Ricochet Pty Ltd v Equity Trustees Executors and Agency Co Ltd

[1993] FCA 99

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JUDGMENT No.	..... 3.9	......	l ! . i33	L:
I

IN THE FEDERAL COURT OF AUSTRALIA 1 1

NEW SOU	TH WALES DISTRICT REGISTRY	) No.	NG 3194 of 1992
1

GENERAL D1 VISION 1

IN THE MATTER OF MINERO PTY LIMITED

JA.C.N. 050 048 256L

BETWEEN:  MINER0 PTY LIMITED

Applicant

RECEIVED AND mom NABBIE AJAM

First Respondent

FEDERAL COURT OF

AND AJAM PTY LIMITED

PRINCIPAL REGISTRY

Second Respondent

Whitlam J. 9 March 1993

REASONS FOR INTERLOCUTORY JUDGMENT

This is an application by the respondents to strike out a further amended statement of claim. Since such document represents the applicant's third attempt at pleading its

was formerly a director of the applicant. The statement of

claim, it is convenient to set out some of the history of this
matter.

The proceedings were commenced against the first respondent alone on 7 September 1992. The application, which invoked the jurisdiction of the Court under s.232 of the Corporations Law, was accompanied by a statement of claim. The first respondent

claim alleged that the first respondent breached the duties he owed to the applicant, as a director, under both the general law and statute in that he received from the applicant payments or the benefit of payments to which he was not entitled; he made false representations to the applicant about the existence of loan accounts, which caused loss to the.,

applicant; and he failed to furnish the applicant or its auditors information about the financial records of' ih& applicant. The statement of claim also alleged &hat honeys were owing by the first respondent to the applicant in re=pec,t,

of shares allotted to him, either by way of the original
subscription price or calls.

At the first directions hearing on 18 September 1992 the matter was referred by the Registrar to Beaumont J. Having regard to the allegations about payments or the benefit of payments being received by the first respondent to which he was not entitled, his Honour directed that the relevant items relating to these allegations should be dealt with by way of a

Scott Schedule. His Honour also gave leave to the applicant

to amended its statement of claim and gave conventional directions for a timetable relating to the provision of particulars, the filing of a defence, discovery and inspection. The matter was stood over until 4 December 1992 for further directions with leave to either party to restore on 7 days notice.

The applicant filed its amended statement of claim and its Scott Schedule on 25 September 1992. The amended pleading deleted an allegation relating to an alternative basis upon which the original subscription price of the shares allotted to the first respondent had been increased. This was a minor amendment and the scope of the applicant's claim remained essentially unchanged.

In October 1992 there were a few brief skirmishes between the parties relating to subpoenas. The matter then came back before Beaumont J. for further directions on 4 December 1992. At this stage the first respondent had neither responded to the Scott Schedule nor filed a defence. The parties consented to directions that each of them should file and serve a "statement of issues, facts and contentions" and that the applicant should give discovery. His Honour also fixed a date to commence the final hearing restricted to the applicant's case in chief. The parties complied with these directions and the hearing commenced before Beaumont J. on 14 December 1992.

the outset an application for summary judgment. The hearing	On that day counsel for the first respondent foreshadowed at
proceeded, however, for half a day with counsel for the applicant tendering documents and adducing oral evidence from one witness, Mr Nott, a chartered accountant. By the next day, 15 December 1992, it became apparent that the focus of the hearing had changed. Beaumont J. emphasized that he was
conducting, in effect, an extended directions hearing. The debate proceeded throughout the afternoon and pointed up the tension between the interlocutory order for account ("a starting point") and the claim for a liquidated sum being sought by the applicant. His Honour was sensitive to the situation in which the first respondent would be placed by having to respond to the Scott Schedule particulars in the light of the serious allegations of misfeasance against him. Counsel for the applicant adduced further evidence from Mr Nott, who had been appointed to reconstruct the applicant's accounts. That evidence was called in support of the applicant's "principal" case for a so-called "accounting" from the first respondent. Counsel for the first respondent repeated his desire to seek summary judgment and his Honour stood the matter over until 23 December 1992 to deal with that application.
On 23 December 1992 the first respondent applied to strike out the amended statement of claim and the applicant filed an
amended application. The first respondent put at the forefront of his submissions the applicant's failure to give
particulars of the first respondent's misfeasance. However, the first respondent also challenged as "defective" the order for an account and inquiry sought in the amended application. Beaumont J. held that the amended statement of claim did not contain the essential allegations conferring an entitlement to a general account. His Honour gave the applicant leave to amend generally the amended statement of claim. The matter
was adjourned until the next day.
The applicant filed in court on 24 December 1992 a further amended statement of claim and a further amended application, joining the first respondent's family company as a respondent in respect of the claim for moneys owing on the shares allotted in the applicant. Counsel for the respondents immediately indicated that they sought to strike out this pleading too. After some desultory debate Beaumont J. indicated that pleadings would be dispensed with and ordered the applicant to pay the first respondent's costs of the application heard on 23 December 1992.
The matter was adjourned until 2 February 1993 when it came before me. Counsel for both parties agreed on that occasion that it was appropriate that I should fix a date to hear the respondent's application to strike out the further amended statement of claim. I heard the application on 2 March 1993.
reason. The further amended statement of claim repeats, in I think that the application must succeed for one simple
substance, the vice identified by Beaumont J. in the amended statement of claim. The facts pleaded could not support the claim for an account. The pleader has merely transposed paragraphs 28-33 of the amended statement of claim to the front of the further amended statement of claim where the allegations in those paragraphs now rely on the payments
the a~plicant which are not "supported by invoices."
(Previously they relied on deposits received by the applicant which were "unaccounted for.") The pleader does not allege any facts which could constitute the first respondent an "accounting party" so as to entitle the applicant to the remedy of account against him. (It may be perhaps that such facts could be extracted from the allegations implicit in paragraphs 8 and 9 of the further amended statement of claim.) The fresh allegation in the new paragraph 4 does not add any relevant allegation.
In any event, it seems to me that the applicant misconceives the role of the remedy of account. This appears particularly from the relief sought in paragraphs l(c) and 2 of the further amended application. The applicant is unable to point to any provision in the Corporations Law obliging the first respondent, as a former director, to furnish the information or explanations sought by the applicant or its auditors. Nor is such interrogation permitted by an order for account.
applicant perceive in pressing the claim for account. As It is difficult to see what utility those advising the
counsel for the respondents submits, the applicant does not really want a general account, but an order for payment of a specified sum. In those circumstances, the applicant will be compelled to give particulars of such sum. I accept that. However, I agree with counsel for the applicant that the particulars in paragraph 20 of the further amended statement of claim are sufficient to entitle it to a trial in respect of such a claim. So too I consider that the applicant has given sufficient particulars of the false representations as to loan accounts and as to the moneys owing in respect of the shares allotted to either the first or second respondent.
It is unfortunate that the applicant has chosen to defend what
I regard as indefensible pleadings, which were doomed to be
struck out. The respondents are entitled to the relief in paragraphs 2 and 4 of the notice of motion filed in court on 2 March 1993. Like Beaumont J., I see little point in persisting with pleadings in this case. The first respondent is not likely to respond to the serious allegations of misfeasance in any useful way. It seems to me that the real issues in this case can be identified and surprise avoided without persisting in this futile exercise. The parties should discuss how this may be done. In any event, the applicant should yet further amend the application and prepare a fresh statement of issues in reliance upon which this matter may be fixed for trial.
I stand the matter over for directions on 18 March 1993 at
9.30 am.

I certify that this and the preceding seven (7)

pages are a true copy of the Reasons for Interlocutory ~udgment herein of his Honour M Justice A.P. Whitlam.

Associate:

Date:

Counsel for the applicant:  G.A. Laughton

instructed by Coleman & Greig

Counsel for the 1st & 2nd respondents: G.E. Underwood

instructed by Gadens Ridgeway

Date of hearing:  2 March 1993

Date judgment delivered:  9 March 1993