Atwell v Roberts

[2004] WASC 120

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ATWELL & ANOR -v- ROBERTS & ORS [2004] WASC 120

CORAM:   MASTER SANDERSON

HEARD:   14 MAY 2004

DELIVERED          :   3 JUNE 2004

FILE NO/S:   CIV 1165 of 2004

BETWEEN:   MALCOLM GEORGE ATWELL

IAN GEORGE ATWELL as Trustee of the Estate of WALTER CHARLES ATWELL on behalf of all other Partners in the ATWELL FAMILY AGENCY other than the First Defendants
Plaintiffs

AND

LEIGH ROBERTS
NOEL HENRY ATWELL
AUDREY ATWELL
First Defendants

LEIGH ROBERTS as Trustee for the Estate of KEITH GILBERT ROBERTS
LEIGH ROBERTS as Trustee for the Estate of HILDA DORCUS ROBERTS
LEIGH ROBERTS as Trustee of the Estate of ADA ETHEL ROBERTS
LEIGH ROBERTS as Trustee for the HAMERSLEY TRUST
JOHN CHARLES STACY as Trustee of the Estate of EDNA PHOEBE PATERSON
EVELYN DIANE BROADLEY as Trustee of the Estate of GLADYS JANET ADDISON BROADLEY
MAURICE EUGENE FRICHOT as Trustee of the Estate of DOROTHY MAY BECKETT
GARY JOHN ATWELL
Second Defendants

Catchwords:

Practice and procedure - Application to set aside writ based on breach of O 6 r 3

Legislation:

Nil

Result:

Writ struck out

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr D H Solomon

First Defendants           :     Mr S K Shepherd

Second Defendants       :     No appearance

Solicitors:

Plaintiffs:     Solomon Brothers

First Defendants           :     Bennett & Co

Second Defendants       :     No appearance

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

Otway Developments Pty Ltd & Anor v Waller & Ors, unreported; SCt of WA; Library No 9042; 10 September 1991

Case(s) also cited:

Assets Company Ltd v Mere Roihi & Ors [1905] AC 176

Austen v Boys [1858] 44 ER 1133

Blacker v National Australia Bank Ltd [2000] NSWSC 805

Bray v Ford [1896] AC 44

Bulkley v Wilford [1834] 6 ER 1094

Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398

Day v William Hill (Park Lane) Ltd [1949] 1 KB 632

Federal Commissioner of Taxation v Everett (1980) 143 CLR 440

Geddes v Wallace [1820] 4 ER 328

Hardie & Lane Ltd v Chiltern [1928] 1 KB 663

Lyle & Scott Ltd v Scott's Trustees [1959] AC 763

Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167

Re Phillips; Public Trustee v Meyer [1931] WN 271

Sadler v Whiteman [1910] 1 KB 868

Shaw v Real Estate Board of Greater Vancouver (1973) 36 DLR (3rd) 250

Silverstone Holdings Pty LTd v American Home Assurance Co (1997) 18 WAR 516

State of Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691

Wallworth v Holt (1841) 4 My & Cr 619

Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

Wong v Silkfield Pty Ltd (1999) 199 CLR 255

1. MASTER SANDERSON:  This is the first defendants' application to strike out the plaintiffs' statement of claim.  Perhaps surprisingly the application is brought only by the first defendants', despite the fact that all defendants are represented by the same solicitors.  At the commencement of the hearing, counsel for the plaintiffs made the point that it was only the first defendants who complained of the pleading.  Counsel for the first defendants made no application to amend the summons.  Given the way the matter was argued, it is perhaps surprising that the application was not brought by all defendants.  In the result, it probably does not make much difference.  Nonetheless, I accept as submitted by counsel for the plaintiffs, that all submissions were made on behalf of the first defendants and the second defendants raised no objection to the pleading.

2. At the outset, counsel for the plaintiffs acknowledged that there was a typographical error in the heading of the action.  In fact Malcolm Walter Atwell and Ian George Atwell are both trustees of the estate of Walter Charles Atwell.  In other words, there is an "s" missing from the second line of the heading describing the plaintiffs.  Without objection, amendment was made to correct the heading.

3. A number of objections were raised to the statement of claim and the form of the writ by counsel for the first defendants.  Each of these matters was fully argued.  However, I have concluded that the writ in this matter should be set aside and it is therefore not necessary for me to deal with other complaints made by the first defendants.

4. By par 26 to 36 of the statement of claim the plaintiffs make allegations against certain of the defendants in relation to the conduct of the affairs of a partnership.  This section of the pleading is headed "Payments to Management Committee and others".  It is pleaded by the plaintiffs that the rules of the partnership allowed for a committee to be elected by the partners.  This committee was to effectively manage the partnership.  Without going into detail as to the precise allegations made against the defendants concerned, it is said that the members of the committee were paid more than they should have been, or received amounts to which they were not entitled.  On behalf of the first defendants it is said that what is pleaded in par 26 to 36 is an allegation of fraud and could not therefore be endorsed on the writ.  Reliance was placed on O 6 r 3.  The first defendants seek to have the writ set aside under O 2 r 1 and 2.

5. On behalf of the plaintiffs, it was said that the allegations in the statement of claim were not properly categorised as allegations of fraud.  Rather, it was said, they were allegations in the nature of equitable fraud - that is to say, a claim based in a breach of fiduciary duty.  That, it was submitted, was not covered by the rule.  Effectively, counsel for the plaintiffs was arguing that the rule only applied where deceit was alleged in the statement of claim.

6. This question was considered by Anderson J in Otway Developments Pty Ltd & Anor v Waller & Ors, unreported; SCt of WA; Library No 9042; 10 September 1991.  His Honour said:

   "I do not consider the reference to 'fraud' in r 3(a) is limited to deceit.  It is not expressly so limited and I do not think there is any good reason why it should be so limited by judicial construction.  In whatever sense the word 'fraud' might be used in a statement of claim, whether in a common law or equitable sense, it remains, prima facie an allegation of impropriety.  It is not to the point to say that equity describes some conduct as fraudulent that would not be so described in ordinary parlance.  Whilst that may be so, there is conduct, morally delinquent by any standards but not amounting to common law deceit and remediable only in the courts of equity, that is at least as reprehensible as common law deceit.  The case of the trustee who misuses trust assets for personal gain is perhaps an example.  There is no reason in principle why a plaintiff should be entitled to specially endorse his writ with a claim alleging fraud of that kind but not with a claim alleging common law fraud.  I do not think that there are any policy considerations that would lead to that conclusion.  Certainly it would be inconvenient if the application of r 3(a) depended on a case by case analysis of the culpability of the conduct pleaded to be fraudulent.  In my opinion, r 3(a) should be given its grammatical meaning.  The procedure whereby a statement of claim may be specially indorsed on the writ is simply not available in the case of a statement of claim in which there is a claim based upon an allegation of fraud in whatever sense the word is used."

7. A reading of the paragraphs of the statement of claim about which complaint is made makes it clear that the allegations concern conduct which might be regarded as morally reprehensible.  In my view there is no doubt that the statement of claim breaches the provisions of O 6 r 3(a).  The question then is what is to be done.

8. Initially I considered that it might be possible to simply limit the right of any person to inspect this file without leave of the Court.  Then the mischief which is addressed by O 6 r 3 could effectively be overcome.  But such an order is not possible.  Order 67 r 11 is clear in its terms and it allows any party who wishes to do so to inspect a writ and any statement of claim indorsed on it.  Counsel for the plaintiff, in the course of his submissions, suggested that the writ should be uplifted, the statement of claim deleted and a fresh writ filed with an indorsement of claim and a separate statement of claim.  I have some doubts as to whether or not that course of action is available under the rules.  But even if it is, in my view it is not appropriate that it be adopted.  Reluctantly I have concluded that the defendants are entitled to have the writ in this matter set aside.

9. As I mentioned above, given the conclusion that I have reached, it is not appropriate that I deal with other objections raised by the first defendants.  If fresh proceedings are issued by the plaintiffs which mirror these proceedings, and if the same objections are taken by any of the defendants, then I will be able to deal with those objections without the need to hear further argument.  But that is a matter for the future.

10. I will hear the parties as to the precise form of orders and as to costs.