Locke v Lepple Pty Ltd

[2009] WADC 21

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   LOCKE -v- LEPPLE PTY LTD [2009] WADC 21

CORAM:   DEPUTY REGISTRAR HARMAN

HEARD:   27 JANUARY 2009

DELIVERED          :   19 FEBRUARY 2009

FILE NO/S:   CIV 987 of 2006

BETWEEN:   MAXWELL THOMAS LOCKE

Plaintiff

AND

LEPPLE PTY LTD
Defendant

Catchwords:

Practice - Western Australia - Practice under the Rules of the Supreme Court of Western Australia - Application to amend statement of claim - Sufficiency of evidence

Legislation:

Nil

Result:

Application refused

Representation:

Counsel:

Plaintiff:     Mr P A Kyle

Defendant:     Mr A P S Hershowitz

Solicitors:

Plaintiff:     Kyle & Company

Defendant:     Griffiths & Godecke

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

Nil

1. DEPUTY REGISTRAR HARMAN:  As assignee of the vendor's cause of action the plaintiff claims damages for breach of an agreement to purchase an insurance broking business.  It is common ground that the purchase price was a percentage of the annual commissions received for former patrons of the business who renewed policies in years following the date of purchase.  The plaintiff alleges breach of the obligation to pay.

2. By the application now before me the plaintiff seeks leave to amend his pleading to add implied terms and to claim for loss arising from breach of those terms.  The terms that he seeks to plead are that the defendant would inform the purchaser of relevant commissions generated, maintain relevant records and permit access to them and to use its best endeavours to maximise relevant commissions.  The onus is upon the plaintiff.  The discretion to grant leave is unfettered. 

3. In the course of the interlocutory processes the defendant has provided the plaintiff with evidence relating to relevant commissions.  At pars 11 to 13 of his affidavit of 12 May 2008 Daniel Jones deposes on behalf of the defendant that it retained in electronic format the records of former patrons of the vendor who renewed policies in the year ending on the first anniversary of the sale.  He deposes that he then destroyed all of the vendor's records.

4. In his affidavit of 23 October 2008 the plaintiff refers to his analysis of the defendant's discovery and particulars of defence upon which he concludes that there are no records of 288 former patrons of the vendor.  At par 5 he deposes:

   "As a result of the destruction of the records, which took place after the Defendant became aware of my intention to take action against it, I have no means of ascertaining whether or not insurances for any of those former clients of Locke Holdings was arranged by the Defendant and therefore no means of verifying or disproving the amount which the Defendant effectively acknowledges would be the purchase price payable under the agreement between Locke Holdings and the Defendant, if its defence to my claim is unsuccessful."

5. There is no basis upon which I could be satisfied of the accuracy of the conclusion expressed as to the timing of record destruction.  Be that as it may, the critical proposition, at par 7, is as follows:

   "In the absence of the means of verifying the amount of the purchase price I contend that the contract lacked business efficacy without an implied obligation on the Defendant to keep proper records of the former clients of Locke Holdings and make them available to me for inspection."

6. The force of that proposition ought to be evaluated in context.  The only interest of a court in discerning the want of such efficacy would be for the purposes of discrete litigation.  The action has been on foot for some 30 months and there is no suggestion that the plaintiff has been put to any trouble in identifying and pursuing a contractual benefit.  I consider that the real issue raised by the submission is whether the scope for the plaintiff to claim under the agreement ought to be enhanced.

7. In putting the case of the defendant's failure to use its best endeavours to maximise commissions the plaintiff submitted that the force for implication of the founding contractual term lay in the proposition that the vendor ought to be accorded the opportunity to realise the benefit of the agreement.  I make the same observation.

8. In considering whether to grant leave it is appropriate to recognise that any breach of the proposed implied terms would not draw upon the same facts or substantially the same facts that support the existing claim.  As much as the focus of the plaintiff is on his contended disadvantage it is appropriate to consider the potential prejudice to the defendant if leave was granted.  Other than what has recently transpired in the context of inspection there is no evidence that the plaintiff had shown any prior interest in the defendant's records. 

9. In the absence of evidence I might infer that other than for the purpose of informing the vendor's clients of the change of ownership of the business the vendor's records and their content had been of no interest to the defendant.  There is no reason to consider that prior to the proposed amendment the defendant would have considered the events upon which the proposed claims are founded were other than benign.  I know nothing of any means by which the defendant could inform itself of the disinclination of the vendor's former patrons to maintain their relationship with the business. 

10. It is open for me to infer that it would only be the plaintiff who could now identify relevant former patrons.  Even if that were the case I do not know whether the plaintiff would have more than their names.  In making an assessment of the position of the defendant it is not inappropriate to reflect on the prospect that on granting the amendment the court would set the defendant the task of seeking particulars.  Beyond that observation there is only scope for speculation.  In my opinion that scope reveals that evidence in support of the application is wanting. In my opinion the prospect of serious prejudice to the defendant is sufficient to justify amendment being refused.

11. It is also significant that there is no support whatsoever for the proposition that the plaintiff has sustained any loss.  I accept that it is always open to the court to draw inferences.  In an application where the onus is unquestionably on the applicant and it neither brings evidence nor evidence of its inability to do so, in my opinion the court should carefully evaluate whether it is appropriate to do so.  In my opinion the absence of any evidence on the point reveals the proposed claims as speculative. 

12. In my opinion the plaintiff has not satisfied the onus and it follows that the application ought to be refused.