Benjamin Corporation Pty Ltd v Smith Martis Cork & Rajan Pty Ltd

[2003] FCA 622

FEDERAL COURT OF AUSTRALIA

Benjamin Corporation Pty Ltd v Smith Martis Cork & Rajan Pty Ltd
[2003] FCA 622

PRACTICE AND PROCEDURE – motion for further and better particulars – no point of principle.

Corporations Act (2001) (Cth), ss 232, 233 and 234

BENJAMIN CORPORATION PTY LTD v SMITH MARTIS CORK & RAJAN
PTY LTD & ORS
W3016 of 2002

CARR J
19 JUNE 2003
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W3016 OF 2002

BETWEEN:

BENJAMIN CORPORATION PTY LTD (ACN 100 278 288)
Plaintiff

AND:

SMITH MARTIS CORK & RAJAN PTY LTD
(ACN 054 277 879)
First Defendant

JACK BRADLEY MANDERS as trustee for the Smith Family Trust, SHIMSHON NOMINEES PTY LTD (ACN 009 097 929) as trustee for the Patrick Cork No 2 Family Trust, PARVATHI BAI RAJAN as trustee for the Rajan Family Trust, VIRINDAR JOSEPH MARTIS as trustee for the VM Trust
Second Defendants

BRUCE RICHARD SIVALINGAM as trustee for the Sled Driver Trust, NAOMI JUDITH FLAVELL as trustee for the Flavell Family Trust and JENNIFER ANNE BURNETT as trustee for the Burnett Saliacus Family Trust
Third Defendants

JACK BRADLEY MANDERS as trustee for the Smith Family Trust, SHIMSHON NOMINEES PTY LTD (ACN 009 097 929) as trustee for the Patrick Cork No 2 Family Trust, PARVATHI BAI RAJAN as trustee for the Rajan Family Trust
Cross-Plaintiff

BENAJMIN CORPORATION PTY LTD (ACN 100 278 288)
As trustee for the Benjamin Trust
Cross-Defendants

JUDGE:	CARR J
DATE OF ORDER:	19 JUNE 2003
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.The plaintiff file and serve within 21 days further and better particulars of its statement of claim in accordance with the reasons published today.

2.The costs of the motion, notice of which was filed on 26 February 2003, be costs in the cause. 

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W3016 OF 2002

BETWEEN:

BENJAMIN CORPORATION PTY LTD (ACN 100 278 288)
Plaintiff

AND:

SMITH MARTIS CORK & RAJAN PTY LTD
(ACN 054 277 879)
First Defendant

JACK BRADLEY MANDERS as trustee for the Smith Family Trust, SHIMSHON NOMINEES PTY LTD (ACN 009 097 929) as trustee for the Patrick Cork No 2 Family Trust, PARVATHI BAI RAJAN as trustee for the Rajan Family Trust, VIRINDAR JOSEPH MARTIS as trustee for the VM Trust
Second Defendants

BRUCE RICHARD SIVALINGAM as trustee for the Sled Driver Trust, NAOMI JUDITH FLAVELL as trustee for the Flavell Family Trust and JENNIFER ANNE BURNETT as trustee for the Burnett Saliacus Family Trust
Third Defendants

JACK BRADLEY MANDERS as trustee for the Smith Family Trust, SHIMSHON NOMINEES PTY LTD (ACN 009 097 929) as trustee for the Patrick Cork No 2 Family Trust, PARVATHI BAI RAJAN as trustee for the Rajan Family Trust
Cross-Plaintiff

BENAJMIN CORPORATION PTY LTD (ACN 100 278 288)
as trustee for the Benjamin Trust
Cross-Defendants

JUDGE:	CARR J
DATE:	19 JUNE 2003
PLACE:	PERTH

REASONS FOR JUDGMENT

INTRODUCTION

1. The Court has before it a motion on notice whereby the defendants other than the fourth-named second defendant and the third-named third defendant seek orders for further and better particulars of the statement of claim.  I shall refer to those defendants as “the defendants”. 

   FACTUAL AND PROCEDURAL BACKGROUND

2. In the principal application the plaintiff alleges that the affairs of the first defendant (“the Company”) have been conducted in a manner which was oppressive to, unfairly prejudicial to and/or unfairly discriminatory against the plaintiff, a member of the Company. The plaintiff seeks orders pursuant to ss 232-234 of the Corporations Act 2001 (Cth) (“the Act”).

3. The Company was an entity which Mr Graham Herbert Smith, Mr Joseph Rosarius Silanand Martis, Mr Patrick Neville Cork and Mr Suresh Rajan used in or about November 1991 to acquire the investment advisory and securities dealing business then conducted by Ficate Ltd which was formerly a well-known Australian company carrying on business under the name Joseph Charles Learmonth Duffy Ltd.  Messrs Smith, Martis, Cork and Rajan had previously worked for that company.  

4. The Company appears to have traded successfully and profitably, but differences between the four individuals (whom I shall call “the Partners”) resulted in the removal of Mr Martis as a director of the company on 10 May 2002 and his dismissal as an employee of the Company on 13 August 2002. 

5. The application was filed on 23 August 2002 and was listed for hearing on 4 February 2003.  The hearing date was vacated by consent because the parties were not ready for trial. 

6. It would appear that, subject to the matters raised in this motion, the interlocutory procedures have now been largely completed.  Pleadings in the claim and cross-claim appear to be closed, numerous affidavits have been filed and the application is listed for hearing on 14 October 2003.  The papers filed to date indicate a substantial disagreement between the parties across a range of factual matters.  It is not necessary, for the purposes of determining this motion, to descend to the details of the dispute. 

7. The motion was conducted on the basis of written submissions.  I now turn to the further and better particulars sought, using the same numbering as in the defendants’ request for further and better particulars. 

   1.        Paragraph 3 of the statement of claim

8. In paragraph 3 of the statement of claim the plaintiff pleads that at all material times from 21 November 1991 until March and April 2002 the Partners were directors of the Company, were employed by the Company as authorised representatives and were involved in the management of the Company.  

9. The defendants’ request is for particulars of the involvement of each of those persons in the management of the Company from 21 November 1991 until March and April 2002.  The plaintiff objects to this particular request, and indeed all of the other paragraphs of the defendants’ request, by submitting that there is no possibility of the defendants not knowing the case they must meet at trial or of them being taken by surprise.  The plaintiff says that its case has been detailed at length in the various affidavits filed by it in this application.  It will be limited at trial to relying on the facts set out in those affidavits and will be unable to rely on any additional evidence save with leave of the Court.  It points to the fact that the defendants have already filed very detailed responsive affidavits and that the request for further and better particulars is unnecessary and oppressive. 

10. The defendants contend that these particulars will serve to clarify the plaintiff’s case as to the involvement in management particularly of Messrs Cork, Smith and Rajan.

    MY REASONING

11. I have read the affidavits filed to date.  They are detailed and voluminous.  Nonetheless, subject to the observations which I make immediately below, I consider that it is appropriate for the plaintiff to provide the particulars sought. 

12. The particulars may be provided in brief summary, sufficient to convey a reasonably clear picture of what the plaintiff says was the degree of involvement of the Partners in the management of the Company during the years referred to in paragraph 3 of the statement of claim.  It would be oppressive for these particulars to be too detailed, but they should convey adequately the extent to which the Partners are said by the plaintiff to have been involved in the management of the Company.

    2.        Paragraph 5 of the statement of claim

13. The defendants have abandoned this request.

    3.        Paragraph 6 of the statement of claim

14. In paragraph 6 of the statement of claim the plaintiff pleads the terms of the oral agreement made between the Partners in or about November 1991 to acquire the business which I have described above, to conduct that business together, to share the net profits, to have an equal share in the business and an equal shareholding in the Company, that each of them would be a director of the Company and would conduct the business together under the name “Smith Martis Cork & Rajan Pty Ltd”.  The only particulars given of that agreement were that it was oral and was made in various conversations between the Partners in or about November 1991.

15. The defendants say that they are entitled to particulars of the agreement, which is a material part of the plaintiff’s claim.  They contend that a reading of the affidavits filed to date confirms that the request is neither oppressive nor unnecessary.  The defendants’ specific requests relate to the conversations referred to in the particulars.  The request is for the plaintiff to specify where such conversations took place and the substance of each and every conversation pursuant to which the agreement is said to have been made. 

    MY REASONING

16. As mentioned above, I have read the affidavits filed to date.  Although there are some references in the affidavits filed on behalf of the plaintiff to the oral agreement of November 1991, in my view, the defendants are entitled to such particulars as it is reasonably capable of giving.  I take into account the fact that these conversations took place well over eleven years ago, but the plaintiff should provide these particulars as best it can. 

    4.        Paragraph 9

17. In paragraph 9 of the statement of claim the plaintiff pleads that in or about late 1992 or early 1993, each of the Partners transferred their ordinary shares in the Company to their director controlled entity. 

18. The defendants make two requests in relation to paragraph 9, one of which has now been abandoned.  The remaining request reads:

    ‘Is the reference to a “Director Controlled Entity” intended to be a reference to a Director’s Related Entity?  If not specify what is signified by the phrase “Director Controlled Entity”.’ 

19. In my view, the plaintiff should provide an answer to that request, which although in the form of an interrogatory, serves as a proper request for further and better particulars. 

    5.        Paragraph 10 of the statement of claim

20. In paragraph 10 of the statement of claim the plaintiff pleads that there was a common assumption amongst each of the Partners and from 1993 each of their “Directors’ Related Entities” that and/or each of them had the reasonable expectation that:

    ·     the Partners would remain directors of the Company;

    ·     each of them would participate in the Company’s management; and

    ·     if as a result of a breakdown of the relationship between the Partners, one of them was removed as a director of the Company, or was excluded from its management, the remaining directors would arrange the purchase of the shares held by the Director’s Related Entity which was related to the excluded director at a fair value or on reasonable commercial terms. 

21. The defendants’ requests are first to ask when it is said such common assumptions or expectations arose.  Secondly by reason of what fact or facts it is alleged that such expectations, if held by Messrs Smith Cork & Rajan, were also held by the trustees of their respective family trusts.  Thirdly the defendants ask by reason of what fact or facts or on what basis it is alleged that such expectations, if held by Mr Martis, were also held by the plaintiff and by any other individual or corporate entity which may have been a trustee of the Benjamin Trust at a time material to this action.

22. Although the plaintiff pleads, in paragraph 11 of the statement of claim, certain facts from which the common understanding and/or reasonable expectation referred to in paragraph 10 are said to have arisen, I think that the defendants are entitled to these particulars.  It may be implicit that the time at which the common assumptions or expectations arose was early 1993, but it would not be oppressive to require the plaintiff to state a time.  Furthermore, the basis upon which the various trustees are said to have the reasonable expectation pleaded may well be quite central to the case.  In those circumstances the defendants are, in my view, entitled to the particulars sought. 

    Paragraph 11

23. In my view, the requests made in paragraph 6(a) and (b) do not require to be answered because the facts pleaded in paragraph 11 provide sufficient particulars. 

24. The particulars sought in paragraph 6(c) will emerge in answer to paragraph 3 of the request. 

25. The defendants have abandoned paragraph 6(d)(i) and (ii) of the request.

26. Paragraph 11.8 of the statement of claim pleads that from 1993 to 2002, each of the Related Entities retained equal ordinary shareholdings in the Company and was paid differential dividends as a reward for the fees each director earned as authorised representatives of the Company. 

27. In paragraph 6(d)(iii) the defendants ask:

    ‘… by reason of what fact or facts is it alleged that the differential dividends paid by [the Company] to the trustees … were paid “… as a reward for the fees each director earned as authorised representatives of [the Company].”’

28. In my view, this is not an appropriate request.  The fact of payment of differential dividends and the reason why they were paid are pleaded.  That, in my view, is sufficient.  

    7.        Paragraph 13.4

29. In paragraph 13.4 the plaintiff pleads that, contrary to the common assumption and/or Mr Martis’ reasonable expectation, the other three Partners have at no time offered to purchase or arrange the purchase of the plaintiff’s ordinary shares or differential dividend shares in the Company at a fair value or on reasonable commercial terms. 

30. In their request for particulars, the defendants require the plaintiff to specify whether the defendants have at any time subsequent to August 2002 offered to purchase or arrange the purchase of those shares and if so to specify when each such offer was made.  Further the defendants request the plaintiff to specify the fact or facts by reason of which it is said that such offer or offers did not represent fair value or were not made on reasonable commercial terms. 

31. In their written submissions the defendants say that paragraph 13.4 of the statement of claim appears to be relied on as a ground of oppression.  They submit that they are entitled to know what the plaintiff says is a fair value, as offers have been made. 

32. In my view, the defendants are entitled to short particulars in response to paragraph 7(a) sufficient to identify the date, the nature of the offer and the price (if any) offered.  The plea in paragraph 13.4 is somewhat “rolled up” in that it may be read as stating that no offer has been made, or that if any offer was made, it was not at a fair value or on reasonable commercial terms. 

33. In view of the extensive affidavits and expert opinions that have been filed, I do not think that there is any need for the plaintiff to provide the further and better particulars sought in paragraph 7(b).  The defendants are well aware of what the plaintiff regards as the fair value of its shares. 

    8.        Paragraph 14

34. In paragraph 14 the plaintiff pleads that “In the premises” the affairs of the Company have been and/or are being conducted in a manner which is oppressive and unfairly prejudicial to the plaintiff. In the prayer for relief the plaintiff claims an order under s 233 of the Act.

35. The defendants require the plaintiff to specify which aspects of paragraph 13 of the statement of claim are relied upon for the allegation of oppression. 

36. In my view, the affidavits filed to date sufficiently provide the defendants with relevant particulars of this aspect of the case which they will have to meet at trial. 

37. However, I think that the defendants are entitled to know the orders which the plaintiff seeks under s 233 of the Act.  They should provide those particulars. 

    QUANTUM

38. In their written submissions the defendants refer to the fact that the statement of claim does not plead quantum.  It was, apparently, served under cover of a letter dated 22 January 2003 from the plaintiff’s solicitor indicating that the claim and its basis were set out in Table 13A and 13B of an expert report dated 20 December 2002.

39. That letter and the relevant pages of the report are exhibited to an affidavit filed in support of the motion. 

40. The letter dated 22 January 2003 relevantly states:

    ‘Particulars of the compensation sought by Benjamin Corporation Pty Ltd (“Benjamin”) are as follows:

    2.1the value of Benjamin’s shares in [the Company] as at April 2003, August 2003 and the date of trial.  The value appears from Mr Edwards’ report Tables 13A and 13B. 

41. Those tables show a range of values for the plaintiff’s shares of between $600,000 and $690,000 on one assumption and between $690,000 and $780,000 on another assumption. 

42. At a subsequent directions hearing before the District Registrar, the plaintiff was directed to file further particulars as to the quantum and calculation of the claim.  It responded with a document entitled “Plaintiff’s supplementary further and better particulars of quantum of claim” dated 4 February 2003. 

43. The defendants say that those particulars are objectionable as they do not specify the sum claimed. They say that they are further objectionable in that they contain the words “without prejudice to the Plaintiff’s ability to make submissions to the Court as to the exercise of its discretion to make orders pursuant to section 233 of the Corporations Act, the quantum of the compensation claimed is presented on a number of alternate bases: …”.

44. In my view, the defendants are not entitled to any further and better particulars of quantum.  Quantification of such matters is not always a precise exercise.  The plaintiff has provided, in its supplementary further and better particulars of 4 February 2003, the range which Mr Edwards assesses on two different assumptions, and the valuation based on Mr McMaster’s report of 22 January 2003. 

45. As to the defendants’ objection to the paragraph which starts “without prejudice …”, I think that that objection is not sustained. Once the plaintiff has provided particulars of the orders which it seeks under s 233 the defendants will know exactly where they stand. The interests of justice do not require the plaintiff, at this stage, to make an election as to the quantum of compensation claim. In my view, they are entitled to put the range of figures before the Court, as they emerge from their experts’ reports. It will then be for the Court to consider any other evidence and make its own judgment as to what is an appropriate amount.

    CONCLUSION

46. There will be an order that the plaintiff within 21 days file and serve further and better particulars in accordance with the foregoing reasons.  After taking into account the requests abandoned and the respective degrees of success in the motion, I think that it would be in the interests of justice for the costs of the motion to be costs in the cause.

I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr J.

Associate:

Dated:            19 June 2003

Solicitors for the Plaintiff:	Messrs Williams & Hughes
Solicitor for the Defendants (other than the fourth-named second defendant and the third-named third defendant):	Mr Stephen Kemp
The motion was decided on written submissions filed by the parties
Date last submissions filed:	10 April 2003
Date of Judgment:	19 June 2003