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[2019] QSC 143
General information, not legal advice.
Supreme Court of Queensland
2019-06-07
Flanagan J
Original judgment source is linked above.
This matter has been placed on hold for the moment following determination of some issues.
I will update you again when these issues have been determined, but no action is required for the time being.
[61] These emails were used by the plaintiffs in paragraph 53 of the original pleading. As with the email sent by the second defendant on 27 August 2010, Bond J concluded that the emails involving the third defendant could not support the allegation. His Honour's reasoning was as follows:[67]
"[29] Although it is obvious enough that the email exchange arguably supports the proposition that the 'draft MMS Option Agreement' to which the legal adviser referred had been placed on hold at some time on or prior to 28 April 2010, how it is that that connects up with -
(a) the 'could not or would not' part of the pleaded case; or
(b) either of the two pleaded types of option agreements,
[30] Whether or not the emails can support some part of what is pleaded in [53] of the statement of claim turns on how the reference to the 'draft MMS Option Agreement' is interpreted. It is for the plaintiffs to explain what their case is concerning the reference, and to do so in a way which makes it clear how the email arguably supports the pleaded case. The present problem is that the reference to the emails does not, without some further pleaded context, support the pleaded allegation. And even if that is done, how are the emails relevant to the proposition that a decision was made that Macarthur could not or would not have done something?"
[62] Unlike the original pleading before Bond J, the present pleading clarifies that the pleaded option agreement(s) which the first defendant allegedly reneged on was in the terms of, or was in similar terms to, the draft MMS option agreement. It may be accepted that this change in the present pleading provides a new relevance to the above emails. However, in my view, further context is required in order for the emails to support an inference of the matters in paragraph 57. The emails only disclose that the third defendant knew that the draft MMS option agreement was, as at 28 April 2010, temporarily on hold "following the determination of some issues". In my view, this falls short of providing a sound basis for the allegation that the third defendant knew that the first defendant had decided it could not or would not enter into the pleaded option agreements and had put negotiations on hold.
[63] I therefore accept the defendant's submission that paragraph 57 is based upon matters which do not establish knowing involvement on the part of the third defendant. Paragraph 57 should be struck out, and consequently paragraph 58 should also be struck out.
[64] Concerning the post-April 2010 debts and the related issue of causation, the defendants submit that the plaintiffs' inability to plead their case, despite four attempts, is, of itself, decisive and supports the conclusion that the proceeding should be dismissed to the extent that losses arising out of the post-April 2010 debts are concerned.[68] In relation to both the post-April 2010 debts and the post-April 2010 payments, the defendants submit that the plaintiffs' inability to progress the allegations of misleading or deceptive conduct beyond bald assertions is reason alone to dismiss the entire proceeding against all of the defendants, as is the failure to disclose a reasonable basis for asserting any knowing involvement on the part of the second and third defendants.[69]
[65] There are two bases for summarily dismissing proceedings: r 293 of the UCPR and the Court's inherent jurisdiction. (There is also the power under r 16(e) to set aside an originating process, which the Court may exercise on the same grounds that are applicable to the exercise of the inherent jurisdiction.[70]) In their amended applications, the defendants did not apply for a dismissal of proceedings under r 293 and I note that no defence is yet to be filed in respect of the present pleading. By implication, the defendants must instead be seeking to invoke the Court's inherent jurisdiction. The Court's inherent jurisdiction to stay or dismiss a proceeding is enlivened either where the proceeding is an abuse of process, frivolous or vexatious, or where the pleadings do not disclose a reasonable cause of action.[71]
[66] It is trite that the power to summarily dismiss a proceeding in the Court's inherent jurisdiction should be treated with caution.
[67] As to that, in Dey v Victorian Railways Commissioners, Dixon J, speaking of the inherent jurisdiction to dismiss frivolous or vexatious proceedings or proceedings amounting to an abuse of process, cautioned that:[72]
"A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process."
[68] Regarding the inherent jurisdiction to dismiss proceedings where the pleading does not disclose a reasonable cause of action,[73] Barwick CJ warned in General Steel Industries Inc v Commissioner for Railways (NSW) that the jurisdiction is to be "sparingly employed" and is only to be used in a "clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion."[74]
[69] These sentiments have been endorsed by the High Court on numerous occasions, both in relation to the Court's inherent jurisdiction and similar powers under rules of court:
- (a) In Fancourt v Mercantile Credits Ltd, the High Court (per curiam) stated, in the context of the predecessor to r 292, that "The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried."[75]
- (b) In Agar v Hyde, Gaudron, McHugh, Gummow and Hayne JJ noted that "a court... should not decide the issues raised in... proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way."[76]
- (c) More recently, in Spencer v Commonwealth, concerning the power to order summary judgment under s 31A of the Federal Court of Australia Act 1976 (Cth), French CJ and Gummow J reiterated, "the exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence."
"The reasons which lie behind the caution expressed by the High Court and the Privy Council are still valid. A plaintiff who claims to have a cause of action should not be prevented from prosecuting his claim unless it be obvious that he cannot succeed... The new rules, just as the old, are concerned with depriving a litigant of participation in the process which the law has always regarded as being the appropriate means of determining rights. The deprivation should only occur in a clear case, as the High Court said."
[71] The proposition which emerges from these cases is that the Court must exercise "great care"[82] if it exercises a discretion to terminate proceedings prior to trial, bearing in mind that the consequence is to deprive a party of the chance to prove his or her claim or defence at trial.
[72] With this in mind, it is now appropriate to turn to the problems with the proceeding and assess whether, in light of these problems, the proceeding is vexatious, frivolous or an abuse of process, and further whether the present pleading fails to disclose a reasonable cause of action. I will first address the plaintiffs' inability to plead a causal link between the defendants' conduct and their liability under Philip McMurdo J's orders. I will then deal with the plaintiffs' failure to substantiate allegations that are essential to the pleaded case, namely that the first defendant had decided in April 2010 that it could not or would not enter into the pleaded option agreements and to put negotiations on hold, and that the second and third defendant either were responsible for, or knew of, that decision.
(a) The plaintiffs' inability to plead a causal link between the defendants' conduct and the post-April 2010 debts
[73] It is important to identify the precise nature of the defect in the present pleading insofar as it seeks the recovery of amounts paid pursuant to Philip McMurdo J's orders. The defendants argued, and it has been accepted, that even if the material facts in the pleading are assumed to be true, the plaintiffs cannot show a relationship of cause and effect between the defendants' conduct and the debt arising from Philip McMurdo J's orders, as required by the Trade Practices Act. In that sense, the defect is that the majority of the pleading is demurrable.
[74] A similar situation to the present one was considered by Jackson J in Haggarty v Wood (No 2)[83] in the context of an application under both rr 171 and 293 and where a prior statement of claim had already been struck out.[84] In its second further amended statement of claim, the plaintiffs failed to link breaches of an alleged contract and unconscionable conduct by a third party testator with the relief claimed against the defendant. The pleading was struck out on that basis. On the issue of summary judgment, Jackson J observed as follows:[85]
"In my view, it will not be appropriate always under r 293 UCPR to give final judgment in a case in the fashion of a decision upon demurrer where a plaintiff has not pleaded a viable case capable of proof at trial by evidence, but might be able to. However, an application under r 293 UCPR presupposes that the defendant has filed a defence in response to a properly prepared and filed claim and statement of claim, so the court should not be too wary of treating a plaintiff as having nailed their colours to the mast. That approach is all the more justified where the plaintiff has had numerous attempts to articulate their case over a lengthy period.
Whether a particular case fits into this category calls for the exercise of a discretionary judgment. Sometimes, a pleader's skills may be the problem but the facts otherwise proved or indicated by the evidence will give pause to a Judge acting under r 293 UCPR. However, in other cases, the difficulty will lie in the absence of a factual stratum to make a necessary allegation, not in the failure to allege it in the pleading. In my view, r 293 UCPR is properly engaged in such a case."
[75] In my view, Jackson J's comments are relevant here notwithstanding that his Honour was proceeding under r 293 whereas the present application proceeds under the Court's inherent jurisdiction and r 171. The plaintiffs have had four opportunities to plead a proper causal link between the defendants' impugned conduct and the alleged loss. Justice Bond has previously given them specific guidance in this regard. The present pleading does not address his Honour's concerns. Given the history of the pleadings, it is unlikely that any further iteration of the pleading will do so. This is not because of a failure to allege a material fact that has hitherto been omitted, but rather because the facts, as they are, do not establish causation. In that sense, the impugned part of the present pleading is, to use Chitty J's expression,[86] worse than demurrable: it cannot be saved by any legitimate amendment. Accordingly, the proceeding should be dismissed to the extent that the plaintiffs seeks compensation arising out of their liability under Philip McMurdo J's orders of 4 April 2014. This is on the basis that the pleading does not disclose a reasonable cause of action for the recovery of such amounts.
(b) The plaintiffs' failure to substantiate allegations that are essential to their case
[76] As submitted by the defendants, the plaintiffs have been unable to progress allegations that are key to their case against each of the defendants. With respect to the first defendant, the present pleading does not disclose a basis for the allegation in paragraph 53 that in April 2010, it decided or resolved that it would not, directly or indirectly, enter into the pleaded option agreements, and to put negotiations on hold. This is in circumstances where the plaintiffs attempted to rely on the second and third defendant's emails to substantiate a materially similar allegation in the original pleading. However, following Bond J's conclusion that the emails were inadequate for this purpose, the plaintiffs have not sought to substantiate the allegation by any other means.
[77] The plaintiffs now rely upon the emails in question for a similar purpose, that is, to support the allegations that the second defendant was responsible for, or knew of, the first defendant's decision in April 2010, and that the third defendant similarly knew of the first defendant's decision. I accept the defendant's submissions that Bond J's reasoning concerning these emails applies with equal force here. The second defendant's email to the first plaintiff on 27 August 2010 does not appear to refer to the pleaded option agreements at all. The pleaded context to the email is unconvincing and, in my view, is too broad to contradict the email's otherwise plain meaning. As concerns the emails of 28 April 2010 involving the third defendant, while the emails suggest the third defendant knew that a "draft MMS option agreement" was temporarily on hold at that time, they fall short of showing that he knew that the first defendant had made the decision in April 2010 pleaded in paragraph 53.
[78] What the above reveals is that the plaintiffs' case against the defendants in this respect essentially consists of piecemeal evidence that is, at best, speculative of the pleaded case. Justice Bond made it clear that the original pleading required further context to make good the case insofar as it turned upon the first defendant's uncommunicated decision in April 2010. That further context is not forthcoming in the present pleading. From this, it can be deduced that the plaintiffs are unable to plead the material facts that are essential components to their case. Further, the differences between the original pleading, the second further amended statement of claim, and the present pleading, suggest that any subsequent pleading will purport to bolster these allegations by simply repurposing parts of the pleading that have already been considered to be deficient for related purposes. It is also noteworthy that the plaintiffs filed the second further amended statement of claim as late as 18 months after Bond J struck out the original pleading.
[80] I order that:
- Paragraphs 53, 54, 55, 56, 57, 58, 59, 59A, 59B, 65(a)(ii), (b) and (c) of the present pleading be struck out.
- The proceeding be dismissed.
- I will hear the parties as to costs.
[1] Chan & Ors v Macarthur Minerals Ltd & Ors [2017] QSC 13.
[2] Submissions of Defendants/Applicants filed 21 January 2019, paragraph 49.
[3] Transcript of Proceedings, 13 March 2019, T1-5, lines 45-47.
[4] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 1(f).
[5] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 1(d).
[6] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 1(e).
[7] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 4.
[8] Third Further Amended Statement of Claim filed 29 March 2019 paragraph 5.
[9] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 7.
[10] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 12.
[11] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 8.
[12] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 8(a), (b)(i).
[13] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 13.
[14] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 15.
[15] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 20.
[16] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 24.
[17] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 39A.
[18] Third Further Amended Statement of Claim filed 29 March 2019, paragraphs 53 and 53A.
[19] Third Further Amended Statement of Claim filed 29 March 2019, paragraphs 55 and 57.
[20] Third Further Amended Statement of Claim filed 29 March 2019, paragraphs 56 and 58.
[21] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 47.
[22] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 12A(a).
[23] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 12A(b)(i).
[24] Third Further Amended Statement of Claim, paragraph 12A(c).
[25] Third Further Amended Statement of Claim filed 29 March 2019, paragraphs 40-42.
[26] In particular, paragraphs 59, 59A, 59B and 65.
[28] Chan & Ors v Macarthur Minerals Ltd & Ors [2017] QSC 13, [13].
[29] First Strategic Development Corporation Ltd (in liq) & Anor v Chan & Anor [2014] QSC 60, [80].
[30] [2014] QSC 60, [78]-[80].
[31] First Strategic Development Corporation Ltd (in liq) & Anor v Chan & Anor [2014] QSC 60, [96]. An appeal from his Honour's judgment was dismissed: Chan v First Strategic Development Corporation Limited (in liq) [2015] QCA 28.
[32] Statement of Claim filed 11 January 2016, paragraphs 61, 63, 67(b), (d), (e), (f) and (g).
[33] Statement of Claim filed 11 January 2016, paragraphs 64(a), 65(a), 66(c).
[34] [2017] QSC 13, [37]-[40].
[35] [2017] QSC 13, [44]-[49].
[36] [2017] QSC 13, [62]-[64].
[37] It should be noted that the pleaded option agreements in the original pleading were in slightly different terms to the pleaded option agreements that now appear in the present pleading.
[38] [2017] QSC 13, [47].
[39] Submissions of Defendants/Applicants filed 21 January 2019, paragraph 34.
[40] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 59(b) and 59B.
[41] Third Further Amended Statement of Claim filed 29 March 2019, paragraph 66.
[42] Submissions of Defendants/Applicants filed 21 January 2019, paragraph 7.
[43] Further Submissions of the Defendants/Applicants filed 23 April 2019, paragraph 4.
[44] Submissions of Defendants/Applicants filed 21 January 2019, paragraph 6.
[45] Submissions for the Plaintiffs on the Defendants' Application to Strike Out the Statement of Claim filed 20 February 2019, paragraph 20; Plaintiffs' Outline of Submissions on the Defendants' Application to Strike Out filed 3 May 2019, paragraph 4.
[46] Transcript of Proceedings 8 May 2019, T1-10, lines 7-8.
[47] Exhibit CME-46 to the affidavit of Chris Michael Erfurt filed 4 December 2018, page 78.
[48] Exhibit CME-47 to the affidavit of Chris Michael Erfurt filed 4 December 2018, pages 83-84.
[49] Submissions for the Plaintiffs on the Defendants' Application to Strike Out the Statement of Claim filed 20 February 2019, paragraph 30.
[51] [2017] FCA 1397, [29].
[52] [2017] FCA 1397, [25].
[53] [2017] FCA 1397, [25].
[54] [2017] FCA 1397, [28].
[55] Submissions for the Plaintiffs on the Defendants' Application to Strike Out the Statement of Claim filed 20 February 2019, paragraph 30.
[57] Transcript of Proceedings, 8 May 2019, T1-13, lines 34-38.
[58] [2017] QSC 13, [26].
[59] [2017] QSC 13, [27].
[60] Transcript of Proceedings, 8 May 2019, T1-23, lines 4-5.
[61] Transcript of Proceedings, 8 May 2019, T1-22, lines 11-12.
[62] The option period was 12 months at the time of execution on or about 3 December 2009: paragraph 16(c).
[64] Submissions of Defendants/Applicants filed 21 January 2019, paragraphs 28(b) and 41.
[65] Submissions for the Plaintiffs on the Defendants' Application to Strike Out the Statement of Claim filed 20 February 2019, paragraph 25.
[66] These emails are found in exhibits CME-22 and CME-23 to the affidavit of Chris Erfurt filed 1 September 2016, pages 191-192. For clarity, I have excerpted Bond J's Reasons [2017] QSC 13, [28], which in turn quote these emails in chronological order.
[67] [2017] QSC 13, [29]-[30].
[68] Submissions of Defendants/Applicants filed 21 January 2019, paragraph 49.
[69] Submissions of Defendants/Applicants filed 21 January 2019, paragraph 50.
[70] Custodial Ltd v Greig [2004] QSC 452; [2005] 2 Qd R 115.
[71] Cairns, Australian Civil Procedure (2013, 10th edition, Thomson Reuters), 508 [12.470]; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 128-130 (Barwick CJ): pleadings fail to disclose reasonable cause of action; Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 (Dixon J): proceeding is an abuse of process, frivolous or vexatious.
[72] (1949) 78 CLR 62, 91.
[73] In addition to relying upon the Court's inherent jurisdiction, the defendants also relied upon the High Court of Australia's rules of court at the time, see [1964] HCA 69; (1964) 112 CLR 125, 127.
[74] [1964] HCA 69; (1964) 112 CLR 125, 128-9.
[75] Fancourt v Mercantile Credits Ltd (1983) HCA 25; (1983) 154 CLR 87, 99.
[76] [2001] HCA 41; (2000) 201 CLR 552, 575-6 [57].
[77] [2010] HCA 28; (2010) 241 CLR 118, 131 [24].
[78] [2002] QCA 224; [2003] 1 Qd R 259, 265 [7] (Davis JA and Mullins J agreeing).
[80] [2004] QCA 5; [2004] 2 Qd R 118, 133 [46].
[81] [2004] QCA 5; [2004] 2 Qd R 118, 125 [11].
[82] Fancourt v Mercantile Credits Ltd (1983) HCA 25; (1983) 154 CLR 87.
[84] Haggarty v Wood [2013] QSC 327.
[85] [2015] QSC 244, [81]-[82].
[86] Republic of Peru v Peruvian Guano Company (1887) 36 Ch D 489, 496.
[87] Reply Submissions of the Defendants filed 14 March 2019, paragraph 13.
Chan & Ors
Macarthur Minerals Ltd & Ors [2019] QSC 143
Agar v Hyde [2001] HCA 41; (2000) 201 CLR 552, cited
Chan & Ors v Macarthur Minerals Ltd & Ors [2017] QSC 13, considered
Custodial Ltd v Greig [2004] QSC 452; [2005] 2 Qd R 115, cited
First Strategic Development Corporation Ltd (in liq) & Anor v Chan & Anor [2014] QSC 60, considered
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, cited
Gray v Morris [2004] QCA 5; [2004] 2 Qd R 118, cited
Haggarty v Wood (No 2) [2015] QSC 244, considered
Jonker v Thomas International Limited [2017] FCA 1397, cited
Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2002] QCA 224; [2003] 1 Qd R 259, cited
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118, cited
(b) The plaintiff must show that the losses suffered are causally related to the contravening conduct. In this regard, in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525, the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ stated that s 82(1) should be understood as taking up the common law practical or common-sense concept of causation as discussed in March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506.
(c) Of course, the offending conduct need not be the sole cause of the plaintiff's loss: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at [33] and [216]. It will suffice if the contravening conduct was a cause which materially contributed to the loss, despite the fact that there may have been other causes.
(d) The reference to 'by' in s 82 has been interpreted as including the common law's approach in contract and tort to limiting damages by reference to concepts such as remoteness. As McHugh J stated in Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [136] (Gummow J agreeing):
[39] As a general proposition, the defendants are entitled to have pleaded a direct and unambiguous identification of the material facts relied on to establish the causal link which the law requires and which, at least arguably establishes that link: Lee v Abedian [2016] QSC 92 at [81].
[40] In Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221, Jackson J collected some further general statements of principle, to similar effect (emphasis added and footnotes omitted):
[45] For their part, the plaintiffs submitted that they had pleaded a classic 'no transaction' case: no agreements would have been entered, payments made or debts incurred if Macarthur had advised the plaintiffs that it would not enter into an option agreement to purchase the shares or Area 317. The plaintiffs submitted that the defendants' proposition that there was no causal link between the impugned conduct and the plaintiffs' decision was the kind of approach rejected by the High Court in Medlin v State Government Insurance Office [1995] HCA 5; (1995) 182 CLR 1 because it wrongly focussed on the intervening decision. They relied on the highlighted parts of the following passage (at 67) from the judgment of the plurality (although expressed in relation to the law of negligence, the observations are just as relevant to causation under the Trade Practices Act):
(2000) 201 CLR 552
(1949) 78 CLR 62
(1983) 154 CLR 87
(1964) 112 CLR 125
(2010) 241 CLR 118
(1992) 175 CLR 514
(1991) 171 CLR 506
(2002) 210 CLR 109
(2001) 206 CLR 459
(1995) 182 CLR 1
[70] It is also noteworthy that the powers to give summary judgment in rr 292 and 293 are also subject to the same precautions. In the Court of Appeal case of Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq), Holmes J (as her Honour then was) repeated Barwick CJ's warning in General Steel Industries Inc in the context of an appeal from a summary judgment application.[78] Similarly, in Gray v Morris, Philip McMurdo J considered the High Court's cautionary statement in Fancourt v Mercantile Credits Ltd[79] to be "forceful and authoritative guidance" in the exercise of the power under r 293.[80] Justice Chesterman (as his Honour then was) made a similar observation in Gray v Morris:[81]
[79] In these circumstances, to allow the proceeding to progress to interlocutory stages, such as disclosure, would, as the defendants submit, allow the plaintiffs to merely fish for a case.[87] In my view, the proceeding is vexatious or frivolous, and would operate as an abuse of process if it were to continue. Accordingly, the proceeding should be dismissed in its entirety.