Supreme Court of NSW|1996-01-12|Before: Miss J, Sixth Mr J, Rolfe J

Ampolex Limited v Perpetual Trustee Company (Canberra) Limited and Ors No. 50101/1995 [1996] NSWSC 7 (12 January 1996)

COURT IN THE SUPREME COURT OF NEW SOUTH WALES COMMERCIAL DIVISION ROLFE J HRNG SYDNEY, 8 December 1995 #DATE 15:12:1995 #ADD 12:1:1996

Counsel for the Plaintiff Mr A.H. Goldberg QC and Mr L. S. Einstein

Solicitor for First Defendant: Miss E.M. Rowe,

Solicitor for Second, Third and Miss J.A. Soars Fifth Defendants:
Norton Smith and Co

Counsel for Fourth and Sixth Mr J.L.B. Allsop SC and Defendants: Mr P.R Whitford

Solicitors for Fourth and Freehill Hollingdale and Sixth Defendants: Page

Counsel for Seventh Defendant: Mr A.J. Meagher SC

Solicitors for Seventh Defendant: Ebsworth and Ebsworth ORDER Orders made JUDGE1 Introduction ROLFE J By a Notice of Motion filed on 28 November 1995, the plaintiff, ("Ampolex"), sought orders that certain subpoenae issued on 15 November 1995 at the request of the fourth defendant, County NatWest Securities Australia Limited, ("County NatWest"), be set aside and for consequential relief The Notice of Motion was supported by the affidavit of Mr Kenneth Watson, a partner in the firm of solicitors appearing for Ampolex, sworn on 4 December 1995.

The subpoenae sought the production of various documents with a view to establishing the distribution, and the reasons therefor, of Ampolex's Amended Further Re-Amended Summons. In so far as there had been publication of it this had been the subject of much correspondence between the solicitors for Ampolex and the solicitors for County NatWest, which is annexed to Mr Watson's affidavit.

The primary submission on behalf of Ampolex, in support of the motion to set aside the subpoenae, was that the documents of which production was sought did not relate to any issue in the proceedings.

On 8 December 1993, on the day the Notice of Motion to set aside the subpoenae came before me for hearing, County NatWest caused its Points of Defence to the Second Amended Further Re-Amended Summons to be filed in Court. Paragraph 9 thereof stated:- "In further answer to the whole of the plaintiff's claim, it says that by reason of the matters alleged in the Amended Third Cross-Claim and in all the circumstances of the case including the matters particularised below, the Court should, in the exercise of its discretion in equity or under s 75 of the Supreme Court Act or under the Corporations Law, in particular s 1002U, decline to make the orders which the plaintiff seeks against the Fourth Defendant.

In the event that the Fourth Defendant is incorrect and its conduct was in contravention of s 1002G of the Corporations Law (which is denied) and on the assumption that the only relief available against the Fourth Defendant is declaratory relief then the following factors militate against the exercise by the Court of its discretion to grant that relief: (a) the inutility of a declaration in the circumstances; (b) the hypothetical nature of the declaration sought;and (c) the fact that the plaintiff brought these proceedings against the Fourth Defendant motivated substantially, if not solely, by a desire to create commercial embarrassment for the Fourth Defendant and thereby to exert commercial pressure on it to facilitate a settlement of the matters in dispute between the plaintiff and GPG and Allied, and the conduct of the plaintiff in disseminating to the market, without just cause, information about these proceedings and allegations made therein, including the Amended Further Reamended Summons which joined the Fourth Defendant and made allegations against it as to insider trading and which contained information subject to implied undertaking to the Court, by publishing such information on an electronic news and information distribution service called Medianet which distributes information to newspapers, radio, television and subscribers."

When the Notice of Motion to set aside the subpoenae came on for hearing Mr Goldberg of Queen's Counsel for Ampolex submitted that paragraph 9 should be struck out on the basis that it disclosed no reasonable defence or other case appropriate to the nature of the pleading, and had a tendency to cause prejudice and embarrassment in the proceedings. His submission was that it is the only pleading, which gave rise to a justiciable issue justifying the issue of the subpoenae. The application, I assume, was made pursuant to Part 15 rule 6. It was not suggested it was not an application, which could be made and which I should determine. Mr Allsop of Senior Counsel for County NatWest opposed the application to strike out paragraph 9.

The Submissions Made 6. Mr Goldberg submitted that paragraph 9 was embarrassing in a number of ways. Firstly, he called attention to the words in the second and third lines "in all the circumstances of the case". He submitted, correctly in my view, that County NatWest was bound to particularise the specific matters on which it relied. Secondly, Mr Goldberg submitted that in the particulars the words "on the assumption that the only relief available against the fourth defendant is declaratory relief" were embarrassing as the pleadings destroyed the validity of the assumption, because, in the circumstances, that could not be the only relief available to County NatWest. It will be necessary to examine the pleadings in more detail in considering this matter, to the extent it remains open for consideration, and further matters upon which reliance was placed. Thirdly, Mr Goldberg objected that in the light of the Corporations Law and the pleadings there could be no inutility in the making of declarations in the circumstances of this case, and they could not be hypothetical. Fourthly, he submitted that sub-paragraph (c) of the particulars did not comprise particulars, but rather a substantive allegation of improper motivation, amounting to an abuse of process, which was not particularised. He submitted that pursuant to Part 16 rule 3 there was an obligation to give particulars of the facts on which County NatWest relied.

Mr Allsop, when the matter was argued on the basis of paragraph 9 as set out already, conceded, as I understood it, that the words "in all the circumstances of the case" were, relevantly, embarrassing. He further said, having heard Mr Goldberg's submissions, that paragraph 9 would not be pressed if Mr Goldberg conceded that Ampolex would not seek the declarations if it was not entitled to damages. There was some argument as to the precise ambit of the concession sought, in which it was made clear by Mr Goldberg that the declarations were required for other purposes in the litigation, namely as a vesting order was being sought in favour of the Australian Securities Commission, and because it was alleged that County NatWest was acting with other parties. Accordingly Mr Goldberg was unprepared to make the concession.

Because of the accepted problem with paragraph 9, and also because on any view there was a difficulty with the words "on the assumption that the only relief available against the fourth defendant is declaratory relief', paragraph 9 was amended and, as finally drafted, it provides:- "In further answer to the whole of the plaintiff s claim, it says that by reason of the matters alleged in the Amended Third Cross-Claim and in all the circumstances of the case including the matters particularised below, the Court should, in the exercise of its discretion in equity or under s 75 of the Supreme Court Act or under the Corporations Law, in particular s 1002U, decline to make the orders which the plaintiff seeks against the Fourth Defendant.

In the event that the Fourth Defendant is incorrect and its conduct was in contravention of s 1002G of the Corporations Law (which is denied) the following factors militate against the exercise by the Court of its discretion to grant that relief: (a) the inutility of a declaration in the circumstances; (b) the hypothetical nature of the declaration sought; and (c) the fact that the plaintiff brought these proceedings against the Fourth Defendant motivated substantially, if not solely, by a desire to create commercial embarrassment for the Fourth Defendant and thereby to exert commercial pressure on it to facilitate a settlement of the matters in dispute between the plaintiff and GPG and Allied, and the conduct of the plaintiff in disseminating to the market, without just cause, information about these proceedings and allegations made therein, including the Amended Further Reamended Summons which joined the Fourth Defendant and made allegations against it as to insider trading and which contained information subject to implied undertakings to the Court, by publishing such information on an electronic news and information distribution service called Medianet which distributes information to newspapers, radio, television and subscribers."

The amended document was brought in. Mr Goldberg, I think, conceded his first objection had been met, but he submitted that none of the others had been overcome.

The Pleadings 10. The case made in the Second Amended Further Re-Amended Summons against County NatWest is contained in paragraphs 22 to 24. It is that County NatWest was prohibited from purchasing or selling, or entering into an agreement for the purchase or sale of, the convertible notes, for the reasons pleaded in paragraph 23. In sub-paragraph (c)(iv) thereof it is alleged that other parties to the proceedings granted County NatWest an option to purchase the convertible notes and, in sub-paragraph (v), that it was agreed that any profits arising from the arrangement would be shared, inter alia, with County NatWest. It was pleaded, in paragraph 22, that the prohibition arose from s.1002G(2)(a) of the Corporations Law, which provides:- "The insider must not (whether as principal or agent):- (a) subscribe for, purchase or sell, or enter into an agreement to subscribe for, purchase or sell, any such security;

The relief sought against County NatWest is set forth in paragraphs 8, 9 and 11 in the following terms,- "8. A declaration that the: (a) agreement by the Fourth Defendant ('County NatWest') to sell Convertible Notes to GPG or alternatively to GPG and Allied; (b) purchase on 12 April 1995 by Allied of 20,000 Convertible Notes and the purchase by GPG on 24 May 1995 of 6,000,000 Convertible Notes; (c) agreement by County NatWest to purchase the Convertible Notes so purchased by GPG or alternatively GPG and Allied;

was a contravention of s.1002G(a)(a) of the Corporations Law.

A declaration that, in contravention of s.1002G(2)(b) of the Corporations Law, County NatWest procured the purchase by GPG and Allied referred to in 8(b).

Damages as against GPG, Allied, County NatWest, Brierley, Weiss, Loomes, Cureton, Thomas and Clayhills and each of them (calculated pursuant to s.1013(5) of the Corporations Law) pursuant to s.1005 of the Corporations Law."

In paragraph 12 orders are sought pursuant to s.1002U vesting the convertible notes in the Commission. That section commences:- "Where, in a proceeding under this Law, the Court finds that a contravention of s.1002G has occurred, the Court, in addition to any other orders that it may make under any other provision of this Law, may make such order or orders as it thinks just, including, but without limiting the generality of the above, any one or more of the following orders:

Sub-paragraph (g) provides for a vesting order.

Section 1005(1) provides. "Subject to the following sections of this Division, a person who suffers loss or damage by conduct of another person that was engaged in in contravention of a provision of this Part or Part 7.12 may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention, whether or not that other person or any person involved in the contravention has been convicted of an offence in respect of the contravention."

Mr Goldberg's submissions were that the declarations sought were sought solely in aid of the primary relief, namely damages and a vesting order, being sought by Ampolex against County NatWest and certain parties. It was submitted that to recover damages against County NatWest it would be necessary to establish the matters the subject of the declarations and, as will have been seen from the concession sought by Mr Allsop, so much was not in issue. It was also submitted that as it is alleged County NatWest had an option to purchase the convertible notes the declarations were necessary because of the interest County NatWest could thereby assert in them. So much was not, as I understood the submissions, in issue. Thirdly, it was submitted that because of the allegation that County NatWest had acted in concert with other parties the declarations were still necessary, even if the primary relief of either damages or a vesting order or both was not pursued successfully against County NatWest. Once again, I do not consider this submission was sought to be controverted.

Is Paragraph 9 Embarrassing? 16. Paragraph 9 as re-drafted removes, in my opinion, the initial ground of objection. The re-draft has also omitted the words in the particulars "and on the assumption that the only relief available against the Fourth Defendant is declaratory relief". The question then arises as to whether the matters particulanised can, in the circumstances of this case, "militate against the exercise by the Court of its discretion to grant that relief'. In my view this should be answered adversely to County NatWest. As the matter is pleaded it cannot be said that there is no utility in the granting of a declaration, nor that the declaration is of a hypothetical nature. In the end I did not understand the contrary to be submitted. It seems to me that whether the declaration is granted depends upon a finding as to whether there was a contravention of s. 1002G(2)(a). If there was not the declarations will be refused. If there was the declarations will be made in aid of any further relief Ampolex seeks consequential upon them. The making of the declaration will, accordingly, depend upon the establishing of those matters.

The question then arises as to whether the matters stated in sub-paragraph (c) are embarrassing. In my opinion they are. Firstly, the assertion that Ampolex brought the proceedings against County NatWest "motivated substantially, if not solely, by a desire to create commercial embarrassment for" County NatWest and "thereby to exert commercial pressure on it to facilitate a settlement ..." is not, in my opinion, a particular. It is an assertion which, in itself, requires particularisation. This can be tested by asking the simple question as to what are the facts and circumstances relied upon to establish that Ampolex brought the proceedings against County NatWest "motivated substantially ..". This, rather than the alleged consequences of the motivation, is the matter requiring particularisation.

Secondly, and perhaps more fundamentally, sub-paragraph (c) raises, in my opinion, a false issue. The allegations have been made against County NatWest, and no application has been made to strike them out as failing to disclose a cause of action against it. The declarations will be determined on one or other of the bases to which I have referred. The intrusion of motivation into that debate seems to me, with respect, to raise what I have described as a false issue. The issue, in effect, is that the proceedings have been brought as an abuse of process, although whilst Mr Goldberg made that submission, Mr Allsop did not adopt it as a description of what had occurred. However it seems to me difficult to escape the conclusion that sub-paragraph (c) raises that very issue. I do not see how, as the case is presently presented, it can be asserted there is an abuse of process. However, if there is, it seems to me, having regard to the seriousness of such an allegation, that it must be pleaded and particularised appropriately. I do not regard sub-paragraph (c) as doing that, essentially for the reasons to which I have referred.

Similarly the further allegations in sub-paragraph (c) commencing with the words "and the conduct of" Ampolex fall within the same category.

County NatWest may, and I am unable to say more about it on the evidence before me, have a legitimate grievance in relation to the conduct about which it complains. However, it seems to me, that is not a grievance appropriate to be litigated in these proceedings and, so far as they are concerned, it raises a false issue.

On Monday, 11 December 1995 I received certain further written submissions from Mr Allsop to which Mr Goldberg responded in writing on the same day. Mr Allsop submitted that particular (c) is not limited to the question of a declaration as the introductory paragraph of the particulars "is not itself limited in that way", although he acknowledged that sub-paragraphs (a) and (b) flare in terms limited to declaratory relief".

As I understand it this submission means that the substantive relief sought against County NatWest should not be granted because of the matters set forth in sub-paragraph (c), which is not confined to the granting of the declaratory relief. If that be so, it points up, even more acutely, the nature of the allegation, namely that there is an abuse of process and the necessity for that to be pleaded and particularised properly. As I have said I do not consider it is. Further, it is difficult to see how such an allegation can succeed unless it can be shown that there is no arguable basis upon which Ampolex will be entitled to the substantive relief it seeks against County NatWest.

Mr Allsop's submissions continue that to the extent "it might be said that such matters", i.e. the matters pleaded in sub-paragraph (c), "are not relevant to discretion we refer to Zamir, The Declaratory Judgment p.191 in particular footnote 39 and Everett v Griffiths (1924) 1 KB 911, 960-61".

The passage from Zamir, which is said to be supported by the decision in Everett, states:-

"The equitable origin, however, has left its mark on the remedy. This is especially evident in its discretionary nature. This discretion is employed, as discretion was originally employed in respect of all equitable remedies, primarily to do justice in the particular case before the Court. It is wide enough to allow the Court to take into account virtually all objections and defences possible in equitable proceedings. Thus, for instance, in one declaratory action the Court took into consideration the motives of the plaintiff in bringing the action."

Everett is stated to be authority for this proposition.

In the submissions in reply Mr Goldberg states Everett is not authority for that proposition. Everett was a case in which declaratory relief was sought. The headnote states, in part, that it was held that the action was not maintainable, as the proper procedure was by an Information in the nature of a quo warranto. At p.959 McCardie J referred to the final feature as being that of motive, and upon which his Lordship thought he ought "to say a few words in view of the prominence it assumed in the proceedings before me". He continued:- "In an action like the present (if it lay) it seems probable that the question of motive would be, in substance, irrelevant."

His Lordship referred to certain submissions and continued:- "It is plain, however, that in quo warranto proceedings the Court can and will enquire into the conduct and motives of the relator: ... The point is well settled."

At pp.960-961 his Lordship said:- "Under these circumstances what should I decide as to the plaintiff s motives in bringing this present action? Motives are subtle things. It was said by Brian CJ in the reign of Edward IV that 'the thought of man is not triable'. Vide Year Book 17 EDW IV.1, and Pollock on Torts 12th Edition, page 35. But if not triable in the fifteenth century it is certainly triable at the present day.

In my opinion these present proceedings were commenced from the

primary motives of resentment and revenge. But I do not think that the plaintiff believed the action to be ill founded. On the contrary, I think he believed it to be well founded. I take the view that the relator issued the writ not merely from the motives I have named but also from the sense that public interests required a disclosure in open Court of those facts

which, to some extent only, appear in the judgment I now give. It happened that in this action the rancorous feelings of the plaintiff coincided with his instincts of public duty as to the matters I have dealt with. When conducting the lengthy

proceedings before me he showed no lack of courtesy or ability, and it is a pity that he wastes on litigation the talents which he might better employ in other ways."

I find this passage helpful in the present case, not in support of the submission Mr Allsop makes, but as showing that there can be circumstances where the pursuit of a legitimate legal entitlement is accompanied by an inappropriate motivation. That, however, does not lead to the result, as his Lordship I think makes plain, that there is any abuse of process.

Further, as Mr Goldberg contends, his Lordship held that it seemed probable to him that the question of motive would be, in substance, irrelevant. I agree with Mr Goldberg's submission that the authority of this case is more helpful to Ampolex than County NatWest and, for the reasons I have stated, it tends to support the view to which I had come.

Examples of abuse of process were referred to by the High Court in Walton v Gardiner [1993] HCA 77; (1992-1993) 177 CLR 378, per Mason CJ, Deane and Dawson JJ at pp.392-393 and per Brennan J at pp.410-411.

Mr Allsop reminded me that I should be wary for striking out a pleading: Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598. In my view it is sufficiently clear this pleading should be struck out to justify my doing so.

Conclusions 32. It was not suggested that if paragraph 9 was struck out the subpoenae referred to in the Notice of Motion should not be set aside. I order that:- (a) Paragraph 9 of the Fourth Defendant's Points of Defence to Second Amended Further Re-Amended Summons filed in Court on 8 December 1995 be struck out; (b) The subpoenae issued on 15 November 1995 and specified in the Notice of Motion filed on 28 November 1995 be set aside; (c) The fourth defendant pay the plaintiff s costs of the Notice of Motion and the application to strike out paragraph 9.

Ampolex Limited v Perpetual Trustee Company

At a glance

Court

Decision date

Before

Source

Judgment (52 paragraphs)

Ampolex Limited v Perpetual Trustee Company (Canberra) Limited and Ors No. 50101/1995 [1996] NSWSC 7 (12 January 1996)

Parties

Cases Cited (1)