South32 Aluminium (RAA) Pty Ltd v Alinta Sales Pty Ltd

[2015] WASC 450

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   SOUTH32 ALUMINIUM (RAA) PTY LTD -v- ALINTA SALES PTY LTD [2015] WASC 450

CORAM:   LE MIERE J

HEARD:   10 NOVEMBER 2015

DELIVERED          :   26 NOVEMBER 2015

FILE NO/S:   CIV 1744 of 2014

BETWEEN:   SOUTH32 ALUMINIUM (RAA) PTY LTD

First Plaintiff

SOUTH32 ALUMINIUM (WORSLEY) PTY LTD
Second Plaintiff

JAPAN ALUMINA ASSOCIATES (AUSTRALIA) PTY LTD
Third Plaintiff

SOJITZ ALUMINA PTY LTD
Fourth Plaintiff

AND

ALINTA SALES PTY LTD
Defendant

Catchwords:

Pleadings - Strike out applications - Sufficiency of particulars - Sufficiency of defence - Force Majeure

Legislation:

Nil

Result:

Paragraphs of the defence struck out
Defendant have leave to replead

Category:    B

Representation:

Counsel:

First Plaintiff                  :     Mr M G Lundberg

Second Plaintiff             :     Mr M G Lundberg

Third Plaintiff                :     Mr M G Lundberg

Fourth Plaintiff              :     Mr M G Lundberg

Defendant:     Mr J C Giles SC

Solicitors:

First Plaintiff                  :     King & Wood Mallesons

Second Plaintiff             :     King & Wood Mallesons

Third Plaintiff                :     King & Wood Mallesons

Fourth Plaintiff              :     King & Wood Mallesons

Defendant:     Clayton Utz

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

Nil

1. LE MIERE J:  The plaintiffs are participants in an unincorporated joint venture known as the Worsley Joint Venture which operates the Worsley Alumina Refinery and associated cogeneration facilities (together the Worsley Plant).  The defendant carries on the business of supply and retail of natural gas to residential, commercial and industrial customers throughout Australia.  By a written agreement dated 14 January 2008 between the defendant as Seller and the plaintiffs as Buyer (GSTA), the defendant agreed to sell and deliver natural gas to the plaintiffs.

2. In 2008 there were only two suppliers of natural gas in Western Australia which supplied quantities of gas large enough to meet the needs of major industrial consumers of gas - the North West Shelf Joint Venturers (NWSJV) and three joint ventures (collectively Varanus Island Sellers) whose gas production and processing facilities are located on and around Varanus Island and operated by Apache Energy Ltd.  The defendant obtained the gas which it sold to the plaintiffs from the NWSJV and the Varanus Island Sellers.  On 3 June 2008 one of the pipelines that connected the Varanus Island gas facilities with offshore gas platforms sprung a leak and then exploded, breaching the other pipelines and triggering a fire that rendered the plant inoperable.  The plant was shut down and gas supply from the plant ceased.  Supply was resumed in stages and finally restored by December 2008.

3. When the Varanus Island explosion occurred the Varanus Island Sellers ceased supplying gas to the defendant.  The defendant demanded that the plaintiffs stop taking any gas supplied or delivered by the defendant.  On or about 4 June 2008 the defendant informed the plaintiffs that the defendant would not be able to provide the plaintiffs with any gas and requested that the plaintiffs reduce to zero its nomination of the gas it required each day.  Between June and December 2008 the defendant supplied gas to the plaintiffs but less than the quantities of gas required by the plaintiffs.  The plaintiffs purchased gas and heavy fuel oil from other parties at prices higher than the price under the GSTA.  The plaintiffs claim that, in breach of its obligations under the GSTA, the defendant failed to sell and deliver gas to the plaintiffs in the quantities required by the plaintiffs and by reason of those breaches of the GSTA the plaintiffs have suffered loss and damage.  In general, the loss and damage claimed is the difference between the amount paid by the plaintiffs to acquire gas and heavy fuel oil between June and December 2008 and the amount it would have cost them had the gas required by the plaintiffs been supplied by the defendant at the price specified in the GSTA.

4. The defendant has filed a reamended defence dated 16 October 2015.  The plaintiffs apply to strike out certain paragraphs of the defence on the ground that they disclose no reasonable defence or alternatively are scandalous, frivolous or vexatious or further alternatively they may prejudice, embarrass or delay the fair trial of the action.

The GSTA

1. The recitals to the GSTA provide context to the agreement.  The Buyer, that is the plaintiffs, requires gas for the primary purposes of operating calciners, liquor burners and various steam raising equipment at the Worsley Plant.  The Seller, the defendant, has a grant of capacity in the Dongara Bunbury Natural Gas Pipeline (DBNGP) and the Buyer is entitled to capacity in the DBNGP.  Clause 5 of the GSTA contains a complex scheme for nominating the quantities of gas required by the Buyer.  Clause 5.2 provides for the Buyer to notify the Seller of its gas requirements for the following day (the Daily Nomination).  Clause 6 provides that the Seller shall deliver gas to the Buyer at the Buyer's Nominated Delivery Points in quantities as required by the Buyer up to the Firm Daily Supply Quantity.  The Buyer's Nominated Delivery Points are specified outlet points from the DBNGP.  The Firm Daily Supply Quantity is a fixed quantity.  Clause 8 provides for the price to be paid by the Buyer for gas sold by the Seller.  Clause 10 provides for the Seller to render to the Buyer an invoice for gas supplied or delivered by the Seller during the relevant accounting period, subject to certain adjustments.  Clause 10.2 provides that the Buyer shall pay the invoices rendered by the Seller.

Force Majeure provision

1. The GSTA contains force majeure provisions, provisions limiting damages in respect of any breach, provisions for termination of the agreement and dispute resolution provisions.  The force majeure provisions are important to this application.  Force Majeure is defined in clause 1.1.  The definition is drafted to include a general definition of Force Majeure followed by a list of specific force majeure events or circumstances.  The most relevant parts of the definition are:

   Force Majeure means any event or circumstance not within the control of the affected party and which that party by the exercise of the standards of a reasonable and prudent person is not able to prevent or overcome including but not limited to:

   (a)acts of God including fire, explosion, earthquake, landslide, flood, washout, lightening and cyclones;

   …

   (g)shortages of necessary equipment, materials or labour;

   …; and

   (j)failure of the participants, from time to time, or any of them in the North West Shelf Joint Venture, or any of the Seller's other suppliers, to supply some or any Gas by reason of an event that constitutes an event of force majeure within the meaning of the gas supply contract between the Seller and those participants or any such supplier.

2. Clause 11.1 provides that other than for the Buyer's obligations under clauses 5.4 and 10 and subject to clauses 11.2 and 11.6, any failure in the performance by either party of any of that party's obligations under the GSTA shall be excused during the time and to the extent that it is prevented from doing so by Force Majeure.  Clause 11.2 is concerned with shipping charges and is not presently relevant.  Clause 11.6 provides that if the Seller is affected by Force Majeure, the Seller must not claim relief under clause 11.1 to an extent that discriminates against the Buyer compared to the Seller's other major industrial customers.  Clause 11.3 requires a party seeking to claim the benefit for protection of the Force Majeure provision to promptly give notice to the other party of, amongst other things, the event or circumstances giving rise to the claim.  Clause 11.4 deals with resumption of performance. 

3. The final provision to which it is necessary to refer is clause 18.1 which provides that in the exercise of their rights and the performance of their obligations under this agreement the Buyer and Seller shall each act as a reasonable and prudent person and the Seller shall use all reasonable efforts to ensure that the operator of the DBNGP (Pipeline Operator) acts as a reasonable and prudent person.

Statement of claim

1. The statement of claim pleads the effect of relevant provisions of the GSTA.  The plaintiffs plead that between 3 June 2008 and December 2008 it did not make Daily Nominations in accordance with the GSTA but the defendant is estopped from asserting that the plaintiffs did not give Daily Nominations pursuant to the GSTA and the plaintiffs were excused from giving the defendant Daily Nominations.  The estoppel is based upon representations by the defendant that it did not intend to sell and deliver gas to the plaintiffs in accordance with its obligations under the GSTA, that the defendant represented to the plaintiffs and encouraged them to believe that the plaintiffs should refrain from giving Daily Nominations and the defendant dispenses with any requirement that the plaintiffs give Daily Nominations.  The plaintiffs say that in reliance on those representations the plaintiffs acted to their detriment in that they refrained from giving the defendant Daily Nominations, they purchased gas from other parties in place of gas they would otherwise have purchased from the defendant under the GSTA on less favourable terms and at higher prices and they consumed heavy fuel oil that they purchased from BP Australia Pty Ltd in place of gas they would otherwise have purchased from the defendant under the GSTA and at greater cost. 

2. The plaintiffs plead that, in breach of its obligations under the GSTA, the defendant failed to sell and deliver gas to the plaintiffs in the quantities required by the plaintiffs and instead sold and delivered gas to the plaintiffs in lesser quantities.  The plaintiffs say that by reason of those breaches of the GSTA they have suffered loss and damage.  The particulars of loss and damage essentially quantify the plaintiffs' loss to be the difference between the price it paid to obtain alternative sources of gas and heavy fuel oil and the amount it would have paid if the defendant had supplied the gas required by the plaitniffs under the GSTA.

Defence

1. The defendant relies on three defences.  First, the defendant denies that it breached an obligation to supply gas to the plaintiffs of the amount required by the plaintiffs.  The defendant says that its obligation to supply gas was conditional on the plaintiffs notifying the defendant of their Daily Nomination and the plaintiffs did not do so.  The defendant denies that it made the representations alleged by the plaintiffs, denies that the plaintiffs acted to their detriment in reliance upon the alleged representations and denies that the defendant is estopped from asserting that the plaintiffs did not give Daily Nominations or that the plaintiffs are excused from giving the Daily Nominations.

2. The second defence relied on by the defendant is the defence of Force Majeure.  The defendant says that the Varanus Island explosion and the consequent inability or failure of the Varanus Island Sellers to supply gas into Western Australia was an event or circumstance of Force Majeure.  The defendant says that if and to the extent that the defendant failed to perform its obligations to deliver gas to the plaintiffs in quantities required by the plaintiffs the defendant was excused from such performance during the time and to the extent that it was prevented from doing so by the Force Majeure event.

3. The third defence relied on by the defendant is that it denies that the plaintiffs suffered the loss and damage claimed.  The defendant pleads that to the extent that the plaintiffs suffered loss, the plaintiffs did not suffer the loss claimed but suffered a loss no greater than the amount of gas to which they were entitled but which was not supplied multiplied by the price of gas available in the market from time to time.  Alternatively, the defendant says that the plaintiffs failed to mitigate their loss by purchasing gas at prices in excess of the price available in the market and/or on non arm's‑length terms by contracts with related entities.

The strike out application

1. The plaintiffs apply to strike out paragraphs 2, 4, 20 and 34 to 42 of the defendant's defence.  Paragraphs 2 and 4 relate to circumstances surrounding the making of the GSTA which were known to the parties.  In paragraph 20 of the defence, the defendant denies that the plaintiffs suffered the claimed loss and damage and says that the plaintiffs failed to mitigate their loss.  In paragraphs 34 to 42 of the defence the defendant pleads the Force Majeure defence.

Defence of paragraphs 2 and 4 - surrounding circumstances

1. The plaintiffs say that the defendant has not pleaded any specific construction of the GSTA but in paragraph 4 of its defence the defendant says that it relies on the GSTA for its full terms and effect and in particular relies on the mutually known background circumstances including the facts pleaded in paragraph 2 and a further fact then set out.  The plaintiffs say the pleading is embarrassing in that there is no plea that any particular provision of the GSTA that forms the basis of any pleaded defence is to be construed by reference to the pleaded background circumstances.

2. The plaintiffs say that if some construction issue is lurking in the statement of claim then it should be articulated so that the plaintiffs know the case to which they have to reply.  On the other hand, if there is no construction issue to which the pleaded background circumstances relate then the pleading of the surrounding circumstances is unnecessary and it should be struck out because it will cause delay or embarrassment at trial.

3. The background circumstances pleaded in paragraphs 2 and 4(b) of the defence are that the defendant bought gas from the Varanus Island Sellers and the NWSJV, that the Varanus Island Sellers and the NWSJV were the only suppliers of gas in Western Australia which supplied quantities of gas large enough to meet the material part of the defendant's demand and that there were numerous other buyers of gas in Western Australia, the combined demand of which exceeded the individual capacity of either the NWSJV or the Varanus Island Sellers.  Those matters are arguably relevant to the matters pleaded by the defendant in paragraph 39(a)(v) and (vi) of the defence.  Those paragraphs, in the context of the defence of Force Majeure, rely upon the lack of available gas to supply the plaintiffs and to obtain an alternative supply of gas to supply the plaintiffs.  The surrounding circumstances pleaded in paragraphs 2 and 4(b) at least arguably go to the question of whether, and extent to which, the defendant was prevented from supplying the gas required by the plaintiffs by a reason of the failure of the Varanus Island Sellers to supply gas into Western Australia.

4. The plaintiffs are not embarrassed by the possibility that the defendant will advance some construction of the GSTA which is not articulated by the defence and which is based upon the pleaded background circumstances.  The defendant must plead any construction for which it contends.  The defendant has pleaded in paragraph 5A the terms of the GSTA for which it contends, including the meaning of Force Majeure, and the Force Majeure provision in clause 11.1 of the GSTA.  The defendant may not advance at trial any construction it has not pleaded.

The plaintiffs' loss and damage

1. In paragraph 20 of its statement of claim the plaintiffs plead that they have suffered loss and damage by reason of the alleged breaches of the GSTA.  As I have said, the particulars of loss and damage essentially quantified the plaintiffs loss to be the difference between the price it paid to obtain alternative fuel sources and the amount it would have paid if the defendant had supplied the gas the plaintiffs required pursuant to the GSTA.  In paragraph 20(a) of its defence the defendant says that the plaintiffs did not suffer the loss claimed but suffered a loss no greater than the amount which they would have paid for the amount of gas to which they were entitled if they had acquired it at the market price available.  The defendant then pleads in paragraph 20(b) that the plaintiffs failed to mitigate their loss by purchasing gas:

   (i)at prices in excess of the price available in the market from time to time; and/or

   (ii)on non arms‑length terms regulated by contracts with BHP Billiton Direct Reduced Iron Pty Ltd and with BHP Billiton Nickel West Pty Ltd, each of which was a Related Entity (clause 1.1 of the GSTA), and/or a related body corporate as defined in the Corporations Act 2001 (Cth), of the first and second plaintiff.

2. The plaintiffs say that the defendant's pleas in paragraphs 20(b)(i) and (ii) are little more than bare assertions which ought to be fully and properly particularised.  The plaintiffs requested particulars of paragraph 20(b) of the defence but the particulars supplied went only to the allegation that BHP Billiton Direct Reduced Iron Pty Ltd and BHP Billiton Nickel West Pty Ltd was a related entity or a related body corporate of the first and second plaintiffs.  However, in its particulars the defendant said that it will give further particulars following discovery of all correspondence and contracts between the plaintiffs and the sellers of gas identified in the statement of claim and following subpoenas.  Counsel for the defendant informed the court that the subpoenas will be directed to ascertaining the price at which other commercial or industrial consumers of gas obtained gas in the market during the relevant period. 

3. The plaintiffs say that the defendant cannot allege that the identified prices paid by the plaintiffs for gas were higher than the prices of gas available in the market without identifying what prices were available in the market.  The plaintiffs say that the defendant's plea should be properly supported before the defendant is permitted to embark on an enquiry to obtain such evidence. 

4. The defendant says that the plea in paragraph 20(b), that the plaintiffs failed to mitigate their loss, is a different way of advancing the denial in paragraph 20(a) that the plaintiffs suffered the loss and damage claimed, the plaintiffs know the case they have to prove or to meet, and hence the defendant's plea is sufficient.  I do not agree.  A defendant should not make unsupported allegations in the hope that, through the interlocutory processes, something helpful will turn up.  The onus of proof on the issue of mitigation is on the defendant.  It is not sufficient that the defendant should plead that the plaintiffs failed to take reasonable steps to mitigate its loss, the defendant must set out the mitigating steps that the defendant says the plaintiffs should have taken but failed to take.  The defendant must provide sufficient facts to inform the plaintiffs of the case they have to meet and to define the issues for decision so that the court can control the preparation of the case and conduct of the trial.  What facts, and particulars, are adequate will depend upon the nature and circumstances of the case. 

5. The plaintiffs obtained gas from alternative sources in varying amounts at varying prices on each day between 3 June and 31 December 2008.  During that period the gas market was disrupted by the Varanus Island incident which cut domestic supply of gas by around 30%.  It may not follow from the fact that a particular consumer was able to obtain a certain quantity of gas on a certain date at a certain price that the plaintiffs could have obtained the quantity of gas they required at the same price.  Matters such as the contractual or other relationship between NWSJV and the consumer and the functions performed by the consumer as well as the quantities of gas sought by the consumer on a particular day may be relevant to whether or not the plaintiffs could reasonably have obtained the gas they required at the same or a similar price.  In the circumstances, the assertion that the plaintiffs failed to mitigate their loss by purchasing gas at prices in excess of the price available in the market and/or on non arms‑length terms from related entities is wholly inadequate to inform the plaintiffs of the case they have to meet.

1. The defendant says that it should be able to obtain discovery and issue subpoenas before giving the necessary particulars.  The court will, in an appropriate case, defer the giving of particulars until after discovery.  In this case, the information the defendant seeks is not likely to be obtained from the plaintiffs.  The defendant will likely seek the information by subpoenaing documents from NWSJV and possibly other commercial or industrial consumers of gas.  It is unusual for the court to defer the giving of necessary particulars or material facts supporting a plea of failure to mitigate until the defendant has obtained information by subpoena from third parties.  The court will not allow a defendant to issue subpoenas to obtain information in support of an inadequately pleaded defence unless there is a proper foundation for the defendant's allegations.  The defendant relies upon an extract from a report released 8 December 2009 published by the Australian Energy Regulator titled 'State of the Energy Market 2009' where it is stated in relation to energy prices in Western Australia:

   Short term wholesale prices reached almost $17 per gigajoule in July 2008 following the Varanus Island incident, which cut domestic supply by around 30%.

   The price paid by the plaintiffs for gas in July 2008 was substantially more than that.  I am satisfied that there is a proper foundation for the defendant's allegation and it is not merely fishing for a defence.  I think it would be unjust to deprive the defendant of the opportunity to obtain the information it seeks from the issue of subpoenas.

2. In all the circumstances I am not persuaded that it would be appropriate to strike out paragraph 20(b) of the defence at this time.  However, the plaintiffs may renew their application if, after the defendant has obtained discovery and the return of subpoenas, the defendant does not provide facts and particulars of its plea that the plaintiffs failed to mitigate their loss to the satisfaction of the plaintiffs.

The Force Majeure defence

1. In paragraph 39 of its defence the defendant pleads that the Varanus Island fire and explosion and the consequent inability or failure of the Varanus Island Sellers to supply gas into Western Australia was an event or circumstance of Force Majeure on one of three alternative bases.  The first is that it was an event or circumstance not within the control of the defendant and which by the exercise of standards of a reasonable prudent person the defendant was not able to prevent or overcome.  The second is that it was an explosion and a fire within the meaning of 'act of God' in the definition of Force Majeure.  The third is that it was a circumstance constituting a shortage of 'equipment' or 'materials' within the meaning of paragraph (g) of the definition of Force Majeure.  Paragraph (g) of the definition of Force Majeure is 'shortages of necessary equipment, materials or labour.  The plaintiffs challenge only the third basis which is pleaded in paragraph 39(c).  The plaintiffs say that that plea is unarguable and should be struck out.

2. The plaintiffs say that the composite phrase 'equipment, materials or labour' is subject to two qualifying concepts.  First, the 'equipment etc' must be necessary.  Secondly, paragraph (g) is concerned with 'shortages' rather than 'failures'; the term 'failure' is used in paragraphs (i) and (j).  To be 'necessary', it must be possible to conclude that the 'equipment etc' forms an essential part of the purpose of the agreement.  The defendant has no obligation to operate or construct any building, plant or pipeline.  The defendant agreed to supply gas through the DBNGP in respect of which it held a grant of capacity.  It was not 'necessary' that the defendant obtain natural gas through the use of 'various gas pipelines and gas processing facilities at Varanus Island' as pleaded at paragraphs 2(a) and (b) of the defence; the defendant had at least one other major source of supply which did not depend on the relevant pipelines or facilities at Varanus Island.

3. The defendant says that that pleading should not be struck out for three reasons.  First, there would be no saving of time or reduction in the evidence at trial; the same events will be lead for the purpose of paragraphs 39(a) and (b).  Secondly, the defendants plea is not unarguable - it does not meet the General Steel standard.  Thirdly, the plaintiffs' construction is not obviously correct.  I accept those arguments.  The matter should be left to trial.

4. The plaintiffs further submit that it is not arguable that shortages of 'materials' in paragraph (g) includes a shortage of gas.  The plaintiffs say it would be entirely inapposite to suggest that the word 'materials' in paragraph (g) of the definition of Force Majeure extends to the very subject matter of the GSTA, namely gas, such that any shortage of gas would provide the defendant with an excuse for non‑performance under clause 11.1.

5. My first impression is that there is force in the plaintiffs' argument that 'materials' does not include gas in the context of the definition of Force Majeure.  However, it is appropriate to leave this matter to trial where all the evidence will have been led and full argument can take place.

6. The plaintiffs submit that paragraph 42 of the defence should be struck out.  Paragraph 42 pleads that between 3 June 2008 and about 25 August 2009, if and to the extent that the defendant failed to perform its obligations to deliver gas to the plaintiffs in quantities required by the plaintiffs the defendant was excused from such performance during the time and to the extent it was prevented from doing so by the Force Majeure event.  The plaintiffs say that the plea is wholly conclusionary.  It fails to articulate any basis for the conditional plea that the defendant was prevented from performing its obligations to deliver gas to the plaintiffs in the quantities required by them by the Force Majeure event.  The defendant does not plead how the Force Majeure event has prevented performance; it pleads no material facts by which it identifies how it was so prevented, the extent to which it was so prevented, and the time or times during which it was so prevented, together with the requisite particulars of those facts.

7. Counsel for the defendant recognised that the pleading in paragraph 42 is conclusionary but says that it must be read with the paragraphs of the defence which precede it.  Paragraph 41 pleads that by reason of the Force Majeure events or circumstances, as pleaded in paragraphs 39 and 40, the defendant was prevented from supplying gas to the plaintiffs by a Force Majeure event and circumstance.

8. It is a material part of the defendant's force majeure defence that it was prevented from supplying gas to the plaintiffs by a Force Majeure event and circumstance.  The defendant must plead the material facts which prevented it from supplying gas to the plaintiffs as alleged.  In my opinion paragraph 41 of the defence does not adequately plead the facts which prevented the defendant supplying gas to the plaintiffs.  Paragraph 41 pleads that by reason of the Varanus Island explosion and fire and one or more of the matters pleaded in paragraphs 39 and 40:

   (a)in the days, alternatively weeks, following the Varanus Island fire and explosion, the defendant initially did not have available gas to supply the plaintiffs with any gas. 

   It is then stated that further particulars of the period of time will be provided following discovery and subpoenas.  Paragraph 41(b) deals with the subsequent period. 

9. It is sufficient to consider paragraph 41(a).  The plea is that in the days, or alternatively weeks, following the explosion the defendant initially did not have available gas to supply the plaintiffs with any gas.  The plea is embarrassing.  The defendant does not plead that it did not have any gas but rather that it did not have 'available gas to supply the plaintiffs with any gas'.  The plea must be seen in the context that gas supplied by the Varanus Island Sellers was not the only source from which the defendant obtained gas immediately prior to the explosion.  It is not apparent whether the plea in paragraph 41(a) is that the defendant had no gas available to it or whether the defendant had gas available to it but not for supply to the plaintiffs.  If the former is intended then there are no facts pleaded to establish that there was no gas available to the defendant from sources other than the Varanus Island Sellers.  The facts pleaded relate only to the availability of gas from the Varanus Island Sellers.  If the latter is intended then there are no facts pleaded to establish that the defendant was prevented from supplying to the plaintiffs any of the gas that was available to it from sources other than the Varanus Island Sellers.

10. In my opinion, paragraphs 41 and 42 as presently pleaded do not fulfil the function of pleadings.  They fail to identify the issues and appraise the plaintiffs of the case that they have to meet.  It is not appropriate to order that the defendant give particulars of its pleading in paragraph 41.  Paragraph 41 should be struck out.  Paragraph 42 should be struck out because, in the absence of paragraph 41, it is purely conclusionary and fails to state the material facts giving rise to the conclusion.  Paragraphs 34 to 40 should be struck out because without paragraphs 41 and 42 they disclose no reasonable defence.  The defendant should have leave to replead.