Cultivaust Pty Ltd v The Grain Pool of Western Australia

REASONS FOR JUDGMENT 1 This is an application by motion dated 25 October 2001 to amend the statement of claim in terms of the document, which is exhibit MK5 to the affidavit of Mark William Kurtze sworn on 26 October 2001. 2 As a result of the submissions which have been made today, the applicants seek leave to amend in terms of that document as further amended in three respects. First, it is proposed to add at the end of the fifth line of par 29A the words "and with the intent of injuring the economic interests of the first applicant". Secondly, it is sought to add in par 28, under the heading "Particulars of the Market", in the sixth line after the words "(in Western Australia)" the words "as competitors in the market". The third proposed amendment to amend par 44(e) of that document by deleting the word "applicants" at its end and substituting the words "first applicant". I will call the document as so amended the "proposed amended statement of claim". 3 The respondent Grain Pool of Western Australia (the first respondent) has adopted what, in my view, is a sensible and robust view to the proposed application. Although it is of the view that in significant respects the proposed amended statement of claim has significant deficiencies, it has limited its opposition to the application to three specific sections. That opposition is confined to the proposed pars 28 to 30B, inclusive, and for an additional separate reason to the proposed pars 29A to 29E inclusive, and thirdly to proposed amendments reflected in the proposed pars 45A, 45B, 50 and 71(e). The opposition is on varying grounds but includes the contention that the Court, in the exercise of its discretion, should refuse leave in respect of those paragraphs of the proposed amended statement of claim because of the lateness of the application in the particular circumstances. The second respondent has not sought to be heard on this application. 4 I do not propose to give lengthy reasons for the ruling which I am about to make. 5 The proposed amendment is to the statement of claim as filed on 24 December 1999. Subsequent to that time discovery and inspection was given by the first respondent and apparently completed in about the middle of 2000. The applicants foreshadowed a desire to amend the statement of claim following the completion of discovery and inspection and, in April 2001, were given leave to amend the statement of claim generally in such manner as they were then advised. A time within which that leave might be exercised was specified at the time the order giving leave was made. That time expired but, in June 2001, the applicants were given an extension of time within which to file their proposed amendments to the statement of claim. Again that time expired without the proposed amended statement of claim being filed and delivered. Subsequently in early August 2001 the applicants provided to solicitors for the respondents a proposed form of their contemplated amendment to the statement of claim and, I am told and accept, that form of proposed amendment has evolved in various ways to the document now before the Court. Indeed, as is now apparent, it has evolved to some extent as a result of consideration by the applicants of certain objections of the first respondent made as late as yesterday and, as a result of the submissions today, to make explicit what the applicants say was implicit in any event by amendments identified today. 6 There is no dispute as to the relevant principles which the Court should apply in ruling upon the motion. I am directed by the High Court decision in JL Holdings Pty Ltd v State of Queensland (1997) 189 CLR 146 to have regard to the interests of justice in all the circumstances, including the interests of justice of the applicants and of the respondents. 7 The objections to the proposed amended statement of claim, apart from dealing with discretionary considerations, assert that in certain respects the proposed pleading does not, and could not, as a matter of law make out a cause of action on the basis alleged or does not, and could not, make out a cause of action on the basis alleged because a significant fact necessary to establish or to complete the cause of action is not pleaded. It is partly in response to those submissions that the alterations to the document have been made today. In considering whether to allow a proposed amendment, provided discretionary considerations otherwise warrant its allowance, in my view I should allow the proposed amendment unless it is clear that there is no reasonably arguable basis upon which it could succeed in any event. If that circumstance applied I would not allow the amendment. I consider that the test to be applied is similar to that test which would be applied if the paragraphs in the proposed amended statement of claim to which objection is taken were already included in the statement of claim, and there was an application to strike them out as not being capable of sustaining the cause of action pleaded. See generally the observations of Weinberg J in McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at [21] ff. 8 The first objection is to pars 28 to 30B of the proposed amended statement of claim. They are intended to make out a cause of action based upon the asserted tort of unlawful interference in the trade or business interests of the first applicant. The first respondent contends that that cause of action in tort is not, and should not, be recognised in Australia. In my view the issue is not beyond reasonable argument. In Sanders v Snell (1998) 196 CLR 329, Gleeson CJ, Gaudron Kirby and Hayne JJ at 341 - 342 [31] declined to pronounce authoritatively on the issue. Their Honours observed: "The tort that is emerging, or has in the United Kingdom, is a tort of interference with trade or business interests by an unlawful act directed at the persons injured. The element of unlawfulness is essential to the definition of the tort. Otherwise, conduct of the most unremarkable kind would be tortious. Any person engaged in trade or commerce will daily act deliberately to further that trader's economic interests by obtaining business that otherwise would go to a trade rival … The fact that the conduct is engaged in deliberately or is directed specifically at the person who suffers economic detriment is not enough to make the conduct tortious. It may or may not, in given circumstances, give rise to statutory remedies." 9 In the light of their Honour's views, I consider that the existence of such a cause of action is not arguable. I do not propose to disallow that part of the proposed amended statement of claim on that ground. 10 It was then argued that the relevant paragraphs of the proposed amended statement of claim do not plead a material fact, namely, an intention or purpose on the part of respondent to unlawfully interfere in the trade or business interests of the first applicant, necessary on any view to complete that cause of action. Counsel for the applicants has submitted that such an intent or purpose is not necessary, referring in particular to the passage in Sanders v Snell which I have quoted above. In my view, that contention is in error. It represents a misunderstanding of what the majority said in Sanders v Snell in that passage. I think it is plain that, if there is a tort of unlawful interference with trade or business interests, some mental element is a necessary component of that tortious conduct. I regard the observations of their Honours in the passage to which I have referred as clearly indicating that. It is correct, as counsel for the applicants pointed out, that that passage has a focus upon the proposition that intention to cause economic harm is not a sufficient factor to give rise to the cause of action. That is because their Honours were addressing the issue whether conduct deliberately engaged in to cause economic detriment was a sufficient element to make out the tortious conduct. They did not, however, indicate (as was contended), that such an intention was not a necessary element of that cause of action The observations of the High Court in other passages in Sanders v Snell make it clear that there must be pleaded both an unlawful act (which is pleaded in the proposed amended statement of claim) and that it be directed at causing economic detriment to the persons injured: see at 341, and the discussion as to what might constitute "unlawfulness" at 342 - 345. That view also reflects the approach of the Queensland Court of Appeal in Deepcliffe Pty Ltd v Council of the City of Gold Coast [2001] QCA 342 at [18] ff. 11 The proposed additional words to be added in the fifth line of par 29A of the proposed amended statement of claim now include an allegation of intention on the part of the first respondent. To that extent, in my view, the proposed amendment does include an allegation of fact, albeit at a very general level, which meets the requirement of there being a material fact pleaded concerning the state of mind of the first respondent. In my view, the proposed amended statement of claim as so amended is sufficient to make out an arguable claim for damages for the asserted tort of unlawful interference in the trade or business interests of the first applicant. I am not to be taken as accepting that that pleading, as so expressed, is an adequate pleading of the state of mind alleged against the first respondent. However, I regard that pleading as sufficient to decline to accede to the proposition that it should be disallowed on the ground that a critical element of the cause of action has not been pleaded. The respondent may, if it is so advised, seek further particulars of that pleading. 12 In addition, subject to the question of which Judge of the Court has the ongoing management of that matter as it proceeds to trial, one possibility is that the applicants could be directed to provide a brief outline of their contentions of fact in relation to establishing the state of mind of the first respondent which they allege. That could be a relatively short document, but in a form which effectively provides the first respondent with the degree of particularity to which it may claim to be entitled and which pins the applicants down to the case which they seek to make. 13 I further observe, that, as the proposed amended statement of claim is expressed, I read it both as expressing and as confining the particulars of the state of mind of the first respondent. The applicant is limiting itself in that regard to the correspondence which is particularised in par 29A of the proposed amended statement of claim. In other words, I read the reference to "correspondence" on the part of the first respondent with the New South Wales Grains Board and with the Australian Barley Board as being a reference to correspondence which relates both to establishing the purpose of entering into the alleged contract arrangement or understanding, and as defining and limiting the correspondence which demonstrates or is said to demonstrate the intention alleged. If the applicants wish to go beyond that correspondence, they will promptly have to give notice to the first respondent of any further material upon which they propose to rely. I regard the proposed amended statement of claim to alleged intention on the part of the first respondent, including the alteration made today, as being based only upon the correspondence referred to in par 29A. 14 The second ground of opposition to the proposed amended statement of claim relates to the unlawful conduct which is alleged in pars 29A to 29E of that proposed pleading. It is asserted that the first respondent attempted to enter into an unlawful arrangement with the Australian Barley Board and the New South Wales Grains Board to fix or control to a certain figure the price to be paid per tonne as a royalty on the production of Franklin Barley in the market. It is not said that that attempt ultimately led to any such arrangement, but it is nevertheless asserted that the attempt itself somehow caused the first applicant to suffer loss ultimately by being unable to obtain from the New South Wales Grains Board and the Australian Barley Board a royalty at a significantly higher level than that in respect of which the attempt was made. There are obvious difficulties of proof in making out that case, given that the attempt is not said to have been a successful one, but that is a matter for the applicants to address at the trial. 15 The point which the first respondent takes on this application is that the alleged unlawful conduct does not include a necessary factual allegation for the applicants to make out contraventions of ss 45 and 45A of the Trade Practices Act 1974 (Cth) (the TPA). The missing material fact is said to be that there is no claim that the first respondent, the Australian Barley Board and the New South Wales Grains Board were at material times in competition with each other, as required by s 45A(1) of the TPA. Counsel for the applicants acknowledged that it is necessary to plead that fact and that such a pleading was not included in the proposed amended statement of claim, until the alteration made to par 28 today. Because that alteration has been made, and subject to considering the adequacy of that alteration, I consider that the alleged unlawful conduct is now properly pleaded in the sense that all of the primary elements of the cause of action are pleaded in the proposed amended statement of claim. 16 I am disposed to allow the proposed amendment notwithstanding the very general nature of the allegation about those entities being competitors in the market. Counsel for the first respondent quite correctly described the allegations in par 28 of the proposed amended statement of claim as being conclusionary in nature. The additional words to which I have referred, that is those added to par 28 this morning, are of the same character. The first respondent, therefore, may well seek to have further particulars of the alleged pleading. The Court may order that an outline of the contentions of fact and law in relation to the alleged participation of those three entities (and other entities) as competitors in the market pleaded be provided by the applicants to the first respondent in the near future. There could be no injustice in requiring the applicants to do that, bearing in mind that at present, and subject to some other matters to be addressed, the trial is generally listed to commence in late March or early April of next year. The Court could also ensure that the generality of that pleading does not unfairly disadvantage the first respondent by requiring the applicants to provide, within a short time, any expert reports upon which they may rely to make out the existence of the market and to make out that those three entities were competitors in the market as they allege. Again, given the proximity of the potential trial date, the applicants could not reasonably complain of any such direction. As I have indicated to the parties today, any such directions, if sought, may be made within the next few weeks. However, I do not regard the pleading in the proposed amended statement of claim as so disadvantageous to the first respondent in its proposed form as to disallow the proposed amendment on that ground. 17 The third ground of objection to the proposed amended statement of claim concerns pleadings in pars 45A, 45B, 50 and 71(e) of the proposed amended statement of claim. They are the facts which are said to give rise to an entitlement to exemplary damages on the part of the applicants against the first respondent. Counsel for the applicants today has acknowledged that, on the basis of those facts as alleged, there is no arguable entitlement to exemplary damages in respect of the cause of action (now to be pleaded) of unlawful interference with the trade or business interests of the first applicant. I do not therefore need to indicate why I regard that acknowledgment as a correct one. Counsel for the applicants has also accepted that the claim for exemplary damages can be pursued only insofar as the applicants allege a cause of action based upon contravention by the first respondent of the Plant Breeders Rights Act 1994 (Cth) or its legislative ancestor, the Plant Variety Rights Act 1987 (Cth). I address this part of the proposed amended statement of claim on the basis that the claim for exemplary damages is confined to the claim based upon the applicants establishing against the first respondent contraventions of those two enactments, and only on that basis. Counsel for the first respondent rightly complained that the proposed pleading itself does not indicate that the claim for exemplary damages is so limited. By reason of the acknowledgment by counsel for the applicants today, which I have taken care to record in these reasons, there can now be no scope for any misunderstanding on that topic nor any scope for the applicants to pursue the claim for exemplary damages beyond a claim based upon contraventions of that legislation. 18 The argument of the first respondent then is that, as a matter of law, it is simply not arguable that exemplary damages for breach of one or other of those enactments could be awarded, and that therefore the proposed amended statement of claim to that extent should be refused. 19 There is much to be said for the view that the claim for exemplary damages for breach of those statutory provisions, as pleaded in the proposed amended statement of claim, could not be upheld as a matter of law. I am, however, required to be satisfied that the claim so expressed is simply not really arguable at all. In Gray v Motor Accident Commission (1998) 196 CLR 1, Gleeson CJ McHugh Gummow and Hayne JJ at 6 described the award of exemplary damages as rare. After referring to some examples of circumstances where such an award has been made, their Honours said: "Because the kinds of case in which exemplary damages might be awarded as so varied, it may be doubted whether a single formula adequately describes the boundaries of the field in which they may properly be awarded. Nevertheless, the phrase adopted by Knox CJ in Whitfield v De Lauret & Co Ltd of 'conscious wrongdoing in contumelious disregard of another's rights' describes at least the greater part of the relevant field." (references omitted) 20 In this matter I am not persuaded that the claim for exemplary damages is clearly untenable, although my present view is that it is a difficult argument to sustain. I have of course not had the benefit of full argument on the topic. I am minded, however, to allow the proposed amendment because of the view I have taken in light of the observations of the High Court in Gray that the categories of entitlement to exemplary damages are not closed or finite, and because there is no decision presently binding on the Court, or a decision of a superior Court to which either party has been able to direct me, specifically deciding that in respect of causes of action based upon contraventions of the Plant Variety Rights Act 1987 (Cth) or the Plant Breeders Rights Act (1994) (Cth) such an entitlement could not arise. 21 Subject to consideration of discretionary matters, therefore, I propose to allow the applicants to amend their statement of claim in terms of the proposed amended statement of claim. In exercising the discretion as to whether or not to allow the amendment, I have had regard to the submissions of counsel for the first respondent about the timing of the application. It is unduly late. There is no apparent reason why it is so late. The amendment is extensive. It has not, however, been contended that the amendment, if allowed, would jeopardise the proposed trial date, assuming it is otherwise adhered to. It has not been put that the additional work to which the first respondent would be put by having to address the allegations would be so great as to disadvantage the first respondent in a significant way in its preparation for trial generally in the matter. There will no doubt be additional work required of the first respondent to investigate and respond to the allegations. Subject to the question of which judge has the future management of this matter leading up to its trial, I express the tentative view that, given the time at which this application has been made and the fact that it has apparently been made in the light of a consideration of the documents discovered by the first respondent some time ago, there would appear to be no real basis upon which the applicants could now seek further discovery from the first respondent If the applicants did seek further discovery, a significant question would arise as to whether that should be permitted, having regard to the belated nature of the application and any detriment to the first respondent if the trial date were put at risk. Those are matters which can be addressed when and if they arise. 22 At present, however, it seems to me that the disadvantages to the first respondent of allowing the amendment are not such as to jeopardise its prospects of having a fair trial at the hearing or such as to jeopardise it being able to secure a hearing in a timely manner. If, as a result of the amendment, the applicants are unable to adhere to timetables imposed upon them for the exchange of evidence, including expert evidence, the Court will have power to strike out those parts of its claim if that is then appropriate They are matters which the applicants appear at present to have brought upon themselves by the belated timing of this application. 23 On the other hand the injustice to the applicants by not being able to pursue this application may be a significant one. It is a case, as was the case in JL Holdings, where a cause of action which was not previously pleaded is now sought to be pleaded and may provide to the applicants an avenue of relief to which they might be entitled but which, if the amendment is not allowed, they may be precluded from pursuing. 24 The balancing of the interests of justice in the circumstances, particularly having regard to the capacity of the Court to impose upon the applicants a timetable for the exchange or provision of any evidence, including expert evidence, to ensure the trial date is not unduly delayed, and with the consequence that failure to comply with such directions may itself later lead to sections of the proposed amended statement of claim being struck out, leads me to the view that I should allow the proposed amendment. 25 Accordingly on the motion, I give leave to the applicants to file and serve a further amended statement of claim in terms of the document entitled Proposed Consolidated Amended Statement of Claim, being Exhibit MK5 to the affidavit of Mark William Kurtze sworn on 26 October 2001 and incorporating the three additional amendments to pars 28, 29A and 44(e) to which I have referred in [2] above. 26 I fix the time by which the applicants may file and serve their amended statement of claim in the form in respect of which leave has been given to be Wednesday, 5 December 2001. I give leave to the respondents to file and serve an amended defence or defences as they may be advised, and I direct that any such amended defences be filed and served by 8 January 2002. I order that the applicants pay to the respondents costs of the notice of motion of 25 October 2001 and costs incurred and thrown away by reason of the amendment to the statement of claim, including the costs of filing and serving their amended defences in any event. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.