ACN 115 722 248 Pty Ltd v Milligan - [2011] SADC 8

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
ACN 115 722 248 PTY LTD v MILLIGAN
[2011] SADC 8
Judgment of His Honour Judge Soulio
7 February 2011
PROCEDURE
Appeal from decision of a Master striking out plaintiff's statement of claim - plaintiff granted leave to re-plead - whether Master erred in exercising discretion.
Held: appeal dismissed.
District Court Act 1991 s 43; District Court Rules 2006 r 98, 99, 104, 292, referred to.
Wunda Joinery Pty Ltd (in Liquidation) & Anor v Wunda Projects Australia Pty Ltd & Ors [2007] SASC 301; Beverage Bottlers (SA) Ltd (in Liquidation) & Anor v Abode Enterprises Pty Ltd [2009] SASC 272; Badcock v State of South Australia & Ors [2010] SADC 147; McLean v D.I.D. Piling Pty Ltd [2010] SASC 33; Pope & Ors v Harris Orchard [2010] SASC 354, considered.

ACN 115 722 248 PTY LTD v MILLIGAN
[2011] SADC 8

This is an appeal from a decision of a Master delivered on 3 August 2010, granting an application by the defendant to have the plaintiff’s statement of claim struck out. The Master did not strike out the action, rather, he granted leave to re-plead the claim.
The Master also dealt with an application by the plaintiff which sought a number of orders including an order that the defendant’s application be dismissed, that the Court refuse the Transport Accident Commission (TAC), the defendant’s insurer, audience in the proceedings, and that an admission made by the TAC on behalf of the defendant be withdrawn. The Master dismissed parts of the plaintiff’s application, and adjourned part of that application. Although the present notice of appeal purports to deal also with the Master’s decision in relation to the plaintiff’s application, that was, as I understand it, not pursued before me, and I do not propose to deal with that part of the appeal further other than to dismiss it.
Nature of the Appeal
The Master’s decision was an interlocutory decision.[1] The appeal is brought pursuant to s 43 of the District Court Act 1991 and Rule 292 of the District Court Civil Rules 2006 (6 DCR 292).
[1] Beverage Bottlers (SA) Ltd (in Liquidation) & Anor v Abode Enterprises Pty Ltd [2009] SASC 272.
The scope of 6 DCR 292 has been the subject of differing views of Judges of this Court, and in particular as to whether this Court, on appeal, may interfere with the exercise of a discretion in the absence of any demonstrable error in the reasons of the Master. I respectfully agree with the observations of Judge Beazley in Badcock v South Australia[2] as to the approach to be taken, and like Judge Beazley, I respectfully adopt the dictum of Layton J in McLean v D.I.D. Piling Pty Ltd[3] where Her Honour concluded, in respect of a co-ordinate rule, that a Court, on an appeal from the Master, ought apply the principles set out in House v The King:[4]
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the Judges composing the appellate court consider that, if they had been in the position of the primary Judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the Judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary Judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
[2]    Badcock v State of South Australia & Ors [2010] SADC 147.
[3]    McLean v D.I.D. Piling Pty Ltd [2010] SASC 33 at [19]-[23].
[4]    House v The King (1936) 55 CLR 499 at 505.
Representation
The plaintiff was represented by counsel, who was instructed by new solicitors not responsible for drafting the statement of claim in question.
The defendant is represented in the action, insofar as the plaintiff’s claim can be said to sound in damages arising out of personal injury to Mr Jordan, by solicitors acting for the TAC. Insofar as the plaintiff’s claim can be said to relate to property damage, the defendant is represented by solicitors acting for his property damage insurer.
As I have said, the plaintiff had previously sought to have TAC withdraw its indemnity of the defendant, apparently on the basis that the claim is not a personal injury claim, and on the basis that it asserts that the truck was not housed in Victoria, and the TAC should therefore not indemnify the defendant. The plaintiff’s motive for adopting that course is not clear, although it might be inferred that the intention is to embarrass the defendant.
Upon inquiry, I was informed that Mr Jordan has separately instructed different solicitors and proposes instituting separate proceedings seeking damages for personal injuries.
History
The claim arises out of a motor vehicle collision which occurred on 20 November 2008. The plaintiff company is alleged to be the owner of a motor vehicle driven by its employee, Neville Jordan. A truck driven by the defendant collided with the rear of the vehicle, driven by Mr Jordan, damaging the vehicle, and, it is said, injuring Mr Jordan. According to the plaintiff’s pleadings, Mr Jordan was a “director and servant” of the plaintiff and the plaintiff brings the action, it appears, in negligence, and in what is pleaded as “trespass to the servant”.
The plaintiff claims, amongst other things, damages for losses including the value of the vehicle, optical reading glasses, wine bottles, car hire expenses, the cost of engaging the proprietor of a used car company to purchase a replacement vehicle, (the charge for which is said to be $2500), the cost of providing a more expensive vehicle due to the injuries to the plaintiff’s “director and servant”, and stamp duty on registration; ongoing losses suffered by the plaintiff as a result of being unable to complete contracts for work due to the damage to the plaintiff’s vehicle, and injury to the plaintiff’s “director and servant”; the cost of engaging a replacement director, and additional costs of relocating by virtue of the injury to the plaintiff’s “director and servant”.
The plaintiff also asserts an entitlement to aggravated damages attributable to the conduct of the defendant or those acting for him. Such conduct, it is said, includes inaccurate and misleading statements made by the defendant in his police report; and the defendant ignoring the claim for damages, complaining to his solicitor (resulting in the defendant’s solicitors “threatening the plaintiff’s solicitor”), and having “demonstrated a contumelius disregard of the circumstances and consequences arising from, and inevitably and obviously and likely to arise, from the gross and extreme negligence, recklessness and disregard for all and any consequences, and a remarkable level of arrogance”. A claim is also made for exemplary damages and the allegations are repeated.
Rules as to Pleadings
The power to strike out a statement of claim derives from 6 DCR 104 which provides:
104—Court's power to strike out pleading
The Court may strike out a pleading in whole or part if the pleading—
(a) does not comply with these rules; and
(b)is an abuse of the process of the Court or prejudices the proper conduct of the action.
Example—
If a statement of claim discloses no reasonable cause of action, or a defence discloses no reasonable ground of defence, the Court may strike it out as an abuse of the process of the Court.
The Rules which govern the form of pleadings relevantly provide:
98—General rules of pleading
(1)     …
(2)     A pleading—
(a)     must be as brief as the nature of the case allows; and
(b)     must state only material facts relied on and not the evidence or arguments by which the facts are to be proved; and
(c)     must not contain matter that is—
(i)    scandalous; or
(ii)     evasive or ambiguous; or
(iii)    frivolous or vexatious; or
(iv)    an abuse of the process of the Court in some other respect.
(d)     must plead such facts as give fair notice of the party’s case at trial.
(3)If a claim or defence is based wholly or in part on a document or conversation, the effect rather than the actual words of the document or conversation should be pleaded unless there is good reason to state the actual words.
Exception— …
(4)If a question of liability has been decided by agreement between the plaintiff and the defendant, a party relying on the agreement must refer to the agreement and its effect in the relevant pleading but not the facts giving rise to the question except to the extent necessary to describe the effect of the agreement.
99—Requirements for statement of claim
(1)     A statement of claim—
(a)     must state each cause of action; and
(b)     must state the basis of each cause of action (including reference to any statutory provision on which the plaintiff relies); and
(c)     must contain a short statement of the material facts on which each cause of action is based; and
(d)     must state any remedy for which the plaintiff asks; and
(e)     if the plaintiff seeks an ancillary remedy (such as an extension of a period of limitation or a temporary injunction)—must state the nature of the remedy and the basis on which it is sought.
(2)If the plaintiff relies on separate causes of action, the statement of material facts must differentiate between—
(a)     facts that are common to both or all causes of action; and
(b)     facts that are relevant only to a particular cause of action.
(3)If a plaintiff claims damages for personal injury, the statement of claim must state—
(a)     the general nature of the injury and any resulting disability; and
(b)     the general nature of treatment received; and
(c)     the general effect of the injury and any resulting disability on the plaintiff's—
(i)    capacity to work; and
(ii)     enjoyment of life; and
(d)the kinds of economic and non-economic loss suffered by the plaintiff, (but is not to contain details of treatment and loss that are required for the statement of loss).
I respectfully agree with the observations of White J in Pope v Harris Orchard[5] that:
The 2006 Rules endeavour to minimise interlocutory disputation about pleadings. Apart from specifying the minimum requirements for an adequate pleading, the Rules confine the circumstances in which a party may obtain further particulars (r 101(3)); confine the circumstances in which the Court will strike out a pleading (r 104); and emphasise the consequences at trial for a party who relies on an inadequate pleading (r 103). Nevertheless, the function and purpose of pleadings stated by King CJ in Williams v Australian Telecommunications Commission[6] in relation to the pleading regime in the 1987 Rules remain true:
The new Rules do not change, however, the fundamental nature, function or purpose of pleadings. The fundamental purpose of pleadings is to provide a structure or framework for the litigation designed to promote a just outcome. Pleadings achieve this purpose by performing two basic functions. The first is to define the issues between the parties thereby providing the basis for the determination of questions as to discovery before trial and admissibility of evidence at trial and of questions as to what the litigation has decided for the purpose of the Rules as to res judicata and issue estoppel. The second function is to give the parties fair notice of the case to be made against them at trial thereby minimising the risk of injustice resulting from surprise.[7]
[5] Pope & Ors v Harris Orchard [2010] SASC 354.
[6] Williams v Australian Telecommunications Commission (1988) 52 SASR 215.
[7] Ibid at 216. See also Marini v MLH Insurance Brokers Pty Ltd & Ors [2004] SASC 400 at [13]; Banque Commerciale SA (en Liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279.
The Master’s Decision
The Master found that there were many aspects of the statement of claim which required significant revision. However, the pleadings are prolix, and in some respects appear to be vexatious. As the Master observed, for example, a significant number of paragraphs relating to the circumstances of the collision could have been summarised in a short paragraph, namely, that the defendant’s truck collided with the rear of the plaintiff’s vehicle, and the defendant has admitted liability for the collision.
The Master was critical of the pleadings insofar as they alleged that the plaintiff had suffered loss by virtue of Mr Jordan’s injuries, as there was no basis pleaded as to why it was that Mr Jordan could not carry out his functions, nor why he needed to be replaced by another director. The Master criticised specific heads of loss claimed by the plaintiff, for example the claim for the more expensive replacement vehicle (in addition to costs of the vehicle damaged in the collision) in circumstances where it is also pleaded that Mr Jordan was no longer employed by the plaintiff.
Other paragraphs were criticised as they pleaded matters which were no longer in dispute, liability having been admitted, and the loss having been previously satisfied by the property damage insurer. The Master struck out certain paragraphs as being irrelevant, and others were struck out as lacking in particularity.
The Master considered, in some detail, the plea for damages for “trespass to the servant”. He found, properly in my view, that the action is an action per quod servitium amisit, and should have been pleaded accordingly, and the claim for trespass should have been pleaded as part of any claim the plaintiff may wish to bring for aggravated and exemplary damages, if such a claim is open to the plaintiff company.
Whilst not specifically deciding that issue, the Master cited Gray v Motor Accident Commission:[8]
[E]xemplary damages could not properly be awarded in a case of alleged negligence in which there was no conscious wrongdoing by the defendant. Ordinarily, then, questions of exemplary damages will not arise in most negligence cases be they motor accident or other kinds of case. But there can be cases, framed in negligence, in which the defendant can be shown to have acted consciously in contumelious disregard of the rights of the plaintiff or persons in the position of the plaintiff. Cases of an employer's failure to provide a safe system of work for employees in which it is demonstrated that the employer, well knowing of an extreme danger thus created, persisted in employing the unsafe system might, perhaps, be of that latter kind. (Citation omitted).
[8] Gray v Motor Accident Commission (1998) 196 CLR 1 per Gleeson CJ, McHugh, Gummow and Haynes JJ.
The Master criticised the pleadings setting out the claim for aggravated and exemplary damages and, in respect of the paragraph in the pleadings from which I have quoted,[9] said:
Apart from what might be seen as a vindictive nature of those words, they are so unhelpful as to be inappropriate and insulting on every level. If the plaintiff wishes to make some allegations against the TAC or its solicitors which is relevant to aggravated damages, then it needs to set it out with detailed particulars. The pleading is struck out.
[9] At para 11 of these reasons.
Conclusion
As Judge Lunn observed in Wunda Joinery v Wunda Projects:[10]
The fundamental object of a pleading is to tell the reader enough about the pleaders’ case so that in the instance of the SOC a reader can see the essential steps which establish the nominated cause of action and can understand the case that the plaintiff will be making for relief in the action. The readers for this purpose are not only the other parties in the action but also the members of the Court who have to deal with interlocutory proceedings, the trial and any subsequent arguments about res judicata or issue estoppel. Hence it is not sufficient to assert that the defendants have background knowledge of the matter which they can use to understand the SOC: Palmos v Georgeson [1961] Qd R 186. The Court is entitled to have a single comprehensible document from which the plaintiff’s case can be readily understood: Norris v McNair (1992) 167 LSJS 389 at 390-392. …
These, and other, paragraphs of the SOC adopt a style of generalised, vague and elliptical pleadings which was common before the repealed R 46 and 46A, but which those rules had sought to eliminate: Rupcic v Baulderstone (1987) 46 SASR 99 at 102-103; Williams v Telecommunication Commission (1988) 52 SASR 215 at 222; Jones v Nuske below. The practice of saying as little as possible in a pleading so as to give the party as much room as possible to manoeuvre at the trial within the breadth and generality of the pleading is to be firmly discouraged. The vice in paragraphs 16-18 of the SOC is not merely a lack of particularity, but an embarrassment and prejudice to the Court and the other parties from not being given a meaningful and functional pleading. A useful test for a meaningful and functional pleading is having read it do I believe that I understand the essence of the case being put forward by the pleader. Here I do not.
[10] Wunda Joinery Pty Ltd (in Liquidation) & Anor v Wunda Projects Australia Pty Ltd & Ors [2007] SASC 301.
It is possible, said Mr Kerin, who appeared on the appeal on behalf of the plaintiff, to understand the nature of the claim and, looking at each paragraph individually, to glean what is intended. However the pleadings do not fulfil the required function as articulated by King CJ, cited by White J above, and by Judge Lunn in the passages to which I have referred.
As I have said the Master did not strike out the plaintiff’s claim. He struck out the plaintiff’s pleading and gave leave to re-plead. In my view the Master’s decision is correct for the reasons articulated by him. The present pleadings are prolix, and in parts, vexatious. Where they are not, they often lack sufficient particularity to put the defendant on notice as to the claim against him. The present statement of claim does not comply with the rules, and prejudices the proper conduct of the action.
I dismiss the appeal. I will hear counsel as to costs and any ancillary orders.