//
[2016] WASC 29
General information, not legal advice.
Supreme Court of WA
2016-02-08
Original judgment source is linked above.
1 ACTING MASTER GETHING: Between August 2004 and March 2010 Graham Merrick was employed as the Chief Executive Officer of the Shire of Toodyay (Shire). When the Shire and Mr Merrick parted company, they entered into a Deed of Settlement and Release dated on 16 February 2010 (Settlement Deed). The Settlement Deed recorded Mr Merrick ceased employment 'by mutual agreement'. In the Settlement Deed, the parties agreed to settle all matters relating to Mr Merrick's employment and the cessation of that employment.
2 Charles Wroth was the President of the Shire for most of Mr Merrick's tenure as CEO, specifically from 19 October 2005 to 19 October 2009. Prior to becoming President, Mr Wroth was an elected councillor of the Shire.
3 Subsequent to Mr Merrick's departure, investigations by the Shire revealed that Mr Merrick had received payments of leave, superannuation and other benefits that it alleges he was not entitled to under his contract of employment. The documentation approving a number of these payments was signed by Mr Wroth in his capacity as Shire president. It took some time for the Shire to complete its investigations.
4 By writ filed 24 March 2014, the Shire commenced an action against Mr Merrick and Mr Wroth. The Shire seeks damages from Mr Merrick on a number of bases for alleged overpayments in relation to leave, superannuation and other benefits. In the statement of claim filed 16 April 2015, the amount of the overpayments is pleaded as $150,980.29. In relation to Mr Wroth, the allegation is that of this amount $63,431.74 was paid to Mr Merrick with the knowledge or approval of Mr Wroth in breach of his duties to the Shire.
5 Four applications are before me for determination.
6 The first application is an application dated 19 June 2015 by Mr Merrick for summary judgment against the Shire pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 16, together with costs on an indemnity basis. As the application was brought more than 21 days after Mr Merrick entered an appearance, he sought leave to bring the application. Mr Merrick's position is that:
(a) the Settlement Deed operates as a complete release and bar to all claims for overpayment;
(b) the claims against him are claims which may only be brought in accordance with the regime in Local Government Act 1995 (WA) (LGA) pt 8 div 4, with the consequence that the failure by the Shire to comply with this regime disentitles it from bringing the present action; and
(c) all claims which accrued prior to 24 March 2008 should be dismissed.
7 The second application is an application dated 19 June 2015 by Mr Wroth for summary judgment against the Shire pursuant to RSC O 16 or, alternatively, to strike out certain paragraphs of the statement of claim. As this application was also brought more than 21 days after Mr Wroth filed his appearance, Mr Wroth sought leave to bring the application. Mr Wroth's position is the same as that of Mr Merrick in relation to the operation of the LGA and limitation issue (being the assertions in (b) and (c) above).
8 The third application is an application dated 3 September 2015 by the Shire seeking leave to amend the writ of summons filed 24 March 2014. An amended minute of proposed amended writ dated 2 October 2015 (2 October Minute) was files on 5 October 2015. Based on the 2 October Minute, the Shire seeks to add two causes of action:
(a) against Mr Merrick, a claim that he breached the terms of the Settlement Deed;
(b) against Mr Wroth, for damages for negligence in that he breached a duty of care owed to the Shire in approving the payment of leave and other benefits by the Shire to Mr Merrick.
9 The claim in relation to the Settlement Deed appears to be an attempt to head off the argument that all claims between the Shire and Mr Merrick were resolved in the Settlement Deed. The claim in negligence appears to have arisen out of the pleading of the statement of claim.
10 The fourth application is an application dated 3 September 2015 by the Shire to extend the limitation period for some of the claims made against Mr Merrick and Mr Wroth. It is made pursuant to Limitation Act 2005 (WA) (LA) s 38. This section empowers the court to extend the time to commence actions in cases of fraud or improper conduct. Six of the payments claimed from Mr Merrick (comprising $27,360.76 plus a proportion of an amount of $60,617.24 which relates the entirety of Mr Merrick's tenure as CEO) and three of the payments claimed from Mr Wroth (totalling $13,297.49) were made prior to 24 March 2008. The Shire asserts that the failure to commence the action in relation to these amounts within time 'was attributable to fraudulent or other improper conduct' of each defendant, within LA s 38(2), enlivening the discretion to extend the limitation period.
11 A number of affidavits were filed in relation to the various applications as set out in the following table:
Stanley Alexander Douglas Scott (LA s 38(1) application)
12 Each affidavit identified on its face which application it was filed in relation to. Given that all applications were before me, their inter‑relationship and the way in which the applications were argued before me, I have treated all the affidavits as relating to each of the applications, and have determined the applications based on the totality of the evidence. I foreshadowed taking this approach to counsel at the hearing, who did not object.
13 On the material before me, nine issues arise for determination:
Should the Shire be granted leave to amend the Writ? Principles
14 The indorsement on a writ is to comprise 'a concise statement of the nature of the claim made, and of the relief or remedy required in the action'.[1] As the amendment in the 2 October Minute adds new causes of action, it cannot be done without leave.[2] The power to amend a writ with leave is contained in RSC O 20 r 5(1), which empowers the court to allow the plaintiff 'to amend his writ ... on such terms as to costs or otherwise as may be just and in such manner (if any) as the court may direct'. The principles governing the exercise of this power are well-established:
(a) an indorsement is not intended to be in the nature of a pleading but only a summary of the nature of the claim;[3]
(b) specifically, RSC O 6 r 1(1) does not require a plaintiff to plead in the indorsement all of the material facts giving rise to a cause of action;[4]
(c) the indorsement must state enough to put the facts in a recognisable legal framework showing how the claim arises and the relationship between the claim and the loss;[5]
(d) an indorsement is not a pleading and it should not be read narrowly, but generously;[6]
(e) an indorsement provides notice to the defendant of the nature of the plaintiff's claim and the relief sought in the action, and does so by enabling the defendant to know, with finality, what fact or facts are said to give rise to the action against him;[7]
(f) provided a writ is not a nullity, amendments can be made to an indorsement, even a defective indorsement, to particularise, clarify, re‑label, add to, expand or modify a cause of action already instituted;[8]
(g) the reference to a 'cause of action' in O 21 r 5 is to 'the basket of facts which give rise to the right to approach the court for relief, rather than as the description of the right to sue by reference to the old forms of action';[9]
(h) whether or not the cause of action in question can be said to arise out of the same, or substantially the same, facts as an existing cause of action is essentially a matter of impression or value judgment based on the degree of overlap;[10]
(i) the key question is whether the degree of overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action;[11] and
(j) factors relevant to the exercise of the discretion to allow the amendment include justice to the plaintiff, delay, reasons for delay, prejudice to the defendant or other persons and whether the amendment would abuse the processes of the court.[12]
The claim against Mr Merrick for breach of the Settlement Deed
15 In relation to Mr Merrick, the amendment sought in the 2 October Minute is to add a claim for 'breaches of the terms of the Deed of Settlement and Release between the first defendant and the plaintiff dated 16 February 2010'. This is necessary as in pars 33 ‑ 40 of the statement of claim, the Shire pleads various breaches of implied terms of the Settlement Deed. These allegations exceed the scope of the current indorsement on the writ, contrary to RSC O 20 r 2(2), and should be struck out if the writ is not amended.[13]
16 The key fact giving rise to the right to relief sought as set out in the current indorsement to the writ is that there was a contract of employment between the Shire and Mr Merrick, the term of which was from 16 August 2004 to 30 March 2010. Out of this contract, causes of action in contract, breach of fiduciary duty and unjust enrichment are identified. There is no reference in the current indorsement to the termination of Mr Merrick's employment or the Settlement Deed.
17 In 'making an assessment of whether a cause of action arises out of the same facts or substantially the same facts as an existing cause of action, it is permissible to have regard to the facts which have been pleaded in support of the existing cause of action and any facts pleaded or proposed to be pleaded in support of the new cause of action'.[14] Two further facts emerge from the statement of claim, each being references to the Settlement Deed:
(a) in or about February 2010, the Shire entered into an agreement with the plaintiff with respect to the termination of the first defendant's employment contract with the Shire; and
(b) in so far as that agreement was in writing, it comprised a Deed of Settlement and Release dated 16 February 2010.
18 Given the connection to the contract of employment set out in the current indorsement, and reading it generously, in my view there is a sufficient degree of overlap for me to conclude that the proposed amendment fairly relates to the current indorsement. It adds to the causes of action, but that is permissible. The amendment should be allowed.
19 One basis on which Mr Merrick seeks summary judgment is that he has a good defence on the merits to the claim that he breached an implied term of the Settlement Deed. Even if this assertion is accepted, this is not a reason to disallow the proposed amendment. There may be other breaches of the Settlement Deed which can properly be pleaded. The issue of whether Mr Merrick has a good defence on the merits to the claim that he breached an implied term of the Settlement Deed is to be determined on the basis that the amendment proposed to the writ is allowed.
20 The Shire seeks to add a claim against Mr Wroth for damages for negligence in that he breached a duty of care owed to the Shire in approving the payment of leave and other benefits to Mr Merrick.
21 The existing claims in the Writ are for breach of fiduciary duty and breach of statutory duties said to be owed under the LGA and the Local Government (Rules of Conduct) Regulations 2007 (WA). The only factual limit specified is that it relates to the period during which Mr Wroth was an elected councillor (2 May 2003 to 15 October 2011) and President (19 October 2005 to 19 October 2009). Turning to the statement of claim,[15] the core allegation is that a series of payments made by the Shire to Mr Merrick were made or granted to Mr Merrick with the knowledge and approval of Mr Wroth in breach of his duties to the Shire. Breaches of fiduciary duty and statutory duty are pleaded.
22 Given the wide scope of the current indorsement, and the way in which the Shire has pleaded its claims for breach of fiduciary duty and breach of statutory duty, there is a more than sufficient degree of overlap to enable me to conclude that the proposed amendment fairly relates to the current indorsement. I did not understand counsel for Mr Wroth to suggest otherwise.
23 The Shire should be given leave to amend the Writ in the terms sought.
Should the defendants be given leave to bring their applications for summary judgment?
24 An application by a defendant for summary judgment must be brought within 21 days after an appearance has been filed, or at any later time by leave of the Court.[16] The policy rationale for the time limit is to ensure that summary judgment applications are brought at an early stage of proceedings before unnecessary expense has been incurred.[17] The discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties, and may be exercised in favour of an applicant where strict compliance with the rules will work an injustice upon the applicant.[18] In order to determine whether the rules will work an injustice, it is necessary to have regard to the merits of the application, the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of the application for the extension of time.[19]
(a) the writ was filed on 24 March 2014;
(b) both defendants were served in March 2015, days prior to the expiry of the writ;
(c) Mr Merrick filed his memorandum of appearance on 1 April 2015;
(d) Mr Wroth filed his memorandum of appearance on 1 April 2015;
(e) the Shire filed its statement of claim on 16 April 1015;
(f) Mr Merrick filed his application for summary judgment on19 June 2015; and
(g) Mr Wroth filed his application for summary judgment on 19 June 2015.
26 Aside from the applications the subject of these reasons, and a status conference, there have been no other substantive steps taken in the action.
27 In relation to Mr Merrick, the delays seems to be due to the Shire taking more than seven weeks to respond to a letter from Mr Merrick's solicitors dated 22 April 2015. The letter raised the issues that are discussed in these reasons. The Shire did not respond until 12 June 2015.[20] The conferral was detailed.
28 In relation to Mr Wroth, the delays again seem to be due to the detail of the conferral.[21]
29 The Shire has not identified any prejudice arising from allowing the summary judgment applications to be filed out of time.
30 I am satisfied that both defendants should be given leave to bring their applications for summary judgment. The court should not discourage detailed conferral by an unduly strict approach to an application for an extension of the time within which to bring a summary judgment application.
31 It is convenient at this point to also address the submission made by the Shire that the applications for summary judgment should be dismissed on the basis that the affidavits in support do not comply with RSC O 16 r 1(2). That rule provides that the application is to be 'supported by affidavit verifying the facts upon which the application is based'. The Shire says that the Bone Affidavit filed in support of Mr Merrick's application and the Tantiprasut Affidavit sworn in support of Mr Wroth's application are inadequate. I do not agree. The summary judgment applications do not require an extensive factual basis. Order 16 r 1(2) does not require the applicant to file an affidavit verifying the facts on which its defence as a whole is based, in contrast to a plaintiff's application which must be accompanied by an affidavit 'verifying the facts on which the claim is based'.[22] It is sufficient that the affidavit verify the facts 'upon which the application is based', which they do.
Are the defendants entitled to summary judgment due to the failure to comply with LGA pt 8 div 4?
32 The defendants' position is that they are each entitled to summary judgment against the Shire as the Shire was required to comply with the procedural requirements in LGA pt 8 div 4 prior to commencing the action, and did not do so. The action was thus instituted without authority, and is an abuse of the processes of the court.[23] The essence of the defendants' position is that if an action is of a type that can be brought under LGA pt 8 div 4, it may only be brought under this division; the division 'covers the field'. The Shire says that LGA pt 8 div 4 does not exclude the right of the Shire to take other causes of action open to it.
33 Given the detail of the argument, it is necessary to quote the entirety of LGA pt 8 div 4:
8.35 Interpretation
(1) For the purposes of this Division, funds of a local government are misapplied if any moneys paid from, or due to, any fund or account of the local government are misapplied to purposes not authorised by law.
(2) For the purposes of this Division, local government property is misapplied if anything that belongs to the local government is dealt with in a way that is not authorised by law and causes the local government to suffer loss.
(3) In this Division -
(a) an amount of money misapplied as referred to in subsection (1); or
(b) the amount of a loss suffered as referred to in subsection (2);
(a) the Departmental CEO; or
(b) any other person authorised to conduct an inquiry under section 8.3; or
(c) any person authorised under section 8.36.
8.36 Authorisation
(1) The Departmental CEO may, by written authorisation, authorise a person to take actions under and subject to this Division.
(2) An authorisation under subsection (1) may confer a general power to take actions or a power to take actions in respect of a specific matter.
(3) The authorisation is to set out -
(a) the name of the authorised person; and
(b) any limit imposed on the duration of the authorisation.
8.37 Powers related to inquiries
The authorisation conferred by this Division on a person authorised to conduct an inquiry under section 8.3 is limited to matters to which the inquiry relates and is subject to any limit imposed on the duration of the authorisation under section 8.4(3).
8.38 Liability for misapplication of funds or property
(1) If -
(a) there has been a misapplication of funds of a local government or of local government property; and
(b) any council member or employee of the local government, has wilfully or through culpable negligence misapplied the funds or property or connived at or concurred in the misapplication,
that council member or employee is personally liable to pay the amount misapplied to the local government.
(2) If 2 or more people are liable to pay the amount misapplied, their liability is joint and several.
(3) A person's liability to pay the amount misapplied continues whether or not the person is still a council member or employee of the local government.
8.39 Action to recover amounts misapplied
If a person is liable under section 8.38 to pay an amount misapplied, an authorised person may, subject to sections 8.40 and 8.41, recover that amount by action in a court of competent jurisdiction.
8.40 Notice to be given before action is taken
(1) Before taking action under section 8.39 to recover an amount misapplied, an authorised person is to give the person against whom he or she proposes to take that action notice that the person may, within 30 days after the notice is given, advance written reasons why that action should not be taken.
(2) A notice under subsection (1) is to -
(a) be in writing; and
(b) include details of the grounds upon which the authorised person proposes to take action; and
(c) state the amount in question.
8.41 Decision whether or not to proceed with action
(1) After considering any reasons advanced by a person to whom notice has been given under section 8.40(1) and all the circumstances of the case, the authorised person is to decide whether or not to proceed with the action.
(2) An authorised person other than the Departmental CEO cannot decide to proceed with the action without the express approval of the Departmental CEO.
(3) If the authorised person decides to proceed with the action, he or she is to give written notice of the decision to the local government concerned.
(4) If the authorised person decides not to proceed with the action, he or she is to give written notice of the decision to the local government concerned and to any person to whom notice has been given under section 8.40(1).
8.42 Power of court to order payment
(1) If in any proceedings brought under this Division, the court before which the proceedings are brought is satisfied that the person against whom the proceedings have been brought is personally liable, under section 8.38, to pay an amount misapplied to a local government, that court may order that person to pay an amount of money stated in the order of the court and that order is enforceable in all respects as a final judgment of the court.
(2) If an authorised person recovers money in proceedings under this Division, he or she is to pay it to the local government concerned.
8.43 Disqualification of person who has misapplied funds or property
(1) If an order has been made under section 8.42(1), the person against whom the order is made is disqualified from being a member of a council for a period of 5 years beginning on the date of the order, but the court making that order may, if it is satisfied that in the circumstances of the case it is appropriate to do so -
(a) order that the period of disqualification will be a period of less than 5 years that is specified in the order and begins on a date specified in the order; or
(b) order that the person is not disqualified.
(2) If at any time after a notice is given under section 8.40(1) but before a court makes an order under section 8.42(1), the person to whom the notice is given pays to the local government concerned or an authorised person part or all of the amount stated in the notice, the Departmental CEO may apply to a court before which an action to recover the amount so paid has been or could have been brought for an order that the person be disqualified from being a member of a council.
(3) A court to which an application is made under subsection (2) may, if it is satisfied that in the circumstances of the case it is appropriate to do so, order that the person is disqualified from being a member of a council for a period (not exceeding 5 years) that is specified in the order and begins on a date specified in the order.
8.44 Evidence of authorisation
In proceedings brought under this Division, a document purporting to be an authorisation or approval given by the Departmental CEO to a person, is prima facie evidence of the authorisation or approval having been given, and of the signature of the Departmental CEO.
34 Pursuant to LGA s 8.35, the funds of a local government are misapplied 'if any moneys paid from, or due to, any fund or amount of the local government are misapplied to purposes not authorised by law'. The allegations against the defendants in the present case fall within this definition.
35 The cause of action is created by LGA s 8.38. There are two elements (relevantly for the present case):
(a) there has been a misapplication of funds of a local government; and
(b) any council member (Mr Wroth) or employee (Mr Merrick) has wilfully or through culpable negligence misapplied the funds or connived at or concurred in the misapplication.
36 If the Shire wanted to commence an action against the defendants under LGA s 8.38, before the cause of action could be commenced, four procedural steps had to be undertaken:
(a) the Departmental CEO[26] must have given the Shire written authorisation to take the action;[27]
(b) the Shire must have given Mr Wroth and Mr Merrick notice in writing, including details of the grounds and the amount in question, that they may, within 30 days after the notice is given, advance reasons why the action should not be taken;[28]
(c) the Shire then had to consider any reasons advanced by Mr Wroth and Mr Merrick, and decide, in all the circumstances of the case, whether or not to proceed with the action;[29] and
(d) the Shire then had to obtain the express approval of the Departmental CEO to commence the action.[30]
38 The purpose of construing the text of LGA pt 8 div 4 is to ascertain the intention of the legislature.[33] Ordinarily, but not always, this will correspond to the natural and ordinary meaning of the words, construed in the context of the LGA as a whole.[34] A construction that would promote the purpose or object underlying the written law (whether that purpose is expressly stated in the written law or not) is preferred to a construction that would not promote that purpose or object.[35]
39 The Shire advances two reasons why the LGA pt 8 div 4 does not prevent a Shire from exercising rights that it otherwise may exercise at common law or in equity against council member and employees.
40 The first is that the LGA is silent as to whether the statutory remedies contained in the LGA abrogate common law remedies entirely or in part, or may be used as an alternative to common law remedies. The Shire submits that, in the absence of an expressly manifest intention of Parliament that the LGA was intended to displace all other common law causes of action, these common law remedies continue to exist alongside the statutory remedies as alternative avenues for legal redress.[36] It says that, in any event, the relationship between the statutory scheme of the LGA and common law is an important question to be tried, and one not suitable for summary determination.
41 The second is that LGA pt 8 div 4 has a wider public interest context that means that it is appropriate for the actions to which it applies to have the added level of procedural oversight. The public interest context is evident in the fact that the action may be brought under the division by a person authorised to conduct an inquiry under pt 8 div 1.[37] Such a person would not otherwise have standing to bring an action to recover funds or property that has been misapplied. It is also evident in the fact that the Departmental CEO may authorise any person to bring an action under the division, a concerned ratepayer for example. Counsel for the Shire likened the provisions to those under the Corporations Act permitting a minority shareholder to commence an action against the company.[38] Clearly, procedural safeguards are warranted in that scenario. The public
interest is also evident in the consequences of a successful action under the division. If an order for payment is made, the person against whom the order is made is disqualified from being a member of council for a period of five years, or any lesser period which the court may set.[39] These public interest elements justify the procedural requirements contained in the division. However, where the action is brought by the Shire, which has standing to seek general law remedies in its own right, there is no equivalent justification.[40]
42 The defendants advance two reasons why an action which may be brought under LGA pt 8 div 4, may only be brought under this division.
43 The first is that allowing parallel common law and equitable claims would undermine the evident purpose of the division. The evident purpose of the division is to prevent actions being brought:
(a) without first affording the person against whom the action is to be brought the opportunity to provide written reasons as to why action should not be taken; and
(b) without the Departmental CEO making an assessment of the utility of the proposed action.
44 The necessity for the Departmental CEO to be involved introduces a review by an independent person into the decision-making. This is a safeguard against the use of litigation for factional, political or other improper purposes. It is also a safeguard against an action that would unduly disrupt the business of local government, or one that would involve a disproportionate amount of public resources to pursue compared to the amounts in issue, or one which was frivolous or ill-considered. Parliament could have, but did not, authorise a local government to commence litigation involving the misapplication of its funds pursuant to LGA s 8.39 without going through the procedural requirements (leaving the review process to only apply to other litigants). Actions by a local government are thus also subject to the independent review process. Permitting a local government to commence an action involving the misapplication of its funds outside of LGA s 8.39 allows the local government to avoid the independent review process, undermining the evident purpose of the division. The only way the evident purpose of the division can be achieved is to construe the division as being the only means by which an action involving the misapplication of funds may be brought, so that all actions of this type are subject to an independent review. Unless other causes of action are excluded, the purpose of LGA pt 8 div 4 would be defeated.[41]
45 The second is that the presumption of construction that a statute is not intended to alter or abolish general law rights unless it evinces a clear intention to do so, is weakening, and its effect in many cases is negligible. Caution is needed in its exercise as 'nowdays legislatures regularly enact laws that infringe the common law rights of individuals'. The presumption is weak 'when the right is merely one to take or not take a particular course of action'.[42]
46 It is clear from this analysis that positions put forward by the Shire and the defendants are both arguable. As the Shire points out in its submissions, these provisions have not yet been tested by the courts, and there are no reported cases on them. This, says the Shire, means that the issue is not one which is appropriately dealt with on a summary basis. I agree.
47 The Shire also points out that the LGA does not expressly provide what the consequences are for a failure to comply with the procedures set out in pt 8 div 4. The parties referred in submissions to the decision in 2 Elizabeth Bay Road Pty Ltd v The Owners Strata Plan No 73943 where Leeming JA set out a number of different possibilities as to the effect of a precondition to the commencement of proceedings.[43] The defendants say that the effect of non‑compliance was either that the Shire was incapable of invoking the court's jurisdiction or that the right to institute proceedings did not arise, two of the possibilities identified by Leeming JA. The Shire again says that it would not be appropriate for an untested contention such as this to be the subject of the grant of summary judgment. Again, I agree.
48 The power to order summary judgment on an application by a defendant may be exercised where the court is satisfied 'that the action is frivolous or vexatious [or] that the defendant has a good defence on the merits'.[44] The onus is on the defendants to so satisfy the court.[45] The power to order summary judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.[46] It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted.[47] For the reasons which I have set out above, this is not such a case. The two competing interpretations are clearly arguable. The defendants have not persuaded me that the Shire's claim is frivolous or vexatious, or that they have a good defence on the merits, as required by RSC O 16 r 1(1) on the ground that the present action may only be brought pursuant to LGA pt 8 div 4.
Do the claims made against Mr Merrick fall within the terms of the Settlement Deed?
49 Mr Merrick asserts that the claims made against him for overpayments of leave, superannuation and other benefits as set out in the statement of claim fall within the terms of the release, agreement not to sue and bar in the Settlement Deed. He asserts that the Settlement Deed provides a complete defence on the merits to these claims.[48]
50 The Shire says that, as a matter of construction, and notwithstanding the breadth of the relevant clauses, the release, agreement not to sue and bar do not apply to matters not within the contemplation of the parties at the time the Settlement Deed was executed. It says that the allegations made in the statement of claim were not of a kind that were within the contemplation of the parties when the Settlement Deed was executed.
51 The starting point in the analysis is to construe the relevant clauses of the Settlement Deed. The 'Background' section of the Settlement Deed provides as follows:
52 The two key operative provisions are cl 2 and cl 3:
The Shire by executing this deed agrees to pay to the Employee the gross sum of $217,579.60 (Settlement Sum) as an eligible termination payment in accordance with clause 2.2 of this deed.
The Settlement Sum does not include the Employee's accrued entitlements to unused annual, long service leave, and accrued rostered days off and retained bonuses, which will be paid to the Employee upon Cessation.
The Shire must pay the Settlement Sum to the Employee by way of electronic funds transfer into the Employee's bank account on or before close of business 30 March 2010.
The Employee will be liable to pay any tax on the Settlement Sum and the Employee acknowledges that the Shire will deduct from that sum such amounts as required under the Income Tax Assessment Act or other applicable taxation legislation, provided that the Employer shall be liable to pay any fringe benefits tax and any other tax, other than income tax, imposed on the components of the Settlement Sum.
(a) releases absolutely and forever discharges the other party and the other party's employees, agents and servants from all Claims which the other party may have or but for this deed might have had against those persons arising out of, from, in, or in connection with the Employment or Cessation; and
(b) agrees not to bring, commence, seek, enforce or continue any Claim against the other party, its employees, agents, or servants arising out of, from, in, or in connection with the Employment or Cessation.
This deed may be pleaded as a bar to any Claim now or in the future commenced or continued by or on behalf of either party, or any person claiming through either party arising out of, from, in, or in connection with the Employment or the Cessation, as set out in clause 3 1.
53 The terms 'Cessation', 'Claim' and 'Employment' are defined in cl 1.1:
Cessation means the cessation of the Employment which will take effect on the date referred to in Background clause C.
Claim includes any complaint, action, suit, cause of action, application, arbitration, award, debt due, cost, claim, demand, liability, right, verdict, judgment or order either at law or in equity or arising out of the provisions of any statute, award, order or determination (with the exception of the provisions of any statute, award, order or determination relating to workers' compensation).
Employment means the employment referred to in Background clause A.
54 The core principle that governs the way in which a contract is interpreted is that 'the meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean'.[49] 'What the parties mean is to be determined by the language in which the parties express their agreement'.[50]
55 The release in cl 3.1(a) is limited to 'Claims ... arising out of, from, in, or in connection with the Employment or Cessation'. The agreement not to sue in cl 3.1(b) and the bar in cl 3.2 have the same limitation as the release.
[W]hile the words 'in connection with' connote a relationship between one thing and another, they do not necessarily connote any causal relationship between the two things: see North Eastern Railway Co v Furness Shipbuilding Co Ltd (1934) 50 TLR 257; Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153, 154, 160, 163; Our Town FM Pty Ltd v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 16 FCR 465, 479, 480 ...
While there is no easy test for the nature or extent of the causal or consequential relationship involved in the words 'arising out of', the relationship is less than that required by words such as 'caused by' or 'as a result of': beyond that it is a question of judgment on the particular facts: Dickinson v Motor Vehicle Insurance Trust [1987] HCA 49; (1987) 163 CLR 500, 505; Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114 [11].
57 The claims made against Mr Merrick relate to six different types of payments which Mr Merrick is said to have received that he was not entitled to:
(a) instructing payroll offices of the Shire to pay additional superannuation to his superannuation fund on various dates during the period 15 November 2005 to 30 March 2010;
(b) instructing payroll officers of the Shire to grant him additional rostered days off on various dates between July 2006 and August 2009;
(c) instructing payroll officers of the Shire to grant him executive time off, and time off for attending quarterly Community Information Sessions, on various dates between December 2007 and March 2009;
(d) instructing payroll officers of the Shire to pay out his unused sick leave in October 2009;
(e) preparing and or submitting a salary package reconciliation for backpay for the 2004/05, 2005/06, 2006/07 and 2009/10 financial years, and instructing officers of the Shire to pay the deficit;
(f) preparing and or submitting a salary package reconciliation for superannuation for the 2004/05, 2005/06, 2006/07and 2009/10 financial years, and instructing officers of the Shire to pay the deficit;
58 The issue is whether the Employment Claims fall within the terms of the release, agreement not to sue and bar.
59 On the meaning of the words in ordinary usage, in my view, each of the Employment Claims, as pleaded, are causes of action (and thus 'Claims' as defined) 'arising out of, from, in or in connection with the' employment of Mr Merrick as CEO of the Shire and the cessation of that employment on 30 March 2010. The common theme is that Mr Merrick received a benefit from the Shire which he was not entitled to under his contract of employment and which he is said to have received in breach of a fiduciary duty arising by virtue of his positon as CEO. The Employment Claims thus fall within the release in cl 3.1(a), the agreement not to sue in cl 3.1(b) and the bar in cl 3.2.
60 This is not a case in which the settlement deed under consideration is limited to issues raised by one party with the other prior to the execution of the Settlement Deed.[53] There is no requirement in the Settlement Deed that either party be aware of a particular issue or that either party had raised the issue with the other. Nor is there any warranty as to certain facts.
61 There is no ambiguity in the meaning of the release, agreement not to sue and bar in the Settlement Deed, and therefore the surrounding circumstances known to the parties are not relevant.[54]
62 The conclusion that the Employment Claims fall within the terms of the Settlement Deed is reinforced when one has regard to the evident purpose and object of the transaction.[55] The evident purpose and object which the parties sought to achieve from the Settlement Deed was to settle any issue that could be characterised as a 'Claim' arising out of, from, in, or in connection with the employment of Mr Merrick as CEO of the Shire and the cessation of that employment on 30 March 2010. The release, agreement not to sue and bar are mutual. As submitted by counsel for Mr Merrick:[56]
In that situation if you're a reasonable person on both sides of the transaction the idea is Mr Merrick's employment will be terminated, he will leave, and he will not hear from the Shire again. And the same from the Shire. There will not be a claim by Mr Merrick.
Against this evident purpose, to allow the Shire to go back and commence a cause of action to recover leave, superannuation and other benefits received by Mr Merrick before the date of the Settlement Deed arguably would make a commercial nonsense of the Settlement Deed.[57]
63 On Mr Merrick's argument, each party to the Settlement Deed would be understood to have taken the risk that subsequent information may come to light which could give rise to a claim for an overpayment or an underpayment. The risk of new information coming to light is a not uncommon, and perhaps routine, aspect of the commercial reality of executing a deed of settlement. This risk is certainly a routine aspect of the negotiations which take place in the mediations which I facilitate in the Supreme Court. If a party is not prepared to take a particular risk, it can insist on a clause in the settlement deed addressing the risk. This may take the form of an express warranty. In the present case, the Settlement Deed could have provided for an audit process for Mr Merrick's employment entitlements, with provision for reconciliation of any overpayment or underpayment. It did not do so. To the extent that a party is of the view that the other misled them in the negotiations for the Settlement Deed, there is a separate statutory cause of action which they may rely on (but which the Shire has not done in the present case).[58]
64 The Shire submitted that the release is to be read down in accordance with the principle in Grant v John Grant & Sons Pty Ltd that a release expressed in general words will usually be read down by reference to what was in the contemplation of the parties at the time of the execution of the release.[59] The principle, as expressed by Dixon CJ, Fullagar, Kitto and Taylor JJ was that:[60]
[E]quity proceeded upon the principle that a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releaser.
65 The Court of Appeal has recently confirmed that the decision in Grant 'has not been overruled, disapproved, confined or read down in any subsequent decision of the High Court', and thus remains a binding authority.[61]
66 There are two aspects to the decision in Grant. The first is principle of construction that the general words of the release should be construed by reference to the subject matter of the particular disputes which the recitals said the parties had resolved to settle on the terms of the deed.[62] This involves the well settled principles of the construction of a contract, to which I have referred above [54]. The second is a principle of equity. This principle was described in some detail by Pembroke J in The Owners of Corporate Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd (No 2).[63]
The joint judgment [in Grant]explained that acceptance of the facts that were pleaded in that case made it inequitable for the releasee to set up the general words of the release in answer to the particular liability that the releasor now sought to enforce. That is because the liability had nothing to do with the subject matter of the deed of release. It was quite extraneous to it. And the releasee's attempt to defend the liability by resort to the general words of the release was unconscionable and opportunistic. This was an additional ground for arriving at the ultimate result. It was the context in which the pleaded facts relied upon included the propositions that the releasor did not know of the liability now sought to be enforced, did not intend to release it as part of the transaction and did not know of any intention on the part of the releasee that it should be released: Grant v John Grant & Sons (supra) at 130.
The court held that in the circumstances it would be unconscientious to allow the general words of the release to be relied upon. The equity was described as one 'to have the general words of a release confined to the true purpose of the transaction ascertained from the scope of the instrument and the external circumstances': Grant v John Grant & Sons (supra) at 130. It is clear from what appears earlier on the same page that 'the circumstances' might include the actual intention of the releasor. The joint judgment referred to the 'state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor': Grant v John Grant & Sons (supra) at 130. It is also clear that the question mark at the bottom of the page is a typographical error.
This aspect of the reasoning was a particular illustration of one of the many ways in which equity restrains a party from any unconscientious reliance on legal rights. Naturally, the trigger for the application of the equitable principle must be some feature of the facts or conduct of one of the parties that is against conscience. That is why the joint judgment in Grant's case endorsed (at 125) Kerly's statement in his Historical Sketch of the Equitable Jurisdiction of the Court of Chancery that:
'The peculiar construction of releases in equity, which restricts their operation to matters within the contemplation of the parties, rests also partly on mistake of expression and partly on mistake going to the substance of the transaction.'
In other words, equity permits an investigation of the circumstances, including consideration of the actual intentions of the parties, in order to determine whether enforcement of the general words of a release would be against conscience.
Significantly however, the joint judgment in Grant v John Grant & Sons (supra) also recognised that there will always be cases where, properly characterised, the parties should be taken to have intended that the general words of a release should operate to encompass all conceivable further disputes, whether disclosed or not and whether within the knowledge of a party or both parties, or outside of it: Grant v John Grant & Sons (supra) at 129. In such a case there is no room for the application of equitable principle. The equitable principle only has a role to play when it appears from the terms or the context or other admissible evidence, that the enforcement of the legal right would, by a literal application of the general words of a release, be against conscience. It would not be against conscience if the court is satisfied that the parties intended 'upon a particular and solemn composition for peace' to release uncertain demands and presently unknown claims: Salkeld v Vernon [1758] EngR 153; (1758) 1 Eden 64 at 67‑68, cited in Grant v John Grant & Sons (supra) at 129.
67 In United States Surgical Corporations v Hospital Products International Pty Ltd McLelland J quoted the passage set out above [64] from the judgment in Grant and then stated:[64]
Indeed the examination of the authorities undertaken by the High Court in that case indicates that a substantially similar rule operates at common law. In Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112, at pp 123, 124 the High Court quotes with approval the following words of Lord Westbury in London and South Western Railway Co v Blackmore [1870] UKLawRpHL 13; (1870) LR 4 HL 610, at p 623:
'The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given.'
and the following words of Tunton J in Upton v Upton (1832) Dowe 400, at p 406:
'... the general words of a release may be limited by the particular matter out of which the release springs, and the particular intent of the parties by whom the release is executed. ...'
On the facts before McLelland J, his Honour held that it was not contemplated by the parties that the release which was sought to be enforced extended to the liability in question.
68 In Commonwealth Development Bank of Australia Ltd v Kok, Beaumont J cited the decision in Grant for the 'settled principle of interpretation that general words in an instrument of release are limited always to that thing, or those things, which were specially in the contemplation of the parties at the time when the release was given'.[65]
69 In Barnes v Forty Two International Pty Ltd Beach J declined to overturn the approach taken by the trial Judge to read down the release to not apply to 'matters which were not in the knowledge' of the parties when the agreement was executed, though his Honour preferred the expression 'not within the contemplation of the parties' at the time the release was given.[66]
70 These authorities are to the effect that the approach proposed by the Shire involves three stages:
(a) construing the release, agreement not to sue and bar as being limited to matters within the contemplation of the parties at the time the Settlement Deed was entered into;
(b) the factual inquiry as to whether the Employment Claims were within the contemplation of the parties at the time the Settlement Deed was entered into; and
(c) the inquiry as to whether it would be unconscientious to allow the general words of the release to be relied upon.
71 Given the authorities to which I have just referred, the first stage must be considered arguable, notwithstanding the ordinary and natural meaning of the relevant terms of the Settlement Deed and its evident purpose. The second stage is a wide ranging factual inquiry, not suitable for summary determination. The third broadens the factual inquiry in the second.
72 It may be that different considerations will apply to the agreement not to sue and the bar, as opposed to the release.[67] However, given that the principle in Grant is based in equity, it is arguable that if a release cannot be enforced in equity on the basis that it would be unconscientious to do so, an agreement not to sue and a bar to the same effect would not be enforced for the same reason.
73 With some reservations given ordinary and natural meaning of the relevant terms of the Settlement Deed and its evident purpose, I am satisfied that the construction submitted by the Shire is reasonably arguable. If ultimately found by the court, it would deprive Mr Merrick of a 'good defence on the merits' to the Employment Claims. I therefore do not have a sufficiently high degree of certainty about the ultimate outcome of the proceedings if it went to trial to make it appropriate for summary judgment to be granted on this issue.[68]
Is Mr Merrick entitled to summary judgment in relation to the claim for breach of an implied term in the Settlement Deed?
74 Mr Merrick seeks summary judgment on the basis that he has a good defence on the merits to the claim that he breached an implied term of the Settlement Deed.
75 Paragraphs 33 ‑ 36 of the statement of claim plead breaches of four terms that are said to have been implied into the Settlement Deed:
(a) an implied term that Mr Merrick warranted that he had, during negotiations for, and on execution of, the Settlement Deed, disclosed to the Shire any and all information that was known to him and was relevant to the negotiations in respect of the Settlement Deed (par 33);
(b) an implied term that Mr Merrick would, after the execution of the Settlement Deed, and during the 42 days between such execution and termination of his employment, disclose to the Shire any and all information that was known to him and was not, but ought to have been, disclosed to the Shire during the negotiations for, and on the execution of, the Settlement Deed (par 34);
(c) an implied term that Mr Merrick would act honestly and in good faith during negotiations for, and on execution of, the Deed by disclosing to the Shire any and all information that was known to him and was relevant to the negotiations for the Settlement Deed (par 35); and
(d) an implied term that Mr Merrick would continue to act honestly and in good faith after the execution of the Settlement Deed by disclosing to the Shire any and all information that was known to him and was not, but ought to have been, disclosed to the Shire during negotiations for, and on the execution of, the Settlement Deed (par 36).
76 The Shire intends to narrow the ambit of the term that it says should be the implied term by replacing these paragraphs with the following term (Implied Term):[69]
The first defendant warranted that, upon the execution of the Deed, he had disclosed and furnished to the plaintiff all relevant knowledge which he possessed relating to any wrongdoing by him as an employee, or relating to actual or potential legal claims of the plaintiff against him arising out of his conduct as an employee, and had concealed nothing from the plaintiff that might reasonably be regarded as relevant to a decision of the plaintiff to release the first defendant from legal claims.
77 For the purposes of a defendant's summary judgment application, the plaintiff is bound by its pleaded case.[70] However, in the present case, no objection was taken to the court determining the application on the proposed amended term.
78 The Implied Term is said to be implied in accordance with the principle set out in BP Refinery (Westernport) Pty Ltd v Hasting Shire Council, namely that a term will not be implied into a formal written agreement unless:[71]
(a) it is reasonable and equitable;
(b) it is necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(c) it is so obvious that it goes without saying;
(d) it is capable of clear expression; and
(e) it does not contradict any express term of the contract.
79 Counsel for Mr Merrick challenged the first four of these requirements.
80 Firstly, the Implied Term is not necessary to give business efficacy to the Settlement Deed. This is because the parties agreed in cl 2.2 (quoted above [51]) that the Settlement Sum did not include accrued entitlements which would be dealt with separately. More generally, there is no need for such a term. There are statutory remedies where there is a failure to disclose where there was an obligation to do so, in particular ACL s 18 for misleading and deceptive conduct. The Settlement Deed is effective without the Implied Term.
81 Second the proposed term is not capable of clear expression. Five different versions of the term have been put forward (above [75] - [76]). The final version, the Implied Term, is loaded with value judgments: all 'relevant' knowledge; 'wrongdoing'; had 'concealed nothing'; that might 'reasonably' be regarded as 'relevant'.
82 Third, if the Shire is correct that Mr Merrick engaged in wrongdoing which he concealed, it cannot be so obvious that it goes without saying that he would disclose either the wrongdoing or the concealment. Further, the Implied Term is cast in the language of lawyers; not in terms so obvious that it goes without saying to people who are not lawyers.
83 Finally as to the requirement that the term be 'reasonable and equitable' counsel for Mr Merrick submitted that it cannot be either reasonable or equitable to imply a term which the law does not require. It is necessary to consider this point in some detail.
84 The primary authority relied on by Mr Merrick for the proposition that an employee is not under a duty to disclose to his employer his own breaches of contract is the decision of the High Court in Concut Pty Ltd v Worrell.[72] Gleeson CJ, Gaudron and Gummow JJ referred to the decision of Lord Atkin in Bell v Lever Brothers Ltd[73] the facts of Bell mirror the present facts. Mr Bell was appointed the chairman of a company. The company was successful and ultimately it amalgamated with a competitor. Mr Bell's services were no longer required. A contract was entered into whereby Mr Bell retired as chairman and was paid a significant sum of money by the major shareholder of the company. Shortly afterwards, the major shareholder became aware that Mr Bell had received profits from acting in the same business as the company, committing what Lord Atkin described as a 'grave breach of duty'.[74] The decision is oft cited on the issue of when a contract can be set aside due to a mistake. There was a second question before their Lordships, being whether the contract could be set aside in consequence of the non‑disclosure by Mr Bell of his misconduct. Their Lordships answered that it could not be set aside on this basis.[75] Lord Blanesburgh described the suggested duty to disclose as being 'plainly non‑existent'.[76] The jury had excluded fraud, and their Lordships must be taken to have left open that issue.[77] I note that the Shire does not plead fraud against either defendant, and is bound by its pleaded case.[78]
85 Given how closely the facts of Bell mirror the present case, it is instructive to quote the following passage from the judgment of Lord Atkin:[79]
[T]his claim is based upon the contention that Bell owed a duty to Levers to disclose his misconduct, and that in default of disclosure the contract was voidable. Ordinarily the failure to disclose a material fact which might influence the mind of a prudent contractor does not give the right to avoid the contract. The principle of caveat emptor applies outside contracts of sale. There are certain contracts expressed by the law to be contracts of the utmost good faith, where material facts must be disclosed; if not, the contract is voidable. Apart from special fiduciary relationships, contracts for partnership and contracts of insurance are the leading instances. In such cases the duty does not arise out of contract; the duty of a person proposing an insurance arises before a contract is made, so of an intending partner. Unless this contract can be brought within this limited category of contracts uberrimae fidei it appears to me that this ground of defence must fail. I see nothing to differentiate this agreement from the ordinary contract of service; and I am aware of no authority which places contracts of service within the limited category I have mentioned. It seems to me clear that master and man negotiating for an agreement of service are as unfettered as in any other negotiation. Nor can I find anything in the relation of master and servant, when established, that places agreements between them within the protected category. It is said that there is a contractual duty of the servant to disclose his past faults. I agree that the duty in the servant to protect his master's property may involve the duty to report a fellow servant whom he knows to be wrongfully dealing with that property. The servant owes a duty not to steal, but, having stolen, is there superadded a duty to confess that he has stolen? I am satisfied that to imply such a duty would be a departure from the well-established usage of mankind and would be to create obligations entirely outside the normal contemplation of the parties concerned. If a man agrees to raise his butler's wages, must the butler disclose that two years ago he received a secret commission from the wine merchant; and if the master discovers it, can he, without dismissal or after the servant has left, avoid the agreement for the increase in salary and recover back the extra wages paid? If he gives his cook a month's wages in lieu of notice can he, on discovering that the cook has been pilfering the tea and sugar, claim the return of the month's wages? I think not. He takes the risk; if he wishes to protect himself he can question his servant, and will then be protected by the truth or otherwise of the answers.
In his speech, Lord Atkin (who, with Lord Blanesburgh and Lord Thankerton, comprised the majority) had isolated '[t]wo points ... for decision' .... The first was whether the agreement with Bell negotiated by Mr Cooper was void by reason of a 'mutual mistake' of Bell and Cooper, as to the 'quality of the thing contracted for' ..., so that, if the agreement be executed (as was the case), one party 'can recover back money paid on the ground of failure of the consideration' ... His Lordship decided that 'the party paying for release [had gotten] exactly what [it had] bargain[ed] for', and it was not to the point that, had it known the true facts, it would not have entered into the bargain .... So, on this ground, Bell was able successfully to resist the claim for repayment.
With this branch of Lord Atkin's speech, which for 70 years has attracted varied academic analysis, the Court of Appeal [in Concut] was not concerned. The passage set out above comes from that part of Lord Atkin's speech answering favourably to Bell the second point for decision. This was whether Bell had 'owed a duty to Levers to disclose his misconduct, and that in default of disclosure the contract was voidable'...
In Bank of Credit and Commerce International SA v Ali [[1999] 2 All ER 1005, 1015], Lightman J dealt with this section of Lord Atkin's speech and said that Bell v Lever Brothers, Limited was authority for the following propositions:
'The current law as generally understood may be stated as follows: that (1) (subject to one exception) neither party to a contract is obliged to disclose facts material to the decision of the other party whether to enter into that contract; (2) the exception is limited to contracts which are uberrimae fidei; (3) neither contracts of employment nor contracts of compromise (unless by way of family arrangement) fall within this exceptional category; and (4) neither the employer nor the employee, once in contractual relations, are under a duty as such to disclose to each other their own breaches of contract.'
Proposition (4) may require qualification to allow for obligations of disclosure which attend a fiduciary duty, if informed consent is to be obtained to what otherwise would be a breach of that duty.
87 In Heugh v Central Petroleum Ltd (No 5), Le Miere J viewed the decision in Concut as being authority for the proposition that an 'employee is not under a duty to disclose to his employer his own breaches of contract'.[82]
88 The Shire seeks to exploit the qualification expressed by the plurality in Concut on the disclosure obligations of a fiduciary. It says that the issue of whether there was an obligation to disclose in circumstances where the parties were in a fiduciary relationship was not argued or considered in Heugh. However, the qualification referred to by the plurality in Concut only dealt with the instance in which the fiduciary was relying on the informed consent of the beneficiary of the duty; the giving of informed consent is inconsistent with the fiduciary withholding relevant information. This does not assist in the present case as it is not alleged that the Shire gave informed consent to any breach of fiduciary duty.
89 In the context of its submissions on LA s 38(2), the Shire referred to three other authorities in addition to Concut on the issue of whether there is a fiduciary duty to disclose, which need to be reviewed at this point in the analysis.
[A] self-dealing obligation: 'a duty when dealing as an interested party with the [principal] in respect of any transaction with the [principal] where their task as fiduciaries includes the giving of advice or information, to disclose and furnish to the [principal] all the relevant knowledge which [the fiduciary] possessed and to conceal nothing from the [principal] that might reasonably be regarded as relevant to the decision being made by the principal] to engage in their dealing with [the fiduciary]'.
91 However, His Honour accepted this duty on the understanding that 'that which is often regarded as a fiduciary obligation of disclosure should not be seen as a positive duty resting on a fiduciary, but a means by which the fiduciary obtains the release or forgiveness of a negative duty; such as the duty to avoid a conflict of interest, or the duty not to make a secret profit'.[85] This qualification is consistent with the observations of the High Court in Concut.
So far as the positive obligation to make disclosure is alleged to be fiduciary in character, that allegation is inconsistent with authority that fiduciary duties are proscriptive not prescriptive in character and that there is no affirmative fiduciary obligation of disclosure. That principle has frequently been applied by courts at first instance: Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566 at [32]; P&V Industries Pty Ltd v Porto [2006] VSC 131; (2006) 14 VR 1 at [42]- [43]; Levy v Bablis [2007] NSWSC 565 at [18]. In both P&V Industries Pty Ltd v Porto and Levy v Bablis, an allegation of such a duty was struck out. However, I consider that the present position cannot be said to be closed beyond argument, given the views recently expressed by the Court of Appeal of the Supreme Court of Western Australia in Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 270 FLR 1 at [1962], albeit in the context of directors' duties; see also Commonwealth v Davis Samuel Pty Ltd (No 7) [2013] ACTSC 146 at [313]- [314]. I would not therefore decline to permit that paragraph in an amendment on that basis, notwithstanding that the allegation might well fail at least at first instance.
93 However, as I have already noted, the context in the present case does not involve the Shire giving informed consent to what would otherwise be a breach of fiduciary duty. In particular, the Settlement Deed was an agreement negotiated at arms-length, in which Mr Merrick was entitled to act solely in his own interests. He, like Mr Bell in Bell was acting 'quite plainly' for himself as a principal.[88] Accordingly, the observations in Concut, Davis Samuel, Iacullo and Bell do not assist the Shire.
94 The Shire's submissions are to the effect that because of his particular role as a CEO of a local government, Mr Merrick was in a fiduciary relationship with the Shire.[89] However, all employees are in a fiduciary relationship with their employer; 'their critical feature is that the fiduciary undertakes or agrees to act for or on behalf of, or in the interests of, another person in the exercise of a power or discretion that will affect the interests of that other person in a legal or practical sense'.[90] Therefore the fact that Mr Merrick is in a fiduciary relationship with the Shire is no basis for distinguishing the principles set out in Concut and applied in Heugh.
95 I am conscious that courts should be careful not to risk stifling the development of the law by summarily disposing of actions where there is a reasonable possibility that, as the law develops, it will be found that a cause of action and remedy lies.[91] The Shire did not point to any decided case in which an employee, acting as a principal, was found to have a duty to disclose to his employer his own breaches of contract. Mr Merrick was acting for himself as a principal in the negotiation of the Settlement Deed and the Shire did not plead fraud against him. The Shire point to any other arguable ground or principle on which the law as set out in Bell, Concut and Heugh could be distinguished. I therefore have a sufficiently high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted on this issue.[92] Mr Merrick has persuaded me that he has a good defence on the merits to the allegations that terms ought to be implied into the Settlement Deed to the effect that he has a duty to disclose as it is well settled law that an employee, at least when acting as principal, is not under a duty to disclose to his employer his own breaches of contract.
96 Given my conclusion on the effect of the Settlement Deed, judgment cannot be ordered against the Shire. Instead, the appropriate order is for pars 31 ‑ 38, and any consequential references to a breach of an implied term, should be struck out with no liberty to replead.
Should the limitation period for the Shire's claims against Mr Merrick be extended pursuant to LA s 38(2)? Issues
97 The claim to which this relates in the statement of claim is contained in par 14, which it is convenient to quote:
Additional superannuation of 9% through the course of the first defendant's employment as CEO from 16 August 2004 to 30 March at a rate of 9% (in additional to the 19% superannuation that the first defendant was entitled to under his contract of employment
Salary package reconciliation for 04/05, 05/06 and 06/07 financial years - back pay
Salary package reconciliation for 04/05, 05/06 and 06/07 financial years - superannuation
46 hours of paid time off to attend quarterly Community Information Sessions
Salary package reconciliation for 09/10 financial year - back pay
Salary package reconciliation for 09/10 financial year - superannuation
98 The relevant causes of action are breach of contract, breach of fiduciary duty and unjust enrichment.[93] The Limitation Act 1935 (WA) (1935 LA) applied to causes of action arising on or before 14 November 2005, after which the LA applies.[94] The causes of action for breach of contract and unjust enrichment arising before 24 March 2008, that is more than six years prior to the commencement of the present action, are statute barred (unless the extension application is granted).[95] Breaches of fiduciary duty arising between 15 November 2005 and 23 March 2008 are barred by the LA.[96] Breaches of fiduciary duty arising prior to 14 November 2005 are not subject to any express limitation period in the 1935 LA. 'When claims are made in equity that are not the subject of a statutory prescription and the claims correspond to a remedy at law that could be subject to a statutory time bar, then a court of equity, in the absence of fraud or other special circumstances, will adopt by way of analogy the same limitation for the equitable claim'.[97] However, equity will not apply to a limitation period by analogy where there are circumstances which make the application of the statute unconscionable.[98] Given the scope of the factual inquiry as to unconscionability, it is not appropriate to determine this issue on a summary basis.[99]
99 Expressed in slightly more detail, the six claims from the table set out above [97] for which there are limitation issues, and the relevant limitation period as submitted by the Shire are:[100]
Conduct the subject of a cause of action (brief description only, with reference to SOC [14]):
(a) Instructing payroll officers of the plaintiff to pay additional superannuation to his superannuation fund on various dates during the period 15 November 2005 to 24 March 2008.
On or about various dates from 14 November 2011 to 23 March 2014
(b) Instructing payroll officers of the plaintiff to grant him 5 rostered days off on or around 3 July 2006.
On or about 2 July 2012 or later in July when time off taken
(c) Instructing payroll officers of the plaintiff to grant him 19 rostered days off on or around 14 December 2006.
On or about 13 December 2012 or later in January/February 2013 when time off taken
(d) Preparing and/or submitting a salary package reconciliation for the 2004/05, 2005/06, 2006/07 financial years (back pay) on or around 15 August 2007.
(e) Preparing and/or submitting a salary package reconciliation for the 2004/05, 2005/06, 2006/07 financial years (superannuation) on or around 15 August 2007.
On or about 14 August 2013 or later when payment made
(f) Instructing payroll officers of the plaintiff to grant him 6 days of executive time off on or around 18 December 2007.
On or about 17 December 2013 or later in following December 2013/January 2014 when time off taken
100 The Shire thus requires a grant of extension pursuant to LA s 38 for each of the causes of action relating to the claims set out in this table.
101 The power to extend relied upon is contained in LA s 38 which is in the following terms (so far as it relevant):
38. Court may extend time to commence actions in cases of fraud or improper conduct
(1) A plaintiff may apply to a court for leave to commence an action on a cause of action even though the limitation period provided for under this Act has expired.
(2) On an application a court may extend the time in which the action can be commenced up to 3 years from when the action ought reasonably to have been commenced if the court is satisfied that the failure to commence the action was attributable to fraudulent or other improper conduct of the defendant or a person for whom the defendant is vicariously liable.
102 The Shire asserts that the failure to commence the action within the limitation period insofar as it relates to the six claims was attributable to fraudulent or other improper conduct of Mr Merrick. Mr Merrick disputes this conclusion, and also states that, in any event, the present action was not commenced within three years of when it ought reasonably to have been commenced.
103 The extension application may be made in an existing action.[101] The application can be sought or determined at any time before or after the issue, or close of, pleadings.[102] The Shire, as plaintiff, has the burden of proving that a court should extend the relevant limitation period.[103] In reaching the conclusions as to fraud and impropriety, I need to have regard to the principles set out by the High Court in Briginshaw v Briginshaw,[104] which was recently explained by Edelman J in the following terms:[105]
In broad terms, people are generally taken to be of good character and unlikely to commit crimes or wrongdoing. The more serious the allegation against a person, the more care ought to be taken before reaching a conclusion on the balance of probabilities which is adverse to that person.
104 One problematic issue which arises in the present case is that the conduct forming the substantive causes of action is the same conduct relied on to establish fraud or other improper conduct. In some cases, in order to determine the LA s 38(2) application, the court would have to hear and make a determination on most, or perhaps all, of the substantive evidence. In a case like this, it may be appropriate for the court to make an order listing the LA s 38(2) application for determination with the trial of the substantive action.[106] In other cases, in particular those involving applications for extension of time, the court has heard and determined the application ahead of the trial, even where the allegation is of fraud.[107]
105 In the present case, extensive affidavit evidence has been filed. However, there were no affidavits filed sworn by Mr Merrick or Mr Wroth. There is no significant factual conflict in the affidavit evidence before me. I am able to determine the applications on the material before me, and it is therefore appropriate that I do so.
106 The power in LA s 38 applies to any cause of action; the cause of action need not be one in which fraud or improper conduct is an element.
107 Five issues need to be determined to apply LA s 38:
When ought the action reasonably to have been commenced?
108 The Shire says that the action ought reasonably to have been commenced by 2013 or even later, but in any event it could not reasonably have been commenced before November 2012.[108]
109 There is a divergence in the interpretation of s 38 as to the next stage:
(a) the Shire says that the time for commencement can be extended up to three years from the date of expiry of the limitation period;
(b) the defendants say that the time for commencement is only extended up to three years from the date when the action ought reasonably to have been commenced.
110 In my view, the defendants' interpretation more accurately reflects the text of LA s 38(2): 'a court may extend the time in which the action can be commenced up to three years from when the action ought reasonably to have been commenced'. This date may be after the date on which the limitation period expired. This interpretation reflects the evident purpose of the section: to give a party whose cause of action has been concealed by fraud or improper conduct a set period of time within which to commence the action commencing from when it ought reasonably to have been commenced.
111 The action was commenced on 24 March 2014. It is thus only necessary for the Shire to satisfy me that the action ought reasonably to have been commenced after 24 March 2011. If it satisfies me that this is the case, the discretion in LA s 38(2) allows me to extend the time within which the action could be commenced until the date on which it was in fact commenced.
112 The Shire did not file any evidence as to why the overpayments could not have been discovered during the period 2006 to 2010.
113 Mr Merrick ceased employment on 30 March 2010. The catalyst for the decision of the Shire to approach Mr Merrick to bring his employment with the Shire to an end by mutual agreement[109] seems to have been concerns raised about his conduct in overseeing aspects of the community recovery process following the December 2009 Toodyay bushfire.[110] The first concerns in relation to the employment arrangements with Mr Merrick appear to have arisen in the months following his departure, and arose because Mr Merrick had instructed Shire staff not to deduct any tax in respect of his lump sum termination payment, meaning he received it tax free. Clause 2.4 of the Settlement Deed provided that Mr Merrick was liable to pay any tax on the Settlement Sum. This issue seems to have been the catalyst for a request to the Shire's auditors to investigate the payments made to Mr Merrick. The Shire's concern was raised in writing at the time with the Department of Local Government (Department) and the Crime and Corruption Commission (CCC). The Department was provided with the documentation supporting the calculation of Mr Merrick's settlement payout, along with comments by the Shire which began to raise a concern as to potential overpayments.[111]
114 The CCC considered whether 'Mr Merrick abused his power in instructing the former manager of Finance and Administration at the Shire to withhold tax'. By letter dated 28 October 2010, the CCC advised the Shire that after 'considering all the available evidence the Commission has determined that misconduct, as defined in s 4 of the Corruption and Crime Commission Act 2003 (WA), has not taken place'.[112] A further complaint to the CCC was made by letter dated 8 February 2011, however again the focus was on Mr Merrick's receipt of the Settlement Sum on a tax free basis.[113]
115 In February 2011, the Shire received a report from its auditors for the year ending 30 June 2010 (2010 Audit Report). The audit report raised two concerns. The first was that certain amounts of tax which should have been remitted by the Shire to the ATO, were instead paid in full to Mr Merrick. The second was that the auditors could find no clause within Mr Merrick's contract entitling him to certain of the allowances comprising the Settlement Sum.[114]
116 The 2010 Audit Report was considered at a special meeting of the council of the Shire on 23 February 2011. The Council adopted a recommendation by the audit committee:[115]
12.1 To seek professional taxation and legal advice with respect to the treatment of the former Chief Executive Officer's termination payment to ascertain if it was treated in accordance with what was permissible under his contract and law;
12.2 After receipt of the advice referred to in 6.1 above, to seek a private ruling from the Commissioner of Taxation in respect to the treatment of termination payments made to the former Chief Executive Officer.
117 The private ruling from the ATO was provided in June 2011, and was to the effect that the Shire should have remitted part of the Settlement Sum to the ATO.[116]
118 The records of the audit committee of the Shire indicate that as at March 2012 the Shire had not then determined what action was to be taken in regard to the salary package reconciliations.[117]
119 In April 2012 the Shire's auditors provided a report to the Shire on Mr Merrick's leave entitlements.[118] This was undertaken in response to concerns raised by the Chair of the audit committee of the Shire. On the material before me, this seems to be the first document which identifies some of the instances in which Mr Merrick was paid amounts which it is now claimed he was not entitled to.
120 The issue was considered by the Shire's audit committee at a meeting in September 2012, who referred the matter to the full council of the Shire.[119]
121 The decision by the council of the Shire to commence recovery action against Mr Merrick was made at a meeting on 19 February 2013, in the following terms:[120]
122 In determining when the action ought reasonably to have been commenced, the Shire notes that the conduct involved a limited number of transactions, 'a needle among a haystack of transactions passing through the books of account' of the Shire.[121] It also states that, a public body such as the Shire is justified, as a matter of prudence and good public administration, in acting cautiously in investigating conduct of its officers and in deciding whether to take legal action. The Shire says that it was reasonable for it to seek the services of auditors and to obtain inter-agency advice before commencing action.[122]
123 The defendants are critical of the Shire for not explaining why the action was not brought prior to 2010. The information was present in the records of the Shire, as was the terms of Mr Merrick's employment. However, given that Mr Merrick was the CEO and Mr Wroth the Shire President, and there being no cause for concern raised prior to Mr Merrick's departure, it is understandable why no inquiry as made at this stage.
124 As I stated above [111], it is only necessary for the Shire to satisfy me that the action ought reasonably to have been commenced after 24 March 2011. By this time the Shire had received the 2010 Audit Report. Whilst this report raised some concerns as to overpayments, it did not identify the extent of the overpayments. This did not appear to have occurred until the report which was received in April 2012. I am satisfied that the date by which the action ought reasonably to have been commenced was well after 24 March 2011, and probably sometime towards the end of 2012 after the Shire had time to further investigate, and obtain legal advice on, the issues raised in the report received in April 2012.
125 I am also satisfied that if it is the case that the failure to commence the action insofar as it relates to the claims which are otherwise statute barred was attributable to the fraudulent or other improper conduct of Mr Merrick, then it would be appropriate to extend the time within which the action could be commenced the full three years to 24 March 2014.
126 To apply this condition, I first need to define the term 'fraudulent'.
127 The Shire submitted that analysis of aspects of the equitable doctrine of concealed fraud, including cases concerning the statutory adoption of that doctrine, assist in understanding the meaning of the word 'fraudulent' in LA s 38(2).[123] In particular, there is authority for the following:
(a) the 'fraud' referred to in the doctrine is not common law fraud, but extends to any unconscionable failure to reveal;[124]
(b) the 'fraud' would also be made out by any conduct by the defendant such that it would be against conscience for him to avail himself of the lapse of time;[125]
(c) the deliberate commission of a wrong in circumstances in which it is unlikely to be discovered for some time will amount to deliberate concealment of a wrong;[126]
(d) in order to show that a defendant concealed a right of action by fraud, it is not necessary to show that the defendant took active steps to conceal his wrongdoing or breach of obligation;[127] and
(e) deliberate or recklessly wrongful conduct in breach of the confidence reposed in the defendant, in circumstances calculated to keep the plaintiff in ignorance of the wrong, can amount to a fraudulent concealment of a cause of action.[128]
128 However, as the High Court observed in The Commonwealth of Australia v Cornwell, this doctrine has limited application to the interpretation of statutes of limitation:[129]
First, in cases of 'concealed fraud' courts of equity refused to apply by analogy statutes of limitation which operated upon actions at law. Secondly, this doctrine of 'concealed fraud' did not furnish an answer on equitable grounds to a plea in a common law court of the 1623 Act or other limitation statute to, for example, an action in tort; it was not possible to plead by way of replication on equitable grounds that the existence of the plaintiff's cause of action had been fraudulently concealed from the plaintiff by the defendant ... . Accordingly, in Metacel Pty Ltd v Ralph Symonds Ltd, Sugerman JA said [[1969] 2 NSWR 201 at 203];
'Concealed fraud remains a special doctrine of courts of equity applicable where relief is sought in those courts and is not applicable in bar of the Statute of Limitations in a pure common law action.'
Section 33 of the Limitation Act is to be read against that background. Significantly for present purposes, it is addressed to any action, whether legal or equitable in nature.
129 Limitation Act 1985 (ACT) s 33(1)(b) allowed the court to extend an otherwise applicable limitation period where 'a fact relevant to a cause of action or the identity of a person against whom a cause of action lies is deliberately concealed'. The ACT legislation thus used wording more closely aligned to the equitable doctrine than in LA s 38(2).
130 The starting point for interpreting LA s 38(2) is to discern the natural and ordinary meaning of the words, construed in the context of the LA as a whole.[130]
131 The term 'fraud' in a limitation context was considered by Scott J in Honey v McLennan. The plaintiff was injured at work and claimed a disablement benefit from his retirement fund. Based on a doctor's report, the fund paid a partial, rather than a permanent, disablement benefit. Sometime later the plaintiff obtained a copy of the doctor's report, and found out that the doctor had suggested he be reviewed in 12 months. The plaintiff commenced an action against the trustees of the fund claiming breach of contract and trust, alleging that the trustees had fraudulently concealed the doctor's report from him. His Honour considered a preliminary issue of whether the plaintiff's claim was statute barred by reason of the Limitation of Actions Act 1958 (Vic), which applied pursuant to the trust documents. By s 21 of that Act, there was no limitation period for an action by a beneficiary under a trust 'in respect of any fraud or fraudulent breach of trust to which the trustee was a party'. Scott J held that this required a consciousness that what is being done is wrong or that to take advantage of the relevant situation involves wrongdoing.[131] His Honour held that this requirement was satisfied as the trustees' conduct 'constituted moral turpitude'.[132]
132 Scott J followed the decision of Mahoney ACJ in Seymour v Seymour.[133] In this case, the court was required to construe the words 'fraudulently concealed' in Limitation Act 1969 (NSW) s 55(1)(b). The context of this phrase is relevant for present purposes:
(a) there is a cause of action based on fraud or deceit; or
>
> (b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed,
the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by him or by a person claiming through him against a person answerable for the fraud deceit or concealment.
133 Mahoney ACJ stated of the term 'fraudulently concealed':[134]
In my opinion, the section is not confined to simple common law fraud. It extends to conduct beyond that. On the other hand, it is not, I think, sufficient merely that for the defendant to take advantage of the statute of limitations would be unconscionable or inequitable in the wide sense of these terms. Terms such as unconscionable and inequitable now are used to describe conduct which, in previous times, would not have fallen within them: see Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 at 147 and Hibberson v George [1989] NSWCA 100; (1989) 12 Fam LR 725 at 731.
Nor, in my opinion, is 'fraudulently' wide enough to include everything which would fall within the description of 'equitable fraud'. Equitable fraud is a doctrine which depends, for this purpose, too much upon nice distinctions which have been drawn in other times: see Snell's Equity, 29th ed (1990) at 550et seq; Meagher, Gummow & Lehane, Equity: Doctrines and Remedies, 3rd ed (1992) at par 1208; and see the discussion in Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 553. The history of the English legislation was recently reviewed in Sheldon v RHM Outhwaite (Underwriting Agencies) [1996] 1 AC 102: see, eg, at 144, 153.
In my opinion, there must be in what is involved a consciousness that what is being done is wrong or that to take advantage of the relevant situation involves wrongdoing. At least, this is so in the generality of cases. (There is in this as in many things, the problem of dealing with the person who 'closes his eyes to wrong' or is so lacking in conscience that he is not conscious of his own lack of proper standards.)
This passage was endorsed by Scott J in Honey.[135]
134 In Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 3] Murray J applied the decisions in Honey and Seymour in the context of the equivalent phrase to Limitation of Actions Act 1958 (Vic) s 21 in Limitation Act 1935 (WA) s 47(1).[136]
135 In Hamilton v Kaljo, McLelland J remarked of the same section considered in Seymour:[137]
For my own part, I would regard it as a misuse of language, and unsound, to apply the statutory expression 'fraudulently' in s 55 to any conduct which did not involve some form of dishonesty or moral turpitude.
136 In my view, it is appropriate to follow the line of authority in Seymour, Hamilton, Honey and Wright Prospecting. It seems the closest authority on point, and the context in the New South Wales legislation is close to the present context. Consequently, I am of the view that the word 'fraudulently' denotes some form of dishonest or moral turpitude, a consciousness that what is being done is wrong or a consciousness that to take advantage of the relevant situation involves wrongdoing.
137 Applying these definitions to the facts of the present application, the Shire says that Mr Merrick:[138]
(a) claimed (and ultimately received from the Shire) monies and other benefits to which he was not entitled;
(b) directed or encouraged staff under his control to process the claims;
(c) did not inform the staff as to the actual limits of his entitlements (which he well knew);
(e) did not report to the council of the Shire his claims in excess of entitlements; and
(f) circumvented his employment contract by obtaining additional monies and other benefits without a contract variation or the approval of the council.
(b) The first defendant's use of the administrative organs of the plaintiff, which were under his direct control as CEO, and non‑disclosure to the council of his excessive entitlement claims, amounted to concealment from the plaintiff of the facts giving rise to the causes of action. As the most senior and trusted employee of the plaintiff, he used his position as CEO to facilitate the payment and receipt of payments and benefits in excess of contractual entitlement, without reporting the same to the council of the plaintiff which was entitled to assume that the administration of his employment contract was in order. The council of the plaintiff relied on the first defendant for the efficient and proper running of its administration. He had all the functions described in section 5.41 of the Local Government Act 1995 (WA).
(c) It was the duty of the first defendant, as the CEO, to bring administrative or financial irregularities in situations that he was not able to resolve (such as when he was conflicted) to the attention of the council of the plaintiff. He did not fulfil this duty.
(d) With respect to some of the claims..., the first defendant involved the second defendant in the process of approving benefits, by purporting to obtain the Shire President's 'approval' to his claim for benefits. In so doing, he must have known (but in any event ought to have known) that the second defendant had no authority in the relevant respects to act independently of the council of the plaintiff (the role of Shire President being that provided for in section 2.8 of the Local Government Act); and he must have known that the council had not passed any resolution authorising the second defendant to so act (it being one of the duties of his employment to attend council meetings).
139 The Shire submits that that this conduct was 'fraudulent or other improper conduct' because it involved concealment.
140 Mr Merrick says that there is no admissible evidence which would allow the court to reach a conclusion on this point.
141 As set out in the following table, in five of the six instances, there is a clearly documented record of the request by Mr Merrick. In this sense, there has been no concealment.
Instructing payroll officers of the plaintiff to pay additional superannuation to his superannuation fund on various dates during the period 15 November 2005 to 24 March 2008.
Instructing payroll officers of the plaintiff to grant him 5 rostered days off on or around 3 July 2006.
Application for leave - First Scott Affidavit, annexure SADS‑10, page 110
Instructing payroll officers of the plaintiff to grant him 19 rostered days off on or around 14 December 2006.
Application for leave - First Scott Affidavit, annexure SADS-11, page 111
Preparing and/or submitting a salary package reconciliation for the 2004/05, 2005/06, 2006/07 financial years (back pay) on or around 15 August 2007.
Preparing and/or submitting a salary package reconciliation for the 2004/05, 2005/06, 2006/07 financial years (superannuation) on or around 15 August 2007.
Instructing payroll officers of the plaintiff to grant him 6 days of executive time off on or around 18 December 2007.
Application for leave - First Scott Affidavit, annexure SADS-13, page 113
142 The three application for leave forms are in what appears to be a standard Shire form. They are each signed by Mr Merrick and Mr Wroth, and in the first two cases by a payroll officer. The salary reconciliation worksheet appears transparent, and in the financial year 2006/07 resulted in an overpayment of $263.96 which Mr Merrick netted off the underpayments for the previous two financial years. It is signed by Mr Merrick and is signed by way of authorisation by another person. I do not detect any element of concealment in this documentation. There is no evidence of any steps that Mr Merrick took to conceal any of this documentation, for example, by removing a document from a file.
143 The essence of the Shire's position is that Mr Merrick knew that the amounts he was claiming were in excess of his entitlements, and had a duty to bring this to the attention of the Shire. I will assume without deciding, and in favour of the Shire, that Mr Merrick had no contractual entitlement to the amounts in issue. However, there is no evidence in the extensive material before me that Mr Merrick knew that he had no entitlement to the amounts claimed which are in issue. Neither is there any evidence that Mr Merrick was conscious that what he did was wrong, or conscious that to take advantage of the situation involved wrongdoing. Further even if Mr Merrick did know that he was not entitled to claim the amounts in issue, for the reasons set out above [84] - [94], I am not satisfied that Mr Merrick as an employee, even a senior employee, was under a duty to disclose this fact to the Shire. Having regard to the principle in Briginshaw v Briginshaw, the Shire has not satisfied me that Mr Merrick acted with some form of dishonestly or moral turpitude, such that his conduct could be described as 'fraudulent'.
144 Again the starting point is to construe the phrase 'or other improper conduct'.
145 The Shire in its submissions referred to the comments of the High Court in R v Byrnes on the phrase 'improper use' in the context of the duties of a director.[140] Their Honours also referred to authority to the effect that what is improper is to be determined objectively.[141] The plurality then stated:[142]
'Improper' is an indefinite term ... Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important ... the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused. But impropriety is not restricted to abuse of power. It may consist in the doing of an act which a director or officer knows or ought to know that he has no authority to do.
146 These comments seem apposite for present purposes. In my view, conduct will be otherwise 'improper' for the purposes of LA s 38(2) if it breaches the standards of conduct that would be expected of a person in the defendant's position. This is to be determined objectively, and, unlike fraudulent conduct, does not depend on the defendant having a consciousness of the impropriety. So defined, the two components of the phrase 'fraudulent or other improper conduct' are each given distinct meaning,[143] and are complementary.
147 The phrase 'other improper conduct' appears in the context of the phrase 'fraudulent or other conduct' in LA s 38(2). According to well established syntactical presumptions of statutory interpretation, its meaning is derived from this context, and is limited by the specific reference to 'fraudulent' which precedes it.[144] Although there is not a series of words which defines the class, the context denotes some element of moral turpitude beyond a mere breach of contract, duty of care or even fiduciary duty. If every breach of contract, duty of care or fiduciary duty amounted to 'other improper conduct' the general limitation provisions in LA pt 2 would cease to have any meaning. Something more is required, which may be in the nature of a particularly egregious breach of contract, duty of care or fiduciary duty. It may also be conduct which is independent of the cause of action, but done with the effect of concealing it. In this regard, the equitable doctrine of concealed fraud, discussed above [127], may provide assistance by way of analogy as to what conduct would be 'other improper conduct'.
148 The Shire says that Mr Merrick's conduct was improper because it was contrary to the standards of behaviour which would be expected of a person in his position by reasonable people with knowledge of his duties, powers and authority on the circumstances of the case.[145]
149 Mr Merrick again says that there is no admissible evidence which would allow the court to reach a conclusion on this point.
150 It is relevant to the issue of misconduct that there is no evidence of any concealment by Mr Merrick of the payments in issue. The recurring themes in the conduct of Mr Merrick identified by the Shire (above [137]‑[138]) are that:
(a) he knew he was not entitled to claim the payments in issue; and
(b) he was under a duty to disclose that he was claiming payments to which he was not entitled.
151 As to the first, there is no evidence of this. As to the second, I have found that he was under no duty to disclose, either as an employee or a fiduciary (above [84] - [94).
152 Again having regard to the principle in Briginshaw v Briginshaw, the Shire has not satisfied me that Mr Merrick engaged in 'other improper conduct'.
Was the failure to commence the action 'attributable' to fraudulent or other improper conduct of Mr Merrick?
The phrase 'attributable to' has been the subject of judicial consideration in a number of cases including Roncevich v Repatriation Commission [2005] HCA 40; (2005) 222 CLR 115, Laminex (Australia) Pty Ltd v Coutts [2006] NSWCA 186 and Central Asbestos Co Ltd v Dodd [1973] AC 518, 533.
In Roncevich the High Court considered the meaning of s 70(5) of the Veterans' Entitlement Act 1986 (Cth), which referred to an injury which 'arose out of, or was attributable to' defence service. In the joint judgment, the High Court said:
'A causal link alone or a causal connection is capable of satisfying a test of attributability without any qualifications conveyed by such terms as sole, dominant, direct or proximate [27].'
That is, a causal connection in fact (as distinct from causation at law) will satisfy the requirement that the injury be attributable to a person's conduct. Whether a non-causal connection could satisfy the requirement does not arise for determination in this case. However, there is much to be said for the view of the New South Wales Court of Appeal in Commonwealth of Australia v Shaw [2006] NSWCA 209; (2006) 66 NSWLR 325 [25] that the statutory requirement in s 60I of the Limitation Act 1969 (NSW) of a 'connection between the personal injury and the defendant's act or omission' must be understood as involving an element of causal relationship. The case is more compelling when the injury must be 'attributable' to a person's conduct.
The word 'attribute', in its ordinary and natural meaning, connotes, relevantly, to ascribe to as belonging or pertaining.
In my opinion, the term 'attributable to', in s 39(3) and s 39(4), refers to a connection between the death or injury, on the one hand, and the conduct of a person, on the other.
It is significant that Parliament used the term 'attributable to' and not the term 'caused by'. The term 'attributable to' is able to accommodate a degree of uncertainty in relation to whether the person to whom the cause of action accrues is aware, or ought reasonably to have become aware, of a connection between the relevant death or injury and the conduct of a person, within s 39(3) or s 39(4), as the case may be.
...
The connection need not be the sole or dominant connection. See and compare, in an analogous legislative context, Roncevich v Repatriation Commission [2005] HCA 40; (2005) 222 CLR 115 [27] (McHugh, Gummow, Callinan & Heydon JJ); Laminex (Australia) Pty Ltd t/as Laminex Industries v Coutts [2006] NSWCA 186 [28] - [33] (Giles JA, Hodgson & Bryson JJA agreeing).
154 There is a measure of agreement in AME Hospitals as to the meaning of the phrase 'attributable' which in the context of in LA s 38(2) may be expressed as follows:
(a) in the context of LA s 38, the phase 'attributable to' refers to a connection between the failure to commence the action and the fraudulent or other improper conduct;
(b) a causal connection will be sufficient; and
(c) the causal connection need not be the sole, dominant, direct or proximate connection.
155 The point of difference between the President and Buss JA was whether a connection not amounting to a causal connection would be sufficient. The President did not decide the issue, though saw some merit in the view that there must be some element of causal relationship. Buss JA focussed on the sufficiency of the connection in the context of LA s 39.
156 In the context of LA s 38, in my view, the phrase 'attributable to' requires some element of causal relationship. There is no justification in principle for the limitation period to be extended if the fraudulent or other improper conduct did not in some way cause the plaintiff not to commence the action within the ordinary limitation period. Having said that, as Buss JA observes, it 'is significant that Parliament used the term "attributable to" and not the term "caused by"'.[149] His Honour also said that the word '"attribute", in its ordinary and natural meaning, connotes, relevantly, to ascribe to as belonging or pertaining'.[150]
157 The Shire submits that Mr Merrick's concealment is not nullified by the fact that at all times the Shire had possession of the employment contract, Mr Merrick's payroll and leave applications, and all relevant accounting records. They say that possession of information 'in discrete pieces', held by different persons or within databases within an organisation, does not negate concealment. Rather, it is consistent with concealment facilitated by the separation of information.[151] The Shire says that the acts constituting causes of action were not known to it until sometime after the termination of Mr Merrick's employment. It says that this means that it is clear that the Shire's failure to commence the relevant actions within the limitation periods was at least partly contributed to by the concealment of the true position by the fraudulent or other improper conduct of Mr Merrick. The Shire says that it is not to the point that there may have been other reasons why actions were not commenced during the limitation period.[152]
158 The defendants say that the evidence filed by the Shire establishes that the delay was, in fact, caused by:[153]
(a) the former, CEO, Mr Simon Fraser being on sick leave for two years;[154]
(b) the Shire's inability to appoint a full‑time CEO until the appointment of Mr Scott until July 2012;[155]
(c) the Shire's dealings with the ATO about the tax payable on the Settlement Sum;[156]
(d) other significant outstanding issues for the current CEO to attend to.[157]
159 The only relevant conduct of Mr Merrick was in preparing and submitting the documentation to justify each payment. As I have found, there is no evidence of concealment, nor a duty to disclose. The Shire has not satisfied me that there is a sufficient connection between the conduct of Mr Merrick and the failure to commence the action insofar as it relates to the claims which are statute barred. There is an insufficient causal connection between the two. Accordingly, I am not satisfied that the failure to commence the action was attributable to the conduct of Mr Merrick.
Should the discretion imported by the use of the word 'may' be exercised in favour of the Shire?
160 Once the court is satisfied that the first two conditions are met, the power to extend is enlivened, the exercise of the power being in the discretion of the court.[158] The applicant 'bears the onus of showing that the justice of the case requires the exercise of the discretion in his or her favour'.[159]
161 There are two matters which the court is required to have regard to when deciding whether to extend the time for commencement of an action, set out in LA s 44:
When deciding, on an extension application, whether to extend the time for the commencement of an action, a court is to have regard to -
(a) whether the delay in commencing the proposed action, whatever the merit of the reasons for that delay, would unacceptably diminish the prospects of a fair trial of the action; and
(b) whether extending the time would significantly prejudice the defendant (other than by reason only of the commencement of the proposed action).
163 Given the conclusions I have reached that there was no 'fraudulent or other improper conduct' by Mr Merrick and that, in any event, the failure to commence the action was not attributable to the conduct identified, there is no meaningful factual basis on which to consider how I would have exercised the discretion had it been enlivened.
Conclusion on LA s 38(2)
164 The Shire has satisfied me that the action ought reasonably to have been commenced after 24 March 2011, being three years prior to date on which it was commenced. However, it has not satisfied me that:
(a) there was 'fraudulent or other improper conduct' by Mr Merrick; or
(b) the failure to commence the action was attributable to the conduct identified.
165 Accordingly, its application pursuant to LA s 38(2) in so far as it relates to Mr Merrick should be dismissed.
Should the limitation period for the Shire's claims against Mr Wroth be extended pursuant to LA s 38?
166 The conclusion that the action could not reasonably have been commenced after 24 March 2011 applies equally to the application relating to the claims against Mr Wroth.
(a) there was 'fraudulent or other improper conduct' by Mr Wroth;
(b) that the failure to commence the action was attributable to the conduct identified; and
(c) that the discretion should be exercised in its favour.
168 The claim to which this relates in the statement of claim is contained in par 17, which cross‑references par 14 which I have quoted above [97]. The Shire asserts that the following payments, leave or other benefits were made or granted to Mr Merrick with the knowledge and approval of Mr Wroth in breach of his duties to the plaintiff:
Conduct the subject of a cause of action (brief description only, with reference to SOC [17]):
(a) Signing an application for leave form dated 4 July 2006.
On or about 3 July 2012 or later in July when time off was taken by the first defendant
(b) Signing an application for leave form dated 18 December 2006.
On or about 17 December 2012 or later in January/February 2013 when time off was taken by the first defendant
(c) Signing an application for leave form dated 18 December 2007.
On or about 17 December 2013 or later in following December 2013/January 2014 when time off was taken by the first defendant
169 As I have noted, in each case Mr Wroth signed the application for leave form. According to the dates on the forms, the leave forms for 4 July 2006 and 18 December 2006 were signed by the payroll officer before being signed by Mr Wroth.[161]
170 The relevant causes of action are breach of fiduciary duty and breach of duty of care.[162]
171 The Shire says that the conduct of Mr Wroth also involved or contributed to the concealment from it both of the facts giving rise to the causes of action and the existence of the causes of action. In particular:[163]
(a) in purporting to approve leave benefits for Mr Merrick, Mr Wroth operated without the authority, sanction or knowledge of the council of the Shire in those respects;
(b) the conduct of Mr Wroth facilitated Mr Merrick's receipt of benefits outside the employment contract and Mr Merrick's own concealing conduct;
(c) Mr Wroth did not inform the council of Mr Merrick's conduct;
(d) nor did Mr Wroth inform the council of his own conduct in relation to Mr Merrick;
(e) Mr Wroth 'a person with a limited role under sections 2.8 and 2.10 of the Local Government Act, had no valid reason to consider that his conduct was within his authority ... [he] was blatantly acting beyond power'; and
(f) whether or not Mr Wroth knew that the benefits approved by him were not entitlements of Mr Merrick, he ought to have made proper inquiry about the basis of entitlement, and he ought to have referred the matters to the council for decision.
172 The Shire submits that the conduct described above was 'fraudulent or other improper conduct' because it involved concealment by Mr Wroth as well as his assistance to concealment by Mr Merrick. The Shire says the conduct was also improper because it involved conduct plainly contrary to Mr Wroth's power as an officer of the Shire. It was also said to be improper because it was contrary to the standards of behaviour which would have been expected of a person in Mr Wroth's position by reasonable people with knowledge of his duties, powers and authority in the circumstances of the case.[164]
173 As with Mr Merrick, the Shire submits that the facts constituting the causes of action were not known to the Shire until sometime after the termination of Mr Merrick's employment. Again it says that the Shire's failure to commence the relevant actions within the limitation period was at least partly contributed to by the concealment of the true position by the fraudulent or other improper conduct of Mr Wroth, and was therefore 'attributable' to that conduct.[165]
174 The first issue is whether Mr Wroth's conduct could be described as 'fraudulent', requiring some form of dishonest or moral turpitude, a consciousness that what is being done is wrong or a consciousness that to take advantage of the relevant situation involves wrongdoing. There is no evidence that Mr Wroth did anything which could be described as concealing the payments. There is no evidence that Mr Wroth knew that Mr Merrick was claiming payment for benefits he was not entitled to. Even if he did have this knowledge, there is no basis for an obligation to disclose (the comments above [84] - [94] about the limited scope of the obligation of disclosure on a fiduciary applying equally in this context). Having regard to the principle in Briginshaw v Briginshaw, the Shire has not satisfied me that Mr Wroth acted with some form of dishonesty or moral turpitude, such that his conduct could be described as 'fraudulent'.
175 Nor has the Shire satisfied me that Mr Wroth's conduct could be described as 'otherwise improper'. At worst he may have been negligent in not making sufficient inquiries to ascertain that the payments were not authorised. However, negligence, without more, is not impropriety, certainly not in the context of LA s 38(2).
176 For the reasons I have set out in relation to Mr Merrick, nor has the Shire satisfied me that the failure to commence the action in so far as it related to the claims that are statute barred was 'attributable to' the conduct of Mr Wroth.
177 The Shire's application pursuant to LA s 38 in so far as it relates to Mr Wroth should also be dismissed.
178 The Shire's application dated 3 September 2015 for orders pursuant to Limitation Act 2005 (WA) (LA) s 38 should be dismissed.
179 The Shire's application dated 3 September 2015 for leave to amend the writ of summons filed 24 March 2014 should be allowed. In addition to the two main amendments which I have dealt with above, there were a number of minor amendments which the defendants did not object to. The Shire should have leave to amend the writ in terms of the 2 October Minute.
180 As to Mr Merrick's application for summary judgment dated 19 June 2015, I have determined that:
(a) the time within which he may bring the application should be extended to 19 June 2015;
(b) summary judgment should not be granted on the basis that the claims may only be brought in accordance with the regime in LGA pt 8 div 4;
(c) all claims which accrued prior to 23 March 2008 should be struck out, save for any claim for breach of fiduciary duty accruing prior to 14 November 2005 (though Mr Merrick could plead the limitation issues by way of defence);
(d) summary judgment should not be granted on the basis that the Settlement Deed operates as a complete release and bar to all claims; and
(e) paragraphs 31 ‑ 38, and any consequential references to a breach of an implied term, should be struck out with no liberty to replead.
181 There should be orders in terms of pars (a), (c) and (e), with the balance of his application be dismissed.
182 On Mr Wroth's application for summary judgment dated 19 June 2015, I have determined that:
(a) the time within which he may bring the application should be extended to 19 June 2015; and
(b) summary judgment should not be granted on the basis that the claims may only be brought in accordance with the regime in LGA pt 8 div 4.
183 In his application, Mr Wroth, as an alternative, also sought orders striking out certain of the claims made against him as set out in the statement of claim, being:
(a) paragraphs 10, 10.2 and 10.3;
(b) paragraphs 13.2 to 13.5;
(c) the entries at par 17 dated 4.07.06, 18.12.06 and 18.12.07;
(d) paragraphs 17.1.1, 17.1.2 and 17.1.13;
(e) paragraph 26;
(f) paragraphs 28, 28.1 and 28.2;
(g) paragraphs 30.2 to 30.5
(h) paragraphs 40 (to the extent it relies on paragraphs 26 and 30).
184 Paragraphs 10, 10.2 and 10.3 contain the plea in relation to breach of statutory duty. Paragraphs 26, 28, 28.1 and 28.2 relate to the same cause of action. The Shire did not seek to defend these paragraphs.[166] They should be struck out as disclosing no reasonable cause of action.
185 Paragraph 13 contains the plea in negligence. The Shire did not seek to defend pars 13.4 and 13.5.[167] Paragraphs 30.4 and 30.5 plead the breach of these paragraphs. These paragraphs should be struck out. Mr Wroth did not press his objection to pars 13.2 and 13.3, and the breaches in pars 30.2 and 30.3, which should be allowed to remain.[168]
186 The entries at par 17 dated 4.07.06, 18.12.06 and 18.12.07, referred to in pars 17.1.1, 17.1.2 and 17.1.13, are clearly statute barred (there being no claims for breach of fiduciary duty accruing prior to 15 November 2005). As I have declined to give the Shire leave under LA s 38(2), these paragraphs should be struck out as disclosing no reasonable cause of action.
187 In each case there should be no liberty to replead.
188 The Shire may need to make other consequential amendments. A timetable should be put in place for it to file an amended (or perhaps a substituted) statement of claim.
189 Mr Wroth's application should be otherwise dismissed.
190 As to costs, each party has been substantially unsuccessful in the applications. Most of the paragraphs struck out of the statement of claim on Mr Wroth's application were conceded prior to the commencement of the hearing before me. The total amount claimed by the Shire is just of $150,000. For an action that will involve an extensive historical factual inquiry, this is well below the amount usually considered to be cost effective to pursue a Supreme Court action. The action should not be burdened by a significant order for costs in the cause. My preliminary view on costs is that there should be no order as to costs on each application. I will hear from counsel on this issue.
191 The action should be listed for a mediation conference as soon as practicable.
192 The following draft orders give effect to the conclusions set out above:
(a) all claims which accrued prior to 23 March 2008 (except for any claim for breach of fiduciary duty accruing prior to 14 November 2005, which should be specifically identified);
>
> (b) paragraphs 33 to 38, and any consequential references,
(a) paragraphs 10, 10.2, 10.3, 26, 28, 28.1 and 28.2 (breach of statutory duty);
>
> (b) paragraphs 13.4, 13.5, 30.4 and 30.5 (negligence);
>
> (c) all claims which accrued prior to 23 March 2008;
(a) the plaintiff's application dated 3 September 2015 for orders pursuant to LA s 38;
>
> (b) the plaintiff's application dated 3 September 2015 for leave to amend the writ of summons;
>
> (c) the first defendant's application dated 19 June 2015 for summary judgment; and
>
> (d) the second defendant's application dated 19 June 2015 for summary judgment
[3] Renowden v McMullin [1970] HCA 24; (1970) 123 CLR 584, 595 (Barwick CJ & McTiernan J); ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington [2001] WASCA 235 [10] (ABB (No 1); Tristram v Hyundai Automotive Distributors Australia Pty Ltd [2005] WASCA 168 [16] (McLure JA, Wheeler JA agreeing).
[4] Tristram [22]; ABB Service Pty Ltd v Hetherington [2001] WASCA 417 [25] ‑ [26] (McLure J, Wheeler J agreeing) (ABB No 2).
[6] Stone James v Pioneer Concrete (WA) Pty Ltd [1984] WASC 460; [1985] WAR 233, 239 (Burt CJ, Brinsden J agreeing); Tristram [26]; Rayney v The State of Western Australia [No 3] [2010] WASC 83 [36] (Martin CJ); Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 3] [2015] WASC 442 [16] (Tottle J).
[7] ABB (No 1) [10]; Tristram [16]; Morgan v Banning (1999) 20 WAR 474, 485 (Wheeler J, Ipp J agreeing).
[8] Morgan (486); ABB (No 1) [9]; Tristram [16].
[9] Morgan (476) (Owen J), (484) (Wheeler J); Dye v Griffin Coal Mining Co Pty Ltd [1998] WASCA 184; (1998) 19 WAR 431, 434 (Owen J, Malcolm CJ & Kennedy J agreeing); Belgravia [12] (Tottle J).
[10] Dye, (434); Hughes v St Barbara Mines Ltd [No 3] [2008] WASC 220 [111]; Rayney [34]; Belgravia [13].
[11] Stone James (240 ‑ 241); Dye (434); Belgravia [14].
[13] ABB (No 1) [8]; Stone James (238 ‑ 239).
[17] Lashansky v Legal Practice Board of Western Australia [No 3] [2013] WASCA 260 [48] (Newnes JA, Pullin & Murphy JJA agreeing); Johnson v Hallam [2015] WASC 149 [9] (Gething AM).
[18] Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458, 459 (McHugh J); Johnson [9]; Bank of Western Australia v Stein [2005] WASC 43 [53] (Commissioner Siopis SC).
[19] Lashansky [48]; Gallo (459); Johnson [9]; Bank of Western Australia [53].
[20] See generally: Bone Affidavit, and in particular attachments LJB‑4 (pages 15 ‑ 17) and LJB‑9 (pages 24 ‑ 29).
[21] See generally: Tantiprasut Affidavit.
[23] Doulaveras v Daher [2009] NSWCA 58; (2009) 253 ALR 627 [150] (Campbell JA, Giles & Macfarlan JJA agreeing).
[32] First Scott Affidavit, attachment SADS‑2, page 26.
[33] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 [41] (Brennan CJ); Polo Enterprises Australia Pty Ltd v Shire of Broome [2015] WASCA 201 [54].
[34] Project Blue Sky [78]; Polo Enterprises [54] ‑ [57].
[36] Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328, 341 (Mason ACJ, Wilson & Dawson JJ).
[38] See Corporations Act 2001 (Cth), pt 2F.1A
[42] Gifford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33; (2003) 214 CLR 269, 284 (McHugh J).
[43] 2 Elizabeth Bay Road Pty Ltd v The Owners Strata Plan No 73943 [2014] NSWCA 409 [90] ‑ [94] (Leeming JA, Basten JA agreeing).
[45] Reid International Pty Ltd v Ron Farris Real Estate Pty Ltd [2016] WASC 6 [26] (Gething AM); Lois Nominees Pty Ltd v QBE Insurance (Australia) Ltd [2011] WASC 208; (2011) 42 WAR 75 [34] (Beech J); WMC Resources Ltd v Roche Mining Pty Ltd [2004] WASC 76 [35] (Newnes M); Anderson v Effexseven (1998) 10 ANZ Ins Cas 61‑424, 74,757 (Parker J, Owen J agreeing).
[46] Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99 (Mason, Murphy, Wilson, Deane & Dawson JJ); SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 [20] (Judgment of the Court).
[47] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57] (Gaudron, McHugh, Gummow & Hayne JJ); Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46] (Gleeson CJ, Gummow, Hayne & Crennan JJ); Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 [24] (French CJ & Gummow J), [54] ‑ [57] (Hayne, Crennan, Kiefel & Bell JJ); SMEC [20]; Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209 [113] (Le Miere J).
[48] RSC O16 r 1(1); Garrett v Macks [2014] FCA 1259 [23] ‑ [26] (Tracey J). An application for leave to appeal was dismissed: Garrett v Macks [2015] FCA 254 (Beach J).
[49] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35] (French CJ, Hayne, Crennan & Kiefel JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] (Judgment of the Court); Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22] (Judgment of the Court); Mackinlay v Derry Dew Pty Ltd [2014] WASCA 24; (2014) 46 WAR 247 [54] (Pullin JA, Buss & Newnes JJA agreeing on this point); Butler v St John of God Health Care Inc [2008] WASCA 174 [34] ‑ [35] (Newnes AJA, McLure & Buss JJA agreeing).
[50] Electricity Generation [35]; Toll [40]; Pacific Carriers [22]; Mackinlay [54]; Butler [34].
[53] See for example: Seduce Pty Ltd v The Trust Company (Australia) Ltd [2015] WASC 441 [63] (Gething AM).
[54] Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 86 ALJR 1 [3] (Judgment of the Court); Toll [40]; Mackinlay [54].
[55] Electricity Generation [35]; Toll [40]; Pacific Carriers [22].
[58] Being the action for misleading and deceptive conduct set out in Australian Consumer Law (Competition and Consumer Act 2010 (Cth), sch 2) s18 (ACL).
[59] Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112, 123 ‑ 130 (Dixon CJ, Fullagar,
[61] Butler [3] ‑ [6] (Buss JA), [30] ‑ [32] (Newnes AJA) (McLure JA agreed with both Buss JA & Newnes AJA); Ridgepoint Corporation Pty Ltd v Perth Airport Pty Ltd [2014] WASCA 235 [55] (McLure P, Newnes & Murphy JJA agreeing). The decision in Grant has not been cited in any High Court case since.
[62] Grant (123); The Owners of Corporate Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd (No 2) [2012] NSWSC 322 [22] ‑ [26] (Pembroke J) (Multiplex).
[64] United States Surgical Corporations v Hospital Products International Pty Ltd [1982] 2 NSWLR 766, 818 (McLelland J).
[65] Commonwealth Development Bank of Australia Ltd v Kok [2003] FCA 90 [34] (Beaumont J).
[66] Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; (2014) 316 ALR 408 [198] (Beach J, Siopis & Flick JJ agreeing).
[67] See generally: Carr & Purves v Thomas [2009] NSWCA 208 [33] ‑ [37] (Judgment of the Court).
[68] Agar [57]; Batistatos [46]; Spencer [24]; SMEC [20]; Alcoa [113].
[69] Plaintiff's submissions 2 October 2015, par 11.
[70] Forsayth NL v Northern Gold NL (Unreported, WASCA, Library No 940012, 20 January 1994) 7 (Franklyn J, Wallwork J agreeing); Anderson (74,757); Johnson [24].
[71] BP Refinery (Westernport) Pty Ltd v Hasting Shire Council [1977] UKPCHCA 2; (1977) 180 CLR 266, 283 (Privy Council); Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, 422 (Brennan CJ, Dawson & Toohey JJ), 441 (McHugh & Gummow JJ); Hethrington v Tallenford Pty Ltd [2013] WASCA 175 [35] (Judgment of the Court).
[72] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312.
[73] Bell v Lever Brothers Ltd [1931] UKHL 2; [1932] AC 161.
[75] Bell (199) (Lord Blanesburgh), (229) (Lord Atkin), (231) (Lord Thankerton). The other two members of the court, Viscount Hailsham and Lord Warrington of Clyffe did not need to decide the issue.
[77] Bell (199) (Lord Blanesburgh), (229) (Lord Atkin), (231) (Lord Thankerton).
[78] Forsayth NL (7); Anderson (74,757); Johnson [24].
[81] Concut [34] ‑ [37] (citations omitted).
[82] Heugh v Central Petroleum Ltd [No 5] [2014] WASC 311 [101] (Le Miere J).
[83] Commonwealth of Australia v Davis Samuel Pty Ltd (No 7) (2013) 282 FLR 1; [2013] ACTSC 146 (Davis Samuel).
[85] Davis Samuel [331] ‑ [333], citing Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566 [32] ‑ [33] (Finkelstein J).
[86] Iacullo v Iacullo [2013] NSWSC 1517.
[87] Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1 [901] (Lee AJA), [1962], [1969] ‑ [1978] (Drummond AJA), [2660] (contra Carr AJA).
[89] Plaintiff's submissions dated 21 August 2015, pars 53 ‑ 57.
[90] Concut [17]; Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96 ‑ 97 (Mason J).
[91] Hospitals Contribution Fund of Australia v Hunt [1938] ArgusLawRp 58; (1983) 44 ALR 365, 373 ‑ 374 (Allen M); Neilson v City of Swan [2006] WASCA 94 [18] (Buss JA, Wheeler & Pullin JJA agreeing); Lois Nominees [35] (Beech J).
[92] Agar [57]; Batistatos [46]; Spencer [24]; SMEC [20]; Alcoa [113].
[93] Statement of claim pars 22, 24 ‑ 25.
[95] LA s13(1); 1935 LA s38(1)(c).
[96] LA s27(1)(a).
[97] Lovell v Western Australian Police Union of Workers [2009] WASCA 34 [69] (Owen JA, Steytler P agreeing); Hewitt v Henderson [2006] WASCA 233 [16] ‑ [25] (Buss JA, Steytler P & Pullin JA agreeing).
[99] Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 533 (Mason CJ, Dawson, Gaudron & McHugh JJ).
[100] Plaintiff's submissions (leave to extend time), 2 October 2015, par 17. That part of item 1 arising on or prior to 14 November 2005 has been omitted from this table.
[101] LA s 43(1)(a).
[104] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.
[105] Commissioner of the Australian Federal Police v Courtenay Investments Ltd [No 4] [2015] WASC 101 [237] (Edelman J).
[106] See for example: Trafalgar West Investments Pty Ltd as Trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [No 7] [2015] WASC 280 [108] (Kenneth Martin J).
[107] See for example: Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541; Honey v McLennan (1997) 18 WAR 384.
[108] Plaintiff's submissions (leave to extend time), 2 October 2015, par 17.
[109] To use the words of the Settlement Deed, Background, par B.
[110] First Scott Affidavit, pars 11 ‑ 12; Fourth Scott Affidavit, annexure SADS‑2, pages 9 ‑ 11.
[111] Fourth Scott Affidavit, annexure SADS-2 ‑ SADS-3, pages 9 ‑ 36.
[112] Fourth Scott Affidavit, annexure SADS-10, page 154.
[113] Fourth Scott Affidavit, annexure SADS-10, page 155.
[114] Fourth Scott Affidavit, annexure SADS-4, pages 37 ‑ 46, in particular pages 40 ‑ 41.
[115] Spencer Affidavit, annexure CCS-2, pages 6 ‑ 15.
[116] Fourth Scott Affidavit, annexure SADS-5, pages 47 ‑ 77, SADS-9, pages 148 ‑ 154.
[117]Fourth Scott Affidavit, annexure SADS-7, page 111.
[118] Fourth Scott Affidavit, annexure SADS-7, pages 104 ‑ 111.
[119] Fourth Scott Affidavit, annexure SADS-11, page 174.
[120] Fourth Scott Affidavit, annexure SADS-11, page 180.
[121] Plaintiff's submissions (leave to extend time), 2 October 2015, par 28.
[122] Plaintiff's submissions (leave to extend time), 2 October 2015, par 30.
[123] Plaintiff's submissions (leave to extend time), 2 October 2015, par 13.
[124] Tito v Waddell (No 2) [1977] Ch 106, 245 (Sir Robert Megarry VC).
[125] King v Victor Parsons & Co [1973] 1 WLR 29,33 (Lord Denning MR).
[128] Beaman v ARTS Ltd [1949] 1 KB 550, 565 ‑ 566 (Lord Greene MR).
[129] Commonwealth of Australia v Cornwell [2007] HCA 16; (2007) 229 CLR 519 [9] ‑ [10] (Gleeson CJ, Gummow, Kirby, Hayne, Heydon & Crennan JJ). See also: Lashansky [60] (Newnes JA, Pullin & Murphy JJA agreeing).
[130] Project Blue Sky [78]; Polo Enterprises [54] ‑ [57].
[133] Seymour v Seymour (1996) 40 NSWLR 358.
[134] Seymour (372) (Mahoney ACJ, Meagher JA & Abadee AJA agreeing).
[135] Honey (389, 392). See also: Commonwealth of Australia v Cornwell [40] ‑ [44] (Gleeson CJ, Gummow, Kirby, Hayne, Heydon & Crennan JJ); Black v Black [2013] NSWSC 954 [45] ‑ [52], [59] (Robb J).
[136] Wright Prospecting Pty Ltd v Hancock Prospecting Pty Limited (No 3) [2007] WASC 118 [55] (Murray J).
[137] Hamilton v Kaljo (1989) 17 NSWLR 381, 386 (McLelland J).
[138] Plaintiff's submissions (leave to extend time), 2 October 2015, par 15.
[139] Plaintiff's submissions (leave to extend time), 2 October 2015, par 15.
[140] R v Byrnes [1995] HCA 1; (1995) 183 CLR 501, 514 ‑ 515.
[141] Byrnes (513 ‑ 515) (Brennan, Deane, Toohey & Gaudron JJ).
[142] Byrnes (513 ‑ 515) (Brennan, Deane, Toohey & Gaudron JJ).
[143] Project Blue Sky [71]; Polo Enterprises [55].
[144] Being the maxims of statutory construct noscitur a sociis and ejudem generis. Pearce DC & Geddes RS, Statutory Interpretation in Australia (8th ed, LexisNexisButterworths, Australia, 2014) [4.25] ‑ [4.26]. See for example: Collett v Repatriation Commission [2009] FCA 667; (2009) 178 FCR 39 [29] (Logan J)
[145] Plaintiff's submissions (leave to extend time), 2 October 2015, par 15.
[146] AME Hospitals Pty Ltd v Dixon [2015] WASCA 63; (2015) 48 WAR 139.
[148] AME Hospitals [208] ‑ [210], [212].
[151] Plaintiff's submissions (leave to extend time), 2 October 2015, par 16.
[152] Plaintiff's submissions (leave to extend time), 2 October 2015, par 19.
[153] Second defendant's submissions, 26 October 2015, par 9.
[154] First Scott Affidavit, pars 15 ‑ 16.
[155] First Scott Affidavit, pars 17 ‑ 19.
[156] First Scott Affidavit, pars 20 ‑ 21.
[159] Brisbane South (551) (McHugh J).
[161] First Scott Affidavit, attachment SADS-11, pages 110 ‑ 111.
[162] Statement of claim pars 29 ‑ 30. An allegation in the statement of claim for breach of statutory duty is not to be pursued: Plaintiff's submissions (leave to extend time), 2 October 2015, par 11.
[163] Plaintiff's submissions (leave to extend time), 2 October 2015, par 21.
[164] Plaintiff's submissions (leave to extend time), 2 October 2015, par 21.
[165] Plaintiff's submissions (leave to extend time), 2 October 2015, par 22.
(2006) 66 NSWLR 325
(1985) 8 FCR 153
(1987) 163 CLR 500
(2006) 14 VR 1
(1987) 164 CLR 137
(1989) 12 Fam LR 725
(2005) 222 CLR 115
(1999) 20 WAR 474
(1990) 64 ALJR 458
(2009) 253 ALR 627
(1998) 194 CLR 355
(2003) 214 CLR 269
(1983) 154 CLR 87
(2006) 226 CLR 256
(2014) 251 CLR 640
(2011) 86 ALJR 1
(2000) 75 ALJR 312
(2013) 282 FLR 1
(1984) 156 CLR 41
(1997) 18 WAR 384
(2007) 229 CLR 519
(1996) 40 NSWLR 358
(1989) 17 NSWLR 381
(1995) 183 CLR 501
(2015) 48 WAR 139
(1987) 16 FCR 465
(1954) 91 CLR 112
(1998) 19 WAR 431
(2001) 188 ALR 566
(2012) 270 FLR 1
(1970) 123 CLR 584
(1983) 152 CLR 328
(2011) 42 WAR 75
(2000) 201 CLR 552
(2010) 241 CLR 118
(2004) 219 CLR 165
(2004) 218 CLR 451
(2014) 46 WAR 247
(2014) 316 ALR 408
(1977) 180 CLR 266
(1995) 185 CLR 410
(2012) 44 WAR 1
(1983) 44 ALR 365
(1992) 175 CLR 514
(1938) 60 CLR 336
(1996) 186 CLR 541
(2009) 178 FCR 39