Ronbar Enterprises Pty Ltd v Elliot Harvey Securities & Ors [2011] QSC 239

HER HONOUR: There are two applications before me. The first was an adjourned application made by Elliot Harvey Securities and its directors and the second is an application made by Ronbar Enterprises Pty Ltd (in liquidation) (receivers and managers appointed) (subject to a deed of company arrangement) (ACN 000 733 219).

I shall refer to those parties in this judgment as EHS and Ronbar, respectively.

EHS and its directors applied for orders that an amended statement of claim filed on 6 April 2011 be struck out pursuant to rule 171 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") and ancillary orders.

The application by Ronbar was that it be given leave to re-plead in terms set out in an exhibit to an affidavit by a solicitor from the firm of solicitors acting for Ronbar and that the applicant also be granted leave to amend the claim filed 5 January 2010 in terms of the claim annexed to that affidavit.

The history behind these applications is complex or perhaps convoluted might be a more appropriate term. I rely, in particular, on the chronology attached to the submissions made by counsel for Ronbar which I have no reason to think incorrect and appear to be comprehensive.

That chronology shows that on 16 March 2009, St George Bank Limited (St George) filed a statement of claim, number 2786 of 2009 against the directors of Ronbar.

On 22 May 2009 those directors filed a defence and counterclaim. Ronbar was the plaintiff on the counterclaim and the defendants by counterclaim were EHS, Michael Harvey and the other directors of EHS.

On 3 July 2009 St George filed an application for summary judgment against the directors of Ronbar. That was followed a fortnight later by EHS, Michael Harvey and the other directors of EHS filing a defence to the counterclaim.

The application for summary judgment by St George was heard by P McMurdo J on 28 August 2009 and in a comprehensive and detailed judgment his Honour granted St George's application for summary judgment against the defendants on 26 October 2009. The reasons for decision are recorded in St George Bank Limited v Wright & Ors [2009] QSC 337.

On 5 November 2009, P McMurdo J heard an application by St George for summary judgment on the counterclaim and reserved his decision. He acceded to that application on 6 November 2009, see St George Bank Limited v Wright & Ors (No 2) [2009] QSC 350.

An appeal was lodged on 23 November 2009 and after hearing argument the decision was reserved and on 27 July 2010 the Court of Appeal dismissed the appeal as recorded in Wright & Ors v Westpac Banking Corporation [2010] QCA 190.

In the meantime, on 30 November 2009, EHS and Michael Harvey, a director of EHS, applied to have parts of Ronbar's defence and counterclaim struck out.

On 5 January 2010 Ronbar then filed a new claim which is this matter, number 103 of 2010 against EHS, Michael Harvey and St George Bank. Those proceedings are not continuing against St George Bank.

That pleading was settled by counsel although not the counsel who appears on this application.

On 16 March 2010 the directors of Ronbar filed notices that they were acting in person in matter number 2786 of 2009 and on 22 March 2010 White J, as her Honour then was, heard the application in number 2786 of 2009 and ordered that paragraphs 18 to 23 of the defence and counterclaim be struck out.

A number of other steps occurred in the actions, none of which need detain me in these reasons.

On 6 April 2011 Ronbar filed an amended statement of claim in the matter before me. That appears to have been filed by the parties acting in person.

On 1 June 2011 EHS and the other defendants to the counterclaim in number 2786 of 2009 and the defendants to the claim in number 103 of 2010, the matter before me, filed an application to strike out both the counterclaim in 2786 of 2009, and the amended statement of claim in 103 of 2010.

That matter came on for hearing in applications on 8 June 2011 when Byrne J ordered in this matter that the application be adjourned to 30 June 2011 and that Ronbar pay the applicants' costs thrown away by the adjournment.

There being no time to hear it on 30 June 2011 the application to strike out the amended statement of claim was adjourned to 13 July 2011.

The matter then came on for hearing before me late in the day on 13 July 2011. The hearing continued on 14 July 2011. Because of prior commitments of counsel I was unable to hand down an ex tempore judgment immediately. I then said that I would do so today at 2.30 pm, a time suitable to the parties and their representatives.

I have read the formal orders that were made because there was some confusion as to what the full orders made before Byrne J were. Let me set out what I think is clear.

First of all, Ronbar did not seek to rely on the amended statement of claim. Counsel for Ronbar quite properly accepted that that pleading would need amendment. It was not formally struck out.

It appears to have been accepted between the parties that Ronbar would be obliged to seek leave to replead, a position strenuously advocated for before me, particularly by EHS. That is, in my view, only partially correct.

Rule 378 of the UCPR provides that before the filing of the request for trial date a party may, as often as necessary, make an amendment for which leave from the court is not required under the Rules.

Nowhere in the UCPR is a party required to seek leave to amend a statement of claim or defence. However, should the plaintiff wish to amend the claim or should any party wish to include other parties, such leave may be necessary: see, for example, rule 377, but note the effect of rule 377(2).

There are circumstances, of course, where a proceeding may be so misconceived and a statement of claim so unlikely to be articulated as to suggest that there is any real cause of action that a court may refuse to allow a party to replead, particularly, when a pleading has been struck out: see, for example_, Von Risefer v Permanent Trustee Co Ltd_ [2005] QCA 109; [2005] 1 Qd R 681.

As the court there held, the Supreme Court's inherent jurisdiction to prevent abuse of its process entitles it to restrain the institution in any Queensland court of new proceedings which constitute an attempt to re-litigate a dispute that has already been concluded.

If a party does not seek leave and, as I have said, there is no requirement in the rules for such leave to be sought, then another party may, within 8 days after service on the party of the amendment, apply to the court to disallow all or part of the amendment. That is found in rule 379(1).

It can therefore be a counsel of caution to apply for leave to amend, although, as I said, there is no rule which requires it.

However, in this case, Ronbar has applied for leave to amend. Such leave is necessary to add parties and to amend the claim and perhaps in the circumstances was a wise precaution for amendment of the statement of claim.

It is not necessary for me to set out the full history of the factual and legal disputes between the parties. They are complicated, serious and the subject of robust debate none of which can possibly be determined on an application for leave to amend a pleading or to strike out a pleading.

Those matters will need to be determined either on a summary judgment application , if it is possible, or more likely at trial.

Essentially, in my view, the matters before me, which require my earnest consideration are: whether or not the proposed amended pleading, on its face, adequately pleads the causes of action which it seeks to plead, that is, does it plead the material facts on which the causes of action are based; should Ronbar be allowed to amend the claim and add the parties that it wishes to add; and whether or not the proceedings, as disclosed in the proposed amended statement of claim, are an abuse of process of the court because it canvasses for decision matters that have already been decided in the litigation already referred to between St George Bank and the directors of Ronbar.

There will be a succeeding issue which is the question of whether or not, if Ronbar is allowed to amend its statement of claim or otherwise proceed with the action, security for costs should be ordered.

I turn then to the pleading which Ronbar has sought leave to file. The pleading, which has been settled by counsel who appears on this application, deals with factual matters in dispute between Ronbar and the first defendant, EHS. It pleads the material facts relevant to the various contractual matters entered into between them and the alleged breach of contract by EHS.

The pleading must go further and plead, clearly, the material facts upon which the alleged breach of contract by EHS has caused the injury suffered by Ronbar. Further, it must show the acts of the second, third, fourth and sixth defendants who are or were the directors of EHS which demonstrate that they have caused the injury to Ronbar which is pleaded.

Unfortunately, it is in those respects that the pleading is still somewhat deficient. It is apparent, however, from the rest of the pleading that this is not a vexatious pleading nor one in which the court would determine that there is no cause of action. In fact, in my view, the pleading is close to pleading all the material facts which it needs to plead, however, it is not quite there.

I would not, for that reason, give leave to file this amended pleading, however, it would be completely inappropriate not to allow the plaintiff, Ronbar, to be given the opportunity to further amend the proposed amended statement of claim to deal with the matters which I have mentioned and any other matters that it might appear wise or convenient to counsel to amend.

As for the allegation that the matters in dispute have already been decided by P McMurdo J, I find no basis for that. Counsel for Ronbar has said, and I accept, that Ronbar is content to accept the findings of P McMurdo J which were, of course, made in an application by St George, which is not a party any further to this litigation and by a director of Ronbar who is not a party to this litigation.

I am not satisfied that there is any abuse of process as articulated by EHS, that is, to prosecute a claim the material facts of which have already been determined.

So far as the application for security for costs is concerned, although this litigation has been on foot since early 2010 and earlier litigation for some time before that, in my view, it is not possible at this stage to be satisfied that a security for costs order should be made.

True it is that Ronbar is impecunious and would not be able to pay the costs of EHS and its directors should it be unsuccessful in the litigation, but should Ronbar's allegations in its statement of claim as presently articulated prove to be correct, then at least a major cause of the impecuniosity would be the actions of EHS. It would be inappropriate in those circumstances to thwart, as it would, Ronbar's attempt to vindicate what it says are its rights against EHS and its directors by ordering that Ronbar pay security for costs.

It follows that I dismiss the application for security for costs.

In order to give effect to what I have said the best thing to do, though I do it with some hesitation, is to adjourn the application to amend the claim and statement of claim, but I would like to do that for the shortest possible period of time. I think it might be better, to avoid delay, that that proposed amended pleading come back before me. If I am satisfied with it I can grant leave; if I am not I will not; and if I do grant leave, then I can put in place directions for this matter to come to trial or if the defendant wishes to make an application for summary judgment for the time-tabling of that with the filing of material.

HER HONOUR: I order that EHS and its directors be awarded 30 per cent of the costs of their application filed 1 June 2011 to be paid by Ronbar in any event.