Luce Optical Pty Limited v Budget Specs

REASONS FOR JUDGMENT 1 On 8 February 2006, the Respondent filed a Notice of Motion seeking particulars of various paragraphs of the Applicant's Statement of Claim. The Notice of Motion was supported by an Affidavit filed 13 February 2006 sworn by Mr Richard Mark Hamwood, a solicitor employed by the solicitors for the Respondent ('Mr Hamwood's affidavit'). 2 Through its solicitors, the Respondent had previously requested particulars of the Statement of Claim by letter dated 14 November 2005. All references in this judgment to 'Request' followed by a number, are references to requests for further and better particulars contained in that letter, attached as Exhibit RMH 1 to Mr Hamwood's affidavit. 3 The Applicant's solicitors took objections to the request for further and better particulars in a document dated 20 December 2005 and entitled 'Applicant's further and better particulars of the Statement of Claim in response to the Respondent's request dated the 14 November 2005'. This document is Exhibit RMH 2 to Mr Hamwood's affidavit. 4 The Respondent's solicitors responded by letter to the Applicant's solicitors on 31 January 2006 acknowledging the objections and pressing for answers to a number of the requests. This letter is Exhibit RMH 3 to Mr Hamwood's affidavit. 5 The Notice of Motion was heard by me on 13 February 2006. Outlines of Submissions on behalf of both the Applicant and Respondent were filed at that time. 6 The Applicant submits generally that the Respondent's requests for particulars are in the nature of interrogatories; are vexatious and oppressive due to the number of requests made and the repetitive nature of many of the requests; and that the requests generally fail to make any distinction between a request for particulars of material facts and a request for the evidence which might be led to establish a pleaded material fact. The Applicant contends that proper and appropriate answers have been provided to the Respondent and no further order should be made. 7 The Respondent submits that the particulars sought from the Applicant fall into four categories: (1) particulars of the form and circumstances relating to agreements or terms of agreements relied on; (2) particulars of the form and circumstances relating to specific communications; (3) particulars of supporting facts relied on; and (4) particulars to clarify what is meant or intended in the Statement of Claim without which there is unresolved ambiguity or uncertainty. The Respondent submits that each request is a proper request for particulars and should be provided by the Applicant.

Further and Better Particulars, compared with Interrogatories 8 The essential function of particulars is to 'carry into operation the overriding principle that the litigation between the parties, and particularly the trial, should be conducted fairly, openly and without surprises and incidentally to save costs'. (Atkin's Encyclopaedia of Court Forms and Precedents in Civil Proceedings, Butterworths, vol 8, p 31). Particulars complete the picture of the applicant's cause of action with information sufficiently detailed to put the respondent on guard as to the case it has to meet and to enable it to prepare for trial (Spedding v Fitzpatrick (1888) 38 Ch D 410; R v Associated Northern Collieries (1910) 11 CLR 738 at 741; Goldsmith v Sandilands (2002) 190 ALR 370 at 371; King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 543 at pars 16-18). A request for further and better particulars should be made initially by letter, however the Court may order further and better particulars to be provided pursuant to O 12 Federal Court Rules. 9 Particulars and interrogatories have complementary functions in preparing for trial. Unlike further particulars, interrogatories may be only be filed and served by leave of the Court (O 16 r 1 Federal Court Rules). Historically, '…the object of interrogatories is to enable a party to obtain from his opponent information as to facts material to the questions in dispute between them, and to obtain admissions on oath of any facts which he has to prove on any issue which is raised between them….The essential function of particulars… is to limit the generality of the pleadings, and to define the issues which have to be tried and as to which discovery has to be given. And thus, while to a certain extent the giving of particulars may render interrogatories unnecessary by informing the opponent of the case he has to meet, they do not perform a function which is co-extensive with that of interrogatories. There are indeed occasions when it is proper to interrogate as to the truth of the particulars, and on the other hand there are cases in which it would not be proper to order particulars, but where interrogatories could be allowed.' (Atkin's Encyclopaedia of Court Forms and Precedents in Civil Proceedings, Butterworths, vol 8, p 31)

10 A succinct summary of the position was expressed by Buckley LJ in GW Young and Co Ltd v Scottish Union and National Insurance Company (1907) 24 TLR 73 at 74 as: 'The principle underlying particulars was that they were given in order to make the plaintiffs' case plain, while interrogatories, on the other hand, were to assist the opposite side, and they had nothing to with particulars.'

11 In the context of this specific objection in relation to a number of requests by the respondent for further and better particulars, the fundamental issue is whether the information sought by the respondent was in the nature of 'particulars' - ie, clarifying the case against the respondent - or seeks information beyond clarification and enters the realm of interrogatories for which it must seek the leave of the Court.

'Vexatious and Oppressive' 12 As has been pointed out in other contexts, the terms 'vexatious' and 'oppressive' 'are not statutory words…they are descriptive words which illustrate but do not confine the courts' general jurisdiction. They are pointers rather than boundary marks'. (The Atlantic Star [1974] AC 436 at 468). However it is claim of some seriousness, as 'vexatious and oppressive' conduct in the framework of litigation connotes an abuse of process of the court (Walton v Gardiner (1992-1993) 177 CLR 378 at pp 392-393, International Entertainment (Aust) Pty Ltd v Churchill [2003] QSC 247, para 24, Young v Holloway [1895] P 87, 90). 13 When these terms are sought to be applied to a request for further and better particulars, the practical application of them is not always an easy task. The special circumstances of each case must be carefully considered (Wootton v Sievier [1913] 3 KB 499 at 503). One test which can be applied is whether the pleading is such that no reasonable person could properly treat it as bona fide (Norman v Mathews (1916) 85 LJKB 857). However, courts will not lightly rule that pleadings are to be struck out for this reason (Bean v Flower (1895) 73 LT 371).

Particulars and evidence 14 Order 11 r 2 of the Federal Court Rules states that a pleading of a party shall only contain in a statement in a summary form of the material facts on which the party relies, but not the evidence by which those facts are to be proved (Blake v Albion Life Assurance Society (1876) 45 LJQB 663 at 667 per Brett J and North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1913] 3 KB 422 at 425.) Further, a request for particulars should not include a request to disclose evidence by which the applicant intends to prove its case at trial (Temperton v Russell (1893) 9 TLR 319 at 322). The application of this principle to individual facts can be difficult. A useful illustration of the principle however was in Re Dependable Upholstery Ltd (1936) 3 All ER 741, where the liquidator of a company sought a declaration against two directors that dividends had been paid wholly out of the capital of the company and not out of profits, and that there had been no profits of the company out of which dividends could be paid. The defendant directors sought further and better particulars of the facts relied upon in support of these allegations. Crossman J held that the liquidators were not required to give particulars of those facts. As the learned judge observed: 'In the present case the material fact on which the applicant, the official receiver, relies, is the alleged fact that each of the two dividends was in fact paid wholly out of the capital of the company. But it is suggested by Mr Morton on behalf of the respondents, the directors, that you have to go behind that allegation and find out the allegations or facts upon which that statement is based. It seems to me if one begins there, I do not know where one would end in the particulars which would have to ordered; because the fact that each of the dividends was paid wholly out of the capital of the company is the fact on which each party relies in the claim or defence. The facts which lead up to that are, in my view, really the evidence of the fact that the dividends were in fact paid wholly out of the capital of the company.' (at 745)

15 The applicant claims that a number of the requests of the respondents for further particulars are in the nature of seeking evidence rather than material facts.

further and better particulars in dispute 16 Prior to the hearing of this matter on 13 February 2006 the parties had resolved a number of issues in relation to the respondent's request for further and better particulars. Outstanding matters requiring determination by this court are requests for further and better particulars concerning the following paragraphs of the applicant's statement of claim: (a) paragraph 7 (b) paragraph 10 (c) paragraph 11 (d) paragraph 12 (e) paragraph 13 (f) paragraph 14 (g) paragraph 18 (h) paragraph 24 (i) paragraph 25 (j) paragraph 29

Paragraph 7 of the Statement of Claim 17 Paragraph 7 of the Statement of Claim states that 'The arrival of the Audit Team at the premises of Budget Mt Gravatt as referred to in para 6 above was without notice or warning'. Paragraph 6 of the Statement of Claim states 'At approximately 9.30 am on Monday the 25th October 2004, Moloney, Frost and Taylor ("the Audit Team") entered the Budget Mt Gravatt premises'. 18 The Respondent seeks particulars clarifying the difference (if any) in the acts asserted in para 6 (that at approximately 9:30 am on Monday 25 October 2004, the Audit Team 'entered' the Budget Mt Gravatt premises) and para 7 in which the 'arrival' of the Audit Team is referred to. In addition the Respondent contends that it is entitled to know who the Applicant alleges notice or warning was to be given and why such notice or warning was required. 19 The Applicant objects to answering such request on the grounds that it is not a proper request for particulars. 20 In my view the Respondent is entitled to further but limited particularisation in relation to this paragraph. Insofar as Request 3(a) is concerned, the Respondent is entitled to clarification as to whether the 'arrival' of the Audit Team is intended to refer to the same event as referred to in para 6 of the Statement of Claim where it is alleged that the Audit Team 'entered' the Applicant's premises. The Applicant should provide the Respondent with sufficient particulars of the time of the event referred to in para 7. 21 In relation to Requests 3(b) and 3(c), although compelling arguments have been submitted from both parties, I am of the view that the Respondent is entitled to further and better particulars as sought. I accept the submission of counsel for the Respondent that para 7 contains an incomplete assertion, namely that notice or warning should have been provided to someone. The information sought here is limited, and is limited to the issue of to whom notice of the visit of the auditors should have been given. It is not akin to providing evidence of facts on which the parties pleading rely for claim or defence. In my view, this is part of the case the Respondent is required to meet, as distinct from evidence which the Applicant will lead to substantiate its claim. Further, in my view the request is not vexatious nor oppressive, nor in the nature of an interrogatory.

Paragraph 10 of the Statement of Claim 22 Paragraph 10 of the Statement of Claim alleges a conversation between Ms Wilde and Mr Livoni, Ms Wilde's subsequent conduct including an attempt to contact the Franchisee's solicitor, and a conversation between Ms Wilde and the Franchisee's accountant Mr Fernicola. 23 In addition to a general claim that the request is in the nature of interrogatories, is vexatious and oppressive, seeks evidence rather than material facts, and is not otherwise a proper request for particulars, the Applicant submits that there is a need to distinguish between the existence of a conversation as being a material fact, and the content of a conversation as being a material fact. The Applicant argues that the fact that a conversation has occurred does not lead to a conclusion that it is necessary for the pleader to plead the substance of the conversation and unless the pleader does, it is not capable of particularisation or a request for particulars. 24 It is submitted by the Respondent that when a communication is alleged in a pleading, the usual particulars of such communication are whether it was oral or written, when it was made, between whom it was made and the substance of the conversation if it was oral, or a copy of the document provided if it is written. 25 The Respondent is entitled to further particulars regarding how and when the conversation referred to in para 9 of the Statement of Claim was 'relayed' by Mr Livoni to Ms Wilde. The Applicant should provide such particulars to give clarity to their pleading in relation to this alleged event. 26 However, I am of the view that the Respondent is not entitled to particulars detailing the substance of any alleged conversation between Mr Livoni and Ms Wilde as this is appears to be a request for evidence and not a proper request for particulars. The content of any conversation between Mr Livoni and Ms Wilde is irrelevant for the purposes of para 10 as that paragraph itself pleads to a conversation 'referred to in para 9' of the Statement of Claim. Paragraph 9 of the Statement of Claim gives particulars of a conversation between Mr Livoni and one or more of the Audit Team.

Paragraph 11 of the Statement of Claim 27 Paragraph 11 of the Statement of Claim alleges that the Audit Team gathered and copied records subsequent to the events referred to in para 10. 28 The Respondent submits that they whilst it is aware of what records it says it copied, it does not know whether the Applicant alleges that it took any further material. The Respondent also seeks a time frame as to the events alleged in para 11 where the term 'subsequent' is used. 29 The Applicant objects to this request for particulars on the grounds that it is not a proper request for particulars and that it seeks enquiries into matters wholly within the knowledge of the Respondent. 30 With regard to Request 10, the Respondent is again entitled to particulars in relation to the timing of the alleged event. The Respondent cannot adequately answer the allegation if it is unclear as to when the event occurred. 31 The Respondent is entitled to the particulars it requests in Request 11 as such material is referred to in the Applicant's prayer for relief at para 35(b) of the Statement of Claim. The Applicant seeks an order that the Respondent, by itself, its servants or agents, yield up all information recorded or otherwise copied or taken from the Applicant. The Respondent is therefore entitled to know the details of what information or records the Applicant alleges it took, recorded or copied.

Paragraphs 12 and 13 of the Statement of Claim 32 Paragraph 12 of the Statement of Claim allege that one or more of the Audit Team asked Ms Wilde and Mr Livoni certain questions relating to cash receipt books. Paragraph 13 of the Statement of Claim alleges an exchange of comments between one or more members of the Audit Team and Ms Wilde and Mr Livoni. The requests for further and better particulars in relation to paras 12 and 13 are similar. 33 The Respondent submits that it is entitled to know who is alleged to have had the relevant conversations with Ms Wilde and/or Mr Livoni and the substance of those conversations. 34 The Applicant objects to all requests for particulars relating to paras 12 and 13 of the Statement of Claim on the grounds that they are not a proper request for particulars. 35 In my view the Respondent is not entitled to the further and better particulars it has sought in relation to paras 12 and 13 of the Statement of Claim. The information sought is a request for evidence and not a proper request for particulars. The nature of the questions asked by members of the Audit Team to Ms Wilde and/or Mr Livoni, and conversations as a result of the posing of questions is a matter to be determined in evidence at the trial.

Paragraph 14 of the Statement of Claim 36 Paragraph 14 of the Statement of Claim alleges that the Audit Team took a copy of the Applicant's computer hard drive, despite not having the Applicant's permission freely given. 37 The Respondent seeks particulars of the Applicant's claim that permission was not 'freely given'. The Respondent seeks clarification as to whether the Applicant alleges that no permission was given or that permission was given but under some form of duress or after complaint. The Respondent submits that if it is said that permission was given but not 'freely', that is entitled to know the facts giving rise to that allegation. 38 The Applicant objects to the requests relating to para 14 on the grounds that they are not proper requests for particulars but are more in the nature of interrogatories. 39 I am prepared to allow limited particularisation of para 14. Again, in my view whether or not the hard drive was removed from the premises of the Applicant over the stated complaint or objection of the applicant is part of the case the respondent is required to meet. Further, in stating that permission was not 'freely' given the Applicant is alleging a condition of mind. Order 12 r 3 provides: '(1) A party pleading any condition of mind shall give particulars of the facts on which he relies.' 40 The Applicant should indicate whether any complaint or objection was made in relation to the removal of the hard drive, the nature of such complaint or objection, who made the complaint or objection and to whom the complaint or objection was made. The contents of any such complaint or objection are an issue of evidence and need not be pleaded.

Paragraph 18 of the Statement of Claim 41 Paragraph 18 of the Statement of Claim alleges that after the Audit Team collected records at the request of the Respondent on 25 and 26 October 2004, a report (dated 21 April 2005) was prepared by Ferrier Hodgson at the Respondent's request in relation to the Applicant's business activities. 42 The Respondent argues that it is entitled to know what records the Applicant alleges it collected along with any information relating to the substance of the request by the Respondent for the collection of records from the Applicant. The Respondent also seeks clarification of para 18(b) of the Statement of Claim which it submits is ambiguous (request 24). 43 The Applicant has provided some particulars to the requests relating to para 18 of the Statement of Claim but objects to providing further particulars on the basis that the Respondent's requests are not proper requests for particulars but are more in the nature of interrogatories. 44 Earlier in this judgment I ordered limited particularisation of para 11 of the Statement of Claim. To the extent that the Applicant claims a report, produced by Ferrier Hodgson, is based on information and materials obtained by the Respondent, it should describe what that information and materials are. It may be appropriate for the Applicant to cross-reference para 18 to the particulars to be included in para 11. 45 In relation to Request 23, contrary to the submission of the Respondent I do not accept the analogy between the pleadings in the case before me, and those in Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135. In my view, in para 18(a) of the Statement of Claim the Applicant has supplied sufficient particulars to the Respondent. The remainder of the Respondent's request is a request for evidence and not a proper request for particulars. 46 In relation to Request 24, in my view para 18(b) of the Statement of Claim is ambiguous, for the reason that, on the face of the document, paras 6, 7, 8, 9, 10, 12 and 13 do not contain references to information obtained by the Respondent. The Applicant is required to either amend para 18(b) or provide particulars as sought by the Respondent.

Paragraph 24 of the Statement of Claim 47 Paragraph 24 of the Statement of Claim alleges that the Respondent failed to act in good faith and fairly in the manner of the exercise of the power conferred by the Franchise Agreement and that the power was exercised oppressively, capriciously, in an arbitrary way and for an improper purpose, being to effect the policy decision of the Respondent, OPSM and Luxotica to acquire independently owned Budget franchises. 48 The Respondent seeks particulars of what conduct the Applicant relies upon to assert the allegation and specific details of the policy decision or facts from which the policy decision may be inferred. 49 The Applicant objects to the request for particulars of the conduct establishing that the Respondent failed to 'act in good faith and fairly' on the grounds that it is not a proper request for particulars and says that it is not able to give further and better particulars in relation to the 'policy decision' until after disclosure. 50 Paragraph 24(b) of the Statement of Claim is currently drafted in broad terms, and makes serious allegations against the Respondent. In my view in order to be in a position to meet the case against it, the Respondent is entitled to particularisation of this paragraph as requested by Request 26, but only as to the facts upon which the Applicant is relying to assert the allegation in subpara (b). In doing so I note the somewhat similar situation in The Briton Medical and General Life Association Limited v The Britannia Fire Association and Whinney (1889) 59 LT 888 where the plaintiff association claimed, inter alia, 'The defendants…knew or ought to have known, and must be taken to have known, the improper motives which actuated the said directors of the plaintiff association'. Kay J, in noting that he was required to draw a line between requiring the plaintiff association to make a statement which would prevent the defendant association being taken by surprise at the trial, and requiring the plaintiff association to make a statement of the evidence on which it intended to rely, nonetheless ordered the plaintiffs to give particulars of the improper motives alleged in that para (at 890). 51 Request 27(c) however, which relates to the alleged policy decision of the Respondent referred to in para 24(c) of the Statement of Claim, in my view is more in the nature of an interrogatory, and not a proper request for particulars.

Paragraph 25 of the Statement of Claim 52 Paragraph 25 of the Statement of Claim alleges that the Respondent failed to exercise the power conferred by cl 9.1 of the Franchise agreement. The Applicant asserts that the process undertaken on 25 and 26 October 2004 was unlawful and of no effect under the terms of the Franchise Agreement. 53 The Respondent requests particulars of what the Applicant alleges it should have done but failed to do in accordance with the terms of the Franchise Agreement. 54 The Applicant objects to the Respondent's request on the grounds that it is not a proper request for particulars. 55 The Applicant has alleged that the Respondent failed to act in accordance with the Franchise Agreement. 56 In my view, the Respondent is entitled to particulars of the conduct constituting the alleged failure to act in order to properly answer the case against it.

Paragraph 29 of the Statement of Claim 57 Paragraph 29 of the Statement of Claim alleges that the author of the Ferrier Hodgson report was not independent, did not conduct an audit, acted on the instructions and the bidding of the Respondent and knowingly and deliberately made assumptions and conclusions contrary to the interests of the Applicant. 58 The Respondent submits that this is akin to an allegation of fraud by both the Respondent and the author of the report. Therefore the Respondent seeks particulars of the facts upon which the allegation is based. 59 The Applicant objects to the Respondent's requests on the grounds that they are not a proper request for particulars. 60 In my view, this paragraph of the Statement of Claim makes serious allegations against the Respondent and the author of the report. While the Applicant contends that the claim is not in the nature of fraud, in my view it comes close. I note that O 12, r 2 Federal Court Rules requires a party pleading fraud to give particulars of any fraud on which it relies. I make no finding at this stage as to whether the Applicant is pleading fraud. In my view the Respondent is entitled to particularisation of this paragraph, in order to be in a position to meet the case against it. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier

Associate: Dated: 16 March 2006 Counsel for the Respondent: Mr Ken Barlow

Solicitors for Respondent: Cutler Hughes & Harris