Westerman v Njamal Mining Pty Ltd
[2019] WASC 314
•29 AUGUST 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WESTERMAN -v- NJAMAL MINING PTY LTD [2019] WASC 314
CORAM: MASTER SANDERSON
HEARD: 1 AUGUST 2019
DELIVERED : 29 AUGUST 2019
FILE NO/S: CIV 1675 of 2018
BETWEEN: SHARON WESTERMAN
Plaintiff
AND
NJAMAL MINING PTY LTD
First Defendant
NJAMAL SERVICES PTY LTD
Second Defendant
INDIGENOUS SERVICES PTY LTD
Third Defendant
RODNEY CHARLES CARTER
Fourth Defendant
GREGORY BRIAN PARKER
Fifth Defendant
Catchwords:
Practice and procedure - Application to amend statement of claim - Plea of conspiracy - Turns on own facts
Legislation:
Corporations Act 2001 (Cth)
Result:
Summary judgment application dismissed
Strike out application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr C Stokes |
| First Defendant | : | Mr L Christensen |
| Second Defendant | : | Mr L Christensen |
| Third Defendant | : | Mr L Christensen |
| Fourth Defendant | : | Mr L Christensen |
| Fifth Defendant | : | Mr L Christensen |
Solicitors:
| Plaintiff | : | Chris Stokes & Associates |
| First Defendant | : | CX Law |
| Second Defendant | : | CX Law |
| Third Defendant | : | CX Law |
| Fourth Defendant | : | CX Law |
| Fifth Defendant | : | CX Law |
Case(s) referred to in decision(s):
Stuart v Hanna [No 3] [2018] WASC 208
Westerman v Njamal Mining Pty Ltd [2018] WASC 403
MASTER SANDERSON:
On 26 July 2018 the defendants applied by chamber summons for three orders. First, they sought summary judgment in relation to a claim set out in pars 24 to 33 of the re‑amended statement of claim (re‑amended SOC).[1] Second, and as an alternative to the first order, they sought to strike out those paragraphs of the re‑amended SOC. Third, they sought security for costs. The matter was heard on 4 December 2018 and on 14 January 2019 I published reasons striking out those paragraphs of the re‑amended SOC of which the defendants complained: See Westerman v Njamal Mining Pty Ltd [2018] WASC 403. I gave the plaintiff leave to re‑plead. A document entitled further re‑amended statement of claim (further SOC) was filed on 21 May 2019. As part of the amendment the action against the fourth defendant was discontinued. The remaining defendants are not satisfied the amendments to the further SOC properly plead what the parties refer to as the 'conspiracy plea'. These reasons are concerned with that issue. The defendants still maintain that they should have summary judgment on that issue or, in the alternative, the paragraphs complained of in the further SOC ought be struck out.
[1] Re-amended statement of claim filed 5 July 2018.
Although I went through those paragraphs of the earlier version of the statement of claim which were not complained of in the judgment published seven months ago, this decision is effectively a standalone judgment. I will therefore detail the nature of the plaintiff's claim to put those paragraphs complained of in context.
Plaintiff's further re-amended statement of claim filed 21 May 2019
Paragraphs 1 through to 5 identify the parties and are uncontroversial. By par 6 it is pleaded the plaintiff and the first defendant entered into an employment contract pursuant to which the plaintiff was employed as the managing director of the first defendant. Paragraph 7 pleads the terms of the contract. It is pars 7(c) and (e) of the amended pleading which are important for the purposes of this application. Those paragraphs read as follows:
c)The Plaintiff would be paid:
i)An Annual Base Salary of $160,000 (exclusive of statutory superannuation entitlements) – see clause 7.1 and the Reference Schedule
ii)Additional Benefits comprising a mobile telephone, a laptop computer and a motor vehicle – see clause 7.3 and the Reference Schedule
iii)An Incentive Payment equal to ten per cent (10%) of the first defendant's gross profits derived from any joint venture projects which the plaintiff was directly responsible for securing, such payment to be paid within14 days of the first defendant being in receipt of (in cleared funds) all dividend payments associated with the joint venture project which the plaintiff was directly responsible for securing – see clause 7.3 and the Reference Schedule ('the Incentive Payments')
…
e)In the event of termination of the Employment Contract by the plaintiff. inter alia, in the circumstances set out in clause 16.1(a)(2), or by the first defendant pursuant to clause16.2, the first defendant shall pay the plaintiff a termination payment equivalent to the Annual Base Salary and Benefits calculated for a period of 12 months – see clause 16.3
Paragraphs 8 through to 18 detail the plaintiff's commencement of employment with the first defendant and the termination of that employment. These paragraphs detail what the parties refer to as the 'contract claim'. The pleading goes into some detail as to the circumstances relating to the plaintiff's termination of her employment. The details of those paragraphs are not presently relevant. It is sufficient if I note there is a dispute between the parties as to the manner of the termination of the plaintiff's employment. That issue and the contract claim generally are matters for trial.
The conspiracy claim is pleaded in pars 23 through to 28 of the amended pleading. Paragraph 23 pleads that the first defendant was the trading entity of the Njamal People's Trust and all profits received from any trading operations of the first defendant were paid to the Njamal People's Trust. That plea is uncontroversial. By par 24 it is pleaded the fifth defendant owed to the first defendant certain duties. Those duties which are set out in par 28 of the pleading are said to arise pursuant to s 181 and s 182 of the Corporations Act 2001 (Cth) (the Act). That, too, is uncontroversial. Paragraphs 25 and 26 plead the duties said to arise under the Act as they relate to the fifth defendant. It would appear in the amending of the pleading some confusion has arisen and there are typographical errors and misnumbering. Leaving that to one side no objection is taken to pars 25 and 26.
It is paragraph 27 which is at the heart of the defendants' complaint. That paragraph reads as follows (marking up omitted):
The matters pleaded in paragraphs 26(b), 28(b), and 29(b) above were done by the fifth defendant with the sole or predominant purpose of causing injury to the plaintiff in that:
(a)as at August 2016
(i)the plaintiff had been directly responsible for securing the Joint Venture Projects and
(ii)the plaintiff was entitled to the Incentive Payments
(iii)the first defendant had failed to account to the plaintiff in respect of the gross profits derived from the Joint Venture Projects or to pay to the plaintiff the Incentive Payments; and
(iv)the first defendant was insolvent and lacked the financial capacity to pay the plaintiff the Incentive Payments
Particulars
The Financial Report of the first defendant for the year ended 30 June 2016, prepared by the fifth defendant, stated that as at 30 June 2016 the first defendant:
(1)had an excess of liabilities over assets amounting to ($38,676);
(2)was not expected to enter into any new commercial agreements in the foreseeable future;
(3)was likely to be wound up in due course.
(b)thereafter:
(i)the fifth defendant caused the second defendant to be incorporated to ensure the first defendant lacked the financial capacity to pay the plaintiff the Incentive Payments
Particulars
(1)in July 2016 Jack Garber for and on behalf of the plaintiff had negotiations with the fourth defendant and the fifth defendant in an attempt to settle, inter alia, the plaintiff's entitlement to the Incentive Payments;
(2)in the course of those negotiations:
i)the fifth defendant stated words to the effect that the Incentive Payment only entitled the plaintiff to 10% of the net profits of any joint-venture project which the plaintiff was directly responsible for securing;
ii)Jack Garber provided to the fifth defendant a copy of the Employment Contract showing that the Incentive Payment was to be equal to 10% of the gross profits of any joint-venture which the plaintiff was directly responsible for securing;
(3)At a meeting between Jack Garber and the fifth defendant on or about 16 August 2016, the fifth defendant referred to 2 voluminous documents that he held and stated words to the effect that they were 2 lithium mining contracts that were to go to the first defendant but because of the threat of legal action by the plaintiff in respect of her employment contract those contracts will go to an entity to be formed
(4)At a meeting of members of the Njamal People's Trust Advisory Committee on 7 September 2016 at 7 Bowman Street South Perth the fifth defendant said that:
(a)the first defendant was in a bad financial position;
(b)the plaintiff had acted wrongly towards the first defendant;
(c)A new company needed to be set and the first defendant set aside
(ii)the fifth defendant diverted extensions of existing Joint Venture Projects, for which the plaintiff was otherwise entitled to be paid 10% of the gross profits as part of her Incentive Payments, from the first defendant to the second defendant;
Particulars
Particulars will be provided after discovery and interrogatories
(iii)the fifth defendant
(1)diverted new commercial employment and training opportunities from the first defendant to the second defendant for the sole or predominant purpose of depriving the first defendant of the financial capacity to pay the plaintiff the Incentive Payments.
Particulars
The plaintiff repeats the matters particularised at paragraph 27(b)(i) above
(2)thereby caused the first defendant to lack the financial capacity to pay the plaintiff the Incentive Payments
Particulars
Payments of the new commercial employment and training opportunities diverted will be provided after discovery and interrogatories.
Tort of conspiracy
The way in which the tort of conspiracy should be pleaded was considered by Tottle J in Stuart v Hanna [No 3] [2018] WASC 208. His Honour said (at [29] – [30]):
The essential elements of the cause of action of conspiracy to injure by unlawful means were stated by Bond J in Lee v Abedian as follows:
(a)there was a combination or agreement between two or more persons to engage in conduct amounting to unlawful means;
(b)a purpose of that combination or agreement was to injure the plaintiff;
(c)the combination or agreement was carried into effect by the commission of the agreed unlawful acts; and
(d)those unlawful acts caused damage to the plaintiff.
In Lee v Abedian, Bond J cited with approval the observations of Ryan J in Elliott v Seymour as to the way in which an unlawful means conspiracy should be pleaded. In Elliott v Seymour Ryan J stated that the plaintiff would be allowed to continue to allege a conspiracy 'only if the statement of claim specifies with sufficient particularity the time and making of each agreement between the alleged conspirators, the unlawful means agreed to be employed and the facts or circumstances which made them unlawful'. His Honour continued:
The unlawful means relied on should be indicated in the body of the pleading alleging the conspiracy or in particular specifically appended to that part of the pleading and should not be incorporated by reference to several other, otherwise unrelated, parts of the statement of claim. The pleading should also indicate what unlawful acts were performed pursuant to the alleged agreement and how those acts caused damage to [the plaintiff].
The essential complaint of the defendants is that the conspiracy plea does not disclose the plaintiff suffered any loss and damage. In his written submissions filed in relation to this issue counsel but the position in this way:
5.Westerman pleads at paragraph 27 of the Further SOC that, as at August 2016, Westerman was entitled to Incentive Payments and that Mr Parker caused Njamal Services to be incorporated to ensure Njamal Mining lacked the financial capacity to pay the Westerman the Incentive Payments. Although, this is a slightly different formulation to the previous allegations, the substance is neither improved nor materially altered to the previous iteration of Westerman's conspiracy claim.
6.The defendants have previously rebutted this claim on the basis that the incorporation of Njamal Services and the use of that company as a trading entity does not have any impact on the Westerman or her right to Incentive Payments (if any) under the terms of her terms of employment. Each of the contracts entered into by Njamal Services (if any) occurred after Westerman had ceased to be employed by Njamal Mining, and the terms of Westerman's employment do not expressly provide for the survival of Incentive Payments. Accordingly, there is no basis for her to claim she is entitled to any such payments in relation to any new or renewed contracts. The Further SOC does not alleviate the defects in this plea so as to plead a viable cause of action.
7.In Westerman's submissions dated 26 October 2018 (at [29]), she also alleged that the defendants' intention was to divert opportunities away from Njamal Mining to ensure that it did not have sufficient funds to pay out Westerman's existing contractual claims, being those claims pleaded in the first part of her pleading. This allegation has not been pleaded in the Further SOC.
8.In relation to paragraph 27(a)(iv), Westerman pleaded that, as at August 2016, Njamal Mining was insolvent and lacked the financial capacity to make the Incentive Payments. While this allegation is now pleaded in the Further SOC, this evidence formed part of the Affidavit of Sharon Westerman sworn on 31 October 2018 (Second Westerman Affidavit) which is already before the Court. Accordingly, the amendment does nothing to further Westerman's claim and is not supported by further evidence (or particulars) to illustrate there is a serious or arguable question to be considered.
9.Paragraph 27(b)(i) of the Further SOC has been amended to include a particular (4) regarding the meeting of the TAC on 7 September 2016. We note that this particular simply reiterates evidence already before the Court at the last hearing and contained in Westerman's Affidavit sworn on 31 August 2018 (commencing at paragraph [12]). As with the preceding paragraph, this amendment does not improve Westerman's position as it is no more than a reiteration of evidence already before the court and which is not sufficient to show a serious or arguable proposition.
10.The additional subparagraphs at 27(b)(ii) and (iii) attempt to connect the earlier pleas in paragraph 27 to the elements of the cause of action of conspiracy without providing any substantive particulars or further evidence to support those allegations. These pleas add nothing to Westerman's claim.
It is important to note that, by reference to par 7(c) (and (e)) of the amended pleading, it is the incentive payments and the termination payment which are in issue. So when looking at the damage allegedly suffered by the conspiracy it must be the case the plaintiff alleges she was denied these two payments either fully or in part. The main point addressed by the defendants' submissions goes to this issue. The question might be put in this way: Are material facts pleaded which show the plaintiff was denied, either in whole or in part, the incentive payments or the termination payment.
Paragraph 27(a) of the amended pleading pleads first the plaintiff had been directly responsible for securing certain joint venture projects and second the plaintiff was entitled to incentive payments. For present purposes we can assume both of those pleas are correct. That meant, as pleaded in par 7(c)(iii), the plaintiff became entitled to a payment on the happening of a certain event. Subparagraph (iii) alleges the first defendant had failed to account to the plaintiff in respect of the gross profits derived from the joint venture or pay the plaintiff incentive payments. The use of the term 'account' in this context does not, I think, embody the idea of an 'account' in equity and still less at common law. Rather that should be read as a reference to a failure to make payment of what was due under the employment contract. Subparagraph (iv) then pleads the first defendant was insolvent. That means the first defendant could not pay the plaintiff. So what the plaintiff is alleging is that there was a conspiracy to render the first defendant insolvent so it would not have to meet the plaintiff's lawful entitlements.
Conclusion
The difficulty with the pleading is that it does not seem to acknowledge the plaintiff was only entitled to incentive payments which arose before she ceased her employment with the first defendant. That must mean the loss and damage suffered by the plaintiff, assuming the conspiracy can be made out, is the non‑payment to her of any incentive payments to which she was entitled and the non‑payment to her of all or part of the termination payment to which she was entitled. The events occurring after August 2016 are relevant only to the extent they render the first defendant incapable of making payments they were required to make pursuant to the contract.
In my earlier reasons I expressed reservations about whether or not the conspiracy plea added anything to the plea of breach of contract. The amended pleading now clarifies that position. If it were the case the first defendant was insolvent to the point where it could not meet any contractual damages then, and only then, the conspiracy plea would be relevant. Presumably discovery will establish whether or not the first defendant is able to meet any damages claim – the financial records of the first defendant would clearly be discoverable. In some ways then the conspiracy plea is an alternative or conditional plea. It may not be relevant to the determination of the issues between the parties. Nonetheless it is appropriate the plea be included in the plaintiff's claim so that all issues which are live between the parties can be ventilated at the one hearing. In the course of his oral submissions, counsel for the defendants maintained the conspiracy plea ought be struck out and if the contractual plea was successful and the plaintiff was not paid because of the impecuniosity of the first defendant then the conspiracy claim could be revived. With respect, that course of action is productive of expense and delay and does not serve anyone's interests.
While there are some issues with the pleading of the alleged conspiracy I am satisfied that the present pleading is proper and appropriate and it ought to stand. That said, the plaintiff will need to correct the obvious typographical errors in the plea and perhaps provide some further particulars. These are matters of form not substance and do not warrant the plea being struck out still less summary judgment being awarded in favour of the first defendant.
For these reasons I would dismiss the defendants' application for summary judgment and dismiss the application to strike out parts of the further re‑amended statement of claim. I will hear the parties as to costs. I will also, in due course, deal with the question of security for costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson18 SEPTEMBER 2019
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