TECHNIP OCEANIA PTY LTD -v- CUTMERE PTY LTD [2019] WASC 478 (6 January 2020)

The defendant (Cutmere):

(a) is an Australian corporation incorporated pursuant to the Corporations Act or its predecessor legislation, on and since 9 December 1981;

(b) is able to be sued in its own name;

(c) at all material times:

(i) since 1 July 2012 was the sole registered proprietor of Lot 60 on Diagram 75298, being the whole of the land in Certificate of Title Volume 1837 Folio 260, also known as 1100 Hay Street, West Perth in the State of Western Australia (the Land);

(ii) did not register any document, whether caveat or otherwise, with the Registrar of Titles (under the Transfer of Land Act 1892 (WA)) providing that it held the Land as trustee for the '333 trust', or for any trust;

(iii) has not provided to Technip, and upon request by Technip has repeatedly refused to provide, inspection or a true copy of any instrument providing, or credible or admissible evidence, that Cutmere holds the Land as trustee for the '333 trust', or for any trust;

(d) nevertheless, purported on or about 6 July 2012 & 13 July 2016 respectively, to be, and (conditionally and in part) to contract as trustee of the '333 trust' in the instruments pleaded at paragraph 3 and 4;

(e) shall, in any event:

(i) be personally liable in connection with the Lease; and

(ii) not limit or exclude any liability in connection with the Lease;

to any extent such liability is not satisfied by indemnity from any '333 trust' because under any trust deed establishing the '333 Trust', or by operation of law, there is a reduction in the extent of the Cutmere's indemnification out of the assets of such trust, as a result of Cutmere's fraud, negligence or breach of trust: Deed of Lease cl. 13 & Deed of Variation cl. 1.4; and

(f) is sued in its own right and in any capacity as trustee of the 333 trust.

1. Paragraphs 7 to 12 of the statement of claim plead matters relating to Cutmere's capacity. In pars 7 to 9, Technip alleges that:

(1) Cutmere did not execute the Lease or Deed of Variation in its capacity as trustee.[3]

(2) Invoices and receipts concerning the Lease did not provide that Cutmere was demanding or receiving payment in its capacity as trustee.[4]

(3) Correspondence did not provide that Cutmere was corresponding in its capacity as trustee.[5]

1. Cutmere also applies to strike out par 10, which pleads:

By reason of:

(a) the facts and matters pleaded in paragraphs 2 and 7 to 9, by reason whereof Cutmere could not, further or alternatively did not, further or alternatively did not in all respects, enter or perform the Lease as any trustee of the '333 trust' or any trust; further or alternatively

(b) paragraphs 2 and 7 to 9 and ss. 126 to 129 of the Corporations Act,

Technip is entitled to assume, and does assume, and Cutmere is precluded from denying, that Cutmere was authorised to execute the Lease including in its own right and capacity, and is, alternatively may conditionally be, personally liable thereunder.

1. In par 11, Technip pleads that cl 13.1 of the Deed of Lease and cl 1.4 of the Deed of Variation are invalid and ineffective to the extent they purport to limit any claim of Technip against Cutmere in its own right.
2. In par 12, Technip pleads that it is permitted to, and brings, the action against Cutmere in its own right, alternatively in its capacity as trustee of 'any trust'.
3. Cutmere has pleaded to the statement of claim, not admitting paragraph 2(c)(iii) and denying the allegations in pars 10, 11 and 12.

1. Although evidence may not be generally adduced on a strike out application, the court is entitled to look at the Lease and Deed of Variation as documents incorporated in the pleadings.[6] For the purposes of this application I have had regard to those agreements. The provisions in each instrument limiting (or purporting to limit) the liability of Cutmere are at the heart of the pleading dispute.
2. In each agreement, Cutmere is described as 'Cutmere Pty Ltd ACN 009 006 857 as trustee of the 333 Trust'.
3. Clauses 13 of the Lease and 1.4 of the Deed of Variation are in essentially the same terms. Clause 13 provides:

The Landlord enters into this Lease only in its capacity as trustee of the 333 Trust ('Trust') and in no other capacity. A liability arising under or in connection with this Lease is limited to and can be enforced against the Landlord only to the extent to which it can be satisfied out of property of the Trust out of which the Landlord is actually indemnified for the liability. This limitation of the Landlord's liability applies despite any other provision of the Lease and extends to all liabilities and obligations of the Landlord in any way connected with any representation, warranty, conduct, omission, agreement or transaction related to this Lease.

The Tenant may not sue the Landlord in any capacity other than as trustee of the Trust, including seeking the appointment of a receiver (except in relation to property of the Trust), a liquidator, an administrator or any similar person to the Landlord or prove in any liquidation, administration or arrangement of or affecting the Landlord (except in relation to property of the Trust).

The provisions of this clause shall not apply to any obligation or liability of the Landlord to the extent that it is not satisfied because under the trust deed establishing the Trust, or by operation of law there is a reduction in the extent of the Landlord's indemnification out of the assets of the Trust, as a result of the Landlord's fraud, negligence or breach of trust.

1. On an application to strike out pleadings, the court must apply case management principles and attain the objects set out in O 1 r 4B of the Rules of the Supreme Court 1971 (WA). The court may adopt a more robust attitude to pleadings in the context of case management, including other pre-trial procedures.[7] And the court discourages needless interlocutory applications.
2. But the observance of rules of pleading is not antithetical to case management. The issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible at trial upon the ground of relevance;[8] and it is the pleadings which determine the matters in issue for the purposes of discovery. Properly defining the issues, and confining them to those that need to be resolved, assists in meeting the objects of O1 r 4A and 4B.
3. To ensure a basic requirement of procedural fairness, a pleading must state the case sufficiently clearly to allow the other party a fair opportunity to meet it.[9] A statement of claim must state the material facts to support the claim for relief, but not the evidence by which those facts are to be proved;[10] and the pleadings must define with clarity and precision the issues or questions which are in dispute between the parties and fall to be determined by the court.[11]
4. Although the defendant's summons includes the ground that the pleadings disclose no reasonable cause of action, the complaint is really that the challenged paragraphs are not material to any cause of action that is properly pleaded. Pleadings that raise immaterial or irrelevant issues, or fail to confine the issues or state the case of the party in question with reasonable particularity, may be struck out on the ground that they may prejudice, embarrass or delay the fair conduct of the proceedings.[12] A defendant may not plead 'irrelevant facts, opinions, arguments, reasons or rhetoric under the guise of background facts or narrative'. The pleading of such matters may improperly enlarge the ambit and range of discovery and make it difficult to determine the admissible evidence which a party is entitled to adduce at the trial.[13]

1. The legal framework for the issues raised in this application was summarised by Leeming JA in ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia.

Subject to statute, a trust has no separate legal personality from the trustee. An obligation incurred by a trustee, whether or not it is properly incurred in accordance with the trustee's obligations as trustee, may ordinarily be enforced in the same way as an obligation incurred by a person who is not a trustee ...

True it is that a creditor of a trustee may have additional rights by reason of the fact that the trustee has legal title to trust assets. In particular, where the trustee's obligation to the creditor was properly incurred, the trustee will regularly (although it will depend upon the terms of the trust) enjoy a right to be indemnified from the trust assets ... The creditor may, in an appropriate case, be subrogated to the trustee's rights ...

It is also true that a creditor may contract on terms that limit the prima facie unlimited personal liability of the trustee to the assets held on trust...[Any] such limitation must emerge from the words or the surrounding circumstances as the proper construction of the contract ...[14]

1. There are distinct questions: does Cutmere hold the subject land as trustee; did it enter the Lease in its capacity as trustee; did it contract in accordance with its obligations as trustee; and did it, contractually, limit its liability to the extent that liability can be satisfied from assets held on trust?
2. Technip identified other possible questions, apparently encompassed by the challenged paragraphs, including whether a trustee might not be a trustee for all the land affected by a Lease, or might not have been the trustee for the whole of the duration of the Lease, or might not have had authority to enter the Lease instrument. Each of those options might arise in a case, although none of them has arisen on the material facts that have been pleaded in the statement of claim or the defence.

1. Cutmere does not challenge whether, notwithstanding the terms of the Lease, including cl 13.2, Technip may plead that Cutmere was liable as lessor both in its capacity as trustee and in its own right. The challenge is more limited.
2. Before considering the challenged paragraphs, I will briefly comment on paragraph 2(d), by which Technip pleads that Cutmere purported to contract 'conditionally and in part' as trustee. The qualification, 'conditionally and in part', is uncertain in meaning; I infer it stems from the limitation of liability in cl 13 of the Lease.[15] Although paragraph 2(d) is not challenged, the plaintiff may give some thought to clarifying what is meant for the benefit of the court, if not the defendant.
3. Cutmere has filed a defence and counterclaim, in which it pleads its contentions regarding the application of cl 13.1 and cl 13.2 of the Lease and cl 1.4(a) and (b) of the Deed of Variation.[16] While the pleaded defence is, strictly, not relevant to whether the statement of claim is properly pleaded, I have taken into account what is in issue on the pleadings for the purpose of applying case management principles to the resolution of this dispute.

1. Technip needed to plead that Cutmere was a party to the Lease. It is neither necessary nor appropriate to use a statement of claim to anticipate and attempt to meet an answer that has not been made.[17] But it was open to Technip (although perhaps unnecessary) to plead in the statement of claim that Cutmere entered and was liable under the Lease in its own right. In pleading that conclusion, it could properly plead the facts material to whether Cutmere was, or contracted as, a trustee.
2. Cutmere has now pleaded that it 'expressly entered into the Lease and the Deed of Variation with the plaintiff only in its capacity as trustee of the 333 Trust'.[18] To the extent that Technip was anticipating an answer to its case, Cutmere has now given the expected answer.
3. The question on the challenge to par 2(c)(iii) is not whether Technip could plead that Cutmere contracted in its own right, but whether it is material that Cutmere had not provided inspection or a true copy of any instrument providing, or credible or admissible evidence, that it contracted as a trustee.
4. Counsel for Technip referred repeatedly to the need to identify the proper party to the Lease (although accepting that it was Cutmere) and the proper party to the proceedings. Technip submitted that the plea about the capacity in which Cutmere was joined to the action was 'fundamental, not incidental'. It relied on two authorities. Both are distinguishable by the context in which the issue arose, and neither establishes the proposition for which Technip contends.
5. First, in Bride as Trustee of The Pinwernying Family Trust & Anor v Stewart,[19] the issue was whether the plaintiffs were claiming for assets owned in their own right, and not owned by them as trustees. The capacity in which the plaintiffs brought the claim was material because they had been made bankrupt and rights in regard to their personal assets had vested in their trustee in bankruptcy.
6. Second, in Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation,[20] the real property assets of a discretionary family trust had been resettled in a 'restructure' so that the same trustee (PSI) now held them but as assets of newly established unit trusts. PSI held a right to indemnification out of the estate of the family trust in respect of liabilities to the Taxation Commissioner it personally incurred in its capacity as trustee of the family trust. It was important in those circumstances to distinguish between property PSI held in its own right, property it held as a trustee of the family trust (against which it had a right to indemnification), and property it held as trustee of the unit trust.
7. In each of those cases, there were existing facts which made it necessary to identify the capacity in which a person held property.
8. Technip submitted that the 'pleaded fact' in par 2(c)(iii) is that there is no evidence of the existence of a trust. The plea regarding the present failure to provide 'credible and admissible evidence' apparently comprehends the possibilities there may be no trust, or that the trust instrument may not comply with the Property Law Act 1969 (WA), the Statute of Frauds (29 Car 2 c 3) (1677) (Imp) or the Duties Act 2008 (WA). Technip submitted that the want of evidence may go to either the absence of a trust, or the inability of Cutmere to establish a trust.
9. Specifically, Technip submitted that the state of evidence now is a material fact because, if it does not change, Cutmere will be unable to establish at trial that it is a trustee.
10. It is in issue whether Cutmere was a trustee of the 333 Trust, but the 'pleaded fact' on which Technip relies - the evidence that has been provided to it to date - is not a material fact. Paragraph 2(c)(iii) is a combination of evidence and argument, aggravated by the inclusion of the words 'credible or admissible' that have no place in the statement of claim.
11. Paragraph 2(c)(iii) should be struck out as embarrassing.

(1) It does not know what the words 'could not, further or alternatively did not, further or alternatively did not in all respects' mean, and Cutmere should not be required to plead to such an ambiguous allegation.

(2) No material facts are pleaded in pars 2, and 7 to 9 of the statement of claim that are capable of giving rise to a conclusion that the defendant 'could not' enter into the Lease as Trustee of the 333 Trust.

(3) It does not understand what is meant by the alternative plea that it did not 'in all respects' enter or perform the Lease as trustee of the 333 Trust.

(4) Nothing in s 126 to 129 of the Corporations Act 2001 (Cth) have anything to do with the capacity in which Cutmere was a party to the Lease.

(5) Nothing in the Corporations Act or pars 2 and 7 to 9 of the statement of claim are capable of giving rise to an estoppel relating to the issue of the capacity in which Cutmere contracted (if Technip relies on an estoppel and not only s 128(2) of the Corporations Act).

(6) It does not understand what is meant by the words 'alternatively may conditionally be, personally liable'.

1. It is sufficient to consider the challenges to par 10 by reference to the second ground of the application: that it may 'prejudice, embarrass or delay the fair trial of the action'.
2. Cutmere's submissions, somewhat informally, say that it does not know or does not understand what is alleged. The effect of the submission is that the pleading is embarrassing because it is not reasonably intelligible.
3. Technip submitted that it is entitled to plead that Cutmere was liable in its own right, and that it was prudent to do so. But that does not answer the challenge to par 10.
4. The expression 'could not, further or alternatively did not, further or alternatively did not in all respects' is uncertain in meaning. It does not clearly state what case Cutmere must meet.
5. The alternative allegation in par 10, that Technip is entitled to assume that Cutmere 'may conditionally be' personally liable under the Lease, is not reasonably intelligible as an allegation relating to Cutmere's liability.
6. If the reference to conditional liability is intended to pick up the exclusion in cl 13.3 of the Lease, it is immaterial where neither party has pleaded that Cutmere is personally liable as a result of fraud, negligence or breach of trust.
7. But the problem with par 10 is more fundamental. Paragraph 10, as a whole, alleges that by reason of the matters alleged in subpars (a) and (b), Technip is entitled to assume, and Cutmere is precluded from denying, that Cutmere was authorised to execute the lease 'including in its own right and capacity'. Counsel for Technip characterised it as ultimately a pleading of law founded on statute, that was being pleaded by reason of the 'surprise rule'.
8. The sections of the Corporations Act pleaded in par 10(b) are irrelevant to whether Cutmere contracted as a trustee or in its own right. Section 126 deals with the authority of an agent to exercise the powers of a company to make, vary, ratify or discharge a contract on behalf of the company. Section 127 provides for how a company may execute a document. Sections 128 and 129 provide for the assumptions a person is entitled to make in dealing with a company. When asked to identify which assumptions in s 129 were relied on, counsel said s (4) and par (b) of s (2).
9. It is not in dispute that Cutmere executed the Lease. The issue Technip seeks to address is the prospect that Cutmere was not a trustee, and whether the statutory presumptions will enable it to establish liability in its personal capacity. It is not apparent how Technip can relate the statutory assumptions to the capacity in which Cutmere contracted, or whether the company was authorised to contract in its own right. That is not what those sections are about.
10. Cutmere contracted as lessor. It either is or is not a trustee. If it is, whether it limited its liability to the extent of the assets of the trust is a question of construction of the Lease and Deed of Variation, applying well settled principles on the construction of commercial agreements.[21] Assumptions by Technip about Cutmere's authority to contract in its own right and capacity are irrelevant to whether Cutmere is a trustee and are irrelevant to the question of construction.
11. I would strike out both challenged paragraphs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Now the further re-amended statement of claim filed 22 September 2019. There was also an application for leave, which was not opposed.

[6] Day v William Hill (Park Lane) Ltd [1949] 1 KB 632, a case frequently cited.

[7] See, for example, Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [5] - [8].

[8] Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658, 664.

[9] Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 286 - 287; Gould v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490, 517; Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 [24] ‑ [26].

[10] Rules of the Supreme Court O 20 r 8(1).

[11] Nyoni v Patterson [2012] WASCA 171 [36] ‑ [38].

[12] Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) 8 ‑ 9. And see Armidale Regional Council v Vorhauer [2019] NSWSC 1153 [29] ‑ [31] (Ierace J) regarding the similar rule in r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW).

[13] Weeks v Nationwide News Pty Ltd [No 2] [2019] WASC 44 [27]; and see Tchenguiz v Thornton UK LLP [2015] EWHC 405 (Comm) [1].

[14] ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia [2014] NSWCA 402; (2014) 89 NSWLR 209 [16] ‑ [18]. See also Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20 [24] (Kiefel CJ, Keane & Edelman JJ).

[15] Cutmere, in effect, denies the allegation: Defence and counterclaim [3e].

[17] Forrest v Australian Securities and Investments Commission [24].

[18] Defence and Counterclaim [3b.], [3e.].

[19] Bride as Trustee of The Pinwernying Family Trust v Stewart [1999] WASCA 116.

[20] Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation [2017] NSWCA 81.

[21] See Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [47].