Parodi v Reid
[1987] TASSC 88
•28 April 1987
Serial No B18/1987
List "B"
COURT: SUPREME COURT OF TASMANIA
CITATION: Parodi v Reid [1987] TASSC 88; B18/1987
PARTIES: PARODI
v
REID, John B
FILE NO/S: MA 159/1986
DELIVERED ON: 28 April 1987
JUDGMENT OF: Nettlefold J
Judgment Number: B18/1987
Number of paragraphs: 5
Serial No B18/1987
List "B"
File No MA 159/1986
PARODI v JOHN B REID & ORS
REASONS FOR JUDGMENT NETTLEFOLD J
28 April 1987
The facts appear in the reasons for judgment of the Master dated 28 November 1986 and 22 December 1986. Both these documents are attached hereto.
With respect, I differ from the learned Master in that I find that the plaintiff has not shown that the action is one in contract. The action is in respect of an alleged breach of trust. No doubt the term "contract" in 011, r1(1) (e) has a wide meaning (Gosper & Ors v Sawyer & Ors (1985) 59 ALJR 429 at 433 and 437). But "it cannot include discretionary trusts, except perhaps in the case where the trustee has admitted that he holds trust money as that of the beneficiary" (Gosper's case (supra) at p433).
The evidence does not establish that the trustees of this single fund (for the relevance of it being a single fund see Gosper's case (supra) at p437) intended to undertake obligations in contract to the plaintiff. The evidence suggests that they intended to undertake the obligations of trustees of the fund and no other obligations. That point is strengthened by a consideration of the relationship of the company to the trustees and to the fund. If they have failed to pay money to the plaintiff which they ought to have paid to him the appropriate remedy is an action to enforce the terms of the trust and not an action for the breach of a personal duty owed to the plaintiff arising out of a contract entered into with him personally. I find insuperable difficulties in treating the Trust Deed and Regulation as an overall "contract". And, unless it is so treated, the proposition that the trustees, defendants, are bound in contract to the plaintiff is simply not true.
In view of the reliance by the plaintiff on Official Solicitor v StypeInvestments (Jersey) Ltd [1983] 1 All ER 629 I should add that, in my opinion, this is not a case where there are contractual obligations and trustee obligations; these are trustee obligations only.
For these reasons the appeal will be allowed. I shall hear counsel as to the appropriate orders to be made.
Annexure (Reasons for judgment)
ANNEXURE
PARODI v REID AND OTHERS
REASONS FOR JUDGMENT: THE MASTER
28th November 1986
The defendants have filed an interlocutory application seeking the following orders:
"l(a) That the writ, or in the alternative, the service of the writ and statement of claim of this action be set aside.
(b)That the writ and action of the Plaintiff against the Defendant be stayed on the grounds that the Supreme Court of Tasmania does not have jurisdiction to entertain the Plaintiff's action.
2Further or other orders as the Court deems meet.
3The Plaintiff pay the Defendants' costs of the action and incidental to the application to be taxed."
The writ in this action was, without leave, served out of the jurisdiction of the Court. The defendants claim, pursuant to Order 11, Rule 1 of the Rules of the Supreme Court, that the writ is not one which may be served out of the jurisdiction without leave as it does not fall into any of the categories set out in sub–rule (1)(a) to (i) of Rule 1 of Order 11. The defendants entered a conditional appearance to the writ pursuant to the provisions of Order 13, Rule 24. It was conceded by Counsel for the Plaintiff that the Conditional Appearance was entered within time.
Three preliminary matters should be noted before dealing with the substance of this particular application.
Firstly, the exercise of the power to allow a writ to be served out of the jurisdiction, even though it may fall into one of the cases enumerated under Sub–rule (1) of Rule 1 of Order 11, is discretionary. The Order provides that a writ may, without leave of the Court or of a judge be served out of the jurisdiction of the Court. The underlining of the word "may" is mine. [See Lewis Construction Co Pty Ltd v M Tichauer Societe Anonyme [1966] VR 341.]
Secondly, at common law, and without the aid of the provisions of the Service and Execution of Process Act (Cwlth) or the Rules of the Supreme Court (Tasmania), a writ issued in this State does not run outside the State. [See Laurie v Carroll & Ors (1958) 98 CLR 310 and Jacobs v Australian Abrasives Pty Ltd [1971] Tas SR 92].
Thirdly, the exercise of jurisdiction is to be exercised with great care and leave will not he given to serve a writ out of the jurisdiction unless in all the circumstances it is appropriate to do so. [See Forestry Commission v Vickers–Armstrong (Tractors) Ltd [1964] Tas SR 109.]
Mr Smith of Counsel for the plaintiff concedes that the onus of proof to show cause that the writ in question falls within the provisions of Order 11 is upon the plaintiff and that sub–rule (1) (e) is the only relevant part of the rule which is applicable to this application. Sub–rule (1) (e) is as follows:
"1 – (1) A writ of summons or notice thereof may, without the leave of the Court or of a judge, be served out of the jurisdiction of the Court in any of the following cases, that is to say, whenever–
(a) ........
(b) ........
(c) ........
(d) ........
(e) the action is one brought to enforce, rescind, dissolve, annul, or otherwise affect a contract, or to recover damages or other relief for or in respect of the breach of a contract–
(i) made within this State;
(ii) made by or through an agent trading or residing within this State on behalf of a principal trading or residing out of this State; or
(iii) by its terms or by implication to be governed by the law of this State,
or is one brought in respect of a breach committed within this State of any contract wherever made, even though such breach was preceded or accompanied by a breach out of this State which rendered impossible the performance of the part of the contract which ought to have been performed within this State;"
The Endorsement of Claim on the Writ and the Statement of Claim are as follow, omitting formal parts:
"The plaintiff(s)' claim against you is for a declaration that he is entitled to payment of the sum of $25,000.00 payable by the Defendants as Trustees of the James Hardie Securiplan Superannuation Scheme to persons totally and permanently disabled.
..........
STATEMENT OF CLAIM
1THE Plaintiff was at all material times an employee of Montpelier Foundry Pty Ltd, a duly incorporated company trading from premises upon Lampton Avenue, Derwent Park.
2MONTPELIER Foundry Pty Ltd is a member of the James Hardie group of companies and its employees are entitled to participate in a superannuation scheme known as the James Hardie Securiplan.
3THE first six named Defendants were Trustees of the James Hardie Securiplan Scheme having been appointed Trustees on a date and in a manner unknown to the Plaintiff.
4.THE seventh named Defendant became a Trustee of the said scheme on the 8th day of December 1983 when the third named Defendant retired as a Trustee.
5ON or about the first day of October 1976 the Plaintiff as a result of representations made to him in that behalf became a member of the James Hardie Securiplan Superannuation Scheme. The representations made to the Plaintiff on behalf of the then Trustees of the James Hardie Securiplan Superannuation Scheme included (inter alia) an entitlement to be 'covered immediately for an amount of $25,000.00 payable in the event of (the plaintiff's) death or total permanent disablement occurring prior – to (the Plaintiff's) normal retirement date'.
6IN or about the month of October 1982 the Plaintiff became totally and permanently disabled so as to be unable to engage in any regular remunerative work.
7UPON the happening of the events described in the preceding paragraph hereof there arose in the Plaintiff an entitlement to receive the benefits prescribed in the James Hardie Securiplan Superannuation Scheme for persons who were totally and permanently disabled.
8THE Plaintiff made application to the first six named Defendants for the benefits referred to in paragraph 5 hereof.
9THE first six named Defendants have on and from the 7th day of December 1982 (and the seventh named Defendant has on and from the 8th day of December 1983) declined to admit the Plaintiff to the benefits referred to in paragraph 5 hereof.
10THE Plaintiff says that all Defendants are thereby in breach of the obligations imposed by the Trust Deed constituting the James Hardie Securiplan Superannuation Scheme andor are in breach of Contract.
WHEREFORE the Plaintiff claims
1A Declaration that he is and was at all material times entitled to the benefits described in paragraph 5 hereof.
2An Order that the Trustees pay to him such amount as represents the totality of benefits due to him as pleaded in paragraph 5 hereof.
3Costs.
4Such further or other orders as the Court deems fit."
Counsel for the defendants, Mr Hawson, submits that the statement of claim is deficient in the sense that it does not bring the plaintiff's cause of action within the provisions of Order 11 Rule 1(1)(e) in that it claims that the plaintiff is entitled to moneys under a trust deed and that a contract is not expressly pleaded, although in paragraph 10 of the Statement of Claim it is alleged in the alternative that the defendants "are in breach of Contract".
Counsel for the defendants tendered an affidavit sworn by Lionel Charles Denmead who deposes that he is one of the trustees of the Fund constituted by a Deed made on 27th March 1956, and now known as the "James Hardie Securiplan". A copy of the latest Deed and regulations (as amended to 311080) is the exhibit marked "LCD3" referred to in his affidavit. In his affidavit Mr Denmead further deposes that he and the other trustee defendants have at all material times resided outside the State of Tasmania and that the Deed has always been administered in New South Wales. He also deposes that the trustees have never contracted themselves, or through an agent, with the plaintiff, other than a member of the Fund. The Deed provides for the establishment of a fund for the provision of retiring allowances and other benefits to persons eligible to participate in the Fund, including benefits payable upon their retirement or total and permanent disablement.
The following facts, which are contained in Mr Denmead's affidavit, are not in dispute. The plaintiff was eligible to join the Fund as he was an employee of a company, Montpelier Foundry Pty Ltd, a company carrying on business in Tasmania and which is an associated company of James Hardie & Co Pty Ltd [See Regulations 25 (a)] The plaintiff was admitted to membership of the Fund on 1st October 1976 at a meeting of the trustees held in Sydney. The plaintiff's employment with Montpelier Foundry Pty Ltd was terminated on 19th May 1982 and he was paid the sum of $7186.00 pursuant to regulation 44 (b) of the amended regulations. In 1982 and 1983 the defendant trustees determined that the plaintiff was not then disabled within the meaning of "total and permanent disablement" as defined by the amended regulations to the deed.
Counsel for the plaintiff tendered an affidavit sworn by the plaintiff. The plaintiff deposes that in 1976 he was approached by the Paymaster of Montpelier Foundry Pty Ltd and asked to consider joining the superannuation scheme and that he was advised of the nature of the claim which he could make upon injury or disablement. He completed an application form for membership of the Fund, a copy of which is annexed to his affidavit. The application form was completed and given by him to the paymaster and shortly thereafter he was notified of his acceptance as a member and deductions from his wages commenced. He claimed that he suffered an injury in 1982 and made a claim for "total and permanent disablement" upon the Fund. All correspondence was with or on behalf of the trustees in Sydney and the plaintiff in Hobart. Again these facts are not in dispute.
Counsel for the defendants makes the following submissions as to why the writ should be set aside and the action stayed.
1It is submitted that before sub–rule 1(1)(e) of Order 11 can operate it is necessary for a contract to be in existence between the parties and that the statement of claim is deficient in that no contract is expressly pleaded and the remedies sought are applicable to an alleged breach of trust.
2It is submitted that Trust Deed and regulations are administered from Sydney and that Clause M of the Trust Deed at page 4 declares that:
'the law of the State of New South Wales shall govern the Fund and its regulations'.
3It is submitted, in the alternative, that if a contract is in existence between the trustees and the plaintiff, then there is no evidence that the contract was made within the State of Tasmania or "by or through" an agent in this State. Further the defendants submit that if there is a contract made within this State then the evidence is insufficient to establish that there has been a breach of it within this State.
4It is also submitted that if I should find that the provisions of sub–rule 1 (1) (e) are applicable nevertheless I should exercise the discretion not to allow the plaintiff's action to proceed in this State.
5Finally, it is put that if the abovementioned submissions fail then the plaintiff should elect whether he proposes to proceed for breach of trust or breach of contract and that the[i] should not be allowed to proceed for an alleged breach of trust in this State.
In his submissions that there is no contract existing between the parties, Counsel for the defendants maintains that the defendants are trustees under a Deed and regulations which govern their powers and duties and that they are under no personal obligations towards the plaintiff. Further, it is stated that there has, since the Deed was executed in 1976, been a change in the persons then appointed as trustees under[ii] the Deed.
Counsel for the defendants refers to the plaintiff's affidavit and the absence in it of any facts which establish a contractual relationship: Paragraphs 3, 4 and 5 of that affidavit refer to the approach by the paymaster of the plaintiff's employer inviting him to join the Superannuation[iii] Scheme. A copy of the application form is annexed to his affidavit and marked with the letter "A". Both Counsel stated at the hearing that the means by which the application was communicated by the paymaster to the trustees and the means of acceptance by the trustees cannot now be ascertained. Thus the rules governing the place where acceptance took place cannot be established. [See Entores Ltd v Miles Far EAst Corporation [1955] 2 All ER 493.]
Counsel for the defendants maintains that the facts alleged in the plaintiff's affidavit are insufficient to establish that, if a contract was made, it was made "by or through an agent trading or residing within this State on behalf of a principal trading or residing out of this State". It is said that the paymaster was not clothed with the authority of an agent and did not in any way bind his principals in New South Wales. As to any alleged breach of contract, Counsel for the defendants submits that a repudiation of the alleged contract has not been expressly pleaded and that the breach arises in the place where the repudiation occurs [See Safran v Chani (1970) 72 SR(NSW) 146 at 149.]
Weighing all these factors Counsel for the defendants submits that the State of New South Wales is the proper and convenient forum for the determination of the action between the plaintiff and the defendants.
Counsel for the plaintiff submits that contractual obligations exist under the Deed and regulations between the parties and that the conception of a trust and contract are not mutually exclusive. He cites Official Solicitor v Stype Investments [1983] 1 All ER 629 as authority for this submission. That submission is also borne out in Halsbury's Laws of England (4th Ed) Volume 48, par522, where it is stated:
"There may be a trust of a contract. If one of two contracting parties contracts expressly as trustee for another person, that third person can enforce the trust." In Stype's case (supra) the deed related, in part, to land within the jurisdiction and a sum of money forming part of the moneys claimed in the action was also within the jurisdiction. In those circumstances Whitford J held that the court in which the plaintiff had instituted his action was the most convenient forum in which to proceed.
Counsel for the plaintiff submits that it is open to infer that an offer was made by the plaintiff to join the Fund under the Trust Deed in Tasmania and by the defendants as trustees of the Deed. But, as stated above, there is no evidence as to the means by which the offer and acceptance were communicated.
Counsel for the plaintiff maintained that the alleged contract was made by or through the paymaster of the plaintiff's employer and that the paymaster fell within the meaning of an "agent" within the meaning of that term as used in sub–rule (1) (e) (ii) of Order 11, rule 1. In support of this submission he referred to National Mortgage and Agency Co of New Zealand Limited v Gosselin & Another (1922) 38 TLR 832 and HC Sleigh Ltd v Clarke [1954] SASR 49. [See also Nygh on "Conflict of Laws in Australia" 4th Ed p32.]. In the former case it was held that the person who arranged the contract was an "agent" within the meaning of an equivalent rule even though he had no authority to bind his principal and the contract was made by the principal outside the jurisdiction.
This concept of an "agent" differs from the normal definition of a person who is authorised to act for his principal. [See Powel on "The law of Agency" p53.] Bowstead, 15th Ed, on "Agency" describes an agent without authority to bind his principal as an "incomplete", "canvassing", or "introducing" agent.
Counsel for the plaintiff has tendered a copy of an unreported judgment of Adam J of the Victorian Supreme Court in M & B Distributors Pty Ltd and Anor v Mitsubishi Nippon Heavy Industries Ltd and Anor where His Honour came to the same conclusion as the court in Gosselin's case (see supra) as to the extended definition of an agent for the purpose of the sub–rule. Upon this authority I am satisfied that the paymaster was the agent of the defendants within the meaning of Order 11, Rule 1(1)(e)(ii).
As to the place where the alleged breach occurred, Counsel for the plaintiff submits that the decision by the defendants in Sydney to refuse to make payment to the plaintiff under the Deed was not in itself the only breach, but that the refusal to pay the plaintiff in this State was at least a continuation of such breach. [See Williams Supreme Court Practice, 2nd Ed p1148.] It is noted that the Deed and regulations are silent as to the place where payment of any moneys due are to be made. Upon the evidence before me, I am not able to conclude that the alleged breach occurred in this State.
I am satisfied that a contract does exist between the plaintiff and the defendants. The question remains whether, in the circumstances of the plaintiff's action, he was entitled to serve the writ outside the jurisdiction, without the leave of the Court, to enforce the contract, or trust, or for any breach of them.
It is clear that the plaintiff cannot, pursuant to the provisions of Order 11 rule 1(1), serve a writ, without the leave of the Court for a breach of trust, despite the fact that he may be able to proceed in contract. [See Nygh, supra, at page 29.]
Finally, it remains to be considered whether, notwithstanding that the plaintiff's action is, in part, one to enforce a contract, the discretion should be exercised to allow service of the writ, without the leave of the Court. The discretion is not to be exercised lightly and involves a consideration of all the relevant criteria. As Nygh said at pages 28–29:
"Under O11 r10 of the Tasmanian Rules and O11 r4 of the Queensland Rules no prior leave is necessary before the writ can be served out of the jurisdiction, but leave to proceed must be obtained at the hearing if the defendant fails to appear. However, there is no difference in the principles applicable: Forestry Commission v Vickers–Armstrong (Tractors) Ltd [1974] Tas SR 109; Laughton v McKenzie [1945] QWN 22. If the hearing is ex parte the question of leave to proceed will normally be considered after the plaintiff has adduced his evidence on the substance of his claim. In that case the court must be satisfied that the facts fall within the scope of the relevant rules. If the defendant appears to protest the jurisdiction the court must, in addition, consider whether to exercise its discretion and allow the action to proceed.
To what extent should an applicant for leave to serve a writ outside the jurisdiction or for leave to proceed satisfy the court that the case is a proper one for the granting of such leave? It is only necessary for him to make out a prima facie case falling within the ambit of one or more of the relevant rules. This means that the court does not have to try the case in advance but need only be satisfied that on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied'. However, the court will not be satisfied on slight material Forestry Commission v Vickers–Armstrong (Tractors) Ltd, supra."
In paragraph 17 of his affidavit the plaintiff deposes that:
"In 1982 as a result of my employment I sustained a back injury as a consequence of which I became totally and permanently disabled."
and in paragraph 21 thereof:
"Since I have been incapacitated all medical examinations that I have had have been arranged at the behest of my Trustees or my solicitors or on my own behalf. They have been arranged with Tasmanian medical practitioners practicing in this State. To the best of my knowledge, no witnesses need be brought from any part of Australia to give evidence in support of my claim."
(See also paragraph 6 of the Statement of Claim.)
"Total and Permanent Disablement" is defined in the Trust Deed as follows:
"and in the unfettered opinion of the Trustees after consideration of such medical or other evidence as the Trustees may require it is unlikely that the Member will ever again be able to engage in any regular remunerative work."
Mr Denmead in paragraph 11(b) of his affidavit deposes as follows in relation to the plaintiff's claim for "total and permanent disablement"
"The trustees met in 1982 and 1983 and in exercise of the discretion conferred on them pursuant to the regulations of the Deed determined on the information made available to them that the Plaintiff at the time of his retirement from his employment with Montpelier Foundry Pty Ltd was not then disabled within the meaning of 'total and permanent disablement' as defined by the amended regulations to the Deed."
Although the plaintiff has not adduced any medical evidence in support of his claim, it is evident upon this application that the strength of his case cannot be summarily determined and that it can only be assessed at trial after hearing all the witnesses and a consideration of the meaning of the phrase "total and permanent disablement" as it has been interpreted by the courts. Notwithstanding the caution contained in the judgments of the Full Court in Forestry Commission v Vickers–Armstrong (see supra), I consider that the facts raised in the plaintiff's cause of action are sufficient to permit him to proceed at this stage.
I also consider that this State is the most convenient forum for the determination of the action and is a factor which is to be taken into consideration of the exercise of the discretion. [See BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 725]. In this instance all the medical witnesses who have examined the plaintiff to date practice in this State. It appears that any other witnesses who might be called at the trial would reside in this State as the plaintiff was employed here and the alleged injury occurred at his place of employment.
In all the circumstances I consider that the plaintiff ought to be allowed to proceed in his action on the contract. But, as Counsel for the defendants submits, the plaintiff should be put on his election as to whether he proceeds on the contract in this State or on the contract and/or the action on the Trust Deed in New South Wales.
I shall hear Counsel as to the precise orders which it is desired be made upon this application after consideration of the abovementioned reasons.
Annexure (Supplementary reasons for judgment)
"ANNEXURE"
PARODI v REID AND OTHERS
SUPPLEMENTARY REASONS FOR JUDGMENT: THE MASTER
22nd December 1986
On 28th November 1986 I handed down my reasons for judgment on an interlocutory application wherein the defendant sought, pursuant to the provisions of Order 11 Rule 1 of the Rules of the Supreme Court, that the plaintiff's writ, or, alternatively, the service of the writ and statement of claim in this action be set aside or stayed on the ground that the Supreme Court of Tasmania did not have jurisdiction to entertain the plaintiff's action.
The plaintiff's statement of claim proceeded both in trust and contract. I indicated that the plaintiff should be allowed to proceed on the contract in Tasmania providing he elected not to proceed on the action of the contract and/or trust in New South Wales.
Counsel for the defendant had made this submission to me during the hearing of the application.
On 28th November 1986, I adjourned the matter to enable Counsel to consider the precise orders which should be made.
On 18th December 1986, Mr Hawson modified his previous submissions and put that as the plaintiff had not instituted any action in new South Wales at this stage he should only be required to elect to strike out the present cause of action based on the trust and confine himself at the trial to the cause of action in contract.
Counsel cited Gosman v Ockerby [1908] VLR 298 as the proposition for this submission. After hearing Mr Pickard of Counsel for the plaintiff and considering the judgment of Cussen J in Gosman v Ockerby (supra), I am satisfied that this is the correct approach which should be adopted upon this application.
I will therefore make orders to give effect to such an election by the plaintiff, or if he does not so elect, to set aside service.
I shall also hear Counsel as to the order for costs which should be made on this application.
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