Ogenic Ltd v Deloitte Touche Tohmatsu ( No 2)

Case •

[2000] FCA 1074

•

16 JUNE 2000

FEDERAL COURT OF AUSTRALIA

Ogenic Ltd v Deloitte Touche Tohmatsu ( No 2) [2000] FCA 1074

OGENIC LTD v DELOITTE TOUCHE TOHMATSU AND OTHERS
WAG 3009 of 1997

FRENCH J
16 JUNE 2000
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA  DISTRICT REGISTRY

WG3009 OF 1997

BETWEEN:

OGENIC LIMITED (ACN 009 205 805)
Applicant

AND:

AND:

AND:

AND:

AND:

AND:

DELOITTE TOUCHE TOHMATSU
First Respondent

POUL ANKER KIRKEBJERG
Second Respondent

IMODAN PTY LTD (ACN 009 295 158)
Third Respondent

STANTON PARTNERS (A PARTNERSHIP)
Fourth Respondent

DELOITTE TOUCHE TOHMATSU
Cross-Claimant in First Cross-Claim

OGENIC LIMITED (ACN 009 205 805)
Cross-Respondent in First Cross-Claim

DELOITTE TOUCHE TOHMATSU
Cross-Claimant in Second Cross-Claim

STANTON PARTNERS (A PARTNERSHIP)
First Cross-Respondent in Second Cross-Claim

JP VAN DIEREN, NB GRAHAM, ADB GRAHAM,
G KELLY, J SHERVINGTON
Second Cross-Respondents in Second Cross-Claim

ABD GRAHAM, ER PEDLOW, DFG GRAHAM,
NDB GRAHAM
Third Cross-Respondents in Second Cross-Claim

PN NICHOLLS, GL KELLY, C PAPADOPOULOS
Fourth Cross-Respondents in Second Cross-Claim

PETER FARR CONSULTANTS AUSTRALIASIA
PTY LTD  (ACN 051 294 583)
Fifth Cross-Respondent in Second Cross-Claim

STANTON PARTNERS (A PARTNERSHIP)
Cross-Claimant in Third Cross-Claim

DELOITTE TOUCHE TOHMATSU
First Cross-Respondent in Third Cross-Claim

PN NICHOLLS, GL KELLY, C PAPADOPOULOS
Second Cross-respondent in Third Cross-Claim

PETER FARR CONSULTANTS AUSTRALASIA
PTY LTD (ACN 051 294 583)
Third Cross-Respondent in Third Cross-Claim

POUL ANKER KIRKEBJERG
First Cross-Claimant in Fourth Cross-Claim

IMODAN PTY LTD (ACN 092 295 158)
Second Cross-Claimant in Fourth Cross-Claim

OGENIC LIMITED (ACN 009 205 805)
First Cross-Respondent in Fourth Cross-Claim

POUL ANKER KIRKEBJERG
First Cross-Claimant in Fifth Cross-Claim

IMODAN PTY LTD (ACN 092 295 158)
Second Cross-Claimant in Fifth Cross-Claim

DELOITTE TOUCHE TOHMATSU
First Cross-Respondent in Fifth Cross-Claim

STANTON PARTNERS
Second Cross-Respondent in Fifth Cross-Claim

PN NICHOLLS, CL KELLY and C PAPADOPOULOS
Third Cross-Respondents in Fifth Cross-Claim

JUDGE:

FRENCH J

DATE OF ORDER:

16 JUNE 2000

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.On the motion by Deloittes filed on 14 June 2000 to amend the cross-claim by including paragraph 44G and consequential amendments, the motion is dismissed.

2.On the motion by Mr Shervington filed on 15 June 21000 to strike out paragraphs 44A to 44I of the second cross-claim:

(a)paragraph 44A to 44I are struck out;

(b)there is leave to Deloittes to further amend within seven days.

3.Deloittes to pay Shervington’s costs of the motions filed on 14 June and 15 June 2000 respectively.

4.Costs reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WG3009 OF 1997

BETWEEN:

OGENIC LIMITED (ACN 009 205 805)
Applicant

AND:

AND:

AND:

AND:

AND:

AND:

DELOITTE TOUCHE TOHMATSU
First Respondent

POUL ANKER KIRKEBJERG
Second Respondent

IMODAN PTY LTD (ACN 009 295 158)
Third Respondent

STANTON PARTNERS (A PARTNERSHIP)
Fourth Respondent

DELOITTE TOUCHE TOHMATSU
Cross-Claimant in First Cross-Claim

OGENIC LIMITED (ACN 009 205 805)
Cross-Respondent in First Cross-Claim

DELOITTE TOUCHE TOHMATSU
Cross-Claimant in Second Cross-Claim

STANTON PARTNERS (A PARTNERSHIP)
First Cross-Respondent in Second Cross-Claim

JP VAN DIEREN, NB GRAHAM, ADB GRAHAM,
G KELLY, J SHERVINGTON
Second Cross-Respondents in Second Cross Claim

ABD GRAHAM, ER PEDLOW, DFG GRAHAM,
NDB GRAHAM
Third Cross-Respondents in Second Cross-Claim

PN NICHOLLS, GL KELLY, C PAPADOPOULOS
Fourth Cross-Respondents in Second Cross-Claim

PETER FARR CONSULTANTS AUSTRALIASIA
PTY LTD  (ACN 051 294 583)
Fifth Cross-Respondent in Second Cross-Claim

STANTON PARTNERS (A PARTNERSHIP)
Cross-Claimant in Third Cross-Claim

DELOITTE TOUCHE TOHMATSU
First Cross-Respondent in Third Cross-Claim

PN NICHOLLS, GL KELLY, C PAPADOPOULOS
Second Cross-respondent in Third Cross-Claim

PETER FARR CONSULTANTS AUSTRALASIA
PTY LTD (ACN 051 294 583)
Third Cross-Respondent in Third Cross-Claim

POUL ANKER KIRKEBJERG
First Cross-Claimant in Fourth Cross-Claim

IMODAN PTY LTD (ACN 092 295 158)
Second Cross-Claimant in Fourth Cross-Claim

OGENIC LIMITED (ACN 009 205 805)
Cross-Respondent in Fourth Cross-Claim

POUL ANKER KIRKEBJERG
First Cross-Claimant in Fifth Cross-Claim

IMODAN PTY LTD (ACN 092 295 158)
Second Cross-Claimant in Fifth Cross-Claim

DELOITTE TOUCHE TOHMATSU
First Cross-Respondent in Fifth Cross-Claim

STANTON PARTNERS
Second Cross-Respondent in Fifth Cross-Claim

PN NICHOLLS, CL KELLY and C PAPADOPOULOS
Third Cross-Respondents in Fifth Cross-Claim

JUDGE:

FRENCH J

DATE:

16 JUNE 2000

PLACE:

PERTH

REASONS FOR JUDGMENT

  1. In my view I should deal with these two motions now and I deal with them on the basis that the further amendments to the reamended second cross-claim, which are shown on the court file copy in blue, being made pursuant to the Order of 29 February and in particular par 7 of that order, I should treat as amendments which have taken effect and therefore are the subject of the strike-out motion which has been brought by Mr Shervington.  The amendments which are shown in black double underlining are amendments which it is sought to introduce outside the framework of that order and which are therefore properly the subject of Deloitte Touche Tohmatsu’s (“Deloittes”)  motion filed on 14 June.

  2. In relation to paragraphs 44A to 44F which are the subject properly of the strike-out motion, at least those parts of them which appear in blue, I am satisfied that the objection to that pleading is properly made out.  The pleading is at least embarrassing and at worst does not disclose all the elements necessary to establish the cause of action asserted in that it alleges a breach of duty owed to Ogenic by Mr Shervington arising from his alleged failure to advise Ogenic that sums advanced by that company to PKE should be secured.  This is against the background of the plea in par 44D that at some time in May 1994 Ogenic retained Mr Shervington and that he accepted a retainer to provide legal advice as to the appropriate corporate structure and mechanisms to utilise the cash reserves of the applicant to:

    1.        retire debt owed by PKE to the banks and PKE’s shareholders;

    2.        acquire new plant and equipment;

    3.        expand marketing activities and existing premises; and

    4.        meet the costs of the prospectus.

    Notwithstanding attempts by Mr Nalder on behalf of Deloittes to justify that plea and its connection with the breach of duty by reference to affidavit material, the judgment I must make about the sufficiency of that plea must be based upon what appears on the face of the statement of claim.  This is not a time to explore evidence which would, of course, properly invite applications for adjournment for affidavits in response to be filed and get us into what would amount to a mini trial.  This is a matter of the sufficiency of the pleadings.

  3. Notwithstanding the submissions that have been made, I see no necessary logical connection between the retainer pleaded in par 44D and the breach of duty pleaded in par 44F.  If it is asserted that Mr Shervington was retained to advise on matters encompassing security arrangements between the applicant, Ogenic, and PKE, then that is a matter which should have been pleaded.  I would therefore accede to the motion filed on behalf of Mr Shervington to strike out pars 44A to 44I of the statement of claim.  I will, however, allow leave to amend, within seven days, subject of course to any further challenge that might be made following that and that will have to be by special appointment if it is going to be pursued. 

  4. The proposed additional material raises a cause of action evidently based upon an alleged contravention of s 10 of the Fair Trading Act 1987 (WA). This is the subject of the Deloittes’ motion which seeks the introduction of new paragraphs 44G, 44H and 44I. It is asserted, in the alternative to the negligence claim, which I have just dealt with, that by failing to advise Ogenic that any sums advanced by it to PKE should be secured, Mr Shervington, in breach of s 10 of the Fair Trading Act, engaged in conduct in trade or commerce that was misleading or deceptive.  This, it is said is because the failure engendered the belief in Ogenic that it was not necessary to secure the sums advanced to protect Ogenic’s interests and in reliance on that belief Ogenic advanced the sums to PKE on an unsecured basis.

  5. The pleading, in my opinion, is flawed for two reasons.  The first is that it depends upon the factual allegations made in par 44A and following paragraphs which have the logical discontinuity that I have already referred to.  Secondly, as pointed out by Mr Murphy, there is no specification of the way in which the alleged failure of Mr Shervington to advise the applicant that sums should be secured constituted misleading or deceptive conduct.  If it is a case of silence engendering some reasonable expectation, it would seem the only reasonable expectation that might be engendered is that if he held an opinion that security was necessary, he would be expected to advise his client of that, assuming of course that to be within the terms of his general retainer, and that his silence would involve a representation that he did not hold such an opinion.

  6. If it is to be said that Mr Shervington believed that security was necessary but for some reason did not advise his client to that effect and therefore misrepresented the position, that should be made explicit.  That does not emerge from the pleading that is put and the pleading, in my opinion, therefore again fails to disclose a cause of action.  Even if by some convoluted course of reasoning it does, it is embarrassing for want of sufficient particularity.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Associate:

Dated:             August 2000

Counsel for the Applicant: Mr D M Stone
Solicitor for the Applicant: Williams and Hughes
Counsel for the First Respondent: Mr S R Nalder with Ms AF Robertson

Solicitor for the First Respondent:

Counsel for the Third
Respondent:

Solicitors for the Third
Respondent:

Counsel for the Fourth Respondent:

Solicitor for the Fourth Respondent:

Counsel for the Second and Third-named Second Cross Respondents in the Second Cross-Claim and the Third Cross-Respondents in the Second Cross-Claim:

Solicitors for the Second and Third named Second Cross-Respondents in the second Cross-claim and the Third Cross-Respondents in the Second Cross-Claim:

Counsel for the First, Fourth and Fifth-named Second Cross-Respondents in the Second Cross-Claim:

Solicitors for the First, Fourth and Fifth-named Second Cross-Respondents in the Second Cross-Claim:

Counsel for the Fifth Cross-Respondents in the Second Cross-Claim and the Third Cross-Respondents in the Third Cross-Claim:

Solicitor for the Fifth Cross-Respondents in the Second Cross-Claim and the Third Cross-Respondents in the Third Cross-Claim:

Phillips Fox

Mr PA Kirkebjerg appeared in person

Mr L A Tsaknis

Healy Pynt

Ms A M I Schoombee

Freehill Hollingdale & Page

Mr J R Atkinson

Freehill Hollingdale & Page

Mr G H Murphy

Wojtowicz Kelly

Mr A McLean

Corrs Chambers Westgarth
Date of Hearing: 16 June 2000
Date of Judgment: 16 June 2000
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