Healthsafe Australia Pty Ltd v Patterson [No 2]

[2023] WASC 217

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HEALTHSAFE AUSTRALIA PTY LTD -v- PATTERSON [No 2] [2023] WASC 217

CORAM:   MASTER SANDERSON

HEARD:   2 FEBRUARY 2023

DELIVERED          :   28 JUNE 2023

FILE NO/S:   CIV 1621 of 2017

BETWEEN:   HEALTHSAFE AUSTRALIA PTY LTD

Plaintiff

AND

MARCELLE ANN PATTERSON

JOHN LESLIE PATTERSON

Defendants

Catchwords:

Practice and procedure - Various applications by defendant - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff	:	Mr A Metaxas
Defendants	:	Mr N Andreou

Solicitors:

Plaintiff	:	Metaxas Legal
Defendants	:	Monaco Lawyers

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

Murray Riverside Pty Ltd v Toscana (WA) Ravenswood Estate Pty Ltd [2022] WASCA 67

MASTER SANDERSON:

1. This is the return of three applications brought by the defendants.  Before detailing the nature of the applications I will provide a summary of the background facts.  This summary is largely taken from the submissions filed on behalf of the plaintiff.  However, I am satisfied that it is a fair summary of both the relevant facts and the progress of the action.

2. In 2002, the plaintiff in its capacity as trustee for the Winton Road Property Trust (WRPT) purchased a commercial property in Joondalup (the property).  WRPT is a unit trust.  At that time the plaintiff was controlled by the late John Robert Clohessy (the deceased) who was then married to the second defendant by counterclaim (Rachael).  The first defendant (Marcelle) is a sister of the deceased.  The second defendant (John) is Marcelle's husband.  After its acquisition, Marcelle worked at the property providing administrative services for reward to the deceased, the plaintiff and to lessees.

3. Healthsafe had entered into a contract to purchase the property for $268,000 in 2002.  The business plan was to lease serviced offices to various business operators.  The bank was prepared to lend 70% of that amount so a further $80,400 was required to complete the purchase.  Marcelle and John agreed to invest $80,000 as 'shareholder equity' so the purchase could be completed.

4. The deceased resided in Melbourne for some years prior to his death in September 2014.  Rachael inherited control of the plaintiff as she was the only shareholder from about 2004.  Management was left to the deceased.  The financial statements prepared for WRPT for the financial years 2009 onwards recorded Marcelle and John as being owed $90,957, which was their initial payment of $80,000 plus later payments totalling $10,957.  It is now in issue whether the accounts were correct in recording John and Marcelle's interest as 'shareholder equity' or whether it should have been regarded as a loan.  The position is complicated by the fact that Marcelle and John had 56 of 100 units, Rachael and the deceased had 10 of 100 units and Meegan Clohessy (the deceased's daughter by an earlier marriage) had 34 of the 100 units.

5. This action was commenced on 13 April 2017.  It sought to compel Marcelle not to enter or remain on the property and to deliver up to the plaintiff the keys to the property and Healthsafe's books and records.  By 2017, those ends had been achieved.

6. On 12 November 2020, the plaintiff's solicitors wrote to the defendants' solicitors in relation to various paragraphs of the defendants' defence and counterclaim.  There was conferral on 6 April 2021.  The defendants proposed to provide 'further and better particulars of the material facts'.  In May, June and July 2021, the defendants filed and served amended pleadings.  The plaintiff says none of the amended pleadings addressed its complaint that the defendants were alleging fraud without particulars.

7. On 21 July 2021, the plaintiff applied to strike out parts of the amended defence and counterclaim filed 8 July 2021. That application was determined by Registrar Whitbread: [2022] WASC 194. Orders were made on 12 July 2022. At the suggestion of the Registrar, the plaintiff agreed to file a substituted statement of claim which was filed on 27 July 2022.

8. The defendants filed and served a substituted defence and counterclaim on 31 August 2022.  On or about 5 September 2022, the defendants raised complaints about the substituted statement of claim.  Those parts of the statement of claim about which complaint was made had been in substantially the same form since 13 April 2017.

9. Against that background, these reasons deal with three applications:

   (1)an application for production of certain documents;

   (2)an application to strike out parts of the substituted statement of claim; and

   (3)an application for default judgment and/or summary judgment on the counterclaim.

10. At the outset the plaintiff raised as an issue a failure to confer as required by O 59 r 9 of the Rules of the Supreme Court 1971 (WA). The evidence makes it plain that in this case there was no meaningful conferral as is required by the rule. To circumvent this failure, the defendants relied on the decision of the Court of Appeal in Murray Riverside Pty Ltd v Toscana (WA) Ravenswood Estate Pty Ltd [2022] WASCA 67 (Murray Riverside)  As the plaintiff pointed out in submissions filed subsequent to the hearing, the facts in the Murray Riverside case are significantly different to the facts here. Nonetheless I would accept the Court of Appeal's decision has significantly narrowed the scope for applications to be dismissed based upon a failure to comply with O 59 r 9. Be that as it may, this is one of those cases where there should have been compliance with the rule. No excuse for a failure to comply was provided. Without analysing the position in detail it would seem that at least so far as the strike out application is concerned, a discussion between solicitors may well have narrowed the scope of this dispute. This is one of those cases where a failure to comply with the rule leads to all three applications being dismissed. That said, I will deal with the merits of all of the applications and explain why it is each of them would fail.

11. The application with respect to the provision of documents and the application with respect to default judgment have been overtaken by events.  The documents requested were provided to the defendants' lawyers by email on 7 and 13 October 2022.  A defence to the substituted counterclaim was filed on 31 January 2023.  Although there was a delay in filing the defence to the substituted counterclaim, the fact it has been filed renders any application for default judgment otiose.  On that basis both these applications should be dismissed.

12. The defendants applied to strike out paragraphs 16, 18, 20, 21, 22, 23, 24, 25, 28(3), 28(4), 29, 30, 32, 34(a), 34(b), 35 and 40(1)(c) of the substituted statement of claim.

13. The complaints with respect to paragraphs 16, 20, 21, 22, 23, 24 and 25 of the substituted statement of claim are that reference is made in these paragraphs to correspondence passing between the plaintiff's solicitor and the defendants' solicitor.  The defendants say the paragraphs do not disclose any material fact or cause of action.  The fact that correspondence is sent or received is not a material fact and similarly the fact that correspondence is sent or received says nothing about the facts alleged in that correspondence.  While I would accept the reference to correspondence in pleadings is poor pleading practice, the paragraphs are in large measure unobjectionable.  They are not vague or embarrassing because they explain clearly what the plaintiff is contending.  Furthermore, these paragraphs in largely unamended form have been in the pleadings for years and no objection has been raised in relation to them until recently.  This observation applies to virtually all of the paragraphs about which complaint is made.  For this reason alone, I would dismiss the defendants' objection.  Taken together with the fact that the paragraphs are relatively benign, there is no basis for striking out these paragraphs.

14. The plaintiff objects to paragraph 18.  It is said the paragraph is vague, embarrassing and likely to prejudice a fair trial of the proceedings.  The paragraph reads as follows:

    The remainder of the Property was leased to other persons under commercial tenancy agreements and the defendants, alternatively the first defendant, received the rent payments as agent for the plaintiff.

15. The defendants say that while the paragraph alleges receipt of rent by Marcelle and John as 'agent' for the plaintiff, no material facts are pleaded which would establish the relationship of principal and agent.  With respect, the principles of agency are well understood.  While it may well have been the case that pleading of material facts to establish agency would have been prudent, taken in the overall there is enough in the substituted statement of claim to establish the basis upon which the plaintiff makes the claim.  I am not satisfied this objection has merit.

16. Objection is taken to paragraph 28(3) of the substituted statement of claim.  The objection is that the paragraph is based on an assumption that Marcelle and John (or alternatively Marcelle only) had received payments of $103,792 and had an obligation to account for any such money received.  It is said there are no material facts pleaded to establish the receipt of the money and the obligation to account for it.  The defendants know whether or not they received the money as alleged and they are hardly likely to be taken by surprise by evidence led to that effect.  As to the obligation to account that arises (if at all) as a consequence of the nature of the relationship between the plaintiff on the one hand and Marcelle and John on the other, this matrix of fact is central to the resolution of the dispute between the parties and the pleading taken in the overall clearly sets out the plaintiff's position.  The defendants' complaints are without merit.

17. The complaints as to paragraph 28(4) and paragraph 29 can be taken together.  Both paragraphs are in the nature of a prayer for relief.  Paragraph 28(4) relates to the duty to account and paragraph 29 relates to retention of the possession of books and records.  If the plaintiff's claim succeeds then the remedy to which the plaintiff is entitled is picked up by and specified in these paragraphs.  They are unobjectionable.

18. Paragraphs 30 and 32 pickup allegations in relation to a Telstra account.  The amount involved is just over $5,500.  The way in which the paragraphs are framed makes clear the nature of the plaintiff's complaint and the remedy which is sought.  There is no basis for striking out these paragraphs.

19. Complaint is made as to paragraph 34.  It is said the allegation in paragraph 34(1) is unclear as to whether what is being alleged is either that the plaintiff did not appoint Victor Clohessy and Marcelle as directors of the plaintiff or they were appointed as directors but the appointment was invalid at law.  This is a very minor issue and the facts led at trial will resolve any confusion if indeed such confusion arises.  The paragraph is not liable to be struck out.

20. Paragraph 35 deals with the Telstra debt and I accept the figures are somewhat confusing.  But this is such a minor point that no strike out application should be entertained.

21. The complaint as to paragraph 40(1)(c) is really a complaint about the prayer for relief.  The relief to which the plaintiff is entitled, if any, is a matter for the trial judge and while the paragraph may alert the defendants to the nature of the relief sought, it cannot in any way determine what relief is actually granted.  On that basis there is no point to striking out the paragraph.

22. For these reasons then the defendants' applications ought be dismissed.  On publication of these reasons the parties should confer as to the form of orders and as to costs.  If no agreement can be reached competing minutes ought be filed, together with short submissions in relation to costs.  This should be done within seven days of publication of the reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CM

Associate

28 JUNE 2023