Harris v Seemungal-Dass

[1998] QSC 7

IN THE SUPREME COURT

OF QUEENSLAND  No. 2585 of 1995

Brisbane

[Harris v Seemungal-Dass]

BETWEEN:    

PAUL FELIX HARRIS
  Plaintiff

AND:
  CATHERINE MAREE SEEMUNGAL-DASS
  Defendant

CATCHWORDS:                 DEFENCE AND COUNTERCLAIM - further amendment - whether amendments change structure of action - statement of claim - striking out - further particulars - vacation of order.

Counsel:A.J.H. Morris Q.C. for the applicant.

J.G. Crowley Q.C. for the respondent.

Solicitors:John Murphy & Co for the applicant.

Cominos & Cominos for the respondent.

Date of Hearing:  16 October 1997

REASONS FOR JUDGMENT - MOYNIHAN J.

Judgment delivered 5 February 1998

INTRODUCTION

There are a number of applications to be disposed of in this action which arises out of a breakdown in a partnership ("the partnership") of which the plaintiff, the defendant and Michael Gerard Harris were members. 

The plaintiff seeks leave to amend the amended statement of claim.  The defendant has a number of  applications not all of which are to be dealt with on this occasion.  The applications by the defendant to be disposed of are:–

(1)to vacate para.6 of an order of 22 February 1996 as varied on 25 October 1996;

(2)to strike out paras.27, 28, 29, 30, 31 and 32 of the statement of claim;

(3)for further particulars of the statement of claim;

(4)to amend the amended defence and counterclaim in terms of exhibits I and K to the affidavit of Gerard James Houlihan sworn to on 20 September 1997 ("the proposed defence");

(5)directions consequent on leave being given and particulars ordered.

The application for leave to amend in terms of the proposed defence is contentious both as to whether leave should be given and as to the form of the proposed defence.  It is convenient to dispose of these issues first.  In order to do so, it is necessary to say something of the background of the action and its history so far.  The following account is far from exhaustive.  It does not purport to resolve contentious issues although it is convenient for narrative purposes to accept some tendentious allegations.

BACKGROUND

The plaintiff has long been an accountant in Rockhampton with a practice in central Queensland and beyond.  Immediately prior to the events giving rise to this action he was practising in partnership with his son, Michael Gerard Harris; the defendant is his daughter.  It is convenient to refer to "the practice" whether referring to the form it took when conducted with the defendant as a partner, prior to her joining the partnership or after the dissolution of that partnership of which she was a member.

At the commencement of the events giving rise to this action the defendant and her husband, Rowan Seemungal-Dass, were accountants employed by Price Waterhouse in Trinidad where they lived a comfortable and affluent lifestyle with their two children.  By 1 August 1994 they had come to Rockhampton with their children and taken up employment in the practice.  The defendant's case is that the plaintiff induced them to do so in circumstances having the consequence  of defeating his claim and sustaining her counterclaim.  I will return to this later.

After an initial period of employment the defendant became a partner from 30 June 1995 on terms contained in an instrument executed on 10 August 1995 ("the partnership deed").  It seems to have been contemplated that the defendant's husband would become a partner when his qualifications were recognised by the relevant Australian accounting authorities to the extent necessary for that to occur.

The partnership deed provided that the plaintiff sold 20% of his 80% share in the  existing partnership (including goodwill) to the defendant for $150,000.  She and Michael Harris  then each had a 20% interest in the partnership and the plaintiff had 60%.  Relevantly for present purposes the partnership deed provided for the determination of the partnership on the expiration of one month's notice by a partner.  There was a restraint of trade clause in the event of the dissolution, determination or winding up of the partnership and a provision that no partner would, without the written consent of the others, dismiss an employee of the partnership except for gross misconduct, insubordination, neglect of duty or inability to attend to work.  There was a further provision that on the dissolution, determination or winding up of the partnership no value was to be placed on the goodwill if it was the plaintiff who withdrew but if the either the defendant or her brother did, the plaintiff would pay $150,000 for that person's share of the goodwill. 

It is unnecessary for present purposes to be concerned with the disputed arrangements for the financing of the defendant's payment for her share of the goodwill save to note that the plaintiff sues to recover $150,000 based on a loan agreement making it repayable if the defendant ceased to be a partner.

On 7 November 1995 the plaintiff dismissed the defendant's husband from his employment with the partnership and gave the defendant a month's notice of termination of the partnership.  The defendant alleges the dismissal was in contravention of the clause of the partnership deed referred to above.

On 20 December 1995 the plaintiff sued the defendant.  The writ was specially endorsed in respect of the loan of $150,000 and of a claim concerning specified partnership property.  The writ was generally endorsed with a claim for an injunction to restrain the defendant from acting in breach of the restraint clause or from soliciting clients of the partnership, it sought an inquiry and accounts, and that the partnership be wound up and the proceeds distributed.

After the notice of dissolution of the partnership the defendant and her husband set up a business providing accountancy and related services.  The plaintiff brought an application for an interlocutory injunction to restrain the defendant from breaching the restraint clause or from soliciting partnership clients.  This was disposed of for the time being by a consent order of 22 February 1996.  The order involved reciprocal undertakings.  The plaintiff gave an undertaking as to damages in the terms usually applicable to the grant of an interlocutory injunction.  The defendant undertook not to solicit, act for or perform work of an accounting nature for anyone who was a partnership client as at 7 December 1995.

The order of 22 February also provided by consent that the plaintiff prepare accounts for the partnership and its service company for the period 1 July to 7 December 1995 in order to determine, "the defendant's entitlement in each entity agreed between the parties to be fixed at 20%".  There was provision as to the form of the accounts, the supporting documentation and other matters.  The order provided that within 21 days of the plaintiff's delivery of the accounts the defendant was to indicate whether she accepted them and the amount that they showed as due to her.  In the event that she did not, the respective calculations were to be submitted to a nominated retired chartered accountant who was to report on the calculations and "give his opinion on the proper sum for the defendant's entitlement in the said partnership and the said service company provided that neither party is to be bound by the said opinion".  The defendant seeks to have these provisions vacated.

The preparation and delivery of the accounts apparently proceeded to the stage where the opinion of the nominated accountant was called for.  He however died at some stage of the process.  As a result  the order of 22 February 1996 was varied by consent on 25 October 1996 to provide that the nominee of the state president of the Institute of Chartered Accountants discharge the function.  I will return to these matters later.

The order of 25 October 1996 provided as to other matters.  It directed that the dispute between the parties be referred to mediation and, with particular reference to the issue of  validity of the restraint clause, that the mediator be at liberty to convert the matter into an appraisal if it was thought appropriate to do so.  On 9 December 1996 a mediator's certificate was lodged stating that the matter had not been resolved.  It seems that no step was taken concerning appraisal.

In the meantime the pleadings progressed.   A statement of claim for the claim generally endorsed on the writ was delivered in March 1996.  It pleaded the dissolution of the partnership by the plaintiff's notice of 7 December 1995, breach of the restraint clause and other matters.  It sought an injunction restraining the defendant from competing, damages for breach of the partnership deed and interest.

The current edition of the defence and counter claim ("the current defence") was delivered on 29 October 1996 and of the reply and answer on 25 November.  The current defence seeks damages, an indemnity in respect of an award by the Industrial Commission (presumably against the partnership) for the wrongful dismissal of the defendant's husband and costs.   The current pleadings do not seek the winding up of the partnership although its dissolution is pleaded.

THE APPLICATION FOR LEAVE TO FURTHER AMEND THE DEFENCE AND COUNTER CLAIM

The current defence admits a loan agreement of 26 October 1995 and the terms relied on by the plaintiff to recover the $150,000.00 referred to earlier but pleads that the defendant was lawfully entitled to refuse to pay.  It sets up a cross-claim for $150,000 as the defendant's share of goodwill under the provision of the partnership deed referred to earlier.  It pleads that the defendant's husband was dismissed in breach of provision of the partnership deed without the consultation referred to earlier.

The current defence goes on to admit the execution of the partnership deed and the determination of the partnership by the notice of 17 November 1995.  A core feature of the current defence is a plea of an implied term that the plaintiff would not exercise what can conveniently be called his partnership powers "arbitrarily, capriciously and unreasonably".  Such a term is said to be implied from the circumstances (they are pleaded with a degree of detail) by which the defendant and her husband were induced by the plaintiff  to leave Trinidad, come to Rockhampton, take up employment and, in the defendant's case, membership of the partnership.  The plaintiff is alleged to have acted in breach of this implied term so as to preclude him from the relief he seeks and found the counterclaim.

The enforceability of the restraint clause in the partnership deed is put in issue on the basis that it is unreasonably wide and also on the basis that it is unconscionable for the plaintiff to enforce it because the defendant was "overborne, intimidated or unduly influenced" by the plaintiff in entering into the partnership agreement.  The plea is founded on the allegations of  the plaintiff's role in inducing the defendant and her husband to leave Trinidad, come to Rockhampton and enter into the partnership deed referred to earlier.

By a letter of 10 June 1997 the plaintiff's solicitors took issue with aspects of the defendant's pleading as it then stood.  The concerns are not necessarily answered by the current defence, it is however unnecessary for present purposes to deal with those issues.  The point is that new counsel was briefed at some stage during this process.  He took a different view of the defendant's case, and the basis on which its case should be pleaded and settled a fresh pleading (the proposed defence). 

It is clear that there are formidable difficulties in the path of the defendant's making out a case based on the implied term currently pleaded in both the current and proposed defences in the face of both the express terms of the partnership agreement and the need to satisfy the requirements necessary to found the implication laid down in the cases; eg. Codelfa Construction Pty Ltd v. State Rail Authority of New South Wales[1].  Counsel for the defendant conceded as much in arguing for leave to amend but declined to abandon the point.

[1](1982) 149 CLR 337

The proposed defence maintains the plea that the restraint clause in the partnership deed is unlawful as being unreasonably wide and introduces a plea that the clause is void for uncertainty.  Both points appear fairly arguable, as to the latter see Austrotanks Pty Ltd v. Running[2], cf. JKAT Pty Ltd v. Storm[3].  The plea of uncertainty simply turns on the construction of the clause.  The point about the clause being unreasonably wide is somewhat more complex.  There is however much to be said for having the issue disposed of separately by trial or appraisal.  Either plea, if successful, provides a complete answer to the plaintiff''s claim for relief based on the restraint clause which, as his action is pleaded, is essentially his case.

[2](1982) 2 NSWLR 840

[3](1987) 2 Qd.R. 162

The proposed defence alleges that the partnership was dissolved not as a consequence of  the plaintiff's notice of 7 November 1995 but by his repudiation and the defendant's acceptance of the repudiation.  The plaintiff objects to this amendment on the basis that it is an express or implied withdrawal of an admission in the current defence that the partnership was dissolved by the notice of 7 November.  It must, however, be borne in mind that any such admission was accompanied by a plea to the effect that the dissolution was unlawful or ineffective.  Any admission was thus of limited consequence, and on either version of the defence issues relating to the plaintiff's inducing the defendant and her family to Australia arise for resolution.  No specific prejudice consequent on any withdrawal is demonstrated.

The plaintiff objects that the proposed defence changes the whole structure of the action, that it will add to the length and expense of the trial, that the advantage of interlocutory steps taken will be lost and such steps will have to be repeated.

The proposed defence is undoubtably more expansive than the current defence;  the former has 38 paragraphs (there are sub-paragraphs) in 11 pages.  The latter has 81 paragraphs (there are sub-paragraphs) in 35 pages.  The relief claimed by the proposed defence is more wide  ranging than current defence and its implications for the parties are undoubtedly greater.  The defendant seeks partnership accounts and accounts for the practice from 7 December 1995 and payment of the balance found due to the defendant. 

It seems inevitable that, in any event, the partnership be wound up and improbable that the parties will agree about it.

The proposed defence alleges that the partnership agreement is unenforceable by the plaintiff because of his repudiation and because his conduct associated with his inducing the defendant (and her family) to come to Rockhampton and take up a partnership make it inequitable to do so.  The defence raises issues to the effect that the partnership agreement is unenforceable against the defendant because it reflects arrangements she was induced to enter into by unconscionable conduct on the part of the plaintiff and, to his knowledge, by his wife who is the defendant's mother.  The proposed defence alleges that the defendant was overborne, intimidated or unduly influenced by the plaintiff in circumstances where her bargaining power was less than his.  There are alternate allegations including estoppel founded on the defendant's being induced by the plaintiff to make "an assumption that . . . (h)e would not arbitrarily or capriciously terminate the partnership" or rely on the restraint clause to the defendant's detriment.

It is clear enough that the proposed pleading relies on that species of unconscionable conduct identified in the judgment of Lord Hardwick LC. in the leading case of Earl of Chesterfield v. Janssen[4] where he speaks of equity concluding:–

[4](1751) 2 Ves Sen 125, 38 ER 82

". . from the circumstances and conditions of the parties contracting . ." and intervening

". . to prevent taking surreptitious advantage of the weakness and necessity of another: which knowingly to do is equally against the conscious as to take advantage of his ignorance.  A person is equally unable to judge for himself in one as the other."

I am presently not concerned  with whether the defendant will succeed in making out her allegations or whether the allegations she makes out will sustain the relief she seeks.  The issue for present proposes is whether the cases raised by the proposed pleading are fairly arguable; Queensland v. JL Holdings Pty Ltd[5].  This is a case which largely turns on creditability and factual issues but this is not the time to resolve them.  It seems to me that the issues raised by the proposed defence are fairly arguable and, if made out, are capable of providing a complete answer to the plaintiff's case and sustaining the relief sought by the defendant. 

[5](1997) 71 ALJR 294 at 296

The core allegations in the proposed defence continue to be founded on allegations of the plaintiff's role in the defendant, her husband and family being induced to leave Trinidad, come to Rockhampton and enter into the partnership agreement.  It must however be acknowledged that the proposed defence both elaborates and expands that conduct and its consequences by comparison with the current defence.  Allowing for that, however, the issues of fact and evidence are not unrelated to those in the current defence. 

The plaintiff complains that the proposed defence implicates the defendant's mother (the current defence does not in terms do so) but it is not pleaded she was the agent of the plaintiff or partnership.  It is said that "statements by her cannot create legal rights."  Such contentions seems to me to miss the point of the pleading which does not plead the breach of legal rights but, seeks to found equitable intervention based on unconscionable conduct giving rise to undue influence, duress etc.  Put shortly, it seems clear enough that the case on behalf of the defendant in this respect is that the mother's intervention, with the plaintiff's "knowledge and approval" was part of the circumstances "paralysing the defendant's will so that she did not freely and voluntarily" (to use the language of the cases) enter into the partnership deed.  A similar comment applies to the plaintiff's complaints about references in the proposed defence to the defendant's husband, proposals for his employment and the prospects of his joining the partnership etc.  The particular allegations are pleaded as part of the circumstances relied on to sustain a conclusion that the defendant was overborne, etc. 

For reasons which have been canvassed it is an overstatement to say that the whole structure of the action will be changed by the proposed defence.  Indeed there is some merit (but only some) in the defendant's submission that it is the relief rather than the facts founding it which has under gone the most substantial change by the proposed defence.  Not all interlocutory steps will be lost or have to be repeated.  It is usual in granting leave to amend to make an order in respect of costs thrown away by an amendment to deal with those aspects of the situation as here they are.

It may be accepted that a trial on the proposed rather than the existing defence, will probably, be longer, more complex and more expensive although the material as it presently stands makes it impossible to quantify these consequences with anything approaching precision.

The plaintiff further objects to the proposed defence on the basis that it opens up "the private discussions of the Harris family", the whole history of the defendant's employment, prospects of achievement, the domestic situation in Trinidad, and will probably necessitate inquiries in that country and London, and perhaps the calling of witnesses from those places.

The opening up of family matters, correspondence and communications is the inevitable consequence of litigation between family members particularly in disputes about a family business.  That is one of the reasons for courts encouraging the consensual resolution of such disputes which unfortunately are far from novel.  It is also fair comment that family disputes have been a rich source of the development of the law which the defendant seeks to invoke by the proposed defence.  The relationship of parent and child is, for example, one of the "presumptive relationships" from which equity is more inclined to infer undue influence.

In any event as has already been indicated, the current defence opens up family issues, the situation in Trinidad and the like.  In this context it is worth mentioning that the plaintiff's solicitor deposes that he has been:–

". . duly informed by the plaintiff and verily believes that communications between the defendant, the plaintiff and his wife by letter and telephone took place during a lengthy period prior to the defendant's returning to Australia . . The nature of this correspondence is personal but refers in other parts to matters relevant to this action . . The plaintiff is opposed to the publication of the private family communications but will be forced to discover them should the action proceed on the amended counterclaim".

There is a point to the defendant's submissions that the correspondence referred to should in any event have been discovered on the pleadings as they presently stand. 

In opposing leave to amend the plaintiff takes issue with what is described as the concept that delay and additional expense can be compensated by costs orders because the plaintiff would not "consider the option of execution against her (the defendant's) dwelling house";  reference is also made to the defendant's transfer of the dwelling house.  There is in my mind an air of unreality about this objection,  the objection that family affairs are private and should not be open to public scrutiny in litigation and that there may have to be investigations made and witnesses called from overseas.  The plaintiff, having commenced the litigation, can not conduct it on a basis of his choosing, restricting the defendant in her ability to met his case against her and advancing her own.

In support of the contention about overseas witnesses the plaintiff's solicitors deposes that at an Industrial Relations Tribunal Hearing as a consequence of which apparently the defendant's husband received some compensation, he gave evidence that he and his wife "spent some time in England before going to Trinidad" and to the effect that they considered returning to London at some later time as founding a concern about overseas witnesses and investigations.  This is a faint basis for opposing the application.  It is far from clear that investigation or evidence from that source is required.  This is an age when telephone and video links are used to take evidence and bearing in mind that the issues giving rise to consideration of overseas witness were in any event open on the current defence.

Bearing all those considerations in mind in my view the defendant should, subject to restrictions I will deal with later, have leave to amend to plead the case raised by the proposed pleading.

TRIAL BY JURY

The parties by their pleadings seek trial by jury.  That occasions two comments; first the pleadings and particulars require closer scrutiny and attention than would be the case if the action was for trial before a judge alone.  Secondly, while I am not dealing with any application about it and whatever may have been the position when the statement of claim was delivered, given the current and proposed defence it is difficult to conceive a case less suited to that mode of trial.  Arguably trial by jury is not available in respect of those aspects of the case founding equitable intervention; Sheaffe v. Hungerford[6].  The case is one in which "experience and common sense" demonstrate that the action is "likely to be long and complex and that, while there would be issues of creditability, the interwoven factual and legal issues would (make) the management of the trial and the ascertainment of the jury's verdict difficult and prone to error";  Shannon v. Australian and New Zealand Banking Group Limited[7].  As to the unsuitability of trial by jury when a case turns on issues of the kind (undue influence, duress etc) raised here see Jenys v. Public Curator  (Queensland)[8].

[6](1879) 1 QLJ (supplement) 51

[7](1996) 1 Qd.R. 340 at 346

[8](1952-1953) 90 CLR 113 at 119

THE CONTENT OF THE PROPOSED DEFENCE

The defendant, assuming leave is granted to amend the defence, opposes leave to deliver the proposed defence in its current form.  I have already dealt with a number of the objections which bear on this.  These include the withdrawal of the admission in relation to the notice determining the partnership and references to the defendant's mother and husband. 

Pleadings are required to make a statement "as brief as the nature of the case will allow, setting out the material facts... to support" the parties case . . . "but not the evidence by which they are to be proved..."[9].  The word "material" has been construed to mean necessary for the purpose of formulating a complete cause of action or defence so as to define the issues and inform opposing parties of the case they have to meet at trial.  In this case the defendant must plead and prove facts to show that the transaction complained of was the outcome of the plaintiff's actual influence over her mind so that the impeached transaction cannot be considered as carried out in the exercise of her free will; Johnson v. Buttress[10].

[9]O.22

[10](1939) 56 CLR 113 at 135

In light of these considerations there are difficulties with the proposed defence particularly if there is to be a trial by jury.  What follows is not an exhaustive canvassing of the difficulties but is sufficient to indicate why, although I am prepared to give leave to amend, I am not prepared to give leave to do so in terms of the proposed defence.

These are parts of the proposed defence which do not plead facts but which advance argument or make assertions, some in prerogative terms;  para.25(d) is an example.  It speaks of "considerable pressure" being placed on the defendant by "using emotive arguments to persuade her to return".  Another example to found in para.41(e) with its reference to "despite all these sacrifices" to the plaintiff being "unreasonable and intransigent" in insisting the defendant execute a deed which would permit the plaintiff "to throw (the defendant) out of the practice."  Paragraph 48 speaks of the plaintiff issuing "an ultimatum"; this is an example of pleading a contention or conclusion without the facts on which the fact finder at a trial is asked to base such a conclusion.  It is not the only occasion on which this occurs.

Paragraph 42 is introduced with "in that state of anxiety, upset and emotional distress".  "that state" is presumably what is alleged in para.41 but that should not be left to inference.  Some of the difficulties with para.41 have be referred to and taint para.42.

Paragraphs 33 and 34 of the proposed defence are said by the plaintiff to be irrelevant but, having regard to the basis of the defendant's claim, which I canvassed earlier, I am not persuaded that is so.  Paragraph 33 however pleads proposals put forward by the plaintiff and agreed to by the defendant while paras.34 and 35 refer to suggestions.  Apart from questions of consistency and terminology there is potentially a difference between a proposal and a suggestion.  The point is that variations of this kind take on a different complexion in pleadings if a case is to be tried before a jury.  Precision and consistency are required.

Parts of the proposed defence are justifiably described as unnecessarily prolix.  Without purporting to be exhaustive paras.62 to 64 are examples of where the point sought to be advanced by the pleading could be made much more directly.  These and other paragraphs mix the pleading of facts as required by O.22 with particulars contemplated by O.23 and contentions and assertions.  An example of a contrasting pleading style is to be found in precedent 180.1580 in Court Forms Precedents and Pleadings Queensland (Butterworths) volume 1 under the title Contract.

Paragraphs 62 to 64 of the proposed defence are designed to set up a claim based on the Trade Practices Act 1974 (Commonwealth) - (the Act).  The incorporation of the trust service company and that it was a trading corporation within the meaning of the Act are pleaded.  It is then pleaded that, in negotiating with the defendant concerning her joining the partnership, the plaintiff was acting on behalf of the service company as well as himself.  The pleading continues that, "(i)nsofar as (the plaintiff) was acting on behalf of" the company his conduct "hereinbefore described" was in contravention of s.52 of the Act (the section deals with misleading or deceptive conduct).  The pleading continues that, to the extent the conduct included the making of representations to future matters, it is deemed by s.51A to be misleading unless the plaintiff proved he had reasonable grounds for making the representation.  There is then a plea that the "conduct hereinbefore described" was unconscionable within the meaning ss.51A and 51AB of the Act.

This is an unsatisfactory plea of a claim based on the Act.  There is no basis pleaded for a conclusion that the service company was involved in the conduct complained of in a relevant sense beyond continuing to provide services to the company once the defendant became a partner.  Moreover the reference to "his conduct hereinbefore described" seems to be a reference to the whole of the conduct canvassed by the preceding part of the pleading.  No basis is pleaded to establish that the whole of that conduct is attributable to the service company and no attempt made to identify conduct which it might be said is.  There are no facts pleaded to found a conclusion that the service company is, so far as the defendant is concerned, a trading corporation or that she is a consumer;  see Concrete Constructions Pty Ltd v. Neilson[11].  There is a plea in anticipation of the plaintiff making a plea the onus of proving the facts to found which lies on him.

[11](1990) 169 CLR 594

Put shortly, if the defendant does have a valid claim based on the Act it is not apparent from paras.62 to 64 of the proposed defence and they would be unsatisfactory pleadings even if they could be said to make such a claim apparent. 

Although no specific objection was taken to paras.66 and 67 it seems they are based on an unduly artificial analysis of what occurred.

In conclusion, in my view, the defendant should have leave to amend the defence and counterclaim by delivering a fresh pleading on conditions to which I will return.

VACATING PARA.6 OF THE ORDER OF 25 FEBRUARY AS VARIED BY THAT OF 25 OCTOBER 1996

This paragraph, it may be recalled, provided to the effect that the plaintiff would prepare partnership and service company accounts, and if  the outcome which they founded were not acceptable to the defendant the rival accounts would be referred to a nominee for report and an opinion as to the proper sum of the defendant's entitlements, but that the opinion would not be binding. 

It is not clear from the material how far the original nominee (Hawley) had progressed in his role before he died.  A letter of 24 October 1996 from the plaintiff's solicitor to the defendant's states that Hawley had communicated his recommendation to the parties that they agree a figure of $23,000 as reflecting 20% share of profits.  Counsel for the defendant makes the point that the "defendant's entitlement in each entity" as stated in the order was not restricted to the defendant's share in the profits from the period 1 July to 7 December 1995 but included a share in the capital.  The point is not without merit.  In any event no agreement was reached to accept the recommendation. 

It was not contended Hawley had discharged his function in making the recommendation, rather the order was varied by consent on 25 October.  As a consequence, the president of the Queensland Chapter of the Institute of Chartered Accountants nominated another accountant (Casey) who proved to be unacceptable to the plaintiff.

By a letter of 28 November 1996 the plaintiff's solicitor wrote to the defendant's, who had been pressing for a basis for the plaintiff's refusal to accept the nomination of Casey:–

"In relation to a client both of this firm and of Mr Harris, Mr Harris contends that errors and omissions in calculations and methodology were made so that the outcome of the report prepared by Mr Casey's firm was not fair and proper.  Requests by Mr Harris to have information provided to him in relation to the report so that he can investigate and correct the shortcoming have been ignored.

Therefore, Mr Harris does not have any confidence that the way his matter will be dealt with will not have shortcomings and be fair and proper.  Hence his objection to the nomination of Mr Casey." 

In the meantime the plaintiff's solicitors, without reference to the defendant's, had approached the president of the Queensland Chapter with a proposal that a "Mr Michael Weil be nominated by the State Chairman to act in the review of calculations in relation to this matter.  It seems that Mr Harris is not satisfied with Mr Casey".  The defendant's solicitors learnt of this approach in a letter from the Institute of 27 November 1996.  The letter advised that Weil was overseas and offered the nomination of another name accountant (Hoiberg) which would not however "be confirmed until advice was received" from respective solicitors that the nomination was acceptable.

The defendant's solicitors, by a letter dated, 28 November to the plaintiff's solicitors, objected to the approach to the Institute without their consent or involvement.  The letter made the point that the nomination was pursuant to a court order and that it was inappropriate for the plaintiff's solicitors to have approached the Institute without first advising them and went on to make the valid point that the order required an independent nomination by the president not one at the behest of the party.

It seems that the matter has rested there although the plaintiff's solicitor has indicated that Hoiberg was an acceptable nominee.  

The position taken by the defendant's solicitors, given the nature of the dispute as it is reflected in the material, was predictable and essentially justifiable although perhaps avoidable with a degree of goodwill and common sense on both sides.  The plaintiff's reasons for not accepting Casey are not particularly compelling.  The points the defendant's solicitor raised about the nature of the mode and approach to the Institute are well taken. 

There is of course nothing to stop the parties agreeing on a resolution of their dispute or agreeing a mechanism to achieve this at any stage.  That requires mutual goodwill and commonsense.  The outcome of the process put in place by para.6 is however not binding on either party.  Given the present attitude of the parties and their legal representatives, it seems the process offers little or no prospect of resolving the dispute and there seems no point in having the parties continue to be under any obligation under para.6 of the order of 22 February 1996 as varied.

THE PLAINTIFF'S APPLICATION TO AMEND THE STATEMENT OF CLAIM AND THE DEFENDANT'S APPLICATION TO STRIKE OUT

These applications are interrelated.  The plaintiff seeks to amend to add a para.31A to the statement of claim.  The defendant does not object to the amendment insofar as it applies to paras.29 to 31 and does not persist with her application to strike out those paragraphs.  She persists with her applications to strike out paras.27, 28 and 32 and objects to the amendments by para.31A insofar as it applies to paras.27 and 28.

Paragraphs 27 and 28 are to the effect that by a letter of 12 December 1995 Winter Homes Pty Ltd, a client of the practice, asked the practice to tender for future accountancy work and that "no similar request had been made in the seventeen years of the association" between Winter Homes and the practice.

The statement of claim, in an earlier paragraph, alleged a connection between the defendant, her husband and Winter Homes and the plaintiff seeks to amend to allege the defendant was implicated in the preparation of the letter asking the practice to tender.  The pleading does not however establish any basis for a claim of breach of any obligation by the plaintiff and paras.27 and 28 should be struck out.

As I have indicated the defendant does not object to para.31A being amended to allege the defendant's implication in the preparation of the letter the subject of the complaints is paras.29 to  31 of the statement of claim, but seeks particulars of the facts relied on in alleging the letter was prepared on her behalf.

Paragraph 32 of the statement of claim is irrelevant and should be struck out.

THE DEFENDANT'S APPLICATION FOR FURTHER PARTICULARS

Paragraph 35 of the statement of claim pleads that the plaintiff claims damages "for breach of the partnership agreement and interest upon damages in accordance with the provisions of the Common Law Practice Act as amended".  Apart from the bald plea nothing is pleaded as to the basis of arriving at the damages, the basis of their calculation or the like.  The order of 25 October 1996 previously referred to, required the plaintiff to deliver particulars including as to damages giving "full and detailed particulars, including the breakup for calculations of the alleged damages".  The plaintiff responded with a letter in November 1996 stating:–

"In accordance with para.4 of the request for particulars the plaintiff says that damages are unable to be quantified at this particular time.  Full particulars of damages will be provided to the defendant prior to trial."

The defendant's solicitors continued to press for particulars and, after the filing of this summons, received a letter from the plaintiff's solicitors dated 8 October 1997 which relevantly provided:–

"The plaintiff's inability to quantify the damages lies in the fact that they are continuing.  The breach of convent 21 of the agreement has caused the Plaintiff loss being his loss of profit from accounts of clients taken in breach of the covenant.

The particulars are these:–

(a)The plaintiff's annual profit from Winter Account, say   $ 10,5237

(b)Plaintiff's annual profit from Kelcher Account, say   $ 4,338

(c)Plaintiff's annual profit from other accounts which can not

be future particularised at this stage, say     $ 13,500

$ 28,365

Present value of $28,365 for ten years discounted at 3% =$246,176."

The particulars are completely inadequate for a claim for loss of profits (the basis on which the plaintiff is proceeding) founded on breach of a restraint clause, particularly in an action which the plaintiff seeks to have tied by a jury.  That damages are continuing is not the point.  Damages which continue beyond trial must be calculated and awarded at trial and the defendant is entitled to know the basis on which that is to be done as well as the facts relied on to founding the allegations that the loss was occasioned by her breach.

Expertise suggests that if the plaintiff succeeds at trial a lesser sum will be awarded.  The sum is in the jurisdiction of the District Court.

The plaintiff must supply full particulars of his claim to damage, including but not limited to the identity of the clients said to have been lost, the facts relied on to establish that loss was due to the defendant's breach and the basis for the calculation alleged to be the plaintiff's share of profits to have been lost for the discount period applied.  If he fails to do so within the time limited by the order I propose that his claim for damages may be dismissed.

THE JOINDER OF MICHAEL GERARD HARRIS

I am not dealing with such an application.  Michael Harris however seems a necessary party and the sooner he is joined the better to facilitate the action being brought to trial.

PROPOSED ORDERS - (3 to 14 are subject to submission)

(1)Refuse leave to amend in terms of exhibits I and K to the affidavit of Gerard James Houlihan sworn 20 September 1997.

(2)Leave to amend the defence and counterclaim by delivery of a fresh pleading to plead:–

(a)unconcernable conduct and relief founded on it;

(b)the restraint clause is void for uncertainty;

(c)putting in issue the termination of the partnership by the notice of 7 November;

(d)breach of the Trade Practices Act 1974 (if she be so advised);

(e)the plea of an implied term be abandoned.

(3)The leave given in (2) is conditional on the defendant:–

(a)delivering a new proposed defence and counterclaim by ;

(b)unless the plaintiff consents to delivery of the proposed new counterclaim by  the plaintiff is to seek leave to deliver the amended pleading forthwith.  The amended pleading is deemed to be delivered on the defendant's solicitor's being notified of consent.

(4)The defendant is to pay the costs:–

(a)of the application for leave to amend the defence and counterclaim;

(b)thrown away by any amendment agreed to by the plaintiff in each case to be taxed;

(5)The application to amend the defence and counterclaim is adjourned to a date to be fixed.

(6)The plaintiff deliver a reply and answer amended as a consequence of delivery of an amended defence and counterclaim  days after delivery of the amended pleading.

(7)Paragraph 6 of the order of 22 February 1997 as varied is vacated.

(8)(a)       the plaintiff have leave to amend by adding para.31A of the statement of claim in so far as it refers to paras.29 and 30;

(b)the plaintiff supply the defendant with particulars of the facts relied on in alleging the defendant caused the preparation of the letter referred to by ;

(c)paras.27, 28 and 32 of the statement of claim are struck out;

(d)the plaintiff pay the defendant's costs of the applications dealt with by (a), (b), and (c) and thrown away by (a) to be taxed.

(9)Leave to each party is conditioned on the new or amended pleading not seeking trial by jury.

(10)The plaintiff to provide the defendant with full particulars of his claim for damages         including:–

(a)identifying all clients alleged to have been lost by the defendant's breaches and the facts relied on in alleging they were so lost;

(b)the basis of calculation of each component of the claim

by ;

(c)the facts relied on in fixing a period of 10 years.

(11)When the matter is certified ready for trail the solicitor for each party certify that his client has been advised of an estimate of the costs the client will have to pay:–

(a)if the client loses;

(b)if the client wins.

(12)Further directions:–

The parties exchange and lodge succinct submissions with my Associate by

in respect of:–

(a)the orders proposed by 1 to 10;

(b)timetable for the further conduct of the action;

(c)trial by jury;

(d)separate trial or appraisal of the issue of the validity of the restraint clause;

(e)any outstanding matters as for direction and as to costs

(13)Liberty to apply.

(14)Adjourn the summonses generally to a date to be fixed.