Scicluna v Royal Motor Yacht Club Port Hacking

Judgment 1In these proceedings David Scicluna seeks damages from the Royal Motor Yacht Club of NSW Port Hacking ("the Club") and four other defendants who were officers or directors of the Club. The statement of claim is not a model of precision. It appears that the Club is sued for breach of the contract of employment. The claims against the other defendants involve conspiracy to procure or procuring the breach of contract by the Club. 2The breach alleged against the Club comprises various matters including breach of good faith, breach of trust and confidence, breach of a term requiring reasonable notice of termination of employment and a breach of a term that required the company to act lawfully. 3The fourth defendant, Darren Vardy, applies by notice of motion to have the proceedings summarily dismissed under rule 13.4 of the Uniform Civil Procedure Rules 2005. That is, he seeks summary dismissal of the claim against him. The other defendants make no application and do not join in this application. 4The allegations in the statement of claim do not identify with precision what Mr Vardy is alleged to have done, subject to one matter to which I will come. In paragraph 8 there is a reference to "the named Defendants". In paragraphs 9, 11, 13 and 17 in the statement of claim there is a reference to "[t]he Defendants". 5The plaintiff, Mr Scicluna, accepts that those references are not intended to embrace Mr Vardy and to the extent that they do so they are incorrect. 6That leaves the allegation in paragraph 19, the final paragraph of the statement of claim, which is in the following terms: "In causing the drafting of and offering additional and unsubstantiated allegations against the Plaintiff the Second Third and Fourth defendants conspired to procure, and procured the First Defendant to breach the good faith term and the trust and confidence term Particulars (i) Letter of 5 June 2013". 7It is not in contest that Mr Vardy signed the letter of 5 June 2013 in his position as a director of the Club. However, Mr Scicluna asserts that the conduct of Mr Vardy went beyond drafting and signing that letter and involved other conduct said to support the pleading that Mr Vardy conspired to procure and procured the Club's breach. 8This pleading raises two immediate concerns. The first is that there is an allegation of conspiracy. Allegations of that nature require a full and detailed pleading and particularisation, and cannot be made in general terms. At paragraph [15.1.30] of Ritchie's Uniform Civil Procedure NSW it states: "In conspiracy, the defendant is entitled to particulars of the manner in which the alleged conspiracy was brought about. If it is alleged that the effect of the conspiracy was that persons broke their contract with the plaintiff, then those persons should be named". 9Paragraph 19 of the statement of claim identifies the second, third and fourth defendants as conspirators. Nevertheless, it does not specify the manner in which the conspiracy was brought about, other than "Letter of 5 June 2013". Mr Scicluna submitted that there was more to Mr Vardy's conduct than merely drafting and signing the letter. However, that additional conduct has not found its way into the statement of claim. 10The second concern is that generally a director of a company is not liable for the tort of procuring a breach of contract by the company. 11In Tsaprazis & Ors v Goldcrest Properties Pty Ltd & Ors [2000] NSWSC 206, Hodgson CJ in Eq stated, at [11]: "directors are not liable for the tort of inducing breach of contract, where, in exercising their functions as directors, they have caused the company to breach its contract". His Honour also referred to the decisions of Said v Butt (1920) 3 KB 497 and O'Brien v Dawson (1942) 66 CLR 18 and at [14] of Tsaprazis stated that the authorities "tend against the existence of a liability based purely on the failure of a director to cause the company to comply with its contract". This passage indicates that there may be circumstances in which that general rule against a director's liability might not apply. 12However, the existence of that general rule fortifies me in my view that the claim against Mr Vardy needs to be pleaded fully and particularised precisely if it is to be maintained at all. 13Mr Scicluna submitted that the absence of these matters in the pleadings is cured by the evidence. To quote paragraphs 11 and 20 of Mr Scicluna's affidavit of 24 February 2014: "11. I was instructed by Second Third and Fifth Defendants through their directions as referred to above, that I was, in contacting the police again, to mislead the police as to the events that had occurred and which were by then recorded with the police... 20. A significant time after my suspension, the Second, Third, Fourth and Fifth Defendants then developed unrelated work performance claims that I had not handled the 'catering contract' properly, that the 'accounts' were out of order, and that I had mis-conducted myself at another club." 14Paragraph 11 is not directly relevant to the claim against Mr Vardy, but indicates the generality with which the affidavit seeks to deal with serious allegations made against the defendants. Paragraph 20 is of more significance in the present application but again does not clearly set out the acts, facts or circumstances that establish the claim of conspiracy alleged against Mr Vardy to procure a breach of contract by the Club. 15The content of an affidavit is not sufficient to satisfy the pleading requirements under the rules. Paragraph 20 of the affidavit is unclear in any event. It does not cure the pleading defect apparent in paragraph 19 of the statement of claim bearing in mind Mr Scicluna's submission that the conduct of Mr Vardy goes beyond the drafting and signing of the letter. 16For these reasons, if the claim is to be maintained against Mr Vardy, the pleading has to be amended. 17Accordingly, I propose to strike out the claim against Mr Vardy but give Mr Scicluna an opportunity, if he be so minded, to maintain a claim against Mr Vardy and re-plead the claim against Mr Vardy in accordance with the rules. 18If a claim is to be maintained against Mr Vardy, Mr Scicluna should, amend the references to "the defendants" in paragraphs 8, 9, 11, 13 and 17 to clarify that those references do not extend to Mr Vardy. I direct that he do so. I propose to strike out the reference to "the fourth defendant" in paragraph 19. Any claim is to be pursued against Mr Vardy will need to be added to the existing pleading. 19Paragraph 19, and indeed other paragraphs of the statement of claim may need amendment in other respects, but no application was made by the other defendants. As the other paragraphs do not refer to Mr Vardy, the only moving party before me, I do not propose to make orders about them. Mr Vardy should be entitled to the costs of the notice of motion because he has been largely successful. 20Mr Vardy also sought in the notice of motion that the plaintiff's solicitor, Mr McArdle, indemnify him in respect to costs under s 348 of the Legal Professional Act 2004 but Mr Vardy declined to press this claim in the hearing before me, so it should be dismissed. 21Accordingly, the orders of the Court are: (1)Strike out the claim against the fourth defendant by striking out the references to the fourth defendant in paragraph 19 and noting the concession of the plaintiff that references to the defendants in paragraphs 8, 9, 11, 13 and 17 do not refer to the fourth defendant. (2)Leave to the plaintiff to amend his statement of claim by adding a claim against the fourth defendant pleaded in accordance with the rules; any amended statement of claim embracing a further claim against the fourth defendant to be filed by 2 May 2014. (3)The notice of motion is otherwise dismissed. (4)Order the plaintiff to pay the fourth defendant's costs of the notice of motion. (5)Liberty to the fourth defendant to apply for an order for his costs of the proceedings payable forthwith in the event that no claim against the fourth defendant is filed 2 May 2014.