Dresna Pty Ltd v Misu Nominees Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537

PRACTICE AND PROCEDURE – pleadings – application for leave to amend – whether proposed further amended statement of claim discloses reasonable cause of action – whether failure to plead material facts – whether pleading embarrassing – whether leave should be refused on discretionary grounds

TORT – tort of conspiracy – whether appropriately pleaded – requirement that conspirators intend to injure applicant – whether “target” too general – “unlawful means” conspiracy – whether breach of contract constitutes “unlawful means” – whether making of “false suggestion” to ACCC relevantly unlawful act – whether breach of undertaking given under s 87B of Trade Practices Act 1974 (Cth) relevantly unlawful act – whether provision of false or misleading document to ACCC conduct “in trade or commerce” – whether conspiracy claim “mere surplusage” – whether unlawful act must itself be actionable – whether “unlawful means” must be same act for all conspirators

Trade Practices Act1974 (Cth) ss 46, 52, 87B
Patents Act 1952 (Cth) s 100(1)(k)
Patents Act 1990 (Cth) s 138
Criminal Code Act 1995 (Cth) ss 136, 137
Federal Court Rules O 11, O 13 r 2(2)

The Commonwealth v Verwayen (1990) 170 CLR 394 at 456 discussed
Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 applied
Cropper v Smith (1884) 26 ChD 700 at 710 cited
Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 applied
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 applied
Prestige Group (Australia) Pty Ltd v Dart Industries Inc (1990) 26 FCR 197 at 213-219 distinguished
Lonrho plc v Fayed [1990] 2 QB 479 at 489-490 and 492 discussed
Lonrho plc v Fayed [1992] 1 AC 448 at 470 discussed
Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 applied
Mulcahy v R (1868) LR 3 HL 306 at 307 referred to
Ahern v The Queen (1988) 165 CLR 87 at 93 referred to
Allen v Flood [1898] AC 1 at 108 referred to
Quinn v Leathem [1901] AC 495 referred to
Sorrell v Smith [1925] AC 700 referred to
Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435 referred to
Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 at 186 discussed
Elliott v Seymour [1999] FCA 976 discussed
McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 415-417, 435 discussed
Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 at 102, 104 discussed
Metall und Rohstoff A.G. v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 referred to
Lonrho Ltd v Shell Petroleum Co Ltd [1981] Com LR 74 discussed
Grupo Torras SA v Sheikh Fahad Mohammed Al-Sabah [1999] All ER (D) 698 discussed
Rookes v Barnard [1964] AC 1129 at 1204 referred to
Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department [1998] 1 Lloyds LR 19 at 32 referred to
Yukong…

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Details
Case
[2003] FCA 1537
Decision Date

CaseChat Overview and Summary

Dresna Pty Ltd has applied for leave to amend its statement of claim for the ninth or eleventh time in its proceeding against Misu Nominees Pty Ltd and others. The proceeding concerns a managed sell-down by Franklins Limited of its Australian assets in 2001. Dresna contends it suffered significant loss due to being deprived of a contract it entered into. The respondents, including Misu Nominees, Franklins, and Coles Myer Limited, oppose the application. The case involves the sale of Franklins' assets under a process to ensure they were sold to independent operators rather than competitors. Dresna entered into an agreement to purchase the Mentone store but alleges various express and implied terms were breached.

The court was required to decide whether Dresna should be granted leave to amend its statement of claim, which it had sought multiple times already. The respondents argued the proposed amendment was defective in its pleading of the tort of conspiracy and should be refused on discretionary grounds. The court considered the principles of the tort of conspiracy, distinguishing between unlawful means and lawful acts done with the predominant purpose of injuring the claimant. The court examined whether the elements of an action in conspiracy were satisfied, including the combination or agreement, intent to injure, acts carried out, and resulting loss or damage.

The court found that the proposed further amended statement of claim sufficiently pleaded the tort of conspiracy. It determined that Dresna's submission that a conspiracy by unlawful means does not require proof of unlawful acts that are themselves actionable at the suit of the applicant was not contrary to Australian law. The court granted leave for Dresna to amend its statement of claim and adjourned questions relating to the final form of the orders and the costs of the application to a directions hearing.

Orders

Orders of the court

1. The parties bring in minutes of orders that give effect to these reasons for judgment, on or before 13 February 2004.

2. All questions relating to the final form of the orders, and the costs of the application for leave to amend, be adjourned to a directions hearing on 16 February 2004 at 9.30am.

Background

Background to the litigation

By notice of motion dated 21 May 2003, the applicant, Dresna Pty Ltd (“Dresna”) applies for leave to amend its statement of claim. Ordinarily, there would be nothing unusual about such an application. However, the present case is far from ordinary. Depending upon how one calculates the number of previous pleadings in this matter, this is either the ninth or eleventh such application. Perhaps not surprisingly, the application for leave is strenuously opposed.BACKGROUND TO THE APPLICATION This proceeding concerns a managed sell-down by Franklins Limited, a large supermarket operator, of its assets in Australia in 2001. Dresna contends that it sustained significant loss and damage by reason of the actions of various parties in depriving it of the benefit of a contract into which it had entered. The respondents fall into three distinct categories:·the first and second respondents are Misu Nominees Pty Ltd and Kandada Pty Ltd. For convenience, I shall refer to them collectively as “the Lessor”;·the third and fourth respondents are Franklins Management Services Pty Ltd (now Linknarf Management Services Pty Ltd (in liq)), and Franklins Limited (now Linknarf Limited (in liq)). They will be referred to collectively as “Franklins”; and ·the fifth respondent is Coles Myer Limited (“Coles”). There were, at one time, three national supermarket retail chains in Australia: Franklins, Coles, and “Safeway”. Woolworths Limited operated Safeway, which is not a party to this proceeding. In January 2001, Franklins commenced a strategic review of its Australian operations. On 18 April 2001, it announced that its parent company, Dairy Farm International Holdings Ltd (“Dairy Farm”), based in Hong Kong, was to commence a managed sell-down of Franklins’ assets in Australia. In June 2001, both Dairy Farm and Franklins gave undertakings to the Australian Competition and Consumer Commission (“the ACCC”). These undertakings (“the Franklins Undertakings”) were given pursuant to s 87B of the Trade Practices Act1974 (Cth) (“the TPA”). Their apparent purpose was to ensure, so far as possible, that the remaining Franklins stores were sold to “independent operators” rather than to Coles or Safeway. That purpose was to be achieved by a process known as the Joint Independent Divestiture Alliance process (“the JIDA process”). In May 2001, Mr Leo Blake entered into an agreement with Franklins to purchase Franklins’ business at two stores, Mentone and North Blackburn. The total purchase price was $2.8 million. The agreement provided that Mr Blake had a right to nominate a substitute purchaser. On 8 August 2001, Dresna, as nominee for Mr Blake, entered into an agreement with Franklins to purchase Franklins’ business at its Mentone store for $2.3 million. This agreement is described in Dresna’s Proposed Further Amended Statement of Claim (“the PFASC”) as “the Mentone BSA”. Dresna alleges that the Mentone BSA contained a series of express and implied terms. They included:·Dresna and Franklins were only obliged to complete the purchase if the Lessor consented in writing to the transfer of the Mentone lease (“the condition precedent”);·Franklins and Dresna were required to use their reasonable endeavours to satisfy the condition precedent;·If the condition precedent was not satisfied by 13 September 2001, either party could terminate the Mentone BSA by giving two days’ notice in writing;·The right of the parties to terminate the Mentone BSA was subject to a duty to act in good faith (“implied term”);·Franklins would do all such acts as were necessary on its part to enable Dresna to enjoy the benefit of the agreement (“implied term”);·Franklins would not, during the course of the agreement, do anything that had the effect of depriving Dresna of the benefit of the agreement (“implied term”); and·Franklins would act in good faith in relation to the implementation of the agreement, including making full and frank disclosure to Dresna of all matters within Franklins’ knowledge relevant to the implementation of the agreement (including the assignment of the Mentone lease) (“implied term”).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

WEINBERG J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: WEINBERG J

Dresna submits that, contrary to Coles’ argument, there is no principle that a conspiracy by unlawful means requires proof of unlawful acts that are themselves actionable at the suit of the applicant. It is true that this principle finds support in some English cases. However, Dresna argues, it is not part of Australian law.CONSIDERATION In broad terms, the respondents argue that Dresna should not be given leave to file the PFASC for two quite separate reasons. First, they say that the pleading is defective, particularly in relation to the manner in which it alleges the tort of conspiracy. Second, they say that leave should be refused on discretionary grounds. Before dealing with these objections, it may be useful to set out, in summary form, my understanding of the principles that govern this variant of the tort of conspiracy.GENERAL PRINCIPLES The traditional formulation of the tort of conspiracy is as follows. Conspiracy is “the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means”: Mulcahy v R (1868) LR 3 HL 306 at 307. See also Ahern v The Queen (1988) 165 CLR 87 at 93. In other words, conspiracy takes two distinct forms: an “unlawful means” conspiracy in which the parties combine together to perform acts which are themselves unlawful; and a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant. an “unlawful means” conspiracy in which the parties combine together to perform acts which are themselves unlawful; and a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant. There is now a substantial body of authority dealing with these two forms of conspiracy. The major English cases include: Allen v Flood [1898] AC 1 at 108; Quinn v Leathem [1901] AC 495; Sorrell v Smith [1925] AC 700; Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435; Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 (“Lonrho v Shell”); and Lonrho v Fayed. This Court has considered a number of these cases in recent years. See for example: Elliott v Seymour [1999] FCA 976; McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409; and Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34. In Bullen & Leake & Jacob’s Precedents of Pleadings, 14th ed., 2001, at 823, the necessary elements of an action in conspiracy are said to be:·a combination or agreement between two or more individuals (required for both types of conspiracy);·an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type 2 above);·pursuant to which combination or agreement and with that intention certain acts were carried out;·resulting loss or damage to the claimant. In Maritime Union v Geraldton, RD Nicholson J elaborated upon the legal requirements necessary to establish the tortious conspiracy pleaded by the applicants. His Honour said, at 102, that the following matters had to be proved:“(a)each of the alleged three co-conspirators was a party to an agreement or combination with either of the other two co-conspirators;(b)the purpose of that agreement or combination was to injure the applicants by unlawful means;(c)the agreement or combination was carried into effect by the commission of agreed unlawful acts; and(d)those unlawful acts caused damage to the applicants.”