Australian Growth Managers Ltd v EGERTON-WARBURTON
[2003] WASC 115
AUSTRALIAN GROWTH MANAGERS LTD -v- EGERTON-WARBURTON [2003] WASC 115
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 115 | |
| Case No: | CIV:2327/2002 | 3 JUNE 2003 | |
| Coram: | MASTER NEWNES | 17/06/03 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Statement of claim struck out | ||
| B | |||
| PDF Version |
| Parties: | AUSTRALIAN GROWTH MANAGERS LTD (ACN 079 141 969) GREY EGERTON-WARBURTON |
Catchwords: | Practice and procedure Application to strike out statement of claim Turns on own facts |
Legislation: | Fair Trading Act 1987 (WA), s 68 |
Case References: | Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129 Henderson v Henderson [1843] 3 Hare 100 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Rahme v Commonwealth Bank of Australia, unreported; NSWCA; 20 December 1991 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 470 ............ Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 Hamilton v Whitehead (1988) 166 CLR 121 Queen v Goodall (1975) 11 SASR 94 Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419 Tannning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 Yorke v Lucas (1984) 158 CLR 661 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
GREY EGERTON-WARBURTON
Defendant
Catchwords:
Practice and procedure - Application to strike out statement of claim - Turns on own facts
Legislation:
Fair Trading Act 1987 (WA), s 68
Result:
Statement of claim struck out
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr A Metaxas
Defendant : Mr M J McCusker QC & Ms K L Browne
Solicitors:
Plaintiff : Metaxas & Vernon
Defendant : Hotchkin Hanly
Case(s) referred to in judgment(s):
Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129
Henderson v Henderson [1843] 3 Hare 100
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Rahme v Commonwealth Bank of Australia, unreported; NSWCA; 20 December 1991
Case(s) also cited:
Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160
Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217
Hamilton v Whitehead (1988) 166 CLR 121
Queen v Goodall (1975) 11 SASR 94
Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419
Tannning Research Laboratories Inc v O'Brien (1990) 169 CLR 332
Yorke v Lucas (1984) 158 CLR 661
(Page 3)
1 MASTER NEWNES: This is an application by the defendant to strike out the statement of claim on the ground that it is an abuse of the process of the Court, alternatively that it discloses no reasonable cause of action or may prejudice, embarrass or delay the fair trial of the action.
2 As the application is some three months out of time under O 20 r 19(3) the defendant requires leave to bring it. I heard argument on the application for leave and the substantive application together, on the basis that the merits of the substantive application were relevant to the question of whether leave should be granted.
3 In this action the plaintiff claims that as a result of misleading and deceptive conduct engaged in by the defendant, the plaintiff was induced to enter into a Forestry Contractor's Agreement with a company, WA Forest Management Pty Ltd, and, as a result of doing so, the plaintiff has suffered loss and damage.
4 The salient parts of the statement of claim are as follows:
"1. The plaintiff is a corporation duly incorporated.
2. The defendant was at all material times pleaded below the sole director of WA Forest Management Pty Ltd (ACN 054 715 972) ('WAFM').
3. At all material times WAFM:
3.1 carried on business in the establishment of eucalypt blue gum plantations and in the maintenance of such plantations; and
3.2 carried on such business pleaded above in the course of trade or commerce.
4. In March of 2000 the plaintiff by its agent James Richardson met with the defendant as agent for and director of WAFM for the purpose of negotiating an agreement whereby the plaintiff would engage WAFM as a contractor for reward to provide various services for the establishment of eucalypt blue gum plantations ('Services') on land at Bremer Bay in Western Australia and Kangaroo Island in South Australia ('Plantation Land').
(Page 4)
- 5. At the meeting between Richardson and the defendant pleaded in paragraph 4 above:
5.1 Richardson provided to the defendant a draft Forestry Contractors Agreement drawn between the plaintiff and WAFM which document included proposed covenants by WAFM to the following effect:
5.1.1 WAFM would do all work necessary to establish plantations on the Plantation Land;
5.1.2 WAFM would perform the Services in accordance with good silvicultural practice;
5.1.3 WAFM would, in performing the Services, exercise the standard of care, skill and diligence normally exercised by competent persons in the performance of similar services; and
5.1.4 WAFM would control vermin on the Plantation Land.
The proposed terms pleaded above are hereafter collectively referred to as the 'Terms';
5.3 the defendant did not seek to amend the Terms.
6. Implicit in the defendant's conduct pleaded in paragraph 5.2 above were the following representations by the defendant:
6.1 WAFM would perform the Services in accordance with the Terms and/or;
6.2 WAFM would take all reasonable steps to perform the Services in accordance with the Terms.
(Page 5)
- 7. In the months of April and May of 2000, Richardson and the defendant continued negotiations as to the terms of the proposed Forestry Contractors Agreement but there were no negotiations which would have caused any amendment to the Terms.
8. Implicit in the defendant's conduct as pleaded in paragraph 7 above were representations by the defendant to the same effect as the representations pleaded in paragraph 6 above. The representations pleaded in paragraphs 6 and 8 hereof are hereafter collectively referred to as 'the Representations'.
9. The Representations were made by the defendant in the course of trade or commerce.
10. In reliance upon the Representations, the plaintiff anticipated that the plaintiff and WAFM would in due course conclude an agreement which would include the Terms and on that basis, the plaintiff permitted WAFM in effect to commence performance of the Services on the Plantation Land.
11. In further reliance upon the Representations, the plaintiff in July of 2000 executed a Forestry Contractors Agreement ('Agreement') with WAFM and which was executed by WAFM shortly thereafter and which provided in effect inter alia:
11.1 the plaintiff appointed WAFM from 1 March 2000 to perform the Services (particularised in schedule 2 to the Agreement including vermin control) for the plaintiff;
11.2 WAFM would perform the Services in a proper and efficient manner and in accordance with good silvicultural practice and exercise the standards of care, skill and diligence normally exercised by competent persons in the performance of the same or similar services;
….
(Page 6)
- 12. A contractor in WAFM's position acting in accordance with the Terms would have advised the plaintiff prior to commencement of work on the Plantation Land and in any event not later than March 2000 that:
12.1 the extent of vermin on the Kangaroo Island properties was such as to require installation of electric fencing around the proposed plantations so as to control the entry of vermin;
12.2 in addition to such installation a shooting programme was required in the areas to be planted to eliminate, so far as was possible, vermin within the boundaries of the proposed plantations.
13. In truth and in fact, WAFM, by its general manager, MacArthur had determined in April of 2000:
13.1 not to take any steps on Kangaroo Island to control vermin prior to planting;
13.2 to permit the extent of vermin infestation of the Kangaroo Island plantations to manifest itself prior to determining what, if any, steps should be taken to control vermin on those plantations.
14. In the premises, the Representations and each of them were misleading and deceptive or likely to mislead and deceive contrary to section 10 of the Fair Trading Act (WA).
15. In the alternative to paragraph 14, the Representations were representations as to future matters for which there was no reasonable basis having regard to the matters in paragraph 13 above contrary to section 9 of the Fair Trading Act (WA).
16. But for the Representations, the plaintiff would have engaged other contractors to provide the Services which contractors would have provided the Services in accordance with the Terms.
(Page 7)
- 17. By reason of the defendants misleading and deceptive conduct, the plaintiff has suffered loss and damage as follows:
17.1 WAFM failed to achieve 950 healthy seedlings on each woodlot at least 9 months after planting as follows:
….
17.2 the failure of WAFM to achieve the warranted 950 healthy seedlings per woodlot on the Kangaroo Island plantations was due to extensive damage to the seedlings by vermin;
17.3 the areas planted in the year 2000 and the areas requiring partial and total replanting at Bremer Bay were:
….
17.4 the cost of plantation re-establishment will be:
….
17.5 the areas planted in the year 2000 at Kangaroo Island and the areas requiring replanting were:
17.6 the costs incurred by the plaintiff to replant part of the Plantation Land were:
(a) Bremer Bay $276,408
(b) Kangaroo Island $617.964
$894,372
- The Plaintiff will incur additional
- costs on Kangaroo Island of $1,188,500
17.7 the loss of 1 year's growth $2,889,360."
(Page 8)
6 It is pleaded in the statement of claim that, arising out of negotiations between the plaintiff and the defendant in March 2000, the defendant impliedly represented that WAFM would perform certain services (in particular, vermin control), under the contract then in the course of being negotiated, in accordance with specific terms ("the Terms") contained in a draft agreement prepared by the plaintiff. It is pleaded that a representation to the same effect was implicit in the continuation of contract negotiations over April and May 2000. The contract to provide the services was ultimately entered into by the plaintiff and WAFM in July 2000.
7 The defendant says, first, all that is alleged to give rise to the implied representation is that the defendant entered into negotiations for a contract and did not seek to amend some of the terms of a draft contract produced by the other party, albeit there was no agreement at that stage except as to WAFM's remuneration if a contract was concluded. The defendant contends that those matters (if proved) are simply not capable of giving rise to the representation pleaded.
8 Secondly, it is pleaded in par 12, in effect, that the representation that WAFM would provide vermin control under the contract according to the Terms was misleading because, to do that, WAFM should have taken steps by no later than March 2000 in respect of vermin control and it did not do so. It is pleaded in par 13 that, in fact, in April 2000 the defendant decided not to take any steps to control vermin until the extent of the problem had manifested itself. By reason of that also the representation is alleged to be misleading.
9 The defendant says that a representation that a contract will be performed in a particular way can only be a representation that it will be so performed if and when a contract is concluded. The plaintiff's case, as pleaded, however, seems to be that it was misleading to represent that WAFM would control vermin, or would take reasonable steps to control vermin, under the contract because WAFM should have, but did not, take steps before the contract was entered into to control the vermin. But there was no obligation on WAFM to take steps to control vermin before a contract was concluded, nor was there anything in the alleged representation, or otherwise, to suggest it had or would do so. The fact that there were negotiations to enter into a contract could not give rise to any duty on WAFM to perform the services before it had concluded a contract to do so.
(Page 9)
10 Whilst it is true that it is pleaded in par 10 that the plaintiff permitted WAFM to go onto the plantations "in effect to commence performance of the services" in anticipation that a contract would be concluded, the defendant says it is not pleaded when that occurred, and in particular it is not pleaded that it occurred at a time, or in circumstances, that could have any bearing on the accuracy of the alleged representation.
11 In addition, to the extent that the alleged representation was made in March 2000 (par 5) it could not be misleading because of a decision not taken until April 2000 (par 13), as pleaded in par 4. Nor could it be said that, because of a decision in respect of vermin control made in April, there was no reasonable basis for a representation in March that the defendant would control vermin, as pleaded in par 15.
12 Thirdly, it is expressly pleaded in par 4 of the statement of claim that, in engaging in the conduct relied upon, the defendant acted "as agent for and director of WAFM". Accordingly, the defendant says, the conduct alleged by the plaintiff is the conduct of the company, not conduct of the defendant for which he is personally liable. If the defendant is to be liable for the alleged conduct, it must be established that he was knowingly involved in the contravention by the company under s 68 of the Fair Trading Act 1987 (WA). The elements of such a cause of action are not pleaded.
13 In my view, the defendant's objections are well-founded. I accept the submissions made in respect of the first two grounds. In respect of the third ground, I accept the defendant's submission that, as the statement of claim is pleaded, the defendant was acting as WAFM in the negotiations and, accordingly, that the person liable under s 11 of the Fair Trading Act for any misleading or deceptive conduct in the course of the negotiations is WAFM, not the defendant in his personal capacity. I understood that in the course of argument counsel for the plaintiff accepted that difficulty and foreshadowed that the statement of claim would be amended to plead that the defendant was knowingly concerned in a contravention of the Act by WAFM.
14 The defendant also attacks pars 12, 13 and 16 of the statement of claim on other grounds.
15 In par 12, it is pleaded that "a contractor acting in accordance with the Terms would have advised the plaintiff … not later than March 2000" of the vermin control which, it is pleaded in subpars 12.1 and 12.2, was required.
(Page 10)
16 In the first place, the defendant says, it is pleaded in par 4 that the first negotiations allegedly giving rise to the Terms did not commence until March 2000. Moreover, there is nothing on the face of the Terms that required WAFM to advise the plaintiff of anything. Under the Terms, as pleaded, the obligation of WAFM was to control vermin, not to proffer advice to the plaintiff on how vermin were to be controlled. If such an obligation to provide advice is said to arise by virtue of any of the Terms, that does not appear from the statement of claim.
17 In my view, those objections are properly taken and par 12, as it is pleaded, discloses no reasonable cause of action.
18 A similar objection is taken in relation to par 13 of the statement of claim. The defendant says it is not clear why the matters alleged are said to cause the Representations to be misleading and deceptive. There is, for instance, nothing in the Representations or the Terms as pleaded that required vermin control to be undertaken on Kangaroo Island prior to planting. It is therefore not apparent why it is said that a decision to act in the manner pleaded in par 13.2 was inconsistent with the Representations or the Terms. What is pleaded is, as Senior Counsel for the defendant observed, on its face simply a management decision as to how to approach vermin control, not a failure to institute vermin control.
19 Objection is taken to par 16 of the statement of claim on the grounds that it does not state when other contractors would have been engaged (given that the alleged representations were spread over three months), who would have been engaged and what facts are relied upon for the allegation that those other contractors would have performed the services in accordance with the Terms. I do not, however, consider that the absence of such particularity renders the plea objectionable and liable to be struck out.
20 The other issue raised by the defendant is one that, if decided in the defendant's favour, is determinative of these proceedings.
21 The defendant contends that the plaintiff is precluded from bringing this action on the grounds described by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. In his affidavit sworn 19 December 2002, the defendant says that a dispute under the Forestry Contractor Agreement arose between the plaintiff and WAFM. It was agreed to refer it to arbitration. In fact the Forestry Contractor Agreement did not contain an arbitration clause, but instead provided for the determination of any dispute arising under it by an expert
(Page 11)
- whose decision would be final and binding. I was told that the arbitration came about as the result of an express agreement between the plaintiff and WAFM to refer the dispute to arbitration, rather than proceed under the expert determination clause in the Forestry Contractor Agreement.
22 A copy of the points of claim and points of defence in the arbitration are annexed to Mr Egerton-Warburton's affidavit in this application. From the points of claim it appears that the plaintiff claimed against WAFM damages for unlawful repudiation of the agreement; alternatively, for failing to perform the services in a proper and efficient manner and in accordance with good silvicultural practice. The plaintiff alleged that WAFM had failed properly to control vermin, had not planted sufficient seedlings to ensure a survival rate of 950 seedlings per woodlot and had planted seedlings too soon after the application of herbicides, with the result that they were destroyed by herbicide residue.
23 The arbitration was heard on various dates in December 2001 and January 2002. In the result, the Arbitrator found that WAFM had not acted in accordance with good silvicultural practices in relation to vermin control on Kangaroo Island and was liable for breach of warranty of the Agreement. The Arbitrator concluded that WAFM had not breached the Agreement in respect of the Bremer Bay plantations. I was informed by counsel for the plaintiff that WAFM was subsequently wound up in insolvency on the plaintiff's petition.
24 The defendant contends that, if the present claim was to be brought, it should have been brought in the arbitration proceedings. The plaintiff not having done so, it is not now open to it to bring the claim in fresh proceedings.
25 In Anshun, dealing with the question of when a party would be estopped from bringing a fresh action, Gibbs CJ and Mason and Aickin JJ at 602 - 3 said:
" … there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it will be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a
(Page 12)
- variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg, expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few."
- At 603 - 4 their Honours said:
"The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in the second hearing. By 'conflicting' judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction."
"Where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points on which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."
27 In Rahme v Commonwealth Bank of Australia, unreported; NSWCA; 20 December 1991, Priestley JA, with whom Meagher JA and
(Page 13)
- Hope AJA agreed, described Anshun as authority for the following propositions:
"1, that Wigram VC's extended principle as stated in Henderson is accepted as good law by the High Court;
2, that that principle applies, inter alia to … a proceeding in which a party is asserting a cause of action which could have been raised, but was not, in a previous proceeding in which the same party was asserting a different cause of action based on substantially the same facts against the same party as the second proceeding is being brought; and
3, that the extended principle of Henderson will be applied to the second proceeding when it was unreasonable for the party asserting the cause of action in that second proceeding to refrain from raising it in the earlier proceeding against the same opponent party."
29 Moreover, accepting for the purposes of this application that it is no obstacle to the application of the Anshun principle that the earlier proceedings were by way of an arbitration, in this case, the arbitration being pursuant to a separate, express agreement between the plaintiff and WAFM, there was no means by which the present plaintiff could have required this defendant to participate in the arbitration as a defendant to it. There was no arbitration agreement to which the defendant was a party that could have been invoked by the plaintiff for that purpose. Nor do I consider it was unreasonable for the plaintiff to have refrained from endeavouring to have this claim litigated in the arbitration proceedings, given those circumstances and, in addition, the fact that, as it appears, this claim has come about only because of the subsequent inability of WAFM to meet the damages awarded against it by the Arbitrator.
(Page 14)
30 I might say that the Anshun point did not appear to be pursued in argument by Senior Counsel for the defendant with any great enthusiasm and I think understandably so. In my view it must fail.
31 On the question of the application for leave to bring this application, as I have said, I consider the defendant's objections to the statement of claim have been made out. They are not what are sometimes disparagingly referred to as "mere pleading points"; that is, objections that, whilst technically valid, relate to pleas which cause no real or practical difficulty to the objecting party. The objections taken on this application raise significant issues with respect to the nature of the case sought to be made out against the defendant. Although the application is late, it raises issues that need to be resolved at this stage, rather than left for trial when their resolution is likely to cause substantial unnecessary expense and inconvenience. Accordingly, I consider leave should be granted.
32 I would therefore grant leave to the defendant to bring the application and order that the statement of claim be stuck out. I would not, however, accede to the defendant's application to dismiss the action. I would give the plaintiff leave to replead the statement of claim.
33 I will hear the parties on the precise form of the orders and costs.
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10
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