Tycoon Holdings Pty Ltd v Trencor Jetco Inc
[1992] FCA 380
•05 JUNE 1992
Re: TYCOON HOLDINGS PTY. LTD. and KANGARILLA PTY. LTD.
And: TRENCOR JETCO INC. and MOLE ENGINEERING PTY. LTD.
No WA G41 of 1991
FED No. 380
Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Lee J.(1)
CATCHWORDS
Practice and Procedure - motion to amend statement of claim served outside jurisdiction - whether it is necessary for an applicant to show prima facie case for the relief sought by way of the proposed amendment.
Sale of Goods Act (W.A.) 1895
Trade Practices Act 1974 s.52
Federal Court Rules O.8 r.2, O.8 r.1, O.8 sub-r.2(2), O.9 sub-r.7(1)(b)
Beck v. Capital Value Ltd. (1975) 1 WLR 6
Re Sherlock (1991) 102 ALR 156
HEARING
PERTH
#DATE 5:6:1992
Counsel for the Applicants: Mr P.F. Fletcher
Solicitors for the Applicants: Solomon Brothers
Counsel for the Respondents: Mr R.L. Le Miere
Solicitors for the Respondents: Mallesons Stephen Jaques
ORDER
THE COURT ORDERS THAT:
ON APPLICANTS' MOTION FILED 27 MARCH 1992
1. The applicants to have leave to amend statement of claim by deleting the words "making the representations pleaded in paragraph 15.3, 15.4, 15.8, 16, 19 and 20" in paragraph 32 and substituting the words "designing and manufacturing the trencher". Otherwise motion dismissed.
ON THE FIRST RESPONDENT'S MOTION FILED 2 APRIL 1992
1. Paragraphs 15, 16, 18, 19, 20, 21, 21A, 22, 24, 25, 26, 28, 31, 32, 41A, 41B, 41C, 41D, 41E and 68 be struck out.
2. Paragraph 10 be amended to delete references to paragraphs other than paragraphs 17 and 20.
3. Paragraph 10.1 be amended to delete any reference to the second respondent being an agent of the first respondent.
4. Paragraph 14 be amended to delete any references to paragraphs other than paragraphs 17, 20 and 23.
5. Paragraphs 45B to 45E be struck out unless application made for further leave to amend paragraph 45B.
6. Paragraph 61 be amended to delete any references to paragraphs 4 1A to 41E and 44A to 44B.
7. The balance of the motion be adjourned sine die with liberty to a apply.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This proceeding was commenced on 24 April 1991. The first respondent ("Jetco") is a foreign corporation. On 1 August 1991 leave was given under O.8 r.2 of the Federal Court Rules to serve an amended application and a further amended statement of claim on Jetco in the United States of America. Leave was not given to serve originating process on the third and fourth respondents who were foreign residents and they were removed as parties to the proceeding. Jetco filed a conditional appearance and pursuant to O.9 sub-r.7(1)(b) sought to set aside the service of the originating process upon it. That application came before Wilcox J. on 5 February 1992 who found that the originating process had been duly served in so far as that process was founded upon claims of breach of contract and negligence but was to be set aside in so far as it relied upon causes of action based upon a breach of s.52 of the Trade Practices Act 1974 and a breach of the Sale of Goods Act (W.A.) 1895.
The background facts are set out in the reasons for judgment of Wilcox J. and are not repeated here.
Wilcox J. granted leave to the applicants to further amend the statement of claim by excising the causes of action in respect of which service of the originating process had been set aside.
On 25 February 1992 the applicants filed an amended statement of claim.
On 27 March 1992 the applicants made application to further amend the statement of claim by, inter alia, inserting three new paragraphs: 44A, 44A.2 and 44B. The proposed paragraphs read as follows:
"44A. The representations pleaded in paragraphs 15.1, 15.2, 15.3, 15.6, 16, 18, 19 and 20 became warranties made by Jetco to Tycoon under a collateral pre-incorporation contract entered into between Jetco, represented by Willhoite and Gilbert, and Tycoon, represented by Kimber, on or about 29 April 1988 whereby in consideration of Tycoon purchasing the trencher, or procuring the purchase of the trencher by a financier, from Mole upon completion of construction of the trencher by Jetco, Jetco would:
(a) do the things specified in paragraphs 15.1, 15.2, 15.3, 15.6, 16 and 18,
(b) cause the trencher to have the characteristics pleaded in paragraph 19,
(c) do, and procure that Mole do, the things specified in paragraph 20. 44A.2 Tycoon ratified the collateral contract, pleaded in paragraph 44A, on or about 3rd January 1989 when it, acting in reliance on the collateral contract, entered into the contract with Mole pleaded in paragraph 10.1. 44B. The representations pleaded in paragraphs 15.1, 15.2, 15.3, 15.6, 16, 18, 19 and 20 became warranties made by Jetco to Kangarilla under a contract entered into between Jetco, represented by Willhoite and Gilbert, and Kangarilla, represented by Kimber and Henning, on or about 29 April 1988 whereby in consideration of Kangarilla procuring that the trencher is purchased from Mole Jetco would:
(a) do the things specified in paragraphs 15.1, 15.2, 15.3, 15.6, 16 and 18,
(b) cause the trencher to have the characteristics pleaded in paragraph 19,
(c) do, and procure that Mole do, the things specified in paragraph 20."
Jetco opposes the leave sought by the applicants and contends that the amendments are not permitted by the terms of the judgment of Wilcox J. on 5 February 1992 or, alternatively, are not amendments in respect of which the applicants have shown that had leave to serve the process out of the jurisdiction been sought based upon the amended pleading, leave would have been granted.The applicants contend that as leave to serve out of the jurisdiction has already been granted, Jetco is now before the Court and amenable to the future conduct and control of proceedings as if it were a respondent subject to the ordinary jurisdiction of the Court.
I cannot accept the applicants' submissions.
The principles applied by Wilcox J. in setting aside in part the service of the originating process outside the jurisdiction of the Court apply equally to the exercise by the Court of its exorbitant jurisdiction thereafter.
The exercise of exorbitant jurisdiction involves the comity of nations and due respect for the sovereignty of a foreign state's sole power over persons present within it.
Whether it is expressed as unjust to a foreign party or an improper exercise of exorbitant jurisdiction, the result is the same. The following discussion by Goulding J. in Beck v. Capital Value Ltd. (1975) 1 WLR 6 at p 15 is pertinent:
"It is common ground that if a cause of action is not within the scope of R.S.C., Ord.11, and therefore could not be the subject of leave under that order, it cannot be introduced by way of amendment under R.S.C., Ord.20, of a writ previously served in pursuance of R.S.C., Ord.11. That view is clearly suggested by dicta in the Court of Appeal in Holland v. Leslie (1894) 2 QB 450 and is supported by the same court's decision on a different but closely related point in Waterhouse v. Reid (1938) 1 KB 743. It was also the subject of agreement between parties represented by distinguished counsel in N.V. Kwik Hoo Tong Handel Maatschappij v. James Finlay and Co. Ltd. (1927) AC 604.
MrWilmers submits that if the additional cause of action is once shown to be generically within the scope of R.S.C., Ord.11, that is an end of the matter. The court must then proceed to exercise its discretion under R.S.C., Ord.20, as though the case were a domestic one, and may not inquire whether leave under R.S.C., Ord.11, would or would not have been granted in the circumstances of the particular case. Mr Harman says No; to add a cause of action under R.S.C., Ord.20, to a writ served under R.S.C., Ord.11, is only permissible if the court thinks leave would in fact be obtainable, had it to be applied for, under R.S.C., Ord.11. No authority directly on the point has been cited. In principle I find Mr Wilmers' proposition unacceptable. it seems to me manifestly unfair to a foreign defendant, and it would often enable a plaintiff to circumvent the court's discretion under R.S.C., Ord.11, by the familiar device of throwing a sprat to catch a mackerel. I do not know that it is necessary to formulate the contrary proposition in quite the way that I have just stated it. It is enough to say that the discretion to allow an amendment under R.S.C., Ord.20, will not be exercised if an injustice to the opposite party will result, and that it is in general unjust to amend a writ served under R.S.C., Ord.11, by adding something which the court would probably have refused to sanction under R.S.C., Ord.11."
(See also Re Sherlock (1991) 102 ALR 156 per Lockhart J. at p 159.)
It is, therefore, not sufficient for the proposed additional cause of action to have a generic connection with O.8 r.1 of the Federal Court Rules. If leave is to be granted to amend a statement of claim served on a person outside the jurisdiction, the amendment must relate to a cause of action nominated in O.8 r.1 and be supported by material sufficient to satisfy the Court pursuant to O.8 sub-r.2(2), inter alia, that the applicants have a prima facie case for the relief sought by way of the proposed amendment.
The applicants contended that a prima facie case had been made out on affidavits already filed in connection with the original application for leave to serve out of the jurisdiction and in opposition to Jetco's motion to set aside that leave.
The applicants refrained from identifying the relevant evidence upon which they relied to support that submission. In my persual of those affidavits I have been unable to find any deposed facts to support a pleading of a "collateral pre-incorporation contract" incorporating the pleaded representations as warranties. The material contained in those affidavits is directed to the issue of whether the pleaded representations allegedly made by Jetco raised a prima facie case of conduct in contravention of s.52 of the Trade Practices Act 1974 on which the applicants allegedly relied to their detriment. No attention is given in those affidavits to facts from which it could be inferred that such representations were intended to be warranties or that the parties had entered into a collateral contract incorporating those representations as warranties. Therefore, the applicants' motion must be dismissed in so far as it seeks leave to amend their statement of claim by inserting the paragraphs described above.
On 2 April 1982 Jetco made application to strike out the re-amended statement of claim on the ground that it disclosed no reasonable cause of action or, alternatively, would tend to cause prejudice, embarrassment or delay in the proceedings. In the same application Jetco sought a further alternative order that certain paragraphs of the re-amended statement of claim be struck out to make the statement of claim comply with the order of Wilcox J. which required the applicants to amend the statement of claim to limit claims pleaded against Jetco to the claims on which his Honour had found service outside the jurisdiction to have been properly grounded.
Pages 11 and 12 of the reasons of Wilcox J. spell out the nature of the contract and negligence claims his Honour was satisfied were supported by a prima facie case for relief against Jetco. Having regard to those reasons I will deal seriatim with the nominated paragraphs of the statement of claim Jetco seeks to have struck out.
PARAGRAPH 9This paragraph is a general relevance to the statement of claim and I will allow it to stand.
PARAGRAPH 10This paragraph can only have relevance to a pleading of contravention of the Trade Practices Act 1974 limited to the conduct of the second respondent ("Mole"). That conduct is pleaded in paras17 and 20. Paragraph 10 should be amended accordingly. In so far as para10.1 refers to Mole as agent for Jetco it is to be amended by deleting that pleading.
PARAGRAPH 14For the reasons set out in the preceding paragraphs, this paragraph should be similarly amended to delete references to paragraphs other than 17, 20 and 23 which are the only paragraphs which pertain to Mole.
PARAGRAPH 14AThere is no ground for striking out this paragraph which refers to Mole.
PARAGRAPHS 15, 16, 18, 19, 20, 21, 21A, 22, 24, 25, 26, 28, 31 AND 32All these paragraphs relate to a claim based on contravention of the Trade Practices Act 1974 and in so far as they refer to Jetco are to be struck out.
The applicants contended that paras10 to 17, 25 and 26 contained a pleading of collateral contract and breach thereof. A reading of the paragraphs shows that they were intended to raise a claim of false representations and misleading conduct and were entirely divorced from any pleading in contract.
PARAGRAPHS 41A, 41B, 41C, 41D, 41E AND 68These paragraphs relate to a cause of action under the Sale of Goods Act (W.A.) 1895 and as stated by Wilcox J. no attempt was made to justify that cause of action to found due service of the process upon Jetco out of the jurisdiction. The paragraphs are to be struck out.
PARAGRAPHS 45B, 45C, 45D and 45EThese paragraphs are within the ambit of a pleading of the contract in respect of which his Honour was satisfied that there was a due foundation for service of the originating process on Jetco. Paragraph 45B is deficient in so far as it refers to paras 15.4, 15.5 and 15.8 in bare form. The pleading should set out the material facts relied upon to support the contract pleaded. Unless application is made for leave to further amend that paragraph it should be struck out and paras 45C to 45E would fall with it.
PARAGRAPH 61The paragraph is to be amended to delete the references in that paragraph to paras 41A to 41E and 44A to 44B.
As to the remainder of the application by Jetco to strike out the balance of the statement of claim, the applicants have declined to make any submissions on that aspect requesting an opportunity to consider further amendments to the pleading after the matters dealt with above have been decided and Jetco's particular objections to the statement of claim have been considered.
Although this matter has gone on too long with inadequate progress, there is little to be gained by spending further time on yet another interlocutory issue if it can be avoided. I will direct that the balance of Jetco's motion stand adjourned sine die with liberty to apply to relist if the applicants take no action on Jetco's objection to the form of the statement of claim and Jetco considers that it can satisfy the onus that rests upon it in such an application.
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