Australian Commercial Research & Development Ltd v Commonwealth of Australia [1994] QSC 20

IN THE SUPREME COURT OF QUEENSLAND No. 858 of 1993 Before the Hon. Mr Justice Thomas BETWEEN: AUSTRALIAN COMMERCIAL RESEARCH & DEVELOPMENT LIMITED Plaintiff AND: COMMONWEALTH OF AUSTRALIA· Defendant REASONS FOR JUDGMENT - THOMAS J. Judgment delivered 21/02/1994 CATCHWORDS: Counsel: Solicitors: Hearing date: Request for further particulars - production of documents - construction of a deed - background facts - "common intention" of parties - "state of mind" of a company - purpose of particulars discussed - 0.22 r.22 Rules of the Supreme Court discussed. M. Fryberg Q.C., with him R. Maguire, for the Applicant P. Morrison Q.C., with him J. McKenna, for the Respondent Australian Government Solicitor for the Applicant Bell, Rapp & Partners, Solicitors for the Respondent 31/01/94 and 01/02/94 -- 1 of 16 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN: No. 858 of 1993 AUSTRALIAN COMMERCIAL RESEARCH & DEVELOPMENT LIMITED Plaintiff AND: COMMONWEALTH OF AUSTRALIA REASONSFORJUDGMENT-THO~J. judgment delivered 21/02/1994 Defendant This is an application by the defendant (Commonwealth of Australia) for further particulars of the plaintiff's statement of claim, and for the production of some documents. I have heard argument over two chamber days totalling over four hours. Although voluminous material was filed, the only documents of direct relevance are the statement of claim, the contract, and certain letters containing the requests and responses of the parties on the points in question. I do not think that lengthy reasons are appropriate for this interlocutory exercise, but will endeavour to indicate the main points that have led me to allow or disallow the particular requests. Background It is enough to indicate that the statement of claim is based upon a deed dated 16th July 1987 in which the Commonwealth indicated its intention of identifying projects which came to its attention through certain research facilities, -- 2 of 16 -- 2 which might be attractive for commercial development. The deed provided a means by which the Commonwealth might bring such projects to the attention of the plaintiff and provided a structure which would permit the plaintiff to examine such projects, and if it chose to take up a particular project, it would then proceed in accordance with structured arrangements contained in the deed. Many of the submissions centre upon the effect of cl. 1.4 of the deed which is in the following terms: "1.4 In respect of all projects or technologies for which the [Defendant] requires commercial funding for development within its defence research laboratories for non-defence use of such projects or technologies, the [Plaintiff] shall have first right of refusal both for provision of such funding pursuant to this Deed and the Research and Development Deed attached hereto, and subsequent to the research and development phase, the non- defence commercial development pursuant to the Commercialisation Agreement attached hereto for that project or technology." The statement of claim relies upon the proper construction of the deed, and also upon its construction in accordance with "background facts" known to both parties, which are set out in the pleading. There is also a claim for rectification of the deed, to accord with the "common intention" of the parties, which is also described at some length in the pleading. There are also pleas of estoppel, which seem to me to be anticipatory, mainly against any contention by the defendant that the agreement was otherwise than that which is pleaded, or that it bears any different meaning from that pleaded. There are claims of breach of contract, arising from the entry by the Commonwealth into agreements with parties other than the plaintiff in relation to projects which the plaintiff claims should have been first submitted to it. Particulars The sub-headings are numbered in accordance with the summons. -- 3 of 16 -- 3 Reguest Al "Insofar as para. 6 alleges that the plaintiff and the defendant shared a common intention at the time of execution by the parties of the principal projects deed, give the name or names of the natural persons who held such intention on behalf of: (a) the plaintiff; and (b) the defendant" Mr Fryberg Q.C. for the applicant submits that 0. 22 r. 22 of the Rules of Court should not be allowed to stand in the way of ordering that these details be given as particulars. The matter was canvassed by Byrne J. in NRNQ v. MEQ Nickel Pty Ltd (1991) 2 Qd.R. 592 in which His Honour refused to order particulars of the individuals in a corporation who were said to have relevant knowledge. This follows a number of decisions in which the rule has been interpreted, in my view directly, as meaning that it is sufficient to plead knowledge, intention or state of mind as a fact, and that a party is not under the necessity of delivering further particulars of such allegations (Webster v. Peninsula Estates Pty Ltd (1969) Q.W.N. 29). It also seems to me that Webster correctly holds that the reference to "any person" in 0. 22 r. 22 includes a corporation. This approach accords with Burgess v. Beethoven Electric Eguipment Limited (1943) K.B. 96, 98. Byrne J ., although with some reluctance, applied Webster, observing that it was undesirable that there be conflicting decisions of single judges concerning the interpretation of a pleadings rule. Since then Williams J. has adopted a similar approach in Eguus Financial Services Limited v. Glengallen Investments Pty Ltd (1688 of 1991 18th December 1992 unreported). Mr Fryberg for the applicant conceded that it would be necessary for me to depart from the existing line of authority in order to accede to his request for this particular. -- 4 of 16 -- 4 I am not prepared to disregard the above authorities and practice. There must be limits upon particulars, and it seems to me that their primary purpose is to give the opposite party a reasonable understanding of the adversary's case, to eliminate ambiguity and to avoid surprise. I am not attempting to be comprehensive, but rather to underline the function that an exercise such as this is intended to perform. There are limits to the extent to which a party, as a pre-trial exercise, ought to be required to extrapolate, expand or particularise material allegations the effect of which is perfectly clear although the evidence by which it might be proved might not be exposed. In short, I think that the present interpretation of 0. 22 r. 22 is workable and that it does not lead to injustice. I am fortified in this by the fact that details of the kind in question may be sufficiently elicited by means of discovery and interrogatories. The request in Al of the summons should be refused. Request A2 This will be dealt with later. Request A3 "As to paragraph 7(a)(i), insofar as it is alleged that the plaintiff (by Mr Palmer) orally advised the defendant (by Messrs Schultz, Murphy and Fogg) that the plaintiff was seeking from the defendant an exclusive arrangement whereby the defendant had the right to commercially develop 'all defence technology' give particulars in respect of the exclusive arrangement: (a) is it alleged that the arrangement was oral, in writing, partly oral and partly in writing or to be inferred from conduct; (b) if it is alleged that the arrangement was oral or partly oral, provide full particulars of the substance and effect of each and every statement alleged to constitute an oral term of the arrangement, identifying in respect of each such statement the maker of such statement." -- 5 of 16 -- 5 To understand this request, it is necessary to refer briefly to paras. 6 and 7 of the further amended statement of claim of 1st September 1993. "6. At the time of the execution by the parties of the PPD, the Plaintiff and Defendant shared a common intention that the PPD would confer upon the Plaintiff a first right of refusal ('the FRR')" in respect of various projects and matters. Paragraph 7 then alleges - "This common intention had been manifested by the Plaintiff and theDefendant to each other by the following conduct (taken as a whole): (a) on or about 24 October 1985, at a meeting at the Department of Defence in Canberra: (i) the Plaintiff (by Mr Palmer) orally advised the Defendant(by Messrs Schultz, Murphy and Fogg) that the Plaintiffwas seeking from the Defendant an exclusive arrangement whereby the Plaintiff had the right to commercially develop all defence technology ... " and much more. The allegation, which is in the context of particulars of the common intention of the parties, is of advice that the defendant "was seeking ... an exclusive arrangement". That is the only relevant allegation for present purposes. There is no allegation of an arrangement at that time, but merely that the plaintiff was seeking one. Mr Fryberg retreated to para. (c)(i) of his client's original request in terms "is it alleged that the arrangement was oral, in writing, partly oral and partly in writing or to be inferred from conduct", but this in my view is equally inappropriate. This particular request amounts to interrogation, not particulars of an allegation made. This request should be refused. Request A4 "As to paragraph 7(h)(ii), insofar as it is alleged that the defendant referred to 'the draft agreement as amended in the light of previous discussions', identify each and every one of the amendments referred to." -- 6 of 16 -- 6 The context is para. 7 of the statement of claim which lists manifestations of the common intention. The problem seems to have been created by pleading evidence rather than material facts in the first place. That is not to say however that the other party may not seek particulars once the allegation is made. The following allegation appears in the statement of claim. "7. This common intention had been manifested ... by the following conduct ••. (h) on 28 February 1986, at a meeting at the Department of Defence in Canberra the Defendant (by Mr Murphy) orally advised the Plaintiff (by Mr Palmer and Mr Owen) that: (ii) the draft agreement, as amended in the light of previous discussions, 'looked OK' but further negotiation must await the processing of the registrations of interest." This is an allegation of what a man said on a particular occasion. If there is a draft agreement, and if it took different forms at various times, that will emerge upon discovery. Pre-existing forms of such an agreement are remote from the allegation in question. The most that could be argued is that it would be necessary to give the effect of the agreement as amended to that time; however that is not what has been sought. It seems to me that it was a reasonable response for the plaintiff to say as it did "wait until after discovery". This request should be refused. Request A5 "As to paragraph 7(i)(i), insofar as it is alleged that the defendant (by Murphy) orally advised the plaintiff (by Mr Palmer and Mr Owen) that the plaintiff's proposal was regarded as 'good - quite attractive in fact but that the proposal would be even more attractive if the exclusivity were modified', give particulars of the proposal referred to, and say: -- 7 of 16 -- 7 (a) is it alleged that the proposal was oral, in writing, partly oraland partly in writing, or to be inferred from conduct; (b) if it is alleged that such advice was oral, or partly oral, provide full particulars of the substance and effect of each and every statement alleged to constitute an oral term of the proposal, constituting in respect of each such statement the maker of the statement; (c) if it is alleged that the proposal is to be inferred from conduct, provide full particulars of each of the facts, matters and circumstances, on the basis of which such inference is to be drawn." The following is a sub-paragraph of para. 7 of the statement of claim, which states manifestations of the common intention. "(i) on or about 22 July 1986, at a meeting at the Department of Defence in Canberra: (i) The Defendant (by Mr Murphy) orally advised the Plaintiff(by Mr Palmer and Mr Owen) that the Plaintiff's proposal was regarded as 'good - quite attractive in fact but thatthe proposal would be even more attractive if the exclusivity clause were modified."' In this instance there is room for speculation as to what was the "plaintiff's proposal" there referred to. However the reference is to a statement made by the defendant, and even if it is capable of more than one meaning, it would not be appropriate to order the plaintiff to give particulars of what the defendant meant by it. It might have been possible to ask what the plaintiff understood Mr Murphy to be talking about, but the request for particulars does not ask for this. The pleading of this conversation does not open up a right in the respondent to require the pleader to dissect every word that was used in the conversation. The present request is much ado about very little, and although I appreciate that the allegation of common intention refers to intentions on both sides, I regard it as unnecessary to order the plaintiff to give in effect particulars of the meaning of -- 8 of 16 -- 8 the statement made by the defendant, or to read it as a request for the plaintiff's understanding of it when it does not ask for this. Request A6 "As to paragraph 11(d)(iv), insofar as it is alleged that officers of the plaintiff and of the technology unit had travelled internationally to establish a network suitable for the raising of these funds, identify: (a) each and every officer of the plaintiff referred to; (b) each and every officer of the technology unit referred to; and in respect of (a) and (b), give full particulars of: (i) the date or dates of such international travel; (ii) the itinerary undertaken including places of origin, stopover and destination; (iii) the names and addresses of all companies, firms and natural persons alleged to have been contacted in the course of such international travel and formation of such network." The context of these allegations is of the background "matrix" which will assist in construing the contract. Fairly extensive particulars have already been given. The only relic of dispute relates to a document referred to in the particulars as "annexure B". During the proceedings before me the respondent indicated that the reference had been intended to be made to "annexure A". The only possible relevance of this matter now is on the issue of costs. Request A7 "Further as to paragraph ll(d)(iv), insofar as it is alleged that the plaintiff had established a network suitable for the raising of funds, give full particulars of such network, including the name and address of each such company, firm or natural person or persons or other entity alleged to form part of such network, and give full particulars of all funds alleged to have been raised from such network including financier, date of draw down, term, and interest rate." Paragraph 11 of the statement of claim appears under the heading "Background Facts at Date of PPD". It includes: -- 9 of 16 -- 9 "11. At the time the PPD was executed by the parties, the following facts ('the Background Facts') were known to both the Plaintiff and the Defendant: (d) (iv) officers of the Plaintiff and of the Technology Unit had travelled internationally to establish a network suitable for the raising of these funds." The statement of claim does not allege that a network was actually established. It is therefore inappropriate to request particulars of anything "insofar as it is alleged that the plaintiff had established a network ... ". The request is inappropriate. Request A8 "As to paragraph 11(e)(ii), insofar as it is alleged that the plaintiff had a business plan, give full particulars of such plan, and say: (a) is it alleged that such plan was oral, in writing, partly oral and partly in writing, or to be inferred from conduct; (b) if it is alleged that such plan was oral or partly oral, provide full particulars of the substance and effect of each and every statement alleged to constitute part of the business plan and the time, date and place such business plan is alleged to have been made." In the same context (background facts) the statement of claim contains the following allegation. "11. . .. (e) The Plaintiff: (ii) had a business plan for this relationship which could absorb losses for a maximum period of five years if that was necessary." Mr Fryberg submitted that the plaintiff had alleged that it had a plan, and that therefore the defendant was entitled to know what it was. I do not think that this follows. The only material part of the allegation is that the parties knew that there was a plan which could absorb losses for a maximum period of five years. -- 10 of 16 -- 10 Nothing more is alleged, and nothing more, in the context of the pleading, seems material. The request should be refused. Request A9 "As to paragraph 14, insofar as it is alleged that the plaintiff acted to its detriment by expending funds upon: (a) raising shareholders' funds; (b) incurring outgoings for the purpose of enabling the plaintiff to perform the agreement, (including the funding of the technology unit and other consultants), with regard to each and every individual item of expenditure referred to, give: (i) the date of such expenditure; (ii) the amount of such expenditure; (iii) the name and address of the person or entity to whom such expenditure was paid." The statement of claim contains the following allegation. "14. In reliance upon this belief, the Plaintiff acted to its detriment by expending funds upon: (a) raising shareholders funds. (b) incurring outgoings for the purpose of enabling the Plaintiff to perform the Agreement, (including the funding of the Technology Unit and other consultants)." A substantial response has been given, in the form of document "B" of ex. SFC5 to the affidavit of Mr Carpenter. This however appears to contain much surplus and irrelevant expenditure and it is impossible to tell which items relate to the allegation in question. It is appropriate that further and better particulars be provided of this allegation. Request A10 "As to paragraph 29(b)(i), insofar as it is alleged that each of the projects is one in respect of which the defendant would have expressed interest pursuant to clause 1.2 of the Principal Projects Deed, identify -- 11 of 16 -- 11 each and every fact, matter and circumstance or thing which theplaintiff intends to rely upon in support of this allegation." The relevant allegation in the statement of claim is: "29. As a consequence of each of the said breaches, the Plaintiff has suffered loss and damage. Particulars ... (b) Further or alternatively to (a), each of the said projects was one; (i) in respect of which the Plaintiff would have expressed interest pursuant to cl. 1.2 of the PPD .... " In short, in support of a claim for damages, the plaintiff alleges that it would have expressed interest in a number of projects. It would seem that under the deed two things were required, namely that the parties identify projects, and that within twenty-one days the plaintiff should express commercial interest. If the allegation could be regarded as entirely subjective, in the sense that it depended entirely upon knowledge or a condition of mind of the plaintiff company, it would not require further particularisation, in view of the terms of 0. 22 r. 22. However the allegation is not in my view necessarily so limited. There may be objective data which the plaintiff will suggest as making it more probable than not that it would have expressed commercial interest. I think that the defendant is entitled to know whether the case that is alleged is entirely subjective or whether there are external factors as well, and if there are such external factors, to indicate their nature. Accordingly, further particulars should be supplied of this allegation. Request All "As to paragraph 29(b)(ii), insofar as it is alleged that the defendant failed to act honestly and/or reasonably, identify the natural person or person alleged to have acted, and give particulars of each and every -- 12 of 16 -- 12 act, fact, matter, circumstance or thing which the plaintiff intends to rely upon in support of this allegation." In the course of argument, Mr Morrison Q.C. for the respondent undertook to delete the allegation "had it acted honestly and/or honestly and reasonably". It is therefore unnecessary for me to deal further with this question. Its only possible relevance is on the question of costs. Request A12 This request raises the same question as I have dealt with under A10. For the same reasons I consider that further particulars should be supplied. Request A2 "In relation to paragraph 6 of the amended statement of claim, give further and better particulars of the commercial funding which is alleged to be the subject of the common intention in paragraph 6, and in particular say if it has the same meaning as in paragraph 21 of the amended statement of claim." The reference to "commercial funding" in para. 21 of the statement of claim is in the context of the meaning of the deed. The reference to the same term in para. 6 of the statement of claim is in the context of the common intention of the parties concerning the deed. These concepts might or might not turn out to be the same. I therefore think that the matter needs to be clarified. Mr Morrison for the respondent submitted that it was already clear that the meaning in para. 21 is the same as that in para. 6. I do not think that this is sufficiently clear, and I consider that the applicant is entitled to have this formally clarified. I turn to a further application in the same summons, for the striking out of certain words in the statement of claim. Request B(ii) "In paragraph 16 of the amended statement of claim, the words 'and the matters pleaded in paragraph 13' be struck out". -- 13 of 16 -- 13 The paragraph in question states: "16. Alternatively to paragraph 15, the PPD upon its true construction (in the light of the Background Facts and the matters pleaded in paragraph 13) confers upon the Plaintiff the FRR." The basis of the application is that the matters pleaded in para. 13 relate only to matters occurring after the formation of the contract. I was referred to authority including Codelfa (1982) 149 C.L.R. 337, 351; FAI v. Savoy (1993) 2 V.R. 343; Hide and Skin Trading v. Oceanic Meat Traders (1990) 20 N.S.W.L.R. 310, 328; Winks v. W.H. Heck and Sons (1986) 1 Qd.R. 226; Australian Energy Limited v. Lennard Oil N.L. (1986) 2 Qd.R. 216, 235. I would not strike out an allegation such as this unless it were quite clear that the allegation is embarrassing to the fair trial of the action. (Compare Rajski v. Powell (1987) 11 N.S.W.L.R. 522). I do not think it is sufficiently clear that evidence of this kind would not be receivable in the present case. My own view is that if it is receivable in the present matter, it would be explicable as evidence of a course of conduct, or possibly as an admission of what the contract was, as distinct from what a party thought it was. But even that may be too narrow a view in the context of a case which includes rectification. In fact I think it likely that evidence to this effect will be receivable on one basis or another, and that there is no point in my striking out the allegation at this interlocutory stage. It is better handled by the trial Judge in due course. Request B(iii) This is an application to strike out para. l(a) of the prayer for relief. That paragraph is - "(a) alternatively, order for the rectification of the PPD by the insertion at the commencement of cl. 1.4 the following: 'Notwithstanding the provisions of any other term contained herein"'. -- 14 of 16 -- 14 Mr Fryberg submitted that the common intention pleaded is not that para. 1.4 is to operate notwithstanding anything else in the contract. Mr Morrison responded with the submission that the relief here requested is a reasonable response to the mutual intention that has been set out. He submitted it was appropriate that para. 1.4 be given an operation not tied to 1.3; that para. 6 is focused upon cl. 1.4; and that the relief requested is responsive to what has been pleaded in para. 6(c)(i) of the statement of claim. He concedes that this is not the only way in which it could be done, but submits that it is not so inappropriate or unjustifiable that it should be struck out. He further submitted that if it were struck out as inappropriate, he would be entitled to re-plead, as the matter is a commercial cause. I take the view that the relief clause is not necessarily inappropriate to the facts that have been pleaded. I decline to strike it out. I turn to further relief requested in the summons, for the production of documents. The only remaining matter is para. C(iv) of the summons. Limited relief in this matter is now not opposed. The only order required is for the production by the plaintiff of each document alleged to contain terms of the draft principal projects deed referred to in para. 7(1) of the amended statement of claim. SUMMARY OF ORDERS Requests for particulars Al Refused. A2 Further particulars ordered. A3 Refused. A4 Refused. A5 Refused. A6 No order required. A7 Refused. AB Refused. -- 15 of 16 -- A9 AlO All A12 Striking out Further particulars ordered. Further particulars ordered. No order required. Further particulars ordered. B(ii) Refused. B(iii) Refused. Production of documents 15 C(iv) Limited order as stated above. I shall hear submissions on costs. -- 16 of 16 --