Resort Corporation Australia (No.2) P/L v. Smith and Greenslade & Ors

[2008] QSC 83

SUPREME COURT OF QUEENSLAND

CITATION:

Resort Corporation Australia (No.2) P/L v Smith and Greenslade & Ors [2008] QSC 83

PARTIES:

RESORT CORPORATION AUSTRALIA (NO. 2) PTY LTD ACN 009 554 133
(plaintiff)

v

MARGARET JOY SMITH and JENNIFER ELIZABETH GREENSLADE as executors and trustees under the Will of COLLIN WILLIAM STEPHEN SMITH (deceased) and RUBY ELLEN SMITH
(defendants)

MARGARET JOY SMITH and JENNIFER ELIZABETH GREENSLADE as executors and trustees under the Will of COLLIN WILLIAM STEPHEN SMITH (deceased) and RUBY ELLEN SMITH
(plaintiffs by counterclaim)

RESORT CORPORATION AUSTRALIA (NO. 2) PTY LTD ACN 009 554 133
(first defendant by counterclaim)

PAUL WESLEY BRINSMEAD
(second defendant by counterclaim)

FILE NO:

BS8529/03

DIVISION:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

29 April 2008

DELIVERED AT:

Supreme Court, Brisbane

HEARING DATE:

23 April 2008

JUDGE:

Wilson J

ORDER:

1. That the defendants have leave further to amend their defence to allege –

(i)     that by reason of adverse publicity attaching to Paul Wesley Brinsmead the development costs thrown away were not caused by any breach of contract by them;

(ii)    that the transactions relating to the properties the subject of proceedings 8529/03, 8530/03 and 8531/03 were interdependent;

2.  That the following be struck out of the defence:

      para 4 (c)(ii)

      in para 5(a) the words “in truth and fact”

      in each of para 7(c) and (d) the word “habitually”

      para 7(f)(ii)

      para 8(b)(iii)-(v);

3.  That the defendants provide particulars of the allegation in para 7(e) that the directors of the plaintiff permitted Brinsmead to act in the manner pleaded in paras 7(a), 7(b), 7(c) and 7(d). 

4.  That the respondent defendants pay the applicant plaintiff’s costs of and incidental to the application in 8529/03 on the standard basis fixed in the sum of $11,500.00.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – Pleading – Defence and Counterclaim – Particulars – whether vexatious or embarrassing – where a statement of defence describes a solicitor as having acted “generally” on the plaintiff’s behalf – where it is alleged that the solicitor is deemed to be a director – where it is alleged in the defence that the solicitor had a financial interest in the plaintiff company – where three proceedings relating to different properties in same development – whether vexatious to plead breach of contract in one of the other proceedings – whether certain terms should be struck out of the defence

COUNSEL:

PH Morrison QC and JW Peden for the applicant plaintiff
AJH Morris QC and AC Barlow for the respondent defendants

SOLICITORS:

Hickey Lawyers for the applicant plaintiff
Saunders Downing Hely for the respondent defendants

1. Wilson J:  In three proceedings (BS 8529/03, 8530/03 and 8531/03) the plaintiff has applied to strike out certain nominated paragraphs of the amended defence.

1. The plaintiff was a property developer. It was endeavouring to amalgamate a site at Currumbin with a view to redevelopment. The amalgamation involved (inter alia) acquisition of certain properties from various members of the Smith family.

1. These proceedings relate respectively to the following properties:

8529/03 – unit 3 at 738 Pacific Parade
8530/03 – unit 4 at 738 Pacific Parade
8531/03 – 732 Pacific Parade.

The defendants to the proceedings were the respective owners of the properties.

1. Each property was the subject of a separate put and call option deed executed in June 2002. Under its terms the exercise of the call option by the plaintiff resulted in the formation of a contract of sale.

1. On 2 July 2003 the defendants purported to terminate the put and call option deeds and the contracts of sale.

1. The plaintiff commenced proceedings for specific performance. It has since elected to terminate and sue for damages.

1. The Court received submissions on the application in proceeding 8529/03 on the basis that once that application was determined, the fate of the other applications would follow.

1. In 8529/03 the objections to the amended defence fall into three categories:

(i)paras 4(c)(ii), 5, 6(b), 7(c)-(f), 8(b)(iii)-(iv)

(ii)paras 16(c)(iv), 17(b)-(c), 45-49

(iii)paras 14(c), 14(d)(iii)-(iv), part 33, 34(b), part 35, 52(b), 53-63, 64(c)–(d), 65(c)-(d), 66 and 67.

The defendants agreed to withdraw the allegations in category 2, and so those objections were not pursued.

1. The first category of objections related to the pleading of facts which the defendants contend support the ultimate legal conclusion that Brinsmead was the plaintiff’s agent (actual or by estoppel) or its deemed director (pursuant to the Corporations Act 2001). To use the expression chosen by senior counsel for the defendants, Brinsmead was “the public face of the company”. He was the subject of adverse publicity. In the result moneys expended by the plaintiff on advertising, marketing and promotion were thrown away. This was so regardless of the defendants’ alleged breach of contract. In other words, that loss was not caused by the defendants’ breach.

1. I shall turn to the specific objections in a moment. At this point, I observe that the pleading does not sufficiently draw together the various factual strands to arrive at this conclusion. Ultimately I have concluded that the defendants ought to be allowed to amend to deal with this.

1. In paragraph 4 it is alleged that –

“4.At all times material to this proceeding:

(a)     the Plaintiff’s solicitors were the firm of Hickey Lawyers;

(b)     Mr Brinsmead was a member of the firm of Hickey Lawyers; and

(c)     Mr Brinsmead, as a member of the firm of Hickey Lawyers, acted on the Plaintiff’s behalf:

(i)in the dealings between the Plaintiff and the Defendants referred to in the Further Amended Statement of Claim; and

(ii)generally.”

Objection is taken to the allegation in 4(c) that Brinsmead acted for the plaintiff “generally”.  Senior counsel for the plaintiffs submitted that the plea is fishing and that it has an unduly burdensome impact on his client’s disclosure obligation. Senior counsel for the defendants responded that it is relevant to his clients’ case that Brinsmead was the public face of the company, and further that there is no evidence that the plaintiff had any business other than this development.

This application relates to the pleading, which contains no allegation that the company did or did not have any other business. I consider that the pleading that Brinsmead acted for the plaintiff “generally” is so vague as to be embarrassing. Paragraph 4(c)(ii) should be struck out.

The plaintiff also objected to the plea that Brinsmead acted for it “as a member of the firm Hickey Lawyers”, in the context where it was already pleaded that that firm were its solicitors and that he was a member of the firm.

I decline to strike out these words. That it was Brinsmead who did the work is relevant to the defendants’ case that he was the public face of the plaintiff.

1. In paragraph 5(a) it is alleged that Brinsmead was “in truth and fact” a director of the plaintiff. Those words are surplusage; they are embarrassing and should be struck out.

In paragraph 5(b) it is alleged that Brinsmead had a direct or indirect financial interest in (i) the plaintiff and (ii) the dealings between the plaintiff and the defendants referred to in the statement of claim. Senior counsel for the plaintiff submitted that this allegation is irrelevant and fishing and so embarrassing. I do not agree. I consider it is relevant to the case that Brinsmead was the public face of the plaintiff. I decline to strike it out.

1. Objection is taken to the plea in paragraph 6(b) that the plaintiff and the holding company had a common logo as irrelevant since no relief is claimed against the holding company. But that sub-paragraph needs to be viewed in the context of the whole of paragraph 6 in which it is alleged that Brinsmead was or held himself out as being joint managing director of the plaintiff and the holding company and as one of the owners of both, and that he was a deemed director of the plaintiff under s 9 of the Corporations Act.  In that context the allegation is relevant to the defendants’ case that Brinsmead was the public face of the company. I decline to strike it out.

1. In paragraphs 7 (c) and (d) it is alleged that at all material times Brinsmead “habitually” executed correspondence and other documents on behalf of the plaintiff.

Objection is taken to the word “habitually”. Senior counsel for the defendants did not press its retention, and I strike it out.

Of more potential substance is the objection that while it is pleaded that he did so “at all times material to this proceeding”, the only documents particularised were executed after the purported termination in July 2003. However, as senior counsel for the defendants pointed out, subsequent events are relevant to quantum.

Objection is also taken to the allegations that the directors knowingly permitted Brinsmead to so act (paragraph 7(e)) and that they acted under his directions or instructions (paragraph 7(f)(ii)).

The defendants should provide particulars of the allegation that the directors knowingly allowed Brinsmead to so act.

The allegation that they acted under his directions or instructions does not follow from the earlier allegations in paragraph 7. Accordingly paragraph 7(f)(ii) should be struck out.

1. In paragraph 8(b) (iii) – (v) it is alleged -

“8.In the premises pleaded in paragraphs 4 to 7 hereof, at all times and for all purposes material to this proceeding, Mr Brinsmead:

…

(b)was knowingly concerned in the conduct of the Plaintiff set forth in:

…

(iii)    Part V of this pleading;

(iv)    Part VI of this pleading; and

(v)     Part VII of this pleading.”

Part V (paras 50-52) is headed “Plaintiff’s breach of clause 24”

Part VI (paras 53-60) is headed “Plaintiff’s breach of clause 29 of the 732 Pacific Parade Deed”

Part VII (paras 61-63) is headed “Plaintiff’s repudiation of the 732 Pacific Parade pro forma Contract”

Objection is taken because there is no mention of conduct of Brinsmead in parts V, VI and VII. Thus, it is submitted, paragraph 8(b)(iii)-(v) is vexatious. I accept this submission; those allegations should be struck out.

1. The third category of objections relates to allegations of breaches of obligations in relation to the property at 732 Pacific Parade – that is, the property the subject of 8531/03. There is no pleading, on either side of the record, that the deed and contract in 8531/03 were interdependent with or conditional upon the deeds or contracts in the other proceedings.

In response, senior counsel for the defendants referred to paragraphs 23 and 24, where it is pleaded that the damages claimed by the plaintiff as “development costs thrown away” were premised on certain “development assumptions”, namely that the project –

(a)would have proceeded;

(b)would have been profitable; and

(c)would have recouped those costs.

The defendants go on to deny the validity of those assumptions (inter alia) on the ground that, regardless of its alleged breaches, the plaintiff had not secured and was unable to secure title to 732 Pacific Parade (inter alia).

Senior counsel for the plaintiff responded that that was already pleaded without objection, and that there was no need for the “rest of the architecture”.

Senior counsel for the defendants pointed to provisions in the deed and the contract in 8531/03 which he submitted supported his contention that the transactions were interdependent. He acknowledged that these had not been pleaded.

I consider that the defendants should be allowed to amend to raise the issue of interdependency. I am not prepared to strike out the allegations in category 3 at this stage. They should be reconsidered in light of any amendments made by the defendants.

1. Summary – orders

(a) that the defendants have leave further to amend their defence to allege –

(i)      that by reason of adverse publicity attaching to Paul Wesley Brinsmead the development costs thrown away were not caused by any breach of contract by them;

(ii)    that the transactions relating to the properties the subject of proceedings 8529/03, 8530/03 and 8531/03 were interdependent;

(b) that the following be struck out of the defence:

para 4 (c)(ii)

in para 5(a) the words “in truth and fact”

in each of para 7(c) and (d) the word “habitually”

para 7(f)(ii)

para 8(b)(iii)-(v);

(c) that the defendants provide particulars of the allegation in paragraph 7(e) that the directors of the plaintiff permitted Brinsmead to act in the manner pleaded in paragraphs 7(a), 7(b), 7(c) and 7(d).

1. Costs

Further order that the respondent defendants pay the applicant plaintiff’s costs of and incidental to the application in 8529/03 on the standard basis fixed in the sum of $11,500.00. 

(There will be no order as to costs in 8530/03 or 8531/03.)