofar as the loans were in writing, they are recorded in the First Defendant's financial statements as at 30 June 1986 and each subsequent year.

10 In substance, the plaintiff claims that she and her late husband were the sole partners of the Blenkinsop Ten Pin Bowls partnership. The partnership assets included bowling alleys in Kalgoorlie, Geraldton and Albany. The partnership accounts for the 1984/1985 financial year record the plaintiff share in the partnership fund as $611,240.55 and her husband's share as $55,455.48 (affidavit of Judith Anne Blenkinsop sworn 20 November 2014 (affidavit of JAB), par 39). The 1985/1986 financial statements show an increase in the loan accounts for the plaintiff of $600,121.90 and for her husband of $44,806.87 (a total of $644,928.77). The plaintiff says these amounts are their share in the partnership fund, less drawings for the financial year (affidavit of JAB, par 41).

11 From 30 June 1986, and each financial year after that, the loan has been recorded in the first defendant's financial statements.

On a date presently unknown in the 1997/1998 financial year, the Plaintiff and Mr Blenkinsop lent the sums of $261,815 and $219,360 respectively to the Second Defendant as trustee for Blenkinsop Family Trust No 2.

Particulars

The loans arose from and are to be inferred from the purchase by the Plaintiff and/o Mr Blenkinsop, and transfer to the Second Defendant, of the properties at 8/69 Murray St, Perth and 5 Warrangoo Road, Bayonet Head, Albany, the combined value of which was around $502,00. Insofar as the loans were in writing, they were recorded in the Second Defendant's financial statements as at 30 June 1998 and each subsequent year.

13 In her affidavit, the plaintiff says the purchase price of the properties was paid using her own and her husband's funds. A significant portion was from her superannuation. The first defendant was, at that time, trustee of the plaintiff's superannuation fund.

14 The Murray St property was purchased for a total of $347,000, plus stamp duty of $10,455. In the 1998/1999 financial statements for the superannuation fund, a withdrawal of $317,592.60 was recorded against the plaintiff (affidavit of JAB, par 46).

15 The Warrangoo property was purchased for $155,000.

16 The loan accounts of the plaintiff and her husband rose by a total of $481,175 in the 1997/1998 financial year. The plaintiff said she believes the increase was due to their contributions to the total purchase price of the Murray and Warrangoo properties (which was $502,000), less drawings for that year (affidavit of JAB, par 41).

17 From 30 June 1998, and each financial year after that, the loan has been recorded in the second defendant's financial statements.

18 To the extent either loan was made by her late husband, the plaintiff, as her husband's sole beneficiary, acquired the debt owing to him upon his death.

19 The plaintiff claims that an implied term of each loan was that it would be repayable on demand (statement of claim, par 5AB and par 6AB). She has not received repayment of any portion of either loan, despite making demands on 6 August 2013, and 2 September 2013.

20 The defendants submit that the evidence relied upon by the plaintiff is unsatisfactory. In particular, they say:

1. No resolutions to adopt and pass accounts of the companies have been passed since, at the latest, financial year 2007/2008.
2. The plaintiff has adduced no evidence of any such resolution or signed accounts of Trust No 1 since 1992/1993, and no evidence of any resolution or signed accounts for Trust No 2 for any material year.
3. To the extent the plaintiff relies upon the books of the two companies, and s 1305(1) of the Corporations Act 2001 (Cth), there is evidence on which the court should doubt the accuracy and reliability of those books, and that they are inherently unreliable. This includes evidence that the directors resolved on 5 March 2012 that the books and the beneficiary loan accounts be reviewed, and resolved not to adopt the accounts of the companies.

21 The defendants also raise an issue of limitation.

22 It is not necessary, and in my opinion not desirable, to go into the evidentiary matters in any depth.

23 The defendants assert, as an overarching proposition, that the plaintiff will be faced with a significant hurdle because her claim is subject to s 38 of the Limitation Act 1935 (WA). They contend that, under s 38(1), the plaintiff's claim is subject to a limitation period of six years, and her claim has been brought outside the time limited.

24 The plaintiff's immediate response to the limitation point was to rely upon s 59 of the Limitation Act 2005 (WA), under which a cause of action for the repayment of a debt repayable on demand accrues when there is a failure to comply with a demand for repayment. But the 2005 Act, subject to exceptions that are not presently relevant, applies to causes of action that accrue on or after its commencement day (15 November 2005): Limitation Act 2005 s 2, s 4. If the cause of action accrued earlier, the issue of limitation is to be determined under the 1935 Act, which has no equivalent provision.

25 The differences between a loan payable on demand, and a loan only repayable when demand is first made, were conveniently summarised by Murphy JA in Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 [36] [38]. The common law distinguished between two positions:

1. Where no time for repayment is specified, or where the loan is stated to be payable 'on demand', the loan creates an immediate debt by which the money is repayable immediately without the creditor first making a demand for payment.
2. This is to be distinguished from a loan only repayable on condition that a demand is first made, where the making of the demand is a condition precedent to liability to repay, and the cause of action does not arise until the demand has been made.

26 The plaintiff pleads that each debt was repayable on demand. On the face of the pleading, the cause of action arose immediately when each loan was made: the first in about 1986, the second in about 1998.

27 The plaintiff may still maintain her action if the debt has been acknowledged for the purposes of s 44 of the Limitation Act 1935:

(1) Except as expressly provided in this Act, nothing in section thirty-eight contained shall take away or lessen the effect of any acknowledgment or promise ... and except as aforesaid any such acknowledgment or promise shall have the same effect as if this Act had not been passed.

...

(3) In actions in the nature of actions founded upon simple contract, no acknowledgment or promise by words shall be deemed sufficient evidence of any new or continuing contract whereby to take any case out of the operation of section thirty-eight, or to deprive any party of the benefit thereof, unless such acknowledgment or promise is made or contained by or in some writing signed by the party chargeable, or by his agent duly authorised.

28 In Giacci v Giacci Holdings Pty Ltd [2010] WASCA 233 [36] [39], Newnes JA summarised the relevant principles (I have omitted the many citations of authority):

In order to take a debt out of the operation of s 38 of the Act, it is necessary that there be a promise by the debtor to pay the debt. A promise need not be express and a promise to pay will be implied from an unconditional acknowledgement of the debt ... In order to constitute such an acknowledgement there must, upon the fair construction of the words read in the light of the surrounding circumstances, be an admission that the debt is owed ... But it is not necessary that the acknowledgement specify the precise amount of the debt so long as it is ascertainable from extrinsic evidence ... Nor need the acknowledgement be contained in a single document but a number of documents can be combined to make up an acknowledgement ...

A promise to pay or acknowledgement of debt must be made to the creditor or the creditor's agent ... Such a promise or acknowledgement need not be made direct to the creditor or the creditor's agent but it is sufficient that the debtor intends that it be communicated to the creditor or the creditor's agent as an admission of the debt ...

It is clear from s 44(3) of the Act that an acknowledgement signed by an agent of the debtor is only effective if the agent is duly authorised to sign it. But it is not necessary that the agent have express authority to do so if it is within the agent's general authority ... The authority of the agent is to be determined according to the ordinary principles of agency.

Ultimately, what amounts to an acknowledgement is a question of construction in each case and previous cases are therefore of little assistance ...

29 Financial statements, including a balance sheet, can constitute an acknowledgement of debt, where they have been received by the creditor who sues in reliance on them: see Stage Club Ltd v Millers Hotels Pty Ltd [1981] HCA 71; (1981) 150 CLR 535, 543 544, 549, 554 563. In the present case, there are complicating issues where the financial statements may not have been passed and approved, or signed, within the period relevant for the plaintiff's claims.

30 Where there is an issue of this nature requiring determination an issue that was not squarely addressed by the plaintiff, perhaps due to the mistaken reliance on the 2005 Act summary judgment should not be given.

31 Because the other issues regarding the proof of the loans remain live in the proceedings, it is preferable to make no further comment as to matters that I may later be called upon to decide.

32 The summary judgment application will be dismissed.

33 Finally, I need to deal briefly with a tangential issue that arose in the application. In his affidavit on behalf of the defendants, sworn 17 March 2015, Scott Blenkinsop gave evidence regarding the circumstances in which Lavan Legal ceased to act. He said:

1. On 27 January 2015 Lavan Legal made application for leave to withdraw from the record and orders in those terms were made on 13 February 2015. The basis for the application was in effect that certain of the directors of the Defendants (the Plaintiff and Christine Thurtell) would not approve the payment of invoices rendered by Lavan Legal despite the Trustee Companies having resolved to defend these proceedings and appoint Lavan Legal to do so. Consequently, the defendants lost their representation in these proceedings.

1. Parties with a position adverse to the interests of the Defendants (the Plaintiff and Christine Thurtell) have been able to engineer, consciously or otherwise, a situation whereby the Defendants have become unrepresented at a critical juncture.

35 In a responsive affidavit, sworn 19 March 2015, Ms Thurtell disputed those assertions.

36 After the hearing, I gave Mr Blenkinsop the opportunity to file a further affidavit in response, in case it became necessary to make any adverse comment regarding his affidavit in deciding the summary judgment application. It did not prove necessary to comment, and I make no findings on this collateral issue.

CITATION : BLENKINSOP -v- BLENKINSOP NOMINEES PTY LTD AS TRUSTEE OF THE BLENKINSOP FAMILY TRUST [2015] WASC 254 (S)

BLENKINSOP NOMINEES PTY LTD AS TRUSTEE OF THE BLENKINSOP FAMILY TRUST

SILVERGLADE PTY LTD AS TRUSTEE OF THE BLENKINSOP FAMILY TRUST NO 2

Practice and procedure - Costs of application for summary judgment - Turns on own facts

Limitation Act 1935 (WA), s 38

1 ALLANSON J: On 20 July 2015, I gave judgment refusing an application by the plaintiff for summary judgment on part of her claim. The defendants now apply for costs on the summary judgment application.

2 Under O 14 r 8 (1) of the Rules of the Supreme Court 1971 (WA):

If the plaintiff makes an application under rule 1 and the case is not within this Order, or if it appears to the Court that the plaintiff knew that the defendant relied on a contention which would entitle him to unconditional leave to defend, the Court may dismiss the application with costs, and may require the costs to be paid by the plaintiff forthwith.

3 The usual order where an application for summary judgment is dismissed is that the costs of the application be costs in the cause: Dal Pont, The Law of Costs (3rd ed, 2013) 441 - 2 [14.25]; and see Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Unreported, WASC, Library No 92034, 19 June 1992) 2 - 4 (Ipp J). The rationale for the usual order is that applications for summary judgment should not be brought when the plaintiff is aware or should be aware that the application is hopeless and that it has no prospect of succeeding.

4 The successful defendants apply for costs on an indemnity basis, submitting that the plaintiff persisted in the application when, on a proper consideration of the evidence, the arguments and authorities provided by the defendants, she should have known that the application was hopeless.

5 The summary judgment application was determined on a single point. The defendants asserted in submissions that the plaintiff's claim was brought outside the sixyear limitation period prescribed by s 38 of the Limitation Act 1935 (WA). In part, the judgment turned on the way in which the plaintiff's claim had been pleaded. The plaintiff pleaded that it was an implied term of each loan that it would be repayable on demand (statement of claim, par 5AB and par 6AB). A loan repayable on demand creates an immediate debt, repayable immediately without the creditor first making a demand for payment. On the face of the pleading, the cause of action arose immediately when each loan was made: the first in about 1986, the second in about 1998.

6 While the plaintiff also pleaded that the debt had been acknowledged in annual financial statements, there are complicating issues regarding whether the financial statements on which she relies have been passed and approved, or signed, within the period relevant for the plaintiff's claims.

7 In short, the plaintiff may still be able to establish her claim - for example, if there has been an acknowledgment of debt, or if the loans are found, on their proper construction in the circumstances, to be repayable only after demand is made. But the defendants had identified an issue requiring determination at trial. Summary judgment was refused.

8 The defendants had not yet pleaded defences. In submissions in this application, the defendants say they had given notice of the defence, and had 'condescended to particularity' in doing so. For this submission, the defendants rely on:

(1) their position at a strategic conference before Edelman J on 27 November 2014 at which, they submit, they stated their position that the claims were statutorily barred and had never been acknowledged;

(2) the terms of the judgment dismissing the application, in which I referred to the way in which the claim had been pleaded as a loan 'payable on demand'; and

(3) the re-iteration of the limitation point in the submissions filed in response to the summary judgment application.

(1) a limitation defence must be pleaded to be relied upon;

(2) the limitation defence had not been raised either in a pleading or in correspondence;

(3) the defendants did not raise reliance on the limitation defence at the strategic conference on 27 November 2014; and

(4) while the defendants raised these matters in submissions before the hearing of the summary judgment application, they filed their submissions and the affidavit evidence on which they relied late. The submissions were filed only one working day before the hearing.

10 The solicitors who represented the defendants at the hearing had only gone onto the record on 17 March 2015, three days before the hearing on 20 March. The solicitors who had previously acted for the defendants had been removed from the record on 13 February 2015.

11 The plaintiff also made submissions to the effect that the plaintiff's case still has reasonable prospects of success. The decision on the summary judgment application does not suggest otherwise. But that does not go to the present question - did the plaintiff know that the defendants relied on a contention that would entitle them to unconditional leave to defend?

12 In my opinion, this is not a matter in which an order for costs should be made in favour of the defendants, on the basis they have argued.

13 First, I have gone to the transcript of the strategic conference before Edelman J on 27 November 2014. I could not find any basis for the defendants' submission that they stated their position on the limitation point at the conference. The position taken by counsel for the defendants on that occasion was that the plaintiff had not properly pleaded the defendants' indebtedness, resulting in Edelman J making orders for the filing of a re-amended statement of claim.

14 Second, as submitted by the plaintiff, in an action to which s 38 of the Limitation Act applies the statute bars the remedy, but not the right. A defendant who says that an action is statute-barred must specifically plead the defence: Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415; (2000) 23 WAR 159 [36]. In considering whether it has been shown that the plaintiff knew the defendants would rely on that defence, I take into account that the defendants are trustee companies for family trusts; the directors are all family members and the plaintiff is the mother of the other directors; and the plaintiff pleaded that the debts had been acknowledged in the annual financial statements of the defendants. I also take into account that, while the defendants raised questions about whether the plaintiff's pleading properly stated a cause of action, they did not raise the limitation issue at the strategic conference. What was said at the conference is consistent with a letter dated 21 October 2014 from the solicitors then acting for the defendants. That is the only correspondence that has been put before the court on this application.

15 Third, the defendants did clearly raise the limitation point in submissions, but those submissions were exchanged late on 18 March 2015, for a hearing on 20 March. The defendants were only permitted to rely on them because of the difficulties they had experienced in securing legal representation.

16 For these reasons, I am not satisfied that a costs order should be made in favour of the defendants for the costs of the application. The costs of that application, including the submissions on the issue of costs, will be in the cause.