Continental Conveyor & Equipment Pty Ltd v Williams

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1622/99 CONTINENTAL CONVEYOR & EQUIPMENT PTY LIMITED & ORS v GARY ALEXANDER WILLIAMS & ORS

1 This is an application upon an amended notice of motion dated 27 July 2000 ("the present notice of motion") for the following orders: "1(a) That the Plaintiffs provide further and better particulars in compliance with the Judgement [sic] of Justice Bryson dated 2 June 2000 and as requested in the letter of Furlong & Associates, Solicitors dated 7 July 2000. (b) In the alternative, the Statement of Claim should be struck out pursuant to Part 16 Rule 7 due to the plaintiff's [sic] failure to provide further and better particulars referred to in proposed order 1a hereof. 2 That the paragraphs of the Statement of Claim relating to Sections 232 & 1317HD & 79 of the Corporations Law be struck out as disclosing no cause of action, pursuant to Part 13 Rule 5." 2 In order to determine the present notice of motion it is necessary to examine the history of the matter. There have been earlier applications relating to the statement of claim and particulars in this case determined by Master McLaughlin: Continental Conveyor & Equipment Pty Limited v Williams 15 December 1999 unreported ("the Master's judgment"); and by Bryson J: Continental Conveyor & Equipment Pty Limited v Williams [2000] NSWSC 481 ("Bryson J's judgment"). 3 The subject matter of the proceedings was stated succinctly by Bryson J in [1]: "In these proceedings the interests of the second, third and fourth defendants are associated and they have common representation. They are not associated with the first defendant. In outline the plaintiffs claim to the effect that the first defendant, Mr Williams, was the managing director of the plaintiff companies, referred to as the Continental companies, and as managing director Mr Williams did business with the second defendant which used the trade name Cross Country and traded as a dealer in motor vehicles in Muswellbrook; the third defendant Mr Pike was the director or managing director of Cross Country and the fourth defendant, Mr Gane, was the sales manager. It is alleged that Mr Williams on behalf of the Continental companies bought motor vehicles on hire purchase at prices which were in excess of the list prices recommended by Ford Australia for the vehicles, that he did not obtain discounts for the Continental group which could have been obtained with fleet operator status accorded by Ford Australia, and that he authorised sales on consignment of vehicles owned by the Continental companies at unrealistic and uncommercial prices. The excess prices paid are alleged to total $79,104, the claims relating to fleet discounts amount to $85,467 and the losses on sales on consignment are alleged to have amounted to $34,125.74" 4 In the statement of claim (in all its manifestations) the plaintiffs have essentially relied upon two sets of causes of action against the second, third and fourth defendants. The first set depends upon participation by the second, third and fourth defendants in breaches by the first defendant of fiduciary duty towards the plaintiffs under the second limb in the well known passage from the speech of Lord Selborne in Barnes v Addy (1874) LR 9 Ch App 247 at 251 ("the fiduciary duty causes of action"). The second set has always depended upon participation by those same defendants in breaches by the first defendant of statutory duties towards the plaintiffs under the Corporations Law and are the set of complaints referred to in the second prayer of the present notice of motion ("the Corporations Law causes of action"). The substantive prayer of the notice of motion dated 2 September 1999 which was before the learned Master was as follows: "That the paragraphs of the Statement of Claim as notified in the Second Defendant's letter to the Plaintiff of 2 September 1999 is [sic] struck out on the basis that they disclose no reasonable cause of action, or will otherwise cause prejudice or delay in the proceedings."

The pleading in fact dealt with on the application before the Master was not the original but the amended statement of claim. It is quite clear from the Master's judgment and from copies of written submissions made to the Master which have been laid before me that the Master traversed two subject matters, the first an application to strike out the whole or particular portions of the amended statement of claim, and the second an application for further particulars. It is clear that the application to strike out was based at least in part on a submission that the amended statement of claim contained no reasonable statement of the causes of action. 5 I do not doubt that the submissions considered by the Master were complicated and not entirely clear (a situation repeated before me). In the Master's judgment the learned Master complained in [3] that the parts of the pleading sought to be struck out were not set out in the notice of motion but could only be discerned by cross reference to the turgid correspondence between the parties. Such cross references to correspondence were part of the complication of the argument. In [4] and [5] the learned Master set out Part 15 r 26 of the Supreme Court Rules 1970 ("the SCR") and recorded that the application was made under that rule and not made for summary dismissal under Part 13 r 5. That he was dealing with a claim to strike out as contravening Part 15 r 26 both the fiduciary duty causes of action and the Corporations Law causes of action is made clear in [6] and [7] of the Master's judgment. The learned Master first dealt with a complaint about paragraph 32 of the amended statement of claim but said that any problem with that paragraph could be met by particulars. He then dealt with paragraph 39 of the amended statement of claim which was taken as an exemplar of the fiduciary duty causes of action: [13] to [22]. His conclusion was stated as follows: "The allegations contained in paragraph 39 seem to me, if they can be established, to ground a cause of action of the nature contemplated by the House of Lords in Barnes v Addy . Neither do I consider that that paragraph is embarrassing, to the extent that it is so framed that the applicant/defendants would not be enabled to plead thereto. There is actual knowledge asserted in paragraph 39; there is wilful closing of the eyes; there is wilful failure to make inquiries; and actual knowledge of further circumstances."

He then turned to paragraph 45 of the amended statement of claim which he considered stood in the same case as paragraph 39: [23] and [24]. He then proceeded to deal with paragraph 49, which is a statement of one of the Corporations Law causes of action: [25] to [35]. He did in fact conclude that he ought strike out paragraph 49: see [35]. But that was only upon the ground that there were not allegations in the body of the pleading properly alleging the conspiracy that was relied on as one of the bases under s 79 of the Corporations Law upon which the second, third and fourth defendants (the second in the particular paragraph) were alleged to be liable under the Corporations Law. He found no other fault with paragraph 49. He granted leave to re-plead to remedy the defect he had found. This led to the filing of the further amended statement of claim which is now before me. The totality of the orders made by the learned Master on the motion was to strike out paragraph 49 with leave to re-plead and to order that the costs of the motion be the plaintiffs' costs in the proceedings. 6 From this decision the plaintiffs sought to appeal to a Judge and the appeal in due course came before Bryson J. There were difficulties as to the competence of the appeal because it was brought out of time. In Bryson J's judgment his Honour stated the subject matter of the proceedings as quoted in [3] above and characterised the application before Master McLaughlin as an application "for an order that certain paragraphs of the Statement of Claim be struck out on the basis that they disclosed no reasonable cause of action or would otherwise cause prejudice or delay in the proceedings." His Honour found that the appeal was out of time and that the explanation for the delay was not satisfactory (see [3]), but on the application to extend time proceeded to consider the merits of the appeal. His Honour turned to the complaint that paragraph 39 of the statement of claim did not state any reasonable cause of action and concluded that "it cannot be said that it fails to allege a recognisable ground of suit; or that it should be struck out for that reason": see [6]. His Honour turned to complaints about particulars of knowledge and concluded that "it would plainly have been erroneous to strike out paragraph 39 or corresponding paragraphs on the ground that they were not sufficiently particular with respect to knowledge." His Honour indicated "that extension of time for appeal should not be granted as the appeal is not fairly arguable": see [8]. 7 His Honour, however, proceeded to criticise the way in which particulars had been given, both as to their substance and as to the fact that they could only be derived by dipping into the turgid correspondence to which I have already referred: see [10]. His Honour set out a sample of the particulars and said of them (at [14]): "Whatever these answers may communicate is concealed behind a chain or fog of references and cross-references, and the particulars are of no real use for the defendants' task of recognising what is alleged against them and preparing to meet it, or for the court's task of recognising during the hearing what is in issue for the purpose of deciding evidence questions, and at the end of the hearing for the purpose of determining the issues. At this stage I am not concerned to decide whether the plaintiffs' case is a good case, if the allegations in the pleading are made out, or whether it should succeed; I am concerned with sufficient particularisation and with preparation for a fair trial without surprise."

His Honour indicated that the inadequacy as to the particulars extended to particulars of a large number of other paragraphs of the amended statement of claim including paragraph 49: see [17]. He did not otherwise refer in his judgment to paragraph 49 of the amended statement of claim (or of the further amended statement of claim which had already been filed on 2 February 2000 containing a re-pleading of paragraph 49 and of other paragraphs). It is not clear whether failure adequately to state a cause of action, either by the original paragraph 49 or the amended paragraph 49, was agitated before Bryson J. Certainly Bryson J did not accede to any such submission, so the Master's judgment stood confirmed with regard to paragraph 49. 8 His Honour ordered the filing of a full and complete set of particulars of the allegations of knowledge in the statement of claim and this order was met by the plaintiffs filing a document entitled "particulars of further amended statement of claim" on 16 June 2000. It was after that the present notice of motion was filed and subsequently amended to contain prayers as set out in [1] above. The complaint made by the "affidavit in support of notice of motion" of the second, third and fourth defendants' solicitor, M W Furlong, sworn 12 July 2000 was that the particulars filed did not satisfy the order made by Bryson J. 9 The motion first came before me on 18 August 2000 and there was a deal of discussion on that day concerning the adequacy of the particulars as filed. I made certain observations concerning the view that I took at that time of their adequacy and the matter was stood over to 5 October 2000. I invited the plaintiffs during that adjournment to amend the particulars to meet the criticisms that I had made and I directed that the second, third and fourth defendants file a defence, since it seemed to me that, as they had to answer the allegations in the pleading and not the statements in the particulars, there was no embarrassment in them doing so. They in fact filed a defence on 4 October 2000. 10 In submissions both oral and written at the hearing on 18 August and 5 October 2000 the second, third and fourth defendants appeared to proceed as if the determination of the earlier proceedings before the Master and Bryson J had not occurred or were of no account. The second, third and fourth defendants' written submissions used on 18 August commenced with a paragraph 1 as follows: "The applicants by motion seek to strike out certain paragraphs of the defendants [sic] statement of claim on the basis that they do not disclose a cause of action, and are otherwise embarrassing and prejudicial: Part 15 rule 26 and Part 13 rule 5. When the matter was before the Master, he made it clear that he was dealing only with the request for particulars and did not deal at all with the question of whether the claim was otherwise demurrably within Part 13 rule 5. The applicants now so contend for the reasons set out below."

A deal of their argument on 5 October emitted more heat than light. It was characterised by the plaintiffs' counsel as "broad brush". That was an understatement. In particular, the statement in the paragraph 1 set out above that before the Master it was "clear that he was dealing only with the request for particulars and did not deal at all with the question of whether the claim was otherwise demurrably within Part 13 r 5" was grossly wrong. Whilst it was said before the Master that the application was not being argued under Part 13 r 5 but only under Part 15 r 26, the matter was plainly argued before the Master on a "demurrer" basis; it is quite clear from the written submissions as well as from the Master's judgment that it was argued that the various claims ought be struck out under Part 15 r 26 as showing no reasonable cause of action, a conclusion which, looking at the material, Bryson J came to as much as I have come to it. The situation remaining palpably unclear at the end of argument on 5 October 2000, I invited counsel to make further written submissions concerning the matter and more than one submission was received from each side over a period of time. 11 The written submissions made on behalf of the second, third and fourth defendants continued to argue that the pleading showed no proper causes of action in relation to the breaches of fiduciary duty (a matter not even raised in the present motion), whereas it was clearly determined by the Master and by Bryson J that those causes of action were properly pleaded. Whilst their judgments were not quite so clear in relation to the Corporations Law causes of action, in my view the proper conclusion to be drawn from the Master's judgment was that the only defect in relation to the statement in the pleading of these causes of action was a lack of proper particularisation of the allegations of conspiracy, and it was on this ground alone that one paragraph was struck out. Insofar as any submission that paragraph 49 was otherwise demurrable was put to the learned Master, he rejected it and, insofar as any submission was put to Bryson J concerning the correctness of the Master's decision, his Honour found the appeal unarguable. In those circumstances I am of the view that the applications now made that the statements of both sets of causes of action are inadequate and should be struck out ought not be entertained. Nor ought there be entertained an application under Part 13 r 5 on the same ground. 12 In coming to this conclusion I rely upon the principle stated in relation to interlocutory applications by Sperling J in Wentworth v Rogers NSWSC 28 April 1995 unreported (noted (1996) 70 ALJ 613), as follows: "I hold that, as a general rule, an interlocutory order made after a hearing at which each side has the opportunity to put its case should not be set aside, varied or discharged, except to accommodate a change of circumstances or where evidence has become available which was not available at the earlier time. By the same token, where an application for interlocutory relief has failed, a further application for the same relief should, as a general rule, not be entertained, subject to the same qualifications, at least after a hearing on the merits, particularly where the application is designed to finalise the principle [sic] proceedings, such as an application for summary judgment or for a permanent stay."

His Honour relied on a number of authorities, including particularly what was said by Griffith CJ in Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164 - 165, and by Buckley LJ in Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485 at 492 - 493. Both of these passages were cited with approval by the High Court in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 178. The matter was stated as follows by McLelland J (as his Honour then was) in Brimaud v Honeysett Instant Print Pty Limited NSWSC 19 September 1988 unreported, where his Honour said: "The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process illustrated in such cases as Stephenson v Garrett (1891) 1 QB 677 and Hunter v Chief Constable (1982) AC 529, and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing (see eg s 75A(8) of the Supreme Court Act 1970). Interlocutory orders, of their very nature, create no res judicata or estoppel, and the Court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will. The over-riding principle governing the approach of the Court to interlocutory applications is that the Court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the Court to set aside, vary or discharge interlocutory orders will ordinarily be exercised... In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application (see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164-5; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447-8; Chanel v Woolworth & Co [1981] 1 WLR 485 at 492-3; Adam P Brown Male Fashions v Philip Morris 148 CLR 170 at 177-8; Butt v Butt [1987] 1 WLR 1351 at 1353; Gordano v Burgess [1988] 1 WLR 890 at 894)."

His Honour repeated that view in Danieletto v Khera NSWSC 1 September 1994 unreported and Collier v Howard NSWSC 23 April 1996 unreported and the same view was expressed by Windeyer J in Re BPTC Ltd (In liquidation) Application of J W Murphy and P B Allen Re G J Kelly NSWSC 16 March 1995 unreported. 13 There has subsequently been one important qualification to these statements of principle. This has arisen in cases concerning repeated applications for extension of time to sue under limitation statutes. The qualification relates particularly to the admissibility on a second application of evidentiary material which is new, but is not "fresh evidence", in that it could have been but was not called on the earlier application. The above statements of principle appear to preclude the admissibility of such evidence. The recent cases (noted (2001) 75 ALJ 229) have generated division of judicial opinion. In the Victorian Court of Appeal such evidence was held inadmissible in D A Christie Pty Ltd v Baker [1996] 2 VR 582 (per Brooking and Hayne JJA, Charles JA dissenting). But in the New South Wales Court of Appeal Charles JA's dissenting view was preferred: Nominal Defendant (NSW) v Manning (2000) 31 MVR 524 (Heydon JA and Foster AJA, Mason P dissenting). However, these cases did not otherwise derogate from the correctness of the general principle. 14 As I have already said, it is clear to me that any application to strike out for want of statement of a reasonable cause of action is precluded by the proceedings that have already occurred and ought not now be considered. In this case there is no question of additional evidence (or any evidence) being led, the applications both turning on the form of the pleading. Nor is there any other consideration which requires in the interests of justice a retraversing of the "demurrability" of the plaintiffs' causes of action. There is no change of circumstances. There is a new paragraph 49, but its re-pleading was allowed in relation to a complaint quite different from that now sought to be made, and the complaint now sought to be made in respect of the Corporations Law causes of action ought not to be allowed to be re-agitated. In relation to the fiduciary duty causes of action the case is quite clear that the complaint made (which is not even encompassed in the present notice of motion) ought not now be allowed. Indeed, this seems to me exactly the sort of application which the general principle is intended to preclude. In any event, whilst I do not need to consider the submissions put to me concerning the Corporations Law causes of action, I should state that it is my view that the submissions now made would not in any event lead me to strike out any of the relevant paragraphs. The question of whether or not the plaintiffs can succeed against any of the second, third or fourth defendants may be dealt with at the trial in the light of all the evidence. 15 So far as the question of particulars is concerned, the complaints in the affidavit of Mr Furlong to which I have referred in [8] above are in the most general terms and the submissions put to me orally on 18 August were also in general terms. Furthermore, the submissions put orally on 5 October, after the amended particulars were filed on 26 September 2000, were again in general terms and there were no additional submissions put concerning the adequacy of the particulars in the written submissions thereafter lodged. In my view, the amended particulars having been filed, the nature of the plaintiffs' case has been made plain enough for present purposes and I do not propose to make any order concerning further particulars on the present motion. If real problems appear as to the definition of the plaintiffs' case or the second, third and fourth defendants' understanding of it as the interlocutory steps in the case unfold, they may be attended to by appropriate directions as time goes by: see Commissioner of Police v Seddon NSWSC Young J 18 April 2001 unreported. In saying this, I am not intending to encourage factitious or combative applications, but only to indicate an avenue for the resolution of real problems arising in the conduct of the case. The parties are urged by me, as they have been by Bryson J to consider the provisions of Part 1 r 3(3) of the SCR and their obligation to cooperate in the preparation of the case. 16 Submissions have been put to me on costs. It seems to me that the appropriate regime as to the costs of the present motion is as follows. As a result of observations made by the Court on 18 August 2000, the plaintiffs made amendments to the particulars they had earlier filed, thereby acknowledging that those particulars required improvement. In those circumstances, it seems to me that the costs of the present motion up to and including 18 August 2000 ought be costs in the proceedings. However, in view of the second, third and fourth defendants' persistence in putting thereafter in oral and written submissions arguments which in my view they were largely precluded from putting by earlier decisions in the proceedings and which did not procure any further order in their favour, I propose to order that the second, third and fourth defendants pay the plaintiffs' costs of the present motion from and after 19 August 2000. The present motion will be dismissed. 17 I have already indicated during the course of argument that I propose to retain the case management of this case, which has been occasioning such difficulty. I shall upon delivering this judgment appoint a day on which the parties may apply for further directions. …oOo…

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