Netline Pty Ltd and Kathryn ISABEL Lance v QAV Pty Ltd

[2014] WASC 280

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   NETLINE PTY LTD and KATHRYN ISABEL LANCE -v- QAV PTY LTD [2014] WASC 280

CORAM:   BEECH J

HEARD:   ON THE PAPERS

DELIVERED          :   5 AUGUST 2014

FILE NO/S:   CIV 1289 of 2014

BETWEEN:   NETLINE PTY LTD and KATHRYN ISABEL LANCE

Plaintiffs

AND

QAV PTY LTD
Defendant

Catchwords:

Practice and procedure - Pleadings - Strike out application

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 19

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiffs:     No appearance

Defendant:     No appearance

Solicitors:

Plaintiffs:     Lavan Legal

Defendant:     Lawton Gillon

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

Agar v Hyde (2000) 201 CLR 552

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564

Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 139 ALR 663

AWB Ltd v Cole (No 2) (2006) 233 ALR 453

Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256

Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1

DM Drainage & Constructions Pty Ltd as trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd [2014] WASC 170

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421

JN Taylor Holdings Ltd v Bond (1993) 59 SASR 432

Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)

Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162

Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428

Puttick v Attorney‑General [1980] Fam 1

SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138

Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507

BEECH J: 

Introduction

1. The plaintiffs (the Owners) own an apartment in a complex known as Ascot Village.  The defendant (the Manager) provides management services to the apartment complex.  The Manager has purported to terminate the agreement between the Owners and the Manager.  In this action the Owners claim that the termination was invalid and seek declarations in relation to the entitlements and obligations of the Manager.

2. By this application, the Owners apply to strike out a paragraph of the Manager's defence.

The relevant pleading

1. The Owners apply to strike out par 23(iii) of the defence.  That paragraph is in the following terms:

   [T]he conduct of one, Mr Warren Lance, who is alleged to be a director of the First‑named Plaintiff whose co‑director is alleged to be the Second‑named Plaintiff has been so reprehensible respecting the current matter that relief should be denied as the Plaintiffs lack of 'clean hands'.

2. Particulars have been provided.  Given the focus of the Owner's submissions, it is not necessary to detail those for present purposes.

Strike out applications - general principles

1. The caution with which a pleading will be struck out on the ground that it does not disclose a reasonable cause of action or any reasonable defence is well known.[1]  The court must feel a high degree of assurance before summarily dismissing a claim or defence.[2]  While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial.[3]  As to the approach to strike out applications in the contemporary case management environment, see DM Drainage & Constructions Pty Ltd.[4]

   [1] Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986) 6 ‑ 7; Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [44].

   [2] Agar v Hyde (2000) 201 CLR 552 [57], Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].

   [3] Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507, 514 ‑ 515; Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1 [36]; SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 [20].

   [4] DM Drainage & Constructions Pty Ltd as trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd [2014] WASC 170 [30] ‑ [34].

The disposition of the application

1. In essence, the Owners' submissions fix upon the use of the phrase 'lack of "clean hands"' in par 23(iii) of the defence.  For reasons which I will explain, it is unfortunate that that phrase was used, and the pleading would be better without it, but I would not strike out the pleading.

2. The Owners submit that the jurisdiction to grant a declaration is statutory, not equitable, which means that the equitable requirement for clean hands does not apply.  I accept that that is so, but in my view that does not sustain the striking out of par 23(iii).

3. The Manager rightly accepts that a declaration is not, historically, a distinctively equitable remedy. Rather, the power of the court to make a declaration without any other substantive relief is statutory, arising under s 25(6) of the Supreme Court Act1935 (WA) and O 18 r 16 of the Rules of the Supreme Court 1971 (WA).[5]  Thus, as the Manager accepts, the equitable defence of clean hands does not, of itself, apply to a claim for a declaration.

   [5] See for example, Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428, 454; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 433 ‑ 435; Meagher RP, Heydon JD and Leeming MJ, Meagher, Gummow & Lehane's Equity - Doctrines & Remedies (4^th ed, 2002) [19 ‑ 010] ‑ [19 ‑ 025].

4. Nevertheless, the Manager submits, and I accept, that:

   (1)the power to grant a declaration is discretionary;

   (2)the discretion is a broad one;

   (3)facts that would or might give rise to a defence of no 'clean hands' in a claim for equitable relief may provide a discretionary reason to refuse to order a declaration; and

   (4)the facts pleaded in par 23(iii) are not so clearly incapable of bearing on the exercise of discretion whether to grant a declaration in this case as to warrant the striking out of that paragraph.

5. The breadth of the discretion whether to grant a declaration has been emphasised in many cases.  For example, in a passage cited with approval in Ainsworth v Criminal Justice Commission,[6] Gibbs J said in Forster v Jododex Australia Pty Ltd[7] that the power to grant a declaration is a discretionary power, and '[it] is neither possible nor desirable to fetter the broad discretion ... by laying down rules as to the manner of its exercise'.  In a case relied on in the Owners' submission, Young J said that the considerations that may be relevant to the exercise of the discretion are 'so numerous that it is not possible to enumerate them'.[8]  These statements underline the difficulty facing a submission that particular facts are incapable of bearing on the proper exercise of discretion to grant or refuse a declaration.

   [6] Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582 ‑ 583.

   [7] Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437.

   [8] AWB Ltd v Cole (No 2) (2006) 233 ALR 453, 463.

6. There are cases in which something about the conduct of the party claiming a declaration was seen to preclude the grant of the declaratory relief.[9] 

   [9] See for example, Puttick v Attorney‑General [1980] Fam 1; Young PW, Croft CE and Smith ML, On Equity (1^st ed, 2009) 108; Tilbury MJ, Civil Remedies (Vol 1, 1990) [8004].

7. The Owners submit that the requirements for declaratory relief, and the ground on which it might be denied, are outlined by Lockhart J in Aussie Airlines Pty Ltd v Australian Airlines Ltd[10] and in JN Taylor Holdings Ltd v Bond.[11]  I do not accept that what is said in those cases is intended to be the comprehensive statement of matters relevant to the exercise of discretion.  Rather, in those cases a court identified some prerequisites for the grant of declaratory relief.  Nothing in those cases limits the scope of matters capable of bearing on the exercise of discretion.

   [10] Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 139 ALR 663, 670 ‑ 671.

   [11] JN Taylor Holdings Ltd v Bond (1993) 59 SASR 432.

Conclusion

1. For these reasons I would dismiss the application.  On the face of things, costs should follow the event, and should be fixed.  I will hear from the parties in relation to costs.