Minelab Electronics Pty Ltd v Trading Force Ltd No. Scciv-00-379, Scciv-00-1242

MINELAB ELECTRONICS PTY LTD V THE TRADING FORCE LIMITED
CONSOLIDATED ACTIONS NUMBERED 379/00 AND 1242/00
[2001] SASC 134

JUDGE BURLEY. By application dated 27 February 2001, the defendant has sought an order that the plaintiff plead further material facts in its consolidated statement of claim. The application refers to SCR 46A.09, which is as follows:-
“46A.09(1) No order is to be made that any further material facts are to be pleaded other than where the material facts pleaded do not disclose facts sufficient to give the other parties fair notice of the case which they will have to meet and the party seeking them would be significantly prejudiced in the conduct of its case by not having them …”
There follows a statement of intent in relation to the rule. It is to avoid “unfairness to another party by any lack of particularity”.
The application was not pursued within the strict confines of SCR 46A.09. In effect, the defendant contended that there were two types of flaw in the plaintiff’s statement of claim: first, there is a want of particularity; and, second, some of the paragraphs in the statement of claim were defective (not because of a want of particularity) and should be struck out. The latter complaint invokes SCR 46.18. The application was pursued in the above manner without objection from the plaintiff.
It is necessary to set out some of the background to these consolidated proceedings in order to understand the nature of the defendant’s complaints. To the extent that findings of fact are included in the following summary, those findings are made merely for the purposes of this interlocutory application and do not purport to be findings of a final nature. The summary consists of a mixture of facts which are common ground and reference to what is contained in the pleadings. The accuracy of the latter is assumed for the purposes of dealing with this application.
The plaintiff is an Australian company which manufactures mine detectors. It attempts to sell these articles globally. In about March 1999 the plaintiff and the defendant entered into a marketing agreement whereby the defendant was to be the plaintiff’s exclusive distributor of mine detectors for two-thirds of the global market. If the defendant failed to sell 2,500 units by 31 March 2000, the plaintiff was entitled to terminate the marketing agreement. On 22 April 2000 the plaintiff terminated the marketing agreement on the basis that the defendant had failed to reach the specified target. The defendant contested the validity of the termination.
The plaintiff commenced proceedings by way of a construction summons in this court (Action No 379 of 2000). Those proceedings were brought for the purposes of obtaining the determination of the court as to whether or not the marketing agreement had been validly terminated. In that action, the defendant sought and obtained injunctive relief, the effect of which was to preclude the plaintiff from acting upon the termination of the agreement. By that injunction the status quo which applied immediately prior to the notice of termination was maintained. The plaintiff was precluded from dealing with customers with whom the defendant had previously dealt pursuant to the marketing agreement.
There was an arbitration clause in the marketing agreement and a stay of the construction summons was obtained pending the parties taking their dispute as to the validity of the termination to arbitration.
Subsequently an arbitrator was appointed. On 28 August 2000 the arbitrator handed down an interim award which determined that the plaintiff had validly terminated the marketing agreement. A final award was published on 31 October 2000 in which, the plaintiff alleges in its statement of claim, the arbitrator determined that the injunction obtained in Action No 379 of 2000 had been obtained for an improper purpose, that the defendant sustained the arbitration knowing that their allegations were unfounded and were for the improper purpose of securing a collateral beneficial advantage.
Prior to obtaining the injunction, the defendant gave the usual undertaking as to damages. The plaintiff now seeks to recover damages pursuant to that undertaking. Because it was not clear to the plaintiff whether the claim for damages pursuant to the undertaking could be pursued in the original action, the plaintiff commenced an additional action (No 1242 of 2000) seeking damages. The two actions have now been consolidated and the plaintiff proceeds by reference to a consolidated statement of claim filed in the consolidated actions (Document 29).
The summonses in the two actions, by leave of the court, have been amended. The first complaint about the statement of claim contained in the request for material facts adverts to the different relief sought by the plaintiff in the two summonses and the statement of claim. This is an example not of a request for material facts, but of a complaint that a pleading is defective and that the offending passages should be struck out. Care should be taken to bear that distinction in mind when a request is made for material facts pursuant to SCR 46A.09 because to include contentions that invoke the provisions of SCR 46.18 in such a notice only creates confusion. Nevertheless, there is confusion between the summonses and the consolidated statement of claim which, I think, has now been resolved during the course of argument. It is clear from concessions made by Mr Tilmouth QC, counsel for the plaintiff, during the course of argument, that the relief sought by the plaintiff is the relief contained in the amended summons in Action No 379 of 2000 apart from paragraph 4 thereof which claims “[d]amages for the wrongful application for a stay and injunction”.
In order to avoid further confusion, I make it clear that the plaintiff, during the course of submissions has made it clear that the damages referred to in paragraphs 1, 2 and 3 of the amended summons filed in Action No 379 of 2000 all relate and are confined to damages arising in respect of the undertaking as to damages given by the defendant in Action No 379 of 2000.
As I have said, the amended summons in Action No 379 of 2000 contains paragraph 4 which makes a claim for damages for the wrongful application for a stay and injunction. This has not been pursued by the plaintiff. I think that concession properly recognises that the damage sought by the plaintiff arises not from the granting of a stay but from the granting of an injunction which was in force for the same period that the stay was in force.
The above concessions by the plaintiff resolve the complaint in paragraph 2 of the defendant’s request that the relevant causes of action are not sufficiently pleaded in the statement of claim. It is accepted by the plaintiff that there is only one cause of action pursued, namely a claim for damages pursuant to the undertaking as to damages giving rise to the claim for compensatory damages, damages for loss of reputation and exemplary, aggravated and/or punitive damages. The fact that a claim is made for such damages does not mean that such damages are recoverable either as a matter of law or as a matter of fact. That is a matter for the trial judge.
I do not intend to address every paragraph of the request for material facts because argument did not proceed in that way. There were a number of paragraphs in the statement of claim the subject of submissions and it is appropriate to deal with those in the context of the submissions put by the respective counsel for the parties.
Paragraph 14 of the statement of claim asserts that the defendant obtained the injunction for an improper purpose and there follows a series of sub-paragraphs which particularise that general assertion. It was the concern of the defendant that it was not clear from the pleading, read as a whole, whether or not the plaintiff was pursuing a claim based on causes of action other than the claim for damages arising from the undertaking as to damages given by the defendant at the time the injunction was granted. That position has now been clarified. In essence, the defendant is seeking various categories of damages in respect of one cause of action only, namely, damages which arise in relation to the undertaking as to damages.
Many of the matters set out in paragraph 14 relate to the types of damage that are sought by the plaintiff, but paragraph 14 needs to be revised, in a major way, before it can be said to be satisfactory. For example, the opening sentence refers to an improper purpose but paragraph 14.1 refers to the alleged provision of false, misleading and deceptive evidence provided to the court in order to obtain the injunction. As such, it does not deal with an improper purpose. It asserts that the defendant knowingly or with reckless indifference provided false evidence in order to obtain the injunction. That may have a bearing upon whether or not exemplary or punitive damages might be recovered if the allegation is established, but it does not deal with an improper purpose. As such paragraph 14 is fundamentally flawed.
It is only in paragraph 14.2 that reference is made to a purpose. The sub-paragraph is as follows:-
“14.2The Defendant obtained the aforesaid injunction and then engaged in Arbitration for the purposes of preventing and/or hindering the Plaintiff from selling in geographic areas previously held by the Defendant: …”
Particulars are then provided. The matters referred to in paragraph 14.2 may be relevant to a category of damages recoverable pursuant to the undertaking as to damages. The allegation in paragraph 14.2 (except for the passage “and then engaged in Arbitration”) supports the primary allegation made at the commencement of paragraph 14, namely that the injunction was obtained for an improper purpose. It defines that purpose. The particulars given under paragraph 14.2 appear to be confined to allegations relating to the actions of the defendant after the injunction was obtained. If the allegations are made out they may be evidence of a furtherance of the alleged primary purpose attributed to the defendant, but paragraph 14.2 does not read in that way.
It is confusing for the plaintiff to plead that the defendant “obtained the aforesaid injunction and then engaged in Arbitration” for the specified purposes. If the plaintiff’s claim is limited to a claim for an undertaking as to damages, the reference to engaging in arbitration for the specified purposes creates that confusion. The fact of engaging in the arbitration is relevant only to the duration of the injunction because the injunction was in force pending the arbitration. The duration of the injunction is a matter which is material to the question of damages, but paragraph 14.2 does not read in that way. As such, that aspect of paragraph 14 is flawed.
The same comments may be made in relation to paragraph 14.3 of the statement of claim because that sub-paragraph refers to obtaining the injunction and engaging in the arbitration for specified purposes.
For the above reasons paragraph 14 of the statement of claim should be struck out. It was accepted by the defendant that if paragraphs of the statement of claim were struck out, the plaintiff ought to be given the opportunity to re-plead. I propose to give leave to the plaintiff to apply for leave to amend the statement of claim in order to remedy the defects which I identify in these reasons.
Paragraphs 15 and 16 of the statement of claim may be dealt with together. By those paragraphs the plaintiff asserts that, during the course of the arbitration, admissions were made by the defendant to the effect that the plaintiff’s claim before the arbitrator was admitted and that no evidence would be led on the defendant’s counterclaim. It is alleged that the marketing agreement was validly terminated on 27 June 2000. The plaintiff then pleads in paragraph 16:
“16.As a result of the Injunction and the Defendant’s said admissions before the Arbitrator, the Plaintiff was unnecessarily and without reasonable cause put to the cost and expense of bringing proceedings in this Court and of arbitrating its dispute before the Arbitrator.”
These paragraphs are confusing. They may be taken to assert that in addition to the granting of the injunction, damages are recoverable by the plaintiff as a result of admissions made before the arbitrator. It is clear that the plaintiff does not intend to pursue a claim for damages other than a claim based on the undertaking as to damages. That being the case the passage in paragraph 16 referring to the defendant’s alleged admissions is confusing. It is possible that the matters raised in paragraphs 15 and 16 of the statement of claim may have a bearing on the extent of the damages recoverable by the plaintiff pursuant to the undertakings but, as presently pleaded, paragraphs 15 and 16 do not have that effect. They should therefore be struck out.
In revising the statement of claim, the plaintiff should pay heed to the defendant’s comment in paragraph 4 of the request for material facts (Exhibit JS1 to the affidavit of Ms Staugas sworn on 27 February 2001). That paragraph is as follows:
“The plaintiff has failed to plead with any precision the loss that allegedly flows from the granting of the injunction and TFL’s undertaking as to damages and the loss which allegedly flows from any other, and if so which, cause of action …”
The reference to multiple causes of action in that complaint may be put to one side because it is now clear that only one cause of action is being pursued. However, in revising the statement of claim, the plaintiff must take into account the need to plead with precision the loss that is alleged to have flowed from the granting of the injunction the right to recover damages for which is conferred by the undertaking as to damages. A number of other complaints are made in the request about individual paragraphs in paragraph 5 of the request. It has not been necessary to make a determination as to whether or not those complaints have been made out because the offending paragraphs have been found to be deficient for other more general reasons. Nevertheless, it would be prudent to take the complaints in paragraphs 5.1 to 5.3 of the request into account when revising the statement of claim in order to avoid a repetition of such complaints on the subsequent application for leave to amend the statement of claim.
The defendant complains about paragraph 17 of the statement of claim. Those complaints are set out at paragraph 5.4 of the request. The plaintiff asserts in paragraph 17 that whilst the injunction was in force the plaintiff was precluded from participating in or taking over without commercial penalty certain evaluation trials that the defendant had secured. Particulars are then provided which to the ordinary reader are incomprehensible. The plaintiff contended that those particulars were derived from documentation discovered by the defendant. That is no answer to the complaint. Apart from anything else, the particulars provided must be comprehensible to the trial judge without elaborate explanation. Paragraph 17 should be struck out.
In paragraph 5.5 of the request the defendant complains about paragraph 18.7 of the statement of claim. That paragraph is as follows:
“As a result of the Injunction, the Plaintiff has lost the ability to effectively market its product in the Defendant’s territory from the period 23 April 2000 to 1 March 2001.”
The defendant contends that the sub-paragraph is vague and embarrassing. However, paragraph 18.7 purports to state the effect of paragraphs 18.1 to 18.6. It therefore seems to me that paragraph 18.7 should be contained within the introductory paragraph to paragraph 18 with paragraphs 18.1 to 18.6 providing particulars of that assertion.
The defendant also complains about paragraph 18.8 and I agree that that sub-paragraph does not plead a material fact and should be struck out. I propose to strike out the whole of paragraph 18 because, for the reasons given above, it is defective.
In paragraph 5.7 of the request, the defendant complains about paragraph 19 of the statement of claim. This paragraph purports to set out damages that have been sustained by the plaintiff. It was asserted by the defendant that paragraphs 17 and 19.1 are mutually inconsistent. That may well be so, but in any event paragraph 19 is confusing when compared with the assertions in paragraph 17. It suffers from the same defect as paragraph 17 in that the particulars given in paragraph 19.1 are not readily comprehensible. I think paragraph 19 should be struck out.
In paragraph 5.8 of the request the defendant complains that paragraph 20.1 of the statement of claim is defective because it is non-specific. I agree with this complaint. The plaintiff should provide particulars of the conduct referred to in paragraph 20.1 even if it is only by cross-reference to other paragraphs of the statement of claim. It is not necessary to strike the paragraph out because the request is a proper request for material facts. I propose to order that those material facts be provided.
In paragraph 5.9 of the request the defendant complains about paragraph 21 of the statement of claim. The first sentence of paragraph 21 is as follows:
“21.The Plaintiff claims aggravated and/or exemplary and/or punitive damages to be determined by this Honourable Court, and repeats the matters pleaded herein.”
I agree that this paragraph is defective. No attempt has been made to state, by cross-reference or otherwise, the basis upon which aggravated, exemplary or punitive damages is sought.
It is also complained that paragraph 21.1 is defective because no material facts have been pleaded supporting the allegation that the plaintiff has lost the value of the services of the employees referred to in paragraph 21.1. I agree that the sub-paragraph suffers from this defect and that it should be struck out. I propose to strike out the whole of paragraph 21 of the statement of claim.
Paragraph 22 of the statement of claim is the first paragraph of the Prayer for Relief and in it the plaintiff claims “[d]amages for breach of undertaking”. The plaintiff accepts that this paragraph is flawed and indicated during argument that it would seek to amend the paragraph as follows:
“The Plaintiff seeks a declaration or order that the Defendant’s undertaking as to damages given in these proceedings should be enforced and a declaration or determination that the Plaintiff is entitled to damages and that there be an inquiry with respect to damages, and an assessment thereof.”
I think that is an appropriate amendment provided that the following additional sentence is added:-
“The damages sought by the plaintiff are those referred to in paragraphs 1, 2 and 3 of the amended summons filed in Action No 379 of 2000.”
I propose to make the following orders:
1.   That paragraphs 14-19, 21 and 22 of the consolidated statement of claim be struck out.
2.   That the plaintiff have leave to apply to amend the consolidated statement of claim within 28 days of publication of these reasons.
3.   That the plaintiff provide to the defendant within 28 days further material facts relating to the conduct referred to in paragraph 20.1 of the consolidated statement of claim.
I will hear counsel as to costs.

[2001] SASC 134

17 May 2001