FAA Services Pty Ltd v Procter [2006] QDC 412

DISTRICT COURT OF QUEENSLAND CITATION: FAA Services Pty Ltd v Procter [2006] QDC 412 PARTIES: FAA SERVICES PTY LTD formerly trading as FINANCIAL ADVISERS AUSTRALIA PTY LTD (Plaintiff) AND PROCTER (Defendant) FILE NO/S: 239 of 2006 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Maroochydore DELIVERED ON: 15 December 2006 DELIVERED AT: Maroochydore HEARING DATE: 8 December 2006 JUDGE: Judge J.M. Robertson ORDER: (a) Summary judgment application dismissed (b) Paragraph 4(b), (c), (d), (e), (f), (g), (h) and (i) and 5(a) of the Defence struck out. (c) Defendant given leave to replead within 14 days. CATCHWORDS: BREACH OF CONTRACT - summary judgment application and pleading dispute, where plaintiff sues on written contract alleging breach of restraint of trade clause. Cases cited: Grey v Morris [2004] QCA 5 Legislation: Uniform Civil Procedure Rules, r. 292, r. 171 COUNSEL: R. Fleming (for the plaintiff) S. Middleton, Solicitor (for the defendant) SOLICITORS: Greenhalgh Pickard Solicitors (for the plaintiff) Griffiths Parry Lawyers (for the defendant) [1] The plaintiff company provides financial planning services to the public through the agency of licensed financial planners. It is common ground that the defendant Mr -- 1 of 4 -- 2 Proctor was contracted by the plaintiff as a consultant by contract dated 8 October 2001. It is also common ground on the pleadings that the defendant terminated the contract on 14 October 2005. The plaintiff alleges that in breach of Clauses 5.10 and 5.40 of the contract, Mr Proctor approached 34 of the plaintiff’s clients who then became clients of the defendant. The most significant component of the claim is $68,000 being liquidated damages provided for in Clause 5.40 being $2000 for each client. Summary Judgment [2] The plaintiff now seeks summary judgment for part of its claim namely $36,000 for 18 clients which it argues Mr Proctor has admitted contacting after termination. [3] Rule 292 of the Uniform Civil Procedure Rules provides a discretion to the court to give summary judgment if satisfied that: (a) the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and (b) there is no need for a trial of the claim or the part of the claim. [4] The phrase “no real prospect” was considered by the Court of Appeal in Grey v Morris [2004] QCA 5. Chesterman J, at paragraph 23 held: “… summary judgment is not to be given, either to defendant or plaintiff, except where it is just to do so and it will not be just to deprive a party of a trial unless it can be seen that their case is hopeless, or bound to fail. Unless that can be said of it, the conclusion cannot be reached that a claim or defence has no “real” prospect of success”. [5] Later in that judgment, McMurdo J held [at 46]: “But in relation to summary judgment for a plaintiff, there was a change from the terms of previous rules to r 292, and each of rr 292 and 293 requires the court to be satisfied that the party against whom judgment is sought has no real prospect of success and that there is no need for a trial. So in that way there is a change from the words of previous rules. With respect to those who may have expressed a different view, it seems to me that rr 292 and 293 should be applied by reference to their clear and unambiguous language, without a need for any paraphrase or comparison with a previous rule. But n the application of the plain words of rules 292 and 293, and in particular the consideration of whether there is a need for a trial, a court must keep in mind why the interests of justice usual require the issues to be investigated at a trial. In my view it surely remains the case, as Mason, Murphy, Wilson, Deane and Dawson JJ said in Fancourt at 99, that “The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried”. That remains a forceful and authoritative guidance and is in no way in tension with the application of these rules according to their own terms.” -- 2 of 4 -- 3 [6] Mr Proctor’s affidavit in response to the summary judgment application is sworn 6 December 2006 and was filed by leave at the hearing. The so called “admissions” are derived from paragraph 21 of the affidavit which in turn provides comments relating to Schedule 1 to the Statement of Claim. [7] The defendant’s argument is that none of the 18 people relied upon by the plaintiff in its summary judgment application are “clients” as that term is defined in the contract. He refers to Clause 5.10 which is the first clause under the heading “Termination or Resignation from FAA”, which provides inter alia “… the consultant shall not directly or indirectly canvass or cause to have any clients canvassed who have been allocated to “the Consultant” by FAA…”. Any fair reading of Mr Proctor’s comments in relation to the client schedule annexed to the claim reveals that he is disputing (for a variety of reasons) that the 18 people were clients in this sense. It seems to me that this dispute can only be resolved at trial which may involve evidence from the various persons referred to in the schedule. It is clearly not a case for summary judgment and the plaintiff’s application in this regard is dismissed. Pleading Dispute [8] The plaintiff also challenges certain paragraphs in Mr Proctor’s defence on the grounds that they are unnecessary, scandalous, frivolous and/or vexatious: r. 171(1) UCPR. The challenge is to paragraphs 4(b), (c), (d), (e), (f), (g), (h) and (i), and 5(a) of the defence: “4(b) John Hehir lost his license to operate as a financial planner in late 2004; (c) From that time on, the Defendant operated as a financial planner in his own right and all licenses and insurances were held by the Defendant and the Defendant was responsible for al clients; (d) From the time John Hehir lost his license, the Plaintiff company did not provide training days to the Defendant so that he might remain compliant; (e) From the time John Hehir lost his license, Total Financial Solutions Australia began providing training and support to the Defendant to keep the Defendant compliant; (f) The Defendant and John Hehir of the Plaintiff company had a meeting wherein the Defendant was informed by John Hehir that after he had lost his license, he could not, under industry laws, continue to trade; (g) As a result of that meeting, the Defendant signed with Total Financial Solutions Australia as an individual; (h) From that time on, Total Financial Solutions Australia was invoice and Total Financial Solutions Australia paid commission to the Defendant; -- 3 of 4 -- 4 (i) All clients were subsequently listed under the Defendant’s name from the date of signing with Total Financial Solutions Australia;” “5 … (a) The agreement was not valid as at the date John Hehir lost his license;” [9] The pleadings in paragraph 4 of the Defence relate to paragraph 7 of the Statement of Claim which is in these terms: “7. After the termination date of the contract, the Defendant approached the Plaintiff’s clients and those clients, as particularised in Schedule 1 to this statement of claim, terminated their business with the Plaintiff and appointed the Defendant as the client’s financial adviser.” [10] Although not raised on the pleadings, it is apparent that the original contract was varied in September 2004 (inferentially around the time Mr Hehir either lost or did not renew his licence to operate as a financial planner), however the remaining terms of the contract remained unaltered. In those circumstances it is difficult to understand what relevance to the present dispute is derived from the allegation that Mr Hehir lost his licence. The contract relevantly was not varied because of this e.g. the “new” contract does not support the matters pleaded in paragraph 4(c) which would appear to be a fundamental departure from the accepted contractual arrangement between the parties. If it is the defendant’s intention to allege some breach of the contract by FAA then it should say so. [11] There is no basis I am told for the allegation in clause 5(a). The parties agreed at the hearing that the relevant regulatory regime permits a corporation to provide financial services to the public through the agency of licensed individuals, even if the alter ego of the corporation does not himself hold a licence. [12] The plaintiff’s application to strike out these pleadings on either (a), (b), (c) or (d) of r. 171 is granted. The defence is very poorly pleaded and I will permit the defendant 14 days to re-plead if he so desires. The plaintiff will have the applicable time limits set out in the Rules to reply if so advised. [13] I will hear the parties as to costs. -- 4 of 4 --