Carna Group Pty Ltd v The Griffin Coal Mining Company

Federal Court of Australia|2020-04-30|Before: McKerracher J

The interlocutory applications of the First and Third Respondents filed on 21 and 20 February 2020 respectively be dismissed.
Costs be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE DISPUTE 1 By interlocutory applications, the first respondent, The Griffin Coal Mining Company Pty Ltd and the third respondent, Mr James Riordan, seek to strike out certain paragraphs of the applicant's, Carna Group Pty Ltd (in liquidation), further re-amended statement of claim (the FASOC). In the alternative, Griffin and Mr Riordan seek further and better particulars with respect to those paragraphs of the FASOC. The applications are made on the basis that the facts pleaded in the offending paragraphs are vague, and fail to disclose with sufficient clarity the case which Griffin and Mr Riordan must meet. In my view the applications were entirely reasonable, however the complaint has now been partially cured by the provision of some particulars in the form of Schedules annexed to Carna's written submissions. On the expectation that others will follow in due course, and that the Schedules will be filed so as to form part of the formal pleadings, strike out is not necessary or appropriate. 2 These reasons discuss the detail of Carna's pleading in relation to the complaints about it but ultimately, for reasons expressed in the Consideration section below, I am satisfied that for now, the litigation should progress as contemplated by the procedural orders currently in place. The parties will also have the opportunity to make submissions and be heard on any further orders that may be required following the delivery of these reasons. 3 The nature of this dispute is touched upon in previous judgments in Carna Group Pty Ltd v The Griffin Coal Mining Company [2019] FCA 1276 and Carna Group Pty Ltd v The Griffin Coal Mining Company (No 2) [2019] FCA 2209 (Carna No 2).

CARNA'S PLEADED CASE 4 Carna's claim against the respondents focusses on representations said to be made to it by Griffin (through Mr Riordan and the second respondent, Mr Raj Kumar Roy), upon which it purports to have relied in entering into a Contract for the provision of mining services at Griffin's Ewington 1 Mine. By these representations, alleged to have been made between 28 January 2014 and 14 March 2014, Griffin assured Carna that it had sufficient financial capacity to timeously meet its payment obligations under the Contract. Carna contends that such representations were misleading or deceptive conduct under s 18 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (the ACL). There is also an alternative claim for breach of contract on the basis that Griffin committed an 'Insolvency Default' under the Contract. The present applications are primarily concerned with the first claim and the precise nature of the payment obligations which Carna contends Griffin failed to meet. 5 It is necessary to set out in detail the representations upon which Carna rely and a number of background facts to give context to the events which transpired. 6 Prior to being placed into administration in March 2015, Mr Harry Carna was a director of Carna and Mr Michael Grey was its business development manager. 7 Griffin is quite an old company, having been incorporated in January 1925. At times relevant to these proceedings, the ultimate holding company of Griffin was Lanco Infratech Limited, a company incorporated under the laws of the Republic of India. 8 Griffin's President was Mr L Madhu Sudhar Rao. Griffin owned the Mine, building and infrastructure established for processing coal from the Mine, the coal handling plant and associated crushing systems, conveyors and coal stockpiles. Together these have been referred to as the Processing Plant. 9 Mr Roy, was from June 2013, a director of Lanco Infratech and from March 2014, the CEO of Griffin. Mr Roy, the second respondent, filed no application for strike out and did not make submissions on the other respondents' applications. 10 Mr Riordan was the financial controller and company secretary of Griffin. 11 The FASOC pleads that in or about November 2013, following an invitation from Griffin, Carna began to investigate a contract with Griffin for the provision of mining services at the Mine and Processing Plant, for the transfer and assumption of entitlements of 350 employees of Griffin to Carna and to refurbish certain facilities at the Mine. 12 On or about 16 December 2013, Messrs Rao and Riordan met with Messrs Riordan, Carna and Grey and stated that Lanco Infratech would ensure Griffin would meet its payment obligations under any contract made with Carna. (No claim is made against Lanco Infratech, a non-party.) 13 The FASOC pleads that on or about 16 April 2012, Griffin had entered into a financing facility with Greensill Capital (Australia) Pty Ltd to assist with the settlement of its indebtedness to creditors for overdue amounts (the Greensill Facility). On or about 26 October 2012, the Greensill Facility was revised by agreement as a financing facility with Greensill Capital (UK). On or about 11 March 2014, the Greensill Facility was increased to a maximum of $30 million. 14 On or about 13 March 2014, according to the FASOC, Messrs Carna and Grey met with Messrs Roy and Riordan. At that meeting, it is alleged that Messrs Roy and Riordan stated that Griffin had available the Greensill Facility from Greensill UK which would be drawn down in favour of Carna in accordance with the terms of the proposed Contract. 15 On or about 13 March 2014, Mr Riordan showed Mr Grey a letter from Greensill UK to support the statement that Griffin had access to the Greensill Facility to pay its creditors. 16 On or about 28 January 2014, Carna entered into a written mining services Contract with Griffin. The Contract provided that: (a) under cl 1.1, the commencement date was 1 March 2014 or four weeks from satisfaction of the conditions precedent set out in cl 21.13, whichever was later; (b) under cl 17.11, an Insolvency Default was a ground for an immediate termination by the other party. Such a default arose when a party became insolvent as that term was defined under cl 1; (c) by cl 3, Carna agreed to perform mining services, namely the operation and maintenance of the Processing Plant in accordance with Griffin's mine plan in a timely manner. Pursuant to that clause, Carna was obliged to do various things including develop, refurbish, repair and maintain the Mine and the Processing Plant in accordance with plans and schedules set out in Sch 2 and Sch 10 of the Contract and all Authorisations. It was obliged, where required, to produce Coal of the desired specification through blending or processing through the Processing Plant in accordance with the Contract, to pay requisite maintenance, water, telephone, gas and electricity charges and all other dues or demands payable to the requisite Authority, if any, in respect of the Mine for the Term and assume on the Commencement Date the responsibility for the employment of all select personnel, including any select personnel who were the subject of a worker's compensation claim or of a salary continuance claim on terms no less favourable than those which those Select Personnel had when employed by Griffin with full recognition of service continuity; (d) by cl 10, a standard process for the calculation and payment of Monthly Progress Claims submitted by Carna was set out. Relevantly, it provided that within 20 Business Days of receipt of a Valid Tax Invoice from Carna, Griffin would pay Carna: (i) the Mining Fee to be calculated in accordance with Sch 13 as amended from time to time; and (ii) any other amounts which became due to Carna under the Contract; (e) pursuant to cl 2.1(b) of the Contract, each party warranted as a matter of present fact that it had the financial standing and capacity to fulfil its obligations under the Contract (the Warranty). 17 On or about 23 February 2014, Carna terminated the Contract pursuant to cl 21.13(b), which set out as a condition precedent to the Contract taking effect that the parties agree in writing to all Schedules to the Contract. Despite this termination, the parties continued to negotiate with each other. 18 According to the FASOC, while negotiations ensued in the period 26 February 2014 to 5 March 2014, through a string of email correspondence, Mr Grey on behalf of Carna stated to Mr Roy that Carna would require financial assistance from Griffin during the first months of any future contract's operation. 19 The FASOC also pleads that in the period from 6 March 2014 to 12 March 2014, in the context of these emails, Griffin (by Mr Roy) represented to Carna (by Mr Grey) that: (a) in the first three months of any future contract, Griffin was, and would be, able to pay to Carna all cash, net of direct costs, received from the sale of all coal mined by Carna for Griffin under any contract; and (b) any amounts paid to Carna in excess of the mining fee would constitute an operating advance, to be settled at a date and on terms to be agreed, between the parties. This is defined as the Cash Support Representation and is said to be particularised by an: (i) email from Mr Roy to Mr Grey and Mr Peddu dated 6 March 2014; and an (ii) email from Mr Roy to Mr Grey dated 12 March 2014. 20 On 14 March 2014, by written notice, Carna withdrew its termination notice for the Contract and Griffin and Carna agreed to proceed to perform the Contract and thus entered into a Substituted Contract. The Substituted Contract was said to contain terms to the effect of the terms pleaded in relation to the initial Contract as set out above (at [16]). 21 Relevantly, under cl 2.1(b) of the Substituted Contract, each party warranted as a matter of present fact that it had the financial standing and capacity to fulfil its obligations under the Substituted Contract. This is defined as the Re-affirmed Warranty. 22 The FASOC then pleads (at [25]) that in the relevant period, Griffin, in effect, stated by each or all of the Warranty, Cash Support Representation and Re-affirmed Warranty that it then had sufficient cash or alternatively, access to funds to meet timeously, its payments obligations under the Substituted Contract. It next pleads, by an amendment, that it was to be inferred from the content of each of the Warranty, Cash Support Representation and Re-affirmed Warranty and, in the case of the Cash Support Representation and the Re-affirmed Warranty, in conjunction with the references to the support from Greensill UK, that there were reasonable grounds for believing that Griffin could meet its payment obligations to Carna (in other words, that it could meet the Warranty, Cash Support Representation and Re-affirmed Warranty). 23 Carna pleads that, to the extent each of those representations related to a future matter within the meaning of s 4(1) of the ACL, it relies on s 4(2) of the ACL, which operates to put the respondents to proof in demonstrating that they had reasonable grounds for making the representations. Carna pleads in the FASOC that each of the Warranty, Cash Support Representation and Re-affirmed Warranty was misleading or deceptive in the following respects (which paragraphs are relied upon for the 'following respects' is a little unclear, but it appears to embrace [29]-[32]) from which the following matters are pleaded): 29. At the time of entry into the Contract on 28 January 2014, the Warranty was misleading or deceptive because Griffin was unable to pay Carna timeously in circumstances where: (a) in the seven months prior to the Contract, Griffin had failed to pay its creditors in accordance with payment terms between Griffin and those creditors; Particulars (i) on or about 5 July 2013 Griffin was served with an application for winding up pursuant to section 459P of the Corporations Act in respect of unpaid obligations of $8.6 million to the Commissioner of Taxation; (ii) on approximately 8 August 2013, Griffin was unable to pay employees' superannuation then due, owing and payable; (iii) creditors of Griffin were issuing letters of demand in respect of amounts that were due and owing, and unpaid at the time the letters were issued: A. a letter of demand dated 30 July 2013 from Mercury for $124.95; B. a letter of demand dated 1 August 2013 from HP Financial Services for $15,375.09; C. a letter of demand dated 7 August 2013 from Fremantle Ports for $536,747.50; D. a letter of demand dated 27 August 2013 from Fremantle Ports for $253,845.02; E. a letter of demand from Davies & Davies dated 1 October 2013 for $9,097.97; F. a letter of demand dated 9 October 2013 from the Bureau of Meteorology in relation to 14 outstanding invoices provided from 1 July 2012 to 31 August 2013 for $47,009.60; G. a letter of demand dated 15 October 2013 from Kleenheat Gas for $52,971.40; and H. a letter of demand dated 1 November 2013 from Holding Redlich in relation to 11 outstanding invoices provided from 17 August 2012 to 18 June 2013 for $51,209.40; (b) Griffin's net operating losses for the year ended 31 March 2013 was $56,640,000 when its net current assets were $289,653,000; and (c) Griffin had drawn down all or a substantial part of the Greensill Facility as: (i) On entry into the Original Contract, Griffin's facility with [Greensill UK] was almost fully utilised; (ii) Griffin was late in its repayments to [Greensill UK]. Particulars of paragraph 29(c) (i) As of 24 January 2014, Griffin had utilised approximately $23,753,387.86 of its then $25,000,000 facility with [Greensill UK]. (ii) Further particulars will be provided in advance of trial. 30. The Cash Support Representation was misleading or deceptive because: (a) in the period 726 February 2014 to 514 March 2014, when it was made, and immediately before it was made, creditors of Griffin were issuing letters of demand and a statutory demand in respect of amounts that were due and owing, and unpaid at the times the letters and statutory demand were issued; Particulars (i) a letter of demand dated 7 February 2014 from Namtech (Aust) Pty Ltd for $1,897.50; (ii) a statutory demand dated 26 February 2014 from Cove Legal (on behalf of Piacentini & Son Pty Ltd) for $4,992,584.17; and (iii) a letter of demand dated 27 February 2014 from Corrs Chambers Westgarth (on behalf of IFM Investors Pty Ltd) for $6,790.49. (aa) in the period 6 March 2014 to 12 March 2014, when the Cash Support Representation was made, demands had been issued to Griffin and remained unpaid; Particulars of paragraph 30(aa) (i) a statutory demand dated 26 February 2014 from Cove Legal (on behalf of Piacentini & Son Pty Ltd) for $4,992,584.17; and (ii) a letter of demand dated 27 February 2014 from Corrs Chambers Westgarth (on behalf of IFM Investors Pty Ltd) for $6,790.49. (ab) on 21 March 2014 and 4 April 2014, shortly after the Cash Support Representation was made, Griffin was served with further statutory demands in respect of amounts which remained unpaid at the dates the statutory demands were issued; Particulars of paragraph 30(ab) (i) a statutory demand dated 21 March 2014 from Cove Legal (on behalf of Piacentini & Son Pty Ltd) for $2,108,979.01; and (ii) a statutory demand dated 4 April 2014 from Cove Legal (on behalf of Piacentini & Son Pty Ltd) for $1,639,646.80. (b) from 24 March 2014 to 24 June September 2014 (being the first three months of the Substituted Contract), Griffin did not advance to Carna all cash received from Griffin customers, net of costs in sale of coal mined by Carna for Griffin at the Mine; (c) Griffin's net current losses for the year ended 31 March 2014 was $58,809,000 when its net current assets were negative $522,892,000; and (d) as of 14 March 2014: (i) Griffin had drawn down all or a substantial part of the Greensill Facility; Particulars of paragraph 30(d)(i) Griffin had utilised approximately $27,950,243.41 of its then $30,000,000 facility with [Greensill UK]. (ii) Griffin was late in its repayments to [Greensill UK]; (iii) the unutilised part of the Greensill Facility, alternatively most of the unutilised part of the Greensill Facility, was not used for payment to Carna but was used by Griffin to pay debts to other creditors. 31. The Re-affirmed Warranty was misleading or deceptive because: (a) of each of the matters pleaded in paragraph 30; and (b) when the Re-affirmed Warranty was made on or about 14 March 2014, Griffin was not capable of advancing to Carna (and did not so advance) cash received from Griffin's customers, net of costs in sale of coal mined by Carna for Griffin at the Mine. 32. Each of the Warranty, Cash Support Representation, and Re-affirmed Warranty was false and misleading misleading or deceptive in that there were not reasonable grounds, at the time each statement was made or given (as the case may be): (a) in the case of the Warranty and the Re-affirmed Warranty, for believing that Griffin would be able to meet timeously its payment obligations under the Amended Substituted Contract; and (b) in the case of the Cash Support Representation, for believing that Griffin would be able to meet its payment obligations under that representation, in that, unless it adduces evidence to the contrary, Griffin is deemed not to have reasonable grounds for making the representations, to the extent they each it concern a future matter. 24 Carna pleads that it entered into the Substituted Contract in reliance on the accuracy of all of the statements in the Warranty, Cash Support Representation and Re-affirmed Warranty and that each and all of the statements therein materially contributed to Carna's decision to enter into the Substituted Contract. On this basis, it alleges that all three representations were conduct in trade or commerce in contravention of s 18 of the ACL. 25 Towards the end of the FASOC, Carna pleads the damages it claims to have suffered as a consequence of its reliance on Griffin's representations. In essence, the claim is that Griffin's failure to meet its payment obligations to Carna placed Carna in financial strife with its own creditors. On or about 6 March 2015, Carna went into administration and on 25 June 2015 Messrs Ian Charles Francis and Michael Joseph Ryan were appointed as the joint and several liquidators of Carna. 26 Carna particularises these damages in the FASOC as follows (at [44]): 44. Carna has suffered loss and or damage comprising the following: (a) losses incurred by Carna in preparation for its fulfilment of, or in fulfilment of, its obligations under the Amended Substituted Contract; and Particulars (i) Particulars will be provided in advance of trial. (b) losses incurred by Carna because it could not pay its creditors by reason of the losses incurred in paragraph 44(a) above. Particulars Had Griffin paid Carna timeously as required under the Amended Substituted Contract, after 14 March 2014: (i) Carna would not have become unable to service its creditors; (ii) Carna would have been able to pay its debts as they became due; (iii) Carna would not have been placed into voluntary administration on 6 March 2015 or at all; (iv) Carna would not have been placed into liquidation on 25 June 2015 or at all; (v) Carna would not have further unpaid creditors, unrelated to the Amended Substituted Contract. Further particulars will be provided in advance of trial. 27 There are also pleadings concerning involved persons. For present purposes, it is unnecessary to closely examine this part of the FASOC, but essentially it pleads that Mr Roy and Mr Riordan were knowingly involved in the alleged statutory breaches. 28 Finally, Carna pleads a breach of contract against Griffin under the Contract's Insolvency Default clause on the basis that Griffin was unable to pay its debts as and when they fell due. Again, for present purposes, it is unnecessary to explore this claim in any detail. 29 In summary then, by [25] of the FASOC, it is asserted that Griffin represented it had sufficient cash or access to funds to meet timeously its payment obligations under the Substituted Contract. Carna particularises the representations as comprising the Warranty, the Cash Support Representation and the Re-affirmed Warranty. At [29]-[32] of the FASOC (at [23] of these reasons) Carna sets out its claim as why each of the representations was misleading by listing all the financial difficulties that Griffin was said to be enduring at that time. Relevantly, at [32] Carna pleads that on the basis of these financial difficulties, Griffin did not have reasonable grounds to make those representations to Carna. Finally, Carna sets out at [44] of the FASOC (at [26] of these reasons) the damages it claims to have suffered by its reliance on Griffin's representations to it.

THE APPLICATIONS FOR STRIKE OUT 30 The applications for strike out by Griffin and Mr Riordan (the Respondents) are in substantially similar terms. They seek orders that [25], [29], [32] and [44(b)] of the FASOC be struck on the basis that each such paragraph is embarrassing. Alternatively, they seek full particulars of: (a) the payment obligations alleged in [25] and the amounts Griffin was to pay as alleged in [29] and [32] of the FASOC including: (i) the amount of each payment that Carna alleges Griffin was obliged to pay Carna; (ii) the date each such payment was due; and (iii) the basis of calculation of each such payment. (b) the amounts that Carna alleges it was obliged to pay its creditors as pleaded in [44(b)] of the FASOC including: (i) the amount of each such obligations; (ii) to whom each such obligation was owed; and (iii) the date each such obligation was due to be discharged (c) the amounts Carna alleges Griffin was required to pay Carna pursuant to the Substituted Contract including: [see (a)(i) and (a)(iii) above]. The embarrassment contended, in substance, pertains to the use without any necessary particulars or clarification by material facts of the adverb 'timeously' and the composite expression 'payment obligations' in [25], [29], [32] and [44(b)]. The Respondents assert that Carna's case begs the question of what amounts Carna says Griffin was obliged to pay Carna and why and when it is alleged each such amount fell due for payment. What the expression 'timeously' means in each of those paragraphs, the Respondents complain, is quite unclear. This is asserted not just because of a lack of pleading but mainly because of different asserted definitions of when the obligations to pay arose. 31 On this topic, the Respondents assert that Carna says three different things which appear to govern when it alleges payments were to be made by Griffin to Carna. The first is by reference to [18(d)] of the FASOC in relation to the Contract and in [24] in relation to the Substituted Contract. There, Carna relies upon cl 10, by which it is said Griffin agreed that within 20 business days of receipt of a Valid Tax Invoice, it would pay Carna the: (1) Mining Fee to be calculated in accordance with Sch 13 as amended from time to time; and (2) Any other amounts which became due to Carna under the Contract. 32 Mr Riordan observes that Carna does not plead what a Valid Tax Invoice is. Secondly, Carna pleads at [21] of the FASOC in relation to the Cash Support Representation that Griffin (by Mr Roy) represented to Carna (by Mr Grey) that in the first three months of any future contract, Griffin would make cash advances to Carna using the proceeds of sale of coal mined by Carna (set out above at [19]). 33 Mr Riordan observes that Carna does not plead in relation to the alleged payment obligations pursuant to this representation when any such payment was to be made, except 'in the first three months of any future contract'. Mr Riordan, in his defence filed 3 December 2018, sets out what he alleges the payment regime was between Carna and Griffin. He says that regime was in familiar contracting terms, namely, that Carna was to submit a monthly progress claim, Griffin's representative would then review and approve, amend or disapprove that claim and Carna would then submit an invoice for the approved amount, which Griffin must then pay. Significantly, in the reply to Mr Riordan's defence filed 7 December 2018, Carna admitted that procedure, but then went on to plead 'that from approximately March 2014 until June 2014 Griffin and Carna agreed that Carna would submit an invoice for payment without first submitting a monthly progress claim as provided for in cl 10.2(a) of the Contract. Carna pleads an email from Mr Grey to Messrs Roy and Riordan dated 15 May 2014 in respect of that claim. 34 Mr Riordan complains that what Carna does not plead is what and when it says Griffin ought to have paid Carna and why each such amount ought to have been paid. It follows that the end result on Carna's pleaded case is there are at least three inconsistent possibilities with respect to any particular amount allegedly due to be paid by Griffin to Carna. Those being: (a) an amount said to be due to be paid by reason of the provisions of the Substituted Contract, including the cl 10 payment provisions admitted by Carna's reply; (b) an amount said to be due to be paid by reason of the provisions of the Substituted Contract as attenuated by the alleged agreement pleaded in [10(e)] of Carna's reply that Carna could invoice Griffin without first submitting a monthly progress claim; (c) it was an amount not due to be paid by reason of any provision of the Substituted Contract at all, but rather, by reason of the representation pleaded in [21] of the FASOC (the Cash Support Representation). 35 Mr Riordan complains that the difficulty is exacerbated because, as matters stand, there are no pleaded obligations on the part of Griffin to pay Carna any particular amount or any particular amount at any particular time or any particular amount at any particular time for any particular reason. Without Carna pleading or particularising the amounts, it says it ought to have been paid by Griffin and the dates on which those amounts ought to have been paid, it is not possible Mr Riordan asserts, to assess whether Griffin was 'unable to pay Carna timeously'. 36 The vagueness of these expressions and the lack of any adequate particularity is such that the paragraph should be struck out (with liberty to re-plead), Mr Riordan says. What has to be pleaded, however, are the following matters: (a) each amount Carna says Griffin was obliged to pay to it; (b) the date on which it says each such amount was due to be paid; and (c) the basis on which each such payment obligation, and the timing thereof, is alleged to have been owed, that is, which one of the three alternatives applied to each alleged payment obligation. 37 Mr Riordan observes that the appropriate use of Schedules would of course be a convenient and efficient way for the task to be attended to. 38 Griffin supports Mr Riordan's submissions and adopts them. 39 Griffin also relies on a supporting affidavit of Ms McNally, solicitor for Griffin, originally unsworn and adopting a date of 26 March 2020, however, then sworn and filed on 15 April 2020. The affidavit annexes the following documents: (a) KMM18 - Carna Notice of default 25 November 2014; (b) KMM19 - Griffin letter dated 29 Novembr [sic] 2014; (c) KMM20 - Carna Notice of termination dated 3 December 2014; (d) KMM21 - Invoice 3722 dated 12 December 2014; (e) KMM22 - Invoice 3742 dated 14 Janaury [sic] 2015; (f) KMM23 - Part of Mining Services contract dated 28 January 2014 (being Index, clause 10, clause 17.11, schedule 13, schedule 14); and (g) KMM24 - Schedule 13 undated. 40 Griffin notes that Carna purports to claim compensation and damages of some $60 million plus interest and costs, but the only reference in the pleading to amounts said to be unpaid is described as being an invoice 3722 for a November monthly progress claim in the amount of $3.9 million and another for $8 million in December. 41 The balance of Griffin's complaints are more difficult to follow and to the extent the points might have merit, they appear in my view to go to the strength or potential shortcomings of the structure of Carna's claim rather than any vagueness or embarrassment in the way that the case is pleaded. As complaints, they will be more relevant to what might be said about the claim when it is fully analysed and particularly with the benefit of expert evidence which will be essential. The essence of the claim itself, however, is not particularly mysterious. 42 Griffin's submissions address each of the three alleged representations in turn. They also address a number of other matters some of which, appear to form a submission by Griffin that it will not be possible for Carna to substantiate the precise nature of Griffin's alleged payment obligations as currently pleaded in the FASOC. I address each of these below, even though a number of these considerations appear to extend beyond the question raised by the present applications as to whether [25], [29], [32] and [44(b)] of the FASOC should be struck out.

The Warranty (28 January 2014) 43 At [29] of the FASOC Carna pleads that the Warranty was misleading or deceptive because Griffin was unable to pay Carna 'timeously'. As referred to earlier, (at [23]) this paragraph pleads facts in relation to Griffin's financial position. The particulars list various letters of demand sent to Griffin, they note Griffin's operating losses in comparison to its net assets and they make an observation as to the position of the Greensill Facility. Griffin contends that these circumstances 'have nothing to do with the assertion that the Warranty was misleading or deceptive or with any obligation under the [Contract] to pay Carna'.

The Cash Support Representation (6-12 March 2014) 44 In a similar vein to its complaint about [29] of the FASOC above, Griffin submits that five of the six particulars pleaded by Carna in support of the claim at [30] that the Cash Support Representation was misleading or deceptive have nothing to do with that assertion. Again, the particulars pleaded by Carna go to purported financial difficulties that Griffin was experiencing. Griffin submits that the only exception is [30(b)] where Carna pleads that between 24 March 2014 and 24 June 2014 Griffin did not advance 'all' cash received from Griffin customers, net of costs in sale of coal mined by Carna for Griffin at the Mine. Griffin says that Carna still fails to specify when these advances were actually due. I treat this submissions as going to the Respondents' overall argument that the FASOC does not plead with enough detail, the precise nature of Griffin's payment obligations to Carna in that, amongst other things, calculations of quantum and dates when these payments become due are not specified. In saying this, neither Griffin nor Mr Riordan has sought orders in the present applications that [30] of the FASOC be struck out.

The Re-affirmed Warranty (14 March 2014) 45 In relation to the Re-affirmed Warranty, Griffin notes that the pleadings at [31] repeat the particulars relied upon for the Cash Support Representation plea. The only difference being that from the date of the Re-affirmed Warranty, 14 March 2014, Carna pleads that 'Griffin was not capable of advancing to Carna (and did not so advance) cash received from Griffin's customers' less costs of mining, from the sale of coal mined by Carna for Griffin at the Mine. (In this case, the same allegation as above, but from an earlier date in March 2014.) Again, I treat this submission much the same as above noting that neither of the present applications seeks the strike out of [31] of the FASOC.

Other issues with the FASOC 46 Griffin raises a number of other, more general issues with Carna's pleaded case which, in my view, go more to the overall merits of the FASOC rather than any specific claim for strike out on the grounds of vagueness or embarrassment. The first is that in relation to the Cash Support Representation and the Re-affirmed Warranty, Carna refers to a payment calculation whereby the 'net costs' are deducted from cash received. 47 The following plea appears at [21(aa)] of the FASOC: In the first three months of any future contract, Griffin would in fact pay to Carna all cash, net of direct costs, received from the sale of all coal mined by Carna under any contract entered into; Griffin says that it is unclear what is meant by 'net costs' or 'net of direct costs'. It is also unclear when Carna contends this payment obligation crystallises and is due. I treat this submissions as supporting the overall complaint that Carna has failed to specify the quantum of Griffin's payment obligations or when such obligations were said to fall due. The Respondents have already made this complaint clear in these applications. I am not convinced that the phrase 'net costs' or 'net of direct costs' is particularly vague, or that it adds anything further to the argument stated above. 48 In response to Carna's claim that Griffin's representations breached s 18 of the ACL, Griffin asserts that at trial, the Court will at least need to determine the amount of any payment due to Carna and whether the obligation to pay arises under the Contract, the Substituted Contract or the Cash Support Representation. Griffin says that it is not clear from the FASOC whether the alleged payments were paid late (after some unspecified due date) or not paid at all. 49 The next issue relates to the structure of Carna's pleadings on the breach of contract claim. It is noted that the breach pleaded is in relation to an Insolvency Default rather than any breach of payment terms. 50 The particulars of the alleged insolvency is said to be identified in a letter from Carna to Griffin dated 3 December 2014 (Notice of Termination Letter). In this letter, Carna refers to its notice of default dated 25 November 2014 (Notice of Default). 51 The Notice of Termination Letter states: The Event of Default committed by [Griffin] is [Griffin's] consistent failure to pay Carna within the time specified in the Contact [sic] (note that payments were outstanding as at the date of the Notice of Default). The cumulative effect of those late payments amounts to an Event of Default. 52 The Notice of Default refers to a variation to the payment obligations in the Contract dated 23 June 2014 and states that as at 12 November 2014 $1,581,783.39 was owing. 53 Griffin points out that the '23 June 2014 Agreement' variation to the payment obligations is not pleaded in the FASOC. 54 Griffin then turns to the issue of how Carna could prove the payment obligations with the required specificity and contends that the case will not be assisted in this regard by expert, lay or documentary evidence. 55 In terms of expert evidence, Griffin points to Carna's proposed questions for an expert that are attached to the affidavit of Ms Schmedje filed 5 December 2019 at annexure FJS27. The annexure includes a number of assumptions which the experts are asked to take into account, one being that 'for Griffin to pay Carna timeously' assume that 'a Valid Tax Invoice was issued and was to be paid within 20 days of receipt by Griffin of the Valid Tax invoice' in respect of each Monthly Progress Claim (at 2(g) on p 5 of FJS27). 56 The reference to 'timeously' here, seems to pick up the payment obligations in clause 10 of the Substituted Contract, which refers to 20 Business Days following receipt of a Valid Tax Invoice. 57 However, Griffin contends these instructions are contrary to the invoices 3722 and 3742 (referred to above (at [40]), which appear to specify payment by the end of a given calendar month. 58 This is also said to conflict with a further assumption the expert is asked to make (at 2(h) on p 8 of FJS27) regarding the time for payment of Valid Tax Invoices 'with the terms identified on each invoice, and if no payment terms are specified, assume payment was to be made by the end of the month of the date of the invoice'. It should be noted that the assumptions at 2(g) and 2(h) of that annexure refer to two separate tables of invoices, however for present purposes, it is sufficient to recognise that Griffin contends that the payment regime that the expert is asked to assume at 2(g) is not pleaded in the FASOC. 59 On this basis, Griffin argues that the question regarding the date of payment will not be resolved through Carna's expert evidence. 60 Griffin similarly contends that any lay evidence sought to be adduced at trial would also not assist Carna because it does not enjoy the benefit of assistance from either Mr Carna or Mr Grey. It is said that they are the only two individuals connected to the claims in the FASOC on Carna's side. Griffin states that based on submissions to the Court on 18 December 2019 during the hearing of Carna No 2, it is clear that both individuals have sought to distance themselves from these proceedings. On that basis, Griffin contends any evidence they might give at trial, if subpoenaed, is unknown. 61 Finally, Griffin makes the point that the current documentary evidence before the Court appears to be missing a number of key documents. These include: (a) Schedule 13 to the Substituted Contract by which the cl 10 payment regime provides for a calculation of the mining fee; and (b) Schedule 14 to the Substituted Contract which is supposed to set out the rates for calculating payment amounts based on quantities of coals dispatched and received by buyers. Griffin notes that a signed but undated document entitled 'Schedule-13 Mining Fee' has been discovered but that this amendment to the Substituted Contract is not pleaded. 62 Turning to the Notice of Default issued on Griffin dated 25 November 2014, Carna stated that it outlined each of the late payments in the schedule at Appendix B of the Notice. However, no Appendix B was attached, as noted by Griffin in its response dated 29 November 2014. 63 The 'contract' that Carna appears to be relying upon as at 25 November 2014 is the Substituted Contract (presumably as at 14 March 2014) as varied by a '23 June 2014 Agreement' (as defined in Carna's correspondence of same date). As noted above (at [52]-[53]), this variation is not pleaded in the FASOC. 64 Although Griffin then raises some arguments concerning interest claims, they have no direct relevance to these applications other than to repeating the need which I accept, for Carna to specify and commit to the dates on which payment of sums were due. 65 As a post script, Griffin notes that Carna has amended its claim four times. The trial is listed for 3 weeks from 9 March 2021. The parties have incurred substantial costs to date and will incur further substantial costs in preparing this matter for trial. 66 At the directions hearing on 4 February 2020 counsel for Griffin submitted that, given the history of the matter, it would be appropriate for senior and junior counsel with conduct of the matter for Carna to sign any further amendment to the statement of claim. Counsel for Carna stated they would seek instructions. The FASOC was filed on 7 February 2020 and was signed by a solicitor but with the words added 'This pleading was prepared by [the solicitor] and settled by SK Dharmananda and R Young of Counsel'. It is not uncommon for the first draft of a pleading to be prepared by a solicitor instructor. It is unclear, Griffin says, what is meant to be conveyed by these additional words.

CARNA'S RESPONSE 67 Carna's response reflects some frustration. It makes the point, despite the fact that this matter was commenced some time ago in August 2018, that the Respondents are still bringing interlocutory applications, even though trial dates have been set down for March 2021. The Respondents have brought variously half a dozen interlocutory applications to strike out, for summary judgment, for particulars and for disclosure of privileged material. It argues that the application is late, does not rest on an inability to understand the case raised and ignores the reality of expert evidence which the parties will have in advance of the trial. 68 The question is whether, as asserted by Griffin and Mr Riordan, the following matters should be pleaded or particularised: (a) the amount of each payment Griffin was obliged to make; (b) the basis for calculating that amount; (c) the date that payment was due. 69 The second issue is whether Carna's pleadings as to the amount that it was obliged to pay its creditors are adequately particularised for present purposes. This relates to [44(b)] of the FASOC. 70 I accept as Carna stresses that the pleading should not be approached with a pedantic eye, but with a practical view to determining whether the pleading, read as a whole, fairly puts the Respondents on notice as to the case to be met. It argues that the payment obligations are sufficiently identified. 71 As to the first issue, Carna says there are six reasons why the applications should be dismissed. In particular, the details as to the specific payment obligations that Griffin and Mr Riordan say are now required are relevant only to quantum and are matters for evidence at trial. 72 Carna contends that the meaning is entirely apparent because, first, the impugned paragraphs of the FASOC are clear on their face. The period, 28 January 2014 to 14 March 2014, runs from the date of the Contract to the Cash Support Representation and to the entry into the Substituted Contract. The representations made in this time period as to Griffin's ability to timeously meet its payment obligations under the Contract or the Substituted Contract are capable of comprehension. Griffin represented that it could and would meet its future obligations to make payment to Carna under the Contract or Substituted Contract. 73 Carna says that it is clear from the FASOC that the representations as to those obligations encompass both the amount and the timing of future payments to be ascertained in accordance with the Contract and Substituted Contract. The word 'timeously' is, on one view, it acknowledges, unnecessary as the concept of timely payment is captured in the concept of a payment obligation, but it helpfully emphasises the point. Griffin represented that it could and would pay Carna and it had agreed to do so under the Contract or Substituted Contract. No further elaboration is necessary Carna says. Carna argues that the payment obligation associated with the Cash Support Representation is evident on the face of the FASOC. Griffin represented that in the first three months of the Substituted Contract's operation it would pay to Carna all cash that Griffin received from the sale of coal, mined by Carna pursuant to the Substituted Contract, less direct costs incurred in selling the Carna coal (the 'lest direct costs' aspect is clear from the plea of 'net of direct costs' and there is no plea as to 'net costs' as contended in Griffin's submissions). This representation encompasses both the timing and quantum of future payments pursuant to the Cash Support Representation. 74 Carna contends that arguments about the clarity of the representation made as to the timing of these payments within the first three months of the Substituted Contract is a matter for trial. 75 Secondly, Carna argues that the case is comprehensible in the sense that, at the time of making the Warranty and the Re-affirmed Warranty, Griffin represented that it could and would pay Carna the amounts due under the Contract and the Substituted Contract at the time required as identified by the Contract or the Substituted Contract. Carna's case is not, for example, that Griffin represented in the period, 28 January 2014 to 14 March 2014 that it would pay a specified sum of money by a specified date. Rather, the amounts to be paid and the dates on which they were to be paid were matters which would later become clear once the contractual works commenced and invoices were issued by Carna under the Contract or Substituted Contract. The same consideration applies, Carna says, to the Cash Support Representation. The amounts to be paid and the dates on which payment would occur were to be determined by the value and timing of the payments received by Griffin from its sales of coal mined by Carna pursuant to the Substituted Contract. 76 Thirdly, Carna says that the relevant Contract is pleaded. In understanding the necessary details of the payment obligations to enable the Respondents to meet the case put against them, the relevant parts of the Contract are pleaded. All parties have the instrument. The Court can consider the Contract and the Substituted Contract in the strike out application as being a document referred to in the pleadings. Those documents identify, Carna submits, the payment obligations at the time relevant to the impugned paragraphs as being: (a) Carna was obliged to undertake certain works identified in cl 3; (b) Griffin was to pay to Carna, subject to Carna performing the mining services, the Mining Fee calculated in accordance with Sch 13 and any other amounts due to Carna under the Contract: cl 10; (c) Griffin was to pay to Carna, after the exchange of relevant invoicing documents, detailed both by reference to the documents and the timeframes on which those documents were to be exchanged in cl 10.2; (d) Griffin agreed, in effect, to pay Carna (within 20 days of receipt of a Valid Tax Invoice) the whole of the amount claimed by Carna unless Griffin issued a Payment Certificate, in which case the amount was as identified by the Payment Certificate and the application of cl 10.2(e); and (e) by the time Substituted Contract was executed (and the Re-Affirmed Warranty was made) the Schedules including Schedules 13 and 6 had been agreed. 77 Each of the capitalised terms above and in the FASOC are defined in the Contract and Substituted Contract and the key obligations are generally admitted by the Respondents. 78 While the Respondents contend that because the Schedules had not been approved by 28 January 2014, the payment obligations had no specific content at 28 January 2014, that is not a matter upon which [25], [29] and [32] of the FASOC could be struck out as being embarrassing. 79 Carna says it is a matter for trial, not interlocutory debate what, if any, representation the Respondents say were conveyed prior to the Mining Plan and Schedules being agreed. The relevance of the Mining Plan and the Schedules is that they exist to identify the specific amount of money to be paid by Griffin to Carna. But the case put by Carna is that Griffin represented it could and would meet its payment obligations under the Contract and Substituted Contract, not a representation as to specific amounts to be paid by Griffin by a specific date. Carna stresses that this recognition is central to an understanding that the Respondents are raising a false issue. 80 Carna further contends that these matters are all best resolved at trial because the relevance of the approved Mine Plan and the Schedules are contested issues. Carna contends that under cl 8 and Sch 2 of the Contract, Carna was not obliged to agree the Mine Plan. It says that that the Schedules were agreed by 12 March 2014 pursuant to an agreement which extended the date on which the conditions precedent to the Contract were to be satisfied by. The pleadings as to the payment obligations, within the purview of the Contract, enable the Respondents to understand the case they have to meet. 81 Fourthly, Carna says, the characterisation of the three inconsistent possibilities by Mr Riordan as to the timing for any payment is neither correct nor relevant to the present interlocutory issue. The FASOC, read as a whole, identifies that: (a) from 28 January 2014 to 14 March 2014, the payment obligations are those identified under the Contract and the Substituted Contract; and (b) from approximately March 2014 to June 2014, (noting that [25], [29] and [32] of the FASOC relate only to the period up to 14 March 2014), cl 10 of the Substituted Contract was varied so that Carna did not have to submit a monthly progress claim. Griffin's obligation to pay these claims arose within 20 days of receipt of a Valid Tax Invoice as is made clear by both cl 10.2(e) of the Substituted Contract and Carna's plea (at [18(d)]) of the FASOC. 82 Carna foreshadows that it will seek leave to amend 20 business days to 20 days in [18(d)] to avoid confusion. The Cash Support Representation pleaded at [21] of the FASOC, which is not attacked in either of the applications by Griffin and Mr Riordan, is a separate representation as made clear by [21] of the FASOC. 83 None of those matters is unclear, inconsistent or incapable of being understood, Carna contends. 84 Fifthly, in relation to the question of whether the representations are future or present as queried by Griffin, Carna contends that the representations insofar as they are to future matters were made without reasonable grounds. The question of the specific amounts and dates of the payment obligations are not relevant to understanding the case raised, nor is it information determinative of the question whether the representation was misleading or deceptive. It matters not whether the representation later came to be true or otherwise. 85 If Griffin did not have reasonable grounds for making any representation with respect to any future matter, then that representation is taken to be misleading: s 4(1) of the ACL. Whether there were reasonable grounds is to be judged, amongst other things, on facts existing at the time of the representation on which Griffin actually relied: Sykes v Reserve Bank of Australia (1998) 88 FCR 511 per Heerey J, with whom Sundberg J agreed (at 513) and Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 per Gleeson JA (at 190), with whom Ward and Emmett JJA agreed. While evidence of later events, including whether the amount requested to be paid was repaid late or not at all, may be examined, to 'throw light upon the overall probabilities', they are not in themselves determinative of whether the representation was misleading or deceptive and 'hindsight illusion' must be avoided: Botany Bay City Council v Jazabas Pty Ltd [2001] NSWCA 94 per Mason P (at [83]), with whom Beazley JA agreed. Carna says that it is not necessary for it to prove the representation later turned out to be false to prove the misleading or deceptive nature of the representation as to a future matter at the time it was made. 86 Carna stresses that Griffin and Mr Riordan do not need to know the specific amounts, the basis of the calculation of those amounts or the date upon which Carna says those amounts were payable to understand the case put against them as to the representation. That applies equally to each and all of the Warranty, the Cash Support Representation and the Re-affirmed Warranty. 87 Sixthly, the true nature of the complaints raised by the Respondents, Carna says, is as to an asserted lack of evidence. The complaints about specific amounts and timing of Griffin's payment obligations under its representations are relevant as evidence of the quantum of Carna's claim, not to elucidating the representations made by Griffin between 28 January 2014 and 14 March 2014. Although Griffin's submissions cast doubt on the evidence it thinks Carna might or might not lead at the trial, the question as to the specific amounts and timing of the payments are matters for Carna to prove through its experts and its lay and documentary evidence are matters for closing submissions. Griffin's submission confirms, Carna says, the position that these are matters for trial, not for summary disposition. 88 Similarly, if the Respondents consider that Carna's quantification of its claim or the assumptions relied upon in any expert evidence are incorrect, they will have the opportunity to put on responsive evidence or tender other documents upon which they might contend alternative facts should be found. Those, Carna says, are actually matters for evidence in trial, not matter for interlocutory debate, particularly given that Griffin and Mr Riordan agitate for these particulars in advance of the filing of evidence. To the extent that the expert in any report filed clarifies the position as to assumptions or otherwise, the Respondents can react in evidence or submissions at trial. 89 Re-pleading is therefore unnecessary Carna argues, as is the provision of further particulars to understand the representations contended by Carna. 90 Nonetheless, to avoid further unnecessary debate and with no concession as to relevance as to the nature of the representations, Carna attaches to its submissions Schedules A to C, which particularise in respect of the Warranty (Sch A) and the Re-affirmed Warranty (Sch B and Sch C): (a) the amounts which Carna says it was entitled to be paid by Griffin under the Contract and the Substituted Contract; (b) the date on which payment was due, being 20 days from Griffin's receipt of the invoice; and (c) whether those amounts were paid and, if paid, when payment was received by Carna. 91 Further, while Carna makes no concession as to relevance as to the nature of the Cash Support Representation, it attaches Schedules C and D to the written submissions which also particularise: (a) Griffin's cash receipts in the period 24 March 2014 to 24 June 2014 for the sale of coal mined by Carna under the Substituted Contract; and (b) direct costs incurred by Griffin in the period 24 March 2014 to 24 June 2014 in selling coal mined by Carna under the Substituted Contract. 92 As to the claim at [44(b)] of the FASOC, Carna claims losses incurred because it could not pay its creditors by reason of the losses incurred in [44(a)] of the FASOC. It is a claim, Carna says, for indirect losses resulting from Carna's losses under the Contract and Substituted Contract causing the consequential failure of Carna to pay its creditors. The particulars of loss and damage of 8 March 2019, detail the specific amounts for each alleged breach which make up the indirect losses pleaded in [44(b)] of the FASOC. The Schedules to the particulars then break down those amounts further, for example, detailing the exact amounts owed to each Carna employee. 93 Above all, Carna stresses that the points made by the Respondents, as good, bad or indifferent as they may be, can all be made at trial with the benefit of all documentary expert and lay evidence. These ongoing skirmishes stand in the way of advancing the matter to trial or any other resolution.

CONSIDERATION 94 The Respondents should not be exposed to the risk or forced to the expense and waste of time and resources of having to work out what the case against them is. However it would be wrong to characterise the case as a classic construction case. Carna's case is more nuanced than that. Representations as to future financial capacity to perform would not commonly be a feature of a classic construction case as suggested by Griffin and Mr Riordan. But Carna's case is simpler conceptually than they portray. In a nutshell, it is that Griffin was insolvent or in a parlous financial state at the time it made the various representations and entered into the Contracts. It continued to be so. Carna says Griffin represented that it would be able to financially perform under the Contracts in circumstances where such a representation was misleading both as to a present and future fact. To the extent that Carna relies upon the absence of reasonable grounds for making a representation as to a future matter, the burden may shift to Griffin, Mr Riordan and/or Mr Roy depending upon Carna actually establishing the representations. To the extent each representation and its misleading nature relies upon existing facts, Carna has detailed them and will have to prove them. Once the relevant contractual relationships subsisted, there are said to have been further specific breaches and the Insolvency Default. As to the statutory claims, Carna says it would not have entered into the Contracts had the misleading representations not been made. By entry into the Contract, and/or reliance on misleading representations, it says it suffered loss and damage. Carna's case may raise many questions as to evidence and proof of the claim, especially issues as to causation. For example, whether Griffin's asserted non-performance of representations, warranties or terms could be said to be the cause of the loss and damage Carna contends it suffered. These are complex issues legally and factually. As to the proof of the loss, I agree with Carna that it will essentially be a matter of expert evidence to be applied with regard to relevant legal principle. 95 But I also agree with the Respondents that Carna should have provided more material before now as reflected in the Schedules Carna has (without any concession) provided accompanying its submissions. Without identification of those matters on which Carna will be bound to rely, the Respondents do not know how it is they are said to have defaulted in any relevant pleaded sense. That is a threshold question. The Respondents should not be taken by surprise, but clearly a significant portion of Carna's case will depend upon the expert evidence it calls. The Respondents will have that material well in advance of trial. 96 As to the contractual claim pertaining to insolvency, Carna will have to prove the insolvency of Griffin within the meaning of that term as relevantly contractually agreed. Expert evidence will almost certainly be needed. As to the claims generally, the Respondents' complaint that 'timeously' lacks the precision that might be expected is not unreasonable. And the absence of other data until the production of the schedules did mean that the Respondents would have been guessing at when, why and by how much Griffin was said to have failed in meeting its obligations or why the representations were misleading. 97 Those schedules must be filed as binding particulars of the claims. Clearly substantially more data and reasoning will be necessary but that gap in what is better characterised as expert evidence will be filed in other ways and, in what is no doubt an organic process. Again some of that information should be provided in particulars but it will also inevitably have to be the subject of expert testimony. There are complicated cause and effect questions that will have to be explored. 98 It seems a little surprising that the information in the schedules has only seen the light of day this late in the litigation. But it is equally curious that the Respondents have only recently pressed for it. There are some obvious reasons why both those events may be as they are. Little turns on that for present purposes and it may be relevant in due course only to the question of costs which I consider should be reserved. The important thing is that the detail of the claims is now sufficiently clear to allow the Respondents to meet the case, but undoubtedly this will need supplementation with additional particulars and evidence. Hopefully the parties will take a common sense cost-effective and efficient approach to exchanging the balance of the information necessary to either proceed to trial or resolve the dispute in other ways.

CONCLUSION 99 In the circumstances, I do not consider further orders are necessary at present, but I equally consider that the provision of the Schedules to the submissions is necessary and necessary to constitute binding particulars. I note as well that the parties have requested the opportunity to submit further procedural orders following the resolution of these applications and that will be provided for shortly after the delivery of these reasons. I will reserve the costs of these applications, noting that the spoils have been fairly evenly divided. I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

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