Tyree v Tyree

Judgment 1This is hearing of the defendant's notice of motion filed 9 March 2011 seeking to strike out the plaintiff's amended statement of claim filed on 15 March 2011. 2The plaintiff, who appears in person, brings a motion resisting the claim and he seeks a referral of the matter to mediation.

Background 3The matter concerns the transfer of certain shares in a company called Tytel Pty Limited from the plaintiff to his father, the defendant, or interests controlled by him in February 1998. 4The first claim made in the statement of claim alleges that in 1993 the plaintiff and his father entered into an agreement whereby, in consideration for the plaintiff agreeing not to pursue a claim for damages arising out of a share transaction in 1988, the defendant would pay the plaintiff certain compensation. This claim appears at paragraphs 2 - 21 of the statement of claim. 5It is also alleged that there were variations to the 1993 agreement in 2004 and 2007. It is alleged that there has been a breach of the 1993 agreement as varied from December 2009. 6There are claims for sums that have not been paid pursuant to the 1993 agreement and its variations; a penalty payment; losses on sale; and damages for pain and suffering. 7The next claim appears in paragraph 22. The plaintiff alleges that the breach of the 1993 agreement, as varied, entitles him to claim damages in respect of the 1988 transaction, which he claims, entitled him to damages of $4.3 million, plus consequential and other losses. 8The defendant raises the following general matters which he says are defects in the statement of claim. (a) There are inconsistent pleadings in the statement of claim: there is a claim for arrears on the 1993 agreement, which therefore must mean the agreement is in force; in contrast, a cause of action on 1998 agreement which depends upon accepting the repudiation of the 1993 agreement. (b) The 1988 cause of action has been abandoned as a result of the 1993 agreement and its repudiation. (c) The 1998 cause of action is statute barred. (d) There are deficiencies in the pleadings. (e) The 1993 agreement is void for uncertainty. (f) The 2004 variation and the 2007 variation are also void for uncertainty. (g) Various complaints about the relief claimed. 9As the question of whether or not the 1988 cause of action can still be maintained impacts on the other complaints in the pleadings, I will first deal with whether the cause of action that is based upon the 1988 matters is statute barred. 10This transaction is pleaded in paragraph 22. The heart of the pleading is in paragraphs 24 to 28, which are in these terms: "1988 Share Transfer Agreement 24. In or about February 1988, the Defendant, through his direct employee Peter Tyree, persuaded the Plaintiff to transfer his controlling shareholding in Tytel to the Defendant. The then $4.3 million value of these shares is outlined in paragraphs 3b and 4 above. 25. The Defendant, through Peter Tyree, claimed the Tytel Shares had an immediate value to the Defendant's companies for tax purposes. Believing he was doing the Defendant a favour, the Plaintiff agreed to the 1988 Share Transfer Agreement, which covered the transfer of Tytel shares to the Defendant solely for a tax benefit on the conditions that; (a) the shares would be returned once the accountants had done their job and; (b) the Defendant would not employ the shareholding to control Tytel and; (c) the Plaintiff would not be financially disadvantaged and; (d) the transfer would be underwritten personally by the Defendant. Particulars 26. The 1988 Share Transfer Agreement was express and oral and constituted a conversation between the Plaintiff and the Defendant's employee Peter Tyree in the Plaintiffs office at Artarmon, Sydney, in or about February 1988. 27. Within days of its signing, the Plaintiff discovered the basis of the 1988 Share Transfer Agreement to be fraudulent. There was no tax benefit to be gained, never could have been. There was no job for the accountants to do. By the Defendant's own subsequent admission, it was a 'tricky' means to obtain control of Tytel. Furthermore, within weeks of obtaining the shares the Defendant had also contravened the first two conditions of paragraph 25 above. 28. As a result of the Defendant's fraud referred to in paragraph 27 above, the Plaintiff has suffered loss and damage. Particulars 29. The Plaintiffs loss and damage was approximately $4.3 million, being the value of the Tytel shares in February 1988, plus compound interest less repayments of $2,802,462 ($1,840,000 +$920,000 +$42,462) received up until February 2011. From the following paragraphs, it can also be seen the Plaintiff suffered consequential damage." 11Thereafter the pleading deals with various breaches of the agreement in a number of different ways. 12The cause of action seems to be negligence and misrepresentation or deceit. By section 14 of the Limitation Act 1980, a cause of action in contract or tort is not maintainable after 6 years. 13In respect of fraud and deceit section 55 of the Limitation Act provides: "55 Fraud and deceit (1) Subject to subsection (3) where: (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 the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment. " 14Given the concession made in the pleading at paragraph 27, it is clear that the plaintiff was well aware of the alleged fraudulent behaviour of the defendant within days of signing the agreement. Accordingly, there is little room for section 55(1) to operate. 15In my view the cause of action is clearly statute barred and should be struck out. 16This means that a number of the other complaints about the form of the pleading are not relevant. It also means that the first two points which were raised by the defendant are not relevant. 17I turn to the claims that the 1993 agreement and its subsequent variations are void for uncertainty. 18The defendant's submissions in respect of the 1993 agreement are as follows: "24. The 1993 Agreement as pleaded in paragraph 3(a) was for payment by the Defendant of " appropriate compensation and/or what was fair and reasonable over a period of time ". 25. Such an agreement is void for uncertainty. Keane CJ recently summarised the law on uncertainty thus in Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19 at [123]: ...where the parties have not agreed upon the content of essential terms and have not agreed upon the application of an objective standard to measure their obligations or to provide a mechanism to fix the content of essential terms (as by third party determination), it is no business of the courts to foist upon the parties a bargain which they have not made. 26. In the instant case, there is no mechanism for determining "appropriate compensation" or "what was fair and reasonable" let alone for determining which is applicable and whether matters such as consequential losses (as indeed are now claimed by the Plaintiff) form part of that. Further, there is no mechanism for determining the relevant " period of time " over which the monies were to be paid. 27. The attempt to imply a term as set out in 3(b) would not cure these defects: first it would not satisfy the requirements for an implication of a term; and secondly it would not resolve the issue of the " period of time " over which the monies were to be paid. The payment summary set out in paragraph 5 demonstrates the lack of certainty in respect of those issues." 19Similar submissions were made in respect of the 2004 and 2006 variations. 20These arguments are matters that may have some substance. However, it seems to me that the background circumstances may well be important in finally determining these matters. In these circumstances, I think it is appropriate that they go to trial. 21Accordingly, I would not strike out these claims. 22There are complaints about a number of the claims for relief. The third claim for relief claims a penalty of 100 per cent in respect of the non-payment of the amounts claimed under the 2004 and 2007 variations. Such a penalty is not available in law and that claim for relief should be struck out. 23In paragraph 20 of the pleading and in prayer for relief 5 there is a claim for pain and suffering. That relief is not available in respect of this contract as it is not a contract for entertainment, enjoyment or freedom from distress. Accordingly paragraph 20 and prayer for relief 5 should be struck out. 24Prayers for relief 6, 7, 8, 9 and 10 relate to that part of the claim that I will strike out and accordingly they should also be struck out. 25The current matter is one that may be appropriate to be mediated and accordingly I will make an order for mediation once the pleadings are completed. 26I make the following orders: