Comprite P/L v Returned & Services League of Australia (Queensland Branch) [2008] QSC 234

SUPREME COURT OF QUEENSLAND CITATION: Comprite P/L v Returned & Services League of Australia (Queensland Branch) [2008] QSC 234 PARTIES: COMPRITE PTY LTD ACN 010 486 736 (plaintiff) v RETURNED AND SERVICES LEAGUE OF AUSTRALIA (QUEENSLAND BRANCH) (defendant) FILE NO/S: 1047 of 2006 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 26 September 2008 DELIVERED AT: Brisbane HEARING DATE: 16 September 2008 JUDGE: de Jersey CJ ORDERS: 1. That the defendant’s counter claim be struck out. 2. That the defendant pay the plaintiff’s costs of and incidental to the application to be assessed on the standard basis. CATCHWORDS: ABUSE OF PROCESS – striking out pleading – prejudicial and embarrassing – leave to re-plead Australian Commercial Research and Development Ltd v Commonwealth (1995) 2 Qd R 336, cited David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, referred to COUNSEL: W Sofronoff QC SG, with T Bradley , for the plaintiff J A Griffin QC, with R Clutterbuck, for the defendant. SOLICITORS: Russell and Company for the plaintiff Mylne Lawyers for the respondent [1] de Jersey CJ: The plaintiff seeks orders that the defendant’s counter-claim be struck out, and for additional or alternative relief. -- 1 of 5 -- 2 [2] The plaintiff’s claim is for approximately $2.6 million, reimbursable expenses incurred by the plaintiff between 1987 and 2005 in conducting art unions for the defendant. The defendant has counter-claimed for damages in an amount exceeding $7.5 million. [3] The plaintiff contends that the counter-claim does not disclose a reasonable cause of action, may prejudice and delay a fair trial, incorporates unnecessary material, and is otherwise an abuse of process. [4] The problems attending the counter-claim may be summarized as follows. Pleading of breach [5] In para 25(b) of the counterclaim, the defendant alleges: “(In) breach of the agreement, however, some of those charges were…in excess of …the amounts…the plaintiff was entitled to charge under the agreement; and/or…not properly payable by the defendant to the plaintiff under the agreement.” The pleading does not specify which terms were breached, and the limit of the entitlement, so that the manner of arriving at the alleged excess can be seen. On 17 January 2007, the plaintiff sought particulars of the terms relied upon, and received no reply. The request was renewed on 28 July 2008 after the proceedings were put into their present consolidated state. The response was as follows: “The defendant says that because of the construction of the agreement, that is, the agreement of 1 April 1999, that the figures referred to in column 12 of the Schedule accompanying the defence and counter-claim were the only sums which the plaintiff was entitled to charge the defendant.” That response was inadequate. The defendant should have identified the contractual provisions or mechanism which led to that result. [6] The schedule referred to in that response lists, as instances of “excess” claiming, various amounts in respect of a large number of art unions, but without any indication how the amount of the excess has been calculated or in respect of which contractual obligations. Some of the individual amounts are very large. [7] Paragraph 25(c) of the counter-claim says: “Further particulars are substantial and are contained in a separate document incorporated herein and filed herewith.” None was filed, although the plaintiff believes the document in question resembles a schedule incorporated by reference into an earlier pleading. When Mr Sofronoff QC addressed me on that basis, there was no contrary suggestion from Mr Griffin QC who appeared for the defendant. The document to which Mr Sofronoff referred is a schedule to a report of an accountant which had been annexed to an amended statement of claim of 15 December 2006. I accept that the incorporation of that document is inappropriate, and properly described as vexatious and oppressive. -- 2 of 5 -- 3 The document contains commentary which, because of the incorporation of the document into the pleading, would necessitate response. Even more fundamentally, the document is part of a forensic accountant’s report commissioned by the defendant upon largely undisclosed oral instructions. [8] Mr McKinnon has affirmed an affidavit of 15 September 2008 filed by leave. It is plain that the report is an expression of his opinions. For example, he says in para 9 of his affidavit: “Each of the 63 folders of annexure 10 details my assessment of the difference between what Comprite charged and what it was entitled to charge, in respect of each art union.” There is an indication of instructions given to him in para 10 of his affidavit, where he says: “My instructions were that Comprite was not entitled to make any ‘mark up’ in respect of printing and stationery items.” Mr Sofronoff formulated his client’s objection in these terms: “Thus, a general accounting report without any identifiable legal parameters has been made a pleading to which the plaintiff must respond by its own pleading.” [9] The defendant’s failure to set out clearly the contractual departures upon which it relies as the foundation of its counter-claim takes on added significance when one examines the relevant terms of the agreement. They are pleaded from para 14 onwards of the second further amended statement of claim. Paragraph 22 of the counter-claim adopts those as the “relevant terms”. The difficulty is that the defendant has not specified which of them have been breached. [10] The “schedule” pleaded at p 14 of the statement of claim alleges a term specifying an agreed figure for certain work for a single art union in 1997, to be followed by an obligation to “assess” the fees for each subsequent art union “in accordance with the work undertaken” and “having regard to gross proceeds”. There were 10 art unions conducted each year. Then followed a requirement that the fees be “reviewed annually”. Should the parties fail to agree on amounts, then resort would be had to the CPI. [11] The plaintiff points to the absence of any plea as to whether any of those provisions were or were not triggered. This lends added significance to the defendant’s particularized reliance on an unspecified “construction” of the agreement. The defendant’s claim for recovery of monies paid by mistake [12] The defendant seeks to mount a case of reliance (para 26(a)), to the effect that it made the payments in question “in reliance upon being charged by the plaintiff”, presumably because of an implied representation that the amounts claimed were payable. It also mounts a case of “mistaken belief” that the amounts were due (para 26(c)(i)). The natural persons who, on behalf of the defendant corporation, did so -- 3 of 5 -- 4 rely, or hold that belief, should be particularized: Australian Commercial Research and Development Ltd v Commonwealth [1995] 2 Qd R 336, 339. The plaintiff sought such particulars and they were denied, on the basis that the defendant so relied “as a corporate entity”. But the individuals involved should have been named, to enable the plaintiff to meet the claim. [13] This is particularly significant in view of the affidavit of Mr Kay. He was the person in charge of art unions on behalf of the defendant for much of the relevant period. It was he who dealt with budgets and authorized payments. In his affidavit filed 4 September 2008, he deals in quite a detailed way with the budgetary and payment processes, leading to his assertion that “every charge which RSL Queensland paid to Comprite during my tenure as promoter was correct. There was no overcharging.” [14] The particular alleged overcharging which assumed prominence at the hearing before me concerns stationery and printing costs, and “mail list rental”. [15] Mr Kay explained the basis on which the plaintiff was entitled to charge, and did charge, for the former. Its entitlement was agreed upon at a meeting on 31 January 2001. The defendant’s relevant deponent, Mr Mialkowski, was not involved with the art union committee at the time of that agreement. There is nothing in Mr Mialkowski’s affidavit to suggest that the position he adopts, in denying various amounts to the plaintiff in respect of printing and stationery costs after the arrangement between the parties changed, is based on information given to him by any person who did participate at the meeting which led to the agreement. [16] A fair reading of Mr Mialkowski’s affidavit leads one to conclude that he has no particular factual foundation for the position he has taken in relation to those instances of alleged overcharging. Indeed, when he stopped making payments in those areas, on the basis of a suspicion as to the plaintiff’s entitlement, he capitulated when the plaintiff sought the renewal of the payments. The contrast with Mr Kay’s affidavit is important. This feature bears on whether the counter- claim in its present form can be resurrected, or whether the defendant should start again and thereby confront the precise basis for a formulation of its claim. [17] The defendant relies of course on David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. [18] The counter-claim is presently inadequate in that it fails to identify the material facts going to why, as a matter of contract, the plaintiff was not entitled to the charges made; in that it fails to identify the natural persons who mistakenly made the payments; and in that it fails to specify the mode of calculation of the alleged excess. Conclusion [19] These are matters of fundamental importance to the counter-claim. While the counter-claim reads comprehensibly, on close analysis the aggregation of these -- 4 of 5 -- 5 deficiencies, which remain notwithstanding reasonable requests for particulars which were not properly answered, render the counter-claim embarrassing to the point where the plaintiff should not have to plead to it in its present form. I do not consider it would be satisfactory for the defendant to amend the existing counter- claim or provide particulars. It should in effect start again. [20] There are other doubtful aspects of the counter-claim which may be mentioned. Paragraph 28 is an example. It reads: “Further and in the alternative, by its conduct including the size of the amounts claimed by the plaintiff for ‘mail list rental’, the plaintiff represented to the defendant that, for the purposes of each art union, it conducted a substantial operation whereby it obtained and utilized a substantial number of new customer names for the purpose and benefit of the defendant.” There are two vices in that allegation. The first is its generality, hinging on the word “substantial”. The second is that it leaves open other bases for the representation beyond “the size of the amounts claimed by the plaintiff…”. That flows from the use of the word “including”. Paragraphs 28, 29 and 30 really lead nowhere, in terms of a claim for relief, and Mr Griffin confirmed that they would not pursued. [21] Notwithstanding the defendant’s failure to respond properly with particulars over a substantial period, it should nevertheless be given an opportunity to re-plead. I will not specify a time period within which that must be done, because I apprehend that to be done properly, the re-pleading could take a substantial period of time. I think it best to leave any timetable to the parties, on the basis that if what is a reasonable timeframe cannot be agreed upon, the court may then be approached for a direction. Orders [22] There will be orders that the defendant’s counter-claim be struck out, and that the defendant pay the plaintiff’s costs of and incidental to the application to be assessed on the standard basis. -- 5 of 5 --