Central Exploration Pty Ltd v Zuks - [2020] WASC 46

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CENTRAL EXPLORATION PTY LTD -v- ZUKS [2020] WASC 46
CORAM:   ALLANSON J
HEARD:   18 DECEMBER 2019
DELIVERED          :   21 FEBRUARY 2020
FILE NO/S:   CIV 2917 of 2017
BETWEEN:   CENTRAL EXPLORATION PTY LTD
First Plaintiff
CENTRAL AREAS LTD
Second Plaintiff
RTG MINING INC
Third Plaintiff
AND
NIKOLAJS ZUKS aka NIKS ZUKS, NICHOLAIS ZUKS, NICHOLAS ZUKS, NIKOLIS ZUKS AND NIKOLAIS ZUKS
First Defendant
KALIA HOLDINGS PTY LTD
Second Defendant
KALIA LTD
Third Defendant
DAVID ALBERT LLOYD JOHNSTON
Fourth Defendant

TERRENCE ARTHUR LARKAN
Fifth Defendant
ADAM NIKOLAIS ZUKS
Sixth Defendant

Catchwords:

Practice and procedure - Application to extend time to file application for summary judgment - Where application based on possible failure of condition precedent - Whether time should be extended to enable application at indefinite future time

Practice and procedure - Application by defendant to be released from undertaking given voluntarily in response to plaintiffs' application for interim injunction - Where information on application for injunction incomplete - Where undertaking in force for more than two years - Where the plaintiffs' position has materially changed since undertakings given - Where difficulties in enforcement of undertaking

Practice and procedure - Application to strike out pleadings for failure to disclose a reasonable cause of action

Practice and procedure - Application to strike out - Where plaintiffs plead matters which have arisen since issue of writ

Practice and procedure - Where defendants apply to strike out claims on ground that they may prejudice, embarrass or delay the fair conduct of the proceedings - Whether allegation of dishonest or unlawful conduct pleaded with sufficient clarity and precision - Whether plaintiff should be given leave to re‑plead

Practice and procedure - Where defendant applies for order requiring plaintiff to write and send letter to third party in terms provided by defendant - Where defendant has brought no counterclaim - Whether application in effect for mandatory injunction

Legislation:

Corporations Act 2001 (Cth), s 1317H, pt 1.2 div 2
Partnership Act 1895 (WA), s 7
Rules of the Supreme Court 1971 (WA), O 14 r 1, O 20 r 10, O 20 r 19, O 37 r 6

Result:

Application to extend time for strike out application dismissed
Application to strike out granted in part
Plaintiff to have leave to re-plead
Application to be released from undertaking granted
Application for order requiring letter to third party dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	A Rumble & M L Bennett
Second Plaintiff	:	A Rumble & M L Bennett
Third Plaintiff	:	A Rumble & M L Bennett
First Defendant	:	M P Bruce
Second Defendant	:	A Pieterse
Third Defendant	:	A Pieterse
Fourth Defendant	:	A Mossop & S M Davies SC
Fifth Defendant	:	No appearance
Sixth Defendant	:	M P Bruce

Solicitors:

First Plaintiff	:	Bennett + Co
Second Plaintiff	:	Bennett + Co
Third Plaintiff	:	Bennett + Co
First Defendant	:	Bruce Legal Consultants (Perth)
Second Defendant	:	Tottle Partners
Third Defendant	:	Tottle Partners
Fourth Defendant	:	Lemonis & Tantiprasut Lawyers
Fifth Defendant	:	No appearance
Sixth Defendant	:	Bruce Legal Consultants (Perth)

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

21st Century Promotions Australia Pty Ltd v Telstra Corp Ltd [2000] SASC 35
Armidale Regional Council v Vorhauer [2019] NSWSC 1153
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers-Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157
Baldry v Jackson [1976] 2 NSWLR 415
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334
Bryant Bros v Thiele [1923] SASR 393
CC Containers Pty Ltd v Lee [2011] VSC 537
Davies v Nyland (1974) 10 SASR 76
Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537
Edenden v Bignell [2007] NSWSC 1122
Eshelby v Federated European Bank Ltd [1932] 1 KB 423
Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486
Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998)
Johnston v Smith [2002] NSWSC 409
Mastec Australia Pty Ltd v Trident Plastics (SA) Pty Ltd (No 2) [2017] FCA 1581
Mickelberg v 6PR Southern Cross Radio Pty Ltd [2002] WASCA 270
Mutual Life & Citizens' Assurance Co Ltd v Evatt [1970] UKPCHCA 2; (1970) 122 CLR 628
Nyoni v Patterson [2012] WASCA 171
Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255
Rosselli v Rosselli [2007] VSC 414
Weston v Publishing and Broadcasting Ltd [2011] NSWSC 433
Wigan v Edwards (1973) 47 ALJR 586

ALLANSON J:

Background

The plaintiffs and the defendants are involved in pursuing commercial interests, particularly in mining, in the Autonomous Region of Bougainville of Papua New Guinea.
The plaintiffs commenced these proceedings in November 2017, seeking urgent interlocutory relief to protect their interests from what they perceived to be an immediate threat from the conduct of the defendants. By December 2019, when these applications were heard, the plaintiffs' expectations about their interests, in particular in respect of the Panguna Mine, had been frustrated by a combination of factors.
The plaintiffs have pleaded, the defendants have not. The action was referred to mediation at a relatively early stage, before defences were filed, but the limited availability of the parties prevented mediation before October 2018. The mediation was held over four days, the final day being 18 June 2019. The dispute remained unresolved.
On 31 October 2019, the parties attended a strategic conference to discuss how the matter should proceed. In short, the plaintiffs wanted the defendants to file their defences, and to avail themselves of the interlocutory processes of the court. The defendants challenged the claim pleaded against them.
Orders were made for the plaintiffs to file a further amended statement of claim, and to program foreshadowed applications by the defendants to strike out the statement of claim, and applications by two of the defendants to be released from undertakings they had given in November 2017.
These reasons deal with the applications that were brought by the first defendant (Nikolajs Zuks), fourth defendant (David Albert Lloyd Johnston) and sixth defendant (Adam Nikolais Zuks).[1]
[1] For clarity I will refer to the first defendant as Mr Zuks ‑ the manner in which he is referred to in the statement of claim - and the sixth defendant as Adam Zuks.

The writ as amended

The writ was filed on 13 November 2017 and amended on 6 December 2017. The claim was initially against the first four defendants.
The indorsement of claim set out claims arising out of the covenants in a Separation Deed, made 18 December 2016, between the plaintiffs, Mr Zuks and Kalia Holdings Pty Ltd. The claims against Mr Johnston and Kalia Limited were for 'knowing participation' in the breaches.
The amended writ of summons added Terrence Arthur Larkan and Adam Zuks as defendants, with claims against them for 'knowing participation' in the breaches by the other defendants.
The plaintiffs also set out a further claim against all defendants for tortious conspiracy to harm the plaintiffs' interests.
The plaintiffs sought relief by way of injunction, including mandatory injunction, and damages.
The statement of claim was filed on 7 February 2018, and has been amended twice since. The present applications were brought with regard to the further amended statement of claim, filed 19 November 2019, but were argued by reference to a later minute, filed 16 December 2019. The claims in the writ have been further expanded to include claims for breach of director's duties against Mr Zuks,[2] with a claim for a compensation order pursuant to s 1317H of the Corporations Act 2001 (Cth);[3] and claims against Mr Johnston and Mr Larkan for interference in contractual relations.[4]
[2] Second further amended statement of claim [33], [95].
[3] Second further amended statement of claim [118.1.10].
[4] Second further amended statement of claim [99] ‑ [101A].
The foundation for much of the liability attributed to Mr Johnston, Mr Larkan and Adam Zuks is a plea that, with Mr Zuks, they formed a partnership (Innovative Economic Solutions or IES).[5]
[5] Second further amended statement of claim [10].
Before addressing the applications, I will briefly set out the history of this action.

The proceedings

Central Exploration Pty Ltd is frequently referred to in documents, including the relevant agreements, as CEPL. For consistency with the documents I will use the acronym.
On 3 November 2017, lawyers then acting on behalf of CEPL wrote to Mr Zuks alleging breach of agreements made between CEPL and Mr Zuks and misuse of confidential information. CEPL sought undertakings from Mr Zuks, and also information about other persons (including Kalia Holdings and Mr Johnston).[6]
[6] Affidavit of Justine Alexandria Magee, sworn 5 December 2017, JAM 9.
The action was commenced by writ on 13 November 2017. On the same day the plaintiffs applied for an urgent interim injunction against the first four defendants, then the only defendants to the action. By originating summons in a related action, the plaintiffs sought pre‑action discovery.[7]
[7] CIV 2919 of 2017.
The applications came before the court on 13 November 2017. Mr Zuks appeared through his lawyer, but had not been formally served. The application was adjourned to the following day.
On 14 November 2017, Mr Johnston also appeared, representing himself.
No order was made on the plaintiffs' application for an interim injunction, but Mr Zuks and Mr Johnston gave undertakings in these terms:
… unless released from this undertaking by order of the Court or until judgment in the within action, whichever is the earlier:
A.I will not; and
B.I will procure that a Connected Person to me does not;
do any one or more of the following:
1.disclose or misuse any confidential information imparted to me or a Connected Person to me by any or all of RTG, CEPL and CAL, particularly CEPL Information;
2.be involved, or otherwise be directly or indirectly concerned with (including whether as an employee, manager, shareholder, partner, tender, joint-venture participant, consultant or in any other capacity or prepared to do so) any business that competes with or involves the CEPL Project Interests or any interest them [sic];
3.on my own account, or for any other person, take any action which would reasonably be regarded as likely to cause detriment to RTG, CEPL or CAL or interfere with the development of the CEPL Project Interests;
4.contact any of the Special Mining Lease Osikaiyang Land Owners Association Inc (5-4832), Me'ekamui Government of Unity or Central Me'ekamui Exploration and any Government Authority or official or any third parties in the region of Papua New Guinea or Bougainville to discuss RTG, CEPL and CAL's interests in Papua New Guinea or Bougainville or the CEPL Project Interests;
5.Counsel, procure or otherwise assist any person to do any of the acts referred to in clauses 2 to 4 herein.
For the avoidance of doubt, nothing in this undertaking prevents me, or a Connected Person to me, from liaising with and making presentations and representations to ABG (Autonomous Bougainville Government) and their representatives and other interested persons or entities in relation to Bougainville's economic development, fiscal self‑reliance, governance, taxation, revenue raising, banking, insurance, agriculture, aquaculture, industrial development and related matters, provided that in doing so I acknowledge that I must not infringe the obligations imposed upon me by the Separation Deed and paragraphs 1 to 5 of this undertaking.
Words in bold in the undertakings were defined terms, having the same meaning as in the Separation Deed. It is necessary to set out some of the terms defined in the Separation Deed:
CEPL Project Interests means any and all interests of [Central Areas Ltd] and CEPL relating to the CEPL Joint Venture Agreement and activities in the Panguna region of Bougainville (including for the avoidance of doubt the surrounding areas or within the Panguna Mine Area).
CEPL Joint Venture Agreement means the joint venture agreement dated 29 February 2016 between Special Mining Lease Osikaiyang Land Owners Association Inc (5-4832), Me'ekamui Government of Unity, Central Me'ekamui Exploration and CEPL.
Connected Person means in relation to a Party to this Deed its Related Body Corporate and any Associate[8] of that Party in the present and former Officers, employees and agents from time to time of that Party and of any such Related Body Corporate.
Panguna Mining Area means the area (previously the subject of EL 1/2014) situated within the area of Prospecting Authorities Nos 1 to 7 under the Mining Ordinance 1928-1966 of the Territory of New Guinea in respect of which Bougainville Copper Limited (and its subsidiaries) had previously been granted mining rights under a Special Mining Lease but which have been repealed by the Bougainville (Transitional Arrangements) Mining Act 2014 (ABG).
[8] Associate was defined to have the meaning given to that term in pt 1.2 div 2 of the Corporations Act 2001 (Cth).
The Separation Deed was made on 18 December 2016. On 21 April 2017, a second CEPL Joint Venture Agreement was made which, by cl 31, was expressed to be the entire agreement of the parties and to supersede all prior agreements.
Clauses 2 to 5 of the undertakings given by Mr Zuks and Mr Johnston reproduced cl 5 (a)(i) ‑ (iv) of the Separation Deed. Mr Zuks was a party to the Separation Deed, Mr Johnston was not, but had signed it as director/company secretary of Kalia Holdings, which was a party.
On 4 December 2017, Kalia Holdings and Kalia Limited also filed undertakings. Those undertakings were expressed to be for a limited time and have since expired.
On 5 December 2017, the case was adjourned to a strategic conference.
On 6 December 2017, the plaintiffs filed the amended writ adding Mr Larkan and Adam Zuks as defendants, and adding the further cause of action against all defendants for engaging in a tortious conspiracy to harm the plaintiffs' interests, 'namely the commercial development of the Panguna Mine or the plaintiffs' interest in Bougainville generally'.
On 15 January 2018, Mr Larkan also gave an undertaking. The substance of the undertaking, cls 1 to 5, was in the same terms as those given by Mr Zuks and Mr Johnston. The proviso, however, was broader. Mr Larkan's undertaking could be withdrawn on seven days written notice to the plaintiffs' solicitors.
On each occasion, the defendants' undertakings were accompanied by cross undertakings as to damages on behalf of the plaintiffs.
The statement of claim was filed on 7 February 2018. At that time, the plaintiffs alleged that the conduct of the defendants had either significantly delayed or frustrated the grant of an exploration license to a joint venture company formed in Bougainville pursuant to a joint venture agreement between CEPL and three entities representing the land owners in Bougainville. The plaintiffs pleaded that, at the time of the defendants contravening conduct, the plaintiffs 'enjoyed a realistic and probable likelihood of obtaining a lawful interest in respect of the Panguna Mine'.[9] The value of that interest was said to be in the billions of dollars.
[9] Statement of claim [117].
The plaintiff sought relief by injunctions, including a mandatory injunction; damages for breach of contract; damages for tortious conspiracy; and a compensation order pursuant to s 1317H of the Corporations Act.[10]
[10] The plaintiffs plead breach of director's duties by Mr Zuks.
The statement of claim was amended on 20 April 2018. The amendments were extensive.
Significantly, in [114], the plaintiffs now pleaded that CEPL and RTG Mining were taking steps for the purpose of 'mining or exploring for' gold, copper and other minerals. The plaintiffs further pleaded that at 16 January 2018, the Joint Venture Company they had formed with the land owners had a right to have its application for an exploration license covering specified areas in the Panguna Region determined in priority over subsequent applicants, and 'a reasonable legitimate expectation' that this application would be granted.[11]
[11] Amended statement of claim [116].
The plea of loss and damage was, however, substantially reduced, with the deletion of the plea that the conduct of the defendants delayed or frustrated the grant of an exploration license.
A mediation on four days between October 2018 and June 2019 failed to resolve the dispute.
The action was then returned for a further strategic conference at which the current applications were foreshadowed.

The second further amended statement of claim

In accordance with orders made at the strategic conference, the plaintiffs filed a further amended statement of claim on 19 November 2019, and, on 16 December 2019, a second further amended statement of claim. Significant changes included:
(1)an expansion of the claim relating to confidential information;[12]
(2)a claim that IES,[13] as a partnership, competed with the CEPL Project Interests;[14]
(3)allegations regarding the conduct of Mr Zuks and Wyndale Holdings Pty Ltd, between about June 2018 and June 2019, regarding activity in the Karatapo region, and pleaded as a breach of the Separation Deed by Mr Zuks and Kalia Holdings;[15]
(4)the plea formerly made that Kalia Limited was liable for breach of the Separation Deed was now pleaded as interference in the performance of the Separation Deed by Kalia Holdings;[16]
(5)similarly, the pleas against Mr Johnston and Mr Larkan for breach of the Separation Deed were now pleaded as interference in the performance of the Separation Deed by Mr Zuks and Kalia Holdings;[17]
(6)the plea that Adam Zuks knowingly participated in breaches of the Separation Deed was pleaded as vicarious liability as a partner in IES.[18]
[12] Further amended statement of claim [23.3], [25].
[13] In the further amended statement of claim [10], the plaintiffs plead that in or about May or June 2017, Mr Zuks, Mr Johnston, Mr Larkan, Adam Zuks, Mr Rudi Sirr and Mr Kevin O'Sullivan agreed to associate with each other to provide advice to persons and organisations within Bougainville, including the ABG, in relation to a number of matters including fiscal self-reliance, governance, banking, insurance, legal issues in the development of international relations, under the name or style Innovative Economic Solutions or IES.
[14] Further amended statement of claim [87A].
[15] Further amended statement of claim [92A] - [92C], [93], [96].
[16] Further amended statement of claim [98].
[17] Further amended statement of claim [99], [100].
[18] Further amended statement of claim [101].
The plea of loss and damage was unchanged.

The applications

The court has before it the following applications:
(1)Mr Zuks applies to discharge his undertaking of 14 November 2017;
(2)Mr Zuks applies to extend the time limited by an earlier order of the court for the defendants to file and serve any application for summary judgment;
(3)Mr Johnston applies to discharge his undertaking of 15 December 2017;
(4)Mr Johnston applies for an order, in substance a mandatory injunction, against RTG Mining and its chairman Mr Michael Carrick;
(5)Mr Johnston applies to strike out the statement of claim as it concerns him and for the action against him to be dismissed; and
(6)Adam Zuks applies to strike out the statement of claim as it concerns him and for the action against him to be dismissed, and for an order that 'as against the remaining defendants' [92A] ‑ [92C] of the further amended statement of claim be struck out.

The application to extend time to apply for summary judgment

The Separation Deed provides in cl 2:
CONDITIONS PRECEDENT
2.1 Condition
The obligations of the Parties under this Deed are subject to the shareholders of CEPL (other than Kalia [Holdings] and Virtual Genius Pty Ltd) each consenting in writing and waiving their first right on the transfer of the Tranche 1 Securities from Kalia [Holdings] to RTG as set out in clause 4.1 of the constitution of CEPL.
2.2 Satisfaction or Waiver
The condition precedent must be satisfied or waived (by mutual agreement) on or before 31 December 2016 (or an extended date agreed by the Parties). If the condition precedent is not satisfied or waived by that date, this Deed is at an end.
On 22 November 2019, the solicitors for the Kalia parties requested the plaintiffs' solicitors to provide a copy of each written consent and waiver. On 28 November 2019, the solicitors for the plaintiffs replied attaching all waivers presently within their clients' possession and stating that they had been instructed that there are additional relevant waivers which they could not presently produce, those waivers being in the records of the former solicitors for CEPL.
An application for summary judgment is required to be brought within 21 days after appearance, or any later date by leave.[19] Mr Zuks filed his appearance on 16 November 2017.
[19] Rules of the Supreme Court 1971 (WA) O 14 r 1.
On 31 October 2019, having regard to the peculiar history of this action, I ordered that any application for summary judgment be filed and served by 29 November 2019. Mr Zuks seeks to extend the time within which he is to bring an application for summary judgment until after all waivers have been produced.
I am not satisfied that I should now extend time beyond that in my order of 31 October 2019 without Mr Zuks showing reason why that time should be extended. Normally, a plea that an agreement is at an end for failure of a condition precedent is a matter the defendant should plead. At the moment, Mr Zuks' position appears to be that he does not know whether or not he has a good defence to the claim based on failure of the condition precedent.
If the defendants, including Mr Zuks, want to bring an application at a later time, they should apply for leave at the time of bringing the application, with evidence justifying the delay.

The discharge of the undertakings

Mr Zuks and Mr Johnston have both applied to discharge their undertakings given in 2017.
There is a material difference between the two applications. Mr Zuks was a party to the Separation Deed, the contractual restraints in which are repeated in the undertaking. In effect, he seeks to be subject only to remedies for breach of contract, and not the risk of contempt proceedings, should he breach contractual covenants.
Mr Johnston, although a signatory in his capacity as an officer of Kalia Holdings, was not himself a party to the Separation Deed. The restraints he has accepted in his undertaking go beyond contractual obligations.

The evidence

Mr Zuks relied on affidavits of Jonelle Di Lena, legal practitioner, sworn 29 October 2019 and 1 December 2019. Ms Di Lena attached correspondence between the solicitors for Mr Zuks (and a letter from the solicitors for the Kalia parties) and the solicitors for the plaintiffs.
While the practice of attaching correspondence is widespread, attaching correspondence between solicitors is seldom an appropriate way to put evidence before the court unless the fact in issue is whether a matter has been raised in correspondence. Order 37 r 6 of the Supreme Court Rules 1971 (WA) permits a statement of information or belief (setting out the sources or grounds for that information or belief) in an affidavit in interlocutory proceedings. Letters passing between the legal representatives, arguing their clients' positions, do not come within that rule and are generally of little if any evidentiary value. If part of a genuine attempt to settle a dispute, the correspondence is privileged and should not filed.
From the affidavit of Ms Di Lena, I accept that the plaintiffs have been asked for but have not provided copies of the maps referred to in the definition of Exploration Area in the Joint Venture Agreement to which the plaintiffs have referred. I also accept that Mr Zuks wishes to pursue unspecified interests and commercial opportunities in Bougainville without the restraint of the undertaking.
A letter from the plaintiffs' solicitors, dated 10 October 2018 and attached to the first affidavit of Ms Di Lena, shows that the plaintiffs raised concerns with the defendants' solicitors about possible breaches of the undertakings by one or more of the defendants seeking to obtain an interest in a joint venture or partnership with landowners in the 'Seven Sisters' area, an area the plaintiffs allege lies within the Panguna Mine Area.
Other than that, very indirect, evidence there is no evidence that Mr Zuks has any interests or commercial opportunities in Bougainville which are affected by the undertaking.
Mr Johnston filed an affidavit, sworn 28 November 2019. His affidavit also attached correspondence between the solicitors for the plaintiffs and various defendants. His affidavit is frequently argumentative, and, in part, unsupported assertion. The evidence about prejudice, or potential prejudice, from the continuation of the undertaking is vague and general and often overstated. For example, the claim that the undertaking prevents his travel to Bougainville for fear of allegations of contempt is far removed from the terms of the restraints he voluntarily accepted.

The submissions

Mr Zuks relied on submissions about the change in circumstances since the undertaking was given, and a fair sprinkling of rhetoric. He submitted that the undertakings are an 'additional weapon in the [plaintiffs'] commercial armoury'; exposure to allegations of contempt in relation to 'any conduct in connection with Bougainville' has had a 'sobering, if not chilling, effect'; and that the plaintiffs have exploited their position.
Mr Johnston submitted that the undertaking was given in circumstances where the plaintiffs were asserting that his conduct jeopardised the acquisition of a licence that, if acquired and developed, would be worth billions of dollars, and that there was a real and not fanciful prospect of the plaintiffs suffering incalculable damage. The plaintiffs were also asserting that there negotiations with the ABG were at a critical point.
Mr Johnston further submitted that the balance of convenience points to the discharge of the undertaking. At present, the plaintiffs' monetary claim, even if fully established, is modest. Mr Johnston submitted that the plaintiffs have been unable to plead a viable case. And, on the case now advanced, it cannot be said that damages would not be an adequate remedy. The commercial interests said to require protection no longer exist, following a rejection letter from ABG to RTG Mining in March 2019.
Mr Johnston also submitted that, since November 2017, the plaintiffs have not secured or materially advanced the acquisition of any exploration license.
Further, undertakings given by the Kalia parties have now expired and the plaintiff has not sought to renew them.
Mr Johnston submitted that the operation of the undertaking has occasioned prejudice and is likely to continue to adversely affect him. It has already been in force for more than two years and will, if it remains operative, be in force for a materially longer period than would reasonably have been anticipated at the time it was given.
Finally, Mr Johnston alleged misuse of the undertaking. I deal with that in more detail below.
The plaintiffs submitted that the undertaking of each defendant should only be discharged when there are good grounds for doing so, such as new facts that have come into existence which would render its enforcement unjust, the prejudice or impact on the party or third parties from the continuation of the undertaking, or the public interest in maintaining the undertaking.
The plaintiff submitted, and I accept, that the assertions of prejudice put forward by Mr Johnston and Mr Zuks are general and often exaggerated. Although the period of the undertaking has been extended now to two years, that has resulted from the slow progress of the claim, including the lengthy period of mediation.
The plaintiffs further submitted that there is evidence of breach of the undertaking by the conduct of Mr Zuks and the company Wyndale Holdings in or around late June 2019.
The plaintiffs submitted that the undertaking should be maintained to do justice between the parties.

Determination

In my opinion, the court's discretion should be exercised by discharging the undertaking in each case. The question can be determined on a quite narrow basis.
At the time the undertakings were given (resolving the plaintiffs' application for interim injunctions), the material before the court was incomplete and inaccurate. In his affidavit, sworn 11 November 2017, Mr Duncan stated that he attached the (first) Joint Venture Agreement dated 29 February 2016. The document attached, however, was the later agreement dated 21 April 2017, which superseded the earlier agreement. The error was patent: the attached copy included the dated execution page. But the effect of the error was that the Joint Venture Agreement referred to in the Separation Deed was not before the court until 4 December 2017 when Mr Duncan filed a supplementary affidavit. That is, the undertakings were given on an application relying on incomplete information.
The matter was before the court on 5 December 2017, and again on several occasions since then. The defendants did not earlier seek discharge of the undertakings on the basis of the, now admitted, error. That does not, however, affect the position that the undertaking was given when the material before the court was inaccurate.
The other important factor is that there has been a material change in the plaintiffs' position since November 2017. The circumstances which gave rise to an urgent application have now abated. While the plaintiffs can continue a claim for injunctive relief, based on contractual obligations, the monetary value of the claim in contract has significantly diminished. The present circumstances do not support the conclusion that the balance of convenience favours the continuation of the restraint.
The continued restraint of Mr Johnston, in particular, cannot be justified. He was not a party to the Separation Deed. Even if the court were to accept that he has obligations in tort not to interfere with the contractual relations between the plaintiffs and Mr Zuks, those obligations are not coextensive with the obligations in the undertaking which extend, for example, to obligations with regard to Connected Persons.
I am also concerned about the utility of an undertaking in such wide but ill-defined terms (and with a wide and similarly ill-defined proviso), relating to conduct in another jurisdiction.
Those factors, in my opinion, are sufficient to warrant the discharge.

Mr Johnston's claim for relief against RTG Mining and Mr Carrick

Order 2 in the minute of proposed orders, filed on behalf of Mr Johnston on 2 December 2019, is in these terms:
Within 1 business day the third plaintiff do cause to be sent to the email and physical addresses therein specified by email and by Courier respectively, a letter, signed by Mr Michael Carrick in his capacity as chairman of the third plaintiff, in the terms set out in Schedule A to this Order.
Mr Carrick is not a party to the action. The letter in Schedule A has five paragraphs in which Mr Carrick is to say that a letter he sent on 19 December 2017 was misleading, false, 'doubly false', misleading and 'also false', with a final paragraph to the effect that he knew each of the statements was false or misleading at the time they were made.
Mr Johnston has not filed a counterclaim seeking any relief. He has not filed a summons in the proceedings, merely a minute of proposed orders. The submissions in support of the order assert, as the basis of the proposed relief, that RTG Mining misused the undertaking by the letter of 19 December 2017.
I am not aware of any basis on which the court might, in these interlocutory proceedings, order relief of this kind. Confining the order sought to RTG Mining does not resolve the difficulty. If Mr Johnston has suffered loss or damage as a result of the undertaking, he potentially has a remedy in the undertaking as to damages given by the plaintiffs. If the letter of 19 December 2017 was tortious in some way, he can seek a remedy. If the conduct of the plaintiffs in these proceedings was unreasonable, that might be reflected in a costs order. If there has been an abuse of process, the plaintiffs' claim can be struck out or stayed. At least some of those are matters that would require resolution of disputed facts by evidence. The procedure which Mr Johnston has attempted to invoke in this case is simply wrong.

The strike out applications

Adam Zuks applied to strike out [10], [70] ‑ [73], [78], [81], [84], [86], [87], [92A] ‑ [92C], [101],[20] [103] and [104]. Mr Johnston applied to strike out the same paragraphs (except for [101A]) and also [35], [43A], [87A], [99], [99A], [99B] and [102]. In the proposed second further amended statement of claim, the pleas in [35] and [43A] were amended to remove allegations regarding Mr Johnston. His application in regard to those paragraphs falls away.

Principles on an application to strike out

[20] His submissions refer to [101A], but the relevant paragraph is now numbered 101.

The applications to strike out rely on the grounds that the challenged paragraphs of the statement of claim:
(a)do not disclose a reasonable cause of action and ought be struck out pursuant to O 20 r 19(1)(a); and/or
(b)may prejudice, embarrass or delay the fair trial of the action and ought be struck out pursuant to O 20 r 19(1)(c).
When it is asserted that the statement of claim does not disclose a reasonable cause of action, the question is whether it would be open to the plaintiff, on the current pleadings, to prove facts at trial which would constitute a cause of action.[21] If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable.[22]
[21] Mutual Life & Citizens' Assurance Co Ltd v Evatt [1970] UKPCHCA 2; (1970) 122 CLR 628, 631.
[22] Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers-Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54].
A statement of claim should define with clarity and precision the issues or questions which are in dispute between the parties and fall to be determined by the court.[23] What is needed to satisfy the requirement for a clear statement of the case will depend upon the nature of the allegations made.
[23] Nyoni v Patterson [2012] WASCA 171 [36] ‑ [38]; Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 286 ‑ 287; Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 [26].
Allegations of serious wrongdoing should not be made lightly. Such allegations must be pleaded with precision and sufficient supporting particularity. An allegation that a party is liable as a knowing participant in dishonest or unlawful conduct must be pleaded clearly and particularised. For example, in Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd Anderson J said:
The rule is very strong in civil litigation that if a party wishes to allege dishonesty as a form of breach of duty, that party must make it clear in its formal pleadings that this is the party's case. As the authors of Odgers 'Principles of Pleading and Practice' tell us in the 21st edition at 113, under the heading 'Charges of Misconduct and Negligence':
'Particularity is especially needed where the pleading contains an imputation on the character of your opponent; as then it is only right and fair that he should know definitely before the trial what is the charge which is made against him. Justice requires you to define the accusation you bring against anyone; and this is a very different thing from setting out the evidence by which you intend to establish it. "The court will require of him who makes the charge that he shall state that charge with as much definiteness and particularity as may be done, both as regards time and place" (per Lord Penzance in The Marriner v Bishop of Bath and Wells [1893] P 145 at p146) ... Each party is entitled to know the outline of the case that his adversary is going to make against him, and to bind him down to a definite story.'[24]
[24] Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 [135].
Pleadings that fail to state the case of the party in question with reasonable particularity, may be struck out on the ground that they may prejudice, embarrass or delay the fair conduct of the proceedings.[25] 'A claim will have a tendency to cause prejudice, embarrassment or delay (a composite concept) if, as framed, it leaves unexplained, ambiguous or at large some element essential to its viability'.[26]

The partnership plea

[25] Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) 8 ‑ 9. And see Armidale Regional Council v Vorhauer[2019] NSWSC 1153 [29] ‑ [31].

[26] Edenden v Bignell [2007] NSWSC 1122 [15].

An obvious difficulty for the plaintiffs is that only Mr Zuks and Kalia Holdings are contractually bound by the Separation Deed and confidentiality obligations. Only Mr Zuks may have further obligations as a former director of CEPL.
To attribute responsibility to the other defendants, the plaintiffs must establish some basis other than contract for liability. One of the bases on which the plaintiffs allege liability against the other defendants is in the plea of a partnership between the individual defendants (IES). Much of the present dispute turns on the pleading relating to IES, and whether, on the material facts pleaded, it would be open to prove at trial that it is a partnership, and that acts which might give rise to liability were done by a partner in the course of business of IES.
Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.[27] In deciding whether a partnership exists in any particular case, the court shall have regard to the true contract and intention of the partners as appearing from the whole facts of the case.[28] A partnership agreement can be inferred from the conduct of the parties in the absence of express agreement. Whether there is a partnership is a question of fact depending upon the joint intention of the parties. The intention is not to be determined by an examination of the private intention of each party, but is to be ascertained by inference from their conduct and actions throughout the whole course of their dealings with each other.[29]
[27] Partnership Act 1894 (WA) s 7(1).
[28] Partnership Act 1894 (WA) s 7(2).
[29] Bryant Bros v Thiele [1923] SASR 393, 401; Rosselli v Rosselli [2007] VSC 414 [39].
A partnership has no legal personality distinct from that of the individual partners; it is not the partnership which carries on business, but the individual members who carry on business in partnership.
The first critical paragraph in the plaintiff's plea is [10], which alleges (excluding particulars):
At a date and time not presently known to the plaintiffs but in or about May or June 2017:
10.1Mr Zuks, Mr Johnston, Mr Larkan, Mr Zuks Junior and 2 additional persons namely Mr Rudi Sirr and Mr Kevin O'Sullivan agreed to associate with each other to provide advice to persons and organisations within Bougainville in the Independent State of Papua New Guinea including the Autonomous Bougainville Government (ABG) in relation to a number of matters including fiscal self-reliance, governance, banking, insurance, legal issues and the development of international relations under the name or style 'Innovative Economic Solutions' or 'IES';
10.1Abetween 12 July 2017 and 15 July 2017 members of IES including Mr Zuks travelled to Bougainville to meet with the ABG and discuss matters pertaining to foreign investments;
10.2the members of IES sought and obtained mandate letters dated on or about 15 July 2017 and 17 July 2017 from persons representing the Autonomous Bougainville Government (ABG) with a view to profit;
10.2Athe members of IES were engaged by persons representing the ABG to identify potential investors and the means to raise funds for the development of natural resources in Bougainville, amongst other things;
10.3in the circumstances pleaded in paragraphs 10.1 to 10.2A hereof, from at least July 2017 the association of members of IES carried on the business of providing relevant advice and services to the ABG with a view to earning or obtaining a profit and constituted a partnership at law …

The plaintiffs are, at this stage, unable to plead the terms or effect of the mandate letters pleaded in [10.2].
The subsequent paragraphs of the statement of claim plead, in effect, that:
(1)In or about August 2018, the defendants, or one or more of them, made a presentation to the ABG.[30] By making the presentation, the defendants 'as members of IES' breached the restraints in the Separation Deed and directly competed with CEPL Project Interests, and caused detriment or interfered with the plaintiffs' development of the CEPL Project Interests.[31] By publishing the August Presentation, Mr Zuks used Confidential Information of CEPL.[32]
(2)On or about 24 October 2017, Mr Zuks and Mr O'Sullivan made another presentation to members of the ABG.[33] Mr Zuks and the defendants who participated in this conduct similarly breached the restraints in the Separation Deed.[34]
(3)On or about 25 October 2017, Mr Zuks and Mr O'Sullivan delivered a presentation to the Chief of Chiefs of the Landowner Groups in the Panguna region, and a group known as the Ex-combatants.[35] Mr Zuks and the defendants who participated in this conduct breached the restraints in the Separation Deed.[36]
(4)On or about 31 October 2017, the name 'Liberty Minerals Ltd' was reserved by the defendants or some of them as a company name in the British Virgin Islands, and on or about 2 November 2017, caused Liberty Minerals to be incorporated with Mr Larkan as its sole shareholder.[37]
[30] Statement of claim [70].
[31] Statement of claim [72].
[32] Statement of claim [73].
[33] Statement of claim [76].
[34] Statement of claim [78].
[35] Statement of claim [79].
[36] Statement of claim [81].
[37] Statement of claim [84] ‑ [86].
Mr Zuks was the only 'member' of IES who was directly subject to the contractual restraints in the Separation Deed. To the extent that the plaintiffs allege conduct in breach of the Separation Deed, as the basis for attributing liability to members of the alleged IES partnership, they rely on the allegation that Mr Zuks breached his contractual obligations.
In [87A], the plaintiffs plead:
In the circumstances pleaded in paragraph 10 hereof:
87A.1 the conduct referred to in paragraphs 70 to 74 and 76 to 87 hereof was conduct in the course of the business of IES as a partnership; and
87A.2 at all material times IES competed with the CEPL Project Interests.
The plaintiffs further plead that Mr Johnston and Adam Zuks are vicariously liable for the conduct of the partners of IES referred to in [70] to [74] and [76] to [87] as partners of IES.[38]
[38] Statement of claim, [99B] and [101]. A similar plea is made with regard to Mr Larkan in [100B].
For Mr Johnston to be liable for the wrongful acts of Mr Zuks, those acts must have been within the ordinary course of business of the partnership. Mr Johnston submitted that the statement of claim is deficient in not pleading what constitutes the business of IES; or that the acts of any of the defendants was in the ordinary course of the business of IES for which Mr Johnston should be liable. He submitted that the general allegation that conduct was conduct of IES as a partnership was not supported by the pleaded material facts.
In particular, Mr Johnston submitted that the plaintiffs have not pleaded the scope of the alleged business of IES; how it was to go about implementing its business objectives; the activities IES performed in furtherance of its business objectives; the manner in which Mr Johnston or any of the defendants intended to generate profit from the activities of IES; or Mr Johnston's role within the partnership. In my opinion, this list goes beyond what is necessary for a valid plea.
Mr Johnston further submitted that there are no material facts pleaded to support the plea in [87A], that the conduct described in [70] to [74] and [76] to [87] was conduct of IES as a partnership which competed with the CEPL Project Interests. The submission seriously overstates the case. For example,
(1)in [70] to [71], the plaintiffs plead the August Presentation as including a 'specific action plan' which proposed the creation of an off-shore entity to hold the Panguna mining licence;
(2)[75] pleads a proposed payment to landowners if they helped Mr Zuks with the proposals in respect of the Panguna Mine;
(3)[77] pleads that the First October Presentation included that the plaintiffs 'were not viable options for the ABG to consider when deciding to whom it will grant the licence to redevelop the Panguna Mine', and Liberty Minerals was a preferable option;
(4)a similar plea is made in [80] regarding the content of the Second October Presentation;
(5)the plea regarding the reservation of the name 'Liberty Minerals' and the incorporation of the company cannot be divorced from the surrounding pleas regarding the proposed purpose of Liberty Minerals.
This application is not the occasion to entertain questions about the evidence. For the purposes of the application, the court assumes the truth of each pleaded matter:
On an application to strike out, the facts alleged in the statement of claim should be accepted as true (Niven v Grant (1903) 29 VLR 102 at 106) and, as a general rule, a plaintiff is entitled as of right to have her case heard, to have the facts found and then to argue the question of law as it arises before the trial Judge upon the facts as found. The pleading should only be struck out where it can be seen from the outset that, however the facts might be found, there is no basis for the legal conclusion contended for by the plaintiff (see Dalgety Australia Ltd v Rubin, unreported; FCt SCt of WA; Library No 5485; 24 August 1984).[39]
[39] Mickelberg v 6PR Southern Cross Radio Pty Ltd [2002] WASCA 270 [29].
If the facts asserted by the plaintiffs in the statement of claim are established, they would support the contention that the Mr Johnston and Adam Zuks were in partnership with the others named, carrying on a business of providing advice and services to the ABG with a view to earning or obtaining a profit. The pleaded conduct is sufficiently related to that business purpose to sustain the plaintiffs' plea.

Paragraphs 92A ‑ 92C

A party may in any pleading plead any matter which has arisen at any time, whether before or since the issue of the writ.[40] The rule does not, however, permit a party to plead a cause of action which has arisen since the proceedings commenced. Such a cause of action must be the subject of separate proceedings, and cannot be added by way of amendment. [41]
[40] Rules of the Supreme Court O 20 r 10.
[41] Eshelby v Federated European Bank Ltd [1932] 1 KB 423; Baldry v Jackson [1976] 2 NSWLR 415; Wigan v Edwards (1973) 47 ALJR 586, 596; Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334 [66].
The plaintiffs submit that the principle relied on by the defendants does not apply, and that the relevant causes of action arose before the proceedings were commenced. They submit that the cause of action in conspiracy is a continuing tort, and the allegations regarding Wyndale Holdings do not add a new cause of action. The plaintiffs submit that damages for a continuing cause of action can be assessed up to the date of assessment, and can include damages for breaches occurring after the proceedings were begun.[42]
[42] Citing 21st Century Promotions Australia Pty Ltd v Telstra Corp Ltd [2000] SASC 35 [69].
For reasons set out below, I would strike out the pleading of an unlawful conspiracy, but with leave to re‑plead. Should the conspiracy claim remain part of the action, I agree that it is a continuing tort. Conduct after the action was commenced may be material as overt acts in proof of the conspiracy, while not constituting separate causes of action.
The plaintiffs also plead the matters regarding Wyndale Holdings as part of the plea against Mr Zuks and Kalia Holdings for breach of the Separation Deed. On that cause of action, the matters pleaded are, at least arguably, relevant to the relief by way of injunction sought in statement of claim [118]. Further or continuing breaches of the Separation Deed, if proved, may be material in determining whether to grant a continuing injunction to restrain breach of the Deed.
I would not strike out [92A] to [92C].

Paragraphs 99 and 99A

At a fundamental level, the plaintiffs and Mr Johnston are at odds over the cause of action relied on in these paragraphs. The plaintiffs say their claim is in knowing interference with contractual relations, and not (as submitted on behalf of Mr Johnston) for the tort of inducing or procuring a breach of contract. The plaintiffs submit that the tort of interference with contractual relations does not require that the defendant's conduct results in a breach of contract, so long as there is a knowing and intentional interference with the plaintiffs' contractual rights.
The plaintiffs plead a claim against Mr Johnston that he 'knowingly and without lawful justification interfered in the performance of the Separation Deed by Mr Zuks'.[43] The plaintiffs allege:
(1)Mr Johnston had actual knowledge of Mr Zuks' obligations and the plaintiff's rights under the Separation Deed;
(2)Mr Johnston was a Connected Person (a term defined in the Separation Deed) of Mr Zuks;
(3)Mr Johnston knew or ought to have known that if Mr Zuks did not procure him (as his Connected Person) not to do the acts set out in cl 5 of the Separation Deed, Mr Zuks would be in breach of the Separation Deed;
(4)Mr Johnston knew that he, Mr Zuks and Mr Larkan 'were partners in, alternatively associates of, IES and were engaged together with Mr Johnston in pursuing the common design of IES pleaded in paragraph 10'; and
(5)Mr Johnston knew and intended that his conduct would constitute a breach of Mr Zuks' obligations.
[43] Statement of claim [99].
The plea is based solely on ('by reason of') the conduct pleaded in [70]. That is, the plaintiffs allege that one or more of the defendants prepared and published the August Presentation, the publication of which breached Mr Zuks' and Kalia Holdings' obligations under the Separation Deed. In particulars to [70], the plaintiffs allege that the August Presentation was in writing and listed Mr Johnston as the contact for IES and provided his email address.
In [117], the plaintiffs allege that by reason of the defendants' conduct they have suffered loss and damage, by incurring costs in sending a senior executive to address the conduct of the defendants, including the conduct pleaded in [70].
In their written submissions in this application, the plaintiffs summarise this part of their claim as:
despite being bound by the terms of the Deed prohibiting the first and second defendants and any of their Connected Persons (as defined in the Deed and including the remaining defendants) from interfering in the CEPL Project Interests, the defendants have, and continue to, interfere and compete with the plaintiffs' interests in Bougainville by …
9.4preparing, publishing and/or presenting [the August Presentation] which… contained proposals to direct the issuing of exploration licences for the Panguna Mine away from the plaintiffs and to an alternate entity ...[44]
[44] Plaintiff's written submissions [9.4].
The plaintiffs submit that they cannot plead the precise extent of the involvement of each individual defendant because the conduct complained of is covert in nature. They submit that they have, nevertheless, pleaded sufficient factual matters to ground their claims.
The paragraph quoted from the plaintiffs' submissions illustrates the difficulty posed by the plea. Mr Zuks and Kalia Holdings are bound by the terms of the Separation Deed and their obligations include that they must procure that their Connected Persons do not do any one or more of the things set out in cl 5. The Connected Persons, including Mr Johnston, are not directly bound by the terms of the Deed. The difference between the parties to the Separation Deed and Connected Persons cannot be ignored. If Connected Persons are to be personally liable, it is in tort. If the plaintiffs' argument is correct, it is tortious for A to do something, which it is otherwise lawful for A to do, if he knows that B has undertaken contractually to procure him not to do it.
Where the interference with contractual relations is not direct, the means by which it is effected must be, or include, an unlawful act; that is, it must include an act which the defendant is not in law at liberty to commit.[45] The material facts pleaded by the plaintiffs include Mr Johnston's knowledge of the contractual restrictions on Mr Zuks and Kalia Holdings. But the conduct on which they rely is limited. They have not pleaded conduct that amounts to inducing or procuring a breach of contract, and apparently disclaim that cause of action. They have not pleaded a direct interference with the contractual relations between Mr Zuks and the plaintiffs. They have not pleaded any unlawful conduct on his part.
[45] See Davies v Nyland (1974) 10 SASR 76, 98; Mastec Australia Pty Ltd v Trident Plastics (SA) Pty Ltd (No 2) [2017] FCA 1581 [197].
Paragraphs 99 and 99A do not disclose a cause of action against Mr Johnston, and should be struck out.

Paragraphs 102 ‑ 104

In these paragraphs the plaintiffs plead an alternative basis for liability in allegations of a tortious conspiracy.
The plaintiffs plead alternative cases.
In [103] they plead a conspiracy by lawful means:
(1)if the association of Mr Zuks, Mr Johnston, Mr Larkan, and Adam Zuks and others did not constitute a partnership and was not founded for the purpose of carrying on any business with a view to profit, 'the conduct of the Conspirator Defendants referred to in [70] to [74], [76] to [87] and [92A] to [92C] hereof was to conspire, as with each other, for the sole or dominant purpose of injuring the plaintiffs and each of them';
(2)by that conduct, the defendants and each of them gave effect to and implemented their purpose of causing harm to the plaintiffs; and
(3)by reason of that conduct, CEPL and RTG Mining have suffered loss and damage.
In [104] they plead a conspiracy by unlawful means:
(1)the defendants entered into an agreement, arrangement or understanding to engage in the conduct referred to in [70] to [74], [76] to [87] and [92A] to [92C] for the purpose of injuring the plaintiffs;
(2)by that conduct they gave effect to their purpose; and
(3)by reason of that conduct, CEPL and RTG Mining have suffered loss and damage.
The plea refers back to [10] and the plea that Mr Zuks, Mr Johnston, Mr Larkan, Adam Zuks and two others 'agreed to associate with each other' to provide advice to persons and organisations within Bougainville and, from at least July 2017, carried on the business of providing relevant advice and services to the ABG with a view to profit.
The plaintiffs plead that the purpose of the association (to cause harm to the plaintiffs) is to be inferred from the knowledge of the defendants as to the commercial intentions of the plaintiffs in respect of seeking to obtain directly or indirectly an interest or mining or exploration licence in respect of the Panguna Mine; the content of the presentations in August and October 2017; and the incorporation of Liberty Minerals in November 2017.
The plaintiffs plead, as the acts giving effect to the purpose of the conspiracy:
(1)The preparation and publishing of the August Presentation by one or more of the defendants;[46]
(2)On or about 24 October 2017, Mr Zuks and Mr O'Sullivan delivered the First October Presentation.[47]
(3)On or about 25 October 2017, Mr Zuks and Mr O'Sullivan delivered the Second October Presentation.[48]
(4)Between about 31 October 2017 and 2 November 2017, the defendants or some of them reserved the name Liberty Minerals Ltd in the British Virgin Islands, Mr Larkan signed a declaration of trust of shares for the ABG, and the defendants or some of them caused Liberty Minerals to be incorporated.[49]
(5)The conduct in relation to the 'Wyndale Proposal', pleaded in [92A] to [92C].
(6)The breaches of the Separation Deed and Non Disclosure Agreement by Mr Zuks and his breach of his director's duties.[50]
(7)The interference by Mr Johnston and Mr Larkan in the performance of the Separation Deed.
[46] Statement of claim [70].
[47] Statement of claim [76].
[48] Statement of claim [79].
[49] Statement of claim [84] - [86].
[50] Statement of claim [93] ‑ [95].
The conduct in relation to the Wyndale Proposal, as pleaded in [92A] to [92C], is alleged to be conduct of Mr Zuks, Frederic Materne, or Wyndale Holdings. As against Mr Johnston, it is alleged that a document prepared by Wyndale Holdings 'contains a photograph featuring Mr Zuks, Mr Johnston, Mr Larkan, Mr Peter Batten (a former director of Kalia Limited) and others',[51] and statements that Adam Zuks 'is part of the Management Team in his role with ABR Legal'.[52]
[51] Statement of claim [92C.4].
[52] Statement of claim [92C.5].
The elements of the tort of conspiracy and the matters which must be pleaded are conveniently summarised in the reasons of Ferguson J in CC Containers Pty Ltd v Lee:[53]
[53] CC Containers Pty Ltd v Lee [2011] VSC 537 [11] ‑ [14].
Conspiracy may take one of two forms:
(1)an 'unlawful means' conspiracy in which the participants combine together to perform acts which are themselves unlawful; and
(2)a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant.
The learned authors of Bullen & Leake & Jacob's Precedents of Pleadings identify the necessary elements that must be pleaded where the tort of conspiracy is alleged:
(a)a combination or agreement between two or more individuals (required for both types of conspiracy);
(b)an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type (2) above);
(c)pursuant to which combination or agreement and with that intention certain acts were carried out;
(d)resulting loss and damage to the claimant.[54]
A conspiracy can be proved without evidence of an express agreement:
A court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert.[55]
An intention to injure is an important part of establishing the tort of conspiracy. In this regard, a conspiracy to injure a person is distinguishable from an agreement to do an unlawful act that results in damage to that person.
[54] Bullen & Leake & Jacob's Precedents of Pleadings, vol 2, (16th ed), Sweet & Maxwell Ltd, London 2008 at 855 [51-02].
[55] Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537 [103].
I have earlier referred to the general principle that a statement of claim should define with clarity and precision the issues or questions which are in dispute, and that an allegation that a party is liable as a knowing participant in a dishonest or unlawful conduct must be pleaded clearly and particularised. Specifically, a defendant is entitled to know the precise factual basis upon which the plaintiff contends that he was party to an unlawful conspiracy.[56] I would, with respect, adopt the statement of O'Keefe J in Johnston v Smith:
A pleading in conspiracy … should set out facts which show the making of an actual agreement between the conspirators, on one occasion or on a number of occasions, or show acts done by them pursuant to a common purpose or with a common end from which the making of the agreement is to be inferred. Alternatively, the facts pleaded may show that the conspiracy was constituted by the doing of acts with the necessary common purpose. Whatever the basis on which the conspiracy is sought to be established, the plaintiff must allege and prove common purpose between the alleged conspirators.[57]
[56] Weston v Publishing and Broadcasting Ltd [2011] NSWSC 433.
[57] Johnston v Smith [2002] NSWSC 409 [25].

The plaintiffs' submissions primarily addressed whether the plea of conspiracy disclosed a cause of action.
The submissions on behalf of Mr Johnston (adopted by Adam Zuks) alleged a failure to plead a cause of action, but also that the pleading was circular and ambiguous in failing to identify with any particularity 'when, how and on what terms the alleged conspiracy or conspiracies were reached'.
In my opinion, the plaintiffs need to clearly set out the material facts from which it is alleged that each defendant became a party to an agreement or combination to injure the plaintiffs. The agreement pleaded in [10] does not go beyond an agreement to do something which might be lawfully done and without an intent to injure the plaintiffs.
Without there being a plea of material facts that go directly to the formation of an agreement between the defendants who are alleged to be conspirators, the plaintiffs must rely on inferences from conduct. But the plaintiffs do not plead any occasion when the defendants acted in concert. The plaintiffs rely on the conduct in [70] to [74], [76] to [87] and [92A] to [92C]. Those paragraphs plead conduct by Mr Zuks and Mr O'Sullivan (not a defendant), and by Mr Larkan, but otherwise refer to 'one or more of the defendants' or to 'the defendants or some of them'. Unless the agreement has been otherwise established, the conduct of 'one or more' cannot be attributed to the group, and cannot support the inference that there was an antecedent agreement or a common intent to injure. The plea has a circularity which makes it embarrassing and it should not stand.

Paragraph 101

In his minute of proposed orders, Adam Zuks seeks an order that the statement of claim be struck out against him.
The reasons given with regard to Mr Johnston's challenge to the plea apply to this application. I would not strike out the plea in [101], by reference to [10] and [87A], that Adam Zuks is a partner and liable for the conduct of partners in the course of the business of IES. The paragraphs setting out the conduct relied on, including the conduct pleaded in [92A] to [92C], will not be struck out for the reasons I have given.
The conspiracy plea will be struck out in relation to Adam Zuks.
No plea is made against this defendant for interference in contractual relations.

Leave to re-plead

Mr Johnston submitted that the court should have regard to the number of times the plaintiffs have restated their claim (including drafts which were not filed, but circulated by the plaintiffs as part of conferral to attempt to resolve any concerns expressed by the defendants). He submitted that the plaintiffs have had sufficient time to rectify any deficiencies in their claim and have been unable to do so.
In deciding whether to give leave to re-plead, proportionality is obviously an issue. The amount in issue on the tort claims (as presently pleaded) is less than $100,000.
It is also relevant to take delay into account. But the history of this matter does not demonstrate that the delay was caused by any failure of the plaintiffs to prosecute their claims.
Relevant to the present question is whether the claims that were struck out could be reformulated in a way which would disclose a reasonable cause of action.
The plea of conspiracy was struck out on the basis that, due to its circularity and failure to define with clarity and precision the elements of the claim, it may embarrass or delay the fair conduct of the proceedings. This is the first time the pleading has been formally challenged. The defects in the plea may be capable of rectification. Having regard to the nature of the allegation and the need for clarity and particularity in the plea, any minute of proposed new pleading would require careful scrutiny. I am not satisfied that the plaintiffs should be denied the opportunity, but will require the plaintiffs to seek leave for any proposed re-pleading of the conspiracy claim.
In my opinion, the defects in the proposed plea of interference in contractual relations cannot be remedied. I would not give leave for that cause of action to be re-pleaded.

Conclusion

The application by each of Mr Johnston and Mr Zuks for discharge of the undertaking will be granted.
The application by Mr Zuks to extend time ‑ in effect indefinitely ‑ to bring an application for summary judgment is not granted. Any application for leave or an extension of time must be brought when the defendant applies for summary judgment and must be supported by an affidavit explaining the delay.
Mr Johnston's application for an order requiring RTG Mining to write to the ABG regarding his undertaking is dismissed.
Paragraphs 99 and 99A of the statement of claim (as set out in the minute of proposed second further amended statement of claim, filed 16 December 2019) are struck out without leave to re-plead.
Paragraphs 102 to 104 of the statement of claim are struck out, and the plaintiffs may apply for leave to re-plead, with the application accompanied by a minute of the proposed amended plea.
The defendants' applications are otherwise dismissed.

Addendum

On 31 January 2020, Mr Zuks' solicitors filed a further affidavit of Jacqui Alexander, affirmed 30 January 2020, and by letter requested that the documents attached to the affidavit be received as fresh evidence in the application to discharge Mr Zuks' undertaking. On 5 February 2020, Mr Johnston's solicitors wrote joining in the application for the affidavit and attachments to be received as fresh evidence.
I had, by 31 January 2020, already arrived at my decision on the application to discharge the undertakings and my reasons for that decision. The documents submitted, even if received as fresh evidence, would not alter the result.
I am not satisfied that the affidavit should be received in evidence. The affidavit will not be read in the application and will be removed from the court file.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson
21 FEBRUARY 2020