Consolidated Food Holdings Pty Ltd v Soares - [2018] WASC 50

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CONSOLIDATED FOOD HOLDINGS PTY LTD -v- SOARES [2018] WASC 50

CORAM: MASTER SANDERSON

HEARD: 8 FEBRUARY 2018

DELIVERED : 15 FEBRUARY 2018

FILE NO/S: CIV 3213 of 2016

BETWEEN: CONSOLIDATED FOOD HOLDINGS PTY LTD
Plaintiff
AND
NEIL JOSEPH SOARES
Defendant

Catchwords:

Practice and procedure - Amendment of pleadings - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)

Result:

Leave to amend granted

Category: B

Representation:

Counsel:

Plaintiff: Ms K S Cheong
Defendant: Mr T M Clavey

Solicitors:

Plaintiff: Aherns Lawyers
Defendant: Sparke Helmore

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

ABB Engineering Service Pty Ltd v Hetherington [2001] WASCA 235
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281
Mako Investments Pty Ltd v Quindo Pty Ltd (Unreported, WASC, Library No 6838, 28 July 1987)
Morgan v Banning (1999) 20 WAR 474
Weldon v Neil [1887] 19 QBD 394

MASTER SANDERSON: This was the defendant's application by letter dated 18 December 2017 to strike out the plaintiff's statement of claim filed 21 February 2017. Prior to the application being made the statement of claim had been through a number of iterations. On 13 December 2017 the plaintiff filed a document entitled 'Minute of Proposed Amended Statement of Claim'. The following day a document entitled 'Minute of Proposed Amended Writ of Summons' was filed. When the matter came on for hearing I approached the application as if the plaintiff was seeking leave to amend both the writ of summons and the statement of claim in terms of the minute. The defendant objected to the form of both documents and maintained the action ought be permanently stayed or dismissed.
For many years applications to strike out pleadings formed a large part of the Master's workload. All of that changed after the decision of the Chief Justice in Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281. Relevantly his Honour said:
In my view, the contemporary role of pleadings has to be viewed in the context of contemporary case management techniques and pre-trial directions. In this Court, those pre-trial directions will almost invariably include; firstly, a direction for the preparation of a trial bundle identifying the documents that are to be adduced in evidence in the course of the trial; secondly, the exchange well prior to trial of non-expert witness statements so that non-expert witnesses will customarily give their evidence-in-chief only by the adoption of that written statement; thirdly, the exchange of expert reports well in advance of trial and a direction that those experts confer prior to trial; fourthly, the exchange of chronologies; and fifthly the exchange of written submissions.
Those processes leave very little opportunity for surprise or ambush at trial and, it is my view, that pleadings today can be approached in that context and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pre-trial case management will exist and be implemented to aid in defining the issues and apprising the parties to the proceedings of the case that has to be met.
In my view, it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and apprising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment [5] - [7].
That case led to a change of attitude on the part of solicitors and counsel - and it was a change of attitude because there had been no change to the Rules of the Supreme Court 1971 (WA) in relation to pleadings. Formerly bewildered solicitors who had routinely complained about obscure pleadings which failed to disclose the true nature of the cause of action or the defence suddenly saw the light. Almost overnight pleading summonses became a rarity. One unfortunate consequence of this much needed reform was that the standard of pleading fell away. Any rigour which was in the system seems to have dissipated. The statement of claim in this matter, which is shot through with flaws but which is, in my view, ultimately able to stand as the statement of claim is a good example of the problems which bedevil the system.
It is convenient to deal first with the plaintiff's minute of proposed amended statement of claim (the minute). The minute contains a number of subheadings such as 'Fiduciary duties', 'Defendant's breaches of duties and employment agreement', 'Tortious interference' and 'Negligent misrepresentation'. What the pleader appears to have done is to have decided what causes of action the plaintiff may have and then to plead material facts to support each cause of action. That approach misunderstands the way in which pleading is to be approached. The confusion may arise in part from the decision of Master Staples in Mako Investments Pty Ltd v Quindo Pty Ltd (Unreported, WASC, Library No 6838, 28 July 1987). In the course of his judgment the learned Master said:
In those circumstances it is important that the rule of pleading that the separate causes of action should be separately and distinctly pleaded should be adhered to: see Bullen, Leake & Jacobs (12th ed) page 53.
It would appear the learned Master was referring to what was said by the learned authors of the text under the subheading 'Substantive content or body of statement of claim'. Relevantly the authors said:
Where claims are made in the alternative the facts on which each alternative claim are founded should be separately and distinctively stated. Sofar as possible the facts or group of facts relied upon should be stated in chronological order.
While that analysis of the position is undoubtedly correct it does not mean that what is pleaded are the pre‑judiciary act 'forms of action'. The distinction between a 'cause of action' and a 'form of action' was discussed by Wheeler J in Morgan v Banning (1999) 20 WAR 474. Her Honour was there considering the so‑called rule in Weldon v Neil [1887] 19 QBD 394. The issue with which that case was concerned is not an issue in this application. But what is relevant is how her Honour dealt with the two expressions. She said:
The answer to both questions appears to me to lie in the ambiguity of the expression 'cause of action'. Not very long before Weldon v Neal, the Judicature Act 1873 (UK) had abolished the old rigid forms of action, but they still dominated - and to an extent continue to dominate - the discourse and thinking of courts and lawyers, leading to a lasting confusion in a number of contexts in which the expression 'cause of action' comes to be considered.
Diplock LJ discussed this phenomenon in the context of Limitation Act issues (although not in quite the context which is in issue here) in Letang v Cooper [1965] 1 QB 232. His Lordship defined a 'cause of action' for limitation purposes (at 242-243) as follows:
'A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person. Historically, the means by which the remedy was obtained varied with the nature of the factual situation and causes of action were divided into categories according to the "form of action" by which the remedy was obtained and the particular kind of factual situation which constituted the cause of action.'
His Lordship observed of the Judicature Act at 243:
'[I]t was convenient for lawyers and legislators to continue to use, to describe the various categories of factual situations which entitled one person to obtain from the court a remedy against another, the names of the various "forms of action" by which formally the remedy appropriate to the particular category or factual situation was obtained.'
However, his Lordship warned that it must be remembered that the name of the old form of action could be considered to be no more than a convenient and succinct description of a particular category of factual situation; to forget this would, he said 'encourage the old forms of actions to rule us from their graves'.
This court recently had occasion to consider the question of what constituted a 'cause of action' for limitation purposes, in order to determine whether an action for a declaration could be considered to be a 'cause of action' in Judamia & Ors v The State of Western Australia, unreported SCt of WA; Library No 960114; 1 March 1996. The court found that in that context, difficulty had been occasioned by a confusion between the old forms of action and the concept of a 'cause of action'. In order to avoid confusion so far as possible, I propose in what follows to use the expression 'cause of action' in order to describe merely a factual situation which will entitle a person to approach the court for relief, and 'form of action' to refer to the old categories of action, several of which might be capable of arising out of one factual situation (484).
As will become clear the factual matrix in this case is not complicated. What the plaintiff should have done was plead the relevant material facts. That might give rise to a claim for breach of statutory duty or a claim for breach of fiduciary duty or a claim in negligence. The same facts might give rise to a number of different grounds for relief. For instance, facts which could give rise to a breach of contract might also give rise to a claim in negligence. The calculation of damages may be different depending on which of these two causes of action are made out. But it does not mean that a separate set of facts needs to be pleaded with respect to each cause of action; worse still it does not mean putting into the pleading subheadings and then drawing in paragraphs which have already been pleaded overlayed perhaps with new facts all of which gives rise to confusion. A pleader who stubbornly sticks to pleading the material fact cannot go wrong.
Turning then to the minute, it is proposed to add a second plaintiff to the action. Paragraphs 1 and 1A of the minute identify what is now described as the first plaintiff and the proposed second plaintiff. There is a subsequence reference in par 6 to a company called Milrow Pty Ltd. By par 6(A) the plaintiff, the proposed second plaintiff and Milrow are referred to as 'the Group'. The defendant complains it is not entirely clear how the employment relationship between the defendant and the plaintiff gives rise to duties with respect to the proposed second plaintiff and how Milrow is involved. In fact the defendant has a plain understanding of how his employment related to the plaintiff, the proposed second plaintiff and Milrow. In support of the strike out application the defendant filed an affidavit he swore on 22 January 2018. Without quoting from the affidavit it is clear from pars 3 through to 10 of the affidavit and other paragraphs the defendant had a clear idea of who he was employed by, what his role was within the group and what his responsibilities were. Although there are undoubtedly defects in the pleading they are not such as to take the defendant by surprise and complaints on this issue are of no substance.
The remainder of the plaintiff's claim is relatively straightforward. The plaintiff says there were certain express terms of the employment agreement. Those are pleaded. The plaintiff also says the defendant owed the plaintiff certain fiduciary duties. It is arguable that fiduciary duties always arise in an employer/employee relationship and the pleading of those duties is not strictly necessary. Be that as it may, the duties which the plaintiff says arise are actually pleaded. So are statutory duties which are said to arise as a consequence of the defendant being an 'officer' of the plaintiff as that term is defined in s 9(b) of the Corporations Act 2001 (Cth). None of those paragraphs are objectionable. Paragraphs 17 through to 21 plead the circumstances in which the defendant is said to have made three representations defined in the minute as the 'eviction representation', the 'buyer representation' and the 'redevelopment representation'. It is these alleged representations which are at the heart of the plaintiff's claim. It is at this point the most serious difficulty with the minute arises. By par 21 the plaintiff pleads all three representations were false. The particulars found in par 21(a) suggest the defendant knew at least the eviction representation and perhaps the other two representations were false. That is a different thing from making representations negligently. That said, the particulars to par 21 do provide material facts which the plaintiff says justify its claim that the defendant knew the representations were false. So the defendant knows the case he has to meet.
Thereafter it is pleaded the plaintiff suffered loss and damage based upon breach of contract, breach of fiduciary duty and a raft of other bases. But the essential facts are clear; an allegation of three false representation, reliance by the plaintiff on those representations and consequent loss and damage. The claims in the prayer for relief could be more clearly and concisely stated but it has never been the case that striking out a prayer for relief is appropriate.
In all the circumstances I am satisfied that the minute, although defective and confusing, can appropriately stand as the statement of claim.
Turning then to the minute of proposed amended writ of summons (amended writ), that too is defective. The relevant principles for determining whether or not an indorsement of claim is adequate was set out by McLure J in ABB Engineering Service Pty Ltd v Hetherington [2001] WASCA 235. Her Honour said (Wheeler J agreeing):
This application raises for consideration the information which must be included in an indorsement to satisfy the requirements of O 6 r 1 and O 20 r 19 of the SCR. The minimum requirement has to be assessed in the context of the functions of an indorsement of claim in a writ. It has three functions two of which are related. Firstly, it marks out the perimeter within which a plaintiff may frame the statement of claim. Pursuant to O 20 r 2(2) of the SCR:
'A statement of claim must not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, the facts giving rise to a cause of action so mentioned.'
If a statement of claim or a proposed amendment exceeds the indorsement, the statement of claim should be struck out or the amendment refused unless the indorsement is amended: Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 238.
Secondly, an indorsement in a writ has important limitation ramifications. The Limitation Act 1935 is concerned with the date of issue of the writ. Provided a writ is not a nullity, amendments can be made to a defective indorsement on the writ if the terms of the writ are wide enough to encompass the proposed amendments as they particularise, clarify or expand a cause of action already instituted: Morgan v Banning (1999) 20 WAR 474; O 21 r 5(5) SCR. An open ended or otherwise defective indorsement may be relied on to the advantage of a plaintiff who seeks to amend its writ and then its statement of claim after the expiry of the limitation provided.
Thirdly, an indorsement also provides notice to the defendant of the nature of the plaintiff's claim and the relief sought in the action. However, it is not intended to be in the nature of a pleading but only a summary of the nature of the claim: Renowden v McMullin (1970) 123 CLR 584 at 595.
The nature and extent of the information necessary to meet the requirement that the indorsement contain a concise statement of the nature of the claim made and the relief or remedy required does not depend upon a rigid formula. Relevant information can be conveyed in different ways and adequacy is to be determined from the indorsement as a whole [7] ‑ [11].
It is perhaps surprising that so much emphasis is placed by her Honour on the requirement that the indorsement of claim provide detail as to the date upon which the cause of action is said to arise. After all a statement of claim has to be delivered and that is delivered after a writ with the indorsement is served. A limitation defence must then be pleaded - it is not a matter of jurisdiction. In any event, the indorsement in this amended writ does not identify the date upon which the cause of action is said to arise. But in circumstances where there is no question about limitation that does not seem to me to be a fatal flaw which would justify leave to amend being refused.
It is also the case that the indorsement itself is poorly worded and to an extent confusing. Once again, it is bedevilled by an attempt to refer to separate forms of action rather than material facts giving rise to causes of action. However, the form of the indorsement is not so obviously bad to lead to leave to amend being refused. That is particularly the case when the defendant has a statement of claim which more comprehensively sets out the plaintiff's position.
According, there will be leave to amend the writ in terms of the amended writ and leave to amend the statement of claim in terms of the minute. In the circumstances of this case the plaintiff ought pay the defendant's costs of the application and the costs thrown away by reason of the amendment. Those costs should be taxed and paid forthwith.