Re Edward James Bride and Wendy Margaret Bride As Trustee of the Pinwernying Family Trust v Bryan Guthrie Stewart [1990] FCA 6 (18 January 1990)

FEDERAL COURT OF AUSTRALIA

Re: EDWARD JAMES BRIDE AND WENDY MARGARET BRIDE AS TRUSTEE OF THE
PINWERNYING FAMILY TRUST
And: BRYAN GUTHRIE STEWART
No. WA G191 of 1988
FED No. 2
Practice and Procedure

COURT

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

CATCHWORDS

Practice and Procedure - pleadings - motion to strike out amended statement of claim - deceit, negligence, conspiracy - some irrelevant and immaterial matter pleaded - insufficient to justify striking out pleadings as a whole - question of degree - motion dismissed.

Coe v Commonwealth of Australia [1979] HCA 68; (1979) 53 ALJR 403

HEARING

PERTH
18:1:1990

Mr E.J. Bride appeared on behalf of the applicants

Counsel for the Respondent: Ms. L. Evans

Solicitors for the Respondent: Robinson Cox

ORDER

The respondent's motion filed 11 December 1989 be dismissed in so far as it seeks to strike out the whole of the amended statement of claim.

The respondent pay the applicants' costs of the motion in so far as they relate to the motion to strike out the statement of claim.

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

DECISION

REASONS FOR JUDGMENT ON MOTION TO STRIKE OUT AMENDED STATEMENT OF CLAIM
On 25 October 1989 an order was made striking out the statement of claim which had been filed in these proceedings, but allowing the applicants leave to file and deliver a further statement of claim on or before 21 November 1989. An amended statement of claim was filed on 15 November and a defence on 11 December. Along with the defence the respondent filed a further motion seeking to strike out the amended statement of claim on the grounds that:
(a) it discloses no reasonable cause of action;

(b) it has a tendency to cause prejudice,
embarrassment or delay in the proceedings; and
(c) it is an abuse of the process of the Court.

An order for security for costs was also sought on the motion but this was adjourned for argument to today. Argument proceeded on the motion to strike out on 19 December and judgment was reserved.

2. The power that the Court has under O.11 r.16 to strike out a pleading is one which is to be exercised sparingly and only in the clearest of cases. The statement of claim previously filed ran to some 77 paragraphs on 24 pages and, as I observed in striking it out, contained such a profusion of material, including matters of a purely evidentiary character and gave rise to so many irrelevant issues that it could not be salvaged by striking out particular parts.

3. The document now filed is considerably more concise, being somewhat less than half the length of its predecessor. The respondent's motion seeks only to strike it out as a whole and although in argument reference was made to a large number of individual paragraphs and their various deficiencies, no orders were sought in respect of particular parts of the pleading. The motion therefore falls for decision on whether or not the pleading taken as a whole cannot stand.

4. Although the application was instituted in the names of Edward James Bride, Wendy Margaret Bride, the Pinwernying Family Trust, Bride Foods Pty Ltd and Swan Stock Foods Pty Ltd, the amended statement of claim now filed is expressed to be filed only on behalf of Edward James Bride and Wendy Margaret Bride as trustees of the Pinwernying Family Trust. Assuming, as appears to be the case, that the other parties are not proceeding the application ought to be either discontinued or dismissed so far as it relates to them. That is a matter however on which I will hear the parties in due course.

5. By the amended statement of claim it is alleged that the applicants bring the action in their capacity as trustees of the Pinwernying Family Trust. It is said that they were the owners and operators of a business known as Oat Milling of Katanning and also of the Pinwernying Winery (paras. 2 and 3). Further, they say they were the owners of land comprising an Oat mill site, a Stock Feed Mill site, the Pinwernying Vineyard and the Pinwernying Winery. These allegations do not specify any relevant period for which ownership is alleged but that is a matter which can be cured by amendment or the provision of appropriate particulars.

6. The existence of the companies Bride Foods Pty Ltd and Swan Stock Foods Pty Ltd as at 18 June 1984 is pleaded although this seems irrelevant to any cause of action (para.5). The respondent is said to have been a chartered accountant employed by K.M.G. Hungerfords as "Senior Manager Financial Services" between February 1983 and April 1984 and later as an agent and advisor to the Australian Bank Limited. Relevantly, he is said to have acted as a signatory and financial controller for the applicants' business from February 1983 until 18 June 1984 and then as sole cheque signatory until 8 August 1984. His function is described as one of liaison between the applicants' legal advisors, accountants, management advisor, Mr Bride and the bank (para.6). Paragraph 6-C then goes on:

"...IT WAS AN IMPLIED CONDITION OF THE LOAN FROM THE
BANK THAT STEWART WOULD BE EMPLOYED DURING THE
PERIOD OF THE APPLICANTS (sic) LOAN WITH THE BANK."

This plea is not supported by any earlier allegation of the existence of a loan, when it was made and the term for which it was made.

7. The substance of that allegation and those which follow is that the applicants were effectively required by their bank to engage Stewart to supervise and manage their businesses. Various acts and omissions by Stewart over the period from February 1983 to 8 August 1984 and more particularly in the period from 18 June 1984 to August 1984 when he is alleged to have taken complete control of the business are then complained of. In summary the complaints are:

1. Failure to advise the applicants in September
1983 that the bank was converting their term
loan to 180 day commercial bills in foreign
currency (para.11) - to the extent that this
is an allegation of negligence there is no
evident connection to any loss or damage and
therefore no cause of action disclosed.
2. On 23 May 1984 providing a "secret report" on
the applicants' business to the bank
(para.12). Which report he later admitted was
wrong (para.17-C)
3. Appointing a general manager to the business
without prior discussion with Bride
(para.17-A).
4. In July 1984 asking the applicants' solicitor,
Fitzgerald, to draft a letter authorising him
to sell the applicants' assets and business
without their knowledge (para.19).
5. Arranging a meeting without notice to the
applicants between Bride, Stewart and Hancock,
an officer of the bank and preparing minutes
falsely recording Mr Bride's purported
agreement with Stewart.
6. Falsely denying, but later admitting the
preparation of a report to the bank of 14 June
1984.
7. On 7 August 1984 indicating his intention to
travel to the United States contrary to
Bride's wishes.

These do not exhaust the matters of complaint raised against Stewart and do not include other matters raised in the narrative which no doubt form part of the background history, but are not recognisable elements of any cause of action.

8. The amended statement of claim continues at para.24 where it is pleaded that advice was given to Bride by the bank on 8 August 1984 that he was under no obligation to continue to employ Stewart and that he immediately decided that Stewart should be dismissed for reasons then expressed. The reasons given by Bride for this decision are then set out. That is not germane to any cause of action and is no more than an account of the reasons he gave for terminating the appointment.

9. Various duties said to have been owed by Stewart are then alleged in para.25, they being:

"A/. A DUTY OF PROFESSIONAL CARE
B/. A DUTY OF PRIMARY REPRESENTATION
C/. AN ABSOLUTE DUTY OF HONESTY."

What is undoubtedly an allegation of fraud on Stewart's part is then set out at para.26 as follows:

"IT IS PLEADED THAT THE RESPONDENT ACTED
DISHONESTLY, UNPROFESSIONALY, DECEITFULY, WITH
CRIMINAL INTENT AND AGAINST THE INTEREST OF THE
APPLICANTS (HIS CLIENTS) AS LISTED BELOW.
A/. STEWART WAS AN "AGENT - ADVISOR" TO THE
AUSTRALIAN BANK IN CONFLICT WITH THE APPLICANTS
INTERESTS.
B/. STEWART HAS BY WAY OF WRITEN AND VERBAL
REPORTS TO THE APPLICANTS BANKERS, TRADE ASSOCIATES
AND GOVERNMENT DEPARTMENTS SUBVERSIVELY,
DISHONESTLY AND DECEITFULY "PUT DOWN" THE
APPLICANTS EXTREMELY VIABLE AND POTENTIALY
PROFITABLE BUSINESS SO AS TO BE ABLE TO AQUIRE SUCH
ASSETS AND BUSINESS FOR "HIMSELF AND HIS PARTNERS".
C/. ACTED AS AN UNOFFICIAL RECEIVER MANAGER OF THE
APPLICANTS BUSINESS FROM THE 18TH JUNE 1984 UNTIL
THE 8TH AUGUST 1984 WITH THE INTENT OF TAKING OVER
THE BUSINESS AND ASSETS.
D/. HAS REFUSED TO OBEY THE ORDERS AND DIRECTIONS
GIVEN TO HIM BY BRIDE RE. THE SUPPLYING OF
INFORMATION TO ONE H. HORDEN FOR THE PURPOSES OF
REFINANCING THE APPLICANTS DEBT TO THE BANK AND IN
SO DOING WAS PURPOSELY THWARTING THE SAID
REFINANCING OF THE DEBT.
E/. STEWART HAS DISHONESTLY OVERCHARGED THE
APPLICANTS FOR PROFESSIONAL TIME AND SERVICES."
(sic)

The thrust of the allegations seems to be that Stewart's conduct during his involvement in the applicants' business was designed to enable him to acquire it for himself. While the various epithets with which paragraph 26 opens do not assist in defining with clarity the cause of action, the broad facts alleged are arguably capable of supporting a cause of action in deceit. No doubt further and better particulars can be requested and should be provided, but in my opinion the pleaded claim as disclosed in para.26 is not so untenable that it should be struck out.

10. Paragraph 27 alleges that Stewart provided to the bank in 1983 and on 14 June 1984 reports which were wrong and misleading and that he was thereby negligent. This is not however linked in the pleading to any loss and without a connection to some loss or damage no cause of action in negligence could be made out under para.27.

11. Paragraph 28 alleges negligence in Stewart's conduct of the business after 20 June 1984 when he:

"A/. SACKED THE CONSTRUCTION STAFF AT THE STOCK FEED
PLANT EMPLOYED TO FINISH THE OVERHEAD STORAGE SILOS
BEING ALMOST COMPLETED.
B/. SACKED AND PAID OFF 2 SHIFTS OF PRODUCTION
STAFF WITHOUT ANY REFERENCE TO BRIDE.
C/. INCURRED UNNECESSARY DEBT AND EXPENSE BY
ALTERING CERTAIN STOCK FEED PLANT WITHOUT ANY
REFERENCE TO BRIDE."

And various losses said to arise from these actions are set out. Other negligent and loss generating conduct is alleged in para.29. The duty of care is repeated in para.30.

12. A rather mixed up plea of deceit is raised in para.30 arising out of non-disclosure of certain matters to the applicants and false denials of others. Based in part on false information provided by Stewart as to the purpose of his appointment the applicants say they handed over control of the business to him on 20 June 1984.

13. By para.33 a conspiracy is alleged between Stewart, the bank officer, Hancock, and the Brides' former solicitor, Fitzgerald. The conspiracy is said to have been a conspiracy to defraud the applicants of their business and assets. The plea requires particularisation including details of the overt acts relied upon to support the inference of an unlawful agreement between these three persons. As presently pleaded however, it is not so manifestly untenable that it should be subject to summary disposition.

14. As with its predecessor there is much in the amended statement of claim that is purely narrative or evidentiary and does not constitute material fact supporting a cause of action. In the reasons for judgment relating to the previous pleading I referred to a passage from the judgment of Jacobs J. in Coe v Commonwealth of Australia [1979] HCA 68; (1979) 53 ALJR 403 in which his Honour, referring to the rule of court which authorises the striking out of defective pleadings or part thereof, said:

"...that rule only permits the striking out of the
whole of a statement of claim when objectionable
matter is so closely intertwined with other matter
that the pleading as a whole may tend to embarrass
the fair trial of the action. The whole pleading
may then be struck out even though a cause of
action might be able to be spelled out of the
pleading as a whole."

15. Accepting that there is material in the statement of claim that is irrelevant or embarrassing the question whether it will bring down the whole pleading is one of degree. In my opinion, while much remains to be done to clarify the thrust of the applicants' case, there is sufficient in the amended statement of claim to enable the respondent to know its nature.

16. I have given some indication, certainly not exhaustive, of some paragraphs which should not remain in the pleading and there are others which do not contribute in any way to the definition of the applicants' case. Bearing in mind however the practical consideration that the applicants are unrepresented and endeavouring to formulate their case unassisted by legal advice, the present priority should be to ensure that the causes of action arguably disclosed on the amended statement of claim are given greater definition and clarity by the provision of appropriate particulars.

17. In the event the motion to strike out the statement of claim as a whole fails and in that regard the motion will be dismissed.