Norilsk Nickel Cawse Pty Ltd v Wingstar Investments Pty Ltd
[2019] WADC 39
•22 MARCH 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: NORILSK NICKEL CAWSE PTY LTD -v- WINGSTAR INVESTMENTS PTY LTD [2019] WADC 39
CORAM: PRINCIPAL REGISTRAR MELVILLE
HEARD: 1 MARCH 2019
DELIVERED : 22 MARCH 2019
FILE NO/S: CIV 2579 of 2016
BETWEEN: NORILSK NICKEL CAWSE PTY LTD
First Plaintiff
NORILSK NICKEL AVALON PTY LTD
Second Plaintiff
AND
WINGSTAR INVESTMENTS PTY LTD
First Defendant
ROBERT CHARLES GARDNER
Second Defendant
Catchwords:
Application to strike out - No reasonable cause of action - Meaning of prejudice embarrass, or delay the fair trial of the action
Legislation:
Rules of the Supreme Court 1971
Result:
Application partially successful
Representation:
Counsel:
| First Plaintiff | : | Mr P Russell |
| Second Plaintiff | : | Mr P Russell |
| First Defendant | : | Mr D Dobson |
| Second Defendant | : | Mr D Dobson |
Solicitors:
| First Plaintiff | : | Clifford Chance |
| Second Plaintiff | : | Clifford Chance |
| First Defendant | : | Hotchkin Hanly |
| Second Defendant | : | Hotchkin Hanly |
Case(s) referred to in decision(s):
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281
Gates v WA & J Jacobs Ltd [1920] 1 Ch 567
Kidd v Artus t/as Downings Legal [2013] WASC 264
Kimberley Downs Pty Ltd v The State of Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Muchison Zinc Company Pty Ltd v Theiss Contractors Pty Ltd [2000] WASCA 167
National Australia Bank v Rowe [2018] WASC 330
PRINCIPAL REGISTRAR MELVILLE:
The plaintiffs commenced this action by writ of summons issued 19 July 2016. There has been an application for summary judgment brought by the plaintiff which application was heard and dismissed on 27 July 2017. Since then the statement of claim has been amended several times, the last iteration being a 'second further amended statement of claim' filed 21 December 2018.
Now, by chamber summons filed 11 February 2019 the defendants seek leave to bring an application, or alternatively seek an extension of time in which to bring an application, to strike out various paragraphs of the statement of claim on the basis they disclose no reasonable cause of action or, alternatively, they may prejudice, embarrass or delay the fair trial of the action.
I will start by making a preliminary observation, and that is there seems to be something illogical about seeking to strike out a paragraph of a statement of claim on the basis that discloses no reasonable cause of action. By the Rules of the Supreme Court 1971 (RSC) O 20 r 8 it is provided that every pleading must contain, and contain only, a statement in summary form of the material facts on which the party pleading relies for his claim or defence, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits. By RSC O20 r 7(2) it is provided that:
Every pleading must, if necessary, be divided into paragraphs numbered consecutively, each allegation being so far as convenient contained in a separate paragraph.
It is impossible for a cause of action to be constituted by a single material fact. In every case, even the simplest cause of action is constituted by several material facts. Commonly, each alleged material fact is or should be found in its own paragraph.
In seeking to strike out pleadings on the basis they fail to disclose a cause of action the pleadings in their totality have to be considered. More particularly the several allegations of material facts have to be considered to see whether a sufficiently pleaded cause of action is established. If insufficient material facts are pleaded to demonstrate a cause of action then the pleadings should be struck out.
A fact pleaded in a statement of claim will either be one material fact of several material facts that point to a cause of action, in which case it cannot be struck out, or it will be immaterial in which case it may well prejudice, embarrass or delay the fair trial of the case. Striking out a paragraph on the basis it is immaterial cannot result in the conclusion that the pleading fails to disclose a cause of action. If a statement of claim is struck out for failing to disclose a cause of action it is not because an immaterial fact is struck out but because there were not enough material facts pleaded in the first place.
Accordingly, insofar as the defendants' application seeking to strike out the various paragraphs of the statement of claim is brought on the basis that the individual paragraphs fail to disclose a cause of action, it cannot succeed.
The law
The Purpose of pleadings
In Muchison Zinc Company Pty Ltd v Theiss Contractors Pty Ltd [2000] WASCA 167 [38] it was said:
It is important to bear in mind the basic function of pleadings. This was described by Isaacs and Rich JJ in Gould v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490 at 517 (in a passage quoted with approval by Dawson J in Banque Commerciale SA (In Liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 293) in the following way:
Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest.
In a similar vein Martin CJ in Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281 said:
[4]It is, I think, important when approaching an issue of that kind to bring to mind the contemporary purposes of pleadings. The purposes of pleadings are, I think, well known and include the definition of the issues to be determined in the case and enabling assessment of whether they give rise to an arguable cause of action or defence as the case may be, and apprising the other parties to the proceedings of the case that they have to meet.
[5]In my view, the contemporary role of pleadings has to be viewed in the context of contemporary case management techniques and pre-trial directions. In this Court, those pre-trial directions will almost invariably include; firstly, a direction for the preparation of a trial bundle identifying the documents that are to be adduced in evidence in the course of the trial; secondly, the exchange well prior to trial of non-expert witness statements so that non-expert witnesses will customarily give their evidence-in-chief only by the adoption of that written statement; thirdly, the exchange of expert reports well in advance of trial and a direction that those experts confer prior to trial; fourthly, the exchange of chronologies; and fifthly the exchange of written submissions.
[6]Those processes leave very little opportunity for surprise or ambush at trial and, it is my view, that pleadings today can be approached in that context and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pre-trial case management will exist and be implemented to aid in defining the issues and appraising the parties to the proceedings of the case that has to be met.
[7]In my view, it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and appraising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment.
Whilst in the District Court the requirement for the filing of witness statements is less common then in the Supreme Court the other observations of Martin CJ relating to contemporary case management techniques remain applicable.
No Cause of action
In Kimberley Downs Pty Ltd v The State of Western Australia (Unreported, WASC, Library No 6414, 25 August 1986) [6] – [7] it was said in respect of an application to strike out a statement of claim on the ground it discloses no reasonable cause of action:
(1)The rule is intended to apply only to cases which are really not arguable and not to cases where under the previous practice demurrer would have been the proper course: Packard v Transport Trading and Agency Co Ltd (1912) 14 WALR 191 per Burnside J at p 195.
(2)On the application, not only must all the facts alleged in the statement of claim be accepted as true, but it must be taken for granted that on all other points the pleading is unassailable: Niven v Grant (1903) 29 VLR 102 per Holroyd J at p 106.
(3)Great care must be exercised to ensure that a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal: General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125 per Barwick CJ at p 130.
(4)But the rule should not be reserved for those cases where argument is unnecessary to show the futility of the plaintiff's claim. Argument, even extensive argument, may be necessary to demonstrate that the plaintiff's case is so clearly untenable that it cannot possibly succeed: ibid at p 130.
(5)As a general rule a plaintiff is entitled as of right to have his case heard, to have the facts found and then to argue the question of law as it arises before the trial judge upon the facts as found. It is only in cases in which it can be seen from the outset that, however the facts be found, there is no basis for the legal conclusion contended for by the plaintiff that the pleading should be struck out: Dalgety Australia Ltd v Rubin per Burt CJ (1984, unreported, Lib No 5485).
(6)A court at first instance should be careful not to risk stifling the development of the law by summarily rejecting a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie: Hospitals Contribution Fund of Australia v Hunt (1982 - 1983) 44 ALR 365 per Master Allen at 373.
Will the pleadings prejudice, embarrass or delay the fair trial of the action?
This ground of objection is said to evoke a composite phrase. Its intent, more particularly, has been described in Kidd v Artus t/as Downings Legal [2013] WASC 264 [26] as follows:
Pleadings may be struck out on this ground “because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general”: see Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998).
When faced with a statement of claim which contains numerous statements of fact that are prejudicial, embarrassing or likely to delay the fair trial of the action the court is faced with a choice of either seeking to excise the offending paragraphs or to strike out the whole pleading and require the pleading party to have another go. In National Australia Bank v Rowe [2018] WASC 330 [7] the court said:
A prolix pleading, offending the requirements of O 20 r 8(1) by its incorporation of unnecessary or irrelevant material, may be struck out on the ground that it will prejudice, embarrass or delay the fair trial of the action.[5] Doing so, approaching the pleading as a whole rather than requiring the other party and the court to undertake the oppressive task of surgical excision to remove all but the material facts, will often be the means most conductive to meeting the goal in O 1 r 4A and the objects of O 1 r 4B.
First plaintiff's case
The first plaintiff's case is that at all material times it was the owner of the Cawse Nickel Project, which involved open pit mining, ore processing facilities and a gas pipeline. On 30 April 2014 the first plaintiff entered into a written contract with the first and second defendants (the Cawse ASA) whereby the first plaintiff transferred its interests in that mine to the first defendant. It was agreed the first defendant would do all that was necessary to transfer the licenses including pipeline licence number 37 and generally assume, perform, discharge and be bound by all the liabilities of the first plaintiff in respect of the Cawse Nickel Project. The first defendants' obligations were guaranteed by the second defendant.
The plaintiff pleads the express terms of the Cawse ASA at pars 9(a) ‑ 9(r) of the Second Further Amended Statement of Claim.
At par 10A the first plaintiff pleads that it had liabilities to the Water Corporation.
At par 13 and 14 the first plaintiff alleges a breach of the contract by saying the first defendant failed to assume and indemnify the first plaintiff in respect of its liabilities to the Water Corporation.
At par 10 the plaintiff pleads that in breaches of cl 11.2(a), cl 11.2(b), cl 11.2(c), cl 11.4 and cl 11.5 of the Cawse ASA the first defendant failed to transfer pipeline licence number 37 into its own name. The clauses alleged to have been breached are the express terms of the contract pleaded at pars 9(c), 9(d), 9(e), 9(f) and 9(g) of the statement of claim.
The plaintiff then pleads out the losses that are said to have flowed from the first defendant's failure to do what it was required to do. In short, those losses are said to be costs the first plaintiff continued to incur in respect of its obligations under the potable water agreement with the Water Corporation and in respect of pipeline 37.
In its summons the defendants sought orders striking out pars 9(a), 9(b), 9(d), 9(e), 9(i), 10, 10(a), 13 and 14 of the second further amended statement of claim.
However, at the hearing of the application the defendants no longer pursued their application in respect to pars 9(a), 9(i), 10(a), 13 and 14. They maintained their application in respect of pars 9(b), 9(d), 9(e), and 10.
At pars 9(b), 9(d), 9(e) the plaintiff pleads what it alleges is the express terms of the contract. Whilst par 9(b) refers to cl 10.3 of the Cawse ASA and while there is no allegation that this clause of the Cawse ASA has been breached, the clause is said by the plaintiff to put context around the other terms of the Cawse ASA. In my opinion there is nothing prejudicial, embarrassing or likely to delay the fair trial of the action in pleading this clause and having regard to the abovementioned comments in Muchison Zinc and in Barclay Mowlem I am not prepared to strike it out.
At par 9(d) the plaintiff pleads that it was an express term of the contract that the first defendant would take any other step reasonably required by the first plaintiff which is necessary or desirable to effect the transfer of the statutory licences as soon as possible after the conclusion of the contract.
By par 10 the plaintiff alleges the first defendant breached this provision, and particularises the breach as having failed to take any or any sufficient steps as soon as possible after the completion of the contract to have pipeline licence number 37 transferred into its name, having failed to assume the liabilities associated with pipeline 37 and having failed to indemnify the first plaintiff. The defendant complains that the pleading does not identify what the defendant's failed to do that was 'necessary'.
When reading par 9(d) with par 10, it is my view that the pleading does identify what the defendant failed to do that was necessary. The first plaintiff's case is made sufficiently plain and to the extent it is not any deficiency can be cured by particulars rather than by striking it out.
With respect to par 9(e) and par 10 the defendant complains that whilst the plaintiff alleges an express term of the contract that with effect from completion the first defendant would be responsible for and bear all costs and expenses of the grant of the application and in respect of any further act or event required to effect transfer of the resultant tenement (cl 11.2(c)) of the contract, the statement of claim makes no allegation of breach of this term and relief is sought in relation to it.
In my view when par 9(e) is read with par 10 which alleges a breach of cl 11.2(c) of the contract it is again clear that the first plaintiff's case is that the defendant breached this clause.
Whilst it might have been more clearly stated that these breaches resulted in the costs obligations and expenses subsequently particularised at par 11 of the statement of claim, and irrespective of whether the plaintiff can prove these losses result from the breach of this term, the plaintiff's case is sufficiently clear and the defendants must be aware of what they need to do to defend themselves against this allegation.
The case of the second plaintiff
The second plaintiff's case is that on 30 April 2014 by way of a written agreement with the first and second defendants it sold the Avalon Nickle Project to the first defendant (the Avalon ASA). Similarly to the first plaintiff's case against the first and second defendant, the second plaintiff says that it was agreed that the first defendant would assume all the liabilities of the second plaintiff under the contract and would indemnify the second plaintiff against any losses arising from or incurred in connection with any breach by the first defendant of the terms of the contract. The second defendant guaranteed the first defendants obligations under the Avalon ASA.
At par 18 the second plaintiff pleads the express terms of the contract, including two express terms which are subject to this application to strike out being those terms pleaded in par 18(d) and 18(f).
Paragraph 18(d) pleads:
A Contract includes the contracts and commitments entered into by the second plaintiff (including its predecessors in title, successors in title and assigns) in conducting the Avalon Nickel Project before the date of the Avalon ASA and between the date of the Avalon ASA and Completion provided such contracts or commitments entered into on or after the date of the Avalon ASA are entered into either:
(i) in the ordinary course of conducting the Avalon Nickel Project as determined by the second plaintiff (acting reasonably) including where reasonably necessary to comply with any applicable law and provided that the aggregate value of the contracts does not exceed $25,000;
(ii) with the consent of the first defendant (such consent not to be unreasonably withheld or delayed) which are not fully performed as at Completion (clause 27.1).
At 18A the second plaintiff alleges that it (including its predecessors in title) entered a contract and commitments which were still being performed notwithstanding the term of some of the contracts and commitments had expired and then particularised them as arrangements with the Water Corporation for the supply of water necessary for the operation of the Avalon Nickle Project prior to completion including the Bulong Nickle water account. The pleaded particulars reveal that in or about 22 July 1998 Bulong Operations Pty Ltd and Bulong Nickel Pty Ltd were both predecessors in title entered into arrangements with the Water Corporation for the supply of water necessary for the operation of the Avalon Nickel Project.
The second plaintiff then at pars 19 and 20 pleads that it continued to incur liabilities with the Water Corporation and that the first defendant failed to assume the second plaintiff’s liabilities or indemnify it in respect of those liabilities.
At par 21 the second plaintiff alleges the second defendant has also failed to comply with his contractual obligations under the Avalon ASA in this regard and at par 23 the second plaintiff alleges that as a result of the first and second defendant's breaches of the Avalon ASA it has suffered loss and damage.
The defendants seek to strike out pars 18(d) of the statement of claim on the basis that par 18(d) when read with par 18A and par 19 does not demonstrate any liability in the second plaintiff to make payment for the water. The liability, it is said, appears to be that of Bulong Operations Pty Ltd and Bulong Nickel Pty Ltd.
For the second plaintiff to succeed on its action it can only do so if it proves that it assumed these liabilities from its predecessors in title. Whilst this might have been specifically pleaded it is not necessary to do so. By RSC O 29 r 8(4) it is provided that a statement that a thing has been done or that an event has occurred, being a thing or even the doing or occurrence of which, as the case may be, constitutes a condition precedent necessary for the case of a party, is to implied in his pleading. To the extent it might be said that the second plaintiff has not expressly pleaded that it did acquire these liabilities from its predecessors in title it is clear to me that it is a condition precedent necessary for the second plaintiff’s case and so is implied. See for example Gates v WA & J Jacobs Ltd [1920] 1 Ch 567 (570) where it was said:
…
In my judgment the concluding words of r. 14 of Order XIX mean that an averment that the notice was given, although not specifically pleaded, must be implied. In other words the statement of claim must be read as if it contained an allegation that the plaintiffs had given the necessary notice under s. 14 of the Act before the commencement of the action. It is said that the absence of the plea is embarrassing, but I fail to see how that can be so because the defendants can obtain particulars of the notice by discovery in the action. I cannot therefore say that the plaintiffs' pleading discloses no reasonable cause of action or that it is frivolous or vexatious or even embarrassing.
Further, par 18(d) is for all practical purposes in exactly the same terms as par 9(i) of the statement of claim relating to the Cawse ASA, a pleading with which the defendants take no issue. In the circumstances it is difficult to see merit in an objection taken to one paragraph on the basis it is prejudicial, embarrassing or may delay a fair trial of an action when it is repeated elsewhere and no objection is taken.
In respect of par 18(f) the plaintiff complains that the particulars of the expressed term are not particulars of the material fact. Paragraph 18(f) pleads:
If the first defendant does not comply with those obligations on time and in accordance with the Avalon ASA, then the second defendant agrees to comply with those obligations on demand from second plaintiff whether or not the second plaintiff has first made demand on the first defendant (clause 21.2(b));
Particulars
The second plaintiff refers to letters dated 29 January 2016 and 25 May 2016 to each of the first and second defendants from the second plaintiff demanding the payment of monies for obligations arising under the Avalon ASA.
(d) The second plaintiff refers to the invoices dated 31 January 2016 – 30 September 2018 to the first defendant from the second plaintiff by its agent MPI Nickel Pty Ltd.
In my opinion the particulars are pointless and bear no relationship to the express term of the contract. To the extent they may be material it would be in the context of alleging compliance with that term by the plaintiff and non-compliance with the term by the defendants. They do not belong where they are found and should be struck out.
The defendants then submit that par 21 should be struck out because it pleads demands were made for compliance with cl 11.2(a) and cl 11.2(b) of the Avalon ASA when those clause have not been pleaded. The defendants also submit that par 21 pleads a fact 'for which there is no basis for making' being that a demand was made by letter dated the 29 January 2016.
The latter point can be shortly disposed of. It is not a matter that determination on the strike out application but is a point for trial. However, it is the case that there no pleading of cl 11.2(a) and cl 11.2(b) of the Avalon ASA and that being the case, one is not able to make sense of what is alleged in par 21 or how it is relevant. That clause should be struck out.
Finally, in the prayer for relief it is sought firstly as to the first defendant an order is sought that the first and second defendants indemnify the first and second plaintiffs, and, as to the second defendant, an order that the first and second defendants indemnify the second plaintiff.
This is obviously a drafting error and it seems that the reference to the orders sought as to first defendant should in fact be a reference to the first plaintiff and the reference to the orders sought as to the second defendant should be as to the second plaintiff. Whilst the prayer for relief as it is currently framed is objectionable that can be cured by amendment.
Conclusion
The particulars of par 18(f) should be struck out together with par 21 of the statement of claim and the prayer for relief, and the plaintiff ordered to file a draft third further amended statement of claim.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AC
Court Officer22 MARCH 2019
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