Focede Pty Ltd v Tove Pty Ltd

[1992] FCA 215

JUDGMENT NO. 21s. / 9%.

FEDERAL COURT OF AUSTRALIA	)
1
VICTORIAN DISTRICT REGISTRY	)
)
GENERAL DIVISION	1
B E T W E E N :

FOCEDE PTY LTD

RAHUL VENDRA SINGH

Applicants

A N D :

COURT :	NORTHROP J
PLACE :	MELBOURNE  G1 MAY lgge
DATE :	FEDERAL COURT OF

- 2 APRIL 1992 AUSTRALIA

EX TEMPORE REASONS FOR JUDGEMENT

In this matter, which has been argued so far in relation to the pleadings and the application, it is noted that the application itself was issued on 31 October 1991, and was accompanied by a statement of claim. By order of the Federal Court of Australia made on 3 December 1991, the statement of claim was struck out but the applicant was granted leave to file and serve a fresh statement of claim. There were	motion that the proceedings be transferred to Sydney was	consequential orders and directions given. In particular a
adjourned. An order was made that the applicants pay the respondents'costs of so much of the motion on notice filed 25 November 1991 as had been determined by the order and the costs of the day. A fresh statement of claim was filed on 5 February 1992, some five days after the date specified in the order of the Court giving leave to file and serve a fresh statement of claim. But in the circumstances, I see no reason why that, by itself, is relevant to any order I should make.
Presently before the Court are a number of motions, notice of which was given first in a notice filed by the respondents on 25 November 1991. The only motion outstanding on that notice is the motion to have the matter transferred to the New South Wales District Registry. In addition, further orders are sought pursuant to a notice of motion filed by the respondents on 19 February 1992 seeking orders:

1.    That the proceeding be permanently stayed under 020 r2; and

2.   Alternatively, the proceeding be struck out under

011 r6.

It is conceded that a typographical error appears and the motion should read that the pleading, that is the statement of claim, be struck out under 011 r16.

In pursuance to a further notice of motion filed by the respondents on 24 February 1992, the respondents are seeking an order that the first and second applicants provide security for costs and that these proceedings be dismissed or stayed in the absence of that security being given.

So the real issues before the Court at the moment were the striking out of the statement of claim, the staying of the proceeding, the security for costs and the transfer of the matter to Sydney.

The Court has initially limited submissions to the question of the pleadings and the application. 020 r2 provides :

"2. (1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding:

(a) no reasonable cause of action is disclosed;

(b) the proceeding is frivolous or vexatious; or

(c)	the proceeding is an abuse of the process of the Court;
dismissed generally or in relation to any claim for	the Court may order that the proceeding be stayed or
relief in the proceeding."
Order 11, the other Order relied upon, by rule 16

provides :

"16. Where a pleading:

(a)	discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b)	has a tendency to cause prejudice, embarrassment or delay in the proceeding; or

(c) is otherwise an abuse of the process of the Court;

the Court may at any stage of the proceeding order that
the whole or any part of the pleading be struck out."

In the present case, there is material before the Court to show that there had been earlier proceedings which, in substance, were between the present applicants, on the one hand, and the respondents on the other but there were two less persons named as respondents in that matter. That action was compromised by agreement and, pursuant to that compromise, releases were given in relation to claims by each party or group of parties against the other. The release was entered into on 6 February 1991 and, on the face of it purports to be a release of all claims including future claims arising from conduct which occurred at least prior to that date.

It is in this context that one turns firstly to the

statement of claim. Many submissions were made going to the

substantive issues on this question but I propose to deal with	it on the broad picture of the requirements of the Rules as to
pleadings and, in particular 011 r2 which provides that:

"2. Subject to these Rules:

(a) a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved;"

In the present case, I have formed the clear view that the majority of the paragraphs contained in the statement of claim do not comply with the requirements of 011 r2. I do not propose to go through and deal with each of the paragraphs because that is the very thing which a Court should not do in a case of this kind. One of the grave difficulties is that there is nowhere a clear statement of what are said to be material facts. The statement of claim itself makes many references to "at all material times" but nowhere is there any clear statement of what those times are. Also, there are many other paragraphs which do not state the relevant facts but contain a rolled up plea, as it were, alleging breaches of obligations, and are in the form of conclusions to be drawn from facts which are not clearly stated anywhere in the pleadings. For instance, reference may be made to paragraph 19:

"19. In breach of their obligations to Berryman, Harris,

Downing and Blows since February 1991 failed:

(a) to implement etc." and so on

Paragraph 20: 

"20. In breach of the obligations as directors ... caused
Berryman to sell its interest - ..." and so on

Very many of the paragraphs contained in the amended statement of claim are in that form. This, of itself, is a non- compliance with the Rules but, more importantly, constitutes an embarrassing pleading in that it makes the task of pleading to them almost impossible.

On its face, it seems to me that this is a case where the statement of claim should be struck out rather than requiring the Court to go through and strike out a paragraph here and a paragraph there. An order should be made striking out the statement of claim.

The more difficult question is to decide what is to follow from that. The motion for the striking out of the statement of claim must succeed. That does not really deal with the more important issue namely whether the proceedings should be stayed under 020 r2 or dismissed generally under 020 r2, being the orders sought pursuant to the motions presently before the Court. It is quite clear that a Court will not permanently stay or dismiss an application except in the clearest of cases where there is no possible basis of the claim succeeding. The position is made very clear in the reasons for judgment by the then Chief Justice of the High Court Sir Garfield Barwick in General Steel Industries Inc v Commissioner of Railwavs ( N S W ) 1964 (112) CLR 125.

In the present case, looking at the application itself, it does appear that a number of the claims made are rather dubious, to say the least of it and, in particular, the first claim sought is a declaration that the respondents have engaged in conduct contrary to s52(1) and s52A of the Trade Practices Act 1974. Submissions have been directed to the issue of whether a claim based upon s52A is appropriate and I note in passing that the application has got brackets around the A which should not be there. Section 52A is a separate section. I will treat that as typographical. Subsection 52A(5) provides:

"(5) A reference in thls section to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption."

In this case, any conduct which would otherwise be in contravention of s52A is of a kind which is said to be in the financial advice and management of Berryman Furniture Company Pty Ltd. On its face, this service is not of a kind ordinarily acquired for personal, domestic or household use or consumption. It was suggested in submissions that possibly it could be that this type of service was for personal use in the sense that it was a service for individuals but I do not accept that submission. I have formed the view that on the facts of this case as appears from the statement of claim, which I will be striking out, and also from the material before the Court there should not be any claim at all based

plea based upon s52 of the Trade Practices Act.	upon s52A of the Trade Practices Act. There was no express
There are a number of other claims based upon the provisions of the Corporations Law, and in particular s260 which relates to oppression. Nice questions arise whether, in this case, the section has any application since at least towards the end of 1991 one of the applicants had been a director of the company, Berryman Furniture, but the other individual respondents apparently have not been directors, although it is alleged that because of arrangements made before that date but after the signing of the release there was a sale of certain assets of the Berryman Furniture which gave rise to problems. The wording of para 260(l) (a) refers to conduct which is being carried on at the time, but sub- paragraph (ii), on its face may relate to an act or omission which was done in the past. The position is further complicated in that at the present time there is a receiver/manager appointed to manage the affairs of the Berryman Furniture Company and, in those circumstances, the directors have no power anyhow. The receiver/manager is in fact conducting the business activities of Berryman Furniture.
Having regard to the submissions put I am not in a position to say that there can be no cause of action based upon s260. So if leave was to be granted to amend the statement of claim there could be a claim based upon s260.
Claims were based upon s232 of the Corporations Law. These claims have their own problems but, in any event, at this stage, I cannot say that there can be no possible claim
in relation to them.
As against the granting of leave to amend the statement of claim, it is argued that this is a case where there is nothing to stop the applicants from commencing an action again based upon a proper application supported by a proper statement of claim in conformity with the requirements of the Rules and that in those circumstances there should be no leave granted to amend the application and to replead the statement of claim but to strike out the application and let the applicants, if they so desire, bring further proceedings. This is so, it is argued, particularly, and it seems to be almost conceded, that the natural person applicant, Mr Singh, may be in a fairly weak position in relation to claiming any of the relief sought in the application. There does appear to be some grounds for saying that at least the claim by him should be struck out or dismissed.
In all the circumstances, this is a case where having regard to the fact that the statement of claim has been amended once and there are still defects in it, it will be struck out. But this is a case where, having regard to those factors and the uncertainty and obscurity of the application as it stands at the moment, the proceeding should be dismissed generally.

This will be a dismissal which is not on the merits. It

will not prevent the applicant, Focede Pty Limited, and possibly the applicant, Mr Singh, from commencing another action. Having regard to what has been argued today, the applicants may need to reconsider the whole of their claims against the respondents or any of them before they do commence any further proceeding. But as I said before, because of the history of this matter, the uncertainty of the statement of claim, the uncertainty of the application, particularly having regard to the release which was entered into in 1991, this is a case where under 020 r2 of the Federal Court rules, it appears to me that no reasonable cause of action is disclosed, and that the proceeding as it stands is frivolous or vexatious. In these circumstances the proceeding ought to be dismissed generally, but without preventing a fresh application from being made.

In the result I order that the proceeding be dismissed and that the applicants pay the respondents' costs of the proceedings.

I certify that this and the preceding nine (9) pages are a true copy of the Ex Tempore Reasons for Judgment of the Honourable M r Justice R.M. Northrop.

Associate: fiA ,%

Date:  -2.2- / q F L