Raphael v Core International Pty Ltd [No 2] - [2021] WASC 379

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RAPHAEL -v- CORE INTERNATIONAL PTY LTD [No 2] [2021] WASC 379
CORAM:   MASTER SANDERSON
HEARD:   26 OCTOBER 2021
DELIVERED          :   3 NOVEMBER 2021
FILE NO/S:   CIV 2216 of 2020
BETWEEN:   FABIANE MICHEL RAPHAEL
Plaintiff
AND
CORE INTERNATIONAL PTY LTD
First Defendant
RESHAT KOCADAGLI
Second Defendant

Catchwords:

Practice and procedure - Application to strike out indorsement of claim, statement of claim and for judgment under O 16 - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Amended chamber summons dismissed

Representation:

Counsel:

Plaintiff	:	J A Robertson
First Defendant	:	K J Morgan
Second Defendant	:	K J Morgan

Solicitors:

Plaintiff	:	Williams & Hughes
First Defendant	:	Murfett Legal
Second Defendant	:	Murfett Legal

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

Raphael v Core International Pty Ltd [2021] WASC 138

MASTER SANDERSON:

By amended chamber summons dated 16 July 2021, the defendants sought the following orders:
1.The whole of the Statement of Claim and/or the Indorsement of Clam filed herein, and/or alternatively the parts of that Statement of Claim and/or that Indorsement of Claim as are set out in the Schedule hereto, be struck out pursuant to:
(a)Order 20 Rule 19(a) of the Rules of the Supreme Court (RSC) on the grounds that it discloses no reasonable cause of action; and/or
(b)Order 20 Rule 19(b) RSC on the grounds that it may prejudice, embarrass or delay the fair trial of the action,
and the Action be dismissed against the First Defendant and/or the Second Defendant, and/or judgment be entered for the Second Defendant pursuant to Order 16 Rule 1(a) RSC.
2.The time for making this application be extended until this application to strike out the Statement of Claim and until this application was amended to strike out the Indorsement of Claim by memorandum filed and served on 12 July.
3.The time for filing and serving a defence and any counterclaim by the defendants be extended until further order.
4.The plaintiff pay on an indemnity basis the defendants' costs of the application.
5.In the alternative to order 4, the plaintiff pay the defendants' costs of the application.
Broken down into it's constituent parts, the orders sought by the defendant are as follows:
1.An extension of time within which to bring an application to strike out the indorsement of claim;
2.An extension of time within which to bring applications for:
(i)an order striking out the whole or parts of the statement of claim; and
(ii)an application for summary judgment under order 16;
3.an order striking out all or parts of the statement of claim; and/or
4.judgment under order 16.
Prior to the hearing, the plaintiff had agreed to an extension of time to allow the defendants to bring an application to strike out the statement of claim. An order should be made to that effect. After hearing argument, I dismissed the remainder of the defendants' application. I said I would publish reasons for that decision. These are those reasons.
The writ in this matter was issued on 14 December 2020. The indorsement of claim found on the writ is in the following terms:
Indorsement of Claim
1.The Plaintiff's claims arise from an investment made in around April 2015 in a proposed land development in Forrestdale, Western Australia, the terms of which were subsequently recorded in a 'Land Development Joint Venture' deed.
2.The Plaintiff's claims against the First Defendant include breach of contract, breach of fiduciary duty and misleading and deceptive conduct.
3.The Plaintiff's claims against the Second Defendant include misleading and deceptive conduct (and/or involvement in misleading and deceptive conduct by the First Defendant) and accessorial liability for breach of fiduciary duty.
4.The Plaintiff claims damages, equitable compensation, return of funds invested and/or other relief arising from the claims described above.
The writ of summons was served on 14 December 2020. Allowing for the fact time does not run between 24 December and 15 January, the application to strike out the indorsement of claim should have been filed by 27 January 2021. In fact, the application was not filed until 14 July 2021, which means it was six months out of time. Nowhere in the evidence is there any explanation for this delay. Moreover, the plaintiff now says there is a real risk that if the indorsement of claim was struck out, parts of her claim may be statute-barred. In that sense, she has suffered prejudice as a result of the defendants' delay. Given the potential for prejudice on the part of the plaintiff, and given the defendants' failure to explain the delay in bringing the application, I would refuse an extension of time to make an application to strike out. Even had I granted leave, I would not have been prepared to strike out the indorsement. Order 6 rule 1(1) of the Rules of the Supreme Court 1971 (WA) is in the following terms:
Nature of claim etc. to be indorsed on writ
(1)Before a writ is issued it must be indorsed with a concise statement of the nature of the claim made, and of the relief or remedy required in the action.
Civil Procedure Western Australia at par 6.1.1 has this to say about the rule:
[6.1.1]Nature and function of the indorsement of claim
A writ must be indorsed with a concise statement of the nature of the claim made, and of the relief or remedy required in the action: O 6 r 1(1); Re Rules of the Supreme Court 1971 (WA); Ex Parte Ruba [2020] WASC 237; BC202005739 at [29]; MJL v Western Australia [2015] WASC 348; BC 201509190 at [25].
The indorsement on a writ serves the following three important functions:
.1It informs the defendant of the nature of the claim and the relief sought.
.2It enables the court to determine whether a cause of action falls outside a relevant limitation period.
.3It sets out the metes and bounds within which the statement of claim must be framed: Sims v JoosteQC[2013] WASCA 245; BC201303413 at [10]; MJL v Western Australia[2015] WASC 348 at [27]; ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington[2001] WASCA 235; BC200104598 at [7] - [10]; Glendinning v Cuzens[2009] WASCA 21; BC200900144 at [29].
These functions are to be borne in mind when determining whether an indorsement is deficient: Sims v Jooste QC[2013] WASCA 245 at [10]; Re Rules of the Supreme Court 1971 (WA); Ex Parte Ruba [2020] WASC 237 at [31].
In construing the writ, the court is concerned with substance over form: Harris v Knell[2016] WASCA 11; BC201600592 at [9]. What will constitute an adequate indorsement on a writ is not something that can be reduced to hard and fast rules, nor is it something that depends upon a rigid formula: Glendinning v Cuzens[2009] WASCA 21 at [28]; ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington [2001] WASCA 235 at [11]; Watch Tower Bible Society and Tract Society of Australia v Sahas[2008] WASCA 51; BC200801272 at [16]. Indorsements should not be read narrowly, but generously: Belgravia Nominees Pty Ltd v Lowe Pty Ltd[2017] WASCA 127; BC201705571 at [10]; Re Rules of the Supreme Court 1971 (WA); Ex Parte Ruba [2020] WASC 237 at [30]; see, by way of example, Watch Tower Bible Society and Tract Society of Australia v Sahas[2008] WASCA 51. Relevant information can be conveyed in different ways and adequacy is to be determined from the indorsement as a whole: ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington [2001] WASCA 235 at [11]. For more as to where an indorsement is deficient, see [6.1.5].
Against that background it can be seen that pars 1 and 2 of the indorsement of claim disclose clearly the nature of action brought by the plaintiff against the defendants. In particular, reference is made to the 'Land Development Joint Venture' deed. It is the breach of that deed which the plaintiff says gives rise to its cause of action. It is true that the plaintiff does not specify with precision the nature of the breach but she is not bound to do so. There is sufficient information to allow the defendants to ascertain the action that is brought against them.
It is convenient at this stage to deal with the plaintiff's statement of claim. However, before doing so, I should provide some background. After these proceedings were issued, the plaintiff applied for a release from a Harman undertaking. I granted that application: see Raphael v Core International Pty Ltd [2021] WASC 138. In those reasons, I set out how it was that an affidavit the subject of the Harman undertaking, had been brought into existence:
2.The relevant background facts are uncontroversial. On 1 May 2020, the plaintiff in these proceedings served a statutory demand on the first defendant. The first defendant applied to set aside the demand and filed an affidavit of the second defendant in support of the application. The statutory demand claimed a debt allegedly owing to the plaintiff under a land development joint venture agreement (JV Agreement) entered into between the plaintiff and the first defendant in 2015. On receipt of the application to set aside the demand and the accompanying affidavit, the plaintiff elected not to pursue the statutory demand. She was advised by her solicitors that the affidavit on its face raised a genuine dispute. On 23 November 2020, I made orders by consent that the statutory demand be set aside. Instead, she elected to commence these proceedings to pursue her claims said to arise under the JV Agreement.
In granting the application, I explained the position as follows:
5.An affidavit of John Andrew Robertson sworn 18 January 2021 and filed in support of the application provides more detail as to the plaintiff's cause of action. Mr Robertson attaches a copy of the JV Agreement. It shows the plaintiff was described as the 'Investor'. The first defendant was described as the 'Developer'. The parties were to jointly develop land in Forrestdale by undertaking a subdivision and construction of nine separately titled industrial units. The plaintiff agreed to advance a loan of $1,000,000 which the parties acknowledged had occurred on 1 April 2015 prior to the execution of the JV Agreement. The first defendant was to contribute the land to the development and meet all costs of the development over and above the loan.
6.The JV Agreement contained a Conditions Subsequent which provided relevantly that the first defendant must use all reasonable endeavours to do or procure the grant of all necessary planning, construction and subdivision approvals within 24 months from the date of execution of the JV Agreement. If this condition was not met within the time allowed then the plaintiff was entitled to terminate the JV Agreement by notice in which case the agreement would terminate and the loan was immediately repayable. The Conditions Subsequent were not met within the time allowed and on 15 April 2020, the plaintiff gave notice to the first defendant electing to terminate. One of the plaintiff's claims is, accordingly, for repayment of the loan which has not been repaid. The plaintiff says, correctly, this claim can be pleaded without the use of any material contained in the affidavit.
7.The affidavit is the effect the first defendant did not use the plaintiff's loan purely for construction of the units but rather used it in part for the acquisition of land. Clause 5.2(b) provides that the first defendant must only use the loan for the purposes of the 'Development' – defined to mean the construction of the units. Clause 5.3 provides that the first defendant will contribute the land to the Development and meet all costs of the Development over and above the loan. Given the plaintiff's funds were to be used solely for construction, the plaintiff says her funds should have remained in the first defendant's bank account and should have been capable of being repaid immediately. The plaintiff says release from the implied undertaking is necessary if this claim is to be pleaded.
The statement of claim which was filed 17 June 2021 is a straightforward affair. The first two paragraphs identify the parties. Paragraph 3 pleads that in or around mid 2015, the first defendant and the plaintiff executed a deed entitled 'Land Development Joint Venture'. That document is defined as the 'Deed'. Paragraph 4 then pleads particular terms of the Deed. The defendants do not suggest that any of these paragraphs are offensive.
By par 5, it is said that the plaintiff advanced to the first defendant the sum of $1 million on 15 April 2015. In other words, the advance was made before the Deed was signed. That fact may or may not have consequences but the Deed acknowledges that was the fact - see cl 5.2. The plaintiff says the first defendant applied to the Western Australian Planning Commission for subdivision approval and was refused. Paragraph 8 pleads the first defendant did not use its best endeavours to reverse the planning decision and by par 9, it is said that this was a breach of contract and the plaintiff has suffered loss and damage. The loss is particularised in par 10.
By par 11, it is pleaded that by letter dated 15 April 2020, the plaintiff gave notice that a condition subsequent in the Deed had not been satisfied and she therefore terminated the agreement.
By par 12, it is pleaded that despite demand, the loan was not repaid in breach of cl 4.9(a) of the agreement. By pars 13 and 14, the plaintiff pleads that part of the loan funds which were advanced to the first defendant were used to acquire the land. That, it is said, is in breach of the terms of the agreement and the plaintiff claims loss and damage. Paragraphs 16 though to 22 plead a claim under the heading 'Misleading and deceptive conduct'. I will come back to this pleaded claim later in these reasons.
It must be acknowledged that this statement of claim is not a masterpiece of the draftsman's art. Insofar as it pleads material facts, it is unobjectionable. Where it becomes a little confusing is the relief that is sought as a consequence of the material facts pleaded. There appear to be four separate but related streams to the plaintiff's claim. The first and most straightforward is the plaintiff's claim for the return of $1 million. This claim relies on the condition subsequent - planning approval was not obtained and the plaintiff was therefore entitled to a refund of the money she had advanced pursuant to the Deed.
Second, there is a claim for breach of contract. The plaintiff says the defendants did not use their best endeavours to ensure planning approval was obtained. Presumably, the damages for this alleged breach would be the profit the plaintiff would have derived had the joint venture been successful. Although proving the case may be somewhat difficult in its terms, the claim is straightforward.
The third claim relates to the alleged use of the loan funds by the first defendant to acquire the land contrary to the provisions of the agreement. It may well be this is not a separate claim at all. That is to say, the plaintiff is seeking to recover her $1 million which has been used to purchase the land. By pleading that fact, the plaintiff may well be setting up a claim for the equitable relief of tracing. If that is so, it is not reflected in the prayer for relief. But on the pleaded case, that is a possibility. Either way, the facts as pleaded are not inconsistent with the case the plaintiff is running so far as the recovery of the loan is concerned.
The final claim relates to misleading and deceptive conduct. This relies on a statement by the second defendant to the effect that the plaintiff, in a worst case scenario, would get her money back. That is said to be a representation. Although the plea is not entirely clear, it would seem the plaintiff is alleging reliance on that representation which induced her to enter into the Deed. The representation is falsified by the fact the plaintiff has not recovered her money. The loss and damage is said to be the $1 million which the plaintiff advanced in reliance on the representation.
There are difficulties about this plea. It would seem that the alleged representation was made as to future matters. I will not rehearse all of the matters a plaintiff has to prove to establish misleading and deceptive conduct when reliance is said to be placed on statements as to future matters. I would accept the plea in its present form has deficiencies. In fact, it is difficult to see how it could succeed. That said, the second defendant either admits he made the representation or it is denied. Either way, the defence will no doubt plead the representation was in all the circumstances reasonable. It is not difficult to see this issue as a fallback position the plaintiff had adopted; it is not central to the action brought by the plaintiff against the defendants. There is no point in striking out this aspect of the claim when it is unlikely to cause the defendants any embarrassment and is unlikely to delay the action at trial. In as much as this aspect of the claim cannot be made out, the plaintiff is at risk as to costs.
At this point, it is appropriate to refer back to the affidavit sworn by the second defendant in the corporations proceedings and the subject of the Harman undertaking application. The second defendant does not deny the plaintiff and the first defendant entered into the Deed and he does not deny that the loan was advanced. In fact, it is very difficult to see what his defence might be. Presumably, it will be there was an oral variation to the Deed, the land was acquired pursuant to that oral variation and the plaintiff has now no right to recover $1 million. If that is the defence, then the defendant will presumably acknowledge that the plaintiff has some interest in the land. Be that as it may, it is apparent that the plaintiff has pleaded a cause of action in contract and that it is neither appropriate to strike out the statement of claim, nor is this a case where, looking at the pleaded statement of claim, judgment under O 16 is appropriate.
It was for these reasons I dismissed the amended chamber summons. I would add this. This application should never have been brought. It represents pointless interlocutory skirmishing which was never likely to achieve anything. Months have been lost and funds have been expended for no purpose. This is a case which cries out for settlement. The defendants properly advised should have got on and filed their defences and without waste of further time and money, attempted to settle the matter. Litigation is not to be viewed as a forensic game where by the use of interlocutory tactics, some perceived advantage is obtained.
Those views will be reflected in the costs order I make in relation to the application. On publication of these reasons, both parties ought file submissions on costs within 7 days.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Court Officer
3 NOVEMBER 2021