Granite Transformations Pty Ltd v Apex Distributions Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Granite Transformations Pty Ltd v Apex Distributions Pty Ltd [2018] FCA 725

File number(s): VID 911 of 2017
Judge(s): O'CALLAGHAN  J
Date of judgment: 22 May 2018
Catchwords: PRACTICE AND PROCEDURE – application by first and third respondents to strike out further amended statement of claim – whether pleading sufficient to appraise first and third respondents of case against them – whether each element of each cause of action pleaded – section of further amended statement of claim struck out with leave to re-plead
Legislation:

Corporations Act 2001 (Cth), s 79

Federal Court Rules 2011 (Cth), r 16.21

Cases cited:

Allstate Life Insurance Co v ANZ (1995) 58 FCR 26

Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82

Classic Gourmet Sausages Pty Ltd v Leda Commercial Properties Pty Ltd (2000) 97 FCR 313

Giorgianni v R (1985) 156 CLR 473

LED Technologies Pty Ltd v Roadvision Pty Ltd (2012) 199 FCR 204

Lumley v Gye (1853) 2 El & Bl 216; (1853) 118 ER 749

Polar Aviation Pty Ltd v Civil Aviation Safety Authority (2012) 203 FCR 325

Sherrin Hire Pty Ltd v Sherrin Rentals Pty Ltd [2015] FCA 1107

Short v City Bank (1912) 12 SR (NSW) 186

Short v City Bank of Sydney (1912) 15 CLR 148

Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15

Young Investments Group Pty Ltd v Mann (2012) 293 ALR 537; [2012] FCAFC 107

Yorke v Lucas (1985) 158 CLR 661

Bullen & Leake & Jacob’s Precedents of Pleadings, (16th ed, Sweet & Maxwell Limited, 2008)

Date of hearing: 24 April 2018
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Category: Catchwords
Number of paragraphs: 32
Counsel for the Applicant: Ms J Granger
Solicitor for the Applicant: Clayton Utz
Counsel for the First and Third Respondent: Mr J Knackstredt
Solicitor for the First and Third Respondent: BlandsLaw

ORDERS

VID 911 of 2017
BETWEEN:

GRANITE TRANSFORMATIONS PTY LTD (ACN 074 218 778)
Applicant

AND:

APEX DISTRIBUTION PTY LTD (ACN 614 691 217)
First Respondent

COLIN MACKENZIE
Second Respondent

BRAD MCDONALD (and others named in the Schedule)
Third Respondent

JUDGE:

O'CALLAGHAN  J

DATE OF ORDER:

22 MAY 2018

THE COURT ORDERS THAT:

1.Paragraph [15M] of the applicant’s further amended statement of claim dated 27 March 2018 be struck out pursuant to r 16.21 of the Federal Court Rules 2011 (Cth).

2.The applicant has leave to re-plead the cause of action struck out pursuant to order 1 above.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

O’CALLAGHAN J:

  1. This is an application by the first and third respondents to strike out certain paragraphs of the applicant’s further amended statement of claim dated 27 March 2018 (the FASOC) pursuant to r 16.21 of the Federal Court Rules 2011 (Cth).

  2. Rule 16.21(1)(e) provides that:

    (1) A party may apply to the Court…

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Details
Case
[2018] FCA 725
Decision Date

CaseChat Overview and Summary

The matter before the court was an application by the first and third respondents, Apex Distributions Pty Ltd and Mr McDonald, to strike out certain parts of the further amended statement of claim filed by Granite Transformations Pty Ltd, the applicant. The dispute centred around the sufficiency of the further amended statement of claim in appraising the respondents of the case against them, specifically whether each element of each cause of action pleaded was properly articulated.

The primary legal issues the court had to address were whether the further amended statement of claim sufficiently pleaded each element of the causes of action and whether it was necessary to strike out certain paragraphs of the pleadings while allowing the applicant leave to re-plead. The court had to assess whether the applicant's pleadings were clear enough to inform the respondents of the precise allegations against them, particularly in light of the extensive cross-referencing within the document.

The court found that while the further amended statement of claim was challenging to follow due to its numerous cross-references, it contained sufficient facts to support the claims made. The court concluded that certain paragraphs, such as paragraph [15M], were not sufficiently pleaded and thus struck them out in accordance with r 16.21 of the Federal Court Rules 2011 (Cth). However, the applicant was granted leave to re-plead the cause of action that was struck out. The court's decision was based on the principle that each cause of action must be clearly articulated in the pleadings to ensure the respondents are fully apprised of the allegations against them.

In conclusion, the court ordered that paragraph [15M] of the applicant’s further amended statement of claim dated 27 March 2018 be struck out and granted the applicant leave to re-plead the cause of action. This decision ensures that the respondents are adequately informed of the claims against them while allowing the applicant an opportunity to rectify any deficiencies in their pleadings.

Orders

Orders of the court

1. Paragraph [15M] of the applicant’s further amended statement of claim dated 27 March 2018 be struck out pursuant to r 16.21 of the Federal Court Rules 2011 (Cth).

2. The applicant has leave to re-plead the cause of action struck out pursuant to order 1 above.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my view, the question whether Apex supplied products of Apex to the applicant’s franchisees, and other distributors of the applicant’s products, is within its own knowledge. It is not appropriate to limit discovery to the one instance particularised, as counsel for Apex submitted.Conclusion Accordingly, I propose to order as follows:(1)Paragraph [15M] of the applicant’s further amended statement of claim dated 27 March 2018 be struck out pursuant to r 16.21 of the Federal Court Rules 2011 (Cth).(2)The applicant has leave to re-plead the cause of action struck out pursuant to order 1 above.

Ratio Decidendi

Legal Principle Established

The FASOC contains a series of pleas that require the reader constantly to cross-refer to a variety of paragraphs in the pleading. It is not necessary for the purposes of deciding this application to recite the paragraphs which are intended to be incorporated by the device of cross-referencing adopted by the pleader. I propose, instead, to summarise the effect of those paragraphs. Mr McDonald: accessorial liability for breach of the Corporations Act Dealing first with the plea that Mr McDonald is accessorily liable for Mr Mackenzie’s breaches of directors’ duties, thereby contravening s 79(a), (c) and/or (d) of the Corporations Act, paragraph [17] of the FASOC alleges:In the premises, by reason of the matters set out in paragraphs 16A to 16H above, each of Apex, Mr Smith and Mr McDonald was involved in the breaches of the Mr Mackenzie’s Duties, referred to in paragraph 16 above, and is liable to GTA for those breachesPARTICULARSSection 79(a), (c) and (d) of the Corporations Act 2001 (Cth) Paragraph [16A] is a plea that Mr Mackenzie engaged in dishonest and fraudulent “design” by reason of conduct pleaded at paragraphs [14], [14A] and [14D]. Paragraph [16D] involves further cross-references to paragraphs [14], [14A], [14B], [14D]-[14F], [16] and [16A]-[16C] in support of the plea that Mr McDonald aided, abetted, counselled or procured or was knowingly concerned in, or conspired with Mr Mackenzie in his breaches of Mr Mackenzie’s Duties, pleaded in paragraph [16]. The FASOC is, admittedly, a difficult pleading to follow because of the seemingly endless cross-references upon cross-references. Ultimately, however, I am satisfied, having regard to the principles set out above, that sufficient facts are pleaded in the paragraphs listed above to support a plea that Mr McDonald is liable as an accessory. For example, and among other things, it is pleaded in paragraphs [14C] and [14E] that: Mr McDonald was a director of Apex at the relevant times and that he sent and received emails using an Apex email address; he liaised with the supplier of the competing stone product in relation to Apex; and that he offered to the applicant’s franchisees (on behalf of Apex) products similar to those that had previously been supplied by the applicant. See, generally, Yorke v Lucas (1985) 158 CLR 661; Giorgianni v R (1985) 156 CLR 473.Mr McDonald: inducing breach of contract Before turning to the particular paragraphs of the pleading which Apex and Mr McDonald challenge, it is necessary to recall the necessary elements of the tort of inducing breach of contract. The cause of action for inducing breach of contract is described by Erle J in the famous case of Lumley v Gye (1853) 2 El & Bl 216; (1853) 118 ER 749, at p 232, as follows:It is clear that the procurement of the violation of a right is a cause of action in all instances where the violation is an actionable wrong, as in violations of a right to property, whether real or personal, or to personal security: he who procures the wrong is a joint wrongdoer, and may be sued, either alone or jointly with the agent, in the appropriate action for the wrong complained of.