Tolefe v CSG Ltd

Case [2012] WASC 261

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   TOLEFE -v- CSG LTD [2012] WASC 261

CORAM:   EM HEENAN J

HEARD:   21 & 22 MARCH 2012

DELIVERED          :   24 JULY 2012

FILE NO/S:   CIV 3374 of 2011

BETWEEN:   GREGORY UCHE TOLEFE

First Applicant

SWOTSMART PTY LTD
Second Applicant

AND

CSG LTD
First Respondent

CSG EDUCATION PTY LTD
Second Respondent

ACN 126 840 542 PTY LTD
Third Respondent

CSG SERVICES PTY LTD
Fourth Respondent

DELEXIAN PTY LTD
Fifth Respondent

CSG SOLUTIONS PTY LTD
Sixth Respondent

Catchwords:

Pre-trial discovery

Legislation:

Rules of Supreme Court O 26A r 4
Corporations Act 2001 (Cth), s 11 to s 16

Result:

Discovery and inspection to be ordered

Category:    B

Representation:

Counsel:

First Applicant              :     Mr P C van Hattem SC

Second Applicant          :     Mr P C van Hattem SC

First Respondent           :     Mr R J Price

Second Respondent       :     Mr R J Price

Third Respondent         :     Mr R J Price

Fourth Respondent        :     Mr R J Price

Fifth Respondent          :     Mr R J Price

Sixth Respondent          :     Mr R J Price

Solicitors:

First Applicant              :     MDS Legal

Second Applicant          :     MDS Legal

First Respondent           :     DLA Piper Australia

Second Respondent       :     DLA Piper Australia

Third Respondent         :     DLA Piper Australia

Fourth Respondent        :     DLA Piper Australia

Fifth Respondent          :     DLA Piper Australia

Sixth Respondent          :     DLA Piper Australia

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

Austrac Operations Pty Ltd v New South Wales (2003) ATPR 41‑960; [2003] FCA 1013

Central Exchange Ltd v Anaconda Nickel Ltd [2001] WASC 128

Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94

Crofter Handwoven Harris Tweed Co Ltd v Veitch [1942] AC 435

Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169

Glencore International AG v Selwyn Mines Ltd (2005) 223 ALR 238

Gliddon Properties Pty Ltd v NP Properties Pty Ltd & Ors [2006] WASC 64

GLR Injection Technology Pty Ltd v Forton Automative Treatments Pty Ltd [2009] WASC 131

Hancock Family Memorial Foundation v Fieldhouse (No 2) [2008] WASC 147

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41

Ideas Plus Investments Ltd v National Australia Bank Ltd [2006] WASCA 215

JC Williamson Ltd v Lukey & Mulholland (1931) 45 CLR 242; [1931] HCA 15

Lumley v Gye [1853] E&B 216; 118 ER 749

McCarthy v Dolpag [2000] WASCA 106

McKernan v Fraser (1931) 46 CLR 343

Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126

Ray Mullins & Sons Pty Ltd v Skycorp Investment Pty Ltd [2005] WASC 142

Sanders v Snell (1998) 196 CLR 329

Secured Income Real Estate (Aust) Ltd v St Martin's Investments Pty Ltd (1979) 144 CLR 596

Stanley v Layne Christensen Co [2006] WASCA 56

Stratford v Lindley [1965] AC 269

Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222

Telstra Corporation Ltd v Minister for Broadband, Communications and Digital Economy [2008] FCAFC 7; (2008) 166 FCR 64

Waller v Waller…

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Tolefe v CSG Ltd [2012] WASC 261
Case
[2012] WASC 261
Decision Date

CaseChat Overview and Summary

Tolefe v CSG Ltd is a case concerning pre-trial discovery in the Federal Court of Australia. The applicants, Tolefe, sought an order for pre-trial discovery from the respondents, CSG Ltd, in relation to a sale and purchase agreement (SSPA) for the sale of shares in a company. Tolefe alleged that the respondents had breached the terms of the SSPA and sought an order to obtain documents from the respondents to assist in their case. The legal issues the court had to decide included whether the applicants had a sufficient cause of action to warrant pre-trial discovery and whether the applicants' claims for breach of fiduciary duties were tenable.

The court held that the applicants had not established a sufficient cause of action to warrant pre-trial discovery. The court considered the applicants' submissions that the terms of the SSPA placed the control of the third respondent in the first respondent and fixed the latter with knowledge that the potential entitlement of the second applicant to the final instalment of the purchase price was contingent upon certain profits being obtained by the business for the financial year ending 30 June 2011. However, the court found that the relationship between the second applicant and the first respondent was that of vendor and purchaser whose interests are usually regarded as antithetical. The court held that the observations of Murray J in Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd did not support the proposition that parties related solely by contractual obligations of vendor and purchaser had the same or comparable obligations. Therefore, the applicants had not established a sufficient cause of action to warrant pre-trial discovery.

The court further held that the applicants' claims for breach of fiduciary duties were not tenable. The court found that there was no fiduciary relationship between the parties and that the first respondent was not a fiduciary towards the second applicant. The court held that the applicants' reliance on the passages in Hospital Products Ltd v United States Surgical Corporation was misplaced, as Mason J was a member of the minority in that case. The court held that the applicants had not established a tenable cause of action which would give rise to a discretionary entitlement to pre-litigation discovery. The court dismissed the applicants' application for pre-trial discovery.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Finally, the applicants submitted that the second applicant may have a cause of action against the respondents, or some of them, for breach of fiduciary duties. The submission was that the terms of the SSPA, whether varied or not, placed the control of the third respondent in the first respondent and fixed the latter with knowledge that the potential entitlement of the second applicant to the final instalment of the purchase price was contingent upon certain profits being obtained by the business for the financial year ending 30 June 2011. The submission proceeded further to contend that, having the control of the affairs of the third defendant in the management of its business with this knowledge, the first respondent was fixed with fiduciary obligations towards the second applicant to avoid any change or diminution in the manner in which the ensuing profit, if any, would be earned and applied. This submission relied upon passages in Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96 ‑ 97 (Mason J) and Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd (No 9) [2010] WASC 44 [622] (Murray J). However, on the question of whether the defendant contracting party was a fiduciary in the Hospital Products case, Mason J was a member of the minority, with Gibbs CJ, Wilson and Dawson JJ deciding that there was no fiduciary relationship between the parties. Gibbs CJ reached that conclusion because, among other reasons, as he observed at [72] Hospital Products did not undertake, whether by representation or contractual provision, to act solely in the interests of United States Surgical Corporation and not in its own interests. In the present case it cannot be overlooked that the relationship between the second applicant and the first respondent was that of vendor and purchaser whose interests are usually regarded as antithetical. Certain restraints and obligations were imposed between the parties by way of contract but neither they nor anything intrinsic in the relationship or the positions deriving from it appears to provide a basis upon which it could be concluded that the first respondent was a fiduciary towards the second applicant. The observations of Murray J in Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd as cited do not take the matter any further. The position in that case was that the contending parties were partners in a commercial enterprise and that as partners they were within a relationship with long‑established and recognised mutual fiduciary obligations and duties. The observations of Murray J at [622] ‑ [627] proceed to explain the nature and extent of obligations within a recognised fiduciary relationship but they do not support the proposition advanced by the applicants in the present case that parties related solely by contractual obligations of vendor and purchaser had the same or comparable obligations. Those observations should be read and considered in the light of the preliminary and provisional nature of the determinations which need to be made on the present application and it remains, of course, possible that more evidence or different circumstances may emerge which may lead to a different conclusion on this point. For the moment, however, I would not be prepared to recognise a breach of fiduciary duty as a tenable cause of action which would give rise to a discretionary entitlement to pre‑litigation discovery.