Re Holk Nominees Pty Ltd As Trustee of the Wilson Family Trust v Pita Holdings Pty Ltd and Charles Ian Timothy Clifford [1990] FCA 259 (25 July 1990)

FEDERAL COURT OF AUSTRALIA

Re: HOLK NOMINEES PTY LTD as trustee for THE WILSON FAMILY TRUST
And: PITA HOLDINGS PTY LTD and CHARLES IAN TIMOTHY CLIFFORD
No. WA G45 of 1990
FED No. 372
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Practice and Procedure - pleadings - claims for equitable relief and for damages for misleading or deceptive conduct - pleas in defence raising irrelevant factual issues - factors relevant to discretionary grant of equitable relief to be distinctly pleaded as such - factors relied upon to support estoppel to be distinctly pleaded.

Trade Practices Act 1974

HEARING

PERTH
25:7:1990

Counsel for the applicant: Mr S. Penglis

Solicitors for the applicant: Freehill Hollingdale and Page

Counsel for the respondents: Mr G. Donaldson

Solicitors for the respondents: Bennett and Co.

ORDER

Sub-paragraphs 6(a) to 6(g) inclusive, 7(b)(ii) and (iii), 8(b)(i) and 10(e) to 10(h) inclusive be struck out of the defence.

There be liberty to the respondents to file an amended defence on or before 8 August 1990.

The respondents to pay the applicant's costs of the motion.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This action arises out of the proposed development of a shopping, office and parking complex on the Stirling Highway in Claremont. It is evident from the pleadings that the principal protagonists behind the contending companies are Perth businessmen, Lawrence Wilson and Charles Clifford. Holk Nominees Pty Ltd ("Holk") sues in its capacity as trustee of the Wilson Family Trust. It claims that by a Deed dated 8 December 1987 it agreed with Pita Holdings Pty Ltd ("Pita") to undertake in partnership the purchase of land at Claremont and the construction, development and operation on that land of a complex comprising shops, showroom, offices and carpark (para 4). Pita admits the Deed but not its characterisation as a partnership, saying instead that it was a joint venture. Terms are pleaded in the defence which are not material for present purposes (defence para 2). Holk says that under the Deed it lent the partnership money to buy the land which was registered in its name (para 5). Pita says that Holk held the land upon trust for itself and Pita, that they resolved to undertake the development, that Pita was appointed manager of the development and made application for the requisite approvals (defence para 3). Holk pleads a fiduciary duty owed by Pita (para 6) which Pita denies and its director Clifford, the second respondent, does not admit (defence para 4).

2. Holk then alleges that it commenced proceedings in the Supreme Court of Western Australia on 3 May 1989 against Pita seeking an order that the partnership be dissolved (para 7). Pita admits the proceedings (defence para 5). Holk pleads the negotiation and agreement on 31 August 1989 of a compromise of the action under which Pita agreed to purchase the land for $2,600,000 (paras 8, 9 and 10). It then alleges the formation of a "Second Agreement" on 14 December 1989 in lieu of that made in August. Under the Second Agreement, Holk was to sell the land to Pita for $2,350,000 and to pay the costs of relocation of a Telecom junction box up to $100,000 (para 14). Settlement under this agreement was effected on 22 December 1989 (para 15) and on that day Pita allegedly on-sold the land to a company called Galton Pty Ltd for $3,040,000 (para 16). The alleged failure of Pita to inform Holk that it proposed to on-sell for an amount exceeding $2,350,000 is said to constitute a breach of its fiduciary duty. In addition, Holk pleads that it was induced to enter into the Second Agreement by various false, misleading or deceptive representations by Pita as to the value of the land, the purpose of the acquisition, Pita's intentions in relation to on-selling and its awareness of a prospective purchaser (paras 11, 12 and 14). These representations are said to have constituted misleading or deceptive conduct by Pita in contravention of s.52 of the Trade Practices Act 1974. Clifford is alleged to have been an accessory to the contraventions. The remedies claimed include an account of profits, equitable damages and damages under s.82 of the Trade Practices Act. Holk now moves to strike out certain parts of the defence, which was filed on 20 July. It is convenient to deal with the attack paragraph by paragraph.

3. The first complaint relates to sub-paras 6(a) to (g) inclusive. Paragraph 6 is in purported answer to paras. 8, 9 and 10 of the statement of claim which relate to the negotiation of the First Agreement and the settlement of the Supreme Court proceedings in August 1989. The matters pleaded in sub-paras. (a) to (f) relate to dealings between the parties in the period from December 1988 to May 1989. They have no apparent relationship to the plea concerning the formation of the partnership, a matter already covered in para.2 of the defence. Nor do they have any logical bearing upon the formation of the First Agreement. They set out an agreement for the sale by Pita and Holk of their interests to a third party or third parties on certain agreed terms. The agreement was said to have been made on 3 March 1989 and terminated by Holk on 3 April 1989. Sub-paragraph (f) then says that for the period from 3 April 1989 to 3 May 1989 officers of Pita and Holk discussed orally on several occasions various proposals whereby Pita would, under cl.16 of the Deed or otherwise, purchase Holk's interest in the development. Sub-paragraph (g) in that context alleges that the Supreme Court proceedings were commenced by Holk solely or primarily for the purpose of seeking to strengthen its relative bargaining position in those discussions. These paragraphs of the defence have only to be stated to be exposed as irrelevant. They raise no answer to the allegations which they purport to answer or to any element of the statement of claim. What they do raise are false issues. They are embarrassing and should be struck out.

4. Paragraph 7 purports to be an answer to paras 11 and 14 of the statement of claim which relate to the making of certain of the representations and their effect in inducing Holk to enter the Second Agreement. Sub-paragraph 7(b)(ii) sets out a representation allegedly made by officers of Holk to Pita that the Second Agreement was necessary because Holk was in a parlous financial position. While this may be indicative of evidence that goes to the questions of reliance and/or causation, it does not itself set up a material fact in answer to the statement of claim. Sub-paragraph 7(b)(iii) alleges that officers of Holk represented to Pita that no moneys were to be paid to Holk before the granting of an order of the Family Court of Western Australia dissolving Wilson's marriage to his then wife so that Wilson's wife would not claim or be entitled to claim any of the price payable under the new Agreement as part of a property settlement consequent upon the dissolution of her marriage. This pleading is patently irrelevant. Both 7(b)(ii) and (iii) should be struck out.

5. Sub-paragraph 8(b)(i) purports to be an answer to para 12 of the statement of claim setting out further representations said to have induced the Second Agreement. It refers to statements by Clifford that in the event Pita was to purchase Holk's interest in the development it would either continue with it alone or in conjunction with a third party or on-sell to a third party and that if the sale were made to a third party it would seek to obtain the highest price. This again may reflect some evidence going to the question of reliance or causation or supporting a contention that the representations alleged were not made or were qualified in some way. It is not however a logical answer to the plea. A similar problem arises with respect to paras 10(e) to (h) of the defence.

6. Counsel for the respondent indicated that certain of the matters pleaded in the impugned paragraphs were intended to raise discretionary considerations against the grant of the equitable relief claimed. If that is so, they can be clearly and distinctly pleaded as such at the end of the defence. And to the extent that a plea of estoppel is raised it too should clearly indicate the conduct and any detriment relied upon.

7. For these reasons the motion will succeed.