Geary v Web Force Australia Pty Ltd

[2000] WADC 127

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   GEARY -v- WEB FORCE AUSTRALIA PTY LTD & ORS [2000] WADC 127

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   16 MAY 2000

DELIVERED          :   25 MAY 2000

FILE NO/S:   CIV 1271 of 1999

BETWEEN:   RODNEY THOMAS FRANK GEARY

Plaintiff

AND

WEB FORCE AUSTRALIA PTY LTD (ACN 009 276 028)
First Defendant

IAN CAMERON
Second Defendant

PETER JOHNSON
Third Defendant

RODNEY KIDD
Fourth Defendant

REGINALD WRAY
Fifth Defendant

Catchwords:

Practice - Western Australia - Application for summary judgment - Defendant sued as a director - Evidence that he was not a director - Whether any other viable action.

Legislation:

Nil

Result:

Action dismissed

Representation:

Counsel:

Plaintiff:     Ms L M Marche

First Defendant              :     No Appearance

Second Defendant         :     No Appearance

Third Defendant            :     No Appearance

Fourth Defendant           :     Mr R Kidd

Fifth Defendant              :     No Appearance

Solicitors:

Plaintiff:     Leonard Cohen & Co

First Defendant              :     In Person

Second Defendant         :     Jackson McDonald

Third Defendant            :     In Person

Fourth Defendant           :     David Heldsinger

Fifth Defendant              :     In Person

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

Nil

Case(s) also cited:

Nil

1. DEPUTY REGISTRAR HEWITT:  At the request of the plaintiff I now provide written reasons for my orders on the fourth defendant's application filed on 26 April 2000 and heard before me on 16 May 2000, in which I ordered:

   (1)    The action against the fourth defendant be struck out;

   (2)The plaintiff pay the fourth defendant its costs of the action including this application and costs reserved on this application.

2. The plaintiff's action was originally brought against a company Web Force Australia Pty Ltd and subsequently, the plaintiff received the leave of the Court to join the second, third, fourth, and fifth defendants to the action.  It received that leave on 29 February 2000 on the basis of an affidavit which was sworn by the solicitor for the plaintiff in which he stated in para 4:

   "I am informed that the proposed defendants were at all times directors of the first defendant company.  On the basis of my instructions it is apparent that the proposed defendants are answerable in respect of the joints and or several breach of their duty of care to the plaintiff."

3. Following the granting of that application the writ in its amended form expressed the cause of action against the second to fifth defendants as relying upon  "…   breach of their duty of care to the plaintiff as directors of the first defendant."

4. The fourth defendant has now applied to have the action against him dismissed on the basis that he is not and never has been a director of the first defendant.

5. The plaintiff opposes that application on the basis that it might be possible to express the cause of action against the fourth defendant on some basis other than the duty of care said to have arisen by virtue of his directorship of the relevant company.

6. In order to assess the merit of that proposition it is necessary to know something of the background of the case.  The plaintiff is one of several directors of the first defendant and he alleges that because of the workload which he was forced to bear in his role within the company that he suffered a psychiatric illness which is the basis of his cause of action.  In para 9 of an affidavit sworn by the plaintiff in opposition to the application he said:

   "I feel that because of the fact that the directors had never provided me with the managerial support as was promised when we first formed the company due to the fact that my education standard was only to Year 10, I found myself continually under pressure and on a number of occasions I wrote to them expressing the desire to resign from my position within the company.  At board meetings I also attempted to resign to no avail.  There are a number of letters written by me to the Board asking them to accept my resignation on the basis that I and my family could no longer handle the pressure or stress associated with the running of the company, plus carrying out all the marketing research development of products.  I was unaware at that time that I did not require of the consent of the Board to resign from my position.  Indeed, I was informed by the Board (which included the Fourth Defendant) that they would not permit me to resign as there was no one who could replace me with the knowledge and expertise that I possessed about the company's products."

7. Later in his affidavit he says:

   "The role of the Fourth Defendant was more than a mere spectator to the company's operation.  The Fourth Defendant advised the directors on the establishment of the company, financial matters generally and management issues to ensure that the business was profitable.  The Fourth Defendant regularly attended meetings of the directors and his advice was sought and obtained by the directors of these meetings. 

   The Fourth Defendant was well aware of the difficult and stressful circumstances under which I was working as a technical adviser to the company through his participation in discussions at board meetings and his knowledge of my attempts to resign from the company."

8. Later the plaintiff makes allegations concerning the involvement of the fourth defendant as a "de facto director".

9. The plaintiff was a director of the first defendant and one would imagine him to be informed as to who his fellow directors were and what the constitution of the Board of which he was a member was.  I would have thought it a moot point that a director in the position of the second, third and fifth defendants would be liable to a fellow director in circumstances which are outlined in the plaintiff's affidavit in opposition.  Whilst I find that proposition to be tenuous, I find the proposition that the fourth defendant through his involvement as some kind of an adviser, together with a level of misapprehension by the plaintiff as to who constituted the Board of which he was a member, is in a position of sufficient level of proximity to the plaintiff to be tortiously liable to him in the circumstances of this case, to be unsustainable.

10. The fact is however that it was represented to this Court in an affidavit in support of an application that the fourth defendant was a director of the plaintiff's company and as such answerable to the plaintiff and it was on that basis that he was joined.  The action postulates that by virtue of his directorship the fourth defendant owed a tortious liability to the plaintiff for decisions of the Board of Directors.  Since he is not a director that proposition breaks down and nothing advanced by the plaintiff suggests any other plausible basis upon which he could be liable for the decisions of the board.  In those circumstances I find the fourth defendant entitled to the orders he seeks.