Menz v Same

[2002] WASCA 269

MENZ & ANOR -v- SAME & ORS [2002] WASCA 269

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2002] WASCA 269
Court:	THE FULL COURT (WA)
Case No:	FUL:148/2001	Heard:	18 SEPTEMBER 2002
Coram:	WALLWORK J ANDERSON J BURCHETT AUJ	Delivered:	18/09/02
No of pages:	6	Judgment Part:	1 of 1
Result:	Order to dismiss the action set aside
Category:	B
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Parties:	GRAHAM HARGRAVE MENZ GFS MANAGEMENT SERVICES PTY LTD (ACN 051 681 077) GARY EVAN SAME GODFREY EDWARD TAYLOR PHILIP JOHN PATTERSON MARCO ANTHONY TEDESCHI KERIN FRANCIS SMART
Catchwords:	Practice and procedure Order dismissing action Action against solicitors for breach of fiduciary duty Subsequent action against company alleging oppressive conduct Whether abuse of process to bring two separate actions Degree of identity in substratum of facts giving rise to each cause of action
Legislation:	Nil
Case References:	Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 43 FCR 510 Henderson v Henderson (1843) 3 Hare 100 Johnson v Gore Wood & Co (a firm) [2001] 2 WLR 72 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Dart v Norwich Union Life Australia Ltd [2002] FCA 168

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : MENZ & ANOR -v- SAME & ORS [2002] WASCA 269 CORAM : WALLWORK J

ANDERSON J
BURCHETT AUJ

HEARD : 18 SEPTEMBER 2002 DELIVERED : 18 SEPTEMBER 2002 FILE NO/S : FUL 148 of 2001 BETWEEN : GRAHAM HARGRAVE MENZ

First Appellant

GFS MANAGEMENT SERVICES PTY LTD (ACN 051 681 077)
Second Appellant

AND

GARY EVAN SAME
First Respondent

GODFREY EDWARD TAYLOR
Second Respondent

PHILIP JOHN PATTERSON
Third Respondent

MARCO ANTHONY TEDESCHI
Fourth Respondent

KERIN FRANCIS SMART
Fifth Respondent

(Page 2)

Catchwords:

Practice and procedure - Order dismissing action - Action against solicitors for breach of fiduciary duty - Subsequent action against company alleging oppressive conduct - Whether abuse of process to bring two separate actions - Degree of identity in substratum of facts giving rise to each cause of action

Legislation:

Nil

Result:

Order to dismiss the action set aside

Category: B

(Page 3)

Representation:

Counsel:

First Appellant : Mr P I Jooste QC & Ms J M Witcombe
Second Appellant : Mr P I Jooste QC & Ms J M Witcombe
First Respondent : Mr S Owen­Conway QC &
Ms N Owen­Conway
Second Respondent : Mr S Owen­Conway QC &
Ms N Owen­Conway
Third Respondent : Mr S Owen­Conway QC &
Ms N Owen­Conway
Fourth Respondent : Mr S Owen­Conway QC &
Ms N Owen­Conway
Fifth Respondent : Mr S Owen­Conway QC &
Ms N Owen­Conway

Solicitors:

First Appellant : MacKinlays
Second Appellant : MacKinlays
First Respondent : Taylor Smart
Second Respondent : Taylor Smart
Third Respondent : Taylor Smart
Fourth Respondent : Taylor Smart
Fifth Respondent : Taylor Smart

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

Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 43 FCR 510
Henderson v Henderson (1843) 3 Hare 100
Johnson v Gore Wood & Co (a firm) [2001] 2 WLR 72
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Case(s) also cited:

Dart v Norwich Union Life Australia Ltd [2002] FCA 168

(Page 4)

1 WALLWORK J: I agree with the reasons which Anderson J has just given and I also agree with his Honour's conclusions. There is nothing I wish to add to what his Honour has said.

2 ANDERSON J: In this action the appellants are seeking to sue their former solicitors for breach of fiduciary duty in failing to advise the appellants, or one or other of them, to obtain independent legal advice as to the terms of a service agreement under which the first appellant, Mr Menz, would render services to a company, Ground and Foundation Supports Pty Ltd, as the managing director of that company.

3 This action was commenced by writ on 4 August 1999 and after it was commenced the second appellant commenced oppression proceedings against Ground and Foundation Supports Pty Ltd, and two directors of that company, after the first appellant, Mr Menz, was dismissed by those two directors, Mr Patterson and Mr Black.

4 An issue in the oppression action is whether it was oppressive conduct on the part of Mr Patterson and Mr Black to cause the company to underpay the appellants and to insist that Mr Menz perform or continue to perform his managerial services at what is described in the oppression proceedings as a gross underpayment.

5 It was submitted to the Master on behalf of the respondents, in the course of an application by the appellants to further amend their pleadings, that the appellants should, in the sense that it was unreasonable of them not to, litigate the issue as to the solicitors' breach of fiduciary duty in the oppression proceedings.

6 Implicit in this proposition is that the alleged failure of the solicitors to advise the appellants to obtain independent advice on the terms of the service agreement with Ground and Foundation Supports Pty Ltd was so connected with, or relevant to, the subject matter of the oppression proceedings that it was unreasonable to allow the appellants, or one of the appellants, to bring both an oppression action against the majority interests in the company and, in separate proceedings, to bring an action against the appellants' solicitors relating to their failure as fiduciaries.

7 I am not able to accept that proposition. I think, with due respect to the Master, who in fact accepted the proposition and made an order dismissing this action, that it was reasonable to bring separate proceedings against the solicitors rather than to rope those solicitors into an oppression action brought under the Corporations Law.

(Page 5)

8 There is some degree of identity in the substratum of facts in both actions, but I am not persuaded that it is an abuse of process to bring a separate claim against the solicitors for breach of their fiduciary duty and at the same time to run an oppression action against the majority interests in the company. I do not believe we should uphold the Master's decision to dismiss the proceedings.

9 Questions whether it might be appropriate to make orders for a consolidation of the two proceedings or to order that the two proceedings run in tandem or to order that they be heard together do not arise for our consideration.

10 As to the pleading points, I do not believe that we can embark upon a consideration as to whether the action or the statement of claim should be struck out, or as to whether leave should be refused to further amend the statement of claim. It is not entirely clear to me that the Master would have struck out the writ or that he would have refused leave to further amend the pleadings on pleading grounds only. It seems to me quite plain from a reading of his judgment that the Master decided to make his order for dismissal on the basis of the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, and not on the basis of the pleading points sought to be agitated in the notice of contention before us.

11 I would set aside the order to dismiss the action. How the pleadings questions may be resolved and what may be the final outcome of the appellants' attempts to get their statement of claim in order are matters for the Master rather than for this Court.

12 I should add that I am certainly not persuaded that the appellants, at all events the first appellant, Mr Menz, have no prospects of formulating an arguable case that the respondents failed to comply with their duties to their clients to resolve the potential conflict between their duty to Mr Menz and his company and their duty to the company which was about to employ them.

13 I think that the Master is in a better position than we are, this matter having come before him many times in the last year or so, to judge whether there is a factual basis upon which a cause of action might in the end be able to be pleaded. In my opinion, the order for dismissal should be set aside and that is the only formal order I think we should make, except perhaps an order in relation to costs.

(Page 6)

14 BURCHETT AUJ: I also agree. In doing so, I would draw attention to the quotation made by Lord Bingham of Cornhill in Johnson v Gore Wood & Co (a firm) [2001] 2 WLR 72 at 87 from a judgment of May LJ in an earlier case:

"It may in particular cases be sensible to advance cases separately. It depends on all the circumstances of each case."

May LJ made the further point that if claims to apply the principle of Henderson v Henderson (1843) 3 Hare 100 (67 ER 313) (commonly cited in Australia as the principle of Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) are allowed too readily, the result may be that legitimate claims may be stifled or otherwise litigants may be driven to include in one proceeding related but distinct claims which might sensibly have been left for later consideration. His Lordship commented (see ibid):

"The law should not thus encourage premature litigation which may prove unnecessary."

15 It seems to me that when interlocutory applications are made to apply Anshun, which is always on the footing that it would be an abuse of process to allow the proceeding to continue (Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 43 FCR 510 at 531-532), that principle ought to be firmly kept in mind and the other abuse (of the bringing of proceedings in circumstances where it may really be quite unnecessary) ought to be avoided.