Casey v Australian Broadcasting Commission [2022] NSWSC 203 | Case summary

Supreme Court of NSW|2022-02-28|Before: Williams J

Introduction

These reasons concern an application by the second to fifth defendants to summarily dismiss or strike out as an abuse of process the whole of the plaintiffs' statement of claim or, alternatively, to summarily dismiss or strike out the plaintiffs' oppression claim.

The present application

The present application was made by the second to fifth defendants by interlocutory process filed on 14 February 2022. The Company did not seek to be heard in relation to the application. The plaintiffs opposed the application.
In these reasons, references to "the defendants" are references to the second to fifth defendants only, unless the contrary intention is plainly indicated.
The defendants' principal application is for an order summarily dismissing the proceedings under r 13.4 or striking out the whole statement of claim under r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The defendants submitted that the statement of claim "posits two alternative cases for declaratory relief, which are irreconcilable" and that "the juxtaposition of these two claims … renders the proceeding untenable". The second to fifth defendants contend that the plaintiffs are entitled to elect which of the two cases to bring and, failing such election, the Court should summarily dismiss the proceedings or strike out the whole of the statement of claim.
The defendants' alternative application is for an order summarily dismissing or striking out the plaintiffs' oppression suit.

Consideration and determination: the defendants' principal application

The applicable principles may be summarised as follows.
A defendant is entitled to plead inconsistent defences in the alternative: Casey v Australian Broadcasting Commission [1981] 1 NSWLR 305 (Casey) at 308-309; UCPR, r 14.18.
However, that is subject to the Court's power to summarily dismiss proceedings or strike out a pleading to prevent what would otherwise be an abuse of process, or to strike out pleadings on any of the grounds set out in UCPR, r 14.28: Casey at 309.
It will be an abuse of process, or a pleading will be liable to be struck out as embarrassing, if a party pleads alternative inconsistent cases and one set of alternative facts is known to the party to be false. However, there is no abuse or embarrassment if the question of which alternative facts are correct involves some complex legal or factual analysis or where the relevant facts are open to different interpretations: Issitch v Worrell [2000] FCA 477; (2000) 172 ALR 586 at [32]; J C Decaux Pty Ltd v Adshel Street Furniture Pty Ltd [2000] FCA 118; (2000) 178 ALR 339 at [21]; CGU Insurance Ltd v Lawless [2008] VSCA 38 at [28]; Hopkins v AECOM Australia Pty Ltd (No. 7) [2016] FCA 234 at [12]-[13]; Otsuka Pharmaceutical Co Ltd v Generic Health Pty Ltd [2019] FCA 230 at [28].
Counsel for the defendants submitted that, in this case, Mr and Mrs Camera positively assert that they are the only shareholders and directors of the Company and deny the authenticity of documents relied on by the defendants as establishing their membership and directorships. It is the denial of the authenticity of those documents that the defendants rely on as precluding the plaintiffs from pleading the alternative oppression suit which rests on the assumed validity of the defendants' membership and directorships of the Company.
The submissions are, with respect, misconceived. The plaintiffs' reply does not admit the authenticity of the relevant documents. The plaintiffs do not positively deny the authenticity of those documents. Moreover, the plaintiffs' first case does not turn solely on the authenticity of the documents. For example, assuming that the authenticity of the Heads of Agreement and Form 484 is established, the pleadings appear to give rise to a legal question about whether those documents constitute a corporate act of the Company through its directors by which shares were issued to Whiteknight: see In the matter of Seabay Kitchen Pty Ltd [2019] NSWSC 790 at [11]. Whether or not the shares were validly issued to Whiteknight will affect the outcome of the other matters in issue in the plaintiffs' first case, as explained at [13] above.
The present case is one in which the Court will be required to undertake a legal and factual analysis in order to make findings as to who were the members and directors the Company at relevant times. Neither the plaintiffs nor the defendants are assured of success in advance of the Court undertaking that analysis. This is not a case in which the plaintiffs know that either the allegations of fact in their first case or the assumptions in their second case are false. There is therefore no embarrassment or abuse of process involved in the plaintiffs pleading the oppression suit in the alternative to their first case and on the assumption that they do not succeed in establishing some of the allegations underpinning their first case. The plaintiffs are not required to make any election.
For those reasons, the defendants' application to summarily dismiss the proceedings or strike out the whole of the statement of claim is dismissed.

Consideration and determination: the defendants' alternative application

The defendants submit that the facts pleaded by the plaintiffs are not capable of establishing oppression because: 1. alleged events prior to 14 April 2015, when the plaintiffs were the sole shareholders and directors the Company, are not relevant to the oppression suit; 2. there are no facts alleged in the period after 14 April 2015 that, on the assumptions that apply to the oppression suit (see [15]-[16] above), are capable of constitution oppression; and 3. the matters pleaded in paragraph 76 of the statement of claim are said to be the result of the exercise by Whiteknight and Property Group of their powers as members of the Company, yet there is no pleading of facts relied on in support of the contention that Whiteknight or Property Group have exercised their powers as members to remove the plaintiffs as directors without their knowledge or consent or to appoint Mr Sheppard and Mr Shannon as directors.
I reject the first submission. The events prior to 14 April 2015 are relevant as context in which the subsequent events allegedly occurred.
I reject the second and third submissions. The assumptions on which the plaintiffs' oppression suit is based do not affect the plaintiffs' allegation that they have never resigned as directors and were purportedly removed without their knowledge and consent. The alleged events after 14 April 2015 involve the plaintiffs being excluded from representing the Company in important dealings with third parties concerning the Company's debts, property and water entitlements on the grounds that the third parties are only prepared to deal with directors of the Company. This has allegedly incurred in circumstances where the plaintiffs allege that Mr Sheppard and Mr Shannon claim to be the directors and are allegedly carrying on the negotiations and dealings that the plaintiffs have been excluded from. Thus, according to the plaintiffs, they are members of the Company and guarantors of its debts, yet they are excluded from the negotiation table or the decisions being made concerning the Company.
In my opinion, it is sufficiently clear from the statement of claim as a whole that the plaintiffs rely on the shares issued or purportedly issued to Whiteknight (and subsequently transferred to Property Group) as indicating that those entities exercised or purported to exercise powers as members by causing or permitting the removal of the plaintiffs as directors and by appointing Mr Sheppard and Mr Shannon as directors of the Company. Neither the pleadings nor commercial common sense point to any other person who would have any interest in causing a change in the directorship of the Company except, on the defendants' case, the plaintiffs themselves. It is clear that the plaintiffs deny having done so.
Although framed as pleading complaints, the defendants' submissions are in substance concerned with the merits (or lack of merit) of the oppression suit. That is a matter for trial. As the plaintiffs submitted, the defendants understand the pleaded case as they have pleaded a defence to it without any complaint at that time.
An application to strike out a pleading on the ground that it discloses no reasonable cause of action is essentially a summary dismissal application. As the defendants acknowledged, an application to summarily dismiss proceedings must demonstrate that the plaintiffs' claim, taken at its highest, is "manifestly groundless" or "so obviously untenable that it cannot succeed": General Steel Industries v Cmr for Railways (1964) 112 CLR 125 at 129; [1964] HCA 69
As Gleeson JA said in Pi v Zhou [2016] NSWCA 24 at [9]: "It may be accepted that the power to order summary dismissal is one that should be exercised with great care and not unless it was clear that there is no real question to be tried. The test to be applied has been variously expressed, including: 'So obviously untenable that it cannot possibly succeed'; and 'manifestly groundless', but the underlying point is that there must be a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial or a hearing in the ordinary way: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552;Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 at [46]; Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 at [24]-[25] (French CJ and Gummow J)."
The defendants' application in the present case does not meet that high test for the reasons explained above.

Conclusion and orders

For the foregoing reasons, the defendants' interlocutory process must be dismissed. There is no apparent reason why the costs of that interlocutory process should not follow the event.
I make the following orders: 1. Order that the interlocutory process filed by the second to fifth defendants on 14 February 2022 is dismissed. 2. Order the second to fifth defendants to pay the plaintiffs' costs of and incidental to that interlocutory process.

Endnotes

Statement of claim, paragraph 18; Defence, paragraph 18.
Defence, paragraph 19. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 March 2022

Casey v Australian Broadcasting Commission

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