Jarvis v Stirling Corporation Pty Ltd
[2005] WASC 210
JARVIS & ORS -v- STIRLING CORPORATION PTY LTD & ORS [2005] WASC 210
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 210 | |
| Case No: | CIV:1728/2002 | 9 SEPTEMBER 2005 | |
| Coram: | MASTER SANDERSON | 22/09/05 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Paragraphs of defence struck out | ||
| B | |||
| PDF Version |
| Parties: | DARREL ARTHUR JARVIS IRENE SARAH JARVIS as Trustee for DARREL JARVIS SUPERANNUATION FUND WESTPOINT HOLDINGS PTY LTD as Trustee for the JARVIS FAMILY TRUST STIRLING CORPORATION PTY LTD VINCENZO MARIO ALESSANDRINO CARMELO ALESSANDRINO LOUIE VISKO ZANINOVICH ROBERT IAN VINER |
Catchwords: | Practice and procedure Application to strike out paragraphs of defence where consent to amend given without reservation of right to strike out Adequacy of pleading Turns on own facts |
Legislation: | Trade Practices Act 1974 (Cth), s 51A |
Case References: | Southern Equities Corp v Western Australian Government Holdings Ltd (No 2) (1993) 10 WAR 351 Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 PRL Nominees Pty Ltd v Glaser Nominees Pty Ltd, unreported; SCt of WA (Master Staples); Library No7235; 8August 1988 The Director of Public Prosecutions for Western Australia v Mansfield [2005] WASC 59 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- IRENE SARAH JARVIS as Trustee for DARREL JARVIS SUPERANNUATION FUND
First Plaintiff
WESTPOINT HOLDINGS PTY LTD as Trustee for the JARVIS FAMILY TRUST
Second Plaintiff
DARREL ARTHUR JARVIS
Third Plaintiff
AND
STIRLING CORPORATION PTY LTD
First Defendant
VINCENZO MARIO ALESSANDRINO
CARMELO ALESSANDRINO
LOUIE VISKO ZANINOVICH
ROBERT IAN VINER
Second Defendants
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Catchwords:
Practice and procedure - Application to strike out paragraphs of defence where consent to amend given without reservation of right to strike out - Adequacy of pleading - Turns on own facts
Legislation:
Trade Practices Act 1974 (Cth), s 51A
Result:
Paragraphs of defence struck out
Category: B
Representation:
Counsel:
First Plaintiff : Mr M C Hotchkin
Second Plaintiff : Mr M C Hotchkin
Third Plaintiff : Mr M C Hotchkin
First Defendant : Mr M M Mony De Kerloy
Second Defendants : Mr M M Mony De Kerloy
Solicitors:
First Plaintiff : Hotchkin Hanly
Second Plaintiff : Hotchkin Hanly
Third Plaintiff : Hotchkin Hanly
First Defendant : Mony de Kerloy
Second Defendants : Mony de Kerloy
Case(s) referred to in judgment(s):
Southern Equities Corp v Western Australian Government Holdings Ltd (No 2) (1993) 10 WAR 351
(Page 3)
Case(s) also cited:
Monaco v Arnedo Pty Ltd (1994) 13 WAR 522
PRL Nominees Pty Ltd v Glaser Nominees Pty Ltd, unreported; SCt of WA (Master Staples); Library No7235; 8August 1988
The Director of Public Prosecutions for Western Australia v Mansfield [2005] WASC 59
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1 MASTER SANDERSON: This is a pleading summons. The plaintiffs seek to strike out the defendants' amended defence filed 18 May 2005. To understand the nature of the objections taken by the plaintiffs to the defence, it is necessary to say something about the facts of the claim. That can conveniently be done by reference to the amended statement of claim dated 27 April 2005.
2 After identifying the parties, the plaintiffs plead that the second defendants were directors and shareholders of the first defendant and directors of Sorrento Beach Resort Pty Ltd ("SBR Pty Ltd"). The pleading also identifies a public company styled Bramasol. Also identified in the pleading is Agostino Irdi ("Irdi") who was trustee of the Jarvis Family Trust from its inception in March 1998 until February 2000. It is to be noted that the second plaintiff is now trustee of the Jarvis Family Trust.
3 It is pleaded that in March 1998, a meeting took place at which the third plaintiff was present as were Irdi and at least the first-named and second-named second defendants. A development known as the Sorrento Beach Resort ("SBR Project") was discussed. The plaintiffs' allege that certain representations were made at that meeting as to the financial viability of the first defendant. Further representations were made (so it is said) about the SBR Project and about the nature and range of investments held by the first defendant. It is pleaded that as a consequence of these representations, the third plaintiff agreed to become a director of SRB Pty Ltd and did so on 7 April 1998. He then became chairman of the company on 17 April 1998.
4 Paragraph 10 of the amended statement of claim pleads two representations. First is said that on or before 18 June 1998, the first defendant represented to the third plaintiff that the first defendant's group of companies and their associated projects had equity at that time, estimated at $5,500,000. That is referred to in the pleading as "the representation". Second, it is said that the first defendant represented to the third plaintiff that the equity of the first defendant was committed as a capital investment to Bramasol to be transferred as soon as possible. This is described as "the promissory representation". Collectively, those two representations are defined as "the representations". Particulars of those representations are given. The representations are said to be partly oral and partly written. The written part of the representations are said to be contained in a letter dated 18 June 1998 signed by the second defendants on behalf of the first defendant. The plaintiffs say that in reliance on the representations, the first plaintiffs advanced $600,000 to Bramasol on
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- 28 August 1998 and purchased shares in Bramasol to the value of $400,000 on 4 February 1999. It is also alleged that the third plaintiff caused an information memorandum to be published aimed at procuring investment in 4,500,000 fully paid shares of $1 each.
5 By pars 14 and 15, it is said that both the representation and the promissory representation were false. Reliance is placed on s 51A of the Trade Practices Act 1974 (Cth) ("the Act") so far as the promissory representation is concerned.
6 It is then pleaded that on 9 June 2000, the board of Bramasol resolved to instruct solicitors to prepare an offer information statement for the purposes of raising $3.39 million for Bramasol. The plaintiffs plead that on various occasions between 9 June 2000 and 8 August 2000, the second-named second defendant and the fourth-named second defendant represented to the third plaintiff that they expected the capital raising to be successful. These further representations are defined in the pleading as "the further oral promissory representation". It is said that this representation was false and reliance is again placed on s 51A of the Act. The plaintiffs then say that as a consequence of their reliance upon the further oral promissory representation, they invested approximately $1 million in Bramasol shares. It is alleged that the capital raising on behalf of Bramasol was unsuccessful and that Bramasol was in a precarious financial position when representations as to its financial health were made. The plaintiffs claim damages of around $2 million. The second defendants are alleged to have been knowingly concerned in the breach of s 52 of the Act and are, on that basis, said to be rendered personally liable for the claim.
7 The pleading then goes on to make a claim under the Fair Trading Act and a claim for breach of the fiduciary duty. This present application is only concerned with the Trade Practices Act claim.
8 By application to the case management registrar dated 14 June 2005, the plaintiffs seek the following orders:
"1. Paragraph 5 of the orders of Registrar Powell made 9 May 2005 be varied by extending the time for the filing and serving of this application be extended to 14 June 2005.
2. Paragraph 1 of the orders of Registrar Powell made 12 August 2004 be varied by adding the words "or to
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- apply to strike out the Re-Amended Defence or any paragraph thereof" at the end of that paragraph.
- 3. The time for filing and serving any application to strike out the Re-Amended Defence or any paragraph thereof which remain in the Amended Defence dated 18 May 2005 be extended to 14 June 2005.
4. The Amended Defence dated 18 May 2005, alternatively paragraphs 12, 13, 14, 16, 17, 22, 23, 32, 33, 36, 48, 51, 54, 55 and 58 to 86 thereof be struck out under Order 20 Rule 19(1)(a) and (c) of the Supreme Court Rules.
5. In the alternative to paragraph 4 hereof, the Defendants provide proper answers to requests numbered 1(b), 1(c), 2(b) to (d), 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20 and 22 in the Plaintiffs' Request for Particulars of the Defendants' Re-Amended Defence dated 26 May 2005.
6. The Defendants pay the Plaintiffs' costs of this application."
9 At the case evaluation conference held on 9 May 2005, the plaintiffs pursuant to Order 5 were given until 2 June 2005 to apply to strike out the amended defence. The application then is some 12 days late. The defendants took no issue with this delay and the time will be extended.
10 On 7 July 2004, the defendants applied to the case management registrar for leave to amend their defence in accordance with a minute proposed re-amended defence dated 7 July 2004. On 12 August 2004 the Registrar made an order in terms of a memorandum of consent orders filed that day. Order 1 was in the following terms:
"That the Defendants have leave to amend the Defence in accordance with the Minute of Proposed Re-Amended Defence dated 7 July 2004 without prejudice to the Plaintiffs' rights to seek further and better particulars thereof."
11 It is this order which the plaintiffs seek to amend in terms of par 2 of the present application. The defendants oppose leave being granted. By par 4 of the application, the plaintiffs' seek to strike out the whole of the defendants' amended defence. In fact as the matter was argued, it was only the numbered paragraphs referred to in par 4 of the application which were attacked. It was also conceded by counsel for the plaintiffs that if
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- these paragraphs were struck out, leave to re-plead ought be granted. Counsel indicated that he expected the defendants would have difficulty reformulating their claim in an acceptable fashion. But he was nonetheless prepared to concede that they should be given the opportunity to re-plead were the application to be successful.
12 It was common ground between the parties, that pars 12, 13, 14, 16, 17, 22, 23, 32, 33 and 36 of the amended defence of 18 May 2005 were the same as like numbered paragraphs found in the amended defence filed pursuant to the consent orders. It was the defendants' position that it was now not open to the plaintiffs to attack these paragraphs. It was said that by virtue of the order made by consent, the appropriateness of those paragraphs had been conceded and they were not now liable to attack.
13 In support of this proposition, counsel for the defendants referred to Seaman "Civil Procedure Western Australia", par 21.5.26 where the learned author says:
"Where specific amendments are before the court and parties do not avail themselves of the opportunity to raise objections or to reserve their rights to apply later to strike out the pleading, they cannot make a subsequent application to strike out the amendments."
14 That statement of principle relies upon the decision of Southern Equities Corp v Western Australian Government Holdings Ltd (No 2) (1993) 10 WAR 351. The facts in that case were slightly unusual. The plaintiffs' sought leave to amend their claim in terms of a minute. The matter came up in general chambers and was argued. Leave to amend was given. These events took place on 9 December 1992. In March 1993, the second defendant sought to strike out certain parts of the statement of claim. As a preliminary point, it was argued on behalf of the plaintiffs that it was not now open to the second defendants to challenge the pleading. A ruling had been made by the Master and that was the end of the matter. Master Adams ruled that it was not then open to the second defendants to challenge the statement of claim. He said (at 354):
"Now, it may well be, as has been submitted, that the second defendant's counsel overlooked the reservation of his client's rights.
There is no evidence before the court one way or the other. What is clear is that if that was the case, once the matter had been appreciated an application could have been made to recall
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- the order, or to vary it, but so far as I am aware that has not been done.
In my view, therefore, it is too late for the second defendants to now challenge this pleading. The matter has been ruled upon by the court; a decision has been handed down and it would, in my view, be an abuse of process for the court to be required to sit through another interlocutory application to challenge the very same paragraphs that were argued before me on 9 December at the behest of another party who sat silently throughout. For all of these reasons the preliminary objection to this application is upheld."
15 Clearly, there are differences between the fact situation in the Southern Equities case and the fact situation here. In the one case there had been full argument before the Master and a ruling had been made on a contested application - albeit that the second defendant appears to have taken little or no part in the application. Here there was an order made by consent. Furthermore, the plaintiffs here have applied to vary the consent orders; they did not just issue an application to strike out particular paragraphs of the statement of claim. They also provided evidence as to how it was that the consent order was made and why there was no reservation of the plaintiffs' right to challenge the amended defence.
16 This evidence is to be found in the affidavit of Michael Charles Hotchkin sworn 14 June 2005. In summary, Mr Hotchkin says that he considered the minute of proposed re-amended defence on 6 August 2004. He came to the conclusion that the pleading had some deficiencies but he was satisfied that these deficiencies could be cured by a request for particulars. On 9 August 2004, the plaintiffs' solicitors wrote to the defendants' solicitors pointing out that the proposed amended defence lacked particularity and foreshadowing a request for particulars. There followed lengthy correspondence, initially about the particulars and how they should be provided and then about whether or not the defence was defective. Essentially, Mr Hotchkin says that it was only belatedly that he came to a realisation that the defects in the defence were so substantial that a strike out application was the best course. It is fair to say, I think, that Mr Hotchkin has made a full and frank explanation of why there was a consent initially and how it is that he has come to the view that the paragraphs complained of ought be struck out. There could be no suggestion that Mr Hotchkin was either careless or inattentive in consenting to the amendment to the defence in August 2004.
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17 In my view, pleading summonses are to be discouraged. Often they are pointless, time-consuming and expensive to the parties. They bedevil litigation in this Court. It follows then that it must be a rare case when leave will be given to attack a pleading which has stood for a considerable period and which has been filed by consent without reservation of the right to apply to strike out. But in my view, this is such a case. There are in the paragraphs complained of, and which have stood for 12 months, serious defects. They are defects which may well be remedied. But unless they are remedied, the position of the defendant will not be entirely clear. This is one of those cases where, I think, certain paragraphs of the defence do embarrass the plaintiff and do require amendment. I am satisfied that the plaintiff has met the requirements set out by Master Adams in the Southern Equities decision and that leave to bring this application ought be granted. In other words, I am prepared to make orders in terms of pars 2 and 3 of the application.
18 Paragraph 12 of the defence deals with the plea of the meeting allegedly held in March 1998. Paragraph 8 (the relevant paragraph of the statement of claim) is denied. That suggests the defendants say the meeting never took place. However, the paragraph goes on to plead that "Mr Irdi arranged a meeting between the Third Plaintiff, the First and second named Second Defendants". The plea then sets out the "purposes" of the meeting. There are two faults in this paragraph. It is not clear whether it is in fact denied that a meeting ever took place - that is to say it is not clear if the defendants say the meeting was arranged but never took place. Secondly, it is not at all clear what is meant by "purposes". The defendants should say whether the meeting did take place and if it did what was discussed at that meeting. The intention of the parties - and the use of the word "purposes" tends to suggest intention - is irrelevant. The paragraph is clearly defective and ought be struck out.
19 Complaint is made as to par 13 in the application. This was not pursued in either the written or oral submissions. Complaint is made as to par 14. That paragraph pleads a meeting on 25 April 1998 between certain individuals. Once again what is pleaded is the "purpose" of the meeting. What should be pleaded is what was said and done at the meeting. In its present form, the paragraph is embarrassing and requires amendment.
20 Complaint is made as to pars 16 and 17. Paragraph 16 pleads that at a meeting on 9 May 1998, it was resolved that SBR Pty Ltd would pay the third plaintiff a directors' fee and a consultancy fee. Paragraph 17 pleads the "purpose" of paying the consultancy fee. The plaintiff says that both
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- paragraphs are irrelevant. So they are. They do not relate to any other matters in the defence and appear not to deal with any matters pleaded in the statement of claim. They ought be struck out.
21 Paragraph 22 of the defence pleads that on 18 June 1998, the second defendants gave to Bramasol a letter. That letter appears as annexure "ADT1" to the affidavit of Andrew David Ledsam Throssell sworn 8 August 2005. It is said that the second defendants gave this letter to Bramasol for the purpose of supporting the establishment of Bramasol and its proposed capital raising. Once again, it is difficult to see the relevance of the "purpose" for which the letter was given to Bramasol. The plaintiffs also complained that pars 22(a)(b) and (c) do not accurately reflect the contents of the letter. The plaintiffs say that the letter did not propose anything. Rather, it confirmed an undertaking already given. Clearly that is right. Paragraph 22 does not accurately reflect the contents of the letter and requires amendment. These two defects in par 22 mean it cannot stand.
22 Paragraph 23 of the defence deals with the letter I have referred to above (and which is defined as the "Bramasol letter"). It is said the Bramasol letter will be referred to at trial for its full terms and effect. The paragraph then says that it was "an implied term" of the Bramasol letter that the funding commitment made therein was conditional upon certain things. Particulars of the implication are then given. It is clear that this plea is bad. There is no plea that there was any contractual arrangement between the plaintiffs or any one of them and the defendants and that the terms of that contractual arrangement were embodied in the Bramasol letter. It is, with respect, a nonsense to say that there is an "implied term" in a letter. Terms can be implied into a contract but that is an entirely different thing. So par 23 cannot stand and should be struck out.
23 It is reasonably clear what is being pleaded by pars 22 and 23. As I have indicated above, the plaintiffs plead that the defendants made certain representations. The defendants denied that those representations were made. They acknowledge the existence of the Bramasol letter but they say that the letter must be seen in the context of the circumstances generally and when a complete picture is obtained, representations as alleged by the plaintiffs were not made. During the course of his oral submissions, counsel for the defendants agreed that this was the intent of the defence. But that is not the position that emerges from pars 22 and 23. This is a point of fundamental importance in the dispute between the parties. The defendants have to amend their defence to adequately
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- explain why they say the representations as pleaded by the plaintiffs were not made. They need to reformulate pars 22 and 23.
24 By par 32 of the defence, it is pleaded that Bramasol "abandoned" any proposal to acquire any assets or interests of the second defendants. The plaintiffs take issue with the use of the word "abandoned" they say it is a word which has no readily discernible meaning in the context of a plea such as this. I agree that the use of the word is unfortunate and in the context of the pleading is embarrassing. Paragraph 32 is said to rely on pars 29, 30 and 31 of the defence. Paragraph 29 pleads that by 15 October 1998, the capital raising had attracted subscriptions of no more than $195,000. Paragraph 30 pleads a meeting at which certain matters were agreed. These related to contribution of equity from the third plaintiff and the second defendants and the attempt to raise further funds by alternative means. Paragraph 31 pleads certain matters, which were done consequent upon the agreement reached on 20 October 1998. All of these paragraphs deal again with the question of the nature of the representations made by the defendants to the plaintiffs. It may also be that par 32 deals with causation - that is to say the defendants may be saying that because of intervening events as pleaded in pars 29, 30 and 31, any losses suffered were not in consequence of reliance placed upon representations made at an earlier time. The position is somewhat confused. Paragraph 32 needs to be re-cast. The use of the word "abandoned" is unhelpful and should be omitted. Paragraph 32 will be struck out.
25 Paragraph 33 pleads that the plaintiffs had knowledge of certain matters. The plaintiffs say the paragraph is irrelevant, is going to no issue between the parties. That seems to be the case. Based upon what was said by counsel in his oral submissions, it may be that the paragraph is relevant to a proper understanding of what representations were made by the defendants to the plaintiffs. If that is so, the paragraph must be put in context. As it stands at present it should be struck out.
26 The complaints as to pars 36, 48, 51, 54, 55 and 58 to 86 are all to do with relevance. As the pleading stands at the moment, so the plaintiff says, these paragraphs provide a narrative which is not relevant to any issue between the parties. That is clearly so. During the course of his submissions counsel for the defendants made a claim that these paragraphs provide background facts which lead to a proper understanding of what representations were made by the defendants. They also go in part to the question of causation and whether or not any losses sustained were as a consequence of reliance placed by the plaintiffs on the representations. That is not presently clear. If these paragraphs or
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- anything like them are to remain in the defence they have to be put in context. As matters stand at the moment, they should be struck out.
27 Complaint was made as to par 56. The complaint was conceded and an amendment will be made. However, the paragraph still seems to be irrelevant and the comments I have made about preceding and subsequent paragraphs would apply.
28 Complaint was made as to par 57 of the defence. That paragraph pleads that an acquiring the shares in Bramasol, the second plaintiff relied upon the business acumen and trustee responsibilities of its trustee and on its investment criteria. The plaintiffs requested particulars of the investment criteria referred to in the paragraph. The defendants response to this request was that:
"The investment criteria required by law to be taken into account including but not limited to that required by the law of trusts and the Superannuation Industry (Supervision) Act 1993."
29 The plaintiffs say these particulars are not sufficient as the Superannuation Industry (Supervision) Act 1993 does not apply to self-administered superannuation funds and the law of trusts does not require a trust to have "investment criteria". In my view, that complaint is well made. Paragraph 57 requires re-pleading. If the defendants allege that the trustee was obliged to have regard to certain facts and did not do so, then that should be pleaded with reference to the particular facts. As the paragraph stands at the moment, it should be struck out.
30 In my view, the plaintiffs have made out a case for striking out those paragraphs of the defence (save for par 13) as to which they complain. Given the extensive nature of the paragraphs struck out, the best course may be for the defendants to have leave to file a substituted defence. I will hear the parties on this question and as to costs.
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