Contact 121 Pty Ltd v Boden - [2018] SASC 61

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
CONTACT 121 PTY LTD v BODEN
[2018] SASC 61
Judgment of The Honourable Justice Parker
15 May 2018
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - FORM OF PLEADING - GENERALLY
Appeal against a decision of a Master.
The respondent is an ex-director and former employee of the appellant company. The appellant commenced these proceedings in September 2014 in order to recover monies paid to the respondent as reimbursements for expenses. Since then, the parties have been embroiled in disputes over the Statement of Claim.
On 28 April 2017, the appellants sought permission to file what is now the ninth draft of the third Statement of Claim (‘proposed TSOC’). Permission was refused by a Master. That refusal forms the subject of this appeal.
Held, per Parker J, dismissing the appeal:
1. The Master gave adequate reasons for his decision (at [71]).
2. The proposed TSOC fails to properly plead the basis upon which both a loan agreement is said to exist and an indemnity is said to arise (at [72] and [74]).
3. Until such time as the appellant establishes a breach of fiduciary duty it cannot particularise the potential liabilities it asserts. Nevertheless, the appellant should clearly plead the basis upon which any liabilities are said to arise (at [76]-[77]).
4. The pleas with respect to the respondent’s employment contract and the appellant’s policies are unclear (at [78]-[79]).
5. The further application for permission to file the proposed TSOC was not an abuse of process. However, the failure by the appellant to make sufficient efforts to rectify deficiencies was relevant to the exercise of the Master’s discretion in respect of the subsequent application (at [82]).
6. A change in the facts being alleged by the appellant is, of itself, a matter for trial rather than a basis to refuse permission. However, a change in position that is not properly explained and which follows a long delay is relevant to the Court’s discretion to grant permission (at [84]).
7. Whether there has been any election and waiver is a matter to be decided at trial in light of all relevant evidence (at [87]).
8. The misleading and deceptive conduct claims cannot succeed because the communications between the respondent and the appellant were internal to the appellant company and therefore not within trade and commerce (at [91]).
9. The observation by the Master that these proceedings were not an audit of the respondent’s claims for expenses did not acknowledge that the alleged breaches of fiduciary duty were a matter for trial. However, because there are other significant deficiencies with the proposed TSOC that is not a basis to allow the appeal (at [94]).
10. If the appellant seeks permission to file yet another version of the proposed TSOC it should exclude those reimbursements that, on balance, it recognises are likely to be legitimate claims (at [95]-[97]).
Supreme Court Civil Rules 2006 (SA) r 98; Competition and Consumer…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] SASC 61
Decision Date: 15 May 2018

CaseChat Overview and Summary

Contact 121 Pty Ltd sought leave to file an amended statement of claim against Boden, seeking recovery of expenses that the respondent claimed were related to his business operations. The nature of the dispute was the validity and scope of the claim for reimbursement of expenses and the procedural issues surrounding the amendment of the statement of claim. The case was heard by the South Australian Supreme Court. The legal issues revolved around the compliance of the proposed third statement of claim (TSOC) with the procedural rules governing pleadings, particularly in relation to the form and content of the pleadings, and the discretionary considerations that might affect the court's decision to allow the amendment. The court needed to determine whether the appellant's proposed TSOC met the requirements of the Uniform Civil Procedure Rules and whether there were any discretionary factors that should be considered in the context of the history of changes to the appellant's case, the delay caused, and the impact on the respondent. The court found that the proposed TSOC did not comply with the Rules in several respects and that there were discretionary considerations that supported the Master's decision to refuse permission to file the revised SOC. These considerations included the history of substantial changes in the appellant’s case without adequate explanation, the delay and uncertainty imposed on the respondent, and the failure to properly address concerns raised by the Master. Consequently, the court dismissed the appeal.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I stress that I have merely identified by way of example a relatively small number of claims where there would appear to be good prospects of the appellant being capable of identifying whether or not they related to legitimate expenditure on company business. I anticipate that there will be many claims in addition to those for December 2008 where the appellant should be able to determine because of the peculiar nature of particular claims whether or not they were legitimate. I have not examined closely all of the spreadsheets submitted by the respondent. That is a task for the appellant and its legal representatives.Conclusion The appeal must be dismissed because the proposed TSOC fails to comply with the Rules governing pleadings in the several ways that I have identified above at [72], [74] and [79]. While that is sufficient to dispose of the appeal, I also find that there are discretionary considerations of the type identified by the High Court in Aon Risk Services v Australian National University[20] and by Bleby J in Channel Seven Adelaide Pty Ltd v Manock[21] that support the Master’s decision to refuse permission to file the revised SOC. I refer to the history of substantial changes in the appellant’s case without adequate explanation and the accompanying delay, strain and uncertainty imposed upon the respondent by the claim for repayment of all monies without any apparent attempt to identify legitimate claims for reimbursement and the failure to address properly several of the concerns expressed by the Master when he refused FDN 13. [20] (2009) 239 CLR 175 at [30], French J, [108] and [114], Gummow, Hayne, Crennan, Kiefel and Bell JJ.[21] [2010] SASCFC 59 at [46]. I dismiss the appeal.

Ratio Decidendi

Legal Principle Established

The causes of action relied upon in the second SOC are breaches of ss 180 to 184 of the Corporations Act 2001 (Cth), breaches of directors duties and the general law, breaches of the respondent’s employment contract and breaches of his fiduciary obligations.The sixth iteration of the third statement of claim The first draft of the proposed third SOC was provided to the respondent’s solicitors on 4 March 2015. Thereafter further iterations of the proposed third SOC were provided to the respondent’s solicitors. An application for permission to file the first draft of the proposed third SOC was filed on 20 April 2015 as FDN 13 (‘FDN 13’). That application came before the Master on 28 September 2016, by which stage the parties were in dispute over the sixth draft of the proposed third SOC. The sum claimed by the appellant from the respondent had increased to $1,142,475.40. That represented a refund of all payments made to the respondent by way of reimbursement of expenses since 1 July 2007. Senior counsel for the respondent made comprehensive submissions to the Master about the alleged defects in the sixth iteration of the proposed third SOC. Before hearing from counsel for the appellant the Master made clear that, in his view, there were many problems with the proposed third SOC. The Master indicated that he was inclined to adopt the submission by the respondent’s counsel that the application should be dismissed with the appellant being given the opportunity to make a further application to file an amended SOC. The appellant’s counsel stated “it is wasting my breath to argue against it”. On that basis the Master made orders granting the appellant liberty to make a further application to file an amended SOC and dismissing FDN 13. Mr Bill’s third affidavit Subsequently, the Master directed that Mr Bill file an affidavit in support of the appellant’s application to file a third SOC. In his third affidavit sworn on 14 March 2017, Mr Bill deposed that the appellant had made payment to the respondent’s credit card providers. Because of the alleged failure of the respondent to submit spreadsheets showing his expenses on a regular and timely basis it was not always possible to link the payments to the claims made by the respondent. Mr Bill stated that the first SOC had sought recovery of payments made to the respondent from July 2012 onwards when he ceased to submit claims for payment. However, because of the refusal by the respondent to provide documentation in respect of payments made prior to July 2012 the appellant was now seeking recovery of all payments that had been made to the respondent by way of reimbursement of expenses. Mr Bill further deposed that he had not referred to the appellant’s Travel Policy in his first affidavit as the claim then being advanced sought recovery of payments made to the respondent in respect of which there had been no claim that the payments were for business expenses.[1] In his view, the Travel Policy had not been relevant to that claim. Mr Bill stated that the appellant considered that because of the failure of the respondent to provide documents when requested to substantiate his expense claims, many of the expenses that he had claimed appear not to be bona fide business expenses.[1] The alleged terms of the Travel Policy appear at [18] below.