| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : MULLINS -v- HUSSEY [2005] WADC 253 CORAM : ACTING PRINCIPAL REGISTRAR WALLACE HEARD : 13 SEPTEMBER 2005 DELIVERED : 16 DECEMBER 2005 FILE NO/S : CIV 1331 of 2002 BETWEEN : ROSAL TANIA MULLINS Plaintiff
CHRISTOPHER JOHN HUSSEY
Defendant
Catchwords: Application to strike out plaintiff's amended statement of claim and for springing orders - Delay generally - Defendant's delay in bringing application - Leave to file supplementary affidavit setting out grounds for delay - Consideration of requirement to do justice between the parties - Turns on own facts
Legislation: Nil
Result: Application partially successful
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Representation:
Counsel:
Plaintiff : Mr S K Shepherd
Defendant : Mr J Eastoe
Solicitors:
Plaintiff : Bennett & Co
Defendant : Jonathan Eastoe
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
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1 REGISTRAR WALLACE: Given the unusual background to the application now before me, I shall give a brief, preliminary outline of the application's history. On 11 August 2005 the defendant filed its application expressed to be "for springing order, further and better particulars and to strike out statement of claim". There was a long hearing before me by way of special appointment on 13 September 2005 and the transcript had not been processed before I went on several weeks' leave in early October. I have already conveyed to the parties my regret regarding that delay, though there has since been further delay, for various reasons.
2 At the hearing, counsel for the plaintiff vigorously opposed the defendant's application on the grounds that it had been brought substantially out of time, and that there was no explanation on affidavit for the several months' delay. At the conclusion of the hearing, counsel for the plaintiff made an oral application for leave to file a supplementary affidavit setting out the circumstances relating to the delay in bringing the application. I was not prepared to grant such leave without first having had an opportunity to consider the somewhat complex submissions made during the hearing, but I advised the parties that, if I should form the view that it was in the interests of justice for the defendant to be permitted to file a supplementary affidavit, then the parties would be so advised by my Associate and the plaintiff would have an opportunity to respond. 3 On or about 26 October 2005 I requested my Associate to contact the parties and advise them that I considered that the defendant should be permitted to file a supplementary affidavit setting out the reasons for the delay in bringing the application. Unfortunately, the first affidavit filed was unsworn; the sworn affidavit of Jonathan Eastoe was filed on 5 November 2005. By letter dated 9 November 2005, the plaintiff's solicitor set out the plaintiff's objections to Mr Eastoe's affidavit. Also received by me on the same day (Monday 13 November 2005) was a letter dated 8 November 2005 from the plaintiff's solicitor, advising, inter alia of the plaintiff's willingness to participate in a court-based mediation conference. The plaintiff's solicitor was asked to take instructions in respect of whether or not the plaintiff was also prepared to participate in a mediation conference, and after a period of deliberation the plaintiff gave her solicitor instructions to the effect that she did not wish to do so. 4 It will be observed that the events set out above have, cumulatively, had the effect of delaying the timely progress of this matter. That is regrettable, particularly in the light of the fact that, even prior to the hearing before me, this action had been characterised by extraordinary episodes of delay. The action has now been on foot for more than three
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years, and has yet to progress to the close of pleadings stage. That having been noted, I now turn to address the application. 5 I have already alluded to the fact that the application was brought substantially out of time, but that, having considered the parties' submissions, I formed the view that it was in the interests of justice for me to permit the defendant to file a supplementary affidavit setting out the reasons for the delay in bringing the application. 6 That supplementary affidavit, sworn by Jonathan Eastoe on 4 November 2005, essentially sets out a chronology of events which have occurred since the appeal against the decision of Deputy Registrar Harman. To my mind, the crucial date is 29 March 2005, being the date upon which the plaintiff's amended statement of claim was filed (pursuant to the original order of his Honour Judge Chaney dated 27 September 2004 and subsequent orders allowing extensions of time for the filing of the amended pleading). 7 There followed a period when correspondence was exchanged between the parties regarding the amendments to the statement of claim, and a period when the defendant's solicitor was overseas. 8 The present application was filed on 11 August 2005. The plaintiff's counsel was correct when he observed that, since there was no affidavit evidence on which I might rely in exercising my discretion to grant leave to bring the application out of time, it was not open to me to grant such leave. 9 For the defendant's application to proceed to a determination on the merits, therefore, it would be necessary for me to grant leave to file a supplementary affidavit setting out the reasons for the delay. Having read the transcript, together with other relevant papers on the court file, I considered that it was in the interests of justice for me to grant leave to file such a supplementary affidavit. The granting of such leave represented, to some extent, an indulgence to the defendant, and that should, in my view, be borne in mind when determining the substantive application. That is, considerations of doing justice between the parties and minimising any further delay are most important. 10 It was submitted by counsel for the plaintiff that the requirement in r 19(3) Rules of the Supreme Court, that an application to strike out a pleading must be made within 21 days from the date of its service, is one to which more than lip service should be paid (Civil Procedure in Western Australia par 20.19.2), and that it is especially so when a number of
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objections raised in the application could have been (but were not) raised in the previous strike-out application. 11 Counsel for the defendant, on the other hand, submitted at the hearing that an amended statement of claim is a fresh document, and if it is objectionable on some basis that has not previously been dealt with, there is no impediment to bringing a second strike-out application. 12 It was submitted by counsel for the plaintiff that, although the authorities are unclear in relation to whether or not only new paragraphs of the amended pleading can be attacked or whether the entire pleading can be attacked, the former is the only logical conclusion. Otherwise, it was submitted, any minor amendment might re-open the opportunity to bring a strike-out application. 13 In my view, this is an issue which attracts the requirement to do justice between the parties. To the extent that the defendant's application seeks to attack paragraphs of the amended statement of claim which have not changed since 2003, and which could have been, but were not, addressed in the defendant's previous strike-out application, I decline to deal with them. I shall confine my determination to those matters which have been raised by the defendant in the light of the judgment of his Honour Judge Chaney and the consequently amended statement of claim. 14 It follows, therefore, that I am not prepared to entertain an application by the defendant to strike out the statement of claim in its entirety. Rather, it is appropriate, in my view, that I focus on the orders made by Judge Chaney upon delivering his judgment on the appeal against Deputy Registrar Harman's decision in respect of the defendant's first strike-out application. 15 On 27 September 2004, his Honour made the following orders: 1. The appeal be allowed; 2. The plaintiff file and serve an amended statement of claim taking account of the reasons of appeal and incorporating the particulars ordered by the Deputy Registrar within 14 days; 3. The plaintiff pay the defendant's costs of the application to the Registrar on summons dated 19 December 2003; 4. The defendant pay the plaintiff's costs of this appeal.
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16 The only order relevant to this application is order number 2, and my attention should be directed to: 17 I shall deal with each of these in turn.
(a) Has the amended statement of claim been amended in accordance with his Honour Judge Chaney's reasons on appeal? 18 In allowing the appeal, his Honour Judge Chaney ordered that par 19 of the amended statement of claim be struck out. (Note: His Honour also made the observation that all parties had proceeded on the argument in relation to a minute of proposed amended statement of claim, rather than the document which then stood as the statement of claim.) 19 The only paragraphs of the amended statement of claim which have been amended in the new pleading are pars 7.7, 13.7, 14A, 14B, 19 and 21.4. 20 I have already confirmed that I am not satisfied that the amended statement of claim should be struck out in its entirety on the basis that it discloses no reasonable cause of action and that it may prejudice, embarrass or delay the fair trial of this action. The defendant chose not to attack the entire statement of claim in his first strike-out application, and, for reasons outlined earlier, it would, in my view, be inappropriate for me to deal with such an application at this point in the proceedings. 21 Confining myself, therefore, to the findings of his Honour and the subsequent amendments, I shall address each relevant paragraph in turn.
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22 Paragraphs 14A and 14B are new paragraphs, and it is appropriate that I set out the paragraphs in full, for the sake of clarity.
"14A Between about 18 February 2002 and 28 March 2002, the plaintiff was entitled to expect that any change in the arrangements between the defendant as proprietor of the Business and Spices Catering prior to settlement would be disclosed to her.
Particulars
(a) the defendant made the oral representations set out in pars 7.1 to 7.5, 7.10 and 7.11 hereof; (b) the defendant provided the financial information set out in pars 8, 9 and 11 hereof; (c) the representations referred to at par 14A.1 and financial information referred to at par 14A.2 hereof were predicated upon the ongoing arrangements between the defendant as owner of the Business and, in the absence of or diminution to the ongoing arrangements, the value of the business was not as represented by the defendant to the plaintiff. 14B Between about 8 March 2002 and 28 March 2002, the defendant intentionally, alternatively recklessly, failed to inform the plaintiff of the matters set out in par 14 hereof.
Particulars The defendant's intention and/or recklessness may be inferred from: (a) the representations referred to at pars 7.1 to 7.5, 7.10 and 7.11 hereof; (b) the terms of the letter dated 8 March 2002, referred to at par 14 hereof; and (c) the provision of financial information about the business by the defendant to the plaintiff, without qualification, on 11 March 2002 referred to in par 11 hereof."
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23 A number of objections were made by counsel for the defendant in relation to these new paragraphs.
24 The first objection was based on counsel's stated observation that the first opportunity for disclosure arose only after the oral contract was formed, and the submission was that there can be no reasonable expectation of disclosure in circumstances where parties are bound to a contract, when the disclosure would have no effect on the parties' respective obligations under the contract. 25 Counsel for the plaintiff's submission in response was that the agreement was constituted by a written part and an oral part, and the relevant representation took place before 20 March 2002. 26 I have considered the pleading at par 12. I am satisfied that the pleading accords with the submission made by counsel for the plaintiff, and that, accordingly, par 14A should be permitted to stand in its present form. 27 The defendant's second objection was that, as part of the basis of the plaintiff's "reasonable expectation", it is pleaded in par 14A(c) that certain representations and financial information were: "predicated upon the ongoing arrangements between the defendant and Spices Catering, and in the absence of or diminution to the ongoing arrangements, the value of the business was not as represented by the defendant to the plaintiff". 28 It was submitted on behalf of the defendant that these words do not amount to a comprehensible allegation to which the defendant can respond, and counsel submitted that. "The best guess one can make is that the plaintiff is saying, 'my decision to buy was predicated on business continuing'." 29 I have considered the pleading of the relevant pars 7.1 to 7.5, 7.11, 8, 9 and 11, and I am satisfied that the pleading in its present form makes sense and should be permitted to remain in its present form. 30 The third objection of the defendant to par 14A relates to the pleading of a representation as to the "the value of the business". It was submitted on behalf of the defendant that nowhere in the pleading is there an allegation that the defendant made any representation as to the value of
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the business. In the defendant's written outline of submissions, the objection is explained in the following terms: "Par 6.3 refers to a representation that the plant and equipment was worth approximately $90,000 but that is not what is being referred to in 14A(c). The only other reference is in par 7.6 where the representation is that 'the business was for sale for $150,000'. That is not a representation as to it's worth. It is to be remembered that the sale price was actually reduced down to $140,000". 31 These are nice distinctions, but, since the objection has been made, I feel bound to uphold it and would direct that the phrase "the value of the business" be more precisely worded, so as to correspond with the allegations in the balance of the amended statement of claim. 32 The fourth and final objection to these paragraphs made on behalf of the defendant is that par 14B alleges intentional, alternatively reckless, behaviour on the part of the defendant, but that the particulars given are incapable of forming the basis for any such inference. 33 There is some merit in that objection. I am of the view that the defendant's intention and/or recklessness may be inferred not from any single matter referred to in sub-pars (a), (b) and (c), but by the entire course of conduct comprising the matters set out in sub-pars (a), (b) and (c). On condition that the plaintiff make a very minor amendment to that effect, I would be prepared to allow the paragraph to stand in its present form.
Paragraph 19 34 This is the only paragraph that was struck out by his Honour Judge Chaney. His Honour said: "There are several objections which the defendant takes to par 19. The first is that the 'true position of the business is not adequately identified, and the pleading is embarrassing from that perspective'. Second, the defendant says that the paragraph does not sufficiently identify how it is that the plaintiff 'would not have proceeded with the purchase of the business'. The defendant also observes that par 19 sits on its own, unrelated to any claim for damages.
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In my view, the objection to par 19 has substance. The plaintiff sought to justify par 19 on the basis that it implicitly asserts an obligation on the part of the defendant to reveal the matters pleaded in par 14. Par 14 pleads that on 8 March 2002, some two days after the agreement for the sale of business was made, the defendant became aware of certain information adverse to the future of the business. As I understand the plaintiff's submission, it is that the implicit assertion in par 19 amounts to misleading and deceptive conduct which forms a basis for the claim for a declaration under S 77 of the FTA. In my view, par 19 is not capable of doing the work which the plaintiff suggests it does. To plead a case of misrepresentation by silence, which seems to me to be what the plaintiff is suggesting, requires far more than is pleaded in par 19. The paragraph does not disclose any cause of action in its present terms, and should be struck out." 35 The new par 19 reads: "19. By reason of the matters referred to in pars 2 to 15 hereof, the defendant's failure to inform the plaintiff of the matters referred to in par 14 was conduct which was misleading and deceptive contrary to S 10 of the Fair Trading Act (WA) 1987." 36 It is the defendant's contention that the new par 19 is still objectionable, insofar as it now pleads that the failure to disclose constitutes misleading and deceptive conduct "by reason of the matters referred to in pars 2 to 15", and pars 2 to 15 cover a range of assertions which bear no relationship to the complaint (in par 14) that the defendant did not disclose that a major client might not continue its relationship with the business. Counsel for the defendant submitted that the plea is embarrassing and is likely to prejudice or delay the fair trial of the action. 37 Counsel for the plaintiff submitted that the pleading is not objectionable, since:
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(c) there is clearly an arguable cause of action. 38 In my view, the position adopted by each of the parties has some merit. Ultimately, a party is entitled to a statement of the opponent's case sufficiently clear to allow him a fair opportunity to meet it (Dare v Pulham (1982) 148 CLR 658). Whilst I acknowledge that the new par 19 might have been drafted with more detailed precision, I am inclined to agree with the following submission made at the hearing by counsel for the plaintiff: "Really it's saying, in the context of all the things that have gone before, there was a proper and reasonable expectation on the part of the plaintiff that the defendant would tell her something like this, and, in the absence of him doing so, particularly when he sends financial statements on the 11th after he knows that the customer has gone, in that context his failure to do so was misleading and deceptive in the context of this sale." 39 So, with due acknowledgement to the observations properly made by counsel for the defendant, in all the circumstances I consider it appropriate that par 19 be permitted to stand as currently pleaded. 40 21.4 This amendment is in the nature of the deletion of the entire original subparagraph and the addition of a new, and in my view, unobjectionable subparagraph.
(b) Does the amended statement of claim incorporate the particulars ordered by the Deputy Registrar? 41 In addition to its relevance in respect of the order of his Honour Judge Chaney, this issue is also relevant to the present application insofar as it forms the basis of the defendant's application for a springing order. The precise terms of the order sought by the defendant are: 1. "Unless the plaintiff complies with the order of Deputy Registrar Harman made on 31 March 2004 within 7 days the plaintiff's claim be dismissed and judgment be entered in favour of the defendant against the plaintiff and the plaintiff pay the defendant's costs of the action to be taxed if not agreed." 42 Though there was some initial uncertainty regarding the relevant order made by Deputy Registrar Harman on 31 March 2004, I was able to
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confirm during the course of the hearing that the court file shows that order to have been made in the following terms: "1. Within 21 days the plaintiff do file and serve further and better particulars of (a) the material substance of the oral conversation referred to in par 12 of the statement of claim (b) the 'majority of equipment' referred to in par 17.5 of the statement of claim (c) the basis on which the plaintiff alleges, in par 17.11 of the statement of claim, that the business was not 'easy to set up'." 43 His Honour Judge Chaney noted that the appeal before him was not concerned with Deputy Registrar Harman's order for further and better particulars, and simply ordered that the particulars ordered by the Deputy Registrar be incorporated into the amended statement of claim. 44 I do not consider, in all the circumstances, that it would be appropriate for a springing order to be made, but, since the amended statement of claim clearly does not incorporate such particulars, an order will be made in relation to their provision, without further delay. 45 In the application now before me, the defendant seeks an order (also framed as a springing order) that the plaintiff provide the further particulars referred to in par 20 and par 22 of the amended statement of claim. 46 In his judgment on appeal, his Honour Judge Chaney did not address the issue of the outstanding particulars in relation to par 20, but he did make the following comment in relation to the outstanding particulars in relation to par 22. "The particulars foreshadow further particulars after expert evidence is obtained. As the defendant observes, much time has passed since the events the subject of this action, and the institution of these proceedings, and one would have expected the plaintiff to be in a position now to fully particularise that loss. I was told from the bar table that expert evidence has not yet been obtained. It is to no-ones credit that over 12 months have passed since this application was first brought, and the
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action has not progressed over that time. There can be no good reason that the plaintiff appears to have done nothing to verify and fully particularise her damages claim. It is likely that the particulars to par 22 will require amendment at some point and steps should be taken quickly to deal with that issue." 47 That judgment was delivered on 27 September 2004. The hearing by way of special appointment before me was just two weeks short of a year later, and since that hearing there have been the delays outlined in the opening paragraphs of these reasons. I now feel bound to make orders that will result in this action's progressing. Accordingly, in my view the time has come for the plaintiff to obtain her expert evidence and provide the further and better particulars to par 20 and par 22 as soon as possible. If, after the process of discovery has been completed, it should be necessary for the further and better particulars to be amended, then so be it. I consider that such a course would be entirely consistent with the view expressed by his Honour Judge Chaney. 48 In the light of these reasons for decision the most efficient way for me to make the appropriate orders and to hear counsel on the question of costs would be for the action to be listed for a special directions hearing, and to that end I shall request my Associate to contact the parties with a view to ascertaining a mutually convenient appointment before me in chambers. 49 Having said that, if, having received these reasons, the parties should both be inclined to participate in a court-based mediation conference, I should be pleased to preside on such a conference with a view to attempting a negotiated settlement of this regrettably protracted matter.
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