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)
ApplicantAND: APEX DISTRIBUTION PTY LTD (ACN 614 691 217)
First RespondentCOLIN MACKENZIE
Second RespondentBRAD 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:
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).
Rule 16.21(1)(e) provides that:
(1) A party may apply to the Court…
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- Case
- [2018] FCA 725
- Decision Date
CaseChat Overview and Summary
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
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.