Opalswan Pty Ltd v Hartz
[2000] WADC 303
•22 NOVEMBER 2000
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: OPALSWAN PTY LTD -v- HARTZ & ORS [2000] WADC 303
CORAM: O'BRIEN DCJ
HEARD: 6 NOVEMBER 2000
DELIVERED : 22 NOVEMBER 2000
FILE NO/S: CIV 1052 of 1998
BETWEEN: OPALSWAN PTY LTD (ACN 061 164 510)
Plaintiff (Respondent)
AND
CLIVE RAYMOND HARTZ
First Defendant (Appellant)ANTHONY JAMES GRIST
Second Defendant (Appellant)CAROLYN ANNE HARTZ
Third Defendant (Appellant)
Catchwords:
Appeal from Deputy Registrar granting leave to amend endorsement on the writ and allowing plaintiff to file amended substituted statement of claim - Whether amended cause of action out of time - Whether new cause of action already litigated in Federal Court - Whether certain paragraphs in substituted amended statement of claim extend beyond the writ - Whether new cause of action constitutes an abuse of process
Legislation:
Nil
Result:
Appeal dismissed
Representation:
Counsel:
Plaintiff (Respondent) : Mr P W Nichols & Mr J A Davies
First Defendant (Appellant ) : Mr R A Rowich
Second Defendant (Appellant) : Mr R A Rowich
Third Defendant (Appellant ) : Mr R A Rowich
Solicitors:
Plaintiff (Respondent) : Davies & Co
First Defendant (Appellant) : Bennett & Co
Second Defendant (Appellant) : Bennett & Co
Third Defendant (Appellant) : Bennett & Co
Case(s) referred to in judgment(s):
Briess & Ors v Woolley & Ors [1954] AC 333
Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346
Opalswan Pty Ltd v Commercial & General Acceptances Pty Ltd & Scott, unreported; Federal Court; BC 9605717; 18 November 1996
Stone James (a firm) v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233
Wardley Australia Ltd & Anor v The State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Ashmore v British Coal Corporation [1990] 2 QB 338
Associated Leisure Ltd (Phonographic Equipment Co Ltd) v Associated Newspapers Ltd [1970] 2 QB 450
Davy v Garrett (1877) 7 Ch D 473
Derry v Peek (1889) 14 App Cas 337
Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404
Harold Thomas James Blakeley & Ors v BMP Pty Ltd & Ors, unreported; SCt of WA; Library No 980631; 7 October 1998
Henderson v Henderson 67 ER 313
McKerlie v Lake View & Star Ltd [No 2] (1939) 41 WALR 86
Metacel Pty Ltd v Ralph Symonds Ltd (1969) 90 WN (Pt 1) NSW 449
Peek v Gurney (1873) LR 6 HL 377
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Renowden v McMullin (1970) 123 CLR 584
White Industries (Q) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169
Yat Tung Investments Co Ltd v Dao Heng Bank [1975] AC 581
O'BRIEN DCJ: This action was commenced by a writ filed on 31 March 1998 and was endorsed with a claim against the defendants arising from their involvement as directors of a company called Commercial & General Acceptances Pty Ltd ("CAGA"). The endorsement of the claim sets out a claim against those directors alleging a breach by each of them as officers of the company pursuant to s 232(2) and s 232(4) of the Corporations Law.
The statement of claim and subsequent amendment of the statement of claim was filed pursuant to that endorsement. On 1 September 1998, the statement of claim was struck out. The action remained in abeyance until an application was brought by the defendants to dismiss it on 7 May 1999. That application led to an order on 10 June 1999 in which the Deputy Registrar ordered that unless the plaintiff files and serves a substituted statement of claim within 14 days, the action be struck out and judgment of dismissal be entered for the defendants along with costs of the action. On 24 June 1999, the plaintiff filed the substituted statement of claim raising a cause of action in deceit, notwithstanding that the writ referred to an action under s 232 of the Corporations Law. On 7 September 1999, the defendants filed a defence to the substituted statement of claim.
On 28 October 1999, the defendants filed a chamber summons to dismiss the action for failure on the part of the plaintiff to file a statement of claim which complied with the orders of the Deputy Registrar made on 10 June 1999, or alternatively, to strike out the statement of claim. This application was heard before the Deputy Registrar on 14 February 2000.
The Deputy Registrar ordered:
(i)The plaintiff has leave to amend the endorsement of the writ to include a claim in deceit;
(ii)The amendment to date from the date of this order;
(iii)The statement of claim filed 24 June 1999 be struck out;
(iv)The application be adjourned to Registrar's chambers on 14 March 2000 at 10.00 am;
(v)The plaintiff file and serve a minute of proposed substituted statement of claim within 21 days;
(vi)The plaintiff pay the defendants' costs of the action, and the application to this stage to be taxed;
(vii)The defendants' application to lift the scale in respect of getting up the case be adjourned for mention at the next hearing date;
(viii)Case management be suspended.
On 21 February 2000, the defendants filed a notice of appeal against those orders. An amended notice of appeal was filed on 26 July 2000. The grounds of appeal are as follows:
(i)The learned Registrar erred in law in granting leave to the plaintiff to amend its writ of summons in that:-
(a)There was a serious question to be determined as to whether the limitation period had expired before any grant of leave could be entertained;
(b)The plaintiff, by reason of filing a defective statement of claim had failed to discharge the onus required to obtain leave;
(c)The Registrar should have refused leave;
(d)Alternatively, the Registrar should have deferred the question of any grant of leave until a fresh minute of substituted statement of claim was filed by the plaintiff.
(ii)The learned Registrar erred in law in considering an oral application to amend the writ in the absence of a pleading or other material on the court record which raised a credible basis for an action of deceit.
(iii)The learned Registrar erred in law in not deciding whether the substituted statement of claim filed and served by the plaintiff on 24 June 1999 failed to comply with the order made by the learned Registrar on 10 June 1999.
(iv)The plaintiff's claim in deceit otherwise amounts to an abuse of process.
In lieu of the orders made by the Deputy Registrar on 14 February 2000, the defendants seek orders in the following terms:
(i)Leave to amend the writ of summons be refused;
(ii)The action be struck out;
(iii)The plaintiff pay the defendants' costs of the action to be taxed;
(iv)The plaintiff pay the defendants' costs of the appeal.
The allegations
The plaintiff seeks damages in respect of alleged advice and confirmations given by Mr Ian Scott allegedly with the knowledge of and acting on behalf of the defendants. The plaintiff claims that the representations were false or, in the alternative, were made without reasonable grounds to believe they were true.
The defendants were office holders of CAGA. The central focus of the action is the intended purchase by the plaintiff of three motor scrapers ("the scrapers").
The plaintiff's claim is that prior to 4 August 1993, the directors of the plaintiff and acting for an on behalf of the plaintiff, and another person called Caratti, were advised by Mr Scott that CAGA had authority to arrange the sale of the scrapers and the finance to facilitate it. It is said that as a consequence, the plaintiff was incorporated for the purpose of purchasing the scrapers. The claim is constituted by a recitation of 19 representations made concerning the finance which are said to have been false. As a result of the representations, it is claimed that the plaintiff relied on the representations concerning the availability of finance until a point had been reached where it had no choice but to implement measures which it says gave rise to the damages it now claims.
The defendants submit that the "factual matrixes" behind a claim for damages pursuant to s 232 of the Corporations Law and a claim in deceit are quite different and that the plaintiff's claim has changed "radically".
The defendants submit that a claim in deceit is a claim in fraud on the part of the defendants personally.
The amended substituted statement of claim filed 30 June 2000
It is alleged that the plaintiff's claim is an attempt to re‑litigate an issue already determined in the Federal Court case.
The amended substituted statement of claim, undated but filed on or about 30 June 2000, is a copy of the statement of claim in an action in the Federal Court, Opalswan Pty Ltd v Commercial & General Acceptances Pty Ltd & Scott, unreported; Federal Court; BC 9605717; 18 November 1996 ("the Federal Court action"). The substituted amended statement of claim is virtually identical to the statement of claim in the Federal Court action save that additional paragraphs have been added at 42A, 42B, 51A, 51B, 52A and 52B ("the additional paragraphs").
The defendants submit that the present action is an attempt to re‑litigate the issues in the Federal Court action on substantially the same evidence. They submit that the plaintiff had deliberately framed its original claim pursuant to s 232 of the Corporations Law to distinguish it from claims under s 52 of the Trade Practices Act 1975 (Cwth) and deceit which are analogous. The defendants further submit that, since the plaintiff has not taken the opportunity of putting forward its alleged involvement of the directors in the Federal Court action (by way of s 75B of the Trade Practices Act), it would be unfair to the defendants and contrary to the interests of justice to permit the matter to be re‑litigated.
It is submitted that it is an abuse of process to seek to raise in the present proceedings issues which could have been litigated in the Federal Court action. In fact, it is submitted that the matters relied upon in the present proceedings were so relevant to the subject matter in the Federal Court action that it is unreasonable not to have litigated them in the latter case.
It is also submitted that the additional paragraphs do not properly particularise the claim in deceit and each paragraph is liable to be struck out for failure to comply with O 20 r 13(1)(a) and/or O 20 r 13(1)(b). Further, it is submitted that each of the additional paragraphs also fail to raise a reasonable cause of action and ought to be struck out pursuant to O 20 r 19(1)(a).
This appeal was argued in the context of the amended substituted statement of claim which was filed pursuant to the order of the Deputy Registrar on 14 February 2000. This is an appeal de novo. Strictly speaking, the appeal involves a fresh consideration of the Deputy Registrar's decision based on the material which was before him at the time. The Deputy Registrar was considering a chamber summons to strike out the substituted statement of claim. If I were to confine my consideration to the application to strike out insofar as it related only to the substituted statement of claim, the defendants' alleged grievances in relation to the amended substituted statement of claim would have to await another hearing. Accordingly, I am prepared to deal with the matters raised on the appeal, which for the reasons expressed below I dismiss. I then propose to deal with the defendants' substantive application which is to strike out the amended substituted statement of claim. Subject to matters which I mention later, there is no prejudice to the plaintiff by taking this course of action as all issues were aired and argued on the appeal in relation to the amended substituted statement of claim. As mentioned previously, I am of the view, for reasons to be expressed, that the Deputy Registrar was correct in giving leave to amend the writ to include an action for deceit, and thereafter, allowing the plaintiff to file an amended substituted statement of claim.
Failure to comply with the Deputy Registrar's order made on 10 June 1999
The substituted statement of claim filed pursuant to an order made on 10 June 1999 alleged the tort of deceit. The defendant alleged that, because of deficiencies in the substituted statement of claim, it, in effect, did not comply with the orders made on 10 June 1999.
The defendants submit that the substituted statement of claim exceeds the endorsement on the writ and, therefore, should be struck out and the amendment refused unless the endorsement is amended (Stone James (a firm) v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 238). In effect, the submission is that the substituted statement of claim which did not fall within the endorsement in the writ failed to comply with the rules. As such, the substituted statement of claim should not be regarded as a pleading which avoided the springing order made by the Deputy Registrar on 10 June 1999 which in turn contemplated a permissible statement of claim being filed. It is said that the substituted statement of claim was a nullity. Therefore, the order of 10 June 1999 was self‑effecting and judgment should be entered for the defendants.
However, the fact of the matter is that whatever its substantive merits as a pleading, the real thrust of the defendants' complaint is that the substituted statement of claim goes beyond the writ, constitutes an abuse of process and is statute barred. In my view, it is pointless to consider the issue of whether the substituted statement of claim constitutes non‑compliance with the orders made on 10 June 1999 because of these and other alleged defects. The fact of the matter is that, on the face of things, the plaintiff did comply with the order to file a substituted statement of claim within 14 days. I intend to take the same course as the Deputy Registrar and consider the substantive objections to the substituted statement of claim. The Deputy Registrar was of the view that the objective of the application which resulted in the orders of 10 June 1999 was to force the plaintiff's hand. The desired result was achieved.
Grant of leave to amend the writ of summons
The application for leave to amend the writ arose in the course of the hearing before the Deputy Registrar as to whether the substituted statement of claim should be struck out. It appears that the application was made orally.
The court may, at any stage of the proceedings, allow the plaintiff to amend the writ or any party to amend the pleadings on such terms as to costs or otherwise as may be just and in such manner (if any) as the court may direct (O 21 r 1). Amendment may be allowed, notwithstanding that the effect of the amendment will be to add or substitute a new cause of action. If the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying to make the amendment, the amendment may be granted.
In this case, the substituted statement of claim pleaded the tort of deceit which was not endorsed on the writ. The defendants submit that "the factual matrixes behind the claims [of deceit and breach of statutory duty] are quite different". However, as developed, this submission was one based on the legal requirements of proof of each claim, rather than an attack on the claims as arising out of a different set of factual circumstances. In my view, each cause of action does arise out of the same or substantially the same facts. This much is clear when the substituted statement of claim is compared with the amended substituted statement of claim. The amendment cannot be said to prejudice the appellants. Accordingly, I would allow the amendment.
A claim in deceit must be commenced within six years of the cause of action accruing (s 38 of the Limitations Act 1935).
The defendants submit that leave should not be granted to amend a writ of summons where the cause of action is statute barred. It was submitted that the plaintiff has been given leave to amend the writ of summons to raise an action in deceit out of time. The defendants rely on the decision of the House of Lords in Briess & Ors v Woolley & Ors [1954] AC 333 at 335 per Lord Tucker:
"The tort of fraudulent misrepresentation is not complete when a representation is made. It becomes complete when a misrepresentation - not having been corrected in the meantime - is acted upon by the representee. Damage giving rise to a claim for damages may not follow or may not result until a later date, but once the misrepresentation is acted upon by the representee, the tortious act is complete provided that the representation is false at that date."
The Deputy Registrar considered the substituted statement of claim and was of the view that there was insufficient information to make a determination as to whether the cause of action was within the limitation period. He therefore permitted an amendment to the writ but ordered that it take effect from the date of his order. He was of the view that if the application to amend was made after the six‑year limitation period had expired, the amendment would not deprive the defendants of the limitation period defence. If the cause of action arose within the six‑year period, then the action could proceed in the usual way.
I agree with the Deputy Registrar that the substituted statement of claim was not helpful in determining when the cause of action in deceit accrued. In my view, once the amendment is allowed, arising as it does here from the same or substantially the same facts, it must date from the date the writ was filed. There is no discretion to order otherwise. I therefore quash the Deputy Registrar's order that the amendment to the writ date from the date of his order, namely, 14 February 2000.
Whether the amended substituted statement of claim should be struck out
The Deputy Registrar was of the view that the substituted statement of claim was inadequate as it lay outside the endorsement on the writ. The Deputy Registrar, to assist counsel draft the amended substituted statement of claim, observed that references to the Corporations Law should be deleted and that it was "not a proper pleading of loss and damage" to simply state that loss and damage has been suffered and that some sort of compensation is the amount of the judgment in the Federal Court. Further, he observed that some factual information is required as to the consequences of the failure of the company to provide finance to the plaintiff in a manner in which that failure led to loss is required.
The defendants submit that the amended substituted statement of claim should be struck out in its entirety because it does not comply with the order of the Deputy Registrar made on 14 February 2000, that within 21 days the plaintiff file a Minute of Proposed Substituted Statement of Claim. The defendants therefore submit that the amended substituted statement of claim should be struck out and the plaintiff file a minute as ordered by the Deputy Registrar. However, if this was done, the time and effort which went into arguing this appeal on its substantive basis would be wasted and the parties would be put to the expense of re‑arguing the substantive strike out application afresh. I, therefore, reject the submission. In any event, the plaintiff has re‑cast the amended substituted statement of claim as a minute.
Is the claim statute barred?
The claim in deceit arises out of 19 representations made between 2 September 1993 and 8 March 1994. These representations are pleaded to be in connection with the plaintiff's purchase of the scrapers. CAGA was to arrange the sale of the scrapers and the finance. To put the matter simply, in order to avoid litigation threatened by the vendor of the scrapers in respect of one of them ("the 089 scraper"), the plaintiff entered into a contract with Zel Nominees Pty Ltd ("Zel") to borrow $155,000 for the purpose of settling the litigation. This was done. The plaintiff claims damages arising out of the loan from Zel.
The defendants seek to support their contention that the claim is out of time by reference to findings by Nicholson J in the Federal Court action. However, with respect to his Honour, I have to make a judgment based upon the amended substituted statement of claim before me without reference to findings of fact in another jurisdiction. The amended substituted statement of claim does not particularise the damages sought. However, the defendants submit that the damage was incurred between 2 October 1993 and 19 November 1993, dates on which certain sums were paid out by the plaintiff in anticipation of settlement of the purchase of the scrapers. The plaintiff submits that the value of these payments was not lost to the plaintiff until the last opportunity for the plaintiff to purchase the scrapers had passed. The plaintiff submits that this date was 8 March 1994, the date of the intervention by Zel, the ultimate purchaser, after which date the benefit of the amounts expended by the plaintiff was beneficially lost to the plaintiff. This submission makes sense when one looks at the pleading. Whether damages arose before that date is a matter that I cannot determine without evidence.
The defendants further submit that the tort of fraudulent misrepresentation is not complete when a representation is made but becomes complete when it is acted upon by the representee (Briess & Ors v Woolley & Ors (supra). In this case, as I understand the plaintiff's claim, a series of representations is said to constitute the deceit and, although the plaintiff acted in reliance of the representations as they were made from time to time, ultimately it was his reliance on the totality of the representations which gives rise to his cause of action.
In my view, the issue of whether the cause of action is statute barred cannot be categorically determined on the pleadings as they now stand. Prima facie, it seems that the action is not statute barred but the matter might be resolved differently at trial.
Where it is unclear as to the date of accrual of the cause of action, the court at a summary level should not dismiss the action (Wardley Australia Ltd & Anor v The State of Western Australia (1992) 175 CLR 514).
Is the amended substituted statement of claim an abuse of process because it seeks to re‑litigate matters which were in issue in the Federal Court action?
This point can be disposed of shortly. The statement of claim in the Federal Court action is, in most respects, identical to the amended substituted statement of claim pleaded in this court. The defendants submit that the plaintiff had the opportunity of putting forward its claim of involvement of the directors in the Federal Court action by way of s 70B of the Trade Practices Act 1975.
It is desirable that there be, so far as practicable, an end to litigation and the law should strive against committing a multiplicity of proceedings in relation to similar issues (Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 at 355). Although the claim in the Federal Court action arose out of the same factual circumstances as the present claim, the cause of action was different and the parties were different. The plaintiff submits that the alleged complicity of the defendants was not known to the plaintiff at the time of the Federal Court proceedings. The plaintiff submits that the allegations of deceit are based upon the evidence of Mr Scott connecting the defendants with his actions in making the false representations alleged. The plaintiff submits that, therefore, it had no grounds during the course of the Federal Court action to allege and litigate the present action.
In my view, given that the parties are different, the cause of action (although similar) is different and that the plaintiff was unaware of the complicity of the defendants at the time of the Federal Court case, the present proceedings are not an abuse of process.
Does paragraph 57 of the amended substituted statement of claim extend beyond the writ?
The defendants submit that the plea in par 57 of the amended substituted statement of claim that the matters pleaded in par 31, par 36 and par 45 constitute economic duress and unconscionable conduct at common law and in equity should be struck out as going beyond the writ. As I observed earlier in these reasons, strictly speaking, I am considering the Deputy Registrar's decision made on 14 February 2000. This issue was not before the Deputy Registrar. It was not fully argued before me and not addressed in the written or oral submissions made on behalf of the plaintiff. Without deciding the matter, it seems that the submission has some validity. However, given that the matter was not pressed and not argued at this appeal by the plaintiff, I will not deal with the submission. The defendants are at liberty to make a separate application in relation to this issue. In fairness to the plaintiff, this matter should be the subject of full submissions.
Paragraphs 13, 20, 21‑23, 27, 30‑34, 36-38, 40, 42A‑43, 45, 47, 49, 50A, 50B, 51A, 51B, 52A and 52B of the amended substituted statement of claim ("the paragraphs")
The defendants submit that each of the above paragraphs should be struck out for failure to comply with O 20 r 13(1)(a) and O 20 r 13(1)(b) and that each of the paragraphs also failed to raise a reasonable cause of action in order to be struck out pursuant to O 20 r 19(1)(a).
Again, this particular argument was not put before the Deputy Registrar as the paragraphs were included in the amended substituted statement of claim after his decision. The plaintiff did not make any submissions in relation to the defendants' submissions concerning these paragraphs and, accordingly, in my view, this is not a matter which I should consider on this appeal. It may be that the complaints of the defendants can be remedied by seeking particulars. However, submissions should be considered, if necessary, in the course of an application to strike out the paragraphs on the grounds put forward on this appeal but not before the plaintiff has had the opportunity of making submissions.
Orders
I would therefore dismiss the appeal. As to Order (ii) of the Deputy Registrar, I quash the order that the amendment to the writ date from the date of this order. As to the defendants' submissions in relation to par 57 and the paragraphs, these can be considered, if necessary, in a separate application to strike out both from the amended substituted statement of claim.
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