Court of Appeal (WA)|2013-12-03|Before: Pullin JA

PLATINUM SYSTEMS RESOURCING PTY LTD -v- NRW HOLDINGS LTD [2013] WASCA 276 (3 December 2013)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : PLATINUM SYSTEMS RESOURCING PTY LTD -v- NRW HOLDINGS LTD [2013] WASCA 276

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : PLATINUM SYSTEMS RESOURCING PTY LTD -v- NRW HOLDINGS LTD [2013] WASC 376

Appeal - interlocutory appeal - whether leave to appeal should be granted

Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82

Dodds v Kennedy [2011] WASCA 32

Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478

Pearce v International Mining Technologies Ltd [2009] WASCA 239

Platinum Systems Resourcing Pty Ltd v NRW Holdings Ltd [2013] WASC 376

Swindale v Babich [No 2] [2007] WASCA 262

Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40

William Buck (WA) Pty Ltd v Faulkner [2013] WASCA 162

Wilson v Metaxas [1989] WAR 285

1 PULLIN JA: The appellant applied for an urgent appeal order under r 46 of the Supreme Court (Court of Appeal) Rules 2005 (WA) (Court of Appeal Rules) and for a stay of an order made by Le Miere J on 15 October 2013 that the respondent be granted leave to inspect certain documents which were the subject of two subpoenas. As the appeal was an interlocutory appeal, the appellant was required to first address the question of whether leave to appeal should be granted. The appellant filed written submissions on the question of leave in its appellant's case, and counsel for the appellant made oral submissions during the course of a hearing on 21 November 2013. At the end of that hearing, an order was made refusing leave with reasons to follow. These are the reasons.

2 By the appeal, the appellant asked this court to set aside an order made by Le Miere J on 14 October 2013 dismissing the appellant's application to set aside certain paragraphs in the respondent's defence and counterclaim: Platinum Systems Resourcing Pty Ltd v NRW Holdings Ltd [2013] WASC 376. The appeal also asked this court to set aside an order made by Le Miere J on 15 October 2013 dismissing the appellant's application to set aside two subpoenas, and to set aside an order that one of the subpoenas be amended.

3 Le Miere J, in his reasons concerning the appellant's attack on the respondent's defence, explained the background in the following terms:

The first defendant, NRW Holdings Limited (NRW), is a public company listed on the Australian Securities Exchange which carries on the business of providing mining and engineering services. The plaintiff, Platinum Systems Resourcing Pty Ltd (Platinum), is a company that carries on the business of providing technology consultant services and job placements in technology projects. On 12 April 2012 NRW and Platinum entered into an agreement, or purported to do so, called a Master Services Agreement. Under the Master Services Agreement Platinum agreed to provide consultancy services to NRW. Between April 2012 and May 2013 Platinum provided consultants to carry out work for NRW. Platinum rendered invoices to NRW. NRW has refused or failed to pay some of the invoices. Platinum claims that NRW is indebted to Platinum in the sum of $1,093,955.50 which is the amount of the unpaid invoices. Platinum also claims that the second defendant, Hyman, the company secretary of NRW, made publications defamatory of the second to fifth plaintiffs, Curtis, Korpas, Wilson and Lendon. Platinum also claims that NRW unlawfully terminated the Master Services Agreement, unlawfully solicited consultants contracted by Platinum to work for NRW and unlawfully interfered with the agreement between Platinum and its consultants.

NRW has filed a defence which raises a number of defences and a counterclaim. Platinum has applied to strike out [pars 20 - 27] of the defence and counterclaim. Those paragraphs plead that the second to fourth defendants by counterclaim, Worrall, Wallace and Curtis, agreed to participate in a dishonest and fraudulent scheme and carried it out. Wallace and Worrall were the Chief Financial Officer and Chief Information Officer respectively of NRW. Curtis was engaged by NRW as Applications Program Manager for the project and was responsible for procuring IT consultants for the project and approving timesheets submitted by IT consultants engaged by NRW to assist with the project on behalf of NRW. Curtis reported to Worrall. The scheme is said to involve the incorporation of a company, Platinum, controlling the company and entitlement to its profit through arrangements with family members and friends who became officers of the company, procuring NRW to engage the company to provide services to NRW and to pay for those services at such rates as they determined regardless of whether the rates were in excess of those that could be properly and reasonably payable for such services, causing NRW to pay the amounts invoiced by the company without proper scrutiny and not disclosing their connection with, and control of, the company to NRW [1] - [2].

Appellant's application to strike out parts of the respondent's defence and counterclaim

4 The appellant applied to Le Miere J to strike out all of pars 20 - 27 of the defence and counterclaim. In support of the application, counsel for the appellant referred to r 36(3) of the Legal Profession Conduct Rules 2010 (WA), which provides that a practitioner must not draw or settle court documents alleging fraud unless, inter alia, there is a proper basis for the allegation. Counsel for the appellant submitted that there were questions as to whether the respondent's lawyers had satisfied themselves as to the appropriateness of drawing the pleading. Le Miere J said that it was not appropriate that he give consideration to whether or not lawyers for the respondent complied with their ethical obligations [6].

5 His Honour in his reasons said that the respondent had complied with its obligation to specifically plead the dishonest and fraudulent scheme relied upon by the respondent [9]. His Honour said that the constituent parts of that scheme were:

(a) to procure the incorporation of a company (Company);

(b) to obtain and maintain control of the Company and entitlement to its profits through agreements, arrangements and understandings to be made with family members and friends who they would procure to become officers and shareholders of the company;

(c) to procure NRW to engage the Company to provide services to NRW and to pay for those services at such rates as they determined, regardless of whether the rates were in excess of those that would be properly and reasonably payable for such services;

(d) to cause NRW to pay amounts invoiced by the Company without proper scrutiny (meaning without scrutiny by someone other than Worrall, Wallace or Curtis); and

(e) not to disclose their connection with, and control of, the Company to NRW [9].

6 His Honour struck out some of the paragraphs in the defence which had been attacked by the appellant and ordered further particulars be given in relation to other paragraphs, but held that the other paragraphs adequately informed the appellant of the dishonest and fraudulent scheme that was charged.

Appellant's application to set aside the respondent's subpoenas

7 The respondent subpoenaed documents from the Australian and New Zealand Banking Group Ltd (ANZ Bank) and KP Accounting Pty Ltd. The KP Accounting subpoena required production of documents concerning the role that KP Accounting played in the incorporation of the Company. On the respondent's pleadings, KP Accounting arranged for the incorporation of the Company. As to the ANZ Bank, the respondent subpoenaed it to produce documents relating to the money trail concerning matters alleged in the respondent's defence and counterclaim and showing where funds going into a named bank account were distributed.

8 The appellant applied to set aside the subpoenas. There were arguments about whether the subpoenas had a legitimate forensic purpose and whether they were oppressive. One paragraph of the schedule to the KP Accounting subpoena was struck out and part of the ANZ Bank subpoena was amended by the judge. His Honour otherwise dismissed the application to set aside the subpoenas. ANZ Bank and KP Accounting produced the subpoenaed documents. The appellant inspected them and then, having done so, instituted this appeal.

9 The appellant appeals on four grounds, which may be summarised as follows:

(a) that the trial judge misdirected himself by determining that Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 relaxed or otherwise reduced the ethical obligations and obligations at law on the pleader of an allegation of dishonesty or fraud to identify in the pleading the material facts or particulars, based on admissible evidence, to support the allegation pleaded;

(b) that the trial judge erred in finding that indirect and circumstantial material pleaded was sufficient and capable of properly supporting a plea of fraud, or alternatively, an inference of fraud;

(c) that the trial judge erred by concluding that the subpoenas issued to ANZ Bank and KP Accounting were for a legitimate forensic purpose and 'not too wide'; and

(d) that the trial judge erred by amending the subpoena to ANZ Bank rather than setting it aside.

10 This is an interlocutory appeal. Interlocutory appeals can only be brought with leave: see s 60(1)(f) of the Supreme Court Act 1935 (WA). An appellant seeking leave to appeal against an interlocutory decision needs to show, generally, that the decision appealed against is wrong, or at least arguably attended with sufficient doubt to support a ground of leave to appeal, and further, that a substantial injustice would be done if leave to appeal was not granted and the interlocutory decision was not reversed: Wilson v Metaxas [1989] WAR 285, 294; Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, 57. A tight reign and special restraint must be exercised where the interlocutory orders under appeal concern practice and procedure: Dodds v Kennedy [2011] WASCA 32 [5]. Appellate restraint is particularly required where the appeal is brought from a procedural decision of the judge who has the management of the case in the Commercial and Managed Cases list: Pearce v International Mining Technologies Ltd [2009] WASCA 239 [25].

11 Even if error by the trial judge could be demonstrated here, there will be no injustice suffered if leave to appeal is refused, because a party may challenge the correctness of a final judgment on the ground that some interlocutory decision, which was relevant to the final result, was wrong: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 [5] - [6], [49]. To encourage the prosecution of appeals against these types of interlocutory orders before final judgment in the action would be to encourage the unnecessary fragmentation of proceedings, interfering with their orderly disposal and increasing costs. It would also encourage appeals in circumstances where the final judgment may have the effect of rendering the appeal unnecessary: Swindale v Babich [No 2] [2007] WASCA 262 [18]; William Buck (WA) Pty Ltd v Faulkner [2013] WASCA 162 [8].

12 For those reasons, leave to appeal was refused and the appeal was dismissed.

Profession Conduct Rules 2010

Court (Court of Appeal) Rules 2005

Barclay Mowlem Construction Ltd v Dampier Port Authority

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Judgment (41 paragraphs)

PLATINUM SYSTEMS RESOURCING PTY LTD -v- NRW HOLDINGS LTD [2013] WASCA 276 (3 December 2013)

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