Pearce v International Mining Technologies Ltd [No 2]

[2009] WASC 336

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   PEARCE -v- INTERNATIONAL MINING TECHNOLOGIES LTD [No 2] [2009] WASC 336

CORAM:   BEECH J

HEARD:   ON THE PAPERS

DELIVERED          :   17 NOVEMBER 2009

FILE NO/S:   CIV 2046 of 2007

CIV 1770 of 2008
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

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

FILE NO/S              :CIV 1268 of 2008

BETWEEN              :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

CIV 1770 of 2008

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 as agents for

Clarke Kann

First Plaintiff by Counterclaim     :        Tottle Partners as agents for

Clarke Kann

Second Plaintiff by Counterclaim   :        Tottle Partners as agents for

Clarke Kann

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 as agents for

Clarke Kann

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

Pearce v International Mining Technologies Ltd [2009] WASC 120

BEECH J: 

Introduction

1. This is an application for particulars of par 46 of the plaintiffs' amended reply and defence to counterclaim.  In 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 Ltd as the defendant. 

2. The chamber summons initiating the application stated that the application was made by the plaintiff in CIV 1770 of 2008, being RD Catelan Investments Pty Ltd.  By letter dated 19 October 2009 solicitors for that company and for the defendant in CIV 2046 of 2007 wrote to the court advising that the application was intended to be in the name of International Mining Technologies Ltd.  However, the letter indicated that it was not proposed to apply to amend the chamber summons.

3. I would have thought an amendment was required.  I would also have been inclined to the view that that amendment should be permitted.  The paragraph in respect of which the particulars are sought is pleaded in response to a plea by the defendant.  Consequently it should come as no surprise that the application for particulars should be brought by the defendant.  However, given the view to which I have come on the merits of the application, it is not necessary to say more about these matters.

4. I will identify the particulars sought by the defendant after I outline the pleadings and some other background.

The pleadings

1. I summarised the pleadings in an earlier decision in this action, Pearce v International Mining Technologies Ltd [2009] WASC 120 [3] ‑ [14], as follows:

   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. 

The background to this application; the plaintiffs' application for particulars

1. At a hearing on 8 December 2008 I heard the plaintiffs' application to strike out portions of the defendant's re‑amended defence and counterclaim dated 31 July 2008.  I refer to what is said in my earlier decision about that background [16] ‑ [22].

2. By chamber summons dated 20 March 2009 the plaintiffs applied for an order that the defendant give particulars of par 67 of its amended defence and counterclaim.  Specifically, the plaintiffs sought 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. 

3. I dismissed the plaintiffs' application for particulars on the basis that the orders sought by the plaintiffs did not involve the providing of particulars of the defendant's case.  The essential reasons were set out in par 31 of my reasons and included the following propositions:

   (a)work and expenses relating to Vital Data Link (VDL) are 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 (CAS) 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. 

4. In light of what had been said in the defendant's submissions and in its solicitors' correspondence, I went on to make some further observations on a matter not directly the subject of the plaintiffs' application for particulars and which did not affect my decision on that application.  At [38] I made the following observations:

   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.

   I said that because I had not heard from the parties as to the steps that might be taken I would not make any orders other than that the parties confer in order to identify and reduce or eliminate any issues as to what work and expenditure related to the VDL project.

5. It appears that the observations I made in [38] have been the genesis of the defendant's application in this case. 

The defendant's application

1. By chamber summons dated 20 August 2009 the defendant applies for an order that the plaintiffs give particulars of par 46 of the amended reply and defence to counterclaim as to what, if any, of the expenditure pleaded by the defendant as ineligible related to VDL. 

2. By consent it was ordered that the application be decided on the papers, if the court so determined after receipt of submissions.  By consent, because the parties were conferring (on this and other related matters), the time for the plaintiffs' submissions was extended to 3 November 2009.  Those submissions were received on that date.

3. It should be noticed at once that in [38] of my reasons on the earlier application I did not say that the plaintiffs must necessarily identify what if any of the expenditure pleaded by the defendant as ineligible related to the VDL.  What I said was that a starting point would be for the plaintiffs to identify whether they say that all of the expenditure pleaded by the defendant as being ineligible related to VDL.  It was only if the answer to that question was no that, in that case, I suggested the plaintiffs should identify which of the work they say does relate to VDL. 

4. The defendant's submissions in support of the application focus on the question of whether the plaintiffs' apparent assertion of inability to provide the particulars is an adequate reason to decline to order the particulars.  In my opinion, that overlooks the first and crucial question ‑ are the requested particulars necessary to a proper identification of the case that the plaintiffs put?  For the reasons that follow, in my opinion, that question is to be answered 'No'.

5. Paragraph 46 of the reply seems to me to make it clear that the plaintiffs say that all of the expenditure pleaded by the defendant as being ineligible related to VDL.  The defendant pleads that it conducted four projects as set out in the particulars under par 67.  In par 46(d) of the reply, the plaintiffs plead that no claims were made against the AusIndustry grant for either the Ground Engaging Tool or the Voice Commander.  Thus the plaintiffs' case is that claims were made against the grant relating to the CAS and VDL, and nothing else. 

6. In those circumstances in my opinion it is not part of the plaintiffs' case to identify how much of the monies claimed on the AusIndustry grant related to VDL as distinct from the CAS.  The thrust of the plaintiffs' case is that it was all one or the other, and it does not matter which, because both were properly the subject matter of the grant. 

7. For those reasons I would dismiss the defendant's application.

8. It will now be for the defendant to make a choice as to its response to the plaintiffs' case on this point, as was the subject of discussion at the directions hearing on 8 December 2008.  In the absence of any reply to counterclaim by the defendant, the defendant is taken to deny each allegation in the plaintiffs' reply and defence to counterclaim.  Thus as things stand, the defendant denies the allegation that some of the monies claimed for the grant related to VDL.  If a different approach (namely a global approach) is to be taken, a rejoinder and reply to counterclaim will need to be filed.

9. 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

1. For the reasons I have given I make the following orders:

   1.the defendant's application by chamber summons dated 20 August 2009 be dismissed;

   2.the costs of the application be determined on the papers; and

   3.any party who seeks a costs order different from that referred to in [19] have liberty to file written submissions within seven days, in which event the other party file written submissions within seven days thereafter.