D & G D Brown Nominees Pty Ltd v Sigma Chemicals (1986) Pty Ltd as Trustee of the Sigma Chemicals Trust - [2002] WASC 138

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: D & G D BROWN NOMINEES PTY LTD & ANOR -v- SIGMA CHEMICALS (1986) PTY LTD as Trustee of the SIGMA CHEMICALS TRUST & ANOR [2002] WASC 138

CORAM: MASTER SANDERSON

HEARD: 24 MAY 2002

DELIVERED : 31 MAY 2002

FILE NO/S: CIV 2041 of 2001

BETWEEN: D & G D BROWN NOMINEES PTY LTD
First Plaintiff
DAVID BROWN
Second Plaintiff
AND
SIGMA CHEMICALS (1986) PTY LTD as Trustee of the SIGMA CHEMICALS TRUST
First Defendant
GRAHAM JUSTIN SHANN EVANS
Second Defendant

Catchwords:

Practice and procedure - Application by defendants for stay of action on an abuse of process - Application by plaintiffs for leave to amend statement of claim and to add third defendant - Turns on own facts

Legislation:

Nil

Result:

Application for stay dismissed - Leave to amend refused

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr G T Bigmore
Second Plaintiff            :     Mr G T Bigmore
First Defendant             :     Mr J A Chaney SC
Second Defendant         :     Mr J A Chaney SC

Solicitors:

First Plaintiff                :     Williams & Co
Second Plaintiff            :     Williams & Co
First Defendant             :     Tottle Christensen
Second Defendant         :     Tottle Christensen

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

Masters v Cameron (1954) 91 CLR 353
McKechnie v Campbell (1996) 17 WAR 62
Packer v Meagher (1984) 3 NSWLR 486

Case(s) also cited:

Nil

MASTER SANDERSON: This is the return of two chamber summonses. The first in time is the defendants' chamber summons seeking to strike out the plaintiffs' action as an abuse of process, or alternatively, to strike out the whole or certain parts of the plaintiff's statement of claim. The second chamber summons was issued by the plaintiffs and seeks leave to amend the statement of claim in terms of a minute of proposed statement of claim filed 21 May 2002. So far as the strike‑out application and the application for leave to amend was concerned, the parties, quite sensible, approached the matter on the basis that the pleading under consideration was the minute of proposed substituted statement of claim. Counsel for the defendants addressed his submissions to that document.
It is convenient to deal first with the application to dismiss the proceedings as an abuse of process. As this application was argued it might more properly have been characterised as an application for summary judgment under O 16 or perhaps even a strike‑out application under O 20 r 19(1)(a). It is difficult to see how the action could be characterised as an abuse of process on the principles set out in Packer v Meagher (1984) 3 NSWLR 486 as applied in this Court in McKechnie v Campbell (1996) 17 WAR 62. In any event it matters not how the application is characterised. In my view it cannot succeed.
The action concerns an alleged settlement the plaintiffs say was concluded between them and the defendants of long‑running litigation in this Court. The defendants deny that any settlement was concluded. They agree that negotiations took place and the parties came close to settlement. However, they say that no agreement was concluded. The plaintiffs say that agreement was reached on 12 April 2001. It is their contention that this occurred at a meeting between the second plaintiff and the second defendant. They say that various other matters required attention but that did not detract in the overall from the fact of a concluded agreement. Furthermore, they say that if no agreement was reached then the defendants are estopped from denying the agreement. As a further alternative the plaintiffs say they are entitled to relief under the Trade Practices Act.
For their part, the defendants in denying any agreement was reached, point both to the conduct of the plaintiffs subsequent to the alleged agreement and the correspondence passing between the parties.
Expressed in this way, it is clear that there is a dispute of fact which it is not possible to resolve on affidavit evidence. The question of whether or not there was an agreement must await trial of the action. That being the case, it is inappropriate for me to undertake a detailed analysis of the various allegations of fact made by both parties. It is not appropriate at an interlocutory stage that I should draw any conclusions from the evidence. For that reason I will confine myself to saying that I am satisfied that the plaintiffs' position is arguable and that they ought be allowed to put their case. Furthermore, I am not satisfied that the claim is an abuse of process. That aspect of the defendants' application fails.
Turning then to the application for leave to amend, it is appropriate to make two preliminary observations. First, it is clear that the original statement of claim was defective. That much was recognised by the plaintiffs and nothing more need be said on that issue. Secondly, whatever may be the defects in the proposed pleading, it cannot be said to be incoherent. There is no doubt that the case the plaintiffs seek to plead is complex. The result is inevitably a complex pleading. But it is not a pleading which, when read carefully, is either illogical or incomprehensible. Counsel for the plaintiffs conceded during the course of his submissions that there may be some matters which require clarification or some aspects of the pleading which could be more happily expressed. Accepting that concession, I think it is fair to say that any failings in the pleading are failings of form, rather than substance. Any defects can, in all likelihood, be rectified by repleading.
Turning then to the specific complaints of the defendants, objection is taken to par 2(c). By this paragraph the plaintiffs plead that the first defendant between 1 February and 16 July 2001 was engaged in trade or commerce. Strictly speaking, for a plea based upon s 51 or s 52 of the Trade Practices Act, the conduct complained of must be in trade and commerce. To that extent the plea in par 2(c) is irrelevant. However, it is not so offensive as to require the paragraph to be struck out. During the course of any reconsideration of the statement of claim the plaintiffs may care to give it further consideration.
By par 4(b) the plaintiffs plead that the proposed third defendant is the beneficial owner of all the issued shares in the first defendant. The defendants say this is pleading a conclusion of law and it is therefore not a proper plea. It is not. It is a plea of a material fact and is unobjectionable.
Objection is taken to par 6 of the proposed pleading. This paragraph appears under subheading "The Agreement" and is central to the plaintiffs' case. It pleads an agreement partly oral, partly in writing, said to have been made between the second plaintiff and the second defendant on 12 April 2001. As I understand the plaintiffs' case, based upon submissions made during the hearing of the application, the plaintiff alleges that on 12 April 2001 a concluded agreement was reached. The written part of the agreement was a document described as "Proposed Joint Venture Discussion Points (Non-exhaustive)"; the oral part comprised two telephone conversations. When an agreement is said to be partly oral and partly in writing, that is a material fact and must be pleaded. It is not a particular which is the way it is dealt with in the proposed par 6. Identification of the documents said to contain the written part of the agreement is also a material fact. In relation to the oral part of the agreement material facts include the persons who held the discussions, when they were held and where they were held. The matters covered in subpar (ii) and (iii) under the heading "Particulars" in par 6 of the proposed pleading are matters which are material fact and not particulars. Furthermore, the terms of any agreement reached are material facts and should be so pleaded. If necessary, particulars can be given of the discussions which took place and which are said to result in the oral agreement between the parties. But those particulars ought be particulars of the conversations. It is not appropriate to plead as part of those conversations what are the terms of the agreement. Those terms must be set out as material facts.
Viewed against that background par 6 in its present form is impermissible. Particulars in material facts are confused in such a way that it would make it impossible for the defendants to adequately plead their defence. I would not permit a statement of claim to be amended in the form of the present proposed par 6. However, it does appear that all elements necessary for the proper pleading are contained within that paragraph. It is a matter of re‑arranging the paragraph to properly identify material facts and particulars, and perhaps to add a further paragraph which plead the terms of the agreement.
There then follows between par 7 and par 21 what are described as "variations to the agreement". In my view that description is misleading. As I understand what the plaintiffs are saying, it is that there was a final and binding agreement concluded between the parties on 12 April 2001. In other words, this is a contract which falls into the first category of cases as specified by the High Court in Masters v Cameron (1954) 91 CLR 353 per Dixon CJ, McTiernan and Kitto JJ at 360. By par 7 to par 21 the plaintiffs say that the terms of the finally concluded agreement were, subject always to the concluded agreement, restated in a form that was fuller and more precise but not different in effect.
On the basis that it is not actually contended that there has been a "variation" of the contract as that expression is generally understood, par 7 through to par 21 cannot stand in their present form. Each variation would require consideration to be pleaded and that has not been done. Furthermore, as I understand the position, it is not intended that it should be done. That being so, the actual basis upon which the contractual arrangement between the parties rests and how the matters raised in par 7 through to par 21 intermesh with those arrangements must be clearly and concisely pleaded.
What the plaintiffs intend to plead by par 7 to par 21 is reasonably clear. For instance, cl 37 of the document entitled "Proposed Joint Venture Discussion Points (Non‑Exhaustive)" is in the following terms:
"37.Brown's children and other members of his family as well as the Evan's family will not be involved in the JV unless by mutual consent of the parties."
On the plaintiffs' case, it is said that this was an express term of the agreement. The proposed par 11 of the statement of claim is in the following terms:
"On or about 19 April 2001, David Brown (on his own behalf and for and on behalf of Brown Nominees) and Justin Evans (on his own behalf and for and on behalf of Sigma) agreed that the Agreement would be varied such that, other than David Brown, Justin Evans, David Brown Investments Pty Ltd and Sigma, no family members, associates or associated entities of either David Brown or Justin Evans would be employed by Sigma X‑Ray Flux Pty Ltd other than as agreed by David Brown and Justin Evans."
It is difficult to see how that formulation of the agreement differs from what is to be found in the written part of the agreement. The particulars to par 11 refer to a written variation comprising a revision of the "Proposed Joint Venture Discussion Points (Non‑exhaustive)". I find it difficult to see how these particulars can sit with what is said to have been a concluded agreement on 12 April 2001.
In my view, par 7 through to par 21 require a complete revision. Apart from the difficulties I have highlighted, the paragraphs were subjected to trenchant criticism in other respects by the defendants. It would be futile to deal with each of these complaints with respect to each paragraph. Each paragraph will need to be reconsidered and recast and many of the defendants' objections may fall away. It may be the case that what the plaintiff is claiming is that there was an implied term in the concluded agreement that matters necessary to give effect to the agreement, which had not been the subject of specific discussion when the agreement was reached, would be resolved at a later date consistent with the agreement reached between the parties. That appeared to be the thrust of the submissions made on behalf of the plaintiff. If that is to be the way the case is pleaded, then the usual rules as to pleading of implied terms would need to be observed.
Paragraph 22 of the proposed pleadings is headed "The Terms of the Agreement". The defendants make a number of criticisms of this paragraph. Before dealing with those criticisms I should perhaps observe that it seems prudent for the plaintiffs to include a paragraph of what they say are the material terms of the agreement. Of course, those terms must be consistent with the pleaded basis of the contract - be that par 6 and "variations" presently pleaded in par 7 through to par 21 or otherwise. Based upon the way the defendants' objections to par 22 are formulated, it is clear they would not suggest otherwise.
At present what are pleaded as terms of the agreement are not in all respects consistent with what has previously been pleaded. For instance, it is pleaded in par 22(b) that "the plaintiffs and Sigma and their associated entities would discontinue all litigation before the Courts with no order as to costs". It is difficult to see how that term of the contract arises from cl 4 and cl 6 of the "Proposed Joint Venture Discussion Points (Non-exhaustive)" as "varied" pursuant to par 8 of the pleading. No logical sequence of events which lead to the pleading in par 22(b) is apparent. A similar criticism can be made of other provisions of par 22. This paragraph requires further consideration and in its present form is unacceptable.
Complaint is made that par 24 and par 25 are pleadings of a conclusion of law. In my view that is not so - they are pleadings of material fact and they can stand. Both paragraphs raise the question as to whether or not the first defendant and the first plaintiff became members of Sigma X‑ray Flux Pty Ltd. This issue has been considered in separate proceedings. In the light of a recent decision dealing with this question, both paragraphs may require amendment. It may be that it is sufficient by way of particulars to simply refer to s 120(2) of the Corporations Act. This is a matter to which the plaintiffs may care to give attention when redrafting the statement of claim.
Complaint is made of par 26 and par 27. Both paragraphs are proper pleas, although both should be particularised. Again, the particulars may amount to nothing more than a reference to provisions of the Corporations Act. This is a matter to which consideration should be given when the statement of claim is redrafted.
Paragraphs 28 through to 32 appear under the heading "Performance of David Brown's Obligations". The plaintiffs raise a number of objections to these paragraphs. In essence, they query to what issue the paragraphs are addressed. There is no ready answer to that question. The plaintiffs do set up a case in promissory estoppel: see par 50. However, that case is based upon what is referred to as "promissory conduct and/or misrepresentations". It does not rely upon matters pleaded in par 28 through to par 32. As the pleading stands at present, these paragraphs seem to raise a false issue, advance the plaintiffs' case not at all and ought be struck out on that basis. Once again, the plaintiffs may care to give consideration to these paragraphs when redrafting the statement of claim.
Paragraphs 33 through to 35 plead "Breach of the Agreement". It would appear that what is pleaded by par 33 and par 34 is a repudiation of the agreement. Paragraph 35 pleads an acceptance of that repudiation. While the pleading of repudiation of the contract by the defendants may be inelegantly expressed in par 33 and par 34, I would allow these paragraphs to stand. However, the plaintiffs may need to give further consideration to precisely what conduct it was in relation to which aspects of the concluded agreement that amounted to a repudiation of that agreement.
Paragraph 36 refers to par 37 to par 49 and pleads that it was conduct "calculated to induce the plaintiffs to act on the basis that the Agreement" or, alternatively, that the terms of the agreement would be honoured by the defendants. This conduct, that is the conduct pleaded in par 37 through to par 49 is referred to collectively as "the promissory conduct and/or misrepresentations". That description of the conduct is somewhat confusing. It is difficult to see why conduct should be characterised as promissory. Conduct can give rise to a promissory estoppel, but if it does, it is simply conduct in the context of the relationship between the parties which gives rise to the cause of action. If a plea is to be made under the Trade Practices Act or the Fair Trading Act, and it is in this case, then conduct which can be characterised as misleading and deceptive gives rise to a cause of action. It is confusing to describe such conduct as "misrepresentations". While this is hardly a point of substance, the pleading is unclear and in my view, any review of the statement of claim should reconsider the use of descriptive terminology presently found in par 36.
Objection is taken to par 37 and par 38. I would agree with the defendants' complaint that these two paragraphs are not capable of being promises or representations. But they are conduct which may be relevant to both the question of estoppel and any action under the Trade Practices Act. In their present form they are unobjectionable.
Objection is also taken to par 39 which pleads that David Brown and Justin Evans engaged in discussions and correspondence aimed at reducing the agreement to writing. It is arguable that this conduct is relevant both to the question of estoppel and misleading and deceptive conduct. On that basis it can stand. Furthermore, the particulars are, I think, properly to be regarded as particulars. It is the fact of the discussions in correspondence which is the material fact and what was done is particularised. In my view, given the nature of the plea, it is appropriate that the matters referred to as particulars are dealt with as such and not pleaded as material facts. The same comments apply to par 45 through to par 46. I do have some doubts about the relevance of the plea in par 45 that the defendants did not inform the plaintiffs of certain test results until after the specified date. It is hard to see how that fact is relevant to the pleaded conduct. Nonetheless, it is a small point which perhaps can be considered by the plaintiffs in the context of their review of the pleading.
Paragraph 47 is of particular importance. It pleads conduct which might give rise to a cause of action either by way of estoppel or under the Trade Practices Act which would entitle the plaintiffs to an order for specific performance of the agreement in terms of the written document sent to Justin Evans on 28 May 2001. However, there is a tension between the estoppel plea and the plaintiffs' earlier plea that they accepted the defendants' repudiation of the agreement. The logical consequence of the repudiation/acceptance plea is that the agreement itself came to an end, leaving the plaintiffs with a claim for damages. The order which would presumably follow a successful claim that the defendants were estopped from denying the agreement is that the plaintiffs were entitled to an injunction enforcing the agreement. This tension is not resolved by the present prayer for relief. The answer may be that there are alternative claims - on the one hand a claim for damages consequent upon repudiation of the agreement by the defendant and on the other hand, a claim which would seek to have the agreement enforced. It is inappropriate for me as the pleadings stand at the moment to express a view as to whether these alternative pleas can stand together. However, the tension between the two pleas when viewed in the light of the prayer for relief is undeniable. Some consideration needs to be given to this issue in the redraft of the statement of claim.

Paragraph 51 is a rolled‑up plea. It is an allegation of misleading and deceptive conduct made against all three defendants. The conduct of each ought be identified and it ought be pleaded how the plaintiffs relied on that conduct so as to found a claim under s 52 of the Trade Practices Act. Furthermore, it is not clear how it is said that the proposed third defendant represented by implication that the second defendant had authority to bind the first defendant. That is the conduct complained of and that is the conduct which, it is alleged, is actionable. But as I understand the structure of the pleading, so far as the first and second defendants are concerned, it is their actual conduct which is said to be misleading and deceptive. There is no question of implications arising from that conduct. If I have misunderstood the pleading then it is perhaps because the pleading is not in its terms clear and it requires clarification. In this sense I think that par 51 through to par 57 need further consideration.
Complaint is made of par 58. This paragraph deals with reliance. It is said that the paragraph is irrelevant. Reliance is always an issue when a claim is made under s 52 of the Trade Practices Act. In my view the plea is proper.
Paragraph 59 pleads detriment. This paragraph is really nothing more than a plea that is a consequence of the reliance by the plaintiff upon the conduct of the defendants, which conduct is said to be misleading and deceptive, the plaintiffs have suffered loss and damage. As that plea is picked up in par 62, par 59 is perhaps superfluous. Again the pleader might give this matter further consideration when redrafting the statement of claim.
Paragraphs 60 and 61 deals with an alleged breach of warranty of authority. These paragraphs appear to anticipate a plea on behalf of the first defendant that the second defendant did not have authority to negotiate any agreement on its behalf. Such a plea must be contained in the statement of claim as no new cause of action can be raised in the reply. While the pleading is sparse I am satisfied that it is, for present purposes, in a proper form and I would allow par 60 and par 61 to stand.
Finally, complaint is made of par 62. This paragraph is the pleading of loss and damage. Strictly speaking, in the contract claim, what is claimed is loss and damage for the defendants' alleged repudiation of the agreement. The plaintiffs are not seeking damages for breach of a contract which is still on foot. With that minor quibble, I see no difficulty about the particulars provided, so far as they relate to the damages for repudiation of the agreement. There is, however, the difficulty about what, if any, damages might flow as a consequence of finding that the defendants are estopped from denying the agreement. The same comments might be made with respect to the trade practices claim. I have touched on this issue above and I need discuss it no further. It is a matter which requires further consideration in any redrafted pleading.
In summary then, I am not satisfied that the plaintiffs ought have leave to amend their statement of claim in terms of the minute of proposed substituted statement of claim dated 21 May 2002. The plaintiffs should, however, have leave to bring in a fresh minute.
That leaves the issue of whether the proposed third defendant ought be joined as a party to the action. Even in its present form the statement of claim makes out a case for such joinder. However, I will not make the order at present. Any order should await a statement of claim in satisfactory form.
I will hear the parties as to costs.