Meridian Oil NL v Smyth
[2003] WASC 49
MERIDIAN OIL NL -v- SMYTH & ORS [2003] WASC 49
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 49 | |
| Case No: | CIV:1208/1995 | 25 NOVEMBER 2002 | |
| Coram: | MASTER SANDERSON | 19/03/03 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Amendment allowed | ||
| B | |||
| PDF Version |
| Parties: | MERIDIAN OIL NL PETER MARK SMYTH DAVID ALEC ANDREW FLEMING CHRISTOPHER PAUL McDONALD MAIN MICHAEL JOHN FULLER CECIL DENNISTON BURNEY LINDSAY GERALD DAVEY CAMERON ROSS PHILIP GLOSSOP RICHARD WEBB |
Catchwords: | Practice and procedure Application to amend statement of claim Turns on own facts |
Legislation: | Nil |
Case References: | Meridian Oil NL v Smyth & Ors [1999] WASC 173 Meridian Oil NL v Smyth & Ors [2000] WASC 156 Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250 Lee v Clarkson (1915) 17 WALR 189 McKechnie v Campbell (1996) 17 WAR 62 Norgard v Rocom Pty Ltd (1990) 93 ALR 571 Richard Walter Pty Ltd v FCT (1996) 33 ATR 97 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PETER MARK SMYTH
First Defendant
DAVID ALEC ANDREW FLEMING
Second Defendant
CHRISTOPHER PAUL McDONALD MAIN
Third Defendant
MICHAEL JOHN FULLER
Fourth Defendant
CECIL DENNISTON BURNEY
Fifth Defendant
LINDSAY GERALD DAVEY CAMERON
Sixth Defendant
ROSS PHILIP GLOSSOP
Seventh Defendant
RICHARD WEBB
Eighth Defendant
(Page 2)
Catchwords:
Practice and procedure - Application to amend statement of claim - Turns on own facts
Legislation:
Nil
Result:
Amendment allowed
Category: B
Representation:
Counsel:
Plaintiff : Mr J Gilmour QC
First Defendant : Mr J C Vaughan
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Solicitors:
Plaintiff : Hotchkin Hanly
First Defendant : Freehills
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
(Page 3)
Case(s) referred to in judgment(s):
Meridian Oil NL v Smyth & Ors [1999] WASC 173
Meridian Oil NL v Smyth & Ors [2000] WASC 156
Case(s) also cited:
Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250
Lee v Clarkson (1915) 17 WALR 189
McKechnie v Campbell (1996) 17 WAR 62
Norgard v Rocom Pty Ltd (1990) 93 ALR 571
Richard Walter Pty Ltd v FCT (1996) 33 ATR 97
(Page 4)
1 MASTER SANDERSON: This is a pleading summons. The background to the application is somewhat convoluted but helps explain the present state of the action.
2 An amended statement of claim was filed on 14 April 1999. On 20 September 1999 I ordered that the amended statement of claim be struck out: see Meridian Oil NL v Smyth & Ors [1999] WASC 173. The plaintiff was given leave to file a minute of proposed amended statement of claim. The plaintiff filed and served a minute of proposed amended statement of claim on 25 November 1999. The first defendant opposed the grant of leave to amend the statement of claim in terms of that minute. On 16 June 2000, after hearing argument, I refused leave. Again the plaintiff was given leave to file a minute of proposed amended statement of claim: see Meridian Oil NL v Smyth & Ors [2000] WASC 156.
3 In or around July 2000 the plaintiff served a further minute of proposed amended statement of claim dated 17 July 2000. That minute was replaced by a further minute dated 5 November 2001. By that time the first and fifth defendants had applied to strike out the action for want of prosecution. Those applications were dismissed: At the time the strike-out application was heard the first defendant had maintained his objection to the filing of the statement of claim in terms of the then extant minute.
4 Subsequent to the determination of the striking out for want of prosecution applications, the parties corresponded with respect to the statement of claim. This led to a further minute which was filed 17 September 2002. The first defendant objected to the terms of this minute. On 25 November 2002 I heard argument in relation to the plaintiff's application for leave to amend. During the course of his submissions, counsel for the plaintiff foreshadowed further amendments to the minute. Leave was given to provide a further minute within seven days. A further minute of proposed amended statement of claim was filed 29 November 2002. Counsel for the first defendant was given a further seven days to make any additional submissions in relation to that minute. On 6 December 2002 the solicitors for the first defendant made further submissions and advised they had sought copies from the plaintiff's solicitors of certain documents referred to in the latest minute. By letter dated 11 December 2002 the plaintiff's solicitors advised they had provided copies of the documents and indicated they had nothing more to add in response to the further submissions of the first defendant's solicitors. The solicitors for the first defendant had foreshadowed that upon receipt of the documents they had requested, they may wish to make
(Page 5)
- further submissions. No further submissions have been made. The question now then is whether or not leave ought be given to amend in terms of the minute of proposed amended statement of claim dated 29 November 2002.
5 Objection was taken to par 57 of the minute of 17 September 2002. As foreshadowed during the course of submissions, that paragraph has now been amended and the first defendant's objections fall away. Paragraph 57 in its present form can stand.
6 In relation to the 17 September 2002 minute, objection was taken to par 79 and 80 which plead that the Claremont Agreement and the Spargos Loan (as these terms are defined in the minute) were not bona fide transactions. Counsel for the first defendant referred to par 75 to 81 of the minute. He acknowledged that the word "sham" had been removed in the amended pleading but said that in substance, this was still the allegation. It was said that the pleading did not disclose a cause of action as no other transaction had been pleaded in respect of the Clarement Agreement and the Spargos Loan.
7 With respect to par 79 as it appears in the minute of 29 November 2002, it seems to me that the pleading is proper. By par 63 of the minute it is pleaded that on 16 June 1988 the plaintiff paid into the trust account of certain solicitors in London an amount of $4.5 million. That amount is defined as "the Sum". By par 76 it is pleaded that the Sum was comprised of funds paid by Claremont and Spargos. Particulars are provided and it is said that Claremont contributed an amount of $1.5 million. That contribution is defined as the "the Claremont Sum". Paragraph 79 then deals with the Claremont Sum and says it was provided pursuant to an agreement for sale by the plaintiff to Claremont of the plaintiff's Australian and USA gas and oil interests. That agreement is in turn defined as "the Claremont Agreement". A series of material facts are then pleaded which, it is said, leads to the conclusion that the Claremont Agreement was not a bona fide transaction in the sense that it was not in the interests of either the plaintiff or Claremont. There is no plea that the Claremont Agreement was not binding.
8 In his additional submissions, counsel for the first defendant says there is no basis for the pleas to be found in par 79(n) and (o). These paragraphs are pleas respectively that the Claremont Sum was used to benefit one Johnson to the detriment of the plaintiff and the purpose of the Claremont Agreement was to obtain the Claremont Sum to be used to assist Johnson to secure control of Claremont. I will deal with these two
(Page 6)
- subparagraphs further below because they are picked up in relation to complaints made about par 84A(a) of the minute. For present purposes it is sufficient if I say that I am satisfied in the context of par 79 of the minute, the subparagraphs can stand. Both are pleas of material fact. Both subparagraphs refer back to par 57 and 57A. Taken in conjunction with those two paragraphs, they lead to a conclusion based upon the pleading that the first defendant knew that the Claremont Sum was to be used to benefit Johnson and to the detriment of the plaintiff, and that the purpose of the Claremont Agreement was to assist Johnson to secure control of Claremont. Paragraph 79 can stand.
9 Complaint is made of par 83A of the minute. (In his supplementary submissions counsel for the first defendant referred to the fact that during the course of his submissions counsel for the plaintiff indicated that par 83(a) in the minute of 17 September 2002 would be further amended. In fact, that paragraph is now repeated in par 83A(a). Counsel's comments were based on an assumption that the paragraph would be further amended. I have dealt with the minute as submitted.) The paragraph is in the following terms:
"Smyth's knowledge of the purported Shirerise Agreement is to be inferred from the following:
(a) he co-operated with Johnson and Burney in achieving objectives of the Scheme as pleaded in paragraph 57."
10 The "Shirerise Agreement" is pleaded and particularised in par 69 of the minute. Essentially it was an agreement between the plaintiff and Shirerise Petroleum Ltd, pursuant to which the plaintiff was to acquire from Shirerise "alleged" oil and gas interests and freehold land in the United States of America. "The Scheme" is defined in par 54 of the minute. That paragraph reads as follows:
"In or about late October 1987, Johnson, Burney and Fuller agreed for IRL and the Ska Trust to complete the acquisition of effective share and board of control each of Claremont, Beach, Coronet and Spargos, and to use those companies' cash reserves and assets by one means or another to repay the ACC Loans."
11 Paragraph 57 is a plea that the first defendant knew Johnson was seeking to secure control of Spargos and Claremont. In my view, all of these matters taken together amount to a proper plea. There is no doubt that the plea of knowledge on the part of the first defendant is inferential (as the paragraph itself says) and no doubt the inference will be drawn
(Page 7)
- from a number of matters which are referred to in par 83A. To that extent, par 83A(a) should not be looked at in isolation. In my view there is no warrant for striking out the subparagraph.
12 Objection is taken to par 97 of the minute. This paragraph deals with what is described in the pleading as the Firstway/Burbank Agreement. That agreement is defined in par 92 of the minute. It in turn relies upon two resolutions of the then board of directors of the plaintiff which are pleaded in par 90 and 91 of the minute. The defendant says that by par 94 of the minute it is pleaded that the Firstway/Burbank Agreement was a sham. By par 97 it is pleaded that the first defendant breached his equitable duty in causing the plaintiff to enter into the Firstway/Burbank Agreement. As I understand the submissions put on behalf of the first defendant (and it must be said that the position is not entirely clear, at least in the written submissions), it is said that it is inconsistent to allege on the one hand a transaction is a sham, and on the other that by causing the plaintiff to enter into the transaction the first defendant breached his equitable duty. The answer to that is that par 97 is pleaded in the alternative. Mutually inconsistent pleas can be made, so long as it is clear that they are made in the alternative. That is the case here.
13 It is further said on behalf of the first defendant that it is the plaintiff's case that the Firstway/Burbank Agreement was never put into effect. Accordingly, it is said that subpar 97(a) to (e) and (h) are irrelevant. It is true that the plaintiff pleads that it did not exercise its option pursuant to the Firstway/Burbank Agreement: see par 99. (In the minute there is an error and the paragraph is numbered 9). The fact that the agreement was not put into effect does not mean that there was no breach of the first defendant's equitable duty in entering into the agreement. It may be that no loss resulted to the plaintiff as a direct consequence of its entering into the Firstway/Burbank Agreement because the agreement was not put into effect. But that is an issue of causation which, given that the allegation is breach of an equitable duty, may not be relevant. In my view there is no substance in the first defendant's objection.
14 There is a further objection raised to subpar 97(f). That subpar pleads that the first defendant breached his equitable duty of care to the plaintiff in that he failed to take any steps to recover certain payments from Firstway and others. It is said that this cannot be inferred. But the plea made by the plaintiff is one of material fact. At trial it will be necessary for the plaintiff to establish that the first defendant failed to take any steps to recover the various amounts. It is difficult to see how events
(Page 8)
- which occurred subsequent to the parties entering into the Firstway/Burbank Agreement could establish a breach of equitable duty of care in resolving to enter into the agreement. The plaintiff entered into the Shirerise Agreement in June 1988: par 69. By that date the Sum had already been paid and as part of the Shirerise Agreement, its character was altered: see par 69(c) and par 76. The Bisset Payments are defined in par 86 of the minute. These payments were made on 30 June 1988 and 18 July 1988. The Firstway/Burbank Agreement was said to be entered into on 30 March 1989: see par 92. It may be then that the fact no steps had been taken to recover these payments prior to the date of entering into the Firstway/Burbank Agreement is what is said to give rise to the breach of equitable duty. In other words, it is an issue of timing. In any event, I am not satisfied that the subparagraph ought be struck out. It does not seem to me to be so offensive in the context of the pleading as a whole to require its omission.
15 Objection is taken to par 119. In the latest minute, that paragraph has been substantially amended and a new par 120 has been added. No comment is made by the first defendant about these two paragraphs in the additional submissions. In my view, both paragraphs are in a proper form and should be allowed to stand.
16 I cannot leave this matter without making some general comments about the pleading. The history of the matter which I have outlined above shows the plaintiff has had great difficulty putting its statement of claim in an acceptable form. To an extent, the difficulties are understandable. This is a complex action involving a number of transactions which are convoluted, interrelated and interdependent. The present minute runs to 120 paragraphs and 77 pages. While following the case put against the first defendant is by no means easy, the pleading does follow a logical narrative and the first defendant is now in a position to know the case he has to meet. Doubtless there are ways in which the pleading could be improved. But to require any further amendments which are of a minor nature would not, in my view, be appropriate. The present minute is, in all respects, satisfactory.
17 For the sake of clarity, it may be best if a substituted statement of claim is filed which omits both the marking up and those paragraphs which have been deleted. That would make the statement of claim easier to follow. I will hear the parties on this question and on the question of costs.
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