QNI Ltd and Queensland Nickel Pty Ltd v Willenborg, Prior Industries Pty Ltd, Prior

[1997] QCA 240

IN THE COURT OF APPEAL	[1997] QCA 240
SUPREME COURT OF QUEENSLAND

Appeal No. 7397 of 1996.

Brisbane
[QNI Ltd & Anor. v. Willenborg & Ors.]

BETWEEN:

QNI LIMITED (ACN 055 313 043)

(First Plaintiff) First Appellant

AND:

QUEENSLAND NICKEL PTY LTD (ACN 009 842 068)

(Second Plaintiff) Second Appellant

AND:

JACOBUS RUTHGERUS WILLENBORG

(First Defendant) First Respondent

AND:

PRIOR INDUSTRIES PTY LIMITED (ACN 009 824 846)

(Second Defendant) Second Respondent

AND:

PRIOR INDUSTRIES (AUSTRALIA) PTY LIMITED
(ACN 002 883 623)

(Third Defendant) Third Respondent

AND:

GORDON RAYMOND PRIOR

(Fourth Defendant) Fourth Respondent

___________________________________________________________________

Macrossan C.J.
Davies J.A.

Pincus J.A.

___________________________________________________________________________

Orders of the Court delivered 31 July 1997

Reasons for Judgment delivered 8 August 1997

Reasons for Judgment - the Court

___________________________________________________________________________

CATCHWORDS: PRACTICE AND PROCEDURE - statement of claim struck out -

adequacy of further and better particulars - order to provide details of "lower costs", "higher rate of extraction" and "higher quality" by way of "quantitative measurement" - whether it could be inferred that the appellants could supply no further particulars.

Counsel:	Mr D F Jackson QC, with him Mr G Brandis for the first and second appellants. Mr P R Dutney QC, with him Mr M E Pope for the first respondent. Mr A J H Morris QC, with him Mr L F Kelly for the second, third and fourth respondents.
Solicitors:	Minter Ellison for the first and second appellants. Nehmer Davenport for the first respondent. Hemming & Hart for the second, third and fourth respondents.
Hearing date:	31 July 1997.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 7397 of 1996.

Brisbane

Before Macrossan C.J.

Davies J.A. Pincus J.A.

[QNI Ltd & Anor. v. Willenborg & Ors.]

BETWEEN:

QNI LIMITED (ACN 055 313 043)

(First Plaintiff) First Appellant

AND:

QUEENSLAND NICKEL PTY LTD (ACN 009 842 068)

(Second Plaintiff) Second Appellant

AND:

JACOBUS RUTHGERUS WILLENBORG

(First Defendant) First Respondent

AND:

PRIOR INDUSTRIES PTY LIMITED (ACN 009 824 846)

(Second Defendant) Second Respondent

AND:

PRIOR INDUSTRIES (AUSTRALIA) PTY LIMITED
(ACN 002 883 623)

(Third Defendant) Third Respondent

AND:

GORDON RAYMOND PRIOR

(Fourth Defendant) Fourth Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 8 August 1997

The appellants, producers of nickel and cobalt, brought an action against the respondents on 13 October 1995 and have since delivered a series of statements of claim, on 22 December 1995, on 12 March 1996 and on 5 July 1996. Of these, the second and third were delivered in consequence of orders made by the Court for provision of further and better particulars. In circumstances which will be explained, a judge struck out the appellants’ action for want of prosecution by an order made on 16 August 1996; it was also ordered that the appellants pay the respondents’ costs of the application to strike out, on a solicitor and own client basis. When struck out the action was, as the judge pointed out, not a very stale one, being then 10 months old.

In the statement of claim of 12 March 1996, being the second pleading referred to above, the appellants alleged that they had developed technologies relating to the extraction and refining of nickel and cobalt, that those technologies constituted confidential information of a valuable kind, and of a kind not possessed by the first appellant’s competitors. The pleading further said that the respondents disclosed the information to the first appellant’s competitors and did so unlawfully. It was alleged that the second and third respondents entered into certain contracts with the appellants’ competitors, which were secured as a result of those respondents having disclosed the confidential information. It was said that the conduct of the respondents caused the first appellant loss and damage; various relief was claimed, including damages, equitable compensation, orders for tracing and an account of profits. In what follows our references to the parties are intended to include references to their solicitors, acting for them.

The respondents complained, by correspondence, of the unsatisfactory nature of some of the allegations made in the second statement of claim, that of 12 March 1996, and, being dissatisfied with the appellants’ response to those complaints, obtained an order from Helman J on 21 May 1996 that further and better particulars be given of certain allegations in that statement of claim. Then on 3 July 1996, Thomas J ordered that the appellants deliver the particulars required by the order of Helman J by 5 July 1996 and that in default of such delivery the statement of claim be struck out. Some particulars were provided in a third statement of claim but, again, the respondents were dissatisfied with them and made written complaints which were summarily rejected by the appellants. On 22 July 1996, the respondents issued summonses seeking among other relief an order that the action be dismissed for want of prosecution. That application succeeded and the appeal is brought against the striking out order, made on 16 August 1996; the appellants also attack the special order for costs which was then made. We have already dealt with the appeal, reserving our reasons.

On the hearing of the striking out application, the primary judge had first to determine whether the third statement of claim, delivered on 5 July 1996, contained particulars in conformity with the order of Helman J; that issue was decided against the appellants and they do not complain of that outcome. However, some explanation of the respects in which the primary judge held the appellants’ particulars to be deficient is called for, since it has been urged against the appellants, at least as an alternative contention, that their failure to carry out the order of Helman J might have been deliberate, in the sense that they knew well what was required and failed to supply it. What became the critical issue, as to the adequacy of the particulars, was the effect of the order made by Helman J with respect to para. 8(d) of the second statement of claim. Paragraph 8(d) alleged, in summary, that the technologies which the appellants claim to be confidential gave the first appellant a competitive advantage over its competitors in three respects: the technologies permitted production of nickel and cobalt at a lower real cost than that incurred by the competitors, they permitted a higher rate of extraction of nickel and cobalt per tonne of ore than was achieved by the competitors and, lastly, they permitted production of a higher quality of nickel and cobalt than their competitors. The order of Helman J required that particulars be given of the "lower costs per tonne" referred to in the relevant paragraph, "by way of quantitative measurement". Similar orders were made with respect to the alleged higher rate of extraction and higher quality.

In purported compliance with these orders the appellant supplied information about their own costs, their own rate of extraction and their own quality without providing any information comparing their position with that of competitors - i.e. any information with respect to the allegation that they had acquired a competitive advantage. It should be noted that one might infer from the particulars given as to real cost that the competitors of the appellants had a certain advantage from the relevant technologies, comparable with that alleged to have been obtained by the appellants.

The order of Helman J did not explicitly, as to the matter of costs, require that any comparative figures be supplied; it did not order either that the appellant should say what was the difference between their costs and those of their competitors or that both the lower costs (of the appellants) and the higher costs (of the competitors) be disclosed; a similar observation may be made about the orders for particulars of the higher rate of extraction and higher quality. It was explained to us by counsel for the appellants that, at least as to the second and third matters referred to in the relevant paragraph of the pleading - the rate of extraction and quality - the correspondence which the respondents had sent to the appellants on the subject of particulars made it clear that what was wanted was information comparing the appellants’ position with that of the competitors and that was not supplied. It was also urged, on the respondents’ side, that the language of the pleading helped towards a construction of Helman J’s order of the character which the respondents intended.

In these circumstances the suggestion that the inadequate response to the order of Helman J was made with deliberation somewhat lacks cogency; it is one thing to say that a person ordered to supply particulars has failed to supply what the order plainly demands, and quite another to say that, if one construes the order having regard to certain surrounding circumstances, it should have been read as requiring a fuller response than was given. The order of Helman J was, if read quite literally, capable of a construction which did not call for those particulars which, according to the respondents’ argument, were obviously what was intended by the respondents.

This conclusion has a bearing upon the question whether the appellants’ failure with respect to supply of particulars was deliberate, or was contumelious. The primary judge, in the course of his Honour’s reasons, pointed out that the appellants’ response to the order provided no information "to indicate the comparative positions" and no information "concerning the relevant circumstances of either of the international competitors". His Honour concluded his discussion of the response to Helman J’s order for particulars of the "lower costs per tonne" by observing that there was "no quantitative measurement of the competitors’ costs". But the competitors’ costs were not, strictly speaking, the "lower costs" mentioned in the order.

In discussing the application that the action be struck out, the primary judge began by

saying:

"It is not suggested that a limitation period has expired; and ordinarily where a new action would be within time, there is not much to be said for putting a plaintiff to the trouble and expense of starting again, at least unless there has been contumelious disregard of the court’s orders".

We respectfully agree. The primary judge went on to discuss considerations affecting the reasons for the appellants’ failure to comply with the order of Helman J, and concluded:

"It seems therefore that, in general at least, the plaintiffs either will not or, which
seems more likely, cannot improve on the particulars so far provided."
This appears to mean that his Honour did not proceed on the basis that contumelious

disregard of orders had been shown; the better explanation of the failure, in his Honour’s view,
was inability to supply the particulars.

Counsel for the appellants argued that the matters relied on by the primary judge did not support the view that the appellants were unable to supply the particulars in issue. He particularly criticised what appeared to be a central part of the reasoning of the primary judge, in which his Honour drew attention to the fact that then counsel for the appellants had been given an opportunity by the judge to deliver a further statement of claim or more particulars, but had declined this, saying that the appellants relied on the current pleadings and particulars and on their contention that the particulars delivered complied with the order of Helman J. The primary judge was of the view that this statement by counsel tended to support an inference that if the appellants could comply with the order of Helman J they would have done so, or advanced a proposal to show how they intended to do so.

With respect, the inference his Honour drew, that the appellants could not supply the particulars, does not appear to be supported by their counsel’s statement to the effect that they adhered to their contention that the particulars were sufficient.; it was not until the primary judge had held the particulars to be insufficient that the appellants were obliged to cease to act on the contrary view. Having regard to the form of the orders for particulars, discussed above, counsel’s expressed wish to stand on the particulars already delivered could not support the inference drawn. The case is not one in which, the appellants’ particulars in the pleading of 5 July 1996 having been held to be inadequate, they then said they would do no more.

It should be added that, in later discussing the question of costs, the judge remarked that there was no suggestion of mala fides or misconduct on the part of the appellants.

To reiterate, the judge rejected the suggestion that there was contumelious conduct on the part of the appellants and inferred that they could supply no further particulars; in our opinion there was not a proper basis for the latter inference. Since that was a crucial part of the reasoning which led to the order complained of, and no other consideration which could justify an order putting an end to the action can be found, the appeal has been allowed. It does not appear to be necessary to give any extensive consideration to the question of the special order for costs which was made, since no doubt that was influenced by the conclusion his Honour drew from the appellant’s expressed attitude, which has just been discussed. Nor need

we discuss other complaints, whose validity was not determined by the primary judge, concerning the appellants’ particulars. No doubt the appellants will consider those complaints carefully when drawing up their new statement of claim, so that the pleadings can be completed and the action proceed.

The foregoing are the reasons for the orders which were made in this Court on 31 July

1997, as follows:-

(1)	That the appeal be allowed without costs;
(2)	That orders (1), (2) and (3) made below be set aside;
(3)	That the appellants pay the costs of the summons heard before Byrne J;
(4)	Declare the statement of claim delivered 5 July, 1996 struck out;
(5)	Leave to deliver a fresh statement of claim on or before 7 August 1997;
(6)	Appellants to pay any costs thrown away in consequence of the delivery of any statement of claim foreshadowed by order number (5).