Supreme Court of WA|2001-06-12|Before: Mr J, Steytler J

Green & Ors v Wilden Pty Ltd & Ors [2001] WASC 145 (12 June 2001)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : GREEN & ORS -v- WILDEN PTY LTD & ORS [2001] WASC 145

Practice and procedure - Pleadings - Applications to strike out plaintiffs' action - Inherent jurisdiction of the Court - Whether action should be struck out for failure to disclose a cause of action or as abuse of process or as failing to disclose a triable issue or for want of prosecution - Whether plaintiffs' pleadings inadequately particularised - Serious delay in bringing applications - No adequate explanation for delay - Issues to be determined at trial of action - Turns on own facts

Practice and procedure - Pleadings - Application to amend reply and defence to counterclaim - Turns on own facts

Rules of the Supreme Court of Western Australia, O 16 r 1, O 20 r 19(3)

Defendants' applications to strike out plaintiffs' action dismissed

Plaintiffs' application to amend reply and defence to counterclaim allowed

First Plaintiff : Mr M L Bennett & Mr J D MacLaurin

Second Plaintiff : Mr M L Bennett & Mr J D MacLaurin

Third Plaintiffs : Mr M L Bennett & Mr J D MacLaurin

Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46

Bride v Peat Marwick [1989] WAR 383

Campbell v Edwards [1976] 1 WLR 403

Cope v Stardust Investments Pty Ltd (1996) 14 ACLC 626

Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Goldspar Australia Pty Ltd v Council of the City of Sydney [2000] NSWSC 685

Goodson v Grierson [1908] 1 KB 761

Hancock Family Memorial Foundation Ltd v Porteous [1999] WASC 55

Hilliard v Eiffe (1874) LR 7 HL 39

Hurley v BGH Nominees Pty Ltd (No 2) (1984) 37 SASR 499

Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314

Lidden v Composite Buyers Ltd (1996) 139 ALR 549

McKechnie v Campbell (1996) 17 WAR 62

National Mutual Life Association of Australasia Limited v Grosvenor Hill (QLD) [2001] FCA 237

Ramage v Waclaw (1988) 12 NSWLR 84

Reddaway v Banham [1896] AC 199

Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] UKPC 4; [1995] 2 AC 378

Sutcliffe v Thackrah [1974] AC 727

Trau v University of Sydney (1989) 34 IR 466

Tringali v Stewardson Stubbs & Collett Ltd (1966) 66 SR (NSW) 335

WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489

1 STEYTLER J: I have been asked to deal with four applications. Before mentioning them, I should say something about the background to the proceedings, the parties and the pleadings.

2 The proceedings have a drawn out and tortuous history. They involve four consolidated actions. Two of these were commenced in 1990 and the other two in 1991. They have been marked by a series of contested interlocutory proceedings, each of which has been productive of delay. The proceedings have been interrupted, and significantly delayed, by an action in which it was unsuccessfully contended that they had been finally resolved at a mediation conference.

3 As to the parties, there is a somewhat intricate set of interrelationships between them.

4 The first plaintiff ("Mr G W Green") is a shareholder in two companies, being the first defendant ("Wilden") and the third defendant ("Tace"). Mr G W Green is also a beneficiary of and unit holder in each of two trusts, being the Summerfield Unit Trust and the Balga Unit Trust. Tace is the trustee of the Summerfield Unit Trust and Wilden is the trustee of the Balga Unit Trust.

5 The second plaintiff ("Green & Co") is also a shareholder in each of Wilden and Tace and a beneficiary of and unit holder in each of the Summerfield and Balga Unit Trusts.

6 The third plaintiffs ("the Green family") are beneficiaries of and unit holders in a trust known as the Kelmscott Unit Trust. The second defendant ("Magenta") is the trustee of that Trust.

7 The fourth and fifth defendants ("Mr Chesson" and "Mr Denboer" respectively) are directors of Tace and Wilden. They are also directors of the eighth defendant ("Deltabrook"). Deltabrook is a unit holder in the Balga Unit Trust. Mr Chesson is also a director of Magenta and the sixth defendant ("Callao"). Callao is the trustee of the S J Chesson Family Trust (of which Mr Chesson is a beneficiary) and a unit holder in the Balga Unit Trust. Mr Denboer is also a director of the seventh defendant ("Benrone"). Benrone is the trustee of the B L & J Denboer Family Trust (of which Mr Denboer is a beneficiary) and a beneficiary of the Summferfield Unit Trust. The ninth defendant ("Mr Kelly") is a director of Tace. Mr Kelly is also a beneficiary of the J M Kelly Family Trust which is a unit holder in the Summerfield Unit Trust.

8 As to the pleadings, there are various causes of action raised by the plaintiffs against the defendants. Those which, for present purposes at least, are most significant relate to repurchase requests which have been made by the plaintiffs in respect of units held by them respectively in the Summerfield, Balga and Kelmscott Unit Trusts. I will, as briefly as I can, summarise the effect of the pleadings in respect of each of these repurchase requests.

9 Each of the deeds regulating the various unit trusts makes a like provision as regards repurchase of the units by the trustee. In each case cl 7.2 provides that any unit holder might request the trustee to repurchase all or any of its units at a price calculated in accordance with Pt 7 of the deed. Clauses 7.4, 7.5 and 7.6 of each trust deed then provide as follows:

"7.4 The price payable on the repurchase of a Unit shall be the Agreed Value or if there is no Agreed Value the Current Repurchase Value on the date on which the repurchase request is received by the Trustee. The Current Repurchase Value shall be as determined by an independent qualified valuer nominated by the President of the Australian Institute of Valuers (Inc.) (W.A. Division).

7.5 Within a period of 90 days after receipt of the repurchase request, the Trustee shall have the option to:-

(a) arrange for some person to effect a purchase the Units; or

(b) have a sufficient portion of the Trust Fund released or converted into cash in order to provide the price payable on the repurchase of the Units; or

(c) borrow a sufficient amount to provide the price payable on the repurchase of the Units; or

(d) effect the repurchase in a combination of the ways specified in paragraphs (a), (b) and (c).

7.6 If within a period of 90 days after receipt of the repurchase request the Trustee has not effected a purchase or a repurchase of the Units, the Trustee shall offer for sale at a price to be determined by an independent qualified valuer nominated by the President of the Australian Institute of Valuers (W.A. Division) such part of the Trust Fund as shall be necessary in order to provide the price payable on repurchase of the Units, and the price payable on repurchase of the Units shall be paid within 7 days after receipt by the Trustee of the proceeds of sale of such portion of the Trust Fund."

10 On about 7 November 1990 each of Mr G W Green and Green & Co lodged repurchase requests with Tace in respect of their respective unit holdings in the Summerfield Unit Trust. On 2 January 1991 Green & Co lodged a repurchase request with Wilden in respect of units held by it in the Balga Unit Trust. Five days later Mr G W Green lodged a similar request in relation to units held by him in that trust. On 24 May 1991 the Green family lodged repurchase requests with Magenta requesting it to repurchase units held by them in the Kelmscott Unit Trust.

11 The plaintiffs say that in no case was an "Agreed Value" arrived at in respect of the repurchase. That being so, they say, a "Current Repurchase Value" was required, in each case, to be determined by an independent qualified valuer nominated by the President of the Australian Institute of Valuers (Inc) (WA Division).

12 So far as Tace is concerned, Mr G W Green and Green & Co say that Tace "did not purport to have" the current repurchase value of their units determined by an independent expert valuer until 1 October 1992, on which date Mr R D Richmond made what they describe as "a purported written determination" of the repurchase value as at 7 November 1990. That "purported determination" is contained in a letter dated 21 October 1992. Mr G W Green and Green & Co say that it is of no force and effect because Mr Richmond was only appointed by the President of the Australian Institute of Valuers to value one asset owned by the Summerfield Unit Trust, being a shopping centre known as the Summerfield Shopping Centre, and not to make a determination of the current repurchase value of a unit in the Summerfield Unit Trust.

13 Mr G W Green and Green & Co go on to say, in any event, that Mr Richmond's determination was not made in accordance with the express terms of the trust deed. They say that this is because he only made an independent discretionary judgment of the value of the Summerfield Shopping Centre and not of the remainder of the assets of the trust and that he made no independent discretionary judgment of the quantum of liabilities of the trust. Rather, they say, he simply adopted the values attributed to the assets of the trust and the liabilities thereof in an auditor's report prepared by M V F Curtis & Associates Pty Ltd ("Curtis"). Finally, they say, Mr Richmond did not make any independent discretionary judgment of the quantum of disposal costs to be incurred by the Summerfield Unit Trust and made no independent determination as to the number of units in that Trust.

14 So far as Wilden is concerned, Green & Co and Mr G W Green say that Wilden "did not purport to have" the current repurchase value of their units determined by an expert valuer until 21 October 1992, on which date Mr I J V Sanderson made what they describe as "a purported written determination" of the repurchase value as at 3 January 1991. The determination is contained in a letter from Mr Sanderson dated 21 October 1992. Green & Co and Mr G W Green say that it is of no force and effect because Mr Sanderson was only appointed by the President of the Australian Institute of Valuers to value specified properties, being the Balga Plaza Shopping Centre in Balga and a property known as Lots 8 and 9 Irwin Chambers, Irwin Street in Perth, and not to make a determination as to the current repurchase value of a unit in the Balga Unit Trust.

15 They go on to say, in any event, that Mr Sanderson's determination was not made in accordance with the express terms of the Balga Trust Deed. This, they say, is because he made no independent discretionary judgment of the current value of the trust fund as at 3 January 1991, having failed to make any independent discretionary judgment as to the assets of the trust fund other than the properties to which I have referred and having failed also to make any independent discretionary judgment of the quantum of liabilities of the fund or of the quantum of disposal costs of the fund. Instead, they say, he merely adopted the values attributed to the assets, liabilities and disposal costs of the trust fund in an auditor's report prepared by Curtis. Mr Sanderson is said also not to have made any independent determination as to the number of units in the Balga Unit Trust.

16 So far as Magenta is concerned, the Green family say that Magenta did not have the current repurchase value of their units in the Kelmscott Unit Trust determined by an independent expert valuer until 1 October 1992, although they presumably intend to refer to 19 November 1992, on which date Mr D J Hunt made what is described as "a purported written determination" of the repurchase value as at 24 May 1991. The determination is contained in a letter from Mr Hunt dated 19 November 1992. The Green family say that the determination is of no force and effect because Mr Hunt was only appointed by the President of the Australian Institute of Valuers to value one asset of the Kelmscott Unit Trust, being a shopping centre known as the Kelmscott Village Shopping Centre, and not to make a determination as to the current repurchase value of a unit in the Trust.

17 The Green family also alleges that, in any event, Mr Hunt's determination was not made in accordance with the terms of the Kelmscott Unit Trust Deed and was consequently of no force and effect. They say, once again, that this is because he made no independent discretionary judgment of the current value of the trust fund other than that part of it comprising the Kelmscott Village Shopping Centre and that he made no independent discretionary judgment of the quantum of liabilities of the trust or of the quantum of its disposal costs. They say, in these last respects, that he merely adopted the values attributed to the other assets of the trust, the trust's liabilities and its disposal costs in an auditor's report prepared by Curtis.

18 Finally they say also that Mr Hunt made no independent determination as to the number of units in the Kelmscott Unit Trust.

19 The plaintiffs go on to allege, in the case of each of Tace, Wilden and Magenta, that, by reason of the matters referred to in the preceding paragraphs, each of those companies knew or ought reasonably to have known that the determination by the valuer in question was not made in accordance with the terms of the respective trust deed. They go on to plead that, as a consequence, each of the trustee companies was required to inform the respective valuer that his determination had not been made in accordance with the terms of the trust deed and to take all steps necessary to ensure that he made a correct determination in accordance with the terms of the deed (pars 33B, 92B and 119B). They also plead that, as a consequence, each trustee's reliance on the determination in purporting to accept the respective repurchase requests amounted to a breach of the provisions of the respective trust deed and also of each trustee's duty as trustee (pars 33C, 92C and 119C).

20 It is also necessary to mention some additional claims.

21 In pars 122 to 131 of the statement of claim various claims are made against Tace. It is said to have owed to each of Mr G W Green and Green & Co a duty to act impartially between unit holders and to treat them equally with other unit holders in the Summerfield Unit Trust and to have breached that duty. The breaches are said to have come about because Tace purported to repurchase units in the Summerfield Unit Trust held by Callao and Benrone in circumstances which resulted in a direct financial benefit to Callao and Benrone, and an indirect financial benefit to Mr Chesson (as a beneficiary of the S J Chesson Family Trust) and Mr Denboer (as a beneficiary of the B L & J Denboer Family Trust) and which caused financial disadvantage to each of Mr G W Green and Green & Co. The plaintiffs also allege that the valuation of the units repurchased from Callao and Benrone was performed by a valuer nominated by the Australia and New Zealand Banking Group Ltd and not by the President of the Australian Institute of Valuers. In these circumstances, the plaintiffs plead, Tace exercised its powers as trustee so as to confer an advantage on each of Mr Chesson, Mr Denboer, Callao and Benrone to the detriment of each of Mr G W Green and Green & Co, causing them to suffer loss and damage. Finally in this respect, the plaintiffs allege that, in breach of a duty owed to Mr G W Green and Green & Co, Tace has failed to make any or any adequate disclosure to each of Mr G W Green and Green & Co of Tace's conduct of the Summerfield Unit Trust.

22 Then, in par 132 of the statement of claim, Mr G W Green and Green & Co claim that Mr Chesson, in breach of a duty owed by him to them to act honestly in the exercise of his powers and the discharge of his duties as a director of Tace, failed to act honestly by causing Tace, in breach of its duties as trustee, to engage in conduct with the fraudulent purpose of causing financial disadvantage to each of them and advancing the financial interests of himself and Callao. They rely, in this respect, upon the repurchase of the units from Callao in the circumstances pleaded and say also that Mr Chesson, well knowing the financial benefit to be conferred on himself and Callao in that way, failed to cause Tace to make any or any adequate disclosure to Mr G W Green and Green & Co, or any of the unit holders, of the application by Callao for the repurchase of its units. These plaintiffs also plead alternative claims to the effect that Mr Chesson improperly made use of his position as a director of Tace so as to gain directly or indirectly an advantage for himself and Callao and a claim, based on the same circumstances, arising out of an alleged failure by Mr Chesson to exercise a reasonable degree of care and diligence in the exercise of his powers and the discharge of his duties.

23 Similar claims are made against Mr Denboer in respect of the repurchase of units from Benrone (pars 135 to 137) and against Mr Kelly arising out of the repurchase of units from both Callao and Benrone (pars 138 to 140).

24 Tace's conduct is also said to have contravened s 52 of the Trade Practices Act 1974 and each of Mr Chesson, Mr Denboer and Mr Kelly is said to have been directly or indirectly knowingly concerned in, or a party to, that conduct and, consequently, liable under s 75B of that Act.

25 Breaches of trust are also pleaded against Wilden in pars 38 to 45. The first of these is said to be constituted by its failure to make any, or any adequate, disclosure to each of Mr W J Green and Green & Co of Wilden's conduct of the Balga Unit Trust. The second relates to a relatively petty issue concerning what is said to have been its disposal of a prize, won in respect of a display of Gillette products, in the form of a trip for two to a World Cup soccer match in Italy.

26 In pars 46 and 47 claims are made against Wilden in respect of its alleged failure to keep and deliver proper accounts and, in pars 48 to 61, causes of action are raised against Wilden in respect of its allocation of additional units and options in the Balga Unit Trust. Each of Callao, Benrone and Deltabrook is said to have been allocated additional units in circumstances of impropriety on the part of Wilden, Mr Chesson and Mr Denboer and in breach of Wilden's duty to act impartially between the unit holders. Wilden is also said to have issued to Callao, Benrone and Deltabrook options to purchase further units in the Balga Unit Trust without making similar issues to Mr W J Green, notwithstanding his request that such an issue be made to him.

27 In pars 62 to 70 various claims are made against Mr Chesson arising out of a range of alleged conduct, including the allocation of the additional units and options to Callao, Benrone and Deltabrook and the alleged fact that Mr Chesson caused Wilden to pay, alternatively to incur a liability to pay, to him moneys to which he had no entitlement in the form of management and other fees. He is said, by virtue of the pleaded matters, to have breached various duties owed by him to those plaintiffs in his capacity as a director of Wilden.

28 Claims have also been brought against Mr Denboer personally (pars 71 to 75) alleging breach of his duties as a director.

29 In par 76 the plaintiffs allege that, in the circumstances pleaded by them, Wilden has conducted the Balga Unit Trust with the fraudulent purpose of causing financial disadvantage to each of Mr G W Green and Green & Co and advancing the financial interests of each of itself, Mr Chesson, Mr Denboer, Callao, Benrone and Deltabrook. Mr G W Green and Green & Co claim, in par 77, to have suffered loss and damage as a consequence but have yet to particularise that loss and damage.

30 Finally, so far as Magenta is concerned, the plaintiffs claim (par 95) that, because of its breach of the Kelmscott Trust Deed in failing to complete the repurchase of the Green family's units in the Kelmscott Unit Trust, the Green family has suffered loss and damage. Similar claims are made by Mr G W Green and Green & Co against Wilden (par 37) and by Mr G W Green and Green & Co against Tace (par 121). Then, in pars 96 and 97, the Green family alleges that Magenta, in breach of a duty owed to them, has failed to make any or any adequate disclosure to them of its conduct of the Kelmscott Unit Trust.

31 It is, for present purposes, unnecessary to summarise the defences which have been lodged in respect of all of these claims in any detail. It is enough to say that each of the defendants says that the repurchase values of the various units have been properly determined by the respective valuers in accordance with the provisions of each trust deed, that the plaintiffs are at fault in failing to complete the repurchase and that none of the defendants has been guilty of any breach of the respective trust deeds or of any breach of duty as a director or otherwise or of misconduct of any kind. The defendants also plead (pars 61, 91 and 142) that, if (which they deny) any of Tace, Wilden or Magenta acted in breach of trust, cl 13.4 of each trust deed provides that the trustee is not to be responsible for any breach of trust on its part "unless it shall be proved to have been committed, made or omitted in personal, conscious, fraudulent bad faith" by the trustee (pars 61, 91 and 142).

32 Wilden has brought a counterclaim against Mr G W Green and Green & Co in respect of money said to be owing by them and claiming damages from Mr G W Green and Mr W J Green in respect of other matters. Magenta has brought a counterclaim against members of the Green family for payment of moneys said to be owing by them.

33 The plaintiffs have sought leave to lodge an amended reply and defence to counterclaim in which they deal, inter alia, with the reliance by Tace, Wilden and Magenta on cl 13.4 of each trust deed. Paragraph 6 of that document, which deals with the defence raised by Wilden, reads as follows:

"6. As to paragraph 61 of the Defendants' Defence the Plaintiffs say that:

6.1 clause 13.4 of the Trust Deed should be construed strictly against Wilden;

6.2 clause 13.4 does not operate to exclude Wilden from liability for the breaches of trust pleaded in the Plaintiffs' Statement of Claim;

6.3 further and in any event, Wilden's breaches of trust as alleged were not honest and were committed in circumstances of personal, conscious and fraudulent bad faith by Wilden, and in all circumstances where Wilden did not honestly believe its conduct was in the best interest of the beneficiaries.

(a) Wilden, in breach of its duty as trustee, deliberately refrained from doing and performing the matters specified in paragraphs 23, 47 and 39 of the Statement of Claim and deliberately performed and did the matters referred to at paragraphs 43, 45, 51 to 55, 57, 57A.1, 59, 60 and 61 as part of a course of conduct calculated to deprive the Plaintiffs of their just entitlements pursuant to the Trust Deed;

(b) the Plaintiffs repeat paragraph 6.3 herein as to the imputation of the intentions, conduct and motives of Chesson and Denboer to Wilden and says that such motives conduct and intentions were part of a court [sic course] of conduct calculated to deprive the Plaintiffs of their just entitlements pursuant to the Trust Deed;

(c) Wilden knew at all material times that its actions were not in the best interests of the Trust's beneficiaries;

(d) Wilden's actions were calculated to deprive the relevant Plaintiffs of the benefit of a re-purchase of their units at a proper value;

(e) Wilden's actions were calculated to enrich parties other than the Plaintiffs by way of the allocation of additional units in the Balga Bazaar (1985) Unit Trust at a rate which was an undervalue, and which was thereby, by way of the increase in units in the Trust, to the Plaintiffs' detriment and to Wilden, Chesson and Denboer, and Callao and Benrone's benefit.

6.3.1 repeat paragraphs 39, 43, 45, 47, 57A.1, 59 and 61 of the Plaintiffs' Statement of Claim; and say further that

6.3.2 the knowledge, intention and conduct of Chesson, as pleaded at paragraphs 62, 64, 65, 66, 67 and 70 of the Plaintiffs' Statement of Claim is imputed to Wilden, which has thereby failed to act honestly and in good faith, and;

6.3.3 the knowledge, intention and conduct of Denboer as described in paragraphs 71, 72, 73 and 74 of the Plaintiffs' Statement of Claim are also imputed to Wilden in the same manner as is pleaded in respect of Chesson herein;

6.3.4 repeat paragraphs 76.7, 76.9 and 76.10 of the Plaintiffs' Statement of Claim as to the fraudulent purpose of Wilden, and the imputation of the knowledge, intention and conduct of Chesson and Denboer to Wilden.

6.4 further and in the alternative, to the extent that clause 13.4 purports to exclude Wilden from liability from the consequences of negligence, a breach of trust in bad faith consciously and/or with reckless indifference to the interests of the Plaintiffs' beneficiaries, and by not honestly believing its conduct to be in best interest of the beneficiaries, it is void and unenforceable as against the Plaintiffs and is contrary to public policy in that it purports to exclude Wilden from liability in respect of an irreducible core of obligations owed by trustees to beneficiaries which are fundamental to the concept of a trust;

6.5 further and in the alternative, the actions of Wilden have vitiated the Trust as it has thereby failed to exercise the core of obligations fundamental to the concept of a trust and owed by a trustee to beneficiaries;

6.6 further and in the alternative, the entire of clause 13.4 is void and unenforceable as against the Plaintiffs and is contrary to public policy in that it purports to exclude Wilden in respect of liability from an irreducible core of obligations owed by trustees to beneficiaries which are fundamental to the concept of a trust."

34 Similar pleas (although there are some differences) have been made in answer to the reliance by each of Magenta (par 15) and Tace (par 28) on cl 13.4 of the respective trust deeds.

35 That brings me back to the four applications with which I was asked to deal.

36 The first is the application by the plaintiffs, to which I have referred above, to amend their reply and defence to counterclaim. The second is an application by the plaintiffs to strike out various paragraphs of Mr Chesson's defence and counterclaim. The third is an application by Mr Chesson to strike out the plaintiffs' action pursuant to the inherent jurisdiction of the court. The fourth is a like application by the remaining defendants, save that they claim, in the alternative, a "springing order" for the provision of particulars of knowledge, fraud and dishonesty alleged against them by the plaintiffs in the statement of claim.

37 So far as the second application is concerned, when that application came on for hearing Mr Chesson consented to it and I made orders accordingly. It is consequently unnecessary to refer to it again.

38 As to the first application, that application would, self-evidently, fall away if I should accede to the third and fourth applications. However I should say of it that it is opposed only upon the grounds that the proposed amendments are inadequately particularised insofar as they allege dishonesty and like conduct.

39 I will deal, first, with the third and fourth applications.

40 I indicated, at the very outset, that it seemed to me that these came far too late. Nothing that I have since heard has caused me to change that opinion.

41 As explained to me by Mr Galic (counsel for all defendants other than Mr Chesson) and Mr Chesson (who appeared in person), each application is something of a hybrid. It seeks to strike out the statement of claim for failure to disclose a cause of action, there are elements of a summary judgment application and there are suggestions that the action should be dismissed as an abuse of process or for want of prosecution. In each case, I was told, the inherent jurisdiction of the court is relied upon.

42 So far as each application is one to strike out the statement of claim for failure to disclose a cause of action, I have previously said (Gardiner v Ray [1999] WASC 140 at [33]) that the requirement of O 20 r 19(3) of the Rules of the Supreme Court that an application to strike out the whole or part of a pleading must be made within 21 days of its service is one to which more than lip service should be paid. In this case no real explanation for the delay (which is one of years) has been offered. All that has been said, in effect, is that the action has now been around for so long, and is so unmeritorious, that it should be brought to an end.

43 So far as each application is one for summary judgment on grounds of lack of merit, or abuse of process, O 16 r 1 requires such an application to be brought within 21 days after appearance, or at any later time by leave of the court. It is required to be supported by an affidavit verifying the facts upon which the application is based. No real effort has been made to do this, other than in certain limited respects. Moreover, as has been pointed out (par 16.1.1) by the learned author of Seaman: Civil Procedure - Western Australia, the policy of the rules is that summary judgment applications must be brought at an early stage of the proceedings and before unnecessary expense has been incurred. The onus is on the applicant to justify any delay by affidavit evidence and its absence is fatal to an application under the order (Michael v Nicolson, unreported; FCt SCt of WA; Library No 950660; 12 January 1995). Once again no real effort has been made to justify any delay by affidavit evidence other than upon the broad grounds to which I have already referred.

44 The applications are even more curious in that the defendants are attacking the plaintiffs' pleading in respects which, to some extent at least, have previously been the subject of contested hearings, one of which went, ultimately, to the Full Court of this Court. The defendants contended before me that the statement of claim should be struck out, or that the action should be dismissed, to the extent that it sought to raise alternative causes of action to the effect that the valuer, in the case of each of the re-purchase requests, was required by the terms of the respective trust deed to make an independent discretionary judgment of the Current Repurchase Value but had not done so and that the appointment of each valuer was of no force and effect because each was appointed to value a specified property or properties rather than the current repurchase value of a unit in the trust concerned. It was submitted that neither contention had any substance.

45 So far as the second of those alternatives is concerned, White J, in reasons for decision delivered on 7 September 1994 (Green v Magenta Nominees Pty Ltd, unreported; SCt of WA; Library No 940475; 7 September 1994), gave to the Green family leave to introduce that cause of action against Magenta by way of amendment after a contested hearing. His Honour said, after reviewing affidavit evidence concerning the appointment of the valuer, Mr Hunt, that it seemed to him that the then proposed amendment raised factual issues and that he should not attempt to resolve those issues summarily (page 11 of his Honour's reasons).

46 So far as the first of those alternatives was concerned, White J declined to give the Green family leave to introduce that cause of action by way of amendment. The Green family appealed. The Full Court (Green v Magenta Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 950311; 15 June 1995), after mentioning that leave had been given to the Green family to amend the statement of claim to raise a contention that the appointment of Mr Hunt by Magenta was of no force and effect, said (at 8 and 9 of the judgment):

"The issues which are at the heart of this application are raised in the alternative to that plea. The applicants [the Green family] contend that the valuer was obliged by the terms of the Deed to make an independent discretionary judgment of the Current Repurchase Value of the units. The applicants say that the valuer has not done so. They seek to plead that he has not made an independent discretionary judgment as to the value of the assets of the Trust (other than an item of real estate that forms part of the Trust assets), or as to the quantum of the liabilities of the Trust or as to the number of units in the Trust. The complaint that the applicants wish to have litigated is that the valuer simply adopted, without making any independent enquiry or turning his own mind to the questions in issue, the value attributed to assets and the quantum of liabilities as disclosed in an auditors report prepared by NVF Curtis and Associates Pty Ltd. It can be assumed for the purposes of this application that Mr Hunt is not associated in any way with the auditors.

The applicants contend that on a proper construction of the express terms of the Deed, the failure of Mr Hunt to make these independent discretionary judgments means that he has not performed that which he was, by his appointment and by force of the Deed, required to do. Counsel for the applicants submitted that this goes to the question whether the valuation was made in accordance with the Deed. It does not allege an error in the discretionary judgment of the valuer. Accordingly, it is amenable to resolution by the court.

The point can, we think, be disposed of quite shortly. It is common ground that Mr Hunt made an independent discretionary judgment as to the value of the real estate owned by the Trust. Where the parties differ is whether he did so in relation to the other assets of the Trust and to the liabilities of the Trust. The thrust of the applicants' proposed case is that in relation to assets other than the real estate and to the Trust liabilities Mr Hunt did no more than adopt uncritically and without any independent assessment or scrutiny the values put on those items by the auditor. This, it seems to us, raises a question of fact. For example, it is possible that Mr Hunt had received a copy of the auditor's report and based a valuation on it. Whether that involves or qualifies as an independent discretionary judgment depends on what he did with it. He might have done nothing more than transpose its figures into his own valuation. On the other hand he might have subjected it to a process of scrutiny and checking before pronouncing himself satisfied as to its accuracy. It is a question of degree and thus raises issues of fact that can only be determined at trial. If the applicants are able to make out a case that Mr Hunt did nothing more than accept uncritically the auditors values, it would be open (and we put it no higher than that) for the trial Judge to conclude that the purported valuation did not correspond to that required by the contract.

In our opinion the proposed amendments did disclose a reasonable cause of action for the relief claimed."

47 There having been no appeal from the decision of White J as regards his Honour's decision on the second of the alternative pleas to which I have referred, nor from the decision of the Full Court as regards the first of them, there is simply no basis for re-agitating the issues which were there decided as between the Green family and Magenta or, for that matter, other, precisely similar issues which arise between the plaintiffs and other defendants.

48 I should mention that there is now affidavit evidence before the Court, which has not previously been there, from each of the valuers to say what he in fact did in the course of preparing his valuation. It is, I think, fair to say that this evidence is to the effect that each subjected the auditor's report to some degree of scrutiny (and this differs as between the valuers) before making use of the figures there disclosed (in one case, subject to a $2 correction). However the question remains whether what was done was sufficient, a question which must be answered having regard to the fact that the auditor's report, in each case, discloses that the auditor had "to some degree attempted to establish the validity of the amounts in relation to the assets ... ". That question, as the Full Court has already said, is one of degree and raises issues of fact that can only be determined at trial. It is, even leaving to one side the prior history of the matter (and the evidence now before the Court could very easily have been placed before White J), inappropriate for the court now to attempt to answer that question on the basis of the limited, and untested, evidence before it.

49 Mr Galic also sought to raise an argument to the extent that, if there had been negligence on the part of the valuers, they would be liable, and the fact that they have not been sued indicates that they are not genuinely believed to have been negligent. Even if it was open for the defendants to raise an argument of this kind at this stage it is, with respect, one that appears to me to be entirely without substance. The issue is not whether or not the valuers were negligent. It is whether or not what was done was done in accordance with the terms of each trust deed. That being so, the failure to join the valuers as defendants or to take proceedings against them is irrelevant.

50 Mr Chesson sought to raise additional arguments in this context. One of these is that the repurchase requests which were made on behalf of the various unit holders were "impotent" because the unit holders in no case agreed a price at which the units were to be repurchased or agreed to be bound by a valuation. This issue (and others raised by Mr Chesson touching upon such matters as the timing of the valuations) turn partly on questions of construction and partly on questions of fact. I am not persuaded, even leaving to one side the history of the matter, that these are issues which should be decided summarily.

51 However, before leaving this issue, there is one point, raised by Mr Chesson, which seems to me to have substance. In par 25.1 of the consolidated substituted statement of claim the plaintiffs have pleaded that, on the proper construction of the terms of each deed, if a determination made by the valuer is not made in accordance with the terms of the trust deed, then the court may make its own determination of the Current Repurchase Value of the units in question. That is a proposition which has already been found by the Full Court, in the judgment to which I have earlier referred, to have no substance. The Court there said (at 11) that it is for the parties in accordance with their contract, not the court, to determine the value of the units in the first instance. It consequently seems to me that the pleading requires attention in that respect.

52 Next, a good deal of time was spent, in the course of submissions, on the question whether any cause of action has been disclosed against any of Mr Chesson, Mr Denboer, and Mr Kelly. It was said, on their behalf, that none of them owed any duties to the unit holders and, Mr Chesson submitted, the duties which directors owe to shareholders are owed to shareholders generally and not to any specific shareholder or group of shareholders. Both Mr Chesson and Mr Galic submitted that there was simply no basis for proceeding against the directors. Mr Chesson also submitted that while beneficiaries of a trust can, in special circumstances, sue in the name of the trustee, there is no basis upon which they can, themselves, sue directors for breach of duty in their capacity as directors of a trustee company.

53 It seems to me, once again, that any application to strike out the plaintiff's claims upon these grounds should have been brought long ago. I might have been prepared, even taking into account the lateness of the applications and deficiencies in their form, to countenance the applications had I been able to arrive at the firm conclusion that there is no substance to the claims against the directors or against any one of them. However, I am not able to arrive at that conclusion at this stage. It is enough, for present purposes, to repeat that the pleaded conduct of Tace is said to have amounted to misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act and that each of Messrs Chesson, Denboer and Kelly is said to have been directly or indirectly knowingly concerned in or a party to that conduct and therefore liable under s 75B of that Act. While I must say that it seems to me that the claim under the Trade Practices Act is inadequately pleaded in that par 143 of the statement of claim does not say in what respect or respects the conduct there referred to is said to have been misleading or deceptive or likely to mislead or deceive, no submissions were made on behalf of any of the defendants in this respect and it seems to me to be plain that, if the conduct in question did contravene s 52 of the Trade Practices Act, then each of the three directors could properly be joined pursuant to s 75B of the Act. While Mr Chesson suggested, in this last respect, that the Act provides for claims against companies and not individuals, this is plainly not so insofar as accessorial liability under s 75B of the Act is concerned.

54 As to the other claims against the directors, while it seems to me that there are, in some respects at least, difficulties in the path of the plaintiffs, these are all matters which, particularly given the long history of the matter, should be determined at the trial of the action. It is also worth mentioning that, as far back as 1991, Mr Chesson, in a defence to the counterclaim lodged in what was then the Wilden action (CIV 2965 of 1990), admitted owing duties to the plaintiffs, in his capacity as a director of Wilden, to act honestly in the exercise of his powers and discharge of his duties, to exercise reasonable care and diligence in the exercise of his powers and not to make improper use of his position as a director of Wilden to gain directly or indirectly an advantage for himself.

55 Next, each of Mr Galic and Mr Chesson complained that the plaintiffs' pleadings were, in material respects, inadequately particularised. Each complained of inadequate pleas of knowledge in pars 33A, 92A and 119A of the statement of claim, and of inadequate pleas of fraud or dishonesty in pars 76.6, 132, 135 and 138 of the statement of claim and par 6.3 of the proposed amended reply (to Wilden's defence), par 15.3 of the proposed amended reply (to Magenta's defence) and par 28.3 of the proposed amended reply (to Tace's defence).

56 In par 33A of the statement of claim the plaintiffs plead that by reason of matters pleaded in other paragraphs there referred to Wilden knew or ought reasonably to have known that the determination by Mr Sanderson was not made in accordance with the terms of the Balga Trust Deed. Pleas in similar form are made in pars 92A (as against Magenta) and 119A (as against Tace). These pleas are said to be inadequate, as I understand the submission, upon the basis that the matters pleaded are not sufficient to explain upon what basis it is alleged that each of Wilden, Magenta and Tace knew or ought to have known that the determination in question had not been made in accordance with the applicable trust deed. To the extent that there is substance to these complaints, and it seems to me that there may well be substance to them, they might best be dealt with by way of requests for further particulars and, so far as I have been able to ascertain, none has been made in this respect.

57 As to the various pleas of fraud or dishonesty, those in the statement of claim have been the subject of requests for particulars. However the defendants are dissatisfied with the responses received by them, which object to the form of the requests and offer to provide additional particulars after discovery and interrogatories (and discovery has since been given), although they do, also, identify the paragraphs of the statement of claim which are relied upon as supporting the plea in each case. It seems to me that the pleas, as they stand, are far too broad in nature and it is by no means clear to me on what basis it is said that some of the matters relied upon, at least, are said to be indicative of a fraudulent purpose. While allegations as serious as these should plainly be pleaded clearly and supported by proper particulars (Davy v Garrett (1877) 7 Ch D 473 at 489), it seems to me that any complaints in this respect (and in additional respects which were mentioned by Mr Chesson) should be addressed by way of an application, properly brought before a Master, to obtain or compel further and better particulars and/or to strike out references to paragraphs of the statement of claim which are thought to be incapable of supporting the pleas of fraud, and not by some general application for judgment on a wide range of grounds claiming (as Mr Galic's application does, no like claim having been made by Mr Chesson), in the alternative, a "springing order" of an undefined kind.

58 As to the minute of amended consolidated reply and defence to counterclaim, attempts have been made to particularise the pleas of bad faith and dishonesty in the paragraphs to which I have referred. However these particulars could, in my opinion, undoubtedly be improved upon. It seems to me that the best means of advancing the proceedings in this respect (and the arguments advanced by the defendants have, as yet, been put only in a very general way) is for me to give the plaintiffs leave to amend in the terms of the minute, subject to a right reserved to the defendants to seek further and better particulars thereof and, if these are not, or cannot be, adequately provided, to bring such further applications in respect thereof as might be warranted.

59 Next, the defendants placed reliance upon the terms of cl 13.4 of each trust deed (the effect of which is set out above), contending that this gives to the trustees a complete answer to the various allegations against it. However, it is at least arguable that this clause provides no answer to the statement of claim insofar as it seeks orders that each trustee perform its obligations in respect of the various repurchase requests. Moreover, I have already mentioned that the plaintiffs plead that the breaches of trust were committed in circumstances of personal, conscious, fraudulent bad faith on the part of the trustee. While the defendants deny that claims to that effect have adequately been particularised that is, as I have already said, a matter to be raised by proceedings to compel further and better particulars, if such are required, and is not a basis for dismissal of the whole claim, at least at this stage.

60 Complaints have also been made that no, or no adequately particularised, facts have been pleaded which entitle the plaintiffs to damages. However, no proper application has been brought for further and better particulars and, insofar as the application is one to strike out the statement of claim for failure to disclose a cause of action in that regard, it comes far too late (it is out of time by some years) and there is no explanation for the delay. I should add, in this respect, that counsel for the plaintiffs indicated, in the course of argument, a preparedness to amend the plaintiffs' pleas in this respect.

61 Next, submissions were addressed to me by each of Mr Galic and Mr Chesson to the effect that the proceedings were an abuse of process. However, no sufficient basis has been shown in that respect and it is, in any event, far too late to bring an application of this kind. Mr Galic sought to support his submission in this respect by saying that senior counsel for the plaintiffs, Mr Grace QC, raised, in the course of submissions made by him on 17 May last year, a case which was somewhat different to that which had been pleaded. To the extent that that is so it does not, in my opinion, suggest that the existing proceedings are an abuse. I should add, if it matters, that this case, as with every other, will be confined by its pleadings.

62 Both Mr Chesson and Mr Galic sought, also, to support their submissions in this respect by the fact that some 10 years has elapsed without the matter being brought to a conclusion. I am not persuaded that there is anything in the history of the matter which shows that this extensive delay is indicative of an abuse. It seems to me that the delay has been attributable to a number of factors, not all of which might be brought home to the plaintiffs. Also, these are not (at least in any formal sense) applications to dismiss the proceedings for want of prosecution and there has been no real attempt, on the part of any of the defendants, to point to any specific prejudice or otherwise to demonstrate any entitlement to have the action dismissed upon that basis.

63 Finally, Mr Chesson raised some issues with respect to what I have referred to as the relatively petty issue concerning the disposal of the prize in the form of a trip for two to a World Cup soccer match in Italy. He submitted that the plaintiffs' discovery revealed that there was no basis for this claim. Moreover, he said that the pleading in that respect was incomprehensible and should be struck out.

64 I am not persuaded that there is anything in the pleading which renders it incomprehensible (and Mr Chesson did not develop his submission in this respect). It has, in any event, already been pleaded to by Mr Chesson. So far as the plaintiffs' discovery may have revealed shortcomings in the claim, this is a matter for trial.

65 Mr Chesson also sought to bolster his submissions in this respect by referring to the fact that the solicitors for the plaintiffs have previously informed the court that the issues other than the valuation issues were not "true" or "real" issues. He says that these issues should consequently be struck out. However it does not, of course, follow from the fact that these issues are subsidiary (and it seems to me that the quoted words were used in this sense), or even unimportant, that they should be summarily dismissed.

66 In all of these circumstances it seems to me that each of the third and fourth applications (those brought by the defendants to have the action dismissed or struck out pursuant to the inherent jurisdiction of the court) is misconceived and inappropriate at this stage of the proceedings. Both applications should be dismissed.

67 As to the plaintiffs' application to amend their reply and defence to counterclaim, it seems to me, as I have foreshadowed, that that application should be allowed, subject to a right reserved to the various defendants to seek further and better particulars of that document and, if there should be any failure to provide sufficient or adequate particulars, or if the pleading is otherwise thought to be inadequate, to bring such further applications in respect thereof, including an application to strike out offending allegations, as might be appropriate.

68 Otherwise, it seems to me, as I have repeatedly said, that it is in the interests of all parties to bring this action on to trial as soon as possible. I propose to make directions to facilitate that outcome.

Green & Ors v Wilden Pty Ltd & Ors [2001] WASC 145

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (119 paragraphs)

Green & Ors v Wilden Pty Ltd & Ors [2001] WASC 145 (12 June 2001)

Parties

Legislation Cited (1)

Cases Cited (10)