Amalgamated Scottish Oil Ltd v Premier (Perth Basin) Ltd - [1999] WASC 52

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: AMALGAMATED SCOTTISH OIL LTD -v- PREMIER (PERTH BASIN) LTD & ANOR [1999] WASC 52

CORAM: MASTER BREDMEYER

HEARD: 10 FEBRUARY 1999

DELIVERED : 9 JUNE 1999

FILE NO/S: CIV 2392 of 1998

BETWEEN: AMALGAMATED SCOTTISH OIL LTD
Plaintiff
AND
PREMIER (PERTH BASIN) LTD
First Defendant
PREMIER OIL AUSTRALIA LTD
Second Defendant

Catchwords:

Pleading - Statement of claim - Application to strike out - Turns on its own facts

Legislation:

Statute of Frauds 1677 (UK) s 4

Property Law Act 1969 (WA) s 34(1)(a)

Result:

Application allowed in part

Representation:

Counsel:

Plaintiff:     Mr H R Robinson
First Defendant             :     Mr K R Jagger
Second Defendant         :     Mr K R Jagger

Solicitors:

Plaintiff:     Haydn Robinson
First Defendant             :     Freehill Hollingdale & Page
Second Defendant         :     Freehill Hollingdale & Page

Case(s) referred to in judgment(s):

Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69

Case(s) also cited:

Bartlett v Swan Television (1995) ATPR 41-43
Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76
Coe v Commonwealth (1979) 24 ALR 118
Commissioner of State Taxation (WA) v Pollock (1993) 12 ACSR 217
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Dalgety Australia Ltd v Rubin, unreported; SCt of WA; Library No 5485; 24 August 1984
Ent Pty Ltd v Dean Roystan & Tim Arthus Jonas; SCt of Tas; Judgment No A61; 30 October 1996
FC LaRosa et al & Ex parte RS Norgard No 616 of 1988 FED No 316 Bankruptcy
Foamlite Australia Pty Ltd v Campbell & Skilled Engineering Pty Ltd, unreported; SCt of WA; Library No 7686; 31 May 1989
General Steel Industries v Commissioner for Railways (1964) 112 CLR 125
Girando v Padbury (1920) 22 WALR 7
HCF v Hunt (1982) 44 ALR 365
Henjo Investments Pty Ltd v Collins Marickville Pty Ltd (1988) 79 ALR 83
Hornsby Building Information Centre Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566
Knowles v Roberts [1888] 38 Ch D 263
Meckiff v Simpson [1968] VR 62
Middleton v Western Australia (1992) 8 WAR 256
Murex Diagnostics Australia Pty Ltd v Chiron Corp et al (1995) 128 ALR 525
Pancontinental Mining v Posgold (1994) 121 ALR 405
Rassam v Budge [1893] 1 QB 571
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Trade Practices Commission v George Weston Foods Pty Ltd (1979) 39 FLR 182

MASTER BREDMEYER: This is an application by the defendants to strike out the plaintiff's statement of claim which is the statement of claim endorsed on the writ of summons of 11 December 1998. The application is to strike out the whole statement of claim as disclosing no reasonable cause of action, or alternatively, to strike out certain paragraphs as embarrassing.
By way of background, Mr Fearnley is a director and the chief executive officer of the plaintiff and also the agent of the plaintiff. Mr Begg, Mr Saitta and Mr Pogson are all agents of the defendants. The first defendant, Premier (Perth Basin) Ltd, is the owner of a half undivided share in the Mt Horner Oilfield referred to in the pleading as "the asset". The owner of the other half share in that oilfield is Phoenix Energy Pty Ltd (Phoenix). In 1998 the plaintiff negotiated with the defendants to purchase the asset. The defendants told the plaintiff that they had a pre‑emption agreement with Phoenix whereby they could not sell the asset to the plaintiff unless an offer in the same terms was first put to Phoenix and rejected by Phoenix.
The plaintiff pleads a case of misleading and deceptive conduct in par 3.3, par 4, par 5, par 6, par 7, par 9, par 11, par 13.1, par 14.1, par 14.3, par 15.2, par 16 1, par 16 2 and par 17 of the statement of claim. The defendants object to that on the basis that it does not disclose an arguable cause of action. It is pleaded in the paragraphs mentioned that the defendants represented that they could only sell the asset to the plaintiff if they first offered it for sale to Phoenix on the same terms and Phoenix refused to purchase it. The defendants also told the plaintiff that, because of the defendants pre-emption agreement with Phoenix, the plaintiff was not to have any contact with Phoenix until agreement on the terms of the sale had been reached between the plaintiff and the first defendant. On 25 June 1998 the plaintiff offered to purchase the asset from the first defendant for $320,000. Instead of putting that offer to Phoenix to see if Phoenix wanted to buy the asset for the same price, the defendants imposed an additional requirement that Phoenix agree to spend $850,000 on other fields. The plaintiff has pleaded that the defendant's representation that the defendant would put the same offer to sell to Phoenix was false as can be seen by the fact that the defendant imposed the additional condition. The second representation, called a restriction in the pleading, that the plaintiff was not to have any contact with Phoenix until the plaintiff had reached an agreement for purchase with the first defendant, is not falsified in the pleading. It therefore appears to be irrelevant to the plea of misleading and deceptive conduct.
The representations mentioned were made in February 1998 and the offer to the first defendant to purchase the asset for $320,000 was made, as I have said, on 25 June 1998 and the plaintiff's offer plus the additional condition mentioned was put to Phoenix shortly after that date. In par 8 and par 10 it is pleaded that on 16 March at the offices of the defendant the plaintiff inspected the data for the asset which it hoped to buy with a team of consultants; and between 16 March and 30 May 1998 the plaintiff continued with its enquiries about the asset and in analysing data provided by the defendants. It is pleaded in par 17.5 and par 17.6 that the defendants' misleading and deceptive conduct induced the plaintiff to make enquiries, inspect and analyse data for the asset which it would not have done if it had known about the falsity of the representation, and that the plaintiff has thereby suffered loss and damage. Particulars are given - the cost of the enquiry and inspection of data for the asset and analysing the data - $166,000. So, in essence, the plea is that as a result of the false representation that the plaintiff's offer to purchase would be put in the identical terms to Phoenix and, if rejected, would result in a sale to the plaintiff, the plaintiff incurred the unnecessary costs of making enquiries as to the value of the asset.
I fail to see how this pleading shows an arguable cause of action for misleading and deceptive conduct for two reasons. Firstly, the defendants' deception in imposing an additional condition on the offer to sell to Phoenix made it less likely that Phoenix would purchase the asset. That, in turn, made it more likely that the plaintiff would purchase the asset. It thereby benefited the plaintiff. If Phoenix failed to purchase for whatever reason then the way was clear for the first defendant to sell the asset to the plaintiff. So how can it be said that the plaintiff has suffered a loss over that? Secondly, the enquiries into the value of the asset which cost $166,000 were carried out between 16 March and 30 May 1998. Those enquiries preceded the plaintiff's offer to buy, and presumably were necessary for the plaintiff to formulate its offer to purchase the asset. The plaintiff initially offered $300,000 for the asset on 30 May and later on 24 or 25 June increased that offer to $320,000. Those enquiries have not been wasted. The plaintiff, in this pleading, is seeking to enforce the purchase agreement, called in the pleading the Mt Horner agreement, namely to purchase the asset for $320,000. It cannot be argued that the costs of collecting and analysing the data were wasted simply because the defendants misled and deceived the plaintiff as to the nature of the offer which they intended to put to Phoenix under the pre-emption agreement. I consider this cause of action should be struck out.
The defendants next attack the pleading of the first tax loss agreement pleaded in par 11, par 12, par 13 and par 14 of the pleading. It is there pleaded that, parallel to the agreement to purchase the asset, the plaintiff offered to buy from the defendant a company called Barrack Hydrocarbons Pty Ltd which had tax losses of more than $1 million. The purchase price is not stated and the agreement was oral. It is then pleaded in par 15 that "pursuant to the first tax agreement" on the next day, 26 June, Fearnley, for the plaintiff, delivered a written offer to the defendant to purchase the company Barrack Hydrocarbons Pty Ltd for the price of $100 which company had tax losses comprising $585,022 exploration deductions, $219,693 capital losses and $651,922 trading losses. It is pleaded that, immediately upon receipt of that offer, Begg on behalf of the defendants executed the acceptance of the offer and returned the agreement to Fearnley and that is called the "second tax loss agreement". The plaintiff in the prayers for relief is seeking declarations that there are agreements between the plaintiff and the defendants in terms of the first and second tax loss agreements and orders compelling the defendants to perform the first and second tax loss agreements.
I consider that the plea of first tax loss agreement is not arguable. No consideration is mentioned for the purchase. Also, how can it be said that the first agreement was intended to be binding, when the next day Fearnley, the plaintiff's agent, delivered a written offer to the defendant to purchase the company for its tax losses for $100 and that that offer was accepted in writing on behalf of the defendants. I consider that the first agreement was not intended to be binding. It was intended to be replaced by a written agreement and that took place. I consider the plea of the first agreement should be struck out.
The defendants next attack the pleading of the Mt Horner agreement, which is found mainly in par 15.3 and par 16.1. It is there pleaded that Fearnley, the plaintiff's agent, delivered a written offer dated 25 June 1998 to the first defendant for the purchase of the asset for $320,000 and the plaintiff will refer at trial to the offer for its complete terms and effect. It is pleaded that on 3 July 1998 in a telephone conversation between Beggs and Fearnley, Beggs orally accepted the offer, conditional on first putting the offer to Phoenix and getting it rejected. The defendants complaint is that the asset being sold is an interest in land and as such the agreement to sell it, falls foul of s 4 of the Statute of Frauds 1677 (UK), or of s 34(1)(a) of the Property Law Act 1969 (WA) which provides, relevantly:
"Instruments required to be in writing
34.(1) Subject to the provision hereinafter contained in this Act with respect to the creation of interests in land by parol -
(a)no interests is capable of being created or disposed of except by writing signed by the person creating or conveying the interest, or by his agent thereunto lawfully authorized in writing, or by will, or by operation by law;
(b)…
(c)…
(2) This section does not affect the creation or operation of resulting, implied or constructive trusts."
There is no plea that this agreement to sell is evidenced by a written document signed by the first defendant or its agent.
The plaintiff has argued that an informal agreement for the sale of land can be enforced, see Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69. I agree with that proposition but it does not help the plaintiff here because the written document has not been signed by the defendant or its agent. I agree with the plaintiff's submission however that the Statute of Frauds and s 34(1)(a) of the Property Law Act 1969 (WA) are defences and do not have to be anticipated by the plaintiff in the statement of claim. The proper practice is for them to be raised as defences, and then for the plaintiff to plead, if it can, in its reply some way around those defences, eg part-performance, estoppel or a trust.
The defendants also attack the pleading on a number of minor scores. I only propose to rule on one of these as the plaintiff's counsel undertook to attend to some of them on a redraft and also I ordered early discovery of an important document, namely the pre‑emption agreement, and an inspection of that document might also necessitate some changes to the plea. In par 3.3 the plaintiff pleads "at the said meeting Begg in effect told Fearnley …". The objection is to the words "in effect" which are repeated in other parts of the pleading. It is true that a pleader is only required to plead the purport of a conversation and is not normally required to plead the precise words of the conversation unless those precise words are themselves material, see O 20 r 8(2). I realise that the pleader here, in using the words "in effect", has endeavoured to do that but I consider that the words are better deleted. Even without those words it is clear that the pleader is pleading only the purport or substance of the conversation. He is clearly omitting irrelevant matters discussed on that occasion.
I do not propose to rule on the other minor challenges set out in the grounds of the application attached to the chamber summons. A repleading is needed and has been promised and I will rule on that if necessary in due course.
I consider that a fresh minute should be produced to give effect to these reasons and to make any necessary changes consequent upon inspection of the pre-emption agreement.