Cheng v Bullseye Mining Ltd [No 4]
[2025] WADC 40
•6 AUGUST 2025
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: CHENG -v- BULLSEYE MINING LTD [No 4] [2025] WADC 40
CORAM: CORMANN DCJ
HEARD: 13 FEBRUARY 2025
DELIVERED : 6 AUGUST 2025
FILE NO/S: CIV 1987 of 2020
BETWEEN: SAM CHENG
Plaintiff
AND
BULLSEYE MINING LTD
Defendant
BULLSEYE MINING LTD
Plaintiff by counterclaim
SAM CHENG
First defendant by counterclaim
Catchwords:
Appeal - Pleadings - Plaintiff's application to strike out defendant's pleading
Legislation:
Nil
Result:
Application granted in part
Representation:
Counsel:
| Plaintiff | : | Mr A J Tharby |
| Defendant | : | Mr M C Goldblatt |
| Plaintiff by counterclaim | : | Mr M C Goldblatt |
| First defendant by counterclaim | : | Mr A J Tharby |
Solicitors:
| Plaintiff | : | Bennett |
| Defendant | : | Murcia Pestell Hillard |
| Plaintiff by counterclaim | : | Murcia Pestell Hillard |
| First defendant by counterclaim | : | Bennett |
Case(s) referred to in decision(s):
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Butt v M'Donald (1896) 7 QLJ 68
CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Mackay v Dick (1881) 6 App Cas 251
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
CORMANN DCJ:
Introduction
This is an appeal from a decision of a registrar delivered on 17 September 2024. In his decision, the registrar allowed, in part, the plaintiff's application to strike out parts of the defence and counterclaim.
The application was brought pursuant to an amended chamber summons dated 22 February 2024 (Chamber Summons). The plaintiff contended that the defendant's pleas as to the construction of an agreement entered between the parties in 2013 (its performance being the primary subject of this action) was not arguable.
The defendant lodged an appeal of the registrar's decision on 26 September 2024.
The defendant does not need to show any error in the decision, and the appeal is by way of a new hearing.[1] It was heard by me on 13 February 2025.
[1] District Court Rules 2005 (WA) r 15(6) (DCR).
Background
Bullseye Mining Ltd is the defendant in the action.
By writ filed 29 May 2020, the plaintiff, Mr Cheng, claims damages in the sum of $580,000. On 30 June 2020, he filed a Statement of Claim in which it is alleged:
(a)an agreement was entered between the parties in 2013, under which services were to be provided by the plaintiff, for which the defendant was to pay monthly fees;
(b)between October 2013 and May 2018, the plaintiff performed services and rendered monthly invoices, and the defendant paid those invoices; and
(c)between June 2018 and May 2020, the plaintiff was ready, willing and able to perform services as required and he continued to render monthly invoices, but the defendant refused, or alternatively failed, to pay the invoices in breach of the agreement.
On 22 August 2024 the defendant filed a Third Re-Amended Defence and Counterclaim (Defence). It is that pleading which is the subject of this appeal. The defendant alleges:
(a)it was an implied term of the agreement that payment of the monthly fee would continue only as long as the plaintiff rendered the services, and it was an implied term that either party may terminate the agreement on reasonable notice;
(b)the plaintiff provided services under the agreement only until 8 December 2017 when it was terminated by the defendant, or alternatively, on 8 March 2018, being a period of reasonable notice to the plaintiff of termination;
(c)it was an implied term of the agreement that the plaintiff would act honestly in service and in the best interests of the defendant, and that he was under an obligation not to disclose confidential information of the defendant;
(d)the plaintiff owed fiduciary duties to the defendant;
(e)in breach of his obligations and duties, in November or December 2017, the plaintiff removed confidential information from the defendant's premises and showed it to third parties; and
(f)the plaintiff engaged in conduct which deterred investors from investing in the defendant, as follows:
(i)in or around April 2018, by 'supporting' an off-market take-over offer to acquire all of the defendant's issued shares, which offer deterred investors because of the low value placed on the shares and the uncertainty created in the market by the offer; and
(ii)in February and March 2020, by lodging up to 18 forfeiture applications against mining tenements and key mining leases of the defendant.
The plaintiff's application
In the application, the plaintiff contends that the defendant's construction of the agreement pleaded in the Defence is not arguable, and that:
1.Nothing in the agreement required him to perform services or work a particular number of hours to be paid. That is, by reason of the nature of the defendant's business, the services required by the plaintiff were ad hoc and sometimes there would be little to nothing for the plaintiff to do. On proper construction of the agreement, a monthly fee was payable regardless of whether any services were performed. The plaintiff relied on the findings in CA & Associates Pty Ltd v Fini Group Pty Ltd[2] in that respect.
2.The alleged implied terms as regards the plaintiff's obligations as to conduct (to act honestly, to act in the best interests of the defendant, and in respect of confidentiality obligations) are not necessary to give effect to 'business efficacy' as alleged; they are not so obvious 'that it goes without saying' and such implied terms are not 'reasonable and equitable'.
3.The defendant's 'breach of confidence' claim discloses no reasonable cause of action and is embarrassing, because it is hopelessly deficient in identifying the relevant information and why it is said to be confidential, and further, there is no loss or damage alleged to arise out of the breach of confidence.
4.The plaintiff did not owe any fiduciary obligations to the defendant because, he contends, the relationship was governed by the agreement, and those duties do not arise from the agreement.
[2] CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 (CA & Associates).
After hearing, and by orders entered 17 September 2024, the learned registrar determined that pars 3.1, 4.2 - 4.4, 5.6, 8.8, 8.9, 8.10.2 - 8.10.6, 16, and 27 be struck. These paragraphs were the subject of submissions by both parties in the appeal before me.
Disposition
It is common ground that the parties entered an oral agreement, which agreement is the subject of a letter dated 9 October 2013 (Letter). Given its brevity, I reproduce the content of the Letter in full, as follows:
… Re: Agreement to pay monthly Consultancy Retainer and 5% underwriting fee for Provision of Loan
Further to recent discussions with the Board of Bullseye Mining Limited, please accept this letter to confirm our agreement of the following:
Monthly Consultancy Retainer
We agree to pay you a monthly consultancy retainer of A$18,000 (+GST) per month, plus approved expenses, for you to undertake capital raising and investor relations activities for the Company. The current services agreement for capital raising with NEZA Trust will remain in place.
Underwriting Fee for Provision of Loan Facility
In return for you providing a loan facility of A$1 million to Bullseye Mining Limited, we agree to pay you a 5% underwriting fee (ie. A$50,000) by way of issue of 500,000 fully paid ordinary shares in Bullseye Mining Limited at A$0.10 per share.
It is also common ground that between October 2013 and May 2018, the plaintiff rendered monthly invoices, and the defendant paid those invoices. The plaintiff asserts that during that period, he 'from time to time' performed capital raising and investor relations activities.[3] In reply, the defendant asserts that, it was from October 2013 to about 8 December 2017 that the plaintiff, 'from time to time', rendered services under the agreement and that it paid the invoices rendered by the plaintiff up to June 2018.[4] The defendant otherwise asserts that the agreement was terminated on or around 8 December 2017.
[3] Statement of Claim, par 5.1.
[4] Defence, par 8.
After June 2018, the plaintiff contends that he was ready, willing and able to perform services up until May 2020 and that, while no services were performed, he continued to render monthly invoices. Finally, it is common ground that the defendant did not pay any of those invoices.
Defence par 3.1
The defendant by par 3.1 of the Defence contends that it was an implied term of the agreement that payment of the fee would only continue so long as the plaintiff continued to render services under it. In the appeal, the defendant contends that:
(a)the construction of the agreement and the implication of terms are not matters which should be resolved at an interlocutory level;
(b)the agreement is distinguishable in various respects from that considered in CA & Associates including because it was 'quite a different contract in quite different circumstances'. Further, that in that case, the terms of the parties' relationship had been comprehensively committed to a written contract whereas, in the present case, the agreement entered, on both parties' versions, was informal and much was left 'unsaid'; and
(c)the plaintiff in the present case was in the nature of an employee and if he did not work, he was not entitled to be paid.
The defendant's plea for implying the terms is outlined in particulars in par 3, being that it contends that the terms:
(a)are necessary to give 'business efficacy' to the agreement;
(b)are just, fair and equitable;
(c)are reasonable in the circumstances;
(d)are obvious; and
(e)do not contradict any express terms.
For the reasons set out below, I consider that the defendant's plea in par 3.1 is not reasonably arguable and it discloses no reasonable defence to the cause.
The plaintiff contends that the agreement is to the effect that the defendant was obliged to pay the monthly fee whether services were rendered by the plaintiff or not. Relevantly, there is no provision in the Letter nor otherwise any alleged material fact contemplating variation or adjustment of the fee corresponding with an amount of service or services performed in any particular month. The agreement in those circumstances, like in CA Associates, cannot be categorised as a 'fee for service' agreement because under it, in one month the plaintiff might provide minimal capital raising and investor relations services and then in another, he might spend substantially more time providing services to the defendant, or, none at all. And in that respect, it is common ground between the parties that in respect of the period up to December 2017, the plaintiff had 'from time to time' performed services. In any scenario, it is apparent that under the agreement, the defendant was liable to pay the plaintiff without any means or provision for adjustment dependent upon an amount of services performed, or indeed, any services at all.
In his plea, the defendant has failed to set out any material facts that would establish any conclusion to the contrary. Instead, in its particulars in par 3.1, it refers only to the general legal and commercial bases as to the need to imply the term but without any particular apparent basis or foundation. In my view, the construction of the contract and implication of the term contended by the defendant does not arise on its plea.
Ultimately, it is apparent that the defendant was obliged to pay the plaintiff a monthly fee for the capital raising and investor relations services regardless as to the amount or the extent provided at any time. The defendant has pleaded no material fact that would demonstrate or establish to the contrary. There was no regime for determining payment for services actually provided, or to any particular extent. I accept the plaintiff's submission that nothing in the agreement required him to perform particular services or work a particular number of hours to become entitled to the payment. The plea in par 3.1 will be struck on the basis that it reveals no arguable or reasonable defence.
Defence pars 4.2 and 4.3
In pars 4.2 and 4.3 of the Defence, the defendant contends that it was implied, either in fact or by operation of law, that the plaintiff would act:
(a)honestly in the service of the defendant; and
(b)in the best interests of the defendant and not in pursuit of his own interests in relation to the defendant's affairs.
The defendant relies on a number of authorities in support of its contentions about terms to be implied as to the plaintiff's conduct. It contends that these arise on application of the general rule that, in respect of any contract, each party agrees, by implication, to do all such things as are necessary on his part, to enable the other party the benefit of the contract.[5] The defendant contends that it can allege, in implied terms, what the 'part' of the counterparty was in relation to the subject contract, and, that the 'part' of each party in relation to such implied term must depend on the circumstances.[6] The defendant contends that the implication of the terms pleaded in pars 4.2 and 4.3 is necessary for the reasonable or effective operation of the agreement in the circumstances of the case.
[5] Referred in Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [11] (Ipp J), on the rule expressed by Griffith CJ in Butt v M'Donald (1896) 7 QLJ 68, 70 - 71 (approved by Mason J in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, 607)).
[6] Mackay v Dick (1881) 6 App Cas 251, 263.
The plaintiff contends that these pleas for the terms contended for in pars 4.2 and 4.3 extend beyond the principle in Mackay v Dick.[7] I agree with that submission. That principle is directed towards construction of contractual terms to the extent that each party agrees to do 'all that is necessary to be done' on their part for the carrying out something they have agreed to do. It is illogical to suggest that principle extends to imposing particular duties on a contracting party akin to an employment relationship or as to one that is fiduciary in nature. There is no basis to suggest that to do all that is necessary to be done, extends to acting honestly or in the best interests of the defendant, and there is no basis for the plea that the 'part' of the plaintiff in the contract extended to those matters in this case.
[7] Mackay v Dick (251).
In the Defence, the defendant does not contend that the plaintiff was an employee nor that he was subject to the duties that might arise in an employer/employee relationship. There is otherwise an absence of any alleged material fact to substantiate an allegation of those duties now alleged to be implied into the terms of the agreement itself. I accept that to imply those duties would create something outside the bounds of a commercial consultancy relationship, and for which there is apparently no reasonable basis. There may be another base or bases on which such duties arise, but it is not reasonably based on the implication of terms into the agreement.
I do not consider that those alleged implied terms, or duties, are necessary to give effect to the agreement, nor are they 'so obvious as to go without saying', and they do not appear to be reasonable or equitable.[8] The pleas in pars 4.2 and 4.3 will therefore be struck on that basis.
Defence par 4.4
[8] In line with the established criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (BP Refinery).
In par 4.4, the defendant contends that it was implied, either in fact or by operation of law, that the plaintiff was under an obligation of confidence not to disclose the confidential information of the defendant which he acquired while discharging his obligations under the agreement.
Unlike my considerations as to the alleged duties to be implied in pars 4.2 and 4.3, the same factors do not arise here. Adapting the analysis in BP Refinery, that implied term may well be necessary to give effect to the agreement. It is also arguable that such an implied term is so obvious as to go without saying, and I see that such implied term necessarily could be considered reasonable and equitable. This includes in circumstances where the defendant pleads that the plaintiff worked closely with directors of the defendant and attended board meetings, was privy to confidential information and attended sites with field crews who were working on drilling programs.
Ultimately, I consider it to be a matter that is sufficiently arguable to be pleaded by the defendant.
Defence par 5.6
In par 5 the defendant contends that it reposed trust and confidence in the plaintiff in respect of his 'undertaking, or agreeing, to act for, or on behalf of, or in the interests of', the defendant. That plea was not the subject of challenge by the plaintiff.
By its par 5.6, the defendant then pleads that between 9 October 2013 until about 8 December 2017, the plaintiff was 'privy to all of [the defendant's] confidential information'. It then sets out particulars of eight categories of documents alleged to constitute that confidential information. This alleged to include information relating to the tenements owed by the defendant (expenditure data and documents lodged with the Department of Mines, Industry Regulation and Safety), mining proposal and mine closure plans, and key contracts between the defendant and drilling contractors, suppliers and consultants.
The plaintiff's complaint is, in essence, that the categories do not disclose sufficient detail or particularity as to what is the 'confidential information' relied on for the purposes of the plea in par 5. I do not accept the plaintiff's complaints in this respect. In disposing of this part of the application, I do not cast any view on the merit of the plea in par 5 generally because the plaintiff's contentions are concerned with whether par 5.6 is sufficiently particularised. To that extent, I agree with the defendant that the plea is unobjectionable. It is not necessary to identify or particularise such confidential information the party is alleged to have had access of the purpose of the pleading, other than what is already pleaded in the Defence.
Relevantly, the defendant contends that the agreement was terminated on or about 8 December 2017. In respect of its pleas as regards the confidential information, contrary to what is suggested by the plaintiff, these are not made in support of a claim for loss or damage by counterclaim for alleged breach of confidentiality. Nor does the defendant seek any injunctive relief in respect of which the imperative for specificity may be more pressing, or mandated. Rather, the point of the defendant's pleas in this respect are its denials that it is indebted to the plaintiff for the period June 2018 to May 2020 because, if the agreement was still extant (which the defendant denies), the plaintiff was acting in breach of it, including in breach of confidentiality which it says he owed to the defendant. In those circumstances, in my view, the level of particularity in the pleading asserted by the plaintiff to be required, is not.
Defence pars 8.8 and 8.9
By par 8.8, the defendant alleges breach of the fiduciary duties contended for in pars 4.2 - 4.4 and in par 6. In particular, it pleads that in November or December 2017 (and prior to 8 December 2017), the plaintiff removed from the defendant's premises documents and images recording confidential information, namely: invoices, company accounting information from internal accounting software, and remuneration details concerning staff and directors.
For the reasons above in [22] ‑ [24], pars 4.2 and 4.3 will be struck. As regards 4.4, I have accepted it is arguable that it was an implied term of the agreement that the plaintiff was under an obligation of confidence not to disclose confidential information acquired in performing services under the agreement.
The plaintiff's complaint in respect of par 8.8 is otherwise that the defendant has failed to identify specific documents and information and thereby fails to disclose a reasonable defence and that those pleas are embarrassing. For the same reasons as relevant to par 5.6, I do not accept those complaints, and I do not consider it necessary for the purpose of the pleading to identify or particularise such confidential information other than in the terms already pleaded.
As regards par 8.9 of the Defence, the defendant asserts that the plaintiff, in breach of the allegedly implied duty, showed third parties 'documents and images containing [the defendant's] confidential information', including (for example) remuneration details taken from a computer at the defendant's office premises and details of a transaction between the defendant and a third party. Again, and for the reasons already set out, I do not consider it necessary for the defendant in its pleading to further specify or particularise the alleged information other than in the terms already pleaded.
Defence par 16
By par 16, the defendant asserts that breaches by the plaintiff of fiduciary duties and of the agreement have caused it to suffer loss and damage, and which loss and damage is the subject of a counterclaim.
The plaintiff complains that the particulars in par 16 do not enlighten him as to what is the alleged act he is said to have participated in causing the loss and damage. With respect, those matters appear to be adequately set out in pars 8.10 and 8.11. The primary assertion of the defendant is that, if the agreement was ongoing after 8 December 2017 (which it denies), the plaintiff engaged in conduct which deterred investors from investing in the defendant.
In that respect, it is asserted by the defendant in those paragraphs that the plaintiff:
1.Lodged a series of forfeiture applications against tenements and mining leases owned by the defendant, which applications dissuaded investors from investing because, the defendant alleges, such created inherent uncertainty about the integrity of the defendant's assets.
2.Supported a third party's offer to acquire all of the defendant's issued shares by way of an off-market takeover pursuant to a bidder's statement issued in April 2018. The defendant asserts that offer deterred investors from investing because of the alleged low value placed on the defendant's shares and the creation of uncertainty in the market.
I agree with the defendant's contentions as regards the pleas in par 16, to the effect that it has particularised both conduct alleged against the plaintiff as causing loss and damage, and the nature of the loss and damage it alleges it has sustained. In my view, it has done so with requisite specificity for the plaintiff to know the case which he has to meet. It is not a requirement of the pleading that the defendant quantify the alleged loss and damage, which would, among other things, need to be the subject of expert evidence.
Counterclaim - par 27
The defence at par 27 simply repeats the pleas in par 16, as regards the alleged suffering by the defendant of loss and damage said to arise by reason of alleged breaches by the plaintiff of fiduciary duties alleged to have been owed.
As before, the defendant is not required to quantify the alleged loss and damage in his pleading, and this would properly be the subject of evidence including expert by the alleging party.
Conclusion and orders
I will hear from the parties in relation to the form of the orders that should be made, and as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
SI
Associate
6 AUGUST 2025
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