Craig v Silverbrook

The Statement of Claim, its Inherent Defects and Prolixity

1. The surviving contest between the remaining Global defendants and the plaintiffs is whether the plaintiffs should be given leave to re-plead, now the plaintiffs have accepted that their pleading is defective. The Court's exercise of discretion on this issue is partly informed by the pleading which is already presented and the nature of the amendments which are foreshadowed that will be made, now that the plaintiffs have legal advice available to them.
2. The existing Statement of Claim is defective at many levels, not only against the remaining Global defendants but against other parties. As a result of the Settlement Agreement the Global defendants exited the first case. Thus relief seeking to set aside Sackar J's judgment is not relevant to them. But the relief claimed against these other parties give some indications of the plaintiff's approach to this litigation. The Statement of Claim is 204 pages long and comprises 1504 paragraphs.
3. The material pleaded against the remaining Global defendants on its face barely makes sense. It does not disclose a cause of action even though it only covers the following eight paragraphs of the total pleading which are set out below: "THE MEMJET COMPANIES AND THE SALE OF THE MEMJET TECHNOLOGIES 1497. On or about 15 September 2012 the plaintiffs entered into an agreement with the Memjet Companies and the GKFF. The effect of the agreement was that: (a) The plaintiffs discontinue the proceeding against the Memjet Companies; and (b) that the plaintiffs only relief was against the 15.0186% held by the Silverbrook Interest as defined in the Memjet Restructure Agreement. 1498. In the period 6 December 2012 and 24 April 2014 the parties in the Restructure Agreement participated in Arbitration through the London Court of Arbitration. 1499. The parties in the Restructure Agreement failed to disclose plaintiffs' claims, rights and interests in the Memjet technology arising out of the matters pleaded in the Third Further Amended Commercial List Statement in the proceedings 2010/333159 to the London Court of Arbitration. As a consequence the plaintiffs rights were ignored. 1500. On or about 24 April 2014 the London Court of Arbitration handed down AWARD Arbitration Number 122270. 1501. On or about 29 January 2014 the Memjet Companies in Ireland, USA, Singapore and parties in the Memjet Restructure Agreement in full knowledge of plaintiffs' claims, rights and interests in the Memjet technology entered into a Confidential Settlement Agreement. (Confidential Settlement Agreement) the effect of which was: (a) that the Silverbrook Interest as defined in the Memjet Restructure agreement transferred the valuable partnership shares to the Memjet Companies and the GKFF for € 0.01 per share. 1502. By reason of matters set out in paragraphs 1499 to 1502 each of Kia Silverbrook, Janette Lee, SRPL and their associated companies, each of Ray Stata, RSIS LLC and the Irish companies defrauded Lorretta and Des Craig of their fair share of the Memjet Technology, its profits and income. Particulars Paragraphs 3254 - 3274 of the affidavit in chief of Lorretta Craig. 1503. Prior to the making of the $2.14 million in advances, the plaintiffs were in a position of financial strength, owned eight real properties and valuable shares. Now the plaintiffs own no property and have no assets. 1504. By reason of the matters pleaded above the plaintiffs seek the relief set out above in this Statement of Claim."
4. But as against the other defendants the pleading, particularly commencing paragraphs [142] and following, seeks to raise extensive alleged errors of fact and law in or leading to Sackar J's judgment, as if the matter were on appeal. The appeal from Sackar J's decision was withdrawn as the chronology shows. Moreover this Court has no jurisdiction of the kind formerly available in the old bill in Equity procedure for a trial judge in a trial division of this Court to seek relief in the nature of a bill of review; such procedure was long ago abolished by the Equity Act 1880, ss 70, 71, 73 and 77: see Harrison v Schipp (2002) 54 NSWLR 612; [2002] NSWCA 78.
5. But the rest of the pleading is defective in other ways. The plaintiffs appear to be contending that by perjury and deception the Silverbrook Parties and wider associated defendants fraudulently procured the outcome before Sackar J. But such a case comes squarely up against the public policy rules perhaps best stated in Cabassi v Vila (1940) 64 CLR 130 that hold that no civil action lies in respect of evidence given by witnesses in the course of judicial proceedings. Thus, neither can the judgment be overturned by what here looks like the old bill in Equity procedure, nor is any action maintainable against the parties or witnesses to the prior action. The parties are of course covered by a res judicata. The only proper form of review of Justice Sackar's decision is on appeal which is now withdrawn. The approach of the Statement of Claim seems to be an attempt to circumvent the plaintiff's withdrawal of their appeal against Sackar J's decision.

The Proposed Claims for Misleading Conduct and Breach of the Settlement Agreement

1. The plaintiffs seek to amend their Statement of Claim to plead that they would not have entered into the Settlement Agreement but for misrepresentations made by the remaining Global defendants among others prior to the plaintiffs entry into the Settlement Agreement with respect to the sale of the intellectual property rights to the Memjet Technology. It is also proposed to be alleged that the remaining Global defendants failed to disclose to the plaintiffs before entry into the Settlement Agreement facts which, in the circumstances, the plaintiffs contend they were reasonably entitled to expect would be disclosed to them.
2. The second proposed pleading relates to alleged breaches of obligation the remaining Global defendants owe to the plaintiffs arising out of the Settlement Agreement. Apparently it is said that the remaining Global defendants breached the notice requirements in the Settlement Agreement, clause 7 by failing to give the plaintiffs prompt reasonable notice of any proposal by interests associated with the Silverbrook Parties to dispose of their interests in various companies holding the Memjet intellectual property.

Consideration

1. In her careful and thoroughly presented submissions Ms Curtin pointed to evidence that the plaintiffs had difficulty in obtaining the assistance of legal representatives to perfect her pleading and submitted that it is usually appropriate to grant leave to re-plead in circumstances where the parties subject to the strike an application are self-represented. She points to the authorities that suggest that if a defect in pleading can be cured by an amendment the Court would ordinarily exercise its discretion to grant leave to amend rather than exercise the power to strike out the pleadings: Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 at 536.
2. Ms Curtin submits that the plaintiffs' pleading is not beyond saving by legitimate amendment although it may be in need of "heroic surgery": Coshott Co v Kam Tou Mak [1998] FCA 147. Moreover she says that the plaintiffs have not been given the time and opportunity to remedy the defects in the pleading, such that they should now have the opportunity to re-plead.
3. But in my view there are some special considerations in this case. The procedural background makes the the Court extremely cautious about allowing re-pleading. There has already been a 13 day trial before Sackar J. His Honour gave a judgment of 524 paragraphs in 174 pages after 13 days of hearing. The existing Statement of Claim in most respects against other defendants is prolix and is an attempt to re-litigate matters raised before Sackar J in a non-maintainable fashion, after an appeal from his Honour's judgment was withdrawn.
4. Conscious of these matters and the fact that Ms Curtin had only come into the matter recently, the Court gave her a further opportunity to explain the nature of the re-pleading in proposed substitution for paragraphs 1497 to 1504 of the existing pleading. That opportunity was given so that the plaintiffs would be able to overcome any prejudice they may have suffered by lack of time.
5. Despite Ms Curtin's best efforts, set out under the heading in her submissions "The Plaintiff's Claims Against the Memjet Defendants", the Court is really none the wiser as to what is going to be alleged. At best the plaintiffs can say that there was a failure to disclose "certain facts"; that there were "certain misrepresentations" made to them; and that "prompt reasonable notice" was not given in breach of clause 7 of the Settlement Agreement, although the consequences of that are failure to give notice are not explained.
6. Ultimately the Court is not confident that a re-pleading will result in the pleading of a clearly articulated cause of action known to the law against the remaining Global defendants.
7. Moreover if the Statement of Claim is struck out, the plaintiffs are not precluded from bringing fresh proceedings; it is a procedural dismissal.
8. In short I do not see that it serves the purposes of Civil Procedure Act, s 56 for the Court to give leave to re-plead so as to further litigate what has already been so prolix. Leave to re-plead is in effect to invite another contest such as the present. If the plaintiffs have a cause of action they can commence fresh proceedings and plead it properly.

Other Matters

1. Such of the pleadings that will remain against other defendants contain allegations that should not remain on the Court record. Paragraph 1487 and 1488 contain allegations which appear, somewhat by a side wind, to challenge the independence of Justice Sackar to hear the proceedings. Such allegations were never raised in the proceedings before his Honour, are on their own quite inadequate to reflect upon his Honour's independence and are not connected obviously to any other form of relief in the Statement of Claim. In my view they should be struck out.

Conclusion and Orders

1. For the reasons indicated, the Court will strike out the Statement of Claim in these proceedings as against the remaining Global defendants, as defined in this judgment without granting them leave to re-plead.
2. The orders of the Court therefore will be as follows: 1. Strike out the Statement of Claim as against the 12th, 17th, 19th, 21st, 22nd, 27th and 28th defendants; 2. Order the plaintiffs to pay the 12th, 17th, 19th, 21st, 22nd, 27th and 28th defendants' costs of these proceedings.

Amendments 03 May 2016 - [40] "plaintiff" to "plaintiffs" 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 May 2016