Slater and Slater v Iama (Qld) Pty Ltd
[1998] QCA 436
•18/12/1998
IN THE COURT OF APPEAL [1998] QCA 436 SUPREME COURT OF QUEENSLAND Appeal No. 9395 of 1998
Brisbane
[Slater & Anor v IAMA (Qld) P/L]
BETWEEN:
PETER JOHN SLATER and
KYM JOANNE SLATER
(Defendants)(Applicants) Appellants
AND:
IAMA (QLD) PTY LTD
ACN 068 181 797
(Plaintiff) Respondent Pincus JA
Thomas JA
White J
Judgment delivered 18 December 1998.
Joint reasons for judgment of Pincus and Thomas JJA, separate reasons of White J concurring as to the orders made.
1. APPLICATION FOR LEAVE TO APPEAL GRANTED. APPEAL ALLOWED WITH COSTS WITH DIRECTION THAT COSTS OF THE AFFIDAVITS OF MR SLATER AND MR CATANZARO FILED FOR THE PURPOSES OF THIS APPEAL BE DISALLOWED.
2. LEAVE GRANTED TO FILE NOTICE OF APPEAL EXHIBITED TO AFFIDAVIT OF MR CATANZARO FILED IN THIS APPEAL.
3. THE ORDER BELOW THAT THE DEFENDANTS'/APPELLANTS' COUNTER CLAIM BE STRUCK OUT IS SET ASIDE AND IN LIEU THEREOF ORDER PARAGRAPH 2 OF THE SUMMONS BE DISMISSED WITH COSTS.
4. SET ASIDE THE ORDER THAT THE DEFENDANTS/APPELLANTS PAY THE PLAINTIFF'S/RESPONDENT'S COSTS OF AND INCIDENTAL TO THE DEFENDANTS'/APPELLANTS' COUNTER CLAIM.
5. UPON THE DEFENDANTS/APPELLANTS BY THEIR COUNSEL UNDERTAKING NOT TO DISPOSE OF THEIR ASSETS EXCEPT IN THE ORDINARY COURSE OF BUSINESS AND WITHOUT OTHERWISE FIRST GIVING SEVEN DAYS NOTICE OF THEIR INTENTION TO DO SO TO THE PLAINTIFF/RESPONDENT, ORDER THAT EXECUTION OF THE JUDGMENT IN FAVOUR OF THE PLAINTIFF/RESPONDENT FOR $101, 307.01 TOGETHER WITH INTEREST THEREON BE STAYED PENDING THE DETERMINATION OF THE COUNTER CLAIM.
CATCHWORDS:
PRACTICE - Interlocutory judgment - summary dismissal of counter-claim - Whether counter-claim amounted to abuse of process.
Counsel: Mr D. Fraser QC, with him Mr V. Catanzaro for the applicants/appellants.
Mr D. Murphy for the respondent.Solicitors: Tavoulas and Company for the applicants/appellants.
Bain Gasteen for the respondent.Hearing Date: 30 November 1998 IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9395 of 1998
Brisbane
Before Pincus JA
Thomas JA
White J[Slater & Anor v IAMA (Qld) P/L]
BETWEEN:
PETER JOHN SLATER and
KYM JOANNE SLATER
(Defendants)(Applicants) Appellants
AND:
IAMA (QLD) PTY LTD
ACN 068 181 797
(Plaintiff) Respondent
JOINT REASONS FOR JUDGMENT - PINCUS AND THOMAS JJA
Judgment delivered 18 December 1998
This is an application for leave to appeal against an order in the District Court for the striking
out of a counter claim. It will be convenient to refer to the parties according to their status in the
proceedings below, that is to say Iama (Qld) Pty Ltd will be referred to as the plaintiff and Mr and
Mrs Slater will be referred to as the defendants.
The plaintiff (which is an agricultural supplier) commenced an action claiming $124,488.95
for goods sold and delivered together with interest at the rate of 24%. The plaint alleged that the
defendants had applied for a credit account with the plaintiff which had a trading division called "Iama Sauers", and that it had granted the application so that outstanding sums would attract interest
at the rate of 2% per month. The goods were claimed to have been sold and delivered by the
plaintiff between 31 July 1996 and 23 September 1997 to a total value of $124,488.95.
The defendants filed an entry of appearance, defence and counter claim which inter alia
denied the credit agreement and admitted that during the period of supply alleged by the plaintiff (ie
between 31 July 1996 and 23 September 1997) the plaintiff had sold and delivered a sprinkler
system for frost protection and that the defendants had not paid any moneys “in respect of this
system”. The defendants however otherwise denied that any money was owing to the plaintiff.
Breaches were alleged under the Sale of Goods Act 1896 (Queensland) and the Trade Practices
Act 1974 (Commonwealth) including allegations that the goods were not fit for the stated purpose,
that they were not of merchantable quality. It was further alleged that defects in the system had
resulted in unsuccessful frost prevention and reduction in yields causing a nett loss of $348,461.00.
This was set up as a counter claim, and as well the defence claimed to set off the counter claim in
extinction or diminution of the plaintiff’s claim.
The plaintiff subsequently amended its plaint to exclude reference to claims arising before
1 October 1995 and reduced its claim to $101,307.01. It also deleted all reference to the credit
account. It then applied for summary judgment for the amended claim and for an order that the
counter claim be struck out.
The plaintiff succeeded before the District Court chamber judge in obtaining summary
judgment upon its amended claim and in having the counter claim struck out. The latter order would
seem to have been based upon evidence given by a Mr Thornton, the plaintiff’s credit manager, who
swore that the plaintiff had only commenced trading as an agricultural supply business under the
trade name “Sauers Iama” from 1 October 1995 (seemingly just after the defendants had purchased the allegedly defective goods), and that prior to that time another company called Frank Sauer &
Sons Pty Ltd had conducted that business. He further alleged that the defendants were customers
of that business before 1 October 1995 and that the former credit arrangements had been extended
and continued by the plaintiff after that date. Mr Thornton further asserted that the plaintiff did not
sell the sprinkler system referred to in the defence, claiming that it was sold by Frank Sauer & Sons
Pty Ltd on or about 24 August 1995 and that the price of the sprinkler system was not and had not
been included in the sums which now make up the plaintiff’s claim. Mr Thornton agreed in cross-
examination that amounts owed by the defendants to Frank Sauer & Sons Pty Ltd were carried
over into the books of the plaintiff from and after 1 October 1995 namely $27,413.33. He claimed
however that subsequently the defendants had made payments on account exceeding $54,000.00
and that these had been appropriated to the oldest accounts thereby extinguishing the defendants’
alleged debt to the plaintiff’s predecessor Frank Sauer & Sons Pty Ltd. The plaintiff and Frank
Sauer & Sons Pty Ltd were part of the same group of companies, and are subsidiaries of the same
holding company.
Affidavit evidence from the defendant Mr Slater and from the defendant’s solicitor Mr
Catanzaro were to the effect that Mr Slater had been dealing with the Sauers Iama outlet at
Ballandean since he commenced farming in the area about 20 years previously, and that he had
never been made aware of any change in the ownership of the business. He had received monthly
statements and was able to produce some invoices as late as March 1997 (no doubt issued by the
plaintiff) showing Frank Sauer & Sons Pty Ltd as the proprietor of Sauers Iama. To the best of Mr
Slater’s recollection he had never received an invoice for the cost of sprinkler heads. He swore
however that the amount claimed in the plaint includes a component for the remainder of the
sprinkler/frost protection system.
The learned chamber judge twice adverted to the circumstance that Mr Slater’s affidavit
“does not purport to be sworn on behalf of his co-defendant Kim Slater”. We find it difficult to
attach any particular significance to that in the circumstances of the present proceedings. Both
defendants would seem to be entitled to rely upon evidence sworn by one of them.
The case alleged and supported by the defendants was that the salesman who had made
the relevant representations leading to the sale of the sprinkler equipment was a Mr Bauman and
that at the time the representations were made he was already an employee of the plaintiff. It would
seem that even if, by means of internal arrangements between the plaintiff and another company in
its group, the business was not taken over by the plaintiff until 1 October 1995, the plaintiff might
still be vicariously liable for the consequences of representations by one of its employees which led
to such a sale, even if the plaintiff was not the immediate supplier. The question then is whether his
Honour erred in summarily striking out the counter claim as an abuse of process.
Company searches were produced to the learned chamber judge showing that since March
1995 both Frank Sauer & Sons Pty Ltd and Iama (Qld) Pty Ltd have had the same registered
office at 500 Collins Street, Melbourne. The searches also show that both companies have the
same ultimate holding company, namely Iama Limited which is registered at the same Melbourne
address.
Further evidence before the learned chamber judge revealed that the solicitors for the
plaintiff continued to refuse to supply particulars requested by the defendant as to when the plaintiff
began employing staff, purchasing stock, leasing premises, operating bank accounts and taking other
steps in relation to the business which it claimed to have commenced on 1 October. It was
indicated that the defendants desired to interrogate the plaintiff in relation to such matters and to
obtain discovery of relevant documents. Such information is of the kind which is within the keeping of the plaintiff and its associated companies and is not the sort of information that the defendants
would be expected to be able to obtain in adequate detail without the assistance of discovery
procedures.
Mr Thornton's evidence was the sole basis of the allegation of a cut-off point in relation to
dealings by different companies who continued to deal under the same trade name. It is significant
that he was not able to deny that Mr Bauman was employed by the plaintiff company at the time
of the relevant representations and sale, which would seem to have been in August and/or
September 1995. During cross-examination of Mr Thornton, he was asked to look at a photocopy
of a group certificate which arguably related to the plaintiff’s employment of Mr Bauman. Mr
Thornton indicated that he had great difficulty in reading it but acknowledged that it was a 1996
group certificate and he could make out the name “Christopher Norman”. He then conceded that
the “Norman” might be “IAUMAN” but was not prepared to say definitely that it was “Christopher
Bauman”. He also acknowledged that the name on the bottom of the group certificate appeared
to be that of "Iama (Qld) Pty Ltd". It may further be noted that the plaintiff's solicitors refused to
produce a legible copy of the group certificate, asserting that it was "not relevant".
During the appeal counsel for the plaintiff conceded that the only basis upon which the
application to strike out the defendant’s pleading was that it was an abuse of process. Such a
power, he submitted, is possessed by the District Court in its inherent jurisdiction. We did not have
the benefit of full argument on that proposition but for the purposes of the present application will
assume, without deciding, that the District Court possesses such jurisdiction. The learned District
Court judge did not in terms hold that the defendants’ pleading was an abuse of process but
observed that “the jurisdiction to strike out an action should only be exercised when the proceeding
is clearly without foundation, and when to allow it to proceed would impose hardship upon the other party which can be avoided without risk of injustice”. His Honour cited Cox v Journeaux &
Others[1] which is a case concerned with the inherent jurisdiction of the High Court to stay an action
as vexatious, and which has been cited as an example of the Court's power to prevent an abuse of
its process.[2]
[1] (1935) 52 CLR 713.
[2] Commonwealth Trading Bank v Inglis (1974) 131 CLR 311, 314.
It is quite apparent that there is nothing defective in the defendants’ pleading as such. The
learned judge’s order seems to have been founded upon his conclusion that "the defendants have
been unable to adduce evidence establishing a contractual relationship between them and the plaintiff
in respect of the system".
"It needs...to be very clear that a claim is groundless before a court will summarily dismiss
it thereby preventing a hearing and a determination in the usual way"[3]. The present case was one
in which the plaintiff brought a summary judgment application after changing the ground of its original
claim in circumstances where the defendants, although having sufficient time to respond experienced
difficulty in gathering the necessary information especially in relation to a new strategy presented by
the plaintiff on points which were largely in the keeping of the plaintiff.[3] Professional Nominees Pty Ltd v Walsh & Walsh (CA No 5591 of 1998, 29 September 1998); Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62, 91.
This was a summary dismissal of a quite substantial counter claim ($.348M) which had been
further particularised, the quantum of which was apparently based upon an expert’s report. We
mention this merely to indicate that this substantial claim does not appear to be the type of claim that
can readily be identified as mere assertion or bluster. Nor is it clear that a case of vicarious liability
for Mr Bauman's actions may not be able to be made out. The dismissal has occurred without the
opportunity of a full gathering of the evidence through a trial process. In so far as the cause of
action in the counter claim was based upon the Trade Practices Act , the limitation period expired
during the period when his Honour’s judgment was reserved. Whilst this interlocutory dismissal
would not shut the defendants out from suing a fresh for Sales of Goods Act remedies, this
dismissal now deprives them of Trade Practices Act remedies, and also of the opportunity to argue
that the summary judgment in favour of the plaintiff should be stayed until determination of the
counter claim.
The defendants require leave under s.118(3) to bring this appeal because the order striking
out the counter claim is interlocutory. However the order has the practical effect of finally
determining certain rights of the parties. Such a factor may be persuasive in inducing an appellate
court to grant leave to appeal notwithstanding that a judgment is in point of form interlocutory4. The
order also imposes a financial hardship upon the defendants which may well affect their capacity to
litigate their remaining rights.
In the present matter both counsel agreed that in the event that the court considered that
leave should be granted to appeal, the appeal should be determined on the written and oral
arguments that have been presented.
On the evidence presented to the learned judge it is true that there remains considerable
doubt as to whether the plaintiff is the correct party against which to bring the counter claim. Before
us counsel for the plaintiff submitted that the question whether the plaintiff was the right party against
which to bring the claim became a question of fact, and that it was determined on its merits against
the defendants. In our view it was not properly litigated as a question of fact, and the proceedings
were a far cry from a determination of such an issue on its merits. It was in our view erroneous to
strike out the counter claim as an abuse of process. It was not demonstrated with the necessary
degree of clarity that the claim was groundless or otherwise not fit to proceed as a claim to be
determined in the usual way.
It was not submitted on behalf of the plaintiff that the striking out could be justified on any
other basis as for example under Rule 109 of the District Court Rules.
It may be noted that very substantial material was filed and read to this court (subject to
objection) which, if received, would substantially strengthen the basis of the claim brought by the
defendants against the plaintiff. Its reception was opposed on the footing that no sufficient
explanation was advanced why it was not placed before the chamber judge, and it is noted that
further objections were taken to parts of three paragraphs of Mr Catanzaro’s affidavit on the
grounds of admissibility. It is however not necessary to deal with this application as the material
before the learned District Court judge was such that it was inappropriate to strike out the counter
claim.
4 Ex parte Bucknell (1936) 56 CLR 221, 225; Jarrett v Seymour (1993) 119 ALR 46, 49.
Orders
The present matter is an appropriate one for the grant of leave to appeal. We would grant
leave and allow the appeal, with costs, but would direct that the costs of the affidavits of Mr Slater
and Mr Catanzaro filed for the purposes of this appeal be disallowed.
The formal order will include leave to file the notice of appeal exhibited to the affidavit of
Mr Catanzaro filed in this appeal. The order below that the defendants' counter claim be struck out
should be set aside and in lieu thereof it should be ordered that paragraph 2 of the summons be
dismissed with costs; the order that the defendants pay the plaintiff's costs of and incidental to the
defendants' counter claim should be set aside; and upon the defendants/appellants by their counsel
undertaking not to dispose of their assets except in the ordinary course of business and without
otherwise first giving seven days notice of their intention to do so to the plaintiff/respondent, it is
ordered that execution of the judgment in favour of the plaintiff/respondent for $101,307.01
together with interest thereon be stayed pending the determination of the counter claim.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9395 of 1998
Brisbane
Before Pincus JA
Thomas JA
White J[Slater & Anor v IAMA (Qld) P/L]
BETWEEN:
PETER JOHN SLATER and
KYM JOANNE SLATER
(Defendants)(Applicants) Appellants
AND:
IAMA (QLD) PTY LTD
ACN 068 181 797
(Plaintiff) Respondent
REASONS FOR JUDGMENT - WHITE J
Judgment delivered 18 December 1998
The evidence in favour of concluding that the plaintiff was not in a contractual relationship
with the defendants in respect of the sprinkler system described in the counterclaim was not so
complete as to justify striking out the counterclaim and, even more, extinguishing any possibility of
basing a claim on the Trade Practices Act 1974 because of the expiration of the limitation period. This is particularly so when related companies were involved and the plaintiff had declined to
produce particulars and documents relating to issues of the proper party.
The apparent genuineness of the complaints ventilated in the counterclaim could be gathered
from an extensive report prepared for the defendants by an agricultural consultant bearing date 18
October 1995 in respect of the sprinkler equipment purchased in August 1995 and, although
inadvertently omitted from the exhibits to an affidavit filed before his Honour could readily have been
obtained. This suggested that a stay of the judgment was the appropriate course whilst the
counterclaim was pursued.
I agree with Pincus JA and Thomas JA for the reasons which they have given that the
application should be granted and the appeal allowed. I agree with the orders proposed.
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