ACN 007 528 207 Pty Ltd (in Liq) v Bird Cameron and Ors (No 3) No. Scciv-99-1392

[2002] SASC 149

ACN 007 528 207 PTY LTD (IN LIQUIDATION) V  BIRD CAMERON AND ORS (NO 3)

[2002] SASC 149

1. JUDGE BURLEY.             These reasons relate to an oral application made by counsel for the plaintiff during the course of an application by the third defendant, Mrs Harris, for an order that the proceedings against her be dismissed. 

2. Mrs Harris has been sued as the executrix of the estate of Neville Alfred Harris, deceased.  Mr Harris was a member of an accountancy practice until 6 October 1989.  It is not disputed by the plaintiff that Mr Harris retired from the partnership on that date. 

3. These proceedings consist of a claim for declaratory relief and damages. It is not necessary for present purposes to set out in detail the nature and extent of the claims by the plaintiff against the various defendants. It is sufficient to say that the defendants, or some of them, are alleged to have given advice to the plaintiff and others in relation to two transactions which have been described in the statement of claim as the Management-Buy-Out (MBO) and as the Haynes transaction. It is alleged that those transactions are invalid because of breaches of Section 129 of the Companies Code and Section 205 of the Corporations Law. Damages are sought against the various defendants under a variety of heads.

4. During the course of argument it became apparent that there are some inconsistencies in the statement of claim as to the time at which certain transactions were discussed as alleged by the plaintiff.  In paragraph 1.13 at page 7 of the statement of claim the plaintiff alleges:

   “1.13In 1990 and 1991, in the course of the Accountancy Services Bird Cameron advised and assisted in the formulation and implementation of a transaction referred to herein as the Management-Buy-Out Transaction (‘the MBO’) more particularly pleaded in para 2 below.”

5. In addition, in paragraph 1.14 of the statement of claim the plaintiff pleads:

   “1.14In 1992 and 1993 in the course of the Accountancy Services, advised and assisted [sic] in the formulation and implementation of a transaction referred to herein of the ‘Haynes Transaction’ more particularly pleaded in para 7 below.”

6. There is obviously something missing immediately before the passage “advised and assisted”.  Presumably what is omitted is the identity of the person or persons who provided the advice and assistance.  I shall make that assumption for the purposes of dealing with this application.

7. As I have said, the plaintiff does not dispute that Mr Harris retired from the partnership on 6 October 1989.  It follows that in light of the present allegations made in paragraphs 1.13 and 1.14, the plaintiff cannot succeed against Mrs Harris because, by the times specified in those paragraphs, Mr Harris had clearly resigned from the partnership.  The plaintiff sought to overcome this difficulty by applying to amend paragraph 1.13 so that the opening part reads “From the second half of 1989 to 1991 ...”.  The plaintiff did not seek to amend paragraph 1.14.

8. Mr Strawbridge, counsel for the defendants, opposed the oral application for leave to amend paragraph 1.13.  He said that there were other paragraphs in the statement of claim which were imprecise as to time.  To date he had not taken issue with this lack of precision in the pleading because paragraphs 1.13 and 1.14 at page 7 of the statement of claim were relatively precise and could be used to establish, where other paragraphs were vague, the starting point in relation to advice given relating to the Management Buy-Out transaction and the Haynes transaction respectively.

9. Mr Brohier has only sought to amend paragraph 1.13.  Paragraph 1.14 is to stand as it is.  He has conceded that because advice regarding this transaction did not start until 1992 at the earliest, Mr Harris could not have been liable for any advice or assistance given in relation to the Haynes transaction.  This means that the plaintiff does not pursue a claim for damages against Mr Harris based on the allegations relating to the Haynes transaction.  This is not apparent from a reading of the statement of claim.  This position has only been reached after Mr Brohier made the concession on behalf of the plaintiff that they could not establish a claim against the estate of Mr Harris in respect of the Haynes transaction.  In my view, the statement of claim ought to be amended to reflect this position.  To the extent that Mr Strawbridge has put such a submission, I agree that the plaintiff should not be permitted to amend paragraph 1.13 at page 7 of the amended statement of claim unless the plaintiff also amends the statement of claim generally to make it clear that the claim against the estate of the late Mr Harris is restricted to damages arising out of the MBO.

10. The effect of Mr Strawbridge’s other submission was that, if paragraph 1.13 is to be amended, all other paragraphs in the statement of claim where it is alleged that certain things were said or done must include a time at which those events took place if those events consist of the impugned conduct (or part thereof) which gives rise to a breach.  For example, paragraph 2.3(a) at page 8 of the statement of claim pleads that “initially” certain introductions took place.  The pleading should state the time to which the word “initially” refers.  Paragraph 2.3(b) refers to when a certain proposal was put by the use of the word “then”.  The time to which the word “then” refers should be specified as accurately as the circumstances permit.  I agree with Mr Strawbridge’s submission.

11. For the above reasons, I propose to give leave to the plaintiff to amend paragraph 1.13 at page 7 of the statement of claim by deleting the passage “In 1990 and 1991” and substituting the passage “From the second half of 1989 to 1991” provided that the pleading is also amended to make it clear that the claim against the estate of the late Mr Harris is not the subject of a claim for any damages which may have arisen out of the Haynes transaction and that the plaintiff plead with greater particularity the times at which relevant things were said or done in accordance with these reasons.