Pearce v International Mining Technologies Ltd - [2009] WASCA 239

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: PEARCE -v- INTERNATIONAL MINING TECHNOLOGIES LIMITED [2009] WASCA 239

CORAM: PULLIN JA
NEWNES JA

HEARD: 8 DECEMBER 2009

DELIVERED : 23 DECEMBER 2009

FILE NO/S: CACV 58 of 2009

BETWEEN: ALAN FRANCIS PEARCE
First Appellant
TODD ANDREW PEARCE
Second Appellant
A & T PEARCE PTY LTD (ACN 093 787 369)
Third Appellant
AND
INTERNATIONAL MINING TECHNOLOGIES LIMITED (ACN 088 606 464)
First Respondent
RD CATALAN INVESTMENTS PTY LTD
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :BEECH J
Citation  :PEARCE -v- INTERNATIONAL MINING TECHNOLOGIES LTD [2009] WASC 120
File No  :CIV 2046 of 2007, CIV 1268 of 2008

Catchwords:

Practice and procedure - Appeal against dismissal of application for further and better particulars - Caution exercised by appellate court in reviewing interlocutory decision on matter of practice or procedure - Particular applicability to procedural decision of judge in CMC List

Legislation:

Nil

Result:

Leave to appeal refused

Category: B

Representation:

Counsel:

First Appellant               :     Mr M J McPhee
Second Appellant          :     Mr M J McPhee
Third Appellant             :     Mr M J McPhee
First Respondent           :     Mr J C Giles
Second Respondent      :     Mr J C Giles

Solicitors:

First Appellant               :     M J McPhee Barrister & Solicitor
Second Appellant          :     M J McPhee Barrister & Solicitor
Third Appellant             :     M J McPhee Barrister & Solicitor
First Respondent           :     Tottle Partners
Second Respondent      :     Tottle Partners

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

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Pearce v International Mining Technologies Ltd [2009] WASC 120
Re the Will of FB Gilbert (Dec) (1946) 46 SR (NSW) 318
The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40
Wilson v Metaxas [1989] WAR 285

JUDGMENT OF THE COURT: On 8 December 2009, we dismissed the appellants' application for leave to appeal against a decision of Beech J of 8 May 2009 in which his Honour dismissed the appellants' application for further and better particulars of the respondents' amended defence and counterclaim: Pearce v International Mining Technologies Ltd [2009] WASC 120. We said we would provide reasons for our decision later. These are our reasons.

The relevant pleadings

In the statement of claim, filed on 4 April 2008, the appellants allege that they were employed by the first respondent as executive directors pursuant to written contracts of service. They allege that under those contracts they were entitled to various benefits in the event of the termination of their employment. The appellants plead that their contracts were terminated without notice and they did not receive the benefits to which they were entitled.
In the amended defence and counterclaim, filed 12 December 2008, the first respondent denies the contracts of employment and, in the alternative, says that if the first respondent entered into any employment agreements with the appellants, those agreements were rescinded by the parties and the appellants waived all termination entitlements.
The respondents allege by way of counterclaim that the appellants breached their duties as directors, among other things, in respect of funds received from AusIndustry. That case is pleaded in pars 57 to 73 of the amended defence and counterclaim.
In par 57, the respondents plead that, in August 2004, the second appellant, with the knowledge and consent of the first appellant, completed a written application on behalf of the first respondent to AusIndustry for a research and development grant with respect to the development of the first respondent's Collision Avoidance System. They plead that the grant was approved and that it 'was payable only in relation to services or materials used by [first respondent] to develop the Collision Avoidance System'.
It is alleged in par 58 that from December 2004 to 12 January 2007 the appellants caused the first respondent to make written applications to AusIndustry for payments, purportedly pursuant to that grant, and to receive payments from AusIndustry paid to or at the direction of the first respondent. The monthly amounts received are particularised.
In pars 59 to 64, the respondents plead certain sub‑periods of the period from December 2004 to 2007. For each sub‑period, the respondents plead the amount for which the appellants caused the first respondent to apply, and the (lesser) amount that is alleged to have been eligible expenditure properly claimable under the AusIndustry grant.
Those allegations are particularised in detailed schedules attached to the pleading. The schedules contain an item‑by‑item breakdown of the expenditure referred to, identifying which items of expenditure (or in the case of employee expenses what proportion of the expenditure) the respondents say was for the Collision Avoidance System project (the CAS project) and therefore eligible expenditure under the AusIndustry grant, and which was not.
In par 65, the respondents plead that an amount of $2,605,907 claimed by the first respondent was not eligible expenditure. The respondents allege that, in respect of the sum of $266,311.58, the expenditure was not incurred at all and, in respect of the balance, it was not incurred by the first respondent in respect of the Collision Avoidance System. In par 66, the respondents plead that the appellants knew or ought reasonably to have known those matters.
It is appropriate to set out the plea in par 67 in full. It is as follows:
In the premises each of the [appellants] caused the [first respondent] to make and receive claims for research and development grants in respect of the expenses set out in paragraph 59 above when they knew, or ought reasonably to have known, that $2,605,907 of the expenses claimed and for which payment was received was not eligible expenditure properly claimable pursuant to the AusIndustry grant.
Particulars
(a)The [first respondent] conducted 4 projects as follows:
(i)Vital Data Link (VDL);
(ii)Voice Commander;
(iii)Ground Engaging Tool; and
(iv)Collision Avoidance System (CAS).
(b)There is no program source code in the possession of [the first respondent] relating to CAS. There are no motherboards created for the CAS. These items would be the foundation of any computer based software product.
(c)The records of the [first respondent] reveal that Ensco were engaged by the [appellants] on behalf of the [first respondent] to prepare a specification document for CAS. The records of [the first respondent] reveal that such a document was never completed. The specification document is the fundamental starting point for any computer based software product.
(d)The records of [the first respondent] reveal that stock purchased by VDL was written off by [the first respondent] as a cost of CAS.
(e)There is no physical item or document or computer software in the possession of the [first respondent] representing the sum of $2,326,989.00 received from AusIndustry or any equivalent sum which ought to have been contributed by [the first respondent].
(f)The records of [the first respondent] show employees who in fact carried out work on VDL as having been recorded against CAS and a grant claimed from AusIndustry.
In their amended reply and defence to counterclaim dated 9 February 2009, the appellants, in par 36, deny the allegations in par 57 of the amended defence and counterclaim and plead that the AusIndustry grant included the work on projects directly associated with the CAS project, such as the Vita Data Link project (the VDL project), and that such associated projects were included in the AusIndustry grant.
The appellants either deny or do not admit the pleas in pars 58 to 66 of the amended defence and counterclaim. In response to par 67 of the amended defence and counterclaim, the appellants plead (in par 46 of the amended reply and defence to counterclaim) that the VDL project formed part of what came 'to be known in generic terms as the Collision Avoidance System' and that claims relating to work on the VDL project were properly made pursuant to the AusIndustry grant. The appellants plead that no claims were made in respect of the Voice Commander or Ground Engaging Tool projects. The appellants plead that the funds expended by the first respondent under the AusIndustry grant are represented by 'the overall Collision Avoidance System' which included development of VDL, and that the costs of employees who worked on and recorded time on the VDL system were properly charged against the AusIndustry grant.
The respondents have not filed a reply to the appellants' amended defence to counterclaim.

The appellants' request for particulars

On 20 March 2009, the appellants applied for further and better particulars of par 67 of the defence and counterclaim. The appellants sought orders that:
(1)the first respondent give particulars of par 67 as to the work, or category of work, upon which the expenditure is said to have been applied; and the basis upon which it is suggested, in each case, that such expenditure is said to have been ineligible for the AusIndustry grant referred to in the pleadings; and
(2)the schedule supplied by the first respondent be amended to include an additional column showing the particulars as to where alleged ineligible expenditure was applied, and a column for a response by the appellants.

The decision of the primary judge

The primary judge refused to order the particulars sought by the appellants. He rejected the appellants' claim that it was entitled to particulars of the basis upon which the respondents said the expenditure was ineligible under the AusIndustry grant. His Honour considered the respondents' case in that respect was clear. The respondents pleaded that the grant was payable only for services or materials used in the CAS project and that the ineligible expenditure referred to in the amended defence and counterclaim had not been used in the CAS project. No further particulars were necessary.
The primary judge also rejected the application for particulars of the work or categories of work upon which the ineligible expenditure was said to have been applied. His Honour found that how the ineligible expenditure had in fact been used was not relevant to the respondents' case. The respondents' case was simply that only expenditure in relation to the CAS project was properly the subject of the grant and the ineligible expenditure had not been used for that purpose. It was the appellants who asserted that the grant was wider than that and included expenditure for work related to the VDL project, and it was for the appellants to plead and particularise their case. It was not for the respondents to establish what expenditure was or was not made on the VDL project.
The primary judge went on, however, to observe that it was clear there was an issue on the pleadings as to whether the AusIndustry grant applied only to the CAS project (as the respondents contend) or whether it also included work relating to the VDL project (as the appellants contend). Whilst the respondents had identified the work they say related to the CAS project, it was not clear from the pleadings whether there were issues between the parties as to which of the other work referred to related to the VDL project.
His Honour accepted the appellants' submission that the scope of the trial may be substantially affected by whether there were disputes between the parties as to the extent to which the alleged ineligible expenditure related to the VDL project.
In light of that, his Honour considered that the parties should take steps at this point to identify any such issues and suggested that one way to go about that would be for the appellants to say which of the alleged ineligible expenditure related to the VDL project and for the respondents to respond to that. His Honour did not, however, make any order in that connection but directed the parties to confer 'in order to identify and reduce or eliminate any issues as to what work and expenditure relates to the [VDL] project' ([41]).

Grounds of appeal

The appellants relied on the following grounds of appeal:
As matter of law, [the primary judge erred in dismissing the application] by misdirecting himself in the exercise of his discretion by not taking into account or giving sufficient consideration the following matters:
(a)the amended defence and counterclaim does not identify which parts of the AusIndustry claim are said to be eligible or ineligible in a way that enables the [appellants] a fair opportunity to meet the case;
(b)by concluding on the pleadings as they stand, that the legal and/or evidentiary onus of proof lay on the [appellants] to plead and particularise what expenditure was or was [not] made on the 'VDL project';
(c)by expressly or impliedly taking into account the difficulty stated by counsel for the [first respondent] in providing particulars but not, in such consideration, considering that it was the [first respondent] who has pleaded precisely … which parts of the overall expenditure is said to be eligible to the AusIndustry grant and which is not, without at the same time saying (either by reference to particulars in pars 67 or otherwise) what materials of work are included in this calculation as to eligibility;
(d)that the [first respondent] in par 67 … does not limit its case to expenditure on the 'VDL project', and thereby leaves in doubt just what items of work and expenditure, are said to be eligible and those which are said to be ineligible and, as a result, leaves in doubt just what is and what is not alleged against the [appellants].
On the hearing of the appeal, counsel for the appellants abandoned reliance on the passage 'or giving sufficient consideration' in the grounds of appeal.

The disposition of the appeal

The decision of the primary judge was an interlocutory decision and accordingly the appellants require leave to appeal. On 11 June 2009, it was ordered that the application for leave to appeal be heard together with the appeal.
Where an appeal is from an interlocutory decision, an appellant must generally show that the decision was wrong, or attended with sufficient doubt to justify the grant of leave and, in addition, that substantial injustice be done by leaving the decision unreversed: Wilson v Metaxas [1989] WAR 285, 294; The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, 57.
In addition, an appellate court will exercise particular caution in reviewing a decision which (as in this case) involves the exercise of discretion on a matter of practice and procedure. In Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177, the High Court adopted the following statement of Jordan CJ in Re the Will of FB Gilbert (Dec) (1946) 46 SR (NSW) 318, regarding the approach to interlocutory appeals:
… I am of opinion that … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a judge in Chambers to a Court of Appeal (323).
Such appellate restraint has particular force in the present case where the appeal is brought from a procedural decision of the judge who has the management of the case in the Commercial and Managed Cases List (CMC List). Cases will generally be admitted to the CMC List where, by reason of their size, complexity or propensity for interlocutory dispute, they require more intensive management by a judge. The object of the CMC List is to ensure that such cases are managed, and that in each case the interlocutory processes of the court are tailored, to achieve a just outcome in the quickest and most cost‑effective way. It is for that reason that cases in the CMC List are managed on a 'docket' system; that is, each case is assigned to a particular judge who is to manage the case throughout the interlocutory process and who will generally be the trial judge.
A judge who has a continuing involvement in the management of a case in the CMC List is likely to have a much better overall perspective of the litigation, and to be in a much better position to determine what particular procedural steps are appropriate, than this court. The advantage that such a judge will generally have from his or her familiarity with the case is not lightly to be put aside. While this court must be prepared to intervene where questions of legal principle arise or the interests of justice otherwise require it, restraint is necessary to avoid the appellate process becoming an obstacle to the proper and effective management of cases in the CMC List.
In the present appeal, we do not consider that any reason has been shown which would justify the intervention of this court. In our view, the appeal is founded upon a misunderstanding of the matters in issue on the pleadings and is misconceived. It is unnecessary to canvass the grounds of appeal in any detail.
It is trite law that a party is entitled to a statement of the opponent's case sufficiently clear to enable him or her the opportunity to meet it. The appellants contend that the particulars they seek are necessary for that purpose. On a proper understanding of the pleaded issues that is plainly not the case
The respondents' pleaded case, in substance, is that:
•at the relevant time the first respondent was engaged in the CAS project and three other projects, one of the other projects being the VDL project;
•the AusIndustry grant was for expenditure on the CAS project only;
•the appellants caused the first respondent to make claims and receive payments under the AusIndustry grant in respect of expenditure which the appellants knew or ought reasonably to have known was not expenditure on the CAS project.
The basis upon which the respondents allege that the expenditure was not eligible expenditure for the purposes of the grant is clear. The primary judge was, with respect, plainly correct to dismiss the appellants' application for such particulars.
The appellants' request for particulars of the work upon which the alleged ineligible expenditure is said to have been applied is equally without merit. As emerged in argument on the appeal, the particulars sought by the appellants are directed, in substance, to ascertaining what (if any) part of the alleged ineligible expenditure related to the VDL project.
The request is not, however, directed to the respondents' case. The respondents' case is simply that the alleged ineligible expenditure was not used for the purpose of the CAS project. At trial the onus of proving that will lie on the respondents. But it is not relevant to the respondents' case to prove for what other purpose or purposes the expenditure was in fact used.
It is the appellants' case, on the other hand, that the VDL project formed part of the CAS project and therefore expenditure on the VDL project was eligible expenditure under the AusIndustry grant. For the purposes of the respondents' case it is obviously relevant to determine which parts of the alleged ineligible expenditure related to the VDL project. But it is irrelevant to the respondents' pleaded case. It is not, therefore, incumbent upon the respondents to provide such particulars.

We should say for completeness that there is no basis for the appellants' contention that in dismissing the appellants' application his Honour took into account that the respondents may have difficulty in providing particulars of the expenditure on the VDL project. There is nothing in his Honour's reasons which might support that assertion. It is plain from his Honour's reasons that he dismissed the application because it was without foundation.
The appellants have failed to establish any error by the primary judge.
We would add that, in any event, the appellants have failed to show that any question of substantial injustice is capable of arising out of the primary judge's decision. It is clear that the primary judge has already determined that it is appropriate the parties endeavour at this point to try to resolve any issue between them as to the extent to which the alleged ineligible expenditure related to work on the VDL project. His Honour has directed that the parties confer with the object of reducing or eliminating any such issue and left it to either side to apply for appropriate relief if the conferral process does not achieve a satisfactory outcome. That is a process properly left to be worked out under the management of the primary judge. And the fact that such a process is already in train highlights why interlocutory appeals in respect of procedural issues of this nature should be approached with caution by this court.

Conclusion

It was for those reasons we concluded that leave to appeal should be refused.