CALEX Trading Pty Ltd v GROWDON
[2008] WASC 273
•27 NOVEMBER 2008
CALEX TRADING PTY LTD -v- GROWDON [2008] WASC 273
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 273 | |
| Case No: | CIV:1251/2008 | 18 NOVEMBER 2008 | |
| Coram: | MASTER SANDERSON | 26/11/08 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application for further and better discovery from defendants granted Application for particulars dismissed | ||
| B | |||
| PDF Version |
| Parties: | CALEX TRADING PTY LTD (ACN 099 622 063) MARK STANLEY GROWDON CINDY CHARMAINE GROWDON LINNET PTY LTD (ACN 128 442 106) |
Catchwords: | Practice and procedure Applications for further and better discovery and particulars of the statement of claim Turns on own facts |
Legislation: | Nil |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARK STANLEY GROWDON
First Defendant
CINDY CHARMAINE GROWDON
Second Defendant
LINNET PTY LTD (ACN 128 442 106)
Third Defendant
Catchwords:
Practice and procedure - Applications for further and better discovery and particulars of the statement of claim - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Application for further and better discovery from defendants granted
Application for particulars dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr I F Tait
First Defendant : Mr T H Brickhill
Second Defendant : Mr T H Brickhill
Third Defendant : Mr T H Brickhill
Solicitors:
Plaintiff : Tait & Co
First Defendant : Brickhills
Second Defendant : Brickhills
Third Defendant : Brickhills
Case(s) referred to in judgment(s):
Nil
(Page 3)
1 MASTER SANDERSON: This is the return of two applications both dated 16 October 2008. The plaintiff seeks further and better discovery from the defendants. The defendants seek further and better discovery from the plaintiff and particulars of the statement of claim.
2 At the commencement of the hearing, I was advised by counsel for the plaintiff that the plaintiff would provide further and better discovery. An affidavit and list of documents had been prepared and would be filed in the near future. Counsel for the defendants was satisfied that no order was required. There only remains the question of costs on that application.
3 Before dealing with the remaining application, it is convenient to outline the nature of the claim made by the plaintiff against the defendants. The plaintiff carries on the business of importing and exporting textiles and insulating material on machinery from premises in Ogilvie Road, Mount Pleasant. It is alleged that the first defendant was a director of the plaintiff from 1 February 2004 and was employed by the plaintiff from February 2002 to 16 November 2007. It is said that the first defendant was the managing director of the plaintiff and responsible for all aspects of its business. The second defendant is the wife of the first defendant and a director and shareholder of the third defendant. It is alleged that the third defendant, since 16 November 2007, has carried on the same business as the plaintiff from premises adjacent to those occupied by the plaintiff in Mount Pleasant.
4 Essentially what the plaintiff alleges is that the first defendant resigned from his employment with the plaintiff on Friday, 16 November 2007 and operated a business in direct competition with the plaintiff through the third defendant. That business commenced operation on Monday, 16 November 2007. The plaintiff also alleges that the first defendant took with him an employee of the plaintiff. It is alleged by the plaintiff that the first defendant's move has drastically reduced the plaintiff's income and effectively destroyed its business. I will deal with the plaintiff's complaints in more detail later in these reasons.
5 As against the first defendant, the plaintiff alleges that the first defendant owed the plaintiff certain fiduciary duties. The nature of these duties is set out in par 6 of the statement of claim. The plaintiff alleges that as a consequence of the first defendant's alleged breach of these duties, it has suffered loss and damage. This loss and damage is particularised in par 8 of the statement of claim. Clearly, if this claim was made out, the plaintiff would be entitled to equitable compensation or an
(Page 4)
- account of profits from the third defendant. However, for the purposes of this application, it is important to note that it was not alleged by the first defendant that at trial equitable compensation would not be assessed.
6 By par 9 of the statement of claim, the plaintiff alleges that the first defendant, in resigning as he did, breached his contract of employment with the plaintiff. It is alleged that there was an implied term in the employment contract that the first defendant would give the plaintiff reasonable notice of resignation. It is alleged that this was not done and, as a consequence, the plaintiff says it has suffered loss and damage. There was no discussion during submissions about what, if any, damages might flow to the plaintiff if the breach of contract alleged by the plaintiff against the first defendant is established.
7 The claims against the second and third defendants are what might be termed accessorial claims. In other words, it is alleged that the second and third defendants were knowingly involved in the breach of fiduciary duties alleged against the first defendant. There is also a claim that the defendants conspired in the first defendant's breach of his alleged fiduciary duties. That allegation really adds nothing to the claim put against the defendants. There is a further claim with respect to a specified amount which the plaintiff alleges is repayable by the first defendant to the plaintiff pursuant to a contractual arrangement. That claim is not the subject of these applications.
8 The statement of claim itself is clear and easily understood. If it has a fault, it pleads causes of action rather than just material facts. But in doing so, it illuminates rather than disguises the plaintiff's position. Allegations of material fact are particularised where necessary. On the face of it, there seems nothing to suggest that further particulars are required.
9 The request for particulars was made by the defendants on 12 August 2008. There are 21 requests. Some are clearly inappropriate. By way of example, par 1 of the request seeks particulars of par 1(b) of the statement of claim. That paragraph of the statement of claim alleges that the plaintiff carries on an importing and exporting business. The request is in the following terms:
Set out each and every act, fact, matter, thing and circumstance relied upon by the Plaintiff in support of the allegations in subparagraph 1(b) of the statement of claim that the Plaintiff carried on the business of:
1.1 exporting textiles;
(Page 5)
- 1.2 importing and exporting insulating material;
1.3 importing and exporting machinery.
10 It is common ground between the parties that the first defendant worked for, and was a director of, the plaintiff for a number of years prior to November 2007. He, more than anyone else, would know the nature of the plaintiff's business. To make a request such as found in par 1 is not only inappropriate but improper. It is a manifestation of the worst aspects of litigation - an interlocutory step taken without purpose and designed to achieve no real result.
11 If par 1 of the request was an isolated instance of an unreasonable request tucked away in an otherwise necessary attempt to elucidate the plaintiff's claim, perhaps the false step could be overlooked. But most of the other requests are in the same vein. For instance, par 2 asks the plaintiff to set out the circumstances relied upon in support of the allegation that the first defendant was the managing director of the plaintiff; par 3 asks the plaintiff for particulars of the allegation that the third defendant 'has carried on business since the date of its incorporation'. In fact, with one exception (which I will deal with below), all of these requests are entirely unnecessary. Even the requests for particulars of loss and damage are unnecessary. Without knowing what, if any, profit the third defendant has made in its activities, particulars of loss and damage the plaintiff has allegedly suffered cannot be provided. The statement of claim makes that plain by stating that particulars of loss will be provided after discovery.
12 Lest it be thought that I am overstating the position in these reasons, I should say that during the course of submissions, I put it to counsel for the defendants that his clients had set up in competition with the plaintiff. They had opened a business next door and were trading with parties who had formerly been clients of the plaintiff. Counsel did not really deny that this was the case. Once that point is reached, it means that there are only really two questions for trial. The first is whether the defendants are in breach of some fiduciary duty by using the plaintiff's confidential information and the second is whether the first defendant breached his contract with the plaintiff.
13 The defences of each of the defendants make no attempt at all to isolate these two matters as the issues between the parties. The defences for the most part comprise a series of denials. For instance, par 2(b) of the statement of claim alleges that the first defendant was employed by the plaintiff as its managing director. By par 5 of his defence, the first
(Page 6)
- defendant admits his employment with the plaintiff, but otherwise denies the plaintiff's allegation. The first defendant filed an affidavit in opposition to the plaintiff's request for further and better discovery dated 7 November 2008. By par 3 of that affidavit, he says:
When I was in the employ of the Plaintiff and based on my day to day management of the Plaintiff's business, I am able to say that the Plaintiff's business related to agency work for sellers and purchasers of textile products and to a lesser degree some trading of textile products.
…
15 The issue that was addressed by counsel for the defendants in his submissions really related to the question of what 'confidential information' the plaintiff alleges the defendants have misused. Paragraph 5(c) of the statement of claim alleges that the first defendant:
[P]rior to ceasing employment with the Plaintiff, misused the Plaintiff's confidential information to contact customers of the Business, and cause them to transfer their business to the Third Defendant's Business.
16 In the particulars, reference is made to par 5(a)(iii) and (iv). Paragraph 5(a)(iii) is in the following terms:
The Plaintiff will invite the inference that the First Defendant used contact details of clients and suppliers of the Business, which is and was at all material times confidential information of the Plaintiff, to contact customers and suppliers of the Business and cause them to transfer their business to the Third Defendant's business …
17 Further details are given in the following subparagraphs, but they really relate to trading details which support the plaintiff's inference that the first defendant usurped its client details. Paragraph 5(a)(iv) is in the following terms:
On or about 15 November 2007 the First Defendant caused the account in respect of the mobile phone used by the First Defendant in the Business, which contained a copy of the contact details of clients and suppliers of the Business, to be transferred from the Plaintiff to the First Defendant.
18 That, essentially, is the evidence upon which the plaintiff relies. It is a very narrow allegation. The real question is whether the plaintiff's client contact list is confidential information. If it is not, that aspect of the
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- plaintiff's case falls away. But no particulars of that allegation are needed. Both parties know exactly what they are talking about. I would not order particulars.
19 There is one further aspect of this application which requires comment. It is made out of time. In some circumstances the making of an application out of time can be overlooked - that is particularly the case where a defendant is intent upon addressing the real issues in dispute between the parties and looks to overcome any deficiencies in a statement of claim by a request for particulars. But this statement of claim was filed on 17 April 2008. The parties were able to go to a mediation and presumably address the issues between them without the defendants being so confused about the nature of the plaintiff's claim that they required particulars. Quite why relatively late in the day the defendants felt that particulars were required is not explained either by the evidence produced by the first defendant or otherwise. Apart from anything else, I would refuse the defendants an extension of time to bring this application.
20 Turning then to the plaintiff's application for discovery, it is clear that the discovery provided by the defendants at present is inadequate. All they have discovered is a series of emails passing between various parties. The plaintiff is clearly entitled to further and better discovery, including discovery of the third defendant's business records. An argument that these business records are confidential and providing them to a competitor would harm the third defendant's business is no reason for not ordering discovery.
21 Annexed to the plaintiff's application for discovery is a schedule which sets out the additional documents the plaintiff says that the defendants ought discover. There are a number of documents or categories of documents in this schedule which, in my view, should not be the subject of an order. Essentially, these are documents which the plaintiff is speculating exist. For that reason, I would not order discovery in terms of par 1(a)(iii) or par 1(d). Otherwise, further and better discovery ought be provided by the defendants.
22 I will hear the parties as to the precise form of orders and as to costs.
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