Supreme Court of WA|2004-11-17|Before: Hasluck J

Macgregor v Macgregor [2004] WASC 237 (17 November 2004)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MACGREGOR -v- MACGREGOR [2004] WASC 237

Practice and procedure - Application to strike out statement of claim - Turns on own facts

Rules of the Supreme Court 1971 (WA), O 20 r 8(1)

Bruce v Odhams Press, Limited [1936] 1 KB 697

Chandler & Ors v Water Corporation [2001] WASC 166

Hanky v Clavering [1942] 2 KB 326

United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd (1968) 1 All ER 104

Baldry v Jackson [1976] 2 NSWLR 415

Briggs v Curtis Quick & Associates [1999] WASCA 139

Hooker Corporation Ltd v Commonwealth (1986) 82 FLR 321

Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167

Silkline Investments Pty Ltd & Ors v Challenge Ltd & Anor [1988] WASC 319

Vandervell Trustees Ltd v White [1970] 3 All ER 16

Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233

1 MASTER SANDERSON: This is the return of a pleading summons in each of two actions. In both actions the defendant seeks to strike out a large number of paragraphs in the plaintiff's statement of claim. Many of the complaints are the same in both actions. So far as many of the paragraphs attacked are concerned, if they are struck out, the claim can be repleaded without difficulty. However, in CIV 1665 of 2004, complaint is made as to certain paragraphs which, if they are struck out, would mean that the action must fail. In other words, there are complaints as to form in both actions and a complaint as to substance in CIV 1709 of 2004. It is convenient to deal first with the complaints as to form. There are some differences between the two statements of claim, but the comments that I make about one apply equally to the other. For no particular reason, I will refer to the statement of claim in CIV 1665 of 2004.

2 Before dealing with the specific complaints, I should make some general comments about the pleading of a claim. Order 20 r 8(1) of the Rules of the Supreme Court 1971 (WA) says that every pleading must contain, and contain only, a statement in summary form of the material facts upon which the party pleading relies, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits. "Material" means necessary for the purpose of formulating a complete cause of action: see Bruce v Odhams Press, Limited [1936] 1 KB 697 at 712 - 713 per Scott LJ.

3 Every competent counsel is aware of that rule and doubtless cognisant of what was said in the Odhams Press decision. It is putting the rule into practice where the difficulty arises. Hasluck J, in Chandler & Ors v Water Corporation [2001] WASC 166, put the position as follows (at [44]):

"The emphasis of the pleading must be upon facts relevant to the claim being advanced, from which it follows that matters of narrative and evidence should be omitted. Unnecessary allegations or details should not be pleaded. ... "

"Put shortly, the plaintiffs are obliged to exercise care in setting out in their statement of claim the case they intend to prove at the trial of the action so that the other party to the dispute, and the Court itself, will have a clear understanding of which rules of law are being relied upon and which facts are said to be important ...

Facts constituting the cause of action may be alleged in the claim, but facts going to prove the existence of those facts are evidence. For example, in an action for negligence a plaintiff must prove a duty of care, and a breach of that duty by the defendant. What the plaintiff must allege is the duty of care and the defendant's breach of that duty. The facts that constitute the breach are evidence. If the defendant owes the plaintiff a duty to provide a safe system of work, facts that the defendant maintained machinery by a particular ineffective method are evidence. While the distinction is easy to state, it is often difficult to draw the line between fact and evidence in practice, as the distinction will often depend upon a matter of degree or detail ... "

4 There is a tendency, perhaps more pronounced these days than in earlier times, to include in pleadings what might be called "background facts". Often, this is done not because the person drafting the pleading is unaware of the provisions of O 20 r 8, but because such background facts are seen as of assistance in making sense of the pleaded material facts. Strictly speaking, such background facts are irrelevant, offend the rules of proper pleading and would be liable to be struck out. Frequently, counsel faced with such a pleading and cognisant of the right to apply to strike out, simply allow the matter to pass because the background facts are not disputed and their presence in a pleading will not cause embarrassment, nor will it delay the trial of the action. But the fact remains that such background facts ought not be pleaded. It is contrary to good pleading practice. Whatever may be the limitations of a system of civil litigation that defines the issues between the parties by reference to pleadings, while such a system is in use its rules, where possible, should be observed.

5 In this case, the defendant complains that pars 4 to 7, 8 to 10, 11 to 14, 15 and 17 of the statement of claim were historical facts and are irrelevant. Without going to any of these paragraphs in detail, it is sufficient if I say that I am satisfied that the defendant's complaints are well-founded. At the heart of the plaintiff's claim against the defendant is an alleged oral agreement entered into in 1983. The relevant material fact is the ownership interest in the Bakewell Pies Business immediately prior to that alleged oral agreement. It may well be necessary at trial for one or other of the witnesses for the plaintiff to give some historical background to put the alleged agreement in context. But the pleading need not deal with these issues. The paragraphs are irrelevant and should be struck out.

6 There is a further complaint made concerning the reference to "Bakewell Trusts" in par 11 of the statement of claim. It is said that this phrase is vague and embarrassing. It is also said that the reference to the Bakewell Trusts is unnecessary and irrelevant. That may well be the case. However, if reference is to be made in a fresh pleading to the Bakewell Trusts, then those entities ought be identified. They can then be collectively defined, but the identity of the Trusts is, in my view, a material fact and ought be pleaded.

7 Complaint was made (in oral submissions, although not in the application nor in the written submissions) as to par 24(a) of the statement of claim. It is said that the reference to the BP Unit Trust transferring the Bakewell Pies Business to another entity is embarrassing. A unit trust cannot transfer anything. Presumably, such a transfer was undertaken by the trustee. If the plea of the transfer is relevant, then the entity which caused the transfer ought be identified. The complaint is well-founded and the position should be rectified.

8 As to par 24(b), it is said that the pleaded mutual intention of the parties is irrelevant. It does not appear to give rise to any cause of action. It is not clear how the subjective intention of the parties is relevant to the plaintiff's claim. This paragraph ought be struck out.

9 In par 25 of the statement of claim, there is a reference to the "purported" transfer of shares. The defendant complains about the use of this word. The shares were either transferred or they were not. If they were transferred and the transfer was ineffective, then material facts must be pleaded to support that proposition. Paragraph 25, as it stands at present, is embarrassing and ought be struck out.

10 Complaint is made as to pars 26 and 27 and the first seven words of par 28. These three paragraphs deal with what is defined as "taxation advice". It is not entirely clear where these paragraphs lead. It would appear that they are directed at explaining why an agreement or agreements were entered into. I can see no reason why the motivation for entering into any agreement or agreements is relevant to this action. Accordingly, the paragraphs complained of ought be struck out.

11 Paragraph 29 pleads what are said to be express terms of an agreement pleaded in par 28. In principle, there is nothing to stop a party pleading express terms of any agreement, be it oral or written. To that extent, par 29 is a proper plea. However, it is logically inconsistent. By par 29(a), there is reference to the "Shares". Nowhere is that term defined, nor is it clear from the pleading what company is involved. Presumably, it is Bakewell Foods Pty Ltd, which is defined in par 24(a) as "Company". The position needs to be clarified. Furthermore, it is not clear what mechanism would cause the Shares to be issued. If the Company was not a party to the agreement, and it is not pleaded that it was, then one or other of the parties to the agreement must have been in a position to cause the Company to issue the shares. Paragraph 29 needs to be reformulated. In its present form, it is embarrassing and should be struck out.

12 Paragraph 30 of the statement of claim pleads a variation to the Agreement pleaded in par 28. The Agreement, as varied, is defined as the "Varied Agreement". The Varied Agreement is not properly pleaded. It is not pleaded whether the "proposal" referred to in the particulars was oral or in writing, by whom it was put and when and where it was put. Perhaps more importantly, it is not clear how Mr Iain Macgregor was in a position to bind the defendant as a party to the Agreement. It is pleaded in par 3 of the statement of claim that Iain Macgregor is a director and shareholder of the defendant. That, by itself, is not sufficient. Something more must be pleaded if the defendant is properly to be regarded as a party to the Varied Agreement. It is also not entirely clear as to what consideration passed between the parties to the Agreement or the Varied Agreement. This is a matter which requires attention. As it stands at present, par 30 ought be struck out.

13 By par 32(a), it is pleaded that the directors of the Company resolved to "refuse" (the word "refuse" appears in the pleading in inverted commas) the purported transfer of one ordinary share in the Company as pleaded in par 25. With respect, that plea is meaningless. First, it suffers from the defect that I referred to when dealing with par 25 - it is not clear what a "purported transfer" might be. Second, if there was a resolution of the directors to decline to register the transfer of the share, presumably they were first asked to approve the transfer. That, surely, is a material fact. With respect to par 32(b), it is a strange situation where a board of directors by resolution "refused" to transfer a share in the Company, presumably upon request to do so and then register a transfer of that same share to another party. If that is what occurred, then material facts need to be pleaded to explain just what happened. At the moment the plea is so sparse as to be embarrassing.

14 Paragraph 34 is irrelevant. It ought be struck out.

15 That deals with matters of form raised by the defendant in each action. While a large number of paragraphs have been struck out, with the result that the whole of the pleading will need to be recast, the integrity of the cause of action remains intact. As I have mentioned above, what is at issue is form, not substance. The further complaints in CIV 1709 of 2004 are of rather more importance.

16 The defendant complains of pars 37 and 38 of the statement of claim. Before detailing these two paragraphs, it is important to restate just what the plaintiff says is the agreement it is seeking to enforce. It is the Varied Agreement pleaded in par 30 of the statement of claim. It is said that pursuant to the Varied Agreement, the defendant became the holder of 34 per cent of the Shares in the Company. It is also said that it was a term of the Varied Agreement that the defendant would transfer to the plaintiff and Catherine MacGregor "such of the Shares as were issued to it upon demand".

17 Against that background, there then appears the pleas in pars 37 and 38 of the statement of claim. These paragraphs read as follows (omitting the marking up):

"37 In her last Will and Testament, Catherine Macgregor bequeathed the whole of her estate to the Plaintiff.

Particulars of last Will and Testament

Catherine Macgregor's last Will and Testament is in writing and dated 27 November 1995 and a copy thereof may be inspected at the offices of the solicitors of the Plaintiff.

38 On or about 12 May 2003, the Plaintiff demanded the First Defendant transfer or cause to be transferred to him 70% of the issued capital of the Company

Particulars of Request

The request is in writing from the solicitors for the Plaintiff, for and on behalf of the Plaintiff, to the First Defendant and is dated 12 May 2003 and a copy thereof may be inspected at the offices of the solicitors for the Plaintiff."

18 A copy of the letter referred to in the particulars from the plaintiff's solicitors to the first defendant dated 12 May 2003 is found as annexure "IM3" to the affidavit of Iain MacGregor, sworn 30 March 2004. The letter sets out the allegations as to the agreement between the plaintiff and the defendant and concludes:

"Please provide us with confirmation, by the close of business on 21 May 2003, that you will promptly transfer, or cause to be transferred, 70% of the issued capital of Bakewell Foods to our client."

19 It is the defendant's position that as he did not hold 70 per cent of the issued capital of Bakewell Foods Pty Ltd, he was in no position to make the transfer as requested. It is common ground between the parties - indeed it is pleaded by the plaintiff - that the defendant did not hold 70 per cent of the shares. On behalf of the defendant it was submitted that the alleged notice could not trigger any contractual obligation on the part of the defendant because the precise nature of the obligation the defendant was to perform was not set out in the notice.

20 In support of his submission, counsel for the defendant relied on two cases. First, the decision of the Court of Appeal in Hanky v Clavering [1942] 2 KB 326. This was a lease case in which the terms of the lease allowed either party to determine the tenancy at the end of seven years on giving six months notice. The landlord gave to the tenant's solicitors a notice as from 21 June 1941, which purported to determine the lease on 21 December 1941. (The six month period would have been 21 January 1942). The solicitors subsequently acknowledged the receipt of the notice, saying that it had been properly served on them. The Court of Appeal held, reversing the decision at first instance, that the notice, although the mistake as to date was obviously due to a slip on the part of the landlord, was invalid and that the acceptance of its service by the solicitors did not cure the defect. Lord Greene MR said (at 329 - 330):

"That takes me back to the real point, namely, whether or not the notice was good, in the sense that it had the effect of terminating the lease on December 25, 1941. Notices of this kind are documents of a technical nature, technical because they are not consensual documents, but, if they are in proper form, they have of their own force without any assent by the recipient the effect of bringing the demise to an end. They must on their face and on a fair and reasonable construction do what the lease provides that they are to do. It is perfectly true that in construing such a document, as in construing all documents, the court in a case of ambiguity will lean in favour of reading the document in such a way as to give it validity, but I dissent entirely from the proposition that, where a document is clear and specific, but inaccurate on some matter, such as that of date, it is possible to ignore the inaccuracy and substitute the correct date or other particular because it appears that the error was inserted by a slip. By the clear wording of this notice the plaintiff purported to bring the lease to an end on December 21, 1941. In so doing he was attempting to do something which he had no power to do, and, however much the recipient might guess, or however certain he might be, that it was a mere slip, that would not cure the defect because the document was never capable on its face of producing the necessary legal consequence."

21 The second case referred to by counsel was also a decision of the Court of Appeal in United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd (1968) 1 All ER 104. In his judgment, Diplock LJ refers to unilateral, or what he describes, as "if" contracts. His Lordship mentions options as one of the commonest kinds of such a contract. He then goes on (at 109):

"A unilateral contract does not give rise to any immediate obligation on the part of either party to do or to refrain from doing anything except possibly an obligation on the part of the promisor to refrain from putting it out of his power to perform his undertaking in the future. This apart, a unilateral contract may never give rise to any obligation on the part of the promisor; it will only do so on the occurrence of the event specified in the contract, viz, the doing (or refraining from doing) by the promisee of a particular thing. ...

...

... as respects the promisor, the initial inquiry is whether the event, which under the unilateral contract gives rise to obligations on the part of the promisor, has occurred. To that inquiry the answer can only be a simple 'Yes' or 'No'. The event must be identified by its description in the unilateral contract; but if what has occurred does not comply with that description, there is an end of the matter. It is not for the court to ascribe any different consequences to non-compliance with one part of the description of the event than to any other part if the parties by their contract, have not done so."

22 The defendant here says that the plaintiff in the letter of demand, did not specify the proportion of the Shares that he was to transfer to the plaintiff. That, it is said, is a non-compliance with one part of what was required by the contract. Hence the obligation of transfer could not, on the pleading, have arisen.

23 In answer to this submission the plaintiff says that it is clear what was intended. What was required of the defendant was that he transfer the interest he held in the Shares to the plaintiff. In all the circumstances the notice, even if it was not specific as to percentages, was sufficiently clear to complete the contract and crystallise the defendant's obligation.

24 On balance, I am satisfied that the notice is deficient and that the contract has not been completed. In my view, given the nature of the contractual relationship between the parties, it was necessary for the plaintiff to specify with precision what percentage of the shares in the company the defendant was required to transfer to him. It was not for the defendant to guess, or to make any assumption about his obligations. I am therefore satisfied that the cause of action was not complete when the proceedings were issued and that pars 38 and 39 of the plaintiff's statement of claim should be struck out.

25 I will hear the parties as to the precise form of orders and as to costs.

Macgregor v Macgregor [2004] WASC 237

At a glance

Court

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Before

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Judgment (47 paragraphs)

Macgregor v Macgregor [2004] WASC 237 (17 November 2004)

Parties

Cases Cited (2)