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  • Unreported Judgment

Maclag (No 11) Pty Ltd v Chantay Too Pty Ltd

 

[2009] QSC 57

 

SUPREME COURT OF QUEENSLAND 

 

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

23 March 2009

DELIVERED AT:

Brisbane

HEARING DATE:

24 February 2009

JUDGE:

McMurdo J

ORDER:

1.That paragraphs 11A and 17B of the further amended statement of claim filed on 24 February 2009 be struck out and that the plaintiffs file and serve an amended statement of claim within 14 days of this judgment. 

2.The defendants’ application filed on 21 January 2009 is otherwise dismissed. 

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – PLEADING – STATEMENT OF CLAIM – where the evidence supporting a pleaded case is limited – where the pleading is in some respects unsatisfactory – whether the pleading discloses no reasonable cause of action – whether the pleading has a tendency to prejudice or delay the fair trial of the proceeding

Uniform Civil Procedure Rules 1999, r 150(2); r 171(1)(a), (b)

COUNSEL:

A P J Collins for the plaintiffs
D Savage SC for the defendants

SOLICITORS:

Frampton Legal for the plaintiffs
Cronin Litigation for the defendants

[1] This is an application to strike out parts of the statement of claim on the basis that they disclose no reasonable cause of action or have a tendency to prejudice or delay the fair trial of the proceeding.[1]  The application as filed sought summary judgment on parts of the plaintiffs’ claim, but during the hearing it was rightly conceded that this order could not be pursued.

[2] This is a partnership dispute.  The business of the partnership was the acquisition and development of land.  The partnership acquired land at Mermaid Beach and Miami on the Gold Coast.  On the plaintiffs’ case, the partnership investigated the prospect of purchasing other nearby land at Miami during the period from June 2006 until May 2007.  This other land is described as the Leon Hill property and the Littlejohn property.  But the partnership did not buy that land. Instead, the Leon Hill property was purchased by the defendants for themselves on or about 3 May 2007.

[3] The plaintiffs allege that the acquisition of the Leon Hill property was a breach of the partnership agreement,[2] which engaged provisions of that agreement under which the partner in default could be compelled to transfer its interest in the partnership at a price to be agreed or fixed by a valuation.  The plaintiffs claim that they have exercised their rights under those provisions and that the defendants are obliged to transfer their interest in the partnership.

[4] They also claim that by the acquisition of the Leon Hill property, the partnership has been denied the opportunity to acquire and develop that property in conjunction with its land at Miami and that the defendants have obtained a benefit from their acquisition, the particulars of which “can only be provided after expert evidence has been attained in respect of the various interests”.[3]

[5] The relevant terms of the partnership agreement provided that if a partner breached certain terms of the agreement or was guilty of conduct which would be a ground for the dissolution of the partnership, the other partners could determine the partnership by notice in writing within three months of becoming aware of that matter, and in that event could, within a further three months, elect to purchase the share of the defaulting partner.  As the plaintiffs plead, they became aware of the purchase of the Leon Hill property about the time it occurred.  Accordingly, consistently with the plaintiffs’ case, they had a period of three months from then to give a notice terminating the partnership.

[6] However, they did not give such a notice within that three month period.  They gave such a notice on 3 September 2008.  The plaintiffs say that they were entitled to give that notice because of events which had occurred within three months prior to September 2008, as well as the purchase of the Leon Hill property.  Anticipating that the defendants would say that they were out of time to rely upon the Leon Hill property purchase, the plaintiffs plead an estoppel.  The intended effect of this plea is that the defendants should be estopped from relying upon the three month time limit insofar as the Leon Hill property is concerned.  It is that plea which is the subject of the strike out application.

[7] The estoppel case is pleaded as follows.  It is alleged that the defendants knew that the acquisition of the Leon Hill property entitled the plaintiffs to issue a notice terminating the partnership within that period of three months;[4] that the defendants “agreed with or otherwise represented to” the plaintiffs that the defendants would grant to the plaintiffs “a right of first and last refusal to purchase the Leon Hill Property” should the defendants wish to sell it;[5] in reliance upon that agreement or representation, the plaintiffs did not elect to terminate the partnership agreement within the three months;[6] the defendants knew that the plaintiffs would “rely on the representations”;[7] the plaintiffs thereby acted to their detriment;[8] so that in these premises, the defendants “are estopped from denying the First Plaintiff and the Second Plaintiff the right to issue a notice pursuant to [the relevant clause] of the partnership agreement on 3 September 2008”.[9]

[8] Mr Savage SC for the defendants referred to documents passing between the parties from May 2007 to September 2008, and strongly argued that these documents demonstrate that the estoppel case has no prospect of success.  However, I am not persuaded that that is so.  There is affidavit evidence from Mr Burns, the principal of the first plaintiff, that had it not been for what he thought was the defendants’ agreement to give the right of first refusal, he would have delivered a notice terminating the partnership within the three months, and that he decided not to do so within that period with the concurrence of the second plaintiff, Mr Lazarides.  There is no direct evidence of the defendants’ knowledge of this reliance, but it is to be expected that they will argue that this knowledge should be inferred.  Unfortunately the facts and circumstances from which that inference would be drawn are not yet pleaded, as they should be pursuant to UCPR r 150(2).  Nevertheless the case is not so evidently hopeless in that respect.

[9] There is more force in Mr Savage’s argument that the alleged “agreement”, in the sense of a concluded contract, for the grant of a right of first refusal is disproved by the contemporaneous documents.  But it is preferable that I not form a concluded view about that until the plaintiffs have had another chance to amend their pleading.  At present their real case seems to be not so much that there was a concluded agreement, but that the plaintiffs were led to expect that such an agreement would be concluded, and that the defendants said otherwise only after the expiry of the three month period.

[10] It is difficult to see that the plaintiffs could establish, as they plead by para 11A(h), that it was not until some time within three months of 3 September 2008 that it became known to them that the defendants did not intend to grant the right of first and last refusal and that the defendants intended to utilise the Leon Hill property to the detriment of the partnership.  The documentary evidence seems to establish that the defendants made it plain in 2007 that they would not grant that right.  But the resolution of that factual question now would have no practical utility.  And from what was said by Mr Collins for the plaintiffs, it seems unlikely that this allegation would appear in any further pleading of the estoppel case. 

[11] The present question is not whether the estoppel case is apparently strong or weak:  it is whether it is so clearly devoid of merit that the plaintiffs should be denied the opportunity of proving it.  The terms in which it is pleaded are in some respects unsatisfactory, as was conceded by Mr Collins during his argument.  However, that is not to say that there is no underlying basis for a proper pleading. 

[12] Mr Savage argued that there was considerable utility in resolving now the question of whether there is any estoppel case which could be pleaded.  He said that the trial would take, in effect, five times as long with the inclusion of the estoppel case.  I do not accept that submission.  This case would still involve a consideration of the propriety of the acquisition of the Leon Hill property, and the obligation or otherwise of the defendants to account for any benefit from that acquisition.  Further, because the plaintiffs rely upon additional grounds for their notice of 3 September 2008, the elimination of the estoppel case would still leave the plaintiffs with a claim that they have validly terminated the partnership and are entitled to acquire the defendants’ interest at a price to be fixed by valuation.  In my view the estoppel case would add relatively little to the time required for a trial of this proceeding.

[13] The relevant paragraphs of the further amended statement of claim are paras 11A and 17B.  The particular defects in the present pleading are as follows.  First, para 17B(f) alleges that the defendants are estopped from denying that the plaintiffs were entitled to issue a notice on 3 September 2008.  This is pleaded too widely, because the estoppel, if any, would be that the defendants are precluded from saying that the notice of 3 September 2008 is invalid for having been given more than three months from May 2007.  Secondly, the pleading of an “agreement” for the grant of the right of first and last refusal is likely to confuse the issues, because with the benefit of argument, it appears that the plaintiffs would not allege that they had made a concluded agreement.  On the other hand, if it is the plaintiffs’ case, at least in the alternative, that a concluded agreement was reached, then this pleading would require amendment because at present, it seems to plead an agreement to agree.  Thirdly, there is the matter already mentioned of para 11A(h).  Fourthly, as also mentioned, there are no facts pleaded from which the defendants’ state of mind is to be inferred.

[14] It will be ordered that paragraphs 11A and 17B of the further amended statement of claim filed on 24 February 2009 be struck out and that the plaintiffs file and serve an amended statement of claim within 14 days of this judgment.  The defendants’ application filed on 21 January 2009 is otherwise dismissed.  I will hear the parties as to costs.

Footnotes

[1] UCPR r 171(1)(a), (b).

[2] Including an express term that the partners would diligently and faithfully employ themselves in the business of the partnership.

[3] Further amended statement of claim, para 20.

[4] Further amended statement of claim, para 17B(b).

[5] Further amended statement of claim, para 11A(c).

[6] Further amended statement of claim, para 11A(e).

[7] Further amended statement of claim, para 17B(d).

[8] Further amended statement of claim, para 17B(e).

[9] Further amended statement of claim, para 17B(f).

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Editorial Notes

  • Published Case Name:

    Maclag (No 11) P/L & Anor v Chantay Too P/L & Anor

  • Shortened Case Name:

    Maclag (No 11) Pty Ltd v Chantay Too Pty Ltd

  • MNC:

    [2009] QSC 57

  • Court:

    QSC

  • Judge(s):

    McMurdo J

  • Date:

    23 Mar 2009

Litigation History

No Litigation History

Appeal Status

No Status