Mondo Di Carne Pty Ltd v David Partridge Pty Ltd - [2006] WADC 161

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: MONDO DI CARNE PTY LTD -v- DAVID PARTRIDGE PTY LTD & ORS [2006] WADC 161

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 13 SEPTEMBER 2006

DELIVERED : 3 OCTOBER 2006

FILE NO/S: CIV 2378 of 2005

BETWEEN: MONDO DI CARNE PTY LTD (ACN 074 619 239)
Plaintiff
AND
DAVID PARTRIDGE PTY LTD (ACN 008 718 750)
ELIZABETH RONA MACKAY PARTRIDGE
DAVID WALKER PARTRIDGE
MICHAEL STEPHEN PARTRIDGE
Defendants
WESFEEDS PTY LTD (ACN 008 704 050)
Third Party

Catchwords:

Practice and procedure - Summary judgment application - Strike out application - Third party given leave to defend plaintiff's claim

Legislation:

Rules of the Supreme Court 1971

Sale of Goods Act 1895

Result:

Application allowed in part

Representation:

Counsel:

Plaintiff:     Mr A J Goldfinch
Defendants:     Mr B A Jackson
Third Party                   :     Mr A J Power

Solicitors:

Plaintiff:     Stables Scott
Defendants:     Holborn Lenhoff Massey
Third Party                   :     Corser & Corser

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

Asphalt & Public Works Ltd v Indemnity Guarantee Trust Ltd [1969] 1 QB 465
Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Barclays Bank v Tom [1923] 1 KB 221
Barton v London & North Western Railway Company (1888) 38 Ch D 144
Baxter v France [1895] 1 QB 591
Burton v The Shire of Bairnsdale (1908) 7 CLR 76
C E Health p/c v Cream Holdings Co [1989] 1 All ER 203
Callender v Wallingford (1884) 53 LJQB 569
Dare v Pulham (1982) 148 CLR 658
Eden v Weardale Iron & Coal Co (1884) 28 Ch D 333
Eden v Weardale Iron and Coal Co (1887) 35 Ch D 287
Edison & Swan United Electric Company v Holland (1889) 41 Ch D 28
Elliot v The Melbourne Tramway and Omnibus Co Ltd and Thornton (1885) 7 ALT 94
Enoch v National Coal Board (1978) 122 Sol Jo 401
Frank Jasper Pty Ltd v Deloitte Touche Tohmatsu (A Firm) [2006] WASC 24
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hermawan v City Construction Ltd (1999) 13 PRNZ 27
Hungerfords v Walker (1988) 177 CLR 125
O'Donohue & Anor v Nolton & Anor, unreported SCt of WA; Library No 4067; 13 March 1981
Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275
Tringali v Stewardson Stubbs & Collett Ltd [1965] NSWR 416

Case(s) also cited:

Blore v Giulini [1903] 1 KB 356
Carpet Call Pty Ltd v Chan (1987) ASC 55-553
Cointat v Myham & Son [1913] 2 KB 220
Criss v Alexander (1928) 28 SR (NSW) 297
Duncombe v Porter (1953) 90 CLR 295
Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500
Kimberley Downs Pty Ltd v Western Australia, unreported; SC of WA; Library No 6414; 25 August 1986
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Patrick v Russo-British Grain Export Co Limited [1927] 2 KB 535
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1965) 157 CLR 17
R & H Hall Ltd v W H Pim (Junior) and Co Ltd (1928) 33 Com Cas 324
Shevill v The Builders' Licensing Board (1982) 149 CLR 620
Speedworx Pty Ltd v Bunbury Car Club Inc [2005] WASC 16
Wong v Hutchison (1950-1951) 68 WN (NSW) 55
Young v Holloway & Anor [1895] P 87

PRINCIPAL REGISTRAR GETHING: The present application is brought by the third party, Wesfeeds Pty Ltd, seeking summary judgment on the claim of the plaintiff, Mondo Di Carne Pty Ltd, against the defendants. There are four named defendants: David Partridge Pty Ltd, David Partridge, Elizabeth Partridge and Michael Partridge. I will refer to these parties as "the defendants" unless there is a need to separately identify them. As an alternative, the third party challenges the plaintiff's statement of claim.
From the Amended Statement of Claim filed by the plaintiff on 10 July 2006 ("Amended Statement of Claim"), it appears that the plaintiff is a premium wholesale and retail butcher. The plaintiff entered into an agreement with the defendants to supply a product known as White Rocks Veal. White Rocks Veal is veal of an identified quality specification. In particular, the meat is of a white or off-white pink colour. The meat apparently obtains this quality as a result of the calves being raised on a diet of milk and low iron grains. The plaintiff goes on to plead that in breach of the agreement with the defendants, the defendants supplied White Rocks Veal that was not in conformity to the identified quality specification. As a result, the plaintiff alleges it has suffered loss and damage.
The defendants have not yet filed a defence to the Amended Statement of Claim. They have filed a defence to the original statement of claim which was annexed to the writ. In this defence, filed on 3 November 2005, the defendants make a bare denial or bare non-admission to most of the statement of claim. There is an admission in par 8 of the defence that for a period of 20 weeks commencing in May 2004 the plaintiff rejected veal supplied by the defendants as not being White Rocks Veal.

The third party proceedings

On 13 December 2005 the defendants obtained leave of the Court to commence third party proceedings against the third party. A statement of claim was filed on 11 January 2006. The defendants' claim against the third party is that feed supplied by the third party to the defendants was in breach of a term of the agreement between them that the feed would have a very low iron content, specifically less than 85 parts per million. As a consequence, it is alleged calves being raised by the defendants, fed on the feed provided by the third party, produced dark coloured meat that was not White Rocks Veal. In essence, the defendants' claim is that it was the third party's actions in supplying feed exceeding the maximum iron content that caused it to, in turn, supply veal to the plaintiff that did not meet the specifications of White Rocks Veal.
By its defence in the third party proceedings, filed on 31 March 2006, the third party denies it was a term of the agreement between the defendants and the third party that the feed would have a maximum iron content of less than 85 parts per million. The third party further calls into question whether the tests on the feed carried out by the defendants were indicative of the whole feed load. It also denies that the meat of the calves was dark coloured as a result of the breach of the agreement between the third party and the defendants.
The third party then applied for, and was successful in obtaining, general leave to defend the plaintiff's claim. This order was made on 29 May 2006. The format of the order was simply that "the third party have general leave to defend the plaintiff's claim". In the course of the argument before me, counsel for the plaintiff submitted that, with the benefit of hindsight, the plaintiff would have sought a more specific order which made it clear what the exact role of the third party would be in defending the plaintiff's claim. It may well be that this issue needs to be determined prior to trial. However, for present purposes, the third party's current applications fall to be determined in the context of the general order made on 29 May 2006.
It is instructive to briefly note the factual background to the order granting the third party leave to defend the plaintiff's claim. This is set out in an affidavit filed by Mr Darge, the third party's solicitor, sworn 15 May 2006. Mr Darge deposes that the plaintiff and defendants are business partners in a joint enterprise known as White Rocks Veal. They have no interest in litigating amongst themselves, but have a joint interest in the third party being held responsible for the losses. Mr Darge goes on to say that the business relationship seems (to him) to have precluded the defendants from raising "the most obvious" argument that there was no breach of contract between the plaintiff and defendants because there was no minimum supply condition in the contract between the two of them. The affidavit foreshadows an application for summary judgment, the present application, which was subsequently filed on 13 June 2006.
No further affidavits were filed in relation to the present application.

Issues to be determined

The first issue raised by the plaintiff in opposition to the application is that the third party does not have standing to bring either an application for summary judgment pursuant to the Rules of the Supreme Court O 16 r 1 ("RSC") or an application to strike out the plaintiff's statement of claim pursuant to 0 20 r 19(1). The plaintiff also asserted that both applications are brought out of time.
At the commencement of hearing, the third party submitted that the summary judgment application ought to be adjourned sine die given that the plaintiff had filed an Amended Statement of Claim subsequent to the commencement of the application. Counsel for the plaintiff argued that the application ought to be heard and determined. Having heard counsel, I formed the view that the appropriate way to proceed was to hear the strike out application then, once the pleading was settled, hear the application for summary judgment. However, during the course of argument, it became apparent that, in order to determine whether the third party had standing to bring the strike out application, I would in all likelihood have to canvas the authorities in a way that would touch on the issue of the standing to bring the summary judgment application. That being so, at the conclusion of the hearing I advised counsel that I would deal with the issue of standing to bring the summary judgment application. The parties were invited to file written submissions on this issue, including the issue of the standing of the third party to bring an application for summary judgment pursuant to the inherent jurisdiction of the Court. The plaintiff and the third party both subsequently filed submissions.
In these reasons, I deal with the issue of the standing to bring the summary judgment application first, then the issue of standing to bring the application to challenge the pleadings. I then deal with the merits of the application to challenge the pleadings.

Standing to bring the summary judgment application

RSC O 16 r 1 grants to the "defendant" the power to apply for summary judgment. The application must be made within 21 days after the appearance or at any later time by leave of the court. I have left to another day the question of leave to bring the application out of time, if indeed it is out of time. In these reasons, I am only concerned with the question of standing.
The term "defendant" is defined in Supreme Court Act 1935 (WA) ("SCA") s 4 to include "any person served with any writ of summons or other process or served with notice of, or entitled to attend, any proceedings". This is subject to the caveat at the commencement of s 4(1), "unless the context otherwise requires".
The general third party direction in this case, made on 13 December 2005, provides that the "third party be at liberty to appear at trial of the action, and take such part as the Judge shall direct, and be bound by the result of the trial." As this order gives the third party an entitlement to attend the trial, the third party could be said, at first blush, to be a "defendant" within the meaning of SCA s 4. The question then becomes whether there is anything in the context of O 16 which suggests that the word "defendant" requires a different interpretation.
The context of O 16 r 1 immediately suggests that the term "defendant" is a reference to a party who has entered an appearance: "[a]ny defendants to an action may within 21 days after appearance.” However, in this case, the third party has also filed a memorandum of appearance. Order 16 r 1 goes on to provide that summary judgment may be given where "the defendant has a good defence on the merits." Where the jurisdiction in the first paragraph of O 16 r 1 is enlivened the order that may be made is "that judgment be entered for the defendant". Each of these references suggests that the term "defendant" is limited in its meaning to a party against whom the plaintiff seeks relief. I will refer to this as its prima facie meaning.
The limited authorities on point are somewhat ambiguous. A starting point is the decision in Eden v Weardale Iron & Coal Co (1884) 28 Ch D 333 at 337. In that case, the Court of Appeal comprising Bowen LJ and Fry LJ held that the extended definition of "defendant" in the Judicature Act UK (1873) s 100 did not include a third party. This definition is in substantially identical terms to the definition of "defendant" in SCA s 4. The specific point determined by their Lordships was that a third party could not counter-claim against a plaintiff. Both their Lordships placed weight on the fact that there were specific provisions dealing with third parties (at 337, 339). Fry LJ commented that the definition in Judicature Act s 100 seemed to apply primarily to instances in which persons interested in a judgment may be served with notice of it and given liberty to attend the proceedings (see for example RSC O 61 r 3).
A different conclusion was reached in a subsequent decision in the same litigation, Eden v Weardale Iron and Coal Co (1887) 35 Ch D 287. In between the decision reported at 28 Ch D 333 and this decision, the third party had been given:
"… liberty to appear at the trial of the action and to oppose the Plaintiff's claim so far as they may be affected thereby, and for that purpose to put in oral and documentary evidence …"
The specific question decided in the decision reported at 35 Ch D 287 was whether the third party should be given leave to interrogate the plaintiff. Cotton LJ held that a third party with liberty to appear was a "defendant" for the purposes of the Judicature Act s 100. His Lordship stated (292):
"[The third party was] put in the position of being entitled to attend, as opponents of the Plaintiff, at the trial of the action, that is to say, to take part in the proceedings just as if they were Defendants, but with this qualification - that they could not be made directly answerable to the Plaintiff in the action. And, in my opinion, that carries with it the right to take any such proceedings previously to the trial of the action which a person made a defendant by the liberty given to attend proceedings, might take, including the right … to interrogate Plaintiff".
However, immediately proceeding this his Lordship commented that:
"… the order puts them in this position, that before that question of indemnity arose at all, they were to come in and at the trial of the action to contest with the Plaintiff the right which he claims as against the original Defendants. They were entitled for the purpose of litigating the question raised by the Plaintiff in his action to appear at the trial, and contest that with him, and to attend the proceedings in the action, where the Plaintiff, as against the Defendants, was seeking to obtain judgment. It is very true that the Plaintiff would not as against [the third party] be able to get any judgment, but they were entitled to go in and attend the trial of the action, and if they could defeat the very foundation of his claim."
The distinction emerges between being able to defeat the foundation of the plaintiff's claim at trial, but not being able to be the subject of judgment by the plaintiff. By parity of reasoning, it would seem to follow that the plaintiff would not be able to be the subject of judgment in favour of a third party given leave to defend the plaintiff's claim. The best that the third party could do is to assist in bringing about an outcome in which the defendant gets judgment against the plaintiff by defeating the very foundation of the claim of the plaintiff. This distinction suggests that the comments of Cotton LJ regarding Judicature Act s 100 ought to be limited to the context of leave to interrogate.
The decision of the other member of the Court, Lindley LJ, seems to be based more on the conclusion that the third party was an "opposite party" within the rule permitting interrogation, rather than on an interpretation of Judicature Act s 100.
The distinction between enabling the third party to defeat the foundation of the plaintiff's claim by supporting the defence and obtaining judgment against the plaintiff is consistent with the decision in Edison & Swan United Electric Company v Holland (1889) 41 Ch D 28. The issue in that case was whether the plaintiff was able to obtain an injunction against the third party who had been given liberty to appear at the trial of the action and who had in substance "fought" the plaintiff (at 34). The Court of Appeal held that the plaintiff had no such entitlement. Cotton LJ commenced his reasons with a statement clearly emphasising the distinction between a third party and a defendant (at 32):
"A curious point has been has been raised after judgment in this case. The Plaintiffs now ask the Court to treat the third parties in this action as if they were defendants to the action, not only to the extent of making them pay costs, but also to the extent of granting relief against them by way of injunction.
That, however, would, I think, be wrong, because the third parties are not in reality defendants.
If a plaintiff has a direct claim against a third party his proper course, as soon as that is known, is to amend the statement of claim, and make the third party a defendant, and then the Court has all that jurisdiction as against that defendant, which is gained by serving him with a writ and bringing him in as a party to the action."
There was no suggestion in this context that the third party was a defendant within the definition of Judicature Act s 100 for the purposes of an order being made against the third party following trial of the action.
In Callender v Wallingford (1884) 53 LJQB 569, the Court upheld an appeal against the grant of limited leave to a third party to defend the plaintiff's claim. All we are told in the report is that the action was brought upon a bond. The Court confirmed that the power equivalent to O 19 r 4(4) may be used to give the third party leave to defend the plaintiff's claim. Williams J concluded that "the third party is intended to be put in place of the defendant, and I think that he should have leave to put in such defences as would be available to the defendants, and no more."
The third party in its supplementary submissions invited me to find that it is implicit in the Callender decision that a third party having general leave to defend may apply for summary judgment. My reading of the decision in Callender does not go that far. It is authority that the third party may raise any substantive defences that the defendant could have raised. It does not go so far as to decide that the third party can obtain judgment directly against the plaintiff. That reading is entirely consistent with the distinction I have referred to earlier.
In Barclays Bank v Tom [1923] 1 KB 221 at 225, Eve J stated that:
"It is clear that service of the third party notice does not constitute the person on whom it is served a defendant to the action, but it seems to me that it does make him a defendant quoad the person serving the notice."
Scrutton LJ, in the same case, sets out the rationale behind the rules relating to third party proceedings in such way that reinforces the distinction I referred to above (at 223-224):
"Now I think it is important to keep clearly in mind what the third party procedure is. A plaintiff has a claim against a defendant. The defendant thinks if he is liable he has a claim over against a third party. With that matter between the defendant and the third party the plaintiff has obviously nothing to do. He is not concerned with the question whether the defendant has a remedy against somebody else. His remedy is against the defendant. But the defendant is much interested in getting the third party bound by the result of the trial between the plaintiff and himself, for otherwise he might be at a great disadvantage if, having fought the case against the plaintiff and lost, he had then to fight the case against the third party possibly on different materials, with the risk that a different result might be arrived at. The object of the third party procedure is then in the first place to get the third party bound by the decision between the plaintiff and the defendant. In the next place it is directed to getting the question between the defendant and the third party decided as soon as possible after the decision between the plaintiff and the defendant, so that the defendant may not be in the position of having to wait a considerable time before he establishes his right of indemnity against the third party while all the time the plaintiff is enforcing his judgment against the defendant. And thirdly, it is directed to saving the extra expense which would be involved by two independent actions. With these objects in view the third party order usually provides that the third party may appear at the trial between the plaintiff and the defendant. When the third party has so appeared as party to the proceedings various questions arise as to what he can do. Can he counterclaim against the plaintiff? The answer is no, for such a counterclaim would have nothing to do with the issue in the action to which he is admitted as a party: Eden v Weardale Iron and Coal Co [28 Ch D 333 at 338]. Can he interrogate the plaintiff. The answer is yes, if the object of the interrogatories is to show that the plaintiff's claim against the defendant cannot be supported: Eden v Weardale Iron & Coal Co [35 Ch D 287]."

In Asphalt & Public Works Ltd v Indemnity Guarantee Trust Ltd [1969] 1 QB 465, the Court of Appeal held that a third party had no right to appeal a decision in favour of a plaintiff against the defendant. The third party had been given leave to defend in similar terms to that given in Eden. Their Lordships did state that a third party could appeal with leave, and that the Court might grant leave whenever it thinks it just and convenient to do so (at 471, 473). Once again, limits are placed on what a third party is able to do even though it has been given general leave to defend the plaintiff's claim
There is a discernable theme in the RSC that the Judges in enacting the rules have turned their collective mind to the grant of summary judgment in the various different combinations of claim that may arise in the court. Moreover, it appears that the courts are reluctant to extend the scope of these powers beyond their prima facie meaning. Thus, a plaintiff may seek summary judgment against a defendant under O 14 r 1. The defendant can seek summary judgment on a counter-claim against a plaintiff pursuant to O 14 r 6. A defendant cannot use this power to seek summary judgment against a third party or another defendant: C E Health p/c v Cream Holdings Co [1989] 1 All ER 203 at 210. A defendant may obtain summary judgment against a third party on the return of the application for third party directions (O 19 r 4(3)(a)). Conversely, the court can also dismiss the application and terminate the proceedings on the third party notice (O 19 r 4(3)(a)). The refusal to give directions brings the third party proceedings to an end, without the need for an express order dismissing them: Baxter v France [1895] 1 QB 591 at 593.In this context, it would seem both unnecessary and unintended to give O 16 r 1 a meaning beyond its prima facie meaning.
On balance, I am of the view that in its context, the term "defendant" in O 16 r 1 does not extend to allowing a third party who has general leave to defend to be able to seek summary judgment directly against the plaintiff. The rule makes it clear that the outcome of a successful summary judgment application is an order "that judgment be entered for the defendant with or without costs". The authorities which I have referred to provide that a third party granted leave to defend cannot be the subject of a judgment in favour of the plaintiff nor can it obtain a judgment against the plaintiff. Rather, the role of a third party who has been granted leave to defend is to appear at the trial of the action to support its own position by acting to ensure that the defence is successful. If the defence is successful, then the plaintiff's claim against the defendant will fail. There would then be nothing for which the defendant would seek an indemnity from the third party.
The conclusion that O 16 r 1 does not apply in the present case is not the end of the matter. The power in O 16 to enter judgment for a defendant makes explicit provision for what is, in any event, the court's inherent jurisdiction to protect its processes from abuse by summarily disposing of an action as being frivolous or vexatious where the action is so obviously untenable that it cannot possibly succeed: Burton v The Shire of Bairnsdale (1908) 7 CLR 76 at 92. O 1 r 3A provides that "[t]he inherent power of the court to control the conduct of a proceeding is not affected by the Rules." Further, the inherent power of the court to control its own proceedings extends to third party proceedings: O'Donohue & Anor v Nolton & Anor, unreported SCt of WA; Library No 4067; 13 March 1981 at 4.
The categories of cases that may constitute an abuse of process are not closed: Tringali v Stewardson Stubbs & Collett Ltd [1965] NSWR 416 at 418; Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 of 279. It seems to me that the inherent power of the court to prevent an abuse of its processes should not be circumscribed. As to standing, it seems to me that at least any party to litigation has standing to request the court to enquire whether its processes are being abused. The remedy given on such an application would be that the plaintiff's claim be struck out as an abuse of process. It would then follow that the named defendant in the action would be entitled to judgment as against the plaintiff. A successful application would not lead to the third party being granted judgment against the plaintiff. In that way, an abuse of process argument is consistent with the authorities which I have discussed above.
In this context, I am of the view that the third party has standing to initiate an inquiry by the court as to whether or not its processes are being abused on the basis that the plaintiff's claim is frivolous or vexatious or that it is so obviously untenable that it cannot possibly succeed.
The defendant in its written submissions made reference to the decision in Enoch v National Coal Board (1978) 122 Sol Jo 401. This is a summary report of a first instance decision in the Queens Bench Division. The report concludes with a comment that:
"There was no principle of law or justice on which the third party should be allowed to prevent the plaintiff having the question of the liability of the defendant to him being determined by the court."
The context was an application by a third party to dismiss the plaintiff's action against the defendant for want of prosecution.
It is difficult to attach much weight to this comment, given the brief nature of the report. In particular, I am not persuaded on the basis of this report that the general power of the court to control its own processes ought to be circumscribed. However, I do note that the authorities in relation to striking out a plaintiff's claim as an abuse of process make it clear that great care must be exercised to ensure that a plaintiff is not improperly deprived of his opportunity for the trial of his case in the appointed manner by the court: General Steel Industries Inc v Commissioner for Railways(NSW) (1964) 112 CLR 125 at 129–130. It is a power which ought to be sparingly exercised and only in exceptional cases: Sea Culture, 32 FCR, at 279.
I was also referred in submissions to the decision in Hermawan v City Construction Ltd (1999) 13 PRNZ 27 in which it was held that an application to dismiss the plaintiff's action could be made by a third party. However, this decision is of minimal relevance as it turned on the interpretation question of whether the third party was an "opposite party" to the plaintiff for the purposes of the relevant Rules of Court in New Zealand.

Standing to bring the O 20 r 19 application

Unlike O 16 r 1, the power in O 20 r 19 in relation to challenging pleadings is not limited to applications by a particular party. Once a third party has been given leave to defend a plaintiff's claim, it must follow that it is entitled to be furnished with a statement of the plaintiff's case sufficiently clear to allow it a fair opportunity to meet the plaintiff's claim. That is of course is the function of pleadings and particulars: Dare v Pulham (1982) 148 CLR 658 at 664. This conclusion is entirely consistent with the authorities I have discussed above. Specifically, it is clear that a third party given leave to defend may defeat the foundation of the plaintiff's claim at trial. To do so, it must know the claim it is setting out to defeat.
It would also seem to follow that, for reasons of justice and the efficient disposition of cases, the third party is entitled to challenge pleadings on any of the grounds set out in O 20 r 19(1). The object of such a challenge is to ensure that the function of pleadings is met. In the words of Mason CJ and Gaudron J in Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286:
"The function of pleadings is to state with sufficient clarity the case that must be met … In this way, pleadings serve to ensure the basic requirements of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision."
The plaintiff in its supplementary submissions noted the comment in Elliotv The Melbourne Tramway and Omnibus Co Ltd and Thornton (1885) 7 ALT 94 at 94 that "great injustice would be done to the plaintiff if two people were permitted to resist him." The plaintiff submitted that this proposition ought to weigh against allowing the third party to challenge the plaintiff's statement of claim. The comment quoted was made in the context of considering whether the third party ought to be given leave to defend the plaintiff's claim. In the present case, that issue has already been determined.
However, as a statement of principle, I would express some agreement with it: there is a risk of injustice if two parties (defendant and third party) are allowed to challenge a plaintiff's statement of claim. However, there is an equal risk of injustice to a third party if no-one challenges the plaintiff's statement of claim. There is a pragmatic way to balance these risks. In the present case, the time limit in O 20 r 19(3) for the defendant to challenge the plaintiff's statement of claim as of right has expired. The fact that no challenge has been made by the defendant, in the context of an order having been made giving the third party general leave to defend, suggests there is a minimal risk of the plaintiff having to resist two challenges to its statement of claim. On the other hand, it also suggests that there is a risk of injustice to the third party if it cannot now challenge the statement of claim. If the defendant subsequently sought the leave of the court to challenge the statement of claim, the court could take into account the fact that the statement of claim has already been challenged in determining whether or not to grant leave and, if leave is granted, on what terms.
Accordingly, I am of the view that a third party who has been granted general leave to defend may make an application under O 20 r 19.
Any application under O 20 r 19(1) must be made within 21 days of the service of the pleading to which the application refers (O 20 r 19(3)(a)). In the present case, the initial statement of claim was in the writ which was presumably served shortly after the writ was filed on 21 October 2006. However, at that stage, it would have only been served on the defendant as the third party proceedings had not been commenced. On one view, at least, the time limit in O 20 r 19(3) has not commenced as the statement of claim has never been "served" on the third party (at least to my knowledge based on the affidavit evidence before me).
Rather than engage in a convoluted interpretative process to determine how O 20 r 19(3) may apply to the present case, if it ever could, it seems to me that the appropriate way to proceed is to determine whether the time limit ought to be extended pursuant to O 3 r 5.
The application was made on 13 June 2006, about a fortnight after the third party was granted leave to defend on 29 May 2006. The plaintiff submits that I should take into account the delay between commencement of the third party proceedings (leave was granted on 13 December 2005), and count that against the third party. However, the plaintiff has not put on any evidence that it has suffered prejudice by reason of the overall time delay. Nor does it appear from the court file that any significant work was undertaken between the commencement of the third party proceedings and the commencement of the application.
In my view, the delays in this case, in the context of the dispute as a whole, are not such that I should decline to grant leave. Rather, given the order made in favour of the third party granting leave to defend the plaintiff's claim, its seems to me to be in the interests of justice to extend the time. I therefore will order that the time for the third party to bring the application pursuant to O 20 r 19 in relation to the statement of claim be extended to 13 June 2006.
The argument of the parties before me focused on the Amended Statement of Claim that was filed on 10 July 2006, after the application was commenced. In my view, no leave is required for the third party to challenge the amended parts of the Amended Statement of Claim.
Even if the power in O 20 r 19(1) cannot directly be exercised by a third party who has been granted leave to defend, the court has the discretionary power to bring about the same outcome. That power is contained in O 19 r 4(4), which is in the following terms:
"(4) On an application for directions under this Rule of Court may give the third party leave to defend the action, either alone or jointly with any defendant, upon such terms as may be just, or to appear at the trial and to take such part therein as may be just, and generally may make such orders and give such directions as appear to the Court proper for having the rights and liabilities of the parties most conveniently determined and enforced and as to the extent to which the third party is to be bound by any judgment or decision in the action."
The power to "make such orders and give such directions as appear to the Court proper" in my view extends to interlocutory orders designed to enable the third party given leave to defend to be furnished with a statement of the plaintiff's case sufficiently clear to allow it a fair opportunity to meet the plaintiff's claim.
The decision in Barton v London & North Western Railway Company (1888) 38 Ch D 144 is instructive as to how this discretion is to be exercised. In that case the third parties sought leave to defend the action, but were only given "liberty to appear at the trial of the action and take such part as the judge shall direct, and be bound by the result of the trial." The Court of Appeal declined to set aside or enlarge the order. The frame of reference adopted by each member of the Court was to balance the risk of injustice; injustice to the plaintiff by having multiple defences; injustice to the third party if the issues raised in the defence are not fairly and properly investigated (at 151, 152, 154). On the facts of the case, all material grounds of defence were being raised and prosecuted by the defendant. In the words of Bowen LJ, the third parties were "unable to make out any case for further protection" (at 154).
In the present case, the defendants have not sought to challenge the adequacy of the statement of claim. Their time to do so as of right has expired. The third parties, having been given leave to defend, are entitled to know the case they have to meet.
Accordingly, even if the power under O 20 r 19(1) were not available, I would allow the third party to make an analogous application pursuant to O 19 r 4(4).

Merits of the strike out application

The relevant principles to determine an application of this kind are summarised by Master Newnes in Frank Jasper Pty Ltd v Deloitte ToucheTohmatsu (A Firm) [2006] WASC 24 at par 11–13, in the following terms:
"In determining the adequacy of a pleading it is fundamental that a party is entitled to a statement of the opponent's case sufficiently clear to allow the party a fair opportunity to meet it: Gould & Birbeck & Bacon v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490 at 517; Dare v Pulham (1982) 148 CLR 658 at 664. A pleading may therefore by struck out where it is vague, ambiguous or pleaded at too great a level of generality so as to leave the other party in doubt as to how to respond to the pleading: Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 413; Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 per Mason CJ and Gaudron J.
The application of those principles, and the rules as to pleading contained on O 20 of the Rules of the Supreme 1971, in any particular case invariably involves matters of judgment and degree. The approach to be taken to objections to pleadings, or proposed pleadings, must be directed to the attainment of the objectives set out in O 1 r 4B. Such an approach requires a degree of flexibility that may not always be consistent with the practices of earlier times. In that connection, in my respectful view, the comments of Lockhart J in Australian Competition & Consumer Commission v Golden West Pty Ltd & Geraldton Telecasters Pty Ltd [1997] FCA 792 are apposite. His Honour said:
'It is important that I say something about motions to strike out statements of claim in the conduct of modern litigation. Today, courts are playing an increasingly active role in case management. Motions to strike out pleadings are matters of practice and procedure. In its role of case management, courts devise various procedures to overcome deficiencies in pleadings other than by simply ordering that the offending paragraphs be struck out. Sometimes it is appropriate to strike them out, sometimes not. On some occasions it is better for the court to direct the applicant, whose statement of claim is under challenge, to furnish particulars or to file and serve affidavits to show that there really are facts which can be proved and which, if proved, would support the general statements made in the statement of claim. This was the course which I took in Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) 22 FCR 305, a practice which other judges adopt from time to time. This is not, of course, intended to be a substitute for a defective pleading in every case because, as is well known, pleadings must assert basic or constitutive facts, not the evidence by which they are to be proved. But case management is a sensible and flexible thing. It must not be unduly circumscribed."
The question of whether a pleading is so defective that it should be struck out is not, therefore, to be answered by any mechanical application of the rules of pleadings. It is generally to be answered by whether or not the pleading serves the fundamental objective of pleadings and whether any significant deficiencies in it can adequately be overcome by the provisions of particulars or by some other means. While it is necessary that a pleading set out with reasonable clarity and detail the case that the other party must meet, the focus must be on whether the pleadings is sufficient for the fair and proper disposition of the case, not whether it complies meticulously with the rules of pleading".
As I have noted, the hearing before me centred on the Amended Statement of Claim and that is the focus of my attention in these reasons.
The third party's challenge to the Amended Statement of Claim is based on the way it construes the agreement between the plaintiff and the defendants. The agreement is set out as an annexure to Mr Darge's affidavit ("Agreement"). The third party submits that, on a proper construction, the Agreement did not create an obligation on the defendants to supply any particular quantities of White Rocks Veal to the plaintiff. Consequently, says the third party, the plaintiff cannot sue for the failure to supply.
In particular, the third party relies on cl 4.2 of the Agreement which is in the following terms:
"Subject to our mutual intention to maintain White Rocks Veal as a premium product, you agree to do your best to buy from us as much White Rocks Veal as we are able to supply, and you agree that we will have the first right to supply White Rocks Veal to you. To the extent that we are not able to supply sufficient White Rocks Veal to meet your needs, you may purchase White Rocks Veal from other growers subject to the terms of this agreement. Our first right to supply White Rocks Veal to you is subject to the existing rights of your other suppliers, Curulli, Spence and Norton to supply four, two and two carcasses respectively per week."
The plaintiff pleads in par 4 of the Amended Statement of Claim that:
"By written agreement between the plaintiff and the first-named defendant made 22 May 1997 ('the Agreement') the first–named defendant agreed to supply to the plaintiff a product known as White Rocks Veal."

There is no plea as to how much White Rocks Veal was agreed to be supplied by the defendants to the plaintiff.
In par 17, the plaintiff simply pleads that "[p]ursuant to the Agreement the defendants supplied the plaintiff with White Rocks Veal on an ongoing basis." There is then a reference in the particulars to par 17 to the defendants supplying carcasses each week plus extra carcasses as required by the plaintiff.
The plaintiff then pleads a breach of this agreement in par 19:
"In or about April 2004 in breach of the Agreement the defendants did not supply White Rocks Veal to the plaintiff but supplied veal which was not White Rocks Veal in that the majority of the calves supplied to the plaintiff were not calves raised on a diet of milk and low iron grains and did not meet the plaintiff's and the defendants' mutually agreed colour specifications one or two."
I note at this point that it is not any part of any of the plaintiff's case that the defendants agreed to supply particular quantities of White Rocks Veal. Rather, the plaintiff's case is more accurately that the defendants agreed to supply White Rocks Veal to the plaintiff from time to time, and that the Agreement set out the specifications agreed by the parties as to what would constitute White Rocks Veal. To my mind, both the defendants and the third party should be in no doubt as to the case they have to meet from this pleading as described so far.
The third party also assert that there is no breach of the Agreement because to the extent that veal was supplied which did not meet the description of White Rocks Veal it was, by that very fact, not supplied pursuant to the Agreement. To my mind, it is open for a trial Judge to find that the purported supply by the defendants of veal as being White Rocks Veal is capable of constituting a breach of the Agreement. On the defence as it currently stands, there is a live issue at the trial of the action as to whether or not the veal in question did or did not constitute White Rocks Veal. I am thus not persuaded that the statement of claim discloses no reasonable cause of action on this particular point.
In pars 11‑16, the plaintiff pleads that certain terms were implied into the Agreement by reason of the Sale of Goods Act. In pars 20‑23, the plaintiff pleads breaches of those terms.
In par 24 of the Amended Statement of Claim, the plaintiff then pleads that because of the breaches in pars 19‑23, "[t]he plaintiff was entitled to and did reject the veal supplied by the defendants as not being White Rocks Veal." This then leads to a claim for damages in par 25 which, by a particular (b), includes loss of profits on veal rejected as being not suitable as White Rocks Veal. That head of damage is particularised in a sum of $263,819.37 in accordance with the schedule annexed to the Amended Statement of Claim.
In pars (c), (d) and (e) of the particulars to par 19 in the original statement of claim the plaintiff had pleaded a claim for loss of profits on expected export sales in the 2004/2005 and 2005/2006 financial years. These particulars were removed in the Amended Statement of Claim. In my view, this deletion is rightly made. The Agreement does not on its face, or as pleaded, provide for the supply of any minimum quantity. Therefore, there can be no claim for breach of an obligation to supply minimum quantities in the future.
Going back to the particulars to par 19, in relation to par (b), the claim is limited to damages for veal actually supplied and rejected, as opposed to the damages for veal that may have been supplied in the future. The right hand columns in the annexed schedule refer to "planned domestic bodies", "planned export bodies", "expected sales" and "expected profit". This has an element of a future supply to it. I am of the view that particular (b) at par 19, when read with the schedule, does not give a sufficiently clear outline of the case that the defendant, and indeed the third party, has to meet. It should be struck out, with liberty to the plaintiff to provide additional particulars.
Aside from this point, I am not persuaded that the central allegation in the Amended Statement of Claim should be struck out. I am not persuaded that the Amended Statement of Claim discloses no reasonable cause of action. Neither am I persuaded that it is vague or ambiguous, or otherwise falling within O 21 r 19 (1). To quote Master Newnes from the Frank Jasper decision, the Amended Statement of Claim is "sufficient for the fair and proper disposition of the case."
It remains then to consider the other strands of the plaintiff's claim. In pars 18, 24A, 24B and 25 particular (a), there is a claim to the effect that because of the breaches, the plaintiff wasted expenditure of a marketing trip to South East Asia in late 2003. The general principle is that "the plaintiff is entitled to full compensation for the loss which he sustains in consequence of the defendants' [breach], subject to the rules as to remoteness of damage and to the plaintiff's duty to mitigate his loss": Hungerfords v Walker (1988) 177 CLR 125 at 143. It is a question of fact for the trial Judge as to whether the claim for wasted marketing expenditure is a consequence of the breach (assuming the breach can be established) and is not too remote. There is no basis to strike out these paragraphs.
In pars 26 to 40 there is an alternate version of the plaintiff's claim in which the relevant contract for sale is said to have been made partly orally, partly in writing and partly implied by the conduct of the parties. Insofar as it is in writing, it consists of the agreement. No particulars are provided of the contract insofar it was made orally and by implication from conduct. These paragraphs likewise do not suffer from the primary defect raised by the third party. The Agreement is drawn in as part of the contract which occurred when each actual supply took place. I am not persuaded that the plaintiff has no reasonable cause of action in relation to this plea. Nor am I persuaded that any of the other limbs of O 20 r 19(1) are made out.
However, the plea in par 27 does seem to me to be inadequately particularised. A number of deficiencies are immediately apparent: What veal was supplied? What were the terms of the contract? What were the particulars of the contract insofar it was made partly orally? What were the particulars of the contract insofar it was made partly by implication from conduct? The plaintiff ought to be ordered to provide these particulars.
The additional particulars I propose to order should not prejudice the ability of the third party to make a request for further and better particulars. From the views I have set out in relation to standing pursuant to O 20 r 19, it should be apparent that I am of the view that the third party would have standing to seek further and better particulars. There is also the related issue of how the plaintiff is to be informed of the case it has to meet from the third party, but I will leave the determination of that issue to another day.
I will hear counsel on the appropriate form of the orders and the question of costs.
The plaintiff in its supplementary submissions submitted that the order granting the third party leave to defend the plaintiff's claim ought to have been made on terms. This issue was not argued at the hearing on 13 September 2006. It should be deferred to a later directions hearing.
In view of the procedural complexities of a case like this, the action should be docket managed in the Commercial List.