David Gordon Fleming v Graeme Weston Mitchell, Fiona Elizabeth Mitchell, John Ross Reid, Brendan Lee Grosse, Mark Alexander Phillips, Archie Tsirimokos, Roderick William Mcdonald, Dennis Mario Barbara and Gavin John Lee [1996] ACTSC 11 (15 March 1996)

SUPREME COURT OF THE ACT

DAVID GORDON FLEMING v. GRAEME WESTON MITCHELL, FIONA ELIZABETH MITCHELL, JOHN
ROSS REID, BRENDAN LEE GROSSE, MARK ALEXANDER PHILLIPS, ARCHIE TSIRIMOKOS,
RODERICK WILLIAM McDONALD, DENNIS MARIO BARBARA and GAVIN JOHN LEE
No. SC 355 of 1993
Number of pages - 4
Practice and Procedure

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
MASTER T CONNOLLY

CATCHWORDS

Practice and Procedure - Application to Strike Out Amended Statement of Claim - Disclosure of a Reasonable Cause of Action

Supreme Court Rules, Order 23, rule 28

HEARING

CANBERRA, 1 March 1996
15:3:1996

Counsel for the Plaintiff: Mr Street

Instructing Solicitors: Barrads

Counsel for the Third to Ninth
Defendants: Mr G Lunney

Instructing Solicitors: Minter Ellison

ORDER

THE COURT ORDERS THAT:

1. The application of the Third to Ninth Defendants be dismissed.
2. The Third to Ninth Defendants pay the Plaintiff's costs of the

application.

THE COURT DIRECTS THAT:

1. The defendants file and serve any defence and cross claim within

fourteen days.
2. The plaintiff file and serve any defence to the cross claim within fourteen days thereafter.
3. Within a further fourteen days the defendants/cross claimants file any further affidavits upon which they intend to rely.
4. The plaintiff file any affidavits in reply within a further fourteen days thereafter.
5. The parties have liberty to apply in the ordinary manner to the Court for listing.

DECISION

MASTER T CONNOLLY This matter came before me on 1 March 1996 by way of a Notice of Motion from the Plaintiff to further amend the Statement of Claim and to make certain directions in relation to the further conduct of the litigation.

2. I granted leave to further amend the Statement of Claim, with the Plaintiff to pay consequential costs, on the day of the hearing.

3. The Statement of Claim, in its further amended form, raises issues going to the conduct of the third to ninth defendants, and, while counsel for the first and second defendants took no further part in the matter, counsel for the third to ninth defendants, Mr Lunney, sought leave, which was granted, to make application to strike out paragraphs 19 to 39 inclusive of the Statement of Claim, being those paragraphs directed to the third defendant in particular.

4. Mr Lunney in effect made three submissions, namely:

1. That amended paragraph 19 re introduces material which had been
struck out by Order of Gallop J on 29 September 1995,
2. That amended paragraph 30, which alleges fraud on the part of
the third defendant, does not raise that charge with the level of
particularity and clarity required by law, and
3. That amended paragraphs 19 to 39 inclusive as a whole disclose
no action, and should be struck out pursuant to Order 23 Rule 28.

5. Mr Street, for the plaintiff, submitted that paragraph 19 has been merely recast and is not inconsistent with the previous order, and that paragraph 30, when read with the preceeding paragraphs to which it refers, does set out the allegation of fraud and the facts going to support that allegation with the level of clarity required. I am satisfied that, on the test set out at page 427 of the 13th edition of Bullen and Leake on Pleading, this allegation is properly pleaded, and that paragraph 19 as it now reads is not inconsistent with the previous order of Gallop J.

6. In relation to the substantial application to strike out paragraphs 19 to 39 inclusive, he argues that Mr Lunney's application is without authority, and that the plaintiff must be in a position to raise in this litigation what it says is a substantial matter, namely the allegations going to the conduct of the third defendant in particular, and the fourth to ninth defendants as partners of the third defendant.

7. An application to strike out pleadings pursuant to O23 r28 on the basis that the pleadings disclose no reasonable cause of action or prejudices, embarrasses or delays the fair trial of the action is an application for the exercise of a power which

"should only be exercised in plain and obvious cases, and
furthermore in cases where no reasonable amendment could cure the
defect".

(O'Leary and Hogan, Principles of Practice and Procedure, 1st ed p 167).

8. It was common ground that the contentious pleadings are not capable of amendment to a form that would resolve this dispute, as the third defendant says that any canvassing of his alleged conduct in the pleadings is inappropriate as, it is said, the conduct alleged ocurred after the conclusion of the agreement that is at the heart of this litigation.

9. The third defendant's argument is comprehensively set out in a letter from Mr Clynes to the plaintiff's solicitors dated 14 December 1995 which was before me. This letter points out, correctly in my view, that there is essentially one factual matter in dispute in this litigation, that being whether or not Mr Fleming agreed to include the Blacket Street property in his agreement with Mr and Mrs Mitchell to sell the Chelsea Lodge business.

10. Mr Clynes argued in this letter, and Mr Lunney argued before me, that this agreement, on the plaintiff's case, was concluded before the alleged conduct of the third defendant occurred, and that accordingly even if the facts alleged were proven, there is no case against the third defendant.

11. Mr Street maintains that the plaintiff has an action against the third defendant. Having read the affidavit of the plaintiff sworn 20 June 1995 and the Amended Statement of Claim, it is clear to me that there are substantial matters of fact in dispute between the plaintiff and the third defendant going to the nature of the said agreement. I am not satisfied that these facts, if made out, would disclose no cause of action against the third defendant which could give rise to the relief, by way of damages, which the plaintiff seeks against the third defendant.

12. Accordingly, I decline to make the order sought to strike out these pleadings. These issues must be resolved on the trial of the matter. The allegations, particularly where fraud is alleged, are serious matters, but they are matters which must be resolved at a substantial hearing. Clearly, if the allegations against the third defendant cannot be made out, this is relevant to costs.

13. Mr Street sought directions for the further conduct of this matter subject to my reserved decision on the application to strike out those portions of the Statement of Claim directed to the conduct of the third defendant. Mr Lunney agreed to the broad form of these directions, also subject to this decision.

14. In order to bring what has become protracted proceedings to some finality, I direct that the matter proceed thus:

1. The defendants file and serve any defence and cross claim
within fourteen days.
2. The plaintiff file and serve any defence to the cross claim
within fourteen days thereafter.
3. Within a further fourteen days the defendants/cross claimants
file any further affidavits upon which they intend to rely.
4. The plaintiff file any affidavits in reply within a further
fourteen days thereafter.

15. I further direct that the parties be at liberty to apply in the ordinary manner to the Court for listing.