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Althaus v Australia Meat Holdings Pty Ltd

 

[2006] QCA 412

Reported at [2007] 1 Qd R 493

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Althaus & Anor v Australia Meat Holdings P/L & Anor
[2006] QCA 412

PARTIES:

JOHN EDMOND ALTHAUS
(first plaintiff/first respondent)
REDMEAT PTY LTD ACN 064 838 982
(second plaintiff/second respondent)
v
AUSTRALIA MEAT HOLDINGS PTY LIMITED
ACN 011 062 338
(first defendant/appellant)
CONAGRA INC
(second defendant/cross-appellant)

FILE NO/S:

Appeal No 3316 of 2006

SC No 7975 of 2004

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

20 October 2006 

DELIVERED AT:

Brisbane 

HEARING DATE:

11 September 2006 

JUDGES:

McMurdo P, Keane and Holmes JJA

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER:

  1. Appeal allowed in part:
  • the grant of leave to the plaintiffs to deliver Exhibit 2, as amended, is set aside
  • plaintiffs to seek the leave of a judge of the trial division to file a further amended statement of claim within 21 days
  • otherwise, appeal dismissed
  1. Mr Althaus to pay one half of the costs of Australia Meat Holdings Pty Limited of and incidental to the appeal to be assessed on the standard basis
  1. Redmeat Pty Ltd to recover, from Australia Meat Holdings Pty Limited and Conagra Inc, its costs of the appeal on the issues relating to the challenge to its joinder to be assessed on the standard basis
  1. No order for costs in favour of Conagra Inc  

CATCHWORDS:

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - PARTIES - first respondent commenced action against appellant and cross-appellant in relation to food product conversion process - first respondent successfully made application to join second respondent as a second plaintiff - second respondent joined - interpretation of rule 69 of Uniform Civil Procedure Rules 1999 (Qld) - whether the learned primary judge erred in joining the second respondent

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - AMENDMENT - learned primary judge held the new claims arose out of substantially the same facts as those for which relief had already been claimed - application of rule 376(4) of Uniform Civil Procedure Rules 1999 (Qld) - whether the learned primary judge erred in concluding that the new causes of action arose out of substantially the same facts as those for which relief had already been claimed

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - PLEADING - STATEMENT OF CLAIM - respondents included a claim for breach of fiduciary duty in statement of claim - appellant argued that absence of pleaded facts on which to base a claim for breach of fiduciary duty meant that the fiduciary duty claim should have been struck out of any pleading which the respondents might have been given leave to deliver - whether the respondents should now be given such leave

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - PLEADING - PARTICULARS - breach of confidence - cross-appellant argues that respondents' pleadings contained inadequate, confusing and internally inconsistent allegations - whether the pleadings fairly and adequately identify the confidential information alleged to have been misused

Personal Injuries Proceedings Act 2002 (Qld), s 6(2)

Uniform Civil Procedure Rules 1999 (Qld), r 69, r 376(4)

Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, cited

Draney v Barry & Ors [1999] QCA 491; [2002] 1 Qd R 145, considered

MAM Mortgages (in liq) v Cameron Bros, unreported, SC No 1562 of 1996, Chesterman J, 16 June 1999, cited

Mann v Commonwealth [2001] NSWCA 236; No 40396 of 2000, 13 July 2001, cited

O'Brien v Komesaroff (1981 - 1982) 150 CLR 310, cited

Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, cited

Thomas v State of Queenlsand [2001] QCA 336; Appeal No 360 of 2001, 24 August 2001, cited

COUNSEL:

D J S Jackson QC, with A M Pomerenke, for the appellant

S L Doyle SC, with S D Anderson, for the cross-appellant

W Sofronoff QC, with J T Stevens, for the respondents

SOLICITORS:

Allens Arthur Robinson for the appellant

Clayton Utz for the cross-appellant

Barwick Stevens for the respondents

  1. McMURDO P:  I agree with Keane JA.
  1. KEANE JA:  On 14 September 2004, Mr Althaus commenced an action against Australia Meat Holdings Pty Limited ("AMH") and its holding company, Conagra Inc ("Conagra"), in respect of dealings by AMH and Conagra with a food product conversion process devised by Mr Althaus.  The process is referred to as the "Pressure Differential Process" or the "PD Process".  It may be more fully described as:

"a process for:

(a)drying meat, fruit and vegetables at low temperatures; and

(b)freezing, flavouring, coating and marinating such dried meat, fruit and vegetables."

  1. Mr Althaus experienced difficulties with the proper formulation of his claim against AMH and Conagra. As a result of those difficulties, on 6 December 2005, the court ordered that Mr Althaus' then current statement of claim (referred to by the learned primary judge as ex 1) be struck out, and that Mr Althaus not file a further statement of claim "without leave or direction of the Court".
  1. On 27 February 2006, Mr Althaus applied for leave to deliver a draft statement of claim (referred to by the learned primary judge as ex 2). The draft pleading provided for the addition of Redmeat Pty Ltd ("Redmeat") as a plaintiff and Mr Lochmann as a defendant. 
  1. Mr Althaus' application was largely successful, in that Redmeat was added as a second plaintiff, and the plaintiffs were given leave to deliver a new statement of claim on certain terms. The application to join Mr Lochmann as a defendant was adjourned because he had not been served with the necessary process.
  1. AMH has appealed against the orders made in favour of Mr Althaus and Redmeat. It contends that the application for leave to deliver ex 2 should have been refused. Conagra seeks to cross-appeal against the orders made by the primary judge to similar effect.
  1. Some further elaboration of the plaintiffs' claims, and of the relevant aspects of the decision of the learned primary judge, is necessary before one may turn to a discussion of the arguments agitated on the appeal.

The plaintiffs' claims

  1. In the original statement of claim, ex 1, Mr Althaus alleged that, in 1993, he disclosed to AMH, in confidence, details of the PD Process which he had developed. He alleged that AMH agreed to preserve the confidentiality of the process. Notwithstanding this agreement by AMH, it disclosed the process to Conagra, which took out patent rights in respect of the process in the United States of America without the consent of either Mr Althaus or Redmeat.  Mr Althaus also alleged that he disclosed details of the PD Process to officers of Conagra, including Mr Lochmann.  It was Mr Althaus' case that AMH and Conagra misused confidential information to obtain the patents and to make profits in the course of their business.  The basis of Mr Althaus' claim was the alleged breach, by both AMH and Conagra, of an equitable obligation arising out of the dealings between the parties. 
  1. Mr Althaus sought leave to deliver the new draft statement of claim, ex 2. In that draft pleading, it was sought to add causes of action for breach of contract, for contravention of the Trade Practices Act 1974 (Cth) ("the TPA"), for negligent misstatement, and for breach of fiduciary duty.
  1. The new cause of action for breach of contractual obligations of confidentiality was based upon alleged breaches of contract which occurred up until February 1999. It was submitted by AMH that this cause of action was statute-barred in February 2005, and, therefore, leave should not be given to plead this cause of action as it was a claim which was bound to fail.
  1. Another of the new causes of action involved allegations that AMH undertook to Mr Althaus, when it was providing confidential information to Conagra, that it would comply strictly with its obligation to ensure the secrecy of the PD Process. The draft pleading alleged that this undertaking was given recklessly without a reasonable basis and without regard to whether the representations were true or false. On this basis, it was said to be misleading and deceptive conduct in contravention of the TPA. Alternatively, it was alleged that AMH's representations and assurances involved negligent misstatement.

The decision below

  1. The learned primary judge compared the allegations in ex 1 and ex 2. His Honour summarised the results of this comparison as follows:[1]

"As an example of their comparability, each of those pleadings deals with the following matters of fact:

  1. the development by Mr Althaus of the novel process, with detailed descriptions of it (para 3 Ex 1, paras 2 and 4 Ex 2);
  1. the deed between Mr Althaus and AMH for disclosure of the process to AMH, with AMH undertaking to preserve its confidentiality (para 4 Ex 1, para 5 Ex 2);
  1. the development of the relationship between Mr Althaus and AMH and Conagra, and the delivery of the document entitled 'Overview of a meat operation for AMH to be based in Brisbane' (para 10 Ex 1, para 12(c) Ex 2);
  1. negotiations between Mr Althaus and AMH and Conagra as to licensing, and further disclosure in the course of those negotiations (para 16 Ex 1, para 15 Ex 2);
  1. Mr Althaus' grant of an exclusive licence to Redmeat (para 25 Ex 1, para 18 Ex 2);
  1. the deed of confidentiality between Redmeat and AMH (para 27 Ex 1, para 20 Ex 2);
  1. the non-exclusive licence granted by Redmeat to AMH, permitting confidential disclosure to Conagra as possible sub-licensee (para 28 Ex 1, para 22 Ex 2);
  1. disclosures by Redmeat to AMH as to the pilot plant, and its specifications and technical manuals (para 37 Ex 1, para 26 Ex 2);
  1. AMH's exercise of the option to use the process for commercial production (para 48 Ex 1, para 32 Ex 2);
  1. the wrongful disclosure of confidential information by Conagra (para 60 Ex 1, para 59 Ex 2);
  1. Conagra's US patent application (paras 87 and 117 Ex 1, para 59(iii) Ex 2);
  1. loss to the plaintiffs through the defendants' misuse of the confidential information for their own profit (para 143 Ex 1, para 107 Ex 2)."
  1. On the basis of this comparison, the learned primary judge held that the new causes of action in the draft statement of claim arose "out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding" so that, by virtue of r 376(4) of the Uniform Civil Procedure Rules 1999 (Qld) ("the UCPR"), the court was empowered to give "leave to make an amendment to include a new cause of action" notwithstanding the expiration of "a relevant period of limitation current at the date the proceeding was started".
  1. His Honour noted that ex 1 had not included any allegations of representations, whether made "recklessly" or not, by AMH or Conagra,[2] but held that this did not take the case outside r 376(4) of the UCPR.  His Honour concluded that ex 2 was "substantially a further characterization of the legal claims which it is said emerge from a factual scenario largely there from the beginning".[3]  In this regard, his Honour relied[4] upon the observations in Draney v Barry where Thomas JA said:

"I do not think that 'substantially the same facts' should be read as tantamount to the same facts, and consider that the need to prove some additional facts is not necessarily fatal to a favourable exercise of discretion under Rule 376(4). If the necessary additional facts to support the new cause of action arise out of substantially the same story as that which would have to be told to support the original cause of action, the fact that there is a changed focus with elicitation of additional details should not of itself prevent a finding that the new cause of action arises out of substantially the same facts."[5]

  1. As to the joinder of Redmeat as a plaintiff, the causes of action sought to be pursued by Redmeat in ex 2 were breach of contract, breach of confidentiality, negligent misstatement and breach of the TPA. His Honour accepted AMH's submission that the causes of action, other than those based on equitable principles, were "all subject to potential limitation problems".[6]  The learned primary judge accepted that r 69(2) of the UCPR denied the possibility of the joinder of Redmeat to pursue the causes of action attended by limitation problems, but held that there was "no sufficient reason why Redmeat should not be joined in this proceeding to permit it to pursue in this proceeding its claims in equity".[7]
  1. At first instance, both AMH and Conagra opposed the grant of leave to deliver ex 2 on the basis that it did not plead "with specificity"[8] the information relating to the PD Process which was alleged to be confidential.  The learned primary judge rejected that criticism on the basis that it was sufficiently clear from ex 2 that Mr Althaus claimed that the "whole process" was confidential.[9]
  1. AMH also argued that, by virtue of the express terms of cl 19 of a Licence Agreement dated 23 June 1994 between Mr Althaus, Redmeat as licensor and AMH as licensee, the claims based on breach of fiduciary duty were unsustainable.  Clause 19 of the agreement was in the following terms:

"This Agreement does not create any relationship of agency, partnership or joint venture between the Licensor and the Licensee.  Neither the Licensee nor the Licensor have power to incur any obligations on behalf of or pledge the credit of the other party in any manner whatsoever."

Clause 23 of the agreement affirmed that the agreement, together with a Confidentiality Deed signed on the same date, contained the entire agreement of the parties.

  1. The learned primary judge held that, notwithstanding these provisions of the agreement of 23 June 1994, it remained arguable that AMH was in a fiduciary relationship with Mr Althaus or Redmeat, but said that "the plaintiff obviously must plead the circumstances giving rise to the fiduciary relationship alleged".[10]  I note here that, on the hearing of the appeal, Mr D J S Jackson QC, who appeared with Mr Pomerenke for AMH, did not dispute the proposition that the terms of the deed were not necessarily decisive against the case of breach of fiduciary duty which Mr Althaus and Redmeat seek to agitate.
  1. In the upshot, his Honour ordered that Redmeat be added as a plaintiff, and gave Mr Althaus leave to deliver the statement of claim in the form of ex 2, but amended, inter alia:
  1. to remove the causes of action by Redmeat other than its equitable claims;
  1. to remove Mr Lochmann as a defendant;
  1. to allege the circumstances said to give rise to fiduciary obligations; and
  1. "in other respects as the plaintiff may be advised".[11]

The arguments on appeal

  1. AMH contends that leave to deliver ex 2 should have been refused, and that Redmeat should not have been joined as a plaintiff. In summary, AMH submits that the learned primary judge erred in:
  1. adding Redmeat as a second plaintiff;
  1. accepting that the claims based on representations by AMH or Conagra arose out of substantially the same facts as those for which relief had already been claimed within the meaning of r 376(4) of the UCPR;
  1. in failing to appreciate that the basis for claims of breach of fiduciary duty had not been pleaded in ex 2;
  1. in granting the plaintiffs leave to amend generally as they "may be advised".
  1. Conagra supports AMH's contentions, and submits that ex 2 does not adequately identify the confidential information in question, and its misuse by Conagra to allow the action to proceed to trial on that pleading.
  1. I now turn to discuss these arguments in turn.

The addition of Redmeat as a second plaintiff

  1. It was common ground, below and on appeal, that none of the circumstances specified in r 69(2)(a) to (f) applies in this case. AMH submits that r 69(2) of the UCPR operated to preclude the addition of Redmeat as a second plaintiff. AMH relies upon the prohibition in r 69(2) that "the court must not include or substitute a party after the end of a limitation period unless 1 of the following applies", and argues that this prohibition applies, not merely to a cause of action asserted by the new party being joined in the proceeding, but in any case where any limitation period applicable to any cause of action asserted by any party to the proceeding has expired.
  1. AMH supports its interpretation of r 69(2) as one which gives effect to the ordinary grammatical meaning of the words of the rule. AMH submits that there is no warrant for reading into the rule additional words so that it would read:

"the court must not include or substitute a party in respect of a cause of action after the end of a limitation period in respect of that cause of action unless 1 of the following applies …". (additional words in bold)

  1. In my respectful opinion, this argument fails to appreciate that considerations of text and context confirm that the prohibition in r 69(2) is indeed concerned to prohibit joinder or substitution of a party in respect of a particular cause of action vested in that party for which the limitation period has ended.
  1. Rule 69 appears in pt 1 of ch 3 of the UCPR. This is a group of provisions dealing with the inclusion of "[s]everal causes of action and parties in a proceeding". Rule 69 itself is concerned with the reconstitution of pending proceedings, either by the removal of a person from the proceeding, or the inclusion as a party of "a person whose presence before the court is necessary to enable the court to adjudicate effectually and completely on all matters in dispute in the proceeding" (r 69(1)(b)(i)) or "a person whose presence before the court would be desirable, just and convenient to enable the court to adjudicate effectually and completely on all matters in dispute connected with the proceeding" (r 69(1)(b)(ii)). 
  1. The broad scope of r 69(1)(b), and especially r 69(1)(b)(ii), means that a wide range of plaintiffs seeking to pursue a wide range of causes of action might be joined in a pending proceeding under the authority of these provisions. The command in r 69(2) that "the court must not include or substitute a party after the end of a limitation period unless 1 of the following applies" serves to ensure that a defendant in pending proceedings is not confronted by a plaintiff seeking to pursue a new cause of action raised for the first time by that plaintiff after the end of "a limitation period".  Where the cause of action sought to be agitated by the person seeking to be joined as a new plaintiff is statute-barred, r 69(2) excludes entirely the risk that, under r 74(5), a good defence under the limitation statute would be defeated by the joinder.  The particular provisions of r 69(2)(a) to (f) each exhibit a concern to ensure that a time-barred cause of action to be pursued by the new party should be closely associated with a cause of action already the subject of a claim by an existing party.  Thus, in the context in which r 69(2) appears, it is difficult to discern an intention to deny the joinder of a new plaintiff who meets the qualifications for joinder in r 69(1)(b) and who seeks to agitate a cause of action that is not statute-barred at the date of joinder. 
  1. The language in which r 69(2) is cast requires close consideration. Rule 69(2) deploys the concept of "a party", and the concept of a "cause of action" in association with each other. When r 69(2) speaks of a limitation period having ended, it is necessarily speaking of a limitation period for a cause of action: it is meaningful to speak of a limitation period only when one is speaking of a cause of action. That cause of action being referred to must, in the nature of things, be associated with a person. The focus of the prohibition in r 69(2) is upon the person to be joined as a party. That this is so is confirmed by r 69(2)(b) which refers to the "relevant cause of action … vested in the new party and the plaintiff [ie the existing plaintiff] … jointly but not severally". The "relevant cause of action" is that vested in the new party. Rule 69(2) is thus concerned to prevent the joinder of a new plaintiff where the limitation period applicable to the cause of action vested in that party has expired. If r 69(1)(b) is satisfied in relation to the proposed new plaintiff, and the causes of action vested in the new party are not affected by a limitation period which has come to an end, then r 69(2) does not prohibit the joinder. On this view of r 69(2), it is concerned to deny the joinder of a party whose relevant cause of action is adversely affected by a limitation period, save in those cases specifically identified in r 69(2)(a) to (f). The rule is not, however, concerned to deny the joinder of a party whose relevant cause of action is not adversely affected by the end of the limitation period applicable to that cause of action.
  1. AMH argues that this view of r 69(2) would tend to undermine the apparent object of r 69(2) by "permitting the destruction of limitation defences in cases outside the defined circumstances". AMH argues that this view of r 69(2) would allow a new party, such as Redmeat, to add otherwise statute-barred causes of action by reliance upon r 376(4). But to say this is simply to recognise that r 376(4) affords a mechanism of general application whereby limitation defences may be avoided where the court considers that such an outcome is "appropriate" pursuant to r 376(4)(a); and that a new party is as entitled to the benefit of the rules of court as an "old" party.  To the extent that it may not be "appropriate" to allow a new party the benefit of r 376(4), then the court may give effect to that view pursuant to r 376(4)(a).
  1. Further in this regard, AMH argues that, on this view, "the joinder of a party would only ever be precluded by operation of r 69(2) … where each and every cause of action upon which that party sought to rely was subject to a limitation period which had expired". But such an outcome is consistent with the view that, because different limitations may apply to different causes of action vested in different plaintiffs, a new plaintiff, who falls within r 69(1)(b), should be shut out from being joined to litigate only those causes of action which have expired. That is not a result which is so obviously unreasonable as to be untenable. It is not difficult to attribute such a view to those responsible for making r 69. To the extent that this approach may have mitigated the rigours of the predecessor of r 69,[12] that is not necessarily surprising.  A defendant would not necessarily be denied the benefit of a limitation defence in respect of those causes of action which were time-barred.  The court which permits the joinder can prevent that kind of prejudice to a defendant by making an order "otherwise" under r 74(5).  Rule 74(5) provides relevantly that "… for a limitation period, a proceeding by or against a new party is taken to have started when the original proceeding started, unless the court orders otherwise".
  1. Finally, in this regard, it was said on behalf of AMH that Redmeat's equitable claims would be defeated on the basis that equity acts by analogy with the statute.[13]  Whether or not a defence of the kind foreshadowed might succeed, it is clear that when r 69(2) of the UCPR speaks of a limitation period, it is speaking of "a limitation period under the Limitation of Actions Act 1974" (Qld).[14]  That Act does not apply, of its own force, a limitation period to render unenforceable actions for breach of confidence.[15]  An equitable defence which arises by analogy with the defence provided by the expiration of a limitation period prescribed by the Limitation of Actions Act is not "a limitation period" for the purposes of r 69(2) of the UCPR. 
  1. For these reasons, I would reject the challenge to the joinder of Redmeat.

The r 376(4) issue

  1. AMH and Conagra submit that the causes of action which rely upon allegations that AMH gave assurances or made representations as to its future conduct cannot be said to "arise out of substantially the same facts as those for which relief had been claimed in Ex 1". Both AMH and Conagra argue that the learned primary judge failed to appreciate that ex 1 did not seek to found any claim, or part of its claim, on assurances or representations made by AMH or Conagra. Conagra emphasises the point that ex 1 made no mention at all of the representation by Mr Lochmann alleged in ex 2 as a basis for claims for negligence and misleading and deceptive conduct against Conagra.
  1. In my respectful opinion, this submission of AMH and Conagra (that the causes of action based on assurances or representations do not arise out of substantially the same facts as those for which Mr Althaus had already claimed relief in ex 1) must be accepted.
  1. As this Court made clear in Thomas v State of Queensland:[16]

"Of course, 'the story' [referred to by Thomas JA in Draney v Barry referred to at para [14] above] is a shorthand reference to the matters that the plaintiff has to prove."

  1. The representations and extra-contractual assurances which the plaintiffs allege as the basis for their claims for damages for misleading and deceptive conduct and negligent misstatement were not matters which the plaintiffs either sought to prove or had to prove in order to succeed with the claims advanced in ex 1. The allegations which founded the causes of action for which relief was claimed in ex 1 made no mention of representations or assurances beyond contractual promises. The falsity of assurances or representations was not raised. The facts alleged in relation to the giving of false assurances or the making of false representations are not substantially the same facts as the plaintiffs had pleaded in ex 1; they are substantially different facts.
  1. AMH's further submission on this point is made on the basis that ex 2 advances a case of fraud and dishonesty, and that, to adopt the observations of Millett LJ (as his Lordship then was) in Paragon Finance plc v D B Thakerar & Co:[17]

"it would be 'contrary to common sense' to hold that a claim based on allegations of negligence and incompetence … involved substantially the same facts as a claim based on allegations of fraud and dishonesty."

  1. In my respectful opinion, this submission must also be accepted. Reckless or dishonest disregard for the truth was not one of the facts that Mr Althaus sought to prove in ex 1, nor was it an allegation which was necessarily implicit in the narrative of those facts contained in ex 1.[18]
  1. For these reasons, I conclude that the claims based on representations by AMH and Conagra should not have been permitted to be added to the statement of claim.

The breach of fiduciary duty case

  1. AMH submits that, even though the terms of cl 19 of the deed of 23 June 1994 may not itself have been fatal to a case of breach of fiduciary duty, the learned primary judge ought to have refused to allow the action to go forward on the basis of a grant of leave to deliver the pleading in Ex 2.
  1. The view taken by the learned primary judge[19] was that leave should be granted if the draft disclosed a reasonable cause of action.  On appeal, AMH argued that, consistently with this view, the absence of pleaded facts on which a claim for breach of fiduciary duty might be based meant that the fiduciary duty claim should have been struck out of any pleading which the plaintiffs might have been given leave to deliver.  This argument is associated with AMH's submission that it was an error to allow the pleading to be delivered on the footing that the draft ex 2 might be amended generally as the plaintiffs "may be advised".  In this regard, AMH argued that the learned primary judge lost sight of the circumstances in which the application came before him, that is to say, the difficulties which had dogged the presentation of a statement of claim which adequately and fairly stated the plaintiffs' case.
  1. His Honour was, however, of the view that ex 2 did fairly plead a number of viable causes of action apart from the fiduciary duty claim. It was, therefore, not inconsistent with his view that leave to deliver the pleading depended upon a demonstration that it did contain a viable cause of action. Once his Honour was satisfied that the draft statement of claim did plead a reasonable cause of action, it was a matter for his Honour's discretion as to what directions were appropriate to the expeditious progress of the matter. His Honour was not constrained by principle to require the plaintiffs to prepare a further draft before leave was granted. His Honour may well have come to the view that, following the course of argument before him, counsel for the plaintiffs could now be relied upon to make explicit the bases of the fiduciary duty case and that the balance of the case was sufficiently pleaded to allow the plaintiffs to get on to further steps rather than to hold the matter up further at this stage. Judgments formed by the learned primary judge in this regard are in the heartland of practice and procedure where the expeditious movement of the proceeding towards a trial is the primary objective. This is an area where appellate courts must be wary of invitations to second-guess decisions which are largely of a managerial nature; and, if this were the only ground of complaint by AMH and Conagra, I would reject it.
  1. Nevertheless, because of the views which I have taken in relation to the plaintiffs' case based on misrepresentation and the embarrassing manner in which the plaintiffs' breach of confidence case is pleaded, I consider that the plaintiffs should not now be given leave to file a statement of claim in the form of ex 2 amended as they may be advised.

The breach of confidence case

  1. Conagra's submission (in which AMH joined) is that ex 2 contains inadequate, confusing and internally inconsistent allegations relating to what confidential information relating to the PD Process has been misused by Conagra. The learned primary judge described the arguments advanced by Conagra as "nit-picking".[20]  I respectfully disagree.
  1. The confidential information which the plaintiffs claim was misused is described in two batches as the "Confidential Information", being information pertaining to the period prior to the deed of 23 June 1994, and the "Supplementary Confidential Information" being information pertaining to the period after 23 June 1994. The draft pleading ex 2 identifies a large volume of drawings and plans which, it is said, have been misused.
  1. The learned primary judge accepted that the complaint made by Mr Althaus and Redmeat related to the misuse of confidential information in respect of the PD Process, considered as a process.  It was also said in the course of argument in this Court, on behalf of Mr Althaus and Redmeat, that the information relating to the PD Process which was confidential concerned both the manufacture of particular components of the process, and the use of these and other components, in association with a novel configuration to achieve a new food manufacturing process.  But while one may readily accept that the plaintiffs might be able to advance such a case, ex 2 does not contain a clear and precise statement of what was confidential about the process, as such, or its individual components, and what specific information concerning the manufacture of particular components which was confidential was misused by AMH or Conagra.
  1. In considering the sufficiency of the pleaded case in relation to the misuse of confidential information, one must bear in mind, as Mason J said in O'Brien v Komesaroff:[21]  "One needs to know not only what was the information conveyed but also what part of that information was not common knowledge".
  1. In ex 2, the plaintiffs seem to say that all information about the process was secret.  That plainly cannot be the case having regard to the schedules to ex 2 which confirm that aspects of the process and the relevant componentry are well known and have been in use in industry for many years.  The confidential information was identified in ex 2 by reference to schedules which described, inter alia, the PD Process at such a high level of generality that it is difficult to discern in what way it could be regarded as confidential.  It also referred to information which was, avowedly, in the public domain.  The pleading lacks a precise and concise statement of "the particular contents of the documents which [the plaintiffs assert] constitute information the confidentiality of which [the plaintiffs are] entitled to protect".[22]  Exhibit 2 does not, in terms, state what it is about the configuration of components or the design or construction of particular components which is said to be of his own secret devising.  This deficiency is not remedied by pointing to all the information ever used or collated by Mr Althaus in relation to every aspect of the PD Process because, as those documents themselves recognise, many of the integers of the process were well known apart from his inventive efforts.  In the identification of the respects in which the components, or the association of components, were novel and confidential, the pleading lacks that "specificity" which is required in the presentation of a claim for misuse of confidential information.[23]
  1. For these reasons, I am respectfully of the opinion that ex 2 does not fairly and adequately identify the confidential information alleged to have been misused by AMH or Conagra.

Further evidence

  1. Both Conagra and AMH sought to adduce further evidence pursuant to r 766(1)(c) and (2) of the UCPR. The further evidence consists of Mr Althaus' affidavits sworn on 10 and 14 June 2006 which was said to be inconsistent with his pleaded case with respect to the confidential information allegedly misused by AMH and Conagra.  It was argued that Mr Althaus' affidavits contained acknowledgments, inconsistent with the case pleaded in ex 2, viz, that the whole of the "Confidential Information" had been misused, and misused in such a way that its value was lost to Mr Althaus and Redmeat.  Because I have come to the view that ex 2 did not identify precisely and fairly those aspects of the confidential information allegedly misused by Conagra, it is unnecessary to resolve the application to adduce further evidence. 
  1. AMH sought to suggest that the further evidence was not only inconsistent with the pleaded case of Mr Althaus and Redmeat, but demonstrative of the speculative nature of the case. AMH argued that this speculative case should not be allowed to proceed. Once again, because I consider that the case as pleaded in ex 2 in relation to the misuse of confidential information has not been formulated with the requisite precision, consistency and clarity, it is unnecessary to resolve AMH's application.

Conclusion and orders

  1. In my respectful opinion, the learned primary judge should not have given leave to deliver ex 2, but should have allowed the plaintiffs a further opportunity to prepare a draft statement of claim which properly pleaded the breach of fiduciary duty case and the breach of confidence case. This should now be done on the basis that the plaintiffs might seek leave to file a further amended statement of claim within a limited time. That pleading should not contain any of the causes of action based on representations by the defendants. To this end, the leave granted by the learned primary judge should be revoked.
  1. The appeal should be allowed in part. The grant of leave to the plaintiffs to deliver ex 2, as amended, should be set aside. The plaintiffs should be directed to seek the leave of a judge of the trial division to file a further amended statement of claim within 21 days. Otherwise, the appeal should be dismissed.
  1. As to the costs of the appeal, each side has enjoyed a measure of success. The appellants had no choice but to come to this Court to obtain the measure of success they have achieved. Nevertheless, the appellants failed in relation to the joinder of Redmeat, and this argument was a substantial issue in the appeal.
  1. I consider that the orders which reflect, albeit in a broad way, the relative success of the parties, are that Mr Althaus should pay one half of the costs of AMH of and incidental to the appeal to be assessed on the standard basis, and Redmeat should recover its costs of the appeal on the issues relating to the challenge to its joinder from AMH and Conagra to be assessed on the standard basis.
  1. I am not disposed to make a separate order for costs in favour of Conagra in relation to the issues on which it was successful. Conagra's interests and arguments on the appeal were in no way inconsistent with those advanced by AMH. While Conagra is an entity separate from AMH, and so entitled to separate representation in the action, the two entities are associated and there was no reason why the arguments presented on appeal on behalf of AMH and Conagra could not have been presented by one set of legal representatives.
  1. HOLMES JA:  I agree with the reasons for judgment of Keane JA and with the orders proposed.

Footnotes

[1] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 056 at [18].

[2] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [19].

[3] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [19].

[4] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [20].

[5] Draney v Barry & Ors [1999] QCA 491 at [57]; [2002] 1 Qd R 145 at 164.

[6] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [23].

[7] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [27].

[8] Cf Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443.

[9] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [33] - [35].

[10] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [44].

[11] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [45].

[12] Cf MAM Mortgages Limited (in liq) v Cameron Bros, unreported, SC No 1562 of 1996, Chesterman J, 16 June 1999.

[13] Mann v Commonwealth [2001] NSWCA 236; No 40396 of 2000, 13 July 2001 at [13].

[14] See UCPR sch 4.

[15] Mann v Commonwealth [2001] NSWCA 236; No 40396 of 2000, 13 July 2001 at [13].

[16] [2001] QCA 336; Appeal No 360 of 2001, 24 August 2001 at [19].

[17] [1999] 1 All ER 400 at 418.

[18] Cf Thomas v State of Queensland [2001] QCA 336 at [19].

[19] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [3].

[20] Althaus v Australia Meat Holdings P/L & Anor [2006] QSC 56 at [34].

[21] (1982) 150 CLR 310 at 327.

[22] (1982) 150 CLR 310 at 326.

[23] See Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443.

Close

Editorial Notes

  • Published Case Name:

    Althaus & Anor v Australia Meat Holdings P/L & Anor

  • Shortened Case Name:

    Althaus v Australia Meat Holdings Pty Ltd

  • Reported Citation:

    [2007] 1 Qd R 493

  • MNC:

    [2006] QCA 412

  • Court:

    QCA

  • Judge(s):

    McMurdo P, Keane JA, Holmes JA

  • Date:

    20 Oct 2006

Litigation History

Event Citation or File Date Notes
Primary Judgment [2006] QSC 56 - -
Appeal Judgment (QCA) [2007] 1 Qd R 493 20 Oct 2006 -
Special Leave Refused (HCA) [2009] HCASL 260 - refused

Appeal Status

{solid} Appeal Determined - {hollow-slash} Special Leave Refused (PC/HCA)