Hannon v Afro Pacific Capital Limited

LEGISLATION CITED : Uniform Civil Procedure Rules 2005

Dey v Victorian Railway Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 Webster v Lampard (1993) 177 CLR 598 at 602-3 and Cosmos E-Commerce Pty Limited v Bidwell Associates Pty Ltd [2005] NSWCA 81 CASES CITED : Banque Commerciale SA In Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 Australian Competition and Consumer Commission v Fox Symes and Associates Pty Ltd [2005] FCA 1071 Gunns Ltd v Marr [2005] VSC 251 Shelton v National Roads and Motorists Association Ltd [2004] FCA 1363 Northam v Favelle Favco Holdings Pty Ltd (Bryson J, 7 March 1995, BC9504276)

PARTIES : David Ross Hannon (Plaintiff) Afro Pacific Capital Limited (Defendant)

COUNSEL : Ms KE Day (Plaintiff) Mr JTG Gibson (Defendant)

SOLICITORS : Gillis Delaney (Plaintiff) Corrs Chambers Westgarth (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20585/08 David Ross Hannon v Afro Pacific Capital Limited

JUDGMENT 1 JOHNSON J: By Further Amended Notice of Motion filed on 3 June 2009, the Plaintiff, David Ross Hannon, seeks certain interlocutory relief in proceedings brought against the Defendant, Afro Pacific Capital Limited. 2 The Plaintiff seeks:

(a) summary judgment on part of his claim contained in paragraphs 5, 6A and 6B of the Amended Statement of Claim filed 12 March 2009 pursuant to Part 13 rule 1 Uniform Civil Procedures Rules ("the Rules");

(b) alternatively, an order striking out paragraphs 2 to 12 and 16 to 18 of the Defence filed 6 May 2009 pursuant to Part 14 rule 28 of the Rules;

(c) or alternatively to (a), if a strike-out order is made in accordance with (b) above, default judgment on part of his claim in paragraphs 5, 6A and 6B of the Amended Statement of Claim pursuant to Part 16 rule 3 of the Rules.

The Principal Proceedings 3 The present dispute arises out of the Plaintiff's employment as executive director of the Defendant between 2001 and 2003. By Statement of Claim filed 22 December 2008, the Plaintiff commenced proceedings against the Defendant seeking damages said to arise by way of outstanding sums owed to him under contractual arrangements said to exist between the Plaintiff and the Defendant. 4 An Amended Statement of Claim was filed on 12 March 2009. In paragraphs 5, 6A and 6B of that pleading, the Plaintiff alleges entitlements, under a Service Contract with the Defendant, to remuneration for a six-month period between April and September 2003, being a period following termination of the Service Contract. In paragraphs 7 to 9 of the Amended Statement of Claim, the Plaintiff claims an entitlement to a bonus payment of $750,000.00, said to arise from an agreement in March 2003. In paragraph 11 of the Amended Statement of Claim, the Plaintiff claims an order for payment of the sum of $854,166.65, or damages, together with interest and costs. 5 By a Defence filed on 6 May 2009, the Defendant denies that the Plaintiff is entitled to any payment from the Defendant. I will return to aspects of the pleaded Defence later in this judgment. 6 At the hearing of the Further Amended Notice of Motion, Ms Day of counsel appeared for the Plaintiff and Mr Gibson of counsel appeared for the Defendant. A number of affidavits were read and other documents were tendered.

Applicable Principles 7 The principles applicable on a summary judgment application are not in doubt. The application for summary judgment is brought under Part 13 rule 1 of the Rules. Those provisions provide that if on application by a plaintiff in relation to the plaintiff's claim for relief, there is evidence of the facts on which the claim or part of the claim is based and there is evidence given by the plaintiff or some responsible person that in the belief of the person giving the evidence, the defendant has no defence to the claim, or part of the claim, or no defence except as to the amount of any damages claimed, the Court may give judgment for the plaintiff or make such other order on the claim or part of the claim as the case requires. 8 It is accepted by counsel for the Plaintiff that, on an application such as this, the Plaintiff bears a heavy burden. I approach the application on the basis that a very clear case is required before summary judgment is granted and that the power should be sparingly used: Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 at 129; Webster v Lampard (1993) 177 CLR 598 at 602-3 and Cosmos E-Commerce Pty Limited v Bidwell Associates Pty Ltd [2005] NSWCA 81 at [37]-[38]. 9 The real issue in the present application is whether a triable or arguable defence is disclosed to part of the claim which has been brought by the Plaintiff which is the subject of this application. 10 The principles applicable on a strike-out application under Part 14 rule 28 of the Rules are likewise not in doubt. The function of pleadings is to state, with sufficient clarity, the case that must be met by the other party. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and to define the issues for decision: Banque Commerciale SA In Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286, 296, 302-303. 11 The issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible upon the grounds of relevance: Banque Commerciale at 296. 12 Pleadings also provide the structure upon which interlocutory processes such as discovery, are governed and they constitute the record of the matters which the Court has resolved and become relevant if, in any subsequent proceedings, any party claims issue estoppel or res judicata: Australian Competition and Consumer Commission v Fox Symes and Associates Pty Ltd [2005] FCA 1071 at [100]-[103]. 13 A pleading is embarrassing where it is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him: Gunns Ltd v Marr [2005] VSC 251 at [14]-[15]. 14 In Shelton v National Roads and Motorists Association Ltd [2004] FCA 1363, Tamberlin J explained the concept of "embarrassment" with respect to pleadings at [18]: "'Embarrassment' in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434." 15 A pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a cause of action if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Ltd (Bryson J, 7 March 1995, BC9504276 at pages 5-6).

The Summary Judgment Application 16 The Plaintiff has complied with the normal requirements of Part 13 rule 1 of the Rules. There is evidence of the facts on which part of the claim is based, and there is evidence given by a responsible person, namely the solicitor for the Plaintiff, that in the belief of that person, the Defendant has no defence to the part of the claim which is presently in issue. 17 As I have said, the real question in the present application is whether a triable or arguable defence is disclosed concerning that part of that claim contained in paragraphs 5, 6A and 6B of the Amended Statement of Claim.

Submissions of Parties 18 Ms Day submits that the terms of the Service Contract are clear and that the Plaintiff is entitled to six months' remuneration even though, in the circumstances of this case, it was the Plaintiff and not the Defendant who gave notice in writing to terminate the Contract. Ms Day submits that the Defence contains a bare denial of liability in this respect, combined with a bare recital of clause 5.1 of the Service Contract itself. 19 Insofar as the Defendant's solicitors, in a letter dated 28 May 2009, referred to the matters and particulars set out in paragraph 19 of the Defence as being somehow related to the defence to the claim in paragraph 6A and 6B of the Amended Statement of Claim, Ms Day submits that these matters relate to discussions between the parties in and after March 2003 which, as paragraph 19(b) of the Defence makes clear, did not lead to any agreement between the parties. The Plaintiff submits that the content of paragraph 19 does not assist the Defendant on the summary judgment application made in this case by the Plaintiff. 20 Counsel for the Plaintiff points to an argument, advanced for the first time, which appears in paragraphs 22 and 23 of Mr Gibson's written submissions of 5 June 2009. That submission raises a question of construction of clause 5.1 of the Service Contract and argues that, upon its proper construction, the Plaintiff is not entitled to six months' remuneration, in particular, as it was the Plaintiff who terminated the agreement and not the Defendant. 21 Ms Day submits that this argument is wrong, and plainly wrong, and that the Plaintiff's construction ought to be preferred, and that this is bolstered by the restraint of trade provision in the Service Contract which operated to restrain the Plaintiff for six months from the date of termination of the Contract from undertaking certain activities. 22 Mr Gibson submits that summary judgment ought not be granted in this case. He submits that it is necessary to construe the Service Contract together with other relevant agreements, the Shareholders' Agreement and the Loan Agreement. He submits that upon the proper construction of clause 5.1, the six-month remuneration entitlement only arises if the Defendant, and not the Plaintiff, gives notice of termination and that that is not what happened here.

Decision 23 The fate of the summary judgment application is dependent upon the issue of construction of the Service Contract raised. 24 The content of the Defence tends to obscure, and not elucidate, the defence to the claim in paragraphs 5, 6A and 6B of the Amended Statement of Claim. Likewise, the matters raised in the Defendant's solicitor's letter of 28 May 2009 tend to confuse, rather than assist, any understanding of the Defence. References to paragraph 19 of the Defence, in this respect, do not assist the Defendant. 25 The matters raised in paragraphs 22-23 in Mr Gibson's written submissions of 5 June 2009 focus on the real issue. That ought to have been set out clearly in the Defence, and not left to written submissions prepared on the eve of the hearing of the summary judgment application. In my view, it is no answer for the Defendant to complain about the content and clarity of paragraphs 5, 6A and 6B of the Amended Statement of Claim. The Defendant sought, and was given particulars of that part of the claim, and did not move to strike out those parts of the pleading. 26 I return to the critical issue on the summary judgment application. Is there no reasonable defence to this part of the claim so that the Plaintiff should be granted summary judgment? There are competing arguments concerning the proper construction of the Service Contract, and in particular clause, 5.1. The Plaintiff's argument is persuasive but, in my view, there is an arguable contrary construction. 27 In these circumstances, I am not persuaded that the Plaintiff has discharged the heavy burden upon him which is necessary to obtain summary judgment on that part of his claim. 28 I decline to grant the relief sought in paragraph 1 of the Further Amended Notice of Motion.

The Strike-Out Application 29 A number of comments which I have made so far bear upon the strike-out application. 30 Ms Day submits that paragraphs 2 to 12 and 16 to 18 of the Defence are embarrassing and ought be struck out. Mr Gibson submits that it is necessary to consider those parts of the Defence as part of the factual background to the dispute arising in the context of several related agreements between the Plaintiff and the Defendant.

Decision 31 I have read and re-read the Defence. It is not an easy document to follow, nor is it coherent and structured clearly. 32 Paragraphs 2 to 12 of the Defence do not respond to any specific parts of the Amended Statement of Claim. They contain a series of factual recitals, some of which only are referred to later in the Defence. They lie between paragraph 1 (which responds expressly to paragraph 1 of the Amended Statement of Claim) and paragraph 13 of the Defence (which responds expressly to paragraph 2 of the Amended Statement of Claim). Paragraphs 2 to 12 sit, as a type of island in the Defence, in a location which does not assist an understanding of their suggested relevance to the matter generally, let alone to the Defendant's response to the claim. 33 Paragraphs 16 to 18 of the Defence are somewhat cryptic. Paragraph 16 contains an admission and a non-admission in response to paragraph 5 of the Amended Statement of Claim. Paragraph 17(a) purports to respond to paragraph 6A by setting out the terms of clause 5.1 of the Service Contract, and then stating that "further particulars will be provided after discovery". Paragraph 17(b) of the Defence is a bare statement of denial of paragraph 6A of the Amended Statement of Claim. Paragraph 18 of the Defence contains a bare denial of paragraph 6B of the Amended Statement of Claim. 34 I am satisfied that paragraphs 2 to 12 and 16 to 18 should be struck out under Part 14 rule 28 of the Rules. These paragraphs illustrate the vices which arise from embarrassing pleadings. 35 In my view, the pleadings contained in paragraphs 2 to 12 and 16 to 18 are examples of unintelligible, ambiguous, vague or overly general pleadings, which serve to embarrass the Plaintiff, who does not know how these matters involve a defence to the claim: Gunns Ltd v Marr, above. Likewise, aspects of these pleadings are at least susceptible to various meanings and involve matters which are confusingly intermixed: Shelton v National Roads & Motorists Association Ltd, above. Even if these matters contain allegations of material facts which are capable of constituting, in some respect, part of a Defence of the Plaintiff's claim, they are at least couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited, above. 36 I will allow the Defendant leave to replead. However, the Defendant might take the opportunity of considering the form and content of the Defence generally, so as to provide a logical pleading which serves the purpose of pleadings, including a clear statement of the Defence which can be comprehended by the Plaintiff and the Court.

The Default Judgment Application 37 I have determined that parts of the Defence ought be struck out, but that the Defendant ought have leave to replead. In these circumstances, this is not an appropriate case for the Plaintiff to be granted default judgment on that part of his claim in paragraphs 5, 6A and 6B of the Amended Statement of Claim.

Costs 38 The Plaintiff has succeeded on the strike-out application but not the summary judgment application. The Plaintiff did not seek particulars of the Defence before filing a Notice of Motion to strike it out, at least in part. However, the Plaintiff's solicitors did write on 26 May 2009 to the Defendant's solicitors, raising the deficiencies of the Defence and inviting the Defendant to replead its Defence. The Defendant rejected that proposal in the letter of 28 May 2009 to which I have already referred, and came to Court resisting all aspects of the Plaintiff's motion. 39 Although the Plaintiff has not succeeded on the summary judgment application, the principal reason for that was an argument advanced for the first time in the Defendant's written submissions of 5 June 2009, being a line of defence not reflected in the Defence as filed. As I have said, the basis for refusing the application for summary judgment is the construction argument which arises with respect to the terms of the Service Contract, and in particular clause 5.1. The Defence filed did not reveal such an argument, and masked whatever argument it was that the Defendant was advancing in that respect. 40 In all the circumstances, I think the appropriate order is that the Defendant pay 75% of the Plaintiff's costs of and incidental to the Further Amended Notice of Motion.

Orders 41 Accordingly, I decline to make Orders 1 and 2 as sought in the Further Amended Notice of Motion filed 3 June 2009. In accordance with paragraph 1A of the Further Amended Notice of Motion, I make an order that paragraphs 2 to 12 inclusive and 16 to 18 inclusive of the Defence filed 6 May 2009 be struck out pursuant to Part 14 rule 28 of the Uniform Civil Procedures Rules 2005. I grant the Defendant leave to replead the Defence within 21 days from today. I order the Defendant to pay 75% of the Plaintiff's costs of and incidental to the Further Amended Notice of Motion. 42 The proceedings are to be listed in the Registrar's list at 9.00 am on 6 July 2009 for directions.

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