Pearce v International Mining Technologies Ltd - [2009] WASC 120

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: PEARCE -v- INTERNATIONAL MINING TECHNOLOGIES LTD [2009] WASC 120

CORAM: BEECH J

HEARD: ON THE PAPERS

DELIVERED : 8 MAY 2009

FILE NO/S: CIV 2046 of 2007
Consolidated with CIV 1268 of 2008 and CIV 1770 of 2008 by orders dated 26 March 2008 and 8 December 2008

BETWEEN: ALAN FRANCIS PEARCE
First Plaintiff
TODD ANDREW PEARCE
Second Plaintiff
AND
INTERNATIONAL MINING TECHNOLOGIES LTD (ACN 088 606 464)
Defendant
AND BETWEEN
INTERNATIONAL MINING TECHNOLOGIES LTD (ACN 088 606 464)
First Plaintiff by Counterclaim
RD CATELAN INVESTMENTS PTY LTD (ACN 110 631 500)
Second Plaintiff by Counterclaim
AND
ALAN FRANCIS PEARCE
First Defendant by Counterclaim
TODD ANDREW PEARCE
Second Defendant by Counterclaim

CONSOLIDATED : CIV 1268 of 2008
WITH
:A & T PEARCE PTY LTD (ACN 093 787 369)
Plaintiff
INTERNATIONAL MINING TECHNOLOGIES LTD (ACN 008 606 464)
Defendant

Catchwords:

Practice and procedure - Application for further particulars - Turns on own facts

Legislation:

Nil

Result:

Application for further particulars dismissed

Category: B

Representation:

CIV 2046 of 2007

Consolidated with CIV 1268 of 2008 and CIV 1770 of 2008 by orders dated 26 March 2008 and 8 December 2008

Counsel:

First Plaintiff               :        No appearance
Second Plaintiff               :        No appearance
Defendant:        No appearance
First Plaintiff by Counterclaim     :        No appearance
Second Plaintiff by Counterclaim    :        No appearance
First Defendant by Counterclaim :    No appearance
Second Defendant by Counterclaim :        No appearance

Solicitors:

First Plaintiff               :        Michael McPhee
Second Plaintiff               :        Michael McPhee
Defendant:        Tottle Partners
First Plaintiff by Counterclaim     :        Tottle Partners
Second Plaintiff by Counterclaim    :        Tottle Partners
First Defendant by Counterclaim :    Michael McPhee
Second Defendant by Counterclaim :        Michael McPhee

CIV 1268 of 2008

Counsel:

Plaintiff: No appearance
Defendant: No appearance

Solicitors:

Plaintiff: Michael McPhee
Defendant: Tottle Partners

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

Nil

BEECH J:

Introduction

By chamber summons dated 20 March 2009 the plaintiffs apply for an order that the defendant give particulars of par 67 of its amended defence and counterclaim. I will identify the further particulars sought once I have put the application into the context of the pleadings in the action and an earlier interlocutory hearing.
Throughout this decision I will refer to Mr Alan Pearce, Mr Todd Pearce and A & T Pearce Pty Ltd as the plaintiffs, and to International Mining Technologies Pty Ltd as the defendant.

The pleadings

The defendant pleads at par 29 of its defence and counterclaim that, at all material times prior to 31 July 2007:
(a)both of the plaintiffs were directors and in senior management of the defendant;
(b)the defendant carried on a business developing and attempting to commercialise a technology known as the Collision Avoidance System, which is designed to prevent or reduce collisions between vehicles and equipment used in the mining industry.
Paragraphs 57 to 73 of the defence and counterclaim relate to an AusIndustry grant. Paragraph 57 pleads that in August 2004, the second plaintiff completed, with the knowledge and consent of the first plaintiff, a written application on behalf of the defendant to AusIndustry for a research and development grant with respect to the development of its Collision Avoidance System. Paragraph 57 further pleads that this grant was approved, and that it 'was payable only in relation to services or materials used by the defendant to develop the Collision Avoidance System'.
Paragraph 58 pleads that in the period from December 2004 to 2007, the plaintiffs caused the defendant to make written applications to AusIndustry for payments, purportedly pursuant to that grant, and that AusIndustry paid a sum of about $2.3 million to or at the direction of the defendant.
Paragraphs 59 to 64 relate to sub‑periods of the period from December 2004 to 2007. For each sub‑period, the defendant pleads an amount for which the plaintiffs caused the defendant to apply, and the lesser amount pleaded that is alleged to have been eligible expenditure properly claimable under the AusIndustry grant.
Detailed schedules are attached to the pleading. As I understand it, within those schedules is an item‑by‑item breakdown of the expenditures referred to in this part of the pleading. The schedules identify which of the expenditures, or in the case of employee expenses, what proportion of the expenditures, is said by the defendant to be eligible expenditure under the AusIndustry grant.
Paragraph 65 pleads that the sum of $2,605,907 was not eligible expenditure, primarily because the costs were not incurred by the defendant on services or materials used to develop the Collision Avoidance System (and, in one case, because the expenditure was not incurred at all).
Paragraph 66 pleads that the plaintiffs knew or ought reasonably to have known of the matters pleaded.
Paragraph 67 of the defence and counterclaim pleads that each of the plaintiffs caused the defendant to make and receive claims for research and development grants in respect of the expenses set out earlier in the pleading 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 are set out under par 67. The particulars state that the defendant conducted four projects: Vital Data Link (VDL), Voice Commander, Ground Engaging Tool and Collision Avoidance System (CAS). The particulars state that the defendant's records reveal that stock purchased for the VDL project was written off by the defendant as a cost of CAS. Further, the particulars state that the records of the defendant show that employees who in fact carried out work on the VDL project were recorded as having worked on the CAS project, and accordingly claimed in the grant from AusIndustry.
The plaintiffs respond to these pleas in their amended reply and defence to counterclaim dated 6 February 2009. The plaintiffs deny par 57 of the defence and counterclaim and plead, in par 36, that the AusIndustry grant included the work on projects directly associated with the Collision Avoidance System, such as VDL, and that such associated projects were included in the AusIndustry grant.
Paragraph 46 of the reply responds to par 67 of the defence and counterclaim. The plaintiffs plead 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 VDL were properly made pursuant to the AusIndustry grant. The plaintiffs plead that funds expended by the defendant 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 VDL systems were properly charged against the AusIndustry grant.
The defendant has not filed a reply to the plaintiffs' defence to counterclaim. Accordingly, the defendant is taken to put in issue the pleas of the plaintiffs to which I have just referred.
It is convenient to turn to the hearing which occurred on 8 December 2008.

The hearing of 8 December 2008

On 8 December 2008, I heard the plaintiffs' application to strike out portions of the defendant's amended defence and counterclaim dated 31 July 2008.
By the time of the hearing on 8 December 2008, the defendant had filed and served schedules substantially along the lines of what is attached to its minute of amended defence and counterclaim dated 25 August 2008 and filed 12 December 2008.
In the course of the hearing counsel for the plaintiffs suggested that the schedules should, in the case of expenditure said by the defendant not to be for the Collision Avoidance System, identify what other project or category of expenditure it related to. In response to a question from me, counsel for the defendant stated that, on his instructions, detailed attention had not been directed by the defendant to the question of what other projects expenditure related to. Rather, attention had been directed solely to whether the expenditure was or was not for the CAS.
In the course of argument, I observed that if the plaintiffs pleaded in reply to par 57 of the defence and counterclaim that certain other projects or types of work were also within the scope of the grant, that would lead both parties to give attention to what work was done in relation to those other projects or other categories (ts 54). In response, counsel for the defendant said as follows:
We would certainly have a choice about how we met that. One way would be to meet it on the facts and then say, 'Even if that's right there is nonetheless certain categories of expenditure which were not claimable'. We might of course simply elect to meet it by saying the document means on its face what we are saying and we are not engaging factually with that argument and we take the risk that if we are wrong about that, your Honour finds against us; we don't prove our case and we lose because of the way we have chosen to fight the case (ts 54).
I observed that if the defendant chose to engage at the level of the factual question of whether particular expenditure was or was not within the additional categories said by the plaintiffs to be eligible, then the defendant would have to revisit the information (ts 55). Counsel agreed with that statement to the extent that the plaintiffs pleaded that a particular additional project was within the grant. Counsel for the defendant then said that, to that extent, the process would need to be undertaken, but not in relation to categories or projects not relied upon by the plaintiffs as eligible expenditure (ts 55).
On 8 December 2008 I did not make an order that the defendant identify, in its schedules, what other project the expenditure or work related to.
On 8 December 2008, I made the following orders:
(1)Subject to par 2, the plaintiffs' application to strike out parts of the defendant's amended defence and counterclaim be dismissed.
(2)The plaintiffs have liberty to bring a further application to strike out following the delivery by the defendant of further schedules to the defendant's particulars.
(3)By 4.00 pm on 12 December 2008 the defendant file and serve their further schedules to the particulars.
That brings me to the plaintiffs' application.

The plaintiffs' application

In support of its application for particulars, the plaintiffs' affidavit annexes some correspondence between the parties' solicitors. By letter of 9 March 2009, the defendant's solicitors stated that the defendant's counsel was questioned by me on 8 December 2008, and that the response was that the defendant would adopt either a line‑by‑line approach or a global approach. The letter stated that, as foreshadowed in an earlier email, it was likely that the defendant would take a global approach, but at this time 'the defendant does not wish to be so confined'. On that basis, the parties agreed to directions for the bringing of this application. Orders were made by consent on 1 April 2009 that the application be determined on the papers.
The plaintiffs apply for orders that:
(1)the defendant give particulars of par 67 of the amended defence as to the work, or category of work (referring to the particulars under par 67), 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 defendant 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 plaintiffs.
I can say immediately that I am not persuaded that I should make an order for particulars as to the second aspect of the first order sought, namely 'the basis upon which it is suggested, in each case, that such expenditure is said to have been ineligible for the AusIndustry grant.' No further particulars are required. The defendant's case as to why the expenditure is said to have been ineligible is clear. It involves two integers, each of which is pleaded:
(a)the grant was payable only in relation to services or materials used by the defendant to develop the Collision Avoidance System (par 57);
(b)the ineligible expenditure was not in relation to services or materials used by the defendant to develop the Collision Avoidance System (par 65).
That leaves me to consider the remainder of the orders sought by the plaintiff.
The plaintiffs' submissions refer to the hearing on 8 December 2008, and to the pleadings to which I have referred. The plaintiffs submit that it is not clear, on the pleadings, whether the defendant has made an election of the sort described by counsel for the defendant at page 54 of the transcript in the passage I have set out at [19] of these reasons. I accept that proposition.
The plaintiffs submit that the length and complexity of the trial will be affected by whether expenditure that is, on the defendant's case, not within the grant because it was not used to develop the CAS, is within the VDL additional category of expenditure. I accept that submission, although, as I will explain, I do not accept that it should lead to the orders now sought by the plaintiffs.
The plaintiffs submit that absent a reply to the defence to counterclaim dated 25 August 2008, the pleading leaves open the inference of an affirmative statement that allegedly ineligible expenditure was spent on things not covered by the grant. It is submitted that although 'it is a general traverse in a defence and counterclaim, it is fairly described as a negative, pregnant with the affirmative allegation as to the work upon which the expenditure is said to have been applied'.
The traverse by the defendant of the plaintiffs' plea in their reply does not, the defendant submits, give rise to an obligation to provide particulars of a denial. I accept that submission. First, what is sought by the chamber summons is an order for particulars of par 67 of the defence and counterclaim, not for particulars of the defendant's denial of one or more paragraphs of the plaintiffs' reply and defence to counterclaim. Secondly, and more substantively, I accept the following submissions of the defendant:
(a)work and expenses relating to VDL is not relevant to the case made by the defendant;
(b)the defendant's case is that only expenditure in relation to services or materials used by the defendant to develop the Collision Avoidance System is properly the subject of the grant;
(c)it is the plaintiffs who assert that the grant had a wider scope and included work and expenditure relating to the VDL project; and
(d)thus it is not for the defendant, and the defendant does not bear an onus, to show what expenditure was or was not made on the VDL project. Rather, the plaintiffs must plead and particularise their case.
Consequently, in my opinion, the orders sought by the plaintiff do not involve the providing of particulars of the case of the defendant.
For these reasons I would dismiss the plaintiffs' application.
I propose to go on to deal with another aspect of the defendant's submissions, which echoes what was said in the defendant's solicitor's letter of 9 March 2009.
The defendant's submissions refer to the interchange between counsel and the bench at ts 54 and 55 on 8 December 2008, to which I have already referred. The defendant submits that the election contemplated in that discussion should occur at the point at which the defendant puts on evidence by its witness statements and documents. The defendant says that its evidence would go first and that the plaintiffs would then have an opportunity to consider the evidence and prepare its case in response.
I do not accept that the progressing of the identification of the extent of any issue as to what expenditure relates to VDL should await the provision of the defendant's witness statements.
It is clear on the pleadings that there is an issue between the parties as to whether the AusIndustry grant related only to the Collision Avoidance System (as the defendant says), or whether it also included work relating to VDL (as the plaintiffs say). The defendant has identified in its pleading and schedules what work it says related to the Collision Avoidance System. What is not yet clear to me from the pleadings is whether there are issues between the parties as to what work related to VDL. As the plaintiffs submit, whether there are issues in that regard may substantially affect the scope of the trial. There is a spectrum of possibilities. At one extreme, there may be no issue as to what work related to VDL; the only issue might be whether the scope of the grant was restricted to the Collision Avoidance System, or whether it extended to include work on the VDL project. At the other end of the spectrum, it is possible that the defendant takes issue with every piece of work said to have been done in relation to VDL.
It seems to me conducive to the efficient, timely and affordable disposition of the action for the parties to take steps now to identify the extent, if any, of any issue as to what work related to VDL. I do not think that that should await the delivery of the defendant's witness statements. One possible starting‑point is for the plaintiffs, not the defendant, to identify whether they say that all of the expenditure pleaded by the defendant as being non‑eligible related to VDL and, if not, which of the work they say does relate to VDL. It would then be for the defendant to respond.
However, I have not heard from the parties as to what steps might now be taken in this regard (apart from the plaintiffs' application for particulars now before me, which I would dismiss). For that reason, the only order I would make without hearing further from the parties is that the parties confer in relation to the question of what work and expenditure relate to VDL. Following that process, either party can, if necessary, make a further application.
My tentative views as to costs are as follows. Costs should follow the event. I would be minded to fix the costs in the sum of $1,650 in accordance with item 2.9 in Practice Direction 4.7.1.1. I would give liberty to any party who seeks a different costs order to file written submissions within seven days.

Conclusion

For the reasons I have given I make the following orders:
(1)the plaintiffs' application by chamber summons dated 20 March 2009 for further and better particulars be dismissed;
(2)the parties confer in order to identify and reduce or eliminate any issues as to what work and expenditure relates to the Vital Data Link project;
(3)the parties have liberty to file written submissions as to the costs of the application within seven days; and
(4)the costs of the application be determined on the papers.