CHIANTI PTY LTD -v- LEUME PTY LTD [2007] WASCA 270 (12 December 2007)

CHIANTI PTY LTD -v- LEUME PTY LTD [2007] WASCA 270 (12 December 2007) - WASCA 2007 case summary — Zoe

[126]

Subject to section 51 the Court has the same jurisdiction to hear and determine and may exercise all the powers and authority that the Supreme Court has and may exercise from time to time, in relation to -

(a) all personal actions, other than those of the kind referred to in subsection (2), where the amount, value or damages sought to be recovered is not more than the jurisdictional limit, whether on the original claim or demand or a balance after allowing payment on account, or the amount of any set off admitted by the plaintiff;

(aa) an action brought claiming an indemnity where the action arises from or relates to another action that is before the Court or that has been heard and determined by the Court;

(b) an action brought to recover a sum of not more than the jurisdictional limit which is the whole or part of the unliquidated balance of a partnership account, including in any such action jurisdiction, powers and authority relating to declaration of partnership or dissolution of partnership;

(ba) an action brought to recover a sum of not more than the jurisdictional limit which is the amount or part of the amount of the distributive share under an intestacy or of a legacy under a will;

(bb) an action for specific performance of or for the rectifying, delivering up, or cancelling of any agreement whatever, where the amount in dispute or the value of the property affected is not more than the jurisdictional limit;

(c) an action of replevin where the value of the goods seized is not more than the jurisdictional limit;

(d) an action of ejectment to recover possession of any land, where the value of the land does not exceed one half of the jurisdictional limit by the year or where the rent exclusive of ground rent, if any, payable in respect of the land does not exceed one half of the jurisdictional limit by the year;

(e) any action, whether commenced in the Court or the Supreme Court, in which the amount, value or damages sought to be recovered exceeds the jurisdictional limit in which the parties thereto agree by a memorandum signed by them or by their respective solicitors, that the Court has power to hear and determine;

(f) all other actions or matters in respect of which jurisdiction is given to the Court by or under this or any other Act.

[132]

Subject to the express provisions of any other Act, in every civil cause or matter commenced in the Supreme Court, law and equity shall be administered by the Court according to the rules following:-

(1) If any plaintiff or petitioner claims to be entitled to any equitable estate or right, or to relief upon any equitable ground against any deed, instrument, or contract, or against any right, title, or claim whatsoever asserted by any defendant or respondent in such cause or matter, or to any relief founded upon a legal right, which before the commencement of the Supreme Court Act 1880, could only have been given by a court of equity, the Court, and every Judge thereof, shall give to such plaintiff or petitioner such and the same relief as ought to have been given by the Court in its equitable jurisdiction in a suit or proceeding for the same or the like purpose properly instituted before the commencement of the said Act.

(2) If any defendant claims to be entitled to any equitable estate or right or to relief upon any equitable ground against any deed, instrument, or contract, or against any right, title or claim asserted by any plaintiff or petitioner in such cause or matter, or alleges any ground of equitable defence to any claim of the plaintiff or petitioner in such cause or matter, the Court, and every Judge thereof, shall give to every equitable estate, right, or ground of relief so claimed, and to every equitable defence so alleged, such and the same effect, by way of defence against the claim of such plaintiff or petitioner, as the Court in its equitable jurisdiction ought to have given if the same or the like matters had been relied on by way of defence in any suit or proceeding instituted in the Court for the same or the like purpose before the commencement of the Supreme Court Act 1880.

(3) The Court, and every Judge thereof, shall have power to grant to any defendant in respect of any equitable estate or right, or other matter of equity, and also in respect of any legal estate, right, or title claimed or asserted by him -

[190]

On behalf of the plaintiff, reliance was placed upon the following statement by the learned authors of Ford and Lee, Principles of the Law of Trusts, at [1440]:

'In its common law sense "creditor" does not ordinarily comprehend a beneficiary in relation to the trustee. But a trustee under an existing trust can become a debtor at common law to the beneficiary by stating an account, or, in other words, admitting to the beneficiary that a certain sum of money is held by the trustee subject to an immediate and unconditional duty to pay it to the beneficiary.' (Citations omitted.) (Emphasis added.)

One of the cases cited by Ford and Lee for the above statement is Bartlett v Dimond [(1845) [1845] EngR 642; 14 M & W 49 at 56 - 7; [1845] EngR 642; 153 ER 385 at 387] in which Pollock CB stated:

'So long as a trust continues, a bill in equity is the only remedy. We think that the moneys received were originally received in trust; and that the trust had not determined at the testator's death. If that trust was ended, and the testator had stated an account, or, in other words, had admitted himself to the plaintiff that he held any sum of money in his hands payable to him absolutely, he would, with respect to that sum, be a debtor, not properly a trustee, and then an action would have been maintainable against him.' (Emphasis added.)

In my view, the principle stated in Ford and Lee and in Bartlett v Dimond does not support the plaintiff's case. In the first place, the Port Side Trust is a continuing trust. Secondly, the 2005 Port Side accounts are not capable of constituting an admission to the unitholders of the kind referred to in Bartlett v Dimond, so as to give rise to a debtor/creditor relationship between the trustee and the unitholders. The accounts do not contain an admission that any sum of money is held by the trustee subject to an immediate and unconditional duty to pay it to the unitholders in respect of the Delprop [sic Port Side] loans. Indeed, the accounts disclose that the trustee did not at that time have sufficient cash on hand to be the subject of an immediate and unconditional duty to repay the Port Side loans. Accordingly, the matter is to be determined by reference to equitable principles [50] - [52].

[192]

A balance sheet can be an acknowledgment of debt (The Stage Club Ltd v Millers Hotels Pty Ltd [1981] HCA 71; (1981) 150 CLR 535), and individual creditors comprised in the aggregate sums shown therein can be identified by extrinsic evidence: see Jones v Bellgrove Properties Ltd ( [1949] 2 KB 700). The acknowledgment operates, of course, at the date at which the balance sheet speaks, namely the end of the relevant financial period. I see no reason why the ordinary rule should not apply, namely that the acknowledgment implies a promise to pay. I do not think that the difference between the date of signature of the Balance Sheet and the date at which it speaks precludes the ordinary implication. If, of course, the debt has been discharged between those dates, there is nothing upon which the promise can operate. If the debt has not been discharged, the implied promise is operative. If there existed an immediate liability to repay, I do not think that the use of the expression 'deferred liability' in the Balance Sheet or the company's financial position could negative the implication of the promise to pay.

I consider that the acknowledgments were communicated to the appellants for the reasons given by Olsson J.

The remaining question is whether the Balance Sheets could operate as an acknowledgment and promise to J P Brooker by reason of his being a director and a signatory. J P Brooker, at the material times, was one of six directors. His interest as a Shareholders' Account depositor would have been well known to his co-directors. There can be no doubt, therefore, that the decisions of the Board to adopt the Balance Sheets containing the acknowledgment of debt and promise to pay J P Brooker were valid decisions. The case is therefore distinguishable from Re The Coliseum (Barrow) Ltd ( [1930] 2 Ch 44). It may also be distinguishable on the same ground from Re Transplanters (Holding Co) Ltd ( [1958] 2 All ER 711) because in that case there were only two directors and it is not stated whether the concurrence of both was required for the adoption of the Balance Sheet. The signature of J P Brooker, together with the co-director Allan, to the Balance Sheets did no more than give effect to the valid decisions of the Board. There was no question of abuse of his fiduciary position for his own benefit. He, like Mr Allan, was a mere instrument of the Board and his signature was the means of complying with the statutory requirement. The acknowledgment and promise were contained in the Balance Sheets validly adopted by the Board (385 - 386).

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CHIANTI PTY LTD -v- LEUME PTY LTD [2007] WASCA 270 (12 December 2007)

Legislation Cited (8)

Cases Cited (13)