Port Kennedy Golf Country Club Pty Ltd v Port Kennedy Resorts Pty Ltd

[2000] WASC 136

PORT KENNEDY GOLF COUNTRY CLUB PTY LTD & ORS -v- PORT KENNEDY RESORTS PTY LTD & ORS [2000] WASC 136

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASC 136
Case No:	CIV:1644/1999	Heard:	17 MAY 2000
Coram:	ANDERSON J	Delivered:	30/05/00
No of pages:	21	Judgment Part:	1 of 1
Result:	Application allowed in part
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Parties:	PORT KENNEDY GOLF COUNTRY CLUB PTY LTD (ACN 060 885 252) HO SWEE HUAT SIEW TIEN CHOW LIM YUE KHIM MOHAMED JAMIL BIN MOHAMED AMIN PAC-ASIA HOLDINGS PTE LTD PORT KENNEDY RESORTS PTY LTD (ACN 061 115 348) RICHARD ANTHONY LUKIN GARY KEVIN SHEEHAN PAUL ANDREWS JOHN MacKAY MATHESON TEOW KIM CHNG STEPHEN WILLIAM MARSHALL FLEURIS PTY LTD (ACN 009 010 495)
Catchwords:	Practice and procedure Pleading Statement of claim Striking out Pleading of contract Not in proper form Failure to plead material facts Failure to clearly plead basis of claim in contract Embarrassing Parts of plea
Legislation:	Corporations Law, s 461(1)(e), s 462, s 462(4)
Case References:	Knight Sugar Company Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266 Palmer v Johnson (1884) 13 QBD 351 Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [1999] WASC 253 Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [2000] WASC 15 Tito v Waddell (No 2) (1977) 1 Ch 106 Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : PORT KENNEDY GOLF COUNTRY CLUB PTY LTD & ORS -v- PORT KENNEDY RESORTS PTY LTD & ORS [2000] WASC 136 CORAM : ANDERSON J HEARD : 17 MAY 2000 DELIVERED : 30 MAY 2000 FILE NO/S : CIV 1644 of 1999

CIV 1718 of 1999
CIV 1266 of 1999
CIV 1717 of 1999
CIV 1737 of 1999
Consolidated by order 7 September 1999

BETWEEN : PORT KENNEDY GOLF COUNTRY CLUB PTY LTD (ACN 060 885 252)

First Plaintiff

HO SWEE HUAT
Second Plaintiff

SIEW TIEN CHOW
LIM YUE KHIM
MOHAMED JAMIL BIN MOHAMED AMIN
Third Plaintiffs

PAC-ASIA HOLDINGS PTE LTD
Fourth Plaintiff

AND

PORT KENNEDY RESORTS PTY LTD (ACN 061 115 348)
First Defendant

(Page 2)

RICHARD ANTHONY LUKIN
GARY KEVIN SHEEHAN
Second Defendants

PAUL ANDREWS
JOHN MacKAY MATHESON
TEOW KIM CHNG
STEPHEN WILLIAM MARSHALL
Third Defendants

FLEURIS PTY LTD (ACN 009 010 495)
Fourth Defendant

Catchwords:

Practice and procedure - Pleading - Statement of claim - Striking out - Pleading of contract - Not in proper form - Failure to plead material facts - Failure to clearly plead basis of claim in contract - Embarrassing - Parts of plea

Legislation:

Corporations Law, s 461(1)(e), s 462, s 462(4)

Result:

Application allowed in part

(Page 3)

Representation:

Counsel:

First Plaintiff : Mr P D Evans
Second Plaintiff : Mr P D Evans
Third Plaintiffs : Mr P D Evans
Fourth Plaintiff : Mr P D Evans
First Defendant : Mr D H Solomon
Second Defendants : Mr D H Solomon
Third Defendants : Mr D H Solomon
Fourth Defendant : Mr D H Solomon

Solicitors:

First Plaintiff : Freehill Hollingdale & Page
Second Plaintiff : Freehill Hollingdale & Page
Third Plaintiffs : Freehill Hollingdale & Page
Fourth Plaintiff : Freehill Hollingdale & Page
First Defendant : Solomon Bros
Second Defendants : Solomon Bros
Third Defendants : Solomon Bros
Fourth Defendant : Solomon Bros

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

Knight Sugar Company Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266
Palmer v Johnson (1884) 13 QBD 351
Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [1999] WASC 253
Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [2000] WASC 15
Tito v Waddell (No 2) (1977) 1 Ch 106

Case(s) also cited:

Nil


(Page 4)


1 ANDERSON J: This application arises out of the plaintiffs' attempts to get their statement of claim into acceptable form. Portions of it have already been struck out once: see Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [1999] WASC 253; Port Kennedy Golf Country Club Pty Ltd & Ors v Port Kennedy Resorts Pty Ltd & Ors [2000] WASC 15. When those strike-out orders were made, the plaintiffs were granted liberty to replead and they have now done so. The new pleading was filed on 25 February 2000 and the present application is to strike out that amended statement of claim or, alternatively, portions of it. The application itself is based on narrow grounds, but the applicants' oral submissions went well beyond the grounds stipulated in the application and no objection was taken to that by counsel for the plaintiffs. On behalf of the applicants, Mr Solomon submitted that the statement of claim is still embarrassing, still fails to disclose a cause of action and appears to be based on misconceptions as to contract law.

2 The arrangement of parties has changed somewhat, recently. Port Kennedy Golf Country Club Pty Ltd, which was the first plaintiff in the consolidated proceedings when the consolidated action was constituted, has discontinued its action and is now joined as a fifth defendant. There remain three groups of plaintiffs, they being Mr Ho, named as second plaintiff, Messrs Siew, Lim and Amin, named as third plaintiffs and Pac-Asia Holdings Pte Ltd, named as fourth plaintiff.

3 The plaintiffs' case is that in April 1995, four entities made an informal investment agreement and later various combinations of these entities executed eight formal contractual instruments. The four entities who are pleaded to have entered into the informal investment agreement are Port Kennedy Golf Country Club Pty Ltd which, as I have said was originally a plaintiff and is now the fifth defendant, Pac-Asia Holdings Pte Ltd, Port Kennedy Resorts Pty Ltd (the first defendant) and Fleuris Pty Ltd (the fourth defendant).

4 None of the eight formal instruments was executed by all four of these entities.

5 Essentially, the action is an action to enforce the investment agreement and the formal instruments and, as Pac-Asia Holdings Pte Ltd is now the only plaintiff which is a party to any of the agreements, questions of privity arise. Of course, Pac-Asia must plead facts which disclose that the relief which it seeks against the defendants is available to it. Insofar as Pac-Asia is seeking to enforce contractual obligations, the

(Page 5)

pleading must make it clear to the defendants upon what basis it is contended that Pac-Asia is the relevant promisee. It must be clear from the pleading upon which of the nine contracts the claim or claims are based and how it is said that the defendants' contractual duty to Pac-Asia arises from that contract or contracts.

6 The relevant parts of the statement of claim are as follows:

"The Investment Agreement

10 In or about April 1995 PKGCC and Pac-Asia entered into anpartly written and partly oral, and further or alternatively implied, agreement with PKR and Fleuris with respect to PKGCC and Pac-Asia's participation in the project (the 'Investment Agreement').


Particulars of Investment Agreement

(i) Insofar as the Investment Agreement was made in writing, it comprised -

(a) undated facsimile from Fleuris (on behalf of Fleuris and PKR) to Lt Gen Ng Jui Ping (retired) aformer director cf Pac-Asia ('General Ng') on behalf of Pac-Asia, enclosing facsimile dated 31 January 1995 from Freehill Hollingdale & Page to General Ng;

(b) letter from Tan Jin Hwee Eunice Lim Choo Eng ('TJELC') on behalf of Pac-Asia to Lukin on behalf of Fleuris and PKR dated 10 February 1995;

(c) letter from TJELC on behalf of Pac-Asia to Lukinon behalf of Fleuris and PKR dated 11 February 1995;

(d) letter from Lukin and Sheehan on behalf of Fleuris and PKR to TJELC on behalf of Pac-Asia dated 13 February 1995;

(e) letter from Lukin on behalf of Fleuris and PKR to TJELC on behalf of Pac-Asia dated 4 April 1995;

(Page 6)

(f) letter from TJELC on behalf of Pac-Asia to Lukin on behalf of Fleuris dated 124 April 1995;

(ii) Insofar as the Investment Agreement was made orally, it was made in -

(g) series of meetings and discussions, both in person and by telephone, between Lukin, Sheehan, General Ng, Tan Jin Hwee of TJELC, and John Robin Hayward of Freehill Hollingdale & Page between December 1994 and April 1995, the substance of which is reflected in the exchange of correspondence referred to above. separate conversations by telephone between Lukin (on behalf of Fleuris and PKR) with each of General Ng (on beha1f of Pac-Asia) and Ravindran Govindan (on behalf of PKGCC), and between General Ng (on behalf of Pac-Asia) and Ravindran Govindan (on behalf of PKGCC) during the period from January to April 1995 and the substance of which was that all three, on behalf of their respective parties, assented to the terms which had been negotiated in the correspondence referred to in paragraphs 10(i)(a) to (f) above;

(iii) The making of the Investment Agreement is also to be implied or inferred from the documents pleaded in sub-paragraph 10(i) above, and those pleaded in paragraph 13 below.

11 There were express terms of the Investment Agreement, in effect that -


(a) Pac-Asia would lend to Fleuris and Fleuris would borrow from Pac-Asia the sum of $6 million, which loan would be secured by a share mortgage;and which funds would be used by Fleuris.

(b) Fleuris promised to Pac-Asia that it would use the sum of $6 million to subscribe for 6 million $1 shares in the capital of PKR, and PKR promised

(Page 7)

to each of Pac-Asia and Fleuris that it would issue 6 million $1 shares to Fleuris;

(b)(c) PKGCC promised to PKR and further or alternatively Fleuris that it would subscribe for 2 million $1 shares in the capital of PKR and PKR promised to each of PKGCC and Pac-Asia that it would issue 2 million $1 shares to PKGCC;

(c)(d) Pac-Asia promised to PKR and further or alternatively Fleuris that it would arrange for the provision to PKR of a bank standby credit facility in an amount of $5 million, to be secured by a deed of charge over the assets, undertakings and rights of PKR;

(d)(e) Fleuris promised to Pac-Asia that it would grant to Pac-Asia a call option in relation to 6 million shares to be held by Fleuris in the capital of PKR;

(e)(f) formal documents would be executed by the parties;

(g)the formal documents to be executed wouldto secure the obligations of Fleuris and PKR under the Investment Agreement, and to enable the immediate and lawful advance of funds by Pac-Asia to finance the development of the project by PKR pending Foreign Investment Review Board approval and Ministerial approval under the provisions of the State Agreement to Pac-Asia becoming a shareholder in PKR;

(f)(h)each of Fleuris and PKGCC separately promised to Pac-Asia that the Board of directors of PKR would consist of no more than 6 persons, and that:


(i) Pac-Asia would, upon necessary approvals being given to it being a shareholder in PKR, be entitled to appoint 4 directors of PKR and Fleuris would be entitled to appoint 2 directors of PKR, and PKR, PKGCC, Fleuris and Pac-Asia would enter

(Page 8)

into a shareholders agreement to give effect to that;

(ii) pending necessary approvals being given to Pac-Asia, Fleuris would (unless otherwise approved by Pac-Asia) appoint or replace or substitute only 2 of the 6 directors of PKR, and the balance would be appointednominated by Pac-Asia, Fleuris would appoint (and not remove) such nominees as directors of PKR, and such arrangements would be reflected in a shareholders agreement to be executed by PKGCC and Fleuris and PKR, and in such other formal documentation as may be required.

(i) Pac-Asia promised to PKGCC that it would advance to PKGCC the sum of $700,000 to enable PKGCC to pay $500,000 to Fleuris towards satisfaction of certain obligations of PKGCC to Fleuris and $200,000 to its shareholders towards repayment of certain loans by shareholders to PKGCC;

(j)PKGCC promised to Pac-Asia that it would grant to Pac-Asia a share mortgage over 1.5 million shares in the capital of PKR as security for to secure Pac-Asia's $700,000 advance;

(k) PKGCC promised to Pac-Asia that it would grant to Pac Asia a call option in relation to 1.5 million of the shares to be held by PKGCC in the capital of PKR.

12 There were further express alternatively implied terms of the Investment Agreement, in effect, that:

(a) approval of the Foreign Investment Review Board ('FIRB') would be sought, when and to the extent lawfully required, in accordance with the terms of the Foreign Acquisitions and Takeovers Act of the Commonwealth of Australia; and

(Page 9)

(b) when and to the extent lawfully required, approval of the Minister under clause 20 of the State Agreement would be sought;

such approval to be sought by Fleuris, PKR and the second defendants, each using reasonable endeavours to obtain such approval.


Particulars of Express AgreementTerms regarding FlRB/Ministerial Approval
Documents referred to in paragraph l0(i)(a) and (b) above.

Particulars of Basis for Implication
(a)(1) It was, at the time the Investment aAgreement was made, known to the parties, as was the fact, that an investment of the kind provided for under the Investment aAgreement was regulated by Commonwealth Statute and would duly require approval of the FIRB, and that the project was regulated by the State Agreement, under which Ministerial approval would duly be required;

(b) the requirements for FIRB approval and Ministerial approval under the State Agreement were discussed and acknowledged by the parties;

(c)(2) the term is reasonable and equitable, is necessary to give business efficacy to the Investment Agreement, is sufficiently obvious so as to go without saying, is capable of clear expression, and does not contradict any express term of the Investment Agreement;.

(c)formal documents executed pursuant to the Investment Agreement would be consistent with and subject to the terms of the Investment Agreement.

(Page 10)

Particulars of Implication

(i) The implication arises from the nature of the Investment Agreement, it being the primary and underlying agreement between the parties pursuant to which individual documents would be executed.

(ii) The term is reasonable and equitable, is necessary to give business efficacy to the Investment Agreement, is sufficiently obvious so as to go without saying, is capable of clear expression, and does not contradict any express term of the Investment Agreement.

12A Each obligation pleaded in paragraphs 11 and 12 above was owed by and to the parties therein pleaded or alternatively was an obligation owed to each other party to the Investment Agreement.

13 Pursuant to In order to giave [sic] effect to, and fulfil the terms of the Investment Agreement, and, by the term pleaded in paragraph 12(c), subject relevantly to the terms of the Investment Agreement pleaded in paragraphs 11(h) and 12(a) and (b), the following documents were executed or alternatively each of the following documents was entered into:

(a) a shareholders agreement between PKGCC, PKR and Fleuris dated 1 June 1995 ('Shareholders Agreement');

(b) a share mortgage between Fleuris and Pac-Asia dated 1 June 1995 ('Share Mortgage');

(c) a deed of charge between PKR and Pac-Asia dated 1 June 1995 ('Deed of Charge');

(d) a call option deed between Fleuris, Pac-Asia and the second defendants dated 1 June 1995 ('Call Option');

(Page 11)

(e) a deed between Fleuris, PKGCC and Pac-Asia dated 1 June 1995 ('Consent Deed');

(f) a call option deed between PKGCC, Pac-Asia, Fleuris and the second defendants in relation to 1.5 million shares in the capital of PKR held by PKGCC (the 'PKGCC Call Option');

(g) a share mortgage between PKGCC and Pac-Asia over 1.5 million shares in the capital of PKR held by PKGCC ('PKGCC Share Mortgage');

(h) a deed between PKGCC, Pac-Asia and Fleuris dated 1 June 1995 ('PKGCC Consent Deed')."

7 The applicants attack the entire plea which pleads the so-called "investment agreement", that is, par 10, par 11 and par 12. Essentially, the applicants submit that there is no cause of action disclosed with respect to the investment agreement because, on the face of the pleading, the investment agreement is "merged in the formal documents" set out in par 13. I cannot accept this submission. Generally speaking, if parties make an informal arrangement in terms which contemplate that it will be reduced to writing and they later reduce the arrangement into a formal contract, or series of contracts, then the rights and obligations of the parties are to be exclusively determined by reference to the subsequent contract or contracts. That is usually the position. But the parties will not be held to have replaced or discharged their informal agreement by entering into a formal agreement or agreements unless it was their intention to do so: Palmer v Johnson (1884) 13 QBD 351, 357. Intention is a question of fact and in this case I think it is a factual issue which should be left to trial. Mr Solomon's appeal to the doctrine of "merger" takes the matter no further. Merger is also a matter of intention. There will only be a merger if the parties intended that the obligations created by the first agreement should be merged in the subsequent instruments: Knight Sugar Company Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266 at 269. And it is more difficult to contend for a merger where, as in this case, the parties to the subsequent document or documents are different from the parties to the first agreement: Tito v Waddell (No 2) (1977) 1 Ch 106 at 284. In my opinion, the question whether and to what extent the parties intended to replace or merge the rights and obligations said to arise from the investment agreement in the rights and obligations spelled out in the subsequent instruments should be left to trial.
(Page 12)

8 Although I would not strike out the paragraph in question on the broad proposition that the investment agreement was replaced by or is merged in the formal instruments, I must say that there seem to me still to be serious defects in these paragraphs of the pleading, notwithstanding the amendments that have been made. Unless these difficulties are addressed, it is likely that they will create problems for the future. I, therefore, feel compelled to raise them, although they are not defects to which counsel referred in argument on the hearing of this application. I am, of course, very conscious that the court should not go looking for pleading points which are not taken by the parties. However, where the court apprehends that there are flaws in the pleadings which may not be apparent to the parties, but which have a real potential to create delays and, perhaps, a waste of resources, I believe it is appropriate for the court to at least raise the matters for consideration by the parties. In this case, due to its complexity, it is of the utmost importance for the welfare of the case that the statement of claim be in proper form and that it contain a clear statement of the contractual basis on which the plaintiffs sue. I do not think it yet does.

9 The most obvious difficulty is that, whereas the main plea in par 10 is of a bilateral agreement between two entities of the one part and two entities of the other part, the express terms pleaded in par 11 suggest that the plaintiffs do not rely on a bilateral agreement, but on a multilateral agreement; that is, an agreement having more than two sides. As a contractual promise may only be enforced by a promisee who has provided consideration, the question whether a party alleges a bilateral contract or a multilateral contract is an important one. It may turn out to be basic to the plaintiffs' entitlement to relief and I suspect that is the position in this case. I will try to explain that in this way. Where A and B jointly make a promise to C and D jointly and the latter between them provide consideration for the promise, either of them may enforce the promise. It is that kind of contract that seems to be pleaded in par 10. But a promise may be made by two parties severally to each of two parties severally, or by one party to the other three or by three parties to the other one or by one of the several parties to another of the several parties. The pleading in par 11 suggests that the arrangement upon which the plaintiff, Pac-Asia, relies and which it now seeks to enforce is a multilateral arrangement of this kind; that is, an arrangement in which several entities contract severally: see, for example, par 11(b) of the statement of claim. If the agreement is a bilateral agreement between Port Kennedy Golf Country Club Pty Ltd and Pac-Asia on the one side and Port Kennedy Resorts Pty Ltd and Fleuris on the other side, as is pleaded in par 10, there

(Page 13)

would be no place in the contract for a contractual arrangement such as is pleaded in par 11(b) whereby rights and obligations arise as between two parties on the one side of the bargain, that is, Port Kennedy Resorts Pty Ltd and Fleuris. These observations apply also to the contractual arrangements pleaded in par 11(h), par 11(i), par 11(j) and par 11(k). Those subparagraphs of par 11 plead contractual arrangements as between parties who are said in par 10 to be on the same side of the contract. The plaintiffs cannot have it both ways. If the contract (the investment agreement) is a bilateral contract as pleaded in par 10, no cause of action is disclosed in the subparagraphs of par 11 to which I have referred. No consideration passes between parties who are on the same side of a bilateral contract. This cannot be overcome by a plea such as that in par 12A, which is nothing more than a bare statement of a legal proposition, depending for its correctness on such material facts as are pleaded and proved. In this case, it is a legal proposition which is not sustained by the material facts pleaded in par 11 of the statement of claim.

10 There are other difficulties with these paragraphs. Paragraph 10(ii)(g) is plainly embarrassing. It is set out above. It is pleaded in the earlier subparagraphs of par 10 that letters passed between the three individual agents of the four entities. In par 10(ii)(g), there is an attempt to say that, from those letters, an oral agreement was formed, binding on all four parties, "the substance of which was that all three [agents], on behalf of their respective parties, assented to the terms which had been negotiated in the correspondence referred to in paragraphs 10(i)(a) to (f) above". This plea contains a non sequitur. If A sends a written offer to B, it does not follow that an oral "assent" (whatever that means) by C to the terms of the offer creates a contract binding on C or enforceable by C.

11 Paragraph 12(c) is embarrassing. It contains a plea that there was an implied term of the investment agreement that the eight formal instruments would be consistent with the investment agreement. This plea goes nowhere, because there is no plea that I can find in the statement of claim that the terms of any one of the formal documents is inconsistent with any of the terms of the investment agreement. The plea of an implied term that they were to be consistent is, therefore, otiose. The paragraph is also embarrassing for lack of clarity because the phrase "would be consistent with and subject to the terms of the investment agreement" is at least ambiguous. It may mean that, in the case of a conflict (if any) or difference between the terms of, say, the deed of charge and the investment agreement, the terms of the solemnly executed deed of charge are to be ignored. If that is what it means, it cannot

(Page 14)

possibly stand as an implied term. I am quite unable to see on what basis such a term as that could possibly be implied into an informal arrangement.

12 The introductory words of par 13 are unclear. The phrase "subject relevantly to the terms of" is embarrassing for lack of clarity as to what is meant by "relevantly". The assertion that a document was "executed" (by which is presumably meant signed or subscribed) "subject" to the terms of another agreement is ambiguous. It may mean that the act of execution was conditioned in some way. Or it may mean that the agreement which was executed is to be construed by reference to some other agreement, or is to be subordinated to some other agreement.

13 For these reasons, and as presently advised, I regard par 10, par 11, par 12 and par 12A as seriously embarrassing and liable to be wholly struck out. However, because the points which I have endeavoured to explain above were not argued before me, I think that the parties should have an opportunity to make further submissions. The defendants should consider whether they wish to take these points against the plaintiffs and the plaintiffs should have an opportunity to persuade me that the criticisms which I have made are ill-founded.

14 I now return to the arguments advanced by the applicants on the hearing of this application.

15 It was submitted on behalf of the applicants that the only plaintiff who is party to any of the agreements, that is, Pac-Asia, is not a party to one of the agreements the plaintiffs are suing on. The agreement in question is the shareholders' agreement pleaded in par 13(a). Therefore, he submitted, all reference to the shareholders' agreement should be struck out of the statement of claim. This submission must be accepted. No facts are pleaded which provide the basis for an action by the present plaintiffs, or any of them, to enforce the shareholders' agreement. I would, therefore, allow the application to strike out the following parts of the amended statement of claim:

(i) The whole of par 14;

(ii) the whole of par 18;

(iii) that part of par 23 which refers to the shareholders' agreement;

(Page 15)

(iv) that part of par 25 which refers to the shareholders' agreement;

(v) that part of par 31(a) and (b) which refers to the shareholders' agreement;

(vi) that part of par 40(b) which refers to the shareholders' agreement;

(vii) that part of particular (A)(1) to par 63(a);

(viii) the whole of par 72(c);

(ix) the words "the instrument pleaded in par 13 above" from par 72(d);

(x) par 10(a) of the prayer for relief;

(xi) that part of par 10(b)(ii) of the prayer for relief referring to the shareholders' agreement;

(xii) that part of par 12(b) of the prayer for relief which refers to the shareholders' argument.

16 The applicants seek to strike out par 48 on the particular ground that "paragraph 48 fails to plead all necessary material facts."

17 As developed in argument, this part of the application is, in truth, grounded on the submission that par 48 is not a plea of material fact at all. I would accept this submission. To understand par 48, the first step is to understand par 22A. I will set out the paragraphs.

"22A(b)Pursuant to the Investment Agreement and further (or alternatively) the Deed of Charge or alternatively at the request of PKR, Pac-Asia, in accordance with and in consideration of, inter alia, the Deed of Charge, directly advanced funds to or in favour of PKR (in satisfaction of its (Pac-Asia's) obligation under the Investment Agreement to provide a standby letter of credit facility securing loans from a third party bank), during the period from June 1996 to November 1996 in a total of $5 million (the 'Deed of Charge Advance') particulars of which are contained in Schedule 2(a) hereto;."

(Page 16)

"48 The Deed of Charge Advance and Further Advances to PKR pleaded in paragraphs 22A (b)and (c) above comprises 'Secured Moneys' under the Deed of Charge, the same comprising loans or advances in connection with or contemplated by the Paribas letter."

18 The trouble with understanding par 48 is that par 22A, on which par 48 depends for its meaning, is very difficult to understand. It contains a plea that the funds referred to - the funds directly advanced to Port Kennedy Resorts Pty Ltd or paid to its use - were advanced:

(i) pursuant to the investment agreement and/or;

(ii) pursuant to the deed of charge; or

(iii) at Port Kennedy Resort's request.

19 It contains a plea that on whichever basis the funds were advanced, they were advanced "in satisfaction of [Pac-Asia's] obligation under the investment agreement to provide a standby letter of credit facility securing loans from a third party bank … ", thus seemingly averring that the funds were advanced not pursuant to the deed of charge nor at the request of Port Kennedy Resorts Pty Ltd, but pursuant to the investment agreement. To this extent, the plea would seem to be internally inconsistent unless it is to be read in some other way.

20 It also contains a plea of a legal conclusion, namely, that the advances by Pac-Asia to Port Kennedy Resorts Pty Ltd satisfied an obligation on Pac-Asia to "provide a standby letter of credit facility securing loans from a third party bank". It is not clear from the pleading what is comprehended by the expression "standby letter of credit facility securing loans from a third party bank" but, prima facie, the expression does not comprehend advances by Pac-Asia itself. Of course, it may be that as a matter of law, a party who promises to provide financial assistance in the one form is discharged from that obligation if he provides or offers to provide financial assistance in another form. It is a proposition which is not self-evidently true and I would think that to make good the proposition, some further facts must be made to appear, such as that the promisee agreed to accept, or did accept, the different mode of performance in satisfaction of the promise.

21 Paragraph 48, especially the particulars, suffers also from the vice that it is merely argumentative. Either that, or it is itself incomplete. If there are terms of the deed of charge which define "secured moneys" to

(Page 17)

include advances made by Pac-Asia in the range of circumstances pleaded in par 22A that should be pleaded with sufficient particularity to enable the defendants to know what part of the document is claimed to have that effect. It is not. The deficiency is not cured by the enigmatic reference in the particulars to the Paribas Letter referred to in the deed of charge. The documents which the pleader calls "the Paribas Letter" is nowhere properly pleaded as the source of any rights or obligations. It is referred to in par 16(g), but that paragraph itself is embarrassing for lack of clarity.

22 The point is that the pleading as it stands in par 22A and par 48 contains themes and combinations which are not at all easy to understand and may easily be misunderstood.

23 I would accede to the application to strike out par 48. I think that par 22A ought also to be struck out, but there is no application to strike it out.

24 The applicants also attack par 60 and par 62. Paragraph 60 is in the following terms:

"Alternative Claim for Money Had and Received

60 Further or aAlternatively to paragraphs 48 to 59 above, if (which is denied) the Investment Agreement, the Variation Agreement, or any documents under those agreements (including the Deed of Charge and Share Mortgage) are void or are unenforceable for any reason, then:


(a) Pac-Asia claims against PKR the sum of $5 million referred to in paragraphs 22A(b) and 48 to 5554 above and the sum of $1,992,000 referred to in paragraph 22B(c) above, being money had and received by PKR to the use of Pac-Asia.
Particulars
The said sums were received by, or to the account of, PKR, in the amounts and on the dates set out in Schedule 2 below. By facsimile dated 12 May 1998, PKR acknowledged to Pac-Asia that the said sum had been paid to (or to the account of) PKR by or on behalf of Pac-Asia.

(Page 18)

(b) Pac-Asia claims against Fleuris the sum of $6 million referred to in paragraphs 22(a) and 56 to 59 above being money had and received by Fleuris to the use of Pac-Asia.

Particulars

The said sum of $6 million was paid to (or to the account of) Fleuris in the amounts, and on the dates, specified in Schedule 1. By facsimile dated 12 May 1998, Lukin on behalf of F1euris acknowledged to Pac-Asia that the said sum of $6 million had been paid to, or to the account of, Fleuris."

25 The applicants submission is that no material facts are pleaded in support of the plea of a "request". I would not uphold this submission. It is the request which is the material fact. The details of the request would seem to me to be merely particulars.

26 Paragraph 62 is in the following terms:

"Alternative claim for Winding Up Order under Section 461(k) of the Corporations Law

62 Alternatively to paragraphs 23 to 28 above:

(a) the fourth plaintiff refers to and repeats paragraphs 10 to 22B 47 to 5554 and 60(a) above;

(b) pursuant to the Investment Agreement (as varied byand the VariationfurtheraAgreement)pleaded in paragraph 20 or alternatively the further agreement pleaded in paragraph 20A) the fourth plaintiff is a creditor, or alternatively a contingent or prospective creditor, of PKR;


Particulars
The plaintiffs repeat paragraphs 22, 22A and 22B and 47 to 545 and 60(a) above.

(c) in the premises, the first to fourth defendants have acted in the affairs of PKR in the interests of the second defendants and Fleuris rather than in the interests of the

(Page 19)

members as a whole, or alternatively, have acted in a manner that is unfair or unjust to the fourth plaintiff, within the meaning of section 461(1)(e) of the Corporations Law;

Particulars

The plaintiffs repeat the particu1ars to paragraph 61(c) above.

The first to fourth defendant's conduct -

(1) lacks reasonable commercial justification;

(2) involves decision making processes that ignore the interests of the plaintiffs inc1uding PKR through the Investment Agreement and further (or alternative1y)the instruments pleaded in paragraph 13 above;

(3) prefers the interests of the second defendants and Fleuris to those of the plaintiffs, notwithstanding, and contrary to, the provisions of the Investment Agreement and further (or alternatively)the instruments pleaded in paragraph 13 above and notwithstanding the performance by the plaintiffs of their obligations under that agreement;

(4) has imperilled the rights of and benefits to PKR under the State Agreement;

(5) represents an attempt by the second defendants to obtain (or alternatively, obtain for the benefit of Fleuris) exclusive control of the affairs of PKR where neither the second defendants nor Fleuris are entitled to exercise such control;

(6) consequent upon the dismissal of an injunction application in this Honourable Court in Action CIV 1266 of 1999, is for the purpose of forestalling the proper and lawful business sought to be conducted by the shareholders and directors of PKR;

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(7) is for the purpose of preventing the lawfully appointed directors of PKR from considering whether to appoint an administrator to conduct the affairs of PKR, in circumstances where the appointment of an administrator is warranted pursuant to section 436A of the Corporations Law;

(8) involves breaches by the second defendants and/or third defendants of their obligations under section 232 of the Corporations Law and their fiduciary duties as directors (and as to which breaches the plaintiffs plead further in paragraphs 63 to 66 below);

(9) involved the second defendants knowingly inducing or procuring breaches of contract by Fleuris and PKR (as to which the plaintiffs plead further in paragraphs 63 to 66 below);

(10) involved PKR appropriating for itself benefits under the Investment Agreement and further (or alternatively)the instruments pleaded in paragraph 13 above without performing its obligations thereunder;

(d) further or alternatively, in the premises, the affairs of PKR are, and have been, conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, the first plaintiffPKGCC or in a manner that is contrary to the interests of the members as a whole, within the meaning of section 461(1)(f) of the Corporations Law;

Particulars
The plaintiffs repeat the particulars to paragraph 612(ec) above.

(e) further or alternatively, in the premises it is just and equitable (within the meaning of section 461(1)(k) of the Corporations Law) that PKR be wound up;

Particulars

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The applicants repeat the particulars to paragraph 612(ec) above.

(f) in the premises, the plaintiffs claim, in the alternative to the relief sought in paragraph 1 to 7 of the prayer for re1ief,and further or alternatively to paragraph 8 of the prayer for relief, the relief sought in paragraph 9 of the prayer for relief."

27 As to this paragraph, the applicants submit that the plea discloses no cause of action because "s 461(e) of the Corporations Law is not available to a creditor on the proper construction of" the Corporations Law. It is contended that "alternatively, the preconditions in s 462(4) have not been pleaded or established, and it is embarrassing to allow the pleading to stand unless and until they are satisfied". I am not persuaded that the plea ought to be struck out on these grounds. The applicants' submission amounts to a submission that, on the pleadings as they stand, the plaintiffs do not have standing to seek an order winding up Port Kennedy Resorts Pty Ltd on the grounds set out in s 461(1)(e). I do not think it is appropriate to resolve a question such as that on this procedural application. That is not to say that the question of standing is not a threshold question. I think it is and that it ought to be resolved, if possible, before trial. However, I do not consider that it is a question that ought to be resolved in an application such as this, which is, essentially, a procedural application relating to pleadings.

28 The applicants attack the prayer for relief in par 1(d), which is a claim for specific performance of the investment agreement. In my opinion, this submission must be upheld. The defendants are entitled to know, at the very least, in what respect it is contended they are obliged to specifically perform the investment agreement. Prayer for relief 1(d) ought to be struck out.

29 No other paragraphs of the statement of claim are attacked and I say nothing about them.