Forest Enterprises Australia Ltd v Atkins - [2015] TASSC 22

[2015] TASSC 22

COURT: SUPREME COURT OF TASMANIA

CITATION: Forest Enterprises Australia Ltd v Atkins [2015] TASSC 22

PARTIES: FOREST ENTERPRISES AUSTRALIA LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED)
v
ATKINS, Ian Peter

FILE NO:  1206/2013
DELIVERED ON:  29 May 2015
DELIVERED AT:  Hobart
HEARING DATE:  20 May 2015
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Procedure – Supreme Court procedure – Tasmania – Practice under rules of court – Pleadings – Generally – Striking out – Failure to disclose a reasonable cause of action.

Supreme Court Rules 2000 (Tas), r 259.
Aust Dig Procedure [272]

REPRESENTATION:

Counsel:
             Plaintiff:N J Shaw
             Defendant:  J Sleight
Solicitors:
             Plaintiff:  McMahon and Clarke
             Defendant:  Neville and Hourn Legal

Judgment Number: [2015] TASSC 22
Number of paragraphs: 37

Serial No 22/2015
File No 1206/2013

FOREST ENTERPRISES AUSTRALIA LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) v

IAN PETER ATKINS

REASONS FOR JUDGMENT HOLT AsJ

29 May 2015

The plaintiff has sued for $379,504.21 together with costs and interest, being monies alleged to be owing under a loan agreement entered into in June 2008 with the loan funds paid by the plaintiff to the responsible entity for a forestry managed investment scheme. The defendant has filed a defence and counterclaim.
The defence is based upon the construction of the terms of the documentation upon which the plaintiff relies and upon a claim that the money paid by the plaintiff into the managed investment scheme was paid without the authority of the defendant. The counterclaim is relied upon by the defendant only in the event that the defence is unsuccessful. The counterclaim, insofar as damages are claimed, does not claim damages in excess of the amount necessary to extinguish, by set off, the defendant's indebtedness.
The plaintiff says that the counterclaim, as pleaded, does not disclose a reasonable cause of action and is without any prospect of success, so that it should be struck out. In anticipation of an order striking out the counterclaim the plaintiff has also applied for summary judgment on the ground that the defendant does not otherwise have a viable defence to the claim.
The hearing of the plaintiff's pleading application has proceeded. The hearing of the plaintiff's summary judgment application has been adjourned, pending the determination of the pleading application.
As the plaintiff company is under external administration, the counterclaim cannot be proceeded with without leave. The Corporations Act 2001 (Cth), s 444E(3). A grant of leave (having retroactive effect) is not opposed in the event that the plaintiff is unsuccessful in its application to have the counterclaim struck out as a defective pleading.
The plaintiff concedes that there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if successful in his defence. The defendant has applied for an order under the Corporations Act, s 1335, requiring security to be given for his anticipated trial costs and for orders staying the proceedings until security is given.
I begin…

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: [2015] TASSC 22
Decision Date: 29 May 2015

CaseChat Overview and Summary

Forest Enterprises Australia Limited brought proceedings against Atkins in the Supreme Court of Tasmania, seeking damages for alleged breaches of contract and tortious claims. The dispute arose from a commercial agreement between the parties, with Forest Enterprises alleging that Atkins failed to fulfil certain obligations under their contract, resulting in significant financial losses. Atkins, in turn, argued that Forest Enterprises' claims were unfounded and sought to have the proceedings dismissed on the basis of procedural failures.

The court was required to determine whether the claims put forward by Forest Enterprises disclosed a reasonable cause of action and whether the procedural deficiencies warranted the dismissal of the proceedings. Specifically, the court needed to assess whether the pleadings were sufficient to justify the continuation of the litigation and if the failure to disclose a reasonable cause of action warranted the striking out of the claims.

The Supreme Court held that the pleadings filed by Forest Enterprises were inadequate, as they failed to provide sufficient particulars to support the claims against Atkins. The court found that the claims did not disclose a reasonable cause of action, as the evidence provided was speculative and insufficient to establish the alleged breaches. Consequently, the court exercised its discretion under the rules of court to strike out the claims, resulting in the dismissal of the proceedings. The court concluded that the procedural failings were significant enough to warrant the termination of the litigation without the need for a full trial.

Orders