Roselle Enterprises Pty Ltd v Morris
[2003] WASCA 277
•19 NOVEMBER 2003
ROSELLE ENTERPRISES PTY LTD -v- MORRIS & ANOR [2003] WASCA 277
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASCA 277 | |
| THE FULL COURT (WA) | 19/11/2003 | ||
| Case No: | FUL:30/2003 | 10 NOVEMBER 2003 | |
| Coram: | STEYTLER J MILLER J WALLWORK AJ | 10/11/03 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Applicant granted extension of time Applicant given leave to appeal Appeals allowed to the extent that leave granted to amend statement of claim | ||
| B | |||
| PDF Version |
| Parties: | ROSELLE ENTERPRISES PTY LTD HENRY CLIFTON MORRIS JOAN FRANCES MORRIS |
Catchwords: | Practice and procedure Appeal against interlocutory decisions of Master Pleading Turns on own facts |
Legislation: | Nil |
Case References: | Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 ASIC v Rowena Nominees Pty Ltd (2003) 45 ACSR 424 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Boomalli v Hake [1985] WAR 7 Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246 Chamberlain v Deputy Commissioner of Taxation (ACT) (1988) 164 CLR 502 Con-Stan Industries v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 Concut Pty Ltd v Worrell (2000) 75 ALJR 312 Cousins v YMCA of Perth (2001) 111 IR 286 D A Christie Pty Ltd v Baker [1996] 2 VR 582 De L v Director-General of the NSW Department of Community Services (No 2) (1997) 190 CLR 207 Esdaile v Payne (1889) 40 Ch D 520 Ester Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196 Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320 Fidelitas Shipping Company Ltd v V/O Exportchleb [1966] 1 QB 630 Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1999) 196 CLR 245 Gallo v Dawson (1990) 64 ALJR 458 Gallo v Dawson (No 2) (1992) 109 ALR 319 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 Girando v Girando (1997) 18 WAR 450 Itek Graphix Pty Ltd v Elliot (2002) 54 NSWLR 207 Jackamarra v Krakouer (1998) 195 CLR 516 Johnson v Gore Wood & Co [2002] 2 AC 1 Mayne Nickless v Multigroup Distribution (2001) 114 FCR 108 Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 Nationwide News Pty Ltd v Wiese (1990) 4 WAR 263 Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167 CLR 219 Nominal Defendant v Manning (2000) 50 NSWLR 139 Osborne v Landpower Developments Pty Ltd [2003] WASCA 117 Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 Re Commonwealth of Australia (Department of Defence); Ex parte Marks (2000) 75 ALJR 470 Re Malley SM; Ex parte Gardner [2001] WASCA 29 Re Will of Gilbert (decd) (1946) 46 SR (NSW) 318 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 25 WAR 311 Waverley Municipal Council v Cheowiry [2003] NSWCA 12 Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 Wilson v Metaxas [1989] WAR 285 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : ROSELLE ENTERPRISES PTY LTD -v- MORRIS & ANOR [2003] WASCA 277 CORAM : STEYTLER J
- MILLER J
WALLWORK AJ
PUBLISHED : 19 NOVEMBER 2003 FILE NO/S : FUL 30 of 2003 BETWEEN : ROSELLE ENTERPRISES PTY LTD
- Applicant
AND
HENRY CLIFTON MORRIS
JOAN FRANCES MORRIS
Respondent
Catchwords:
Practice and procedure - Appeal against interlocutory decisions of Master - Pleading - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Applicant granted extension of time
Applicant given leave to appeal
Appeals allowed to the extent that leave granted to amend statement of claim
Category: B
Representation:
Counsel:
Applicant : Mr R H B Pringle QC
Respondent : Mr J C Giles
Solicitors:
Applicant : MacKinlays
Respondent : Solomon Brothers
Case(s) referred to in judgment(s):
Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133
Case(s) also cited:
ASIC v Rowena Nominees Pty Ltd (2003) 45 ACSR 424
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Boomalli v Hake [1985] WAR 7
Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246
Chamberlain v Deputy Commissioner of Taxation (ACT) (1988) 164 CLR 502
Con-Stan Industries v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226
Concut Pty Ltd v Worrell (2000) 75 ALJR 312
Cousins v YMCA of Perth (2001) 111 IR 286
D A Christie Pty Ltd v Baker [1996] 2 VR 582
De L v Director-General of the NSW Department of Community Services (No 2) (1997) 190 CLR 207
(Page 3)
Esdaile v Payne (1889) 40 Ch D 520
Ester Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196
Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320
Fidelitas Shipping Company Ltd v V/O Exportchleb [1966] 1 QB 630
Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1999) 196 CLR 245
Gallo v Dawson (1990) 64 ALJR 458
Gallo v Dawson (No 2) (1992) 109 ALR 319
Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478
Girando v Girando (1997) 18 WAR 450
Itek Graphix Pty Ltd v Elliot (2002) 54 NSWLR 207
Jackamarra v Krakouer (1998) 195 CLR 516
Johnson v Gore Wood & Co [2002] 2 AC 1
Mayne Nickless v Multigroup Distribution (2001) 114 FCR 108
Monaco v Arnedo Pty Ltd (1994) 13 WAR 522
Nationwide News Pty Ltd v Wiese (1990) 4 WAR 263
Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167 CLR 219
Nominal Defendant v Manning (2000) 50 NSWLR 139
Osborne v Landpower Developments Pty Ltd [2003] WASCA 117
Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166
Re Commonwealth of Australia (Department of Defence); Ex parte Marks (2000) 75 ALJR 470
Re Malley SM; Ex parte Gardner [2001] WASCA 29
Re Will of Gilbert (decd) (1946) 46 SR (NSW) 318
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Temwood Holdings Pty Ltd v Western Australian Planning Commission (2001) 25 WAR 311
Waverley Municipal Council v Cheowiry [2003] NSWCA 12
Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Wilson v Metaxas [1989] WAR 285
(Page 4)
1 JUDGMENT OF THE COURT: The applicant sought leave to appeal against two interlocutory decisions of a Master of this Court made, respectively, on 22 November 2001 and on 11 December 2002. The application for leave in respect of the first of those decisions was well out of time. The applicant applied to the Master for an extension of time, but that application was refused and was renewed before this Court. At the conclusion of the hearing we made orders, by consent, extending time, giving leave to appeal in both applications and allowing each appeal. These reasons set out the background to our doing so.
2 By the first of the two decisions sought to be appealed the Master struck out a statement of claim which had been prepared on behalf of the applicant.
3 The applicant had pleaded what it referred to as a "Loan Agreement" which was said to have been made between the applicant, the respondents and other parties, by the terms of which the respondents and those other parties loaned money to the applicant, the loans being secured, inter alia, by a mortgage granted over the land to be purchased by the applicant. The purpose of the loan was said to be that of facilitating the acquisition of the land and the carrying out of subdivision works on it. The applicant pleaded that there was an implied term of the Loan Agreement to the effect, inter alia, that the respondents "would not do any act or thing or refuse to act or do anything to frustrate or deny any common purpose or the benefit of the … [applicant] or the other lenders" (par 12 of the amended statement of claim). There were also said to be implied terms to the effect that the respondents and the other lenders would act in good faith to assist the applicant to facilitate the subdivision and that the respondents would "act in good faith to co-operate with the other lenders in doing such acts or things to assist the other lenders in fulfilling their obligations to facilitate the subdivision provided that it was not to the detriment of the … [respondents] and the other lenders" (pars 13.3 and 13.4).
4 Next, the applicant pleaded that there were power lines traversing the land and that the power supply corporation, Western Power Corporation, had an easement over the land in order to protect its interests. It also pleaded that the approval of the subdivision by the Western Australian Planning Commission was expressed to be conditional, inter alia, on the provision of easements for existing or future power supply infrastructure and, in order for the applicant to comply with that condition, it was required to register a formal easement over the title to the land in favour of Western Power. It
(Page 5)
- required, for that purpose, the consent of all of the lenders, including the respondents (pars 17, 18 and 19). The applicant pleaded, however, that the respondents refused to consent to the registration of the easement in breach of the implied terms to which I have referred. Consequently, the applicant claimed that it was unable, inter alia, to complete the subdivision of the land, as a result of which it had suffered loss and damage.
5 Clause 3(4) of the mortgage which secured the loan read as follows:
"(4) Limitation of Liability When Acting in Good Faith
Provided the Mortgagee acts in good faith the Mortgagee may exercise the Mortgagee's Powers at the absolute discretion of the Mortgagee and shall not be liable to the Covenantor [defined in cl 1(1)(h) of the mortgage to mean, inter alia, the Mortgagor] for any exercise [,] purported exercise or non-exercise of the Mortgagee's Powers."
6 Counsel for the respondents contended before the Master that the implied terms of the Loan Agreement pleaded by the applicant were inconsistent with cl 3(4) of the mortgage and that, because the Loan Agreement was collateral to the mortgage, there was no room for the operation of those terms, on the authority of Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133. That contention was upheld by the Master who consequently struck out the statement of claim. However, he added that he thought it open to the applicant to argue that the mortgagees had not acted in good faith as required by cl 3(4) of the mortgage and also that an action for rectification of the mortgage might succeed. Consequently, he gave the applicant liberty to replead.
7 The applicant did so, eventually producing a further minute on 5 December 2002. When the application for leave to amend came before the Master, he could see no material difference between that minute and the earlier pleading and consequently refused to give the applicant leave to amend in terms of it. However, he reiterated that it was open to the applicant "to run its case on the basis that there was a lack of good faith on the part of the … [respondents]".
8 When these applications came on for hearing before us, it was very properly acknowledged by Mr Giles, who appeared on behalf of the respondents, that the judgments of the Master left it open to the
(Page 6)
- applicant to plead a case based on breach of the Loan Agreement (we shall continue to call it that, for the sake of convenience), if it was alleged that the breach occurred in circumstances demonstrating a lack of good faith on the part of the respondents. Counsel for the applicant, on the other hand, said that, while he was content to plead in that way, he read the judgments of the Master as precluding him from doing so and as permitting him only to allege a cause of action, if he could frame one, for breach of cl 3(4) of the mortgage. He also contended that the Master had misconstrued cl 3(4) of the mortgage because the operation of that clause was limited to an exercise of the "Mortgagee's Powers" as defined in the mortgage and these, on the proper construction of cl 1(1)(m) and cl 3(12) of the mortgage, did not include the ability to consent to an easement, which ability, he submitted, the respondents plainly had, albeit it was not a "Mortgagee's Power" as defined (and we should add that this argument appears not to have been put to the Master in the course of the first of the hearings before him). Implicit within this last contention was the further proposition that there consequently remained room for the operation of implied terms of the kind pleaded, notwithstanding cl 3(4) of the mortgage.
9 Having heard from each of the counsel, the Court formed the tentative view that the applicant was not (and should not have been) constrained by the decisions of the Master from pleading a case based upon breach of the alleged implied terms of the Loan Agreement in circumstances in which it alleged that the breach occurred in bad faith (although we accept, with respect, that the Master's reasons were not entirely clear in that regard). The Court also indicated its tentative opinion that the applicant's construction of the relevant provisions of the mortgage was arguable (although we should not be taken to have expressed any opinion whether or not the applicant's overall argument in that respect was likely to succeed, more particularly so given the way in which the pleading of the implied terms has presently been formulated). In those circumstances Mr Giles very sensibly acknowledged that, given the somewhat troubled history of this matter, the fact that, as will be apparent, it was common cause that the applicant should be permitted to plead a case based on breach of the Loan Agreement if it alleged, as it intends to do, that the breach occurred in circumstances of lack of good faith on the part of the respondents and the fact that the construction point could very quickly be dealt with at trial, the applications before the Court might best be dealt with, by consent, by orders extending time in the case of the first application, allowing each application for leave to appeal and allowing each appeal so far as was necessary to permit the applicant to file an amended
(Page 7)
- substituted statement of claim in the form of its minute dated 2 December 2002, as amended before us. That amendment introduced a new par 22 as follows:
"22. If (which is denied) the defendants' refusal to consent to the grant of the Easement in Gross constituted non-exercise of their powers as mortgagees within the meaning of clause 3(4) of the mortgage, the plaintiff pleads further or alternatively -
(a) that clause 3(4) of the mortgage embodied a provision to the effect that provided the defendants acted in good faith they might exercise the mortgagees' powers contained or implied in the mortgage at their absolute discretion and would not be liable to the plaintiff for the exercise or non-exercise of such powers;
(b) the defendants' refusal to consent to the grant of the Easement in Gross constituted non-exercise of the mortgagees' powers, contained or implied in the mortgage, in bad faith.
Particulars of Bad Faith
The plaintiff repeats the particulars to paragraph 21(b) above."
11 We consequently made orders accordingly, by consent, and then, having heard submissions from the parties in that respect, dealt separately with the issue of costs.
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