IPA Holdings Pty Ltd v Onetemp Pty Ltd (No 2) - [2010] SASC 259

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
IPA HOLDINGS PTY LTD v ONETEMP PTY LTD & ANOR (No 2)
[2010] SASC 259
Reasons of Judge Lunn a Master of the Supreme Court
23 August 2010
PROCEDURE
Defendants pointing to defects in Statement of Claim and requesting Court to order plaintiff to remedy them - held was for defendants to take out and prosecute application to strike out the Statement of Claim if they objected to its contents - no duty or obligation on the Court under 6R 113 or otherwise to remedy the breaches.

PROCEDURE
Plaintiff applies for further disclosure of documents by defendants - defendants apply for better particulars of the Statement of Claim - particulars necessary to identify properly what documents were directly relevant - particulars to be ordered and plaintiff's application held over until particulars given.
Wunda Joinery Pty Limited (In Liquidation) & Anor v Wunda Projects Australia Pty Limited & Ors [2007] SASC 301; Davies & Anor v Chicago Boot Company Pty Ltd (No 3) [2007] SASC 399, applied.

IPA HOLDINGS PTY LTD v ONETEMP PTY LTD & ANOR (No 2)
[2010] SASC 259
JUDGE LUNN:
Reasons on plaintiff’s application for better disclosure of documents and defendants’ application for particulars
Definitions
In these reasons:
“Holdings” is IPA Holdings Pty Ltd, the plaintiff, which is the trustee of the Trust;
“Onetemp” is Onetemp Pty Ltd, the first defendant;[1]
[1] There is a second defendant, Daron Carne, who is a director of Onetemp, but it is not necessary to refer to him in these reasons.
“the Trust” is the IPA Trust, created under a Deed of 1 July 1982 of which Holdings is the trustee;
“Manufacturing” is IPA Manufacturing Pty Ltd, which with Onetemp are the beneficiaries of the Trust;
“the 1999 Deed” is a deed made on 25 June 1999 by the interested parties in an effort to resolve a dispute between Manufacturing and Onetemp over the affairs of the Trust, and
“the 1999 Contract” is an alleged agreement made in 1991 between various parties which was either varied or superseded by the 1999 Deed.
Background

The background facts stated here are confined to those related to the applications before me. From about 1982 the Trust had conducted a business of instrument manufacture, engineers, importers, wholesalers and retailers and boat manufacturers, importers, wholesalers and retailers. In about 1991 there was an arrangement between Manufacturing and Onetemp that the business of the Trust would be split so that Manufacturing would undertake the manufacturing operations of the business under licence from Holdings and Onetemp would undertake the sales operations of the business under licence from Holdings. This arrangement was further refined by the 1999 Deed under which Holdings granted “certain licences” to Onetemp and different licences to Manufacturing. In December 1999 or January 2003 Onetemp terminated the 1999 Deed and has allegedly thereafter continued to carry on the sales business using the licences granted to it by the Trust. Holdings alleges that under the 1999 Contract Onetemp and Manufacturing were to recombine the sales and manufacturing operations of the Trust business upon various events having occurred so they could be sold, but Onetemp has not done so.
In this action, Holdings claims against Onetemp delivery up of the “sales operations of the business”, damages for breach of the 1999 Contract and/or the 1999 Deed, an account of profits earned by Onetemp since 31 January 2003 from the use of the assets which were the subject of the licences granted under the 1999 Deed and various other consequential remedies. By paragraph 22 of the Amended Statement of Claim Holdings pleads:
22.Since 31 January 2003, in breach of the 1999 contract and/or the 1999 Deed, Onetemp:
22.1 Has continued to use and have the benefit of the assets which are the subject of the license granted by Holdings to it under the 1999 Deed.
…
22.3 Has failed and/or refused to use its best endeavours to enable Holdings to sell the recombined sales and manufacturing operations of the business.
The present application
By an application FDN17 of 2 December 2009 Holdings sought an order under 6R 136(1)(a) that the defendants provide further and better disclosure of documents. That application has now been confined to one class of documents, as set out in paragraph 4(b) of the affidavit of the solicitor for Holdings, FDN21, filed on 13 July 2010. These documents are “the Statistical Analysis Reports for the first defendant’s business for the period from 13 August 2008 in the same format as has already been provided for the period from 1 July 1999 to 12 August 2008”.
By an application FDN23 of 3 August 2010 the defendants seek an order for particulars identifying the assets which are referred to in paragraphs 22.1 and 22.3 of the Amended Statement of Claim as quoted above. The defendants submitted that no disclosure order should be made against them on FDN17 unless they first had these particulars. Holdings did not object to FDN23 being heard in conjunction with FDN17.
Defects in the Statement of Claim
In its submissions on the applications Onetemp complained of the manner in which the relevant provisions of the 1999 Deed had been pleaded in the Amended Statement of Claim. It contended that the effect of the document had not been pleaded as required by 6R 98(3) and it did not plead what licences had been granted by Holdings to Onetemp.[2] However, the defendants did not seek to strike out what they contended were the defective pleadings. Their position was set out in the following portion of their counsel’s written submissions:
[2] As to what is required for the pleading of such contents of documents, see my reasons in Wunda Joinery Pty Limited (In Liquidation) & Anor v Wunda Projects Australia Pty Limited & Ors 16 August 2007, [2007] SASC 301 at [12].
Breach of rules as to pleadings
42.The statement of claim on its face breaches the mandatory requirements of Rule 98(3) because it fails to plead the effect of a document relied upon.
43.Pursuant to Rule 113(2)(c) that breach ought to be remedied before trial. Rule 113(2)(c) would be rendered nugatory if the breach of the mandatory requirement was simply left to the trial judge to sort out. Rule 103(1) may provide consequences for the breach but that is no answer to the obligation to get the pleadings in order before trial.
44.The plaintiff should be ordered to remedy the breach.
Counsel for the defendants informed me that the defendants did not intend to apply to strike out the alleged defective paragraphs of the Statement of Claim because they did not wish to incur the delay and expense in doing so. That is a tactical decision which the defendants are entitled to make, but they will have to live with the consequences of it.
I do not accept that there is any power of the Court of its own motion to order a party to remedy defective pleading. If the Court does have power to do so, it will only be exercised in exceptional circumstances. It is not for the Court to police the adequacy of every pleading of a party. This is adversarial litigation and primarily the onus is on the parties to require compliance by their opponents with the Rules. Where a party alleges a breach of the Rules by its opponent, and even where it appears to have a strong case that the breach has occurred, it cannot then expect the Court to act of its own volition to strike out the offending pleadings. Under the Rules it is required to take out the appropriate application under 6R 131 and to take the risk in costs if it fails. If it elects not to challenge a defective pleading of its opponent, the case will usually go to trial on such a defective pleading.[3]
[3] As the defect has been pointed out, the plaintiff would be well advised to consider whether it wishes to seek to amend, and, if it does not, it probably will suffer the consequences of the defect at trial. In deciding on the consequences of the defect the trial Judge is likely to take into account that it was brought to the attention of the party and it elected not to remedy it at the appropriate time.
The defendants’ counsel cited 6R 113 which provides:
113—General duty of parties
(1)The parties to a proceeding, and their lawyers, have a duty to the Court to assist in the orderly progress of the proceeding from its commencement until it has been finally dealt with by the Court.
(2)In particular, the parties have a duty to the Court to ensure that—
(a)they comply with the Court's directions as to the conduct of the proceeding; and
(b)they are ready to proceed with each interlocutory hearing at the time appointed under these rules; and
(c)all interlocutory proceedings are completed by the time the case is referred for trial and, in particular, the pleadings properly reflect the case that is to be presented at trial; and
(d)the trial can proceed, as far as practicable without interruption, from the time appointed for its commencement.
That Rule imposes duties on the parties, but not on the Court. There is a duty both on the plaintiff to remedy the defective pleading if the point has been well taken and on the defendant to pursue the defect by proper means if it alleges any prejudice or embarrassment from it. 6R 113 does not impose any duty on the Court to order a plaintiff to remedy the breach or to strike out the defective pleading.
Having read the Statement of Claim for the purposes of preparing these reasons, there is another apparent defect in the pleading of the 1999 Deed which I bring to the attention of the plaintiff for it to consider whether it wishes to seek to remedy it by amendment. For the purposes of the argument I was given a copy of the 1999 Deed and referred to various parts of it. Clause 4(a) is a lease by Holdings to Onetemp of “the Sales Assets”. Sub-clauses 4.1(b)-(g) are various licences granted by Holdings to Onetemp. “Sales Assets” is defined in clause 2.6 to mean the assets described in Schedule C. Schedule C defines “Sales Assets” as “goodwill associated with the sales products set out in Schedule B and any additional similar products”. Schedule B, under a heading of “Sales Products (as at 31/1/91),” contains a number of words which are apparently brand names.
Paragraph 19.3 of the Amended Statement of Claim pleads that the 1999 Deed “granted to Onetemp certain licences. [Clause 4.1]”. The whole of what is pleaded about the 1999 Deed only refers to licences granted by Holdings to Onetemp.[4] It does not plead the granting of any lease of the “Sales Assets” contained in clause 4.1(a) of the 1999 Deed, but the submissions of the plaintiff’s counsel seem to assume that whatever was granted as a “licence” by clause 4.1 of the 1999 Deed to Onetemp included these Sales Assets. I doubt that is the proper interpretation of the pleading as it stands.
[4] It pleads in terms of “certain licenses”. It is unclear what is meant by “certain” in this context. It may mean that it is not all of the licences granted by Holdings to Onetemp.
Further particulars of clauses 22.1 and 22.3
Under 6R 98(2)(d) Holdings was required to “plead such facts as give fair notice of (its) case at trial”. By 6R 102(3) the Court is only to make an order for further particulars if it is satisfied that the Statement of Claim does not give fair notice of the plaintiff’s case and the order is necessary to avoid substantial prejudice to the defendants. The substantial prejudice to the defendants can be in them complying with their obligations to make disclosure of documents.[5]
[5] Davies & Anor v Chicago Boot Company Pty Ltd (No. 3) Lunn M, 14 November 2007, [2007] SASC 399.
It is necessary here to digress into what documents the plaintiff seeks by way of further disclosure of documents. Its application FDN17 is based on these documents being directly relevant to the issues raised on the pleadings. That requires what is directly relevant to be readily discernable from the face of the pleadings, including proper particularity.
In its previous disclosure of documents Onetemp has disclosed Analysis Reports of its business activities up until 12 August 2008 which refer to some of the brands of products set out in Schedule B to the 1999 Deed. Thus Holdings has ascertained what use Onetemp has made since the termination of the 1999 Deed until 12 August 2008 of products of the brands referred to in that Schedule. This analysis document up until 12 August 2008 also shows that Onetemp has been dealing in products with brands which are not in Schedule B. Whether these other products are “any additional similar products” as set out in Schedule C, as quoted above, and therefore might be subject to the lease in clause 4.1(a) of the 1999 Deed is unknown to Onetemp, and is not the subject of any pleading.
After 12 August 2008 Onetemp apparently changed its computer system so that the equivalent Analysis Report on the products which it dealt with after that date did not disclose the brand names. In essence, what Holdings now seeks is an Analysis Report for the business of Onetemp from 12 August 2008 to the present in the format which was used for the analysis before 12 August 2008 so that it can ascertain the brand names of the products in which Onetemp has been dealing. Onetemp does not say that such an analysis cannot be produced from its computer data if it was required to do so. Its objection to the order sought is all that is directly relevant on the pleadings are that portion of its business which are Sales Assets as defined in Schedule C of the 1999 Deed. It is clear this is not the whole of its present business. It says it should only be required to disclose an Analysis Report confined to sales assets which are within Schedule C and are the assets referred to in paragraphs 21.1 and 21.3 of the Amended Statement of Claim. It understandably says that if those paragraphs of the Statement of Claim refer to “any additional similar products” as referred to in Schedule C, it needs them to be identified. I accept its contention that any order for further disclosure of the Analysis Reports should be confined to the assets as pleaded in paragraph 22.1 and 22.3 of the Amended Statement of Claim and as properly particularised by Holdings so as to enable Onetemp to know what it is obliged to disclose as directly relevant documents. Hence I will order the particulars requested. The order is necessary to avoid substantial prejudice to the defendants in complying with their disclosure obligations.
There was some suggestion in the submissions from counsel for Holdings that it could not give any such particulars unless it first had further disclosure of documents from Onetemp. Counsel for Onetemp disputed this. If that is wholly or partly the case, Holdings should in its particulars of paragraphs 22.1 and 22.3 say why it cannot at this stage give the necessary proper particulars.[6] If Holdings takes this course, the Court will need to consider any further applications which are respectively brought for further disclosure or further particulars on the topic.
[6] As to when the giving of particulars may be deferred pending disclosure of documents from another party see Wunda Joinery Pty Limited (In Liquidation) & Anor v Wunda Projects Australia Pty Limited & Ors above at [26].
To avoid making piecemeal orders I merely publish these reasons at this stage and adjourn the matter to a directions hearing when I will consider any application by the plaintiff to amend to insert particulars and/or to make other amendments to the Amended Statement of Claim. I will deal with the question of costs when the applications have run their full course