Plaintiffs v Defendants

Supreme Court of Victoria|2009-04-06|Before: JUDD J

PRACTICE AND PROCEDURE - Application for summary judgement and to strike out pleading - Conspiracy to injure - Embarrassing - Failure to plead elements - pleading struck out - summary judgement refused.

1 On 2 and 6 April 2009 I heard applications by the first, second and fourth to tenth defendants to strike out the plaintiffs' conspiracy allegations in paragraphs 94 to 109 of the substituted statement of claim dated 27 June 2008. The first and fourth to ninth defendants also applied for summary judgment against the plaintiffs in respect of their breach of contract claim in paragraphs 133 to 138 inclusive, although the relief sought in paragraph 138 is for repayment of overpayments by PDC Singapore.

2 The defendants' summonses extend their attack beyond the paragraphs mentioned above to include paragraphs 80 to 80J and 110 to 117J. Alternative claims are made for particulars. The attack on paragraphs 80 to 89J fell away after the delivery of further particulars. These allegations are, however, the platform upon which the plaintiffs construct their claim for loss and damage resulting from alleged conspiracies to injure. The plaintiffs allege, against the first defendant, Elizabeth Back, breach of her contract of employment and duties owed to plaintiffs when recommending that they award a contract to the fifth defendant to undertake certain joint venture works.

3 The fifth defendant was known as Petroleum Development Consultants Pty Ltd and is described in the pleading as PDC Pty Ltd. PDC has undergone numerous name changes, it was the subject of a successful takeover by Back, the second defendant, Andrew Venables and others. That transaction lies at the heart of the plaintiffs' case.

4 The parties agree that it was appropriate to deal first with the plaintiffs' conspiracy claims as pleaded in paragraphs 94 to 109 and the summary dismissal application in relation to paragraphs 133 to 138.

5 The defendants also foreshadowed applications to have this proceeding transferred to the Supreme Court of Western Australia to be heard and determined with proceeding number CIV 2260 of 2007. PDC and the sixth defendant, a subsidiary of PDC, described in this pleading as PDC Singapore, are plaintiffs in the West Australian proceeding and the first and third plaintiffs in this proceeding are defendants in the West Australian proceeding. In the West Australian proceeding PDC and PDC Singapore claim unpaid fees and other amounts under the Installation Contract and the defendants have counterclaimed. There is no dispute that there are common issues. It is agreed that the applications to transfer this proceeding should await the resolution of the challenges to the pleadings.

6 At the conclusion of the hearing, on 6 April 2009, I acceded to the strike out applications in relation to paragraphs 94 to 109, but refused summary judgment in relation to the cause of action pleaded in paragraphs 133 to 138 of the statement of claim. My reasons are as follows.

7 The principles applicable to such applications are well understood and are not in dispute.[1] Insofar as the defendants seek dismissal of the plaintiff's case, they bear the onus of demonstrating that it is:

... so obviously untenable that it cannot possibly succeed; manifestly groundless; so manifestly faulty that it does not admit of argument; discloses a case which the Court is satisfied cannot succeed; under no possibility can there be a good cause of action; be manifest that to allow them (the pleadings) to stand would involve useless expense.[2]

8 In Dey v Victorian Railways Commissioners, Dixon J said:[3]

A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.[4]

9 The purpose of the rule under which a party may impeach a pleading is to secure compliance with the rules of pleading.[4] It is for the plaintiffs to formulate their claim in an intelligible form. They must also plead facts which meet the requirements of their causes of action.

10 The statement of claim is long and confusing. This may be explained in part by the plaintiffs' attempt to anticipate and defend the money claims by the PDC entities. They make numerous complaints against Back and their former solicitors upon which the plaintiffs' ultimately rely to allege that the benefit to the defendants of the Installation Contract and the takeover of PDC is held upon a constructive trust for the plaintiffs.

11 Along the way the plaintiffs plead elaborate conspiracies to injure which are the subjects of the defendants' present attack. They allege that Back, Venables, Peter Hoie, the seventh defendant, Michael Johnson, the eight defendant and John Mann, the ninth defendant set out to injure them through their manipulation and exploitation of a contractual relationship between the plaintiffs and the PDC entities. A brief summary of the allegations relevant to the conspiracy claims will suffice to demonstrate the substance of the plaintiffs' case.

12 The first plaintiff, AED Oil Limited is engaged in the business of oil exploration and the development of oil reserves in the Puffin Oil Field in the Timor Sea. Until about September 2007 AED Oil was a client of the third defendant, Minter Ellison, a firm of solicitors. The second plaintiff, AED Services Pte Ltd is a company incorporated in Singapore. It is a wholly owned subsidiary of AED Oil. It is engaged in the same business. It was also a client of Minter Ellison.

13 Until about September 2005, Back was a solicitor employed by Minter Ellison engaged in providing legal services to AED Oil. She became company secretary and remained in that position until about mid 2007. Back was employed by AED Oil as general counsel until late August 2007 and was a director of AED Services until late November 2007.

14 PDC was in the business of providing underwater installation services to the oil and gas exploration industry. These services involved the installation of pipes, equipment and platforms. Michael Johnson, the eighth defendant, was and is a director of PDC.

15 On about 3 November 2006 AED Oil, Sea Production Ltd, a company managed by Hoie and PDC entered into an agreement, by way of a "Letter of Intent", under which PDC would be appointed by AED Oil and Sea Production as the contractor for the provision of sub-sea aspects of work that were required for the Timor sea project. These works were described in the pleding as the "Joint Venture Works".

16 The letter of intent contemplated that a Singapore based company might perform the services which PDC agreed to provide in the Letter of Intent. On about 7 November 2006 Petroleum Development Consultants Pte Ltd was incorporated in Singapore as a wholly owned subsidiary of PDC. It is described in the pleading as PDC Singapore and commenced performing the sub-sea aspects of the Joint Venture Works pursuant to the Letter of Intent, in lieu of PDC, in about December 2006. It is alleged that Back was responsible for the inappropriate appointment of PDC and thus PDC Singapore, as the contracting party. The Letter of Intent was replaced by the Installation Contract in May 2007.

17 The plaintiffs' allege that in about January 2007 Back and Venables agreed to acquire PDC from its shareholders and take the profits to be earned for the Joint Venture Works. In May 2007 the fourth defendant, Equinox Energy Pty Ltd, was incorporated by them for the purpose of making the acquisition. PDC's shareholders agreed to sell and Equinox Energy agreed to buy all of the issued shares in PDC. Back became a director of Equinox Energy in about May 2007. Venables became a director of PDC following the takeover and a short time later became a director of Equinox Energy Holdings. In October 2007 PDC changed its name to Equinox Energy Installation; and in January 2008 changed its name again to Equinox Engineering & Installation. It is a wholly owned subsidiary of Equinox Energy. The share sale agreement included terms under which the vendors of the shares became entitled to a 50% after tax profit share from the Joint Venture Works.

18 One of the plaintiffs' claims against Back [paras 80 to 93] is for breach of contract and breach of duty by her recommendation of PDC for appointment as the contractor for the Joint Venture Works [paras 80 to 89J] and the preparation of the contract [paras 90 to 93]. The claim for damages in respect of the appointment of PDC also forms part of the counterclaim in the West Australian proceeding. It is not alleged that the advice and recommendation by Back, leading to the appointment of PDC as contractor, was motivated by a desire to appoint a party amenable to acquisition by her through Equinox Energy.

19 It is alleged that Back was principally responsible for negotiating the terms under which the Joint Venture Works would be performed and that it was her duty to protect the interest of the plaintiffs. The plaintiffs allege that the contract failed to properly protect them in the event of delays or cost over-runs. They allege that the Installation Contract should have contained provisions to protect AED Oil and AED Services in the event of delays or cost over-runs. For example, it is alleged that it should have contained a provision requiring PDC to pay liquidated damages in the event of delay; or requiring PDC Singapore to indemnify AED Services in respect of additional costs incurred in the event of delay; or reducing PDC Singapore's profit in the event of delays; or requiring PDC Singapore to properly account to AED Services for amounts actually paid to sub-contractors; or imposing an obligation on PDC to minimise costs for which it was being reimbursed by the plaintiffs.

20 The loss and damage claimed to have been suffered by the plaintiffs as a consequence of the alleged breaches by Back is essentially the same loss alleged to have been caused by the conspiracies. The loss, said to have been caused by significant delays in the joint venture works, forms part of the counterclaim in the West Australian proceeding.

21 The plaintiffs plead two forms of conspiracy: conspiracy to injure by unlawful means [ paras 94 to 107] and conspiracy with the sole or predominant purpose to injure [paras 108 and 109].

22 The construction of the conspiracy case is at best confusing. Much of the confusion arises from the employment of unhelpful definitions. The confusion is amplified by the persistent cross-referencing within particulars to other parts of the pleading. The pleading also fails to grapple with the essential elements of the torts and studiously avoids embracing the substance, as I understand it, of the plaintiffs' real complaints against Back and Venables.

23 The starting point for the conspiracy allegation is a concept of "Wrongful Agreement", first introduced as a heading to paragraphs 94 to 100. In paragraph 94 the plaintiffs allege that Venables and Back formed the intention to register a corporation with a view to that corporation acquiring the whole of the share capital of PDC and sharing the profits that would be earned by it or its wholly owned subsidiary from the performance of the Joint Venture Works. This allegation is defined as the "Intention". It is not alleged, at least at this point, that Venables and Back intended the acquisition to injure the plaintiffs.

24 In paragraph 95 the plaintiffs allege that in furtherance of the Intention (that is the intention of Back and Venables to make the acquisition) Back and Venables met with Hoie, Mann and Johnson in Perth and negotiated the terms of an agreement to acquire the shares of PDC. This meeting and agreement is defined as a "Preliminary Agreement". Thereafter, further matters are alleged which resemble allegations of acts in furtherance, as if the conspiracy and its purpose are to be found in paragraphs 94 and 95 of the statement of claim.

25 In paragraphs 98 and 99, the plaintiffs allege discussions between Johnson and Venables, acting with the knowledge and authority of Back, Hoie, Mann and Equinox Energy, about the terms on which Equinox Energy would acquire the shares of PDC. It is alleged that these discussions resulted in an "In-principle Agreement" to the effect that Equinox Energy would pay a purchase price to the shareholders of PDC not exceeding $15m and agreed to share profits earned by PDC with the former shareholders.

26 The facts constituting the Intention, the Preliminary Agreement and the In-principle Agreement are not said to constitute the conspiracy to injure. The purpose of those allegations is unclear, except insofar as they provide background to the "Wrongful Agreement" alleged in paragraph 100.

27 The Wrongful Agreement, alleged in paragraph 100, is an agreement made at a time presently unknown to but no later than 17 May 2007. The parties to the agreement are alleged to be Back, Venables, Hoie, Johnson, Mann and Equinox Energy. The terms of the agreement are that Back would cause AED Services, Hoie would cause Sea Production and Johnson would cause PDC Singapore to enter into the Installation Contract for the Joint Venture Works. A further term of the agreement was that Equinox Energy would enter into an agreement to acquire the shares in PDC. The Wrongful Agreement includes various steps in the acquisition of the shares and employment arrangements involving Back, Venables, Hoie, Mann and Johnson. Particulars are provided of facts and matters from which the Wrongful Agreement and its terms are to be inferred. For the most part the particulars refer to the events surrounding the acquisition of the shares and the employment of the individuals. Paragraphs (viii), (ix) and (x) require close attention. Paragraph (viii) of the particulars provides:

The fact that after the Wrongful Agreement was made there were significant delays and cost over-runs in the performance by PDC Singapore of the Joint Venture Works, and significant claims arose against PDC Singapore which it has yet to meet as alleged in paragraphs 101C(a) and (b) below;

28 Paragraphs 101C(a) and (b) occupy three pages of the pleading and form part of an allegation of acts in furtherance of the Wrongful Agreement coupled with an a "Wrongful Intention" alleged in paragraph 100A. The substance of the allegations in paragraphs 101C (a) and (b) is that the alleged conspirators, with the intention of injuring the plaintiffs, caused PDC Singapore to delay its performance of the Joint Venture Works under the Installation Contract and to make claims against AED Services in respect of the Joint Venture Works in breach of the terms of the Installation Contract. Particulars of the first allegation (causing delay) are in substance particulars of the delays and that the alleged conspirators were in a position to cause the delays. The second allegation (causing claims to be made in breach of contract) is primarily based on particulars cross referenced to paragraphs 133 to 138, in which the plaintiffs allege that the PDC entities claimed more than they were entitled to claim for the supply of a diving support vessel, the "Havila Harmony".

29 Finally, in the particulars under 101C (a) and (b), the reader is driven back to paragraphs 100(c) and (d) forming part of the Wrongful Agreement and to the Wrongful Intention. At the hearing the plaintiffs' proposed to delete those parts which most vividly exposed the circularity in pleading. Such cosmetic surgery does not, however, resolve more fundamental defects.

30 Returning to the particulars of the Wrongful Agreement in paragraph 100, the next significant paragraph is (ix) which provides:

The fact that after the Wrongful Agreement was made Venables and Equinox Energy, with the knowledge and acquiescence of Johnson, made demands for payments to PDC Singapore to which PDC Singapore was not entitled under the Installation Contract and insisted upon payments for those demands as a condition of continuing to perform the joint venture works as alleged in paragraph 101C (d) below.

31 Paragraph 101C (d) is a further allegation of an act in furtherance to the effect that in mid September 2007, Venables and Equinox Energy, with the knowledge and acquiescence of Johnson, demanded that AED Oil pay at least $US1.3m as a condition of PDC Singapore continuing to perform the joint venture works, well knowing that PDC Singapore was not entitled to that payment. Particulars are given of the demand and the circumstances in which it was made. General particulars are then given under the whole of paragraph 101C in which it is alleged that each of the matters identified as acts in furtherance gave effect to the matter alleged in paragraph 100(d). That is an allegation that Equinox Energy controlled PDC Singapore and would be in a position to take steps to maximise the profits obtained by it under the Installation Contract.

32 Paragraph (x) of the particulars of the Wrongful Agreement provides:

The fact that PDC Pty Ltd and PDC Singapore have, after the Wrongful Agreement was made, brought the WA Proceeding against Puffin IS and AED Oil in which they make unsustainable claims that AED Oil is liable to them for US$14,800,202 plus interest in respect of the joint venture works.

33 This is an arresting allegation of fact from which the plaintiffs contend the Wrongful Agreement is to be inferred. The proceeding itself is alleged to constitute an act in furtherance of the Wrongful Agreement [para 101C (c)] and the plaintiffs' cost and expense form part of the alleged loss and damage [para 106].

34 In paragraph 100A the plaintiffs allege a "Wrongful Intention". They plead that the intention of Back, Venables, Hoie, Johnson and Mann in making the Wrongful Agreement was to injure AED Oil and AED Services. The particulars are divided into two parts. The first part is an assertion that the Wrongful Intention is to be inferred from a number of matters set out thereunder including knowledge of delays and cost overruns; opportunity to cause further delays and overruns; the fact that delays and cost overruns injured the plaintiffs; the defendants' knowledge that they were in a position to make demands for payments to which they were not entitled; and the claims made by PDC in the West Australian proceeding.

35 The second part of the particulars under paragraph 100A (Wrongful Intention) is an allegation that Back, Venables, Hoie, Johnson and Mann knew of the matters referred to in the first part by reason of their respective positions and familiarity with the project. The particulars then set out the respective employment and other positions occupied by them at relevant times.

36 In paragraphs 101 to 101D, the plaintiffs allege acts in furtherance of the Wrongful Agreement with the Wrongful Intention. These acts include execution of the Installation Contract; putting in place the structures required for the takeover; putting in place the employment arrangements for the individual defendants with the takeover entities and the target; and, in paragraph 101C, causing PDC Singapore to delay its performance of the joint venture works; failing to prevent delays; failing to cause PDC Singapore to indemnify the plaintiffs in respect of their loss; causing PDC Singapore to make unfounded claims against AED Services; and bringing and prosecuting the West Australian proceeding.

37 It is further alleged in the particulars under paragraph 101C that the fact that the acts in furtherance were done with the Wrongful Intention is to be inferred from the fact that by doing those things, effect was given to the Wrongful Agreement which was made with the Wrongful Intention.

38 In paragraph 101D the plaintiffs allege that the conspirators made profits from the joint venture works through PDC.

39 In paragraphs 102 to 105A the plaintiffs make a broad range of allegations under the heading, "Unlawful Means". These include conduct by Back, in breach of her contract of employment and duties, executing the Installation Contract. The breaches alleged concern her failure to prepare an agreement that properly protected her employer [para 102]. In paragraph 102A there is a bald allegation that in making and furthering the Wrongful Agreement Back acted in bad faith and infidelity towards AED Oil. In paragraph 102B the plaintiffs allege that Back misused confidential information to improperly gain an advantage for herself or to cause detriment to the plaintiffs. The remaining paragraphs 102C, 102H, 102I, 102J, 103, 103A, 104, 105 and 105A allege breaches of various duties by Back and Venables when making or furthering the Wrongful Agreement.

40 The plaintiffs' claim for loss and damage has three components. First, loss and damage occasioned by reason of delays in the performance of the joint venture works; second, overcharging for the supply of the diving support vessel, Havila Harmony; third, costs and expenses of AED Oil of the West Australian proceeding.

41 The loss caused by the delay is the subject of separate causes of action against Back in relation to the preparation of contract documents and the appointment of PDC as contracting party to perform the joint venture works. The loss suffered by reason of the supply of the Havila Harmony is the subject of a separate contractual claim in paragraphs 133 to 138 of the statement of claim. The defendants seek summary judgment in respect of that claim.

42 Paragraphs 108 and 109 constitute the plaintiffs second conspiracy allegation in which they allege a sole or predominant purpose or intention to injure, relying upon the general construct of the conspiracy case alleged in the preceding paragraphs.

43 It is unnecessary to proceed further with a microscopic analysis of the pleading to demonstrate that it is confusing and embarrassing. Some of these defects may be capable of correction by proper particulars, when and if available. While the paragraphs are embarrassing, they also fail as a pleading for much more fundamental reasons.

44 While there was no dispute concerning the central elements of the torts of conspiracy, the plaintiffs submitted that it was unnecessary to plead or to prove that the agreements relied upon, whether inferred from overt acts or other evidence, must incorporate a purpose to inflict particular injury and, in the case of the "unlawful means" conspiracy, any agreement to injure by means which were unlawful. The plaintiffs' submission is reflected in their pleading. They introduce an intended disjunction between the agreement, the intention or purpose, the overt acts and the unlawful means.

45 The elements of the torts of conspiracy which the plaintiffs purport to plead against the defendants are helpfully summarised by Hely J in Australian Wool Innovation Ltd v Newkirk[5]:

Like fraud, conspiracy is not an allegation that should lightly be made: Hughes v Western Australian Cricket Assn Inc [1986] FCA 357; (1986) 69 ALR 660 at 700 (Toohey J).

Conspiracy is the agreement of two or more persons to do an unlawful act, or to do a lawful act by unlawful means. Historically, there are two kinds of conspiracy, the elements of which are distinct:

(1) an 'unlawful means' conspiracy in which the participants combine together to perform acts which are themselves unlawful; and

(2) a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant.

See Bullen & Leake & Jacob's Precedents of Pleadings, Vol 2, 15_th_ edn, Sweet & Maxwell, London, 2004, at [50-01]; McKellar v Container Terminal Management Services Ltd (above) at [135] - [154].

Bullen & Leake identifies the necessary elements in an action in conspiracy at [50-01.1]:

The claimant must plead and prove the following necessary elements:

(i) a combination or agreement between two or more individuals (required for both types of conspiracy);

(ii) an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type (2) above);

(iii) pursuant to which combination or agreement and with that intention certain acts were carried out;

(iv) resulting loss and damage to the claimant.

A conspiracy can be proved without evidence of an express agreement. A court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an express agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstance, and share the same object, for it properly to be said that they are acting in concert.

'Unlawful means' includes crimes and tort and breaches of statutory provisions: Trindade & Cane, The Law of Torts in Australia, 3_rd_ edn, Oxford University Press, Melbourne, 1999 at p 230. A person is using unlawful means if they are doing an act which they are not at liberty to commit: Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169. It is not open to a party to plead as an alternative to a substantive cause of action already pleaded the tort of conspiracy to commit the substantive wrong, nor can there be a common law conspiracy to contravene the TPA outside the form of conspiracy expressly provided for in s 75B(1)(d) of the TPA: McKellar (above) at [195] and [197]. But the first respondent has not taken any objection to the ASC on this account, hence these matters can be put to one side.

The tort requires an intention to injure. As Kiefel and Jacobson JJ observed in Dresna Pty Ltd v Misu Nominees Pty Ltd (supra, at [7]) an agreement to do an unlawful act that results in damage to another party is not the same as a conspiracy to injure that party. In order to prove a conspiracy a claimant must show that the wrongful act complained of was done with a design of injuring the claimant and that it did so. According to their Honours, a conspiracy could be directed not only at a particular individual, but also at a class, in the sense of all members of the class. Their Honours went on to say (at [123]) that the test for an action in conspiracy is: 'what was the object of those combining when they acted as they did'. They must have acted in order that, not with the result that, the claimant should suffer damage.

46 The terms of the Wrongful Agreement [100] do not include injury. The Wrongful Agreement is no more than an agreement to bring about the commercial relationship and circumstances which the plaintiffs contend were employed to their detriment. The alleged intention to injure [100A], defined as the "Wrongful Intention", is alleged to be that of Back, Venables, Hoie, Johnson and Mann in making the Wrongful Agreement. There may be a fine line between an agreement to injure and the purpose for which the agreement is made. In the case of conspiracies that fine line is not immaterial. The purpose must form part of the agreement. In the present case the plaintiffs have separated purpose or intention from the agreement.

47 The separation of purpose or intention from agreement may be explained, at least in part, by the nature of the conspiracies sought to be alleged. The plaintiffs' substantive case may not lend itself to the broad conspiracies alleged. They seek to elevate complaints against Back and Venables, in particular those made in relation to the appointment of PDC and the preparation of contract documents, into conspiracies to injure without actually alleging that the contract was prepared or that PDC was appointed as part of a plan, with others, to cause prejudice to the plaintiffs by the manipulation of the contractual relationship by deliberately overcharge the plaintiffs for work carried out under the Installation Contract. If so expressed, the alleged conspiracy would be most unusual and may be difficult to sustain in the absence of proper particulars supporting the purpose.

48 The construct of the plaintiffs' conspiracy pleading is, in my view, an attempt to recover amounts allegedly overcharged by PDC Singapore under the guise of damages suffered as a result of conspiracies to injure without the need to prove the necessary agreement incorporating a purpose or the purpose to cause such loss.

49 The so-called acts in furtherance [101 to 101D] do not support, by inference, a conspiracy to injure the plaintiffs by procuring PDC as the contracting party for the joint venture works and failing to protect the plaintiffs' position under the installation contract.

50 When, in paragraph 101C, the plaintiffs allege that the conspirators caused PDC Singapore to delay; failed to prevent delays, failed to cause PDC Singapore to indemnify AED Oil; caused PDC Singapore to make unjustified claims against AED Services; brought the Western Australian proceeding which they allege is unsustainable; ad demanded a payment of $US1.3m, the alleged acts in furtherance have no connection with the alleged agreement. It is not alleged by the plaintiffs that it was part of the Wrongful Agreement that delays would be caused, unjustified claims made or unsustainable proceedings would be brought against them.

51 The allegations of the unlawful means [102 to 105A] are also disconnected from the agreement. The wrongdoing said to constitute the unlawful means is, for the most part, conduct by Back in breach of her contract of employment or duties owed to the plaintiffs. Curiously, the unlawful means include the conduct of Back in "making the Wrongful Agreement" [102A and 102B].

52 When the allegations begin to address the substantive issue of breach of duty by Back [102A and 102B] and Venables [103 and 103A] they are not attributed any connection with the Wrongful Agreement. There is nothing to connect the other alleged co-conspirators with the purposeful agreement. It is not alleged that that Back, Venables and the other alleged co-conspirators agreed to improperly gain advantages for themselves or others or to cause detriment to AED Oil. The "unlawful means" allegations have been quarantined from the agreement in form and substance, just as was the alleged purpose to injure.

53 Finally, the claim for loss and damage [106] highlights the fundamental problem with the overall pleading of the conspiracy allegations. The loss and damage claimed consists of two substantive components. The first is loss caused to AED Oil and AED Services by reason of the delays in the performance of the joint venture works. The second component is the cost and expense to AED Oil of the West Australian proceeding.

54 It is difficult to conceive of a circumstance where a party's costs incurred in prosecuting or defending a legal proceeding in a court of competent jurisdiction may be claimed as part of loss and damages caused by a conspiracy to injure, alleged in another jurisdiction. Apart from difficulties with causation and the connection with the conspiracy alleged, there are policy considerations as to why such a claim is not sustainable. A litigant's right of access to the Supreme Court of Western Australia, coupled with the ample power of that court to supervise proceedings should not be second guessed by a court in a different jurisdiction. If the proceeding is an abuse of process it may be dismissed. Special orders for costs may be made where appropriate. In my view, reliance on the West Australian proceedings as an act in furtherance and to support the claim for loss and damage is misconceived.

55 While the claim based upon delays in performance might have reflected an allegation that the subject matter of the purposeful agreement was to bring about delays to cause loss, there is no such allegation. The claim for loss and damage assiduously avoids a claim for compensation in respect of the improper advantage to the alleged co-conspirators or detriment to the plaintiffs resulting from a conspiratorial agreement to do that very thing.

56 The allegations in paragraphs 108 and 109, pleading the "sole or predominant purpose" conspiracy suffer from the same defects as the "unlawful means" conspiracy. It is built upon the same flawed framework.

57 In my opinion, paragraphs 94 to 109 inclusive should be struck out as embarrassing and failing to disclose causes of action.

58 I am not persuaded that the cause of action pleaded in paragraphs 133 to 138 is bound to fail.

59 The plaintiffs allege that the Letter of Intent (which preceded the Installation Contract) and the Installation Contract both included a term that AED Oil (and later Puffin IS) would only be liable to reimburse PDC (or PDC Singapore) costs plus a mark-up of 6% [para 133]. PDC or PDC Singapore entered into a contract for the supply of a diving vessel, Havila Harmony, at a cost of US$95,000 per day [para 134].

60 The plaintiffs allege that in breach of the agreement PDC Singapore demanded payment at a daily rate of US$138,370 [para 135] and the plaintiffs paid on the mistaken assumption that those payments were due and payable in accordance with the terms of the Letter of Intent and the Installation Contract. The plaintiffs demand repayment of the difference between that which they contend was payable and that which was paid [para 138].

61 PDC Singapore contends that the Installation Contract confirms that the daily rate agreed between the parties was US$138,370, not US$95,000. It submits that should be the end of the matter. The plaintiffs, on the other hand, point to emails in late 2006 which would indicate that PDC negotiated a rate of US$95,000 per day. They submit that there is evidence to support an allegation that the price was artificially inflated by those alleged to have engaged in serious breaches of duty in connection with the appointment of PDC, the administration of the contract and who derived benefits as a consequence of the breaches of duty.

62 In my opinion there is some evidence raising a serious question to be tried in relation the what was agreed as the daily rate for the Havila Harmony. It would be unsafe and unjust, at this time, to attempt to resolve the issues raised in paragraphs 133 to 138 in advance of a trial in which the Letter of Intent, the Installation Contract and the surrounding negotiations and circumstances will be closely examined.

[1] Dey v Victorian Railways Commissioners [1949] HCA 1; (1948) 78 CLR 62; Little v Law Institute of Victoria (No 3) [1990] VicRp 25; [1990] VR 257; Hubbuck & Sons Ltd v Wilkinson Heywood & Clark Ltd (1899) 1 QB 86; Mutual Life and Citizens Assurance Co Ltd v Evatt [1970] UKPCHCA 2; (1970) 122 CLR 628; Batistatos v Roads and Traffic Authority of NSW [2006] HCA 27; (2006) 226 CLR 256; 275.

[2] General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125 at 129, 130.

[4] Meckiff v Simpson [1968] VicRp 7; [1968] VR 62, 70.

[5] [2005] FCA 290; Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135, 149-150; State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499 at [34]- [35]; Adsteam Building Industries Pty Ltd v Queensland Cement and Lime Company Ltd (No 4) (1985) 1 Qd R 127; OBG Ltd v Allan [2007] UKHL 21; [2008] 1 AC 1, 57; Revenue and Customs Commissioner v Total Network SL [2008] UKHL 19; [2008] 1 AC 1174, 1240.

At a glance

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Judgment (75 paragraphs)

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Cases Cited (7)