Beasam Pty Ltd v Jackwitz [1991] QSC 171

IN THE SUPREME COURT OF QUEENSLAND Before Mr. Justice G.N. Williams No. 735 of 1991 BETWEEN: BEASAM PTY. LTD. Plaintiff DESMOND EDWARD JACKWITZ Defendant JUDGMENT - G.N. WILLIAMS J. Delivered the 21st day of June, 1991. CATCHWORDS: Summary judgment - leave to defend on condition pay substantial amount of claim into court - shadowy defence - appeal against order of Master dismissed. Counsel: Solicitors: Mr. Roberts for Appellant-Defendant. Mr. O1 Donnell for Respondent-Plaintiff. McCarthy, Palethorpe and Blanch for Appellant- Defendant. Morris, Fletcher and Cross for Respondent- Plaintiff. Hearing date: 18th June, 1991. -- 1 of 13 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN: BEASAM PTY. LTD. DESMOND EDWARD JACKWITZ JUDGMENT - G.N. WILLIAMS J. No. 735 of 1991 Plaintiff Defendant Delivered the 21st day of June, 1991. At all material times the respondent-plaintiff Beasam Pty. Ltd. ( "Beasam") carried on the business of distributing and selling Shell petroleum products. On or about 1st March, 1990 Beasam acquired the business which had previously been carried on by Morland Queensland Pty. Ltd. under the trading name Lockyer Valley Petroleum. Beasam also acquired that trading name and the business continued trading under that name. The appellant-defendant is one Desmond Edward Jackwi tz ( "Jackwi tz"). The following matters relating to him are of importance for the present proceedings: ( i) He is a director of Neparta Pty. Ltd. ( "Neparta") which was incorporated in June 1982. A company search reveals that its principal activity is as a "trustee company", and that its registered office is at Clarendon Road, Lowood. The only other director and shareholder is Gale Heather Jackwitz, presumably the wife of Jackwitz. -- 2 of 13 -- 2 (ii) In his affidavit filed 31st May, 1991 he swears that Neparta trades as Jackwitz Fuel Distributors at Clarendon Road, Lowood, as a wholesale distributor of petrol products. (iii) A search of the business names register indicates that the name Jackwitz Fuel Distributors was registered on 18th September, 1990 as the name under which Neparta carried on business at Clarendon Road, Lowood. His solicitor (Falconer) swears to some hearsay information that "Jackwitz Fuel Distributors was registered at the time it commenced business in 1981, expired on 7th September, 1989 and was re-registered on 19th September, 1990." Nothing is said as to what entity carried on business under that name from 1981 to 19th September, 1990, but it must be remembered that Neparta was not incorporated until 7th June, 1982. (iv) As at 29th May, 1991 the business names "Jackwitz Fuel Sales" , "Jackwi tz Fuel Sales (Oil) 11 , and "Jackwitz Fuel Supplies" were not registered. ( V) At all material times Jacko's Services Station Pty. Ltd. carried on business as a service station proprietor at Clarendon Road, Lowood. There seems to be no dispute that between March and October 1990 Beasam supplied a business at Clarendon Road which distributed petroleum products a considerable quantity of Super Shell petrol, formula diesel, and unleaded petrol which that -- 3 of 13 -- 3 business on sold. Thus that business incurred an indebtedness to Beasam. Based on quantities supplied and details furnished as to on sales, Beasam prepared invoices bearing dates in August 1990 totalling $198,984.97. There is nothing in the material before the court challenging the assertion that the petroleum product referred to in those invoices was obtained from Beasam and distributed through a business carried on at Clarendon Road. Beasam in fact invoiced Jackwitz personally and in default of payment commenced action against him seeking to recover that amount. In the action Beasam has also claimed an additional $18,810.60 for unleaded petrol it sold on 13th September, 1990 and other products supplied in August and September 1990, less credits for items returned. By way of response to the- judgment summons Jackwitz has asserted that he is not personally liable and has foreshadowed a defence that the goods were supplied to Neparta which is the entity which is liable. Both before the Master and on appeal the question agitated was whether or not Jackwitz should be given unconditional leave to defend in the circumstances revealed by the material. Master Horton Q.C. gave leave to defend conditional upon Jackwitz's paying into court the sum of $207,794.00. The total amount of the claim was for $217,795.57 and it was not clear how the Master arrived at the amount referred to in his order; it may well be he intended to refer to the full amount of the claim but made an arithmetical error in adding the amounts referred to in the writ. But the point is of no real practical significance. -- 4 of 13 -- 4 The defendant has appealed against the order of the Master insofar as it attaches the condition to the grant of leave to defend. Beasam relied on evidence in a series of affidavits in support of its application for summary judgment. In addition counsel for Beasam submitted that the plaintiff's case was supported by certain material found in affidavits by or on behalf of Jackwitz. Jackwitz was aware of the change of ownership of Lockyer Valley Petroleum; he refers to the fact that in about February 1990 he was told of the take-over and introduced to Oxenham. But Jackwitz asserts no recollection of a meeting with Oxenham on 8th May, 1990; that would appear to have been the date of a very critical meeting. Oxenham, who had managerial responsibilities for Lockyer Valley Petroleum, swears that he had a discussion with Jackwi tz and his son on 8th May, 1990 relating to the position of Jackwitz as the consignor. More importantly, following that meeting a letter dated 11th May, 1990 was sent to Jackwitz setting out the basis on which trading arrangements would continue. Jackwitz admits receipt of the letter, but did not in his affidavits comment in any detail on the contents thereof. The letter of 11 th May, 1990 was addressed to "Des Jackwi tz, Jackwi tz Fuel Sales, Clarendon Road, Lowood. " salient parts of the letter: I quote the "Further to our meeting with Andrew and yourself on Tuesday 8th May, I wish to confirm the following points for the record. (1) It has been proposed that we should work closer as two organisations. Jackwitz Fuel Sales would -- 5 of 13 -- 5 be a sub-distributor of Lockyer Valley Petroleum on the complete Shell oil product range. (3) It is proposed that we will participate in the Lowood show with the Shell tent under the name of Jackwi tz Fuel Sales. It is proposed that this display will be manned over a two day period by Andrew, Bob Cramer-Roberts from Lockyer Valley Petroleum, Tony and yourself, on various roster systems. (4) We look forward to resolving within two weeks the designated customers and area Jackwitz Fuel Sales would wish to operate with, in conjunction with the support of Lockyer Valley Petroleum. (5) It is proposed as agreed within the same period, we will attempt to have Coominya Store transferred from Lockyer Valley Petroleum to a Jackwi tz Fuel Sales customer. We will also consider any other customers in our area which can be economically serviced by Jackwi tz Fuel Sales. ( 6) We look forward to working more closely with Jackwitz Fuel Sales in the future, however we wish to clearly point out that our strict trading terms must be adhered to. (All of the above points detailed will become null and void unless the detailed trading terms were agreed to.) It I should also point out that on the top of the second page of the letter there is another reference to "Des Jackwitz, Jackwitz Fuel Sales". On my count "Jackwitz Fuel Sales" is referred to on eight occasions in that document. In my view it is impossible for anyone reading that letter not to conclude that the trading arrangement under discussion was between Lockyer Valley Petroleum and Des Jackwitz, trading as Jackwitz Fuel Sales. In my view it is of critical importance to note that there was no immediate response, verbal or in writing, from Jackwi tz correcting the impression created by that letter. -- 6 of 13 -- 6 I referred above to the sale of unleaded petrol on 13th September, 1990. That transaction resulted from a conversation between M.C. Morland, a principle of Beasam, and Jackwitz on that date. They determined the quantity of unleaded petrol in the tank and agreed that it should be the subject of a sale. Morland made notations with respect to that agreement on an invoice addressed to Jackwi tz Fuel Sales and handed that document to Jackwitz personally. There is nothing to suggest that at that time any relevant response was forthcoming from Jackwitz. Exhibit MCM4 to the affidavit of M.C. Morland of 24th May, 1991 and ex. MCM7 to the affidavit of M.C. Morland sworn 12th June, 1991 each contains two invoices made out to Jackwitz Fuel Sales (Oil) and signed by Jackwitz personally. Exhibit MCM3 to the affidavit of M.C. Morland sworn 24th May, 1991 contains a number of invoices variously made out to Jackwitz Fuel Sales, Jackwitz Fuel Sales (Oil), or simply Jackwitz, each-of which is signed by Andrew Jackwitz, the son of the defendant. In addition to that the evidence from M.C. Morland and Oxenham suggests that the records of Lockyer Valley Petroleum prior to 1st March, 1990 generally indicated that consignments of petroleum product were to Jackwitz trading either as Jackwitz Fuel Sales or Jackwitz Fuel Sales (Oil). Further all of the material suggests that no invoice in the period March to September 1990 showed a consignment of petroleum product to Neparta or Jackwitz Fuel Distributors. All invoices showed either Jackwitz Fuel Sales, Jackwitz Fuel Sales (Oil), or simply Jackwitz. There is a body of evidence in the material filed by or on behalf of Jackwitz to the effect that prior to 1st -- 7 of 13 -- 7 March, 1990 personnel employed by Lockyer Valley Petroleum were informed that the real customer was Neparta Pty. Ltd. trading as Jackwitz Fuel Distributors. That is irrelevant for present purposes. After the plaintiff acquired Lockyer Valley Petroleum on 1st March, 1990 there is only a vague reference to the fact that Jackwitz informed Oxenham that accounts were being made out in the wrong name. That evidence is of little weight given the letter of 11th May, 1990 referred to above, and the lack of formal response to it. Throughout the entire period relevant to this action Jackwitz Fuel Distributors was not a registered business name. It is true that before and after 1st March, 1990 cheques in payment of the products supplied were drawn on an account in the name "Neparta Pty. Ltd. trading as Jackwitz Fuel Distributors". But that is not conclusive; the -account could have been paid from any source associated with Jackwitz. Counsel for Jackwitz made much of the fact that Beasam addressed letters dated 31st August and 7th September, 1990 to Jackwi tz Fuel Distributors. There is no explanation from the plaintiff as to why that was done. Certainly that evidence establishes that by those dates Beasam was aware of that name, but it had appeared on the cheques for some time. In the circumstances that evidence is not, in my view, of critical importance. There are two further matters of importance to the plaintiff's case which should be noted. It commenced an earlier action claiming the same amount; number 1539 of 1990. In that proceeding Jackwitz was the sole defendant and the statement of -- 8 of 13 -- 8 claim alleged that the petroleum product was sold to him. A defence was filed in which the defendant admitted the sale and supply "to him" of petroleum products between 29th June and 29th August, 1990. Jackwitz and his solicitors have stated in affidavits that that defence was a "holding defence" only and that the question as to the identity of the business to whom the product was supplied was not addressed. I find that puzzling to say the least. There is, in my view, more significance in the fact that Jackwitz 's solicitor swears that at the time the defence was prepared he was not aware of Neparta or Jackwi tz Fuel Distributors. One would think that if there was merit in the now proposed defence that it would have been to the forefront of Jackwitz' s mind when he first consulted his solicitor with respect to action 1539 of 1990. The original defence filed in 1539 of 1990 also asserted that the money was not due and owing as at the date those proceedings were commenced. That, in my view, affords a sufficient explanation for the discontinuance of the earlier action and the commencement of the proceedings now under consideration. The other matter of some significance is that the evidence suggests that it was the policy of Lockyer Valley Petroleum to obtain guarantees from directors of any company with whom it was trading. M. C. Morland makes the point that the conduct of Jackwitz in acquiescing with trading documents indicating that he was personally liable has prejudiced the plaintiff in that otherwise it would have sought personal guarantees from the directors of Neparta. -- 9 of 13 -- 9 There is evidence from the defence that the directors of Neparta gave personal guarantees to Lockyer Valley Petroleum when it was the business name under which Morland Queensland Pty. Ltd. traded, but that is of no relevance for present purposes. The existence of those guarantees was not known to Beasam. The Master gave brief oral reasons for making the orders which he did. He observed that the "credibility of the defendant was seriously in issue" and that the defendant "barely satisfied" the onus on him to raise a triable issue. He went on to say that "the defence raised by the defendant was so shadowy as to call for the Master to exercise his discretion to place a condition upon the leave granted to the defendant to defend." It was for that reason that he made it a condition of the leave to defend that Jackwitz pay into court the sum of $207,794.00. The Master was referred to the decision of the House of Lords in M.B. Yorke Motors (a firm) v. Edwards (1982) 1 W.L.R. 444 and he obviously had some of the reasoning therein in mind when he used the term "shadowy". The reasoning of Lord Diplok is clear authority f6r the proposition that, where the material going to the merits of a defence is just sufficient to raise aI triable issue but is regarded as "shadowy", a condition of payment into court, or giving security, is frequently imposed. To similar effect is the reasoning in the judgments of the Court of Appeal in Ionian Bank Ltd. v. Couvreur (1969) 1 W.L.R. 781. The facts of that case, and the defence there sought to be raised, are somewhat similar to that under consideration here. At 787 Lord Denning M.R. said: "The long and short of it is that M. Couvreur signed these guarantees; the money has been advanced -- 10 of 13 -- 10 by the bank; M. Couvreur or his companies have had the wine; and the bank have not seen a penny or hardly a penny of it. In my judgment the defendant's case is so shadowy that the Judge was right in giving leave to defend only conditional on the full amount being brought into court." The reasoning of Davies L.J. at 788 was to the same effect. The decision of the High Court in Laws Holdings Pty. Ltd. v. Short (1972) 46 A.L.J.R. 563 was referred to by counsel for each of the parties in the course of argument. A passage at 569 in the judgment of Gibbs J. clearly supports the observation I made above that nothing conclusive is established by the fact that the account was paid with a cheque drawn on a particular account; an account may be paid with anybody's cheque. But more importantly for present purposes is a passage in the judgment of Gibbs J. at 570; he was there dealing with a factual situation broadly similar to that under consideration here: "In these circumstances it was in my opinion the duty of the appellant, if it knew or believed that the respondents were doing or intending to do work on the erroneous assumption that it had been ordered on behalf of the appellant, to correct the respondents' error. If the appellant then stood by and remained silent, and the respondents acted to their detriment on the erroneous assumption which the appellant had refrained from correcting, the appellant would not be permitted to dispute that the work was done on its behalf." The appellant here asserts that it acted to its detriment in not obtaining personal guarantees from the company directors if in fact it was trading with the company. Applying my mind de novo to the facts of the case, and the submissions made by either side, I have come to the same conclusion as the Master. Jackwi tz has barely satisfied the test -- 11 of 13 -- 1 1 of establishing a triable issue and the defence on which he relies is in all the circumstances "shadowy". If the goods in question were not supplied to him they were supplied to a company solely under his control but he has not said anything about what happened to the proceeds of the on sale of those goods (an amount in excess of $200,000.00) and he has not said anything about payment for those goods. When Beasam wrote to him on 11th May, 1990 formally setting out the terms of the trading arrangement, and formally discussing matters relevant to the mutual business interests of Beasam and the party to whom it was supplying the product, he made no response correcting the identity of the party with whom Beasam was trading. The evidence strongly suggests that at all material times Beasam was trading with Jackwitz personally (albeit trading under a business name) and that the proposed defence is "shadowy". In those circumstances it is appropriate to make the grant·of leave to defend conditional upon payment into court of all, or at least a substantial part of, the claim. In an affidavit Jackwitz asserts in broad~ unspecific terms that between 1989 and 1990 there was an overcharge of $93,377.74. Counsel for Jackwi tz ref erred to Morgan and Son Limited v. S. Martin Johnson and Company Limited (1949) 1 K.B. 107 and submitted that where there was a right to a set-off unconditional leave to defend should be given. He asserted a right to a set-off in at least the amount of $93,377.73. A number of points need to be made with respect to that submission. The assertion is extremely vague, not supported by particulars, and no attempt is made to demonstrate how the amount was arrived at. Further, -- 12 of 13 -- 12 some or all of that amount must have related to the period prior to Beasam acquiring the business of Lockyer Valley Petroleum. No attempt at all is made to address the problem thereby created. In the circumstances I am not satisfied that there is any substance in the submission in the circumstances of this case. Of more importance is the assertion (made not by Jackwitz but by his solicitor) that Jackwitz is unable to pay the sum of $207,794.00, and that in consequence he would be unable to defend the claim on its merits if he were obliged to satisfy that condition. Again there is no attempt to condescend to particulars. The material does not disclose anything as to Jackwitz' s financial position, and no attempt is made to indicate the maximum amount which he could pay into court. There is, as I have already said, no attempt by him to indicate the financial position of Neparta. In all of those circumstances I am not persuaded that a case has been made out for interfering with the condition initially imposed by the Master. In my opinion the appeal should be dismissed with costs and the orders made by the Master should stand. I would hear submissions as to an extension of time for compliance with the condition with respect to payment of the money into court. -- 13 of 13 --