- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Baldwin & Anor v Icon Energy Ltd & Anor (No 2)  QSC 286
RONALD WILLIAM BALDWIN
SOUTHERN FAIRWAY INVESTMENTS PTY LTD
ACN 115 060 378
ICON ENERGY LIMITED
ACN 058 454 569
JAKABAR PTY LIMITED
ACN 058 454 765
SC No 3667 of 2014
Application to amend pleadings
Application to strike out pleadings
Supreme Court at Brisbane
15 October 2015
25 June 2015; Further written submissions received 31 July 2015; 10 August 2015
Philip McMurdo J
The orders will be as follows:
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – STATEMENT OF CLAIM – where the second plaintiff amended its statement of claim reformulating its claims for breach of contract pleading a different legal entitlement under that contract – plaintiff pleaded that it suffered loss and damage not from the loss of the benefit of the MOU but from its having spent money in ignorance of the fact that the defendants never intended to perform the MOU and to enter into a concluded gas supply agreement – where the defendants argued the amended pleading should be struck out – where the second plaintiff sought leave to amend its claim to include allegations of a contravention of section 52 of the Trade Practices Act 1974 (Qld), breach of fiduciary duty and deceit – where the first plaintiff claimed damages for breach of contract and the defendants argued that this claim should be summarily dismissed – where the first plaintiff’s pleading was deficient and failed to inform the defendants of the plaintiff’s case regarding the particular construction of a contractual clause it advanced and the facts by which he said he was entitled to be issued an option to purchase shares under the contract – where the defendants strike out application in relation to the first plaintiff’s claim was successful but the first plaintiff was granted leave to re-plead
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – AMENDMENT – where the second plaintiff sought leave to amend its claim to include allegations of a contravention of section 52 of the Trade Practices Act 1974 (Qld) – where the defendants applied to strike out parts of the pleading relating to that claim because the limitation period had expired – whether the claim could be added under r 376(4) of the UCPR – whether the new cause of action arose out of the same facts or substantially the same facts – where the second plaintiff was refused leave to add its claim for contravention of TPA s 52 – the plaintiff’s introduction of a factual case that the defendant acted with fraudulent intent effectively precluded the operation of r 376(4) and to allow the amendment would defeat the availability of a defence that the claim was statute barred – where the second plaintiff sought leave to amend its claim to include allegations of breach of fiduciary duty – fiduciary case was clearly without merit and leave to amend to add the claim was refused – where the second plaintiff sought leave to amend its claim to include a deceit claim – unclear that r 376 of the UCPR operated as the limitation period for a cause of action based upon fraud does not begin until the fraud is or could be discovered: Limitation of Actions Act 1974 (Qld) s 38 – defendants not deprived of a limitation defence – where the second plaintiff was granted leave to amend its claim to include the deceit claim
Limitation of Actions Act 1974 (Qld), s 38
Trade Practices Act 1974 (Cth), s 82, s 87
Uniform Civil Procedure Rules 1999 (Qld), r 376, r 387
Air Link Pty Ltd v Patterson (No 2) (2003) 58 NSWLR 388, cited
Althaus v Australia Meat Holdings  1 Qd R 493;  QCA 412, applied
Baldwin & Anor v Icon Energy Ltd & Anor  QSC 12, discussed
Coles Supermarkets Australia Pty Ltd v FKP Ltd  FCA 1915, cited
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64;  HCA 54, discussed
Concrete Constructions Group v Litevale Pty Ltd (2002) 170 FLR 290, cited
Dart Industries Inc v Décor Corp Pty Ltd (1993) 179 CLR 101;  HCA 54, cited
Draney v Barry  1 Qd R 145;  QCA 491,
Electricity Generation Corporation v Woodside Energy Ltd & Ors  HCA 7; (2014) 251 CLR 640, applied
Fibreglass Pool Works (Manufacturing) Pty Ltd v ICI Australia Pty Ltd  1 Qd R 149, cited
Futuretronics International Pty Ltd v Gadzhis  2 VR 217, cited
Goldcorp Exchange Ltd (In Receivership), Re  1 AC 74, applied
Henry v Calamvale Estates Pty Ltd  QSC 200, cited
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41;  HCA 64, applied
International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151, applied
John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd  HCA 19; (2010) 241 CLR 1, considered
Marks v GIO Australia Holdings (1998) 196 CLR 494;  HCA 69, applied
Middleton v O’Neill (1943) 43 SR (NSW) 178, cited
Mokrzecki v Popham  QSC 123, cited
Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (2001) 109 FCR 528, considered
Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274, cited
Rafferty v Madgwicks (2012) 203 FCR 1, cited
Ramsey v McElroy  1 Qd R 667;  QCA 208, applied
Streetscape Projects (Australia) Pty Ltd v City of Sydney (2013) 85 NSWLR 196;  NSWCA 2, considered
Wang v Anying Group Pty Ltd (No 3)  FCA 1380, cited
P Dunning QC, with D A Skennar for the first and second plaintiffs
S Couper QC, with A Nicholas for the first and second defendants
Clayton Utz for the first and second plaintiffs
HopgoodGanim for the first and second defendants
- In an earlier judgment in this case, I struck out the plaintiffs’ statement of claim with liberty to re-plead. The plaintiffs re-pleaded and the defendants applied to strike out parts of that pleading. Shortly prior to the hearing of that application, a draft of yet another amended pleading was delivered. Then during the hearing, the plaintiffs’ counsel acknowledged that there were still deficiencies in that pleading. Directions were made for the provision of yet another draft statement of claim and written submissions about it. The latest draft meets some, but not most, of the defendants’ objections.
- This judgment should be read with my previous judgment which set out most of the presently relevant terms of the contract between the second plaintiff (described in the contract as “B&B”) and the defendants, which I called the MOU. The pleading which I struck out in the previous judgment claimed damages for breach of that contract. There is still such a claim in the present pleading, although in markedly different terms. B&B has added further causes of action, namely for relief for misleading and deceptive conduct in contravention of the Trade Practices Act 1974 (Cth) (“TPA”), damages for deceit and relief for alleged breaches of fiduciary duties said to have been owed by the defendants to B&B.
- The first plaintiff has also reformulated his case. He still claims damages for breach of his contract with the defendants. But he pleads a different legal entitlement under that contract, which the defendants argue is unsustainable and should be struck out.
B&B’s new contract case
- B&B alleges that the defendants breached clauses 2(a) and 3 of the MOU. Clause 2(a) required the defendants to deal only with B&B during the so-called Exclusivity Period. Essentially the same facts are pleaded, as constituting the breach or breaches of this clause, as were pleaded in the statement of claim which was the subject of my previous judgment. However, the relief claimed is substantially different. B&B no longer claims that the consequence of these breaches was that it was denied the benefit, or even the prospect, of a concluded gas supply agreement. The present case is that B&B suffered losses by spending money in pursuing that gas supply agreement, which it would not have spent had it known that the defendants were dealing with other parties in breach of the exclusivity provisions of s 2(a).
- Clause 3 of the MOU contained a number of terms to protect so-called Confidential Information, being information disclosed by one side to the other in the course of negotiations for a gas supply agreement. It is sufficient to set out these parts of clauses 3 and 3.2:
(a)The parties recognise that improper disclosure or use of Confidential Information disclosed by one party (the ‘Disclosing Party’) to the other (the ‘Recipient’) in connection with the development of the Gas Supply Agreement may result in damage to the Disclosing Party.
(b)Each party acknowledge[es] and agree[s] to comply with its respective confidentiality obligations set out in 3.2.
3.2Conditions of Disclosure
The Recipient agrees:
(a)not to disclose the Confidential Information to any third party …”
B&B now alleges that in breach of cl 3, the defendants disclosed the terms of the MOU “or information concerning, relating to and in connection with the Gas Supply Agreement (as that term is used in the MOU)” to third parties with whom, B&B alleges, the defendants were negotiating in breach of the exclusivity provisions, namely Stanwell Corporation Ltd and Australian Worldwide Exploration Ltd. B&B claims the same wasted expenditure as damages for breach of cl 3.
- In my previous judgment, I said that cl 2(a) was different from the promises within cll 1.3 and 2(b) of the MOU and would be a sufficiently certain and enforceable provision if severable from the unenforceable provisions of the MOU. As I then noted, there was no argument at that stage as to whether the provisions were severable. Now the defendants argue that they are not severable, so that the unenforceability of clauses 1.3 and 2(b) has the result that none of the MOU is enforceable.
- Schedule 1 of the MOU contained so-called General Terms of Conditions which included this term:
If any provision of the MOU is construed as illegal or invalid or void, the legality or validity or enforceability of any other provision of the MOU will not be affected, and the illegal, invalid or void provision will be deemed to be deleted from the MOU to the same extent and effect as if it were never incorporated, but all other provisions of the MOU will continue in force unless the deletion of the provision would alter the commercial efficacy of the MOU.”
- In the terms of cl 11, the defendants argue that clauses 1.3 and 2(b) are “invalid” and that the proviso at the end of the clause applies because the deletion of those provisions “would alter the commercial efficacy of the MOU”. They say that absent clauses 1.3 and 2(b), B&B “had no obligations at all” and that the defendants “had the obligations under clause 2(a) for which they received no enforceable benefit”. That cannot be accepted, because B&B remained bound by the confidentiality provisions in cl 3, which imposed obligations on each side of the transaction. Still, the question is whether the unenforceability of the promises to negotiate “altered” the “commercial efficacy of the MOU”. Undoubtedly, there was good consideration for the remaining promises by the defendants, not only because of cl 3 but also because the MOU was executed as a deed. But cl 11 calls for a comparison between the MOU on its face and the MOU without the promises to negotiate.
- Absent cll 1.3 and 2(b), the MOU was not clearly devoid of commercial efficacy. The obvious reason for the inclusion of the exclusivity provisions was that they were conducive to the prospect of a concluded gas supply agreement being reached between these parties.
- If the required comparison is between the relative efficacy of the MOU with and without clauses 1.3 and 2(b), difficult questions arise. In a sense, the severance of clauses 1.3 and 2(b) would not alter the commercial efficacy of the MOU because those terms, having had no legal content, could not have contributed to the commercial efficacy of the contract. If it is necessary to hypothesise that these terms had some legal content, what was it? But quite apart from that point, a present problem in the defendants’ argument is that it raises a factual question, namely the impact on the MOU as conducing to the conclusion of a gas supply agreement, for which evidence which is not presently before the court could be relevant. Therefore, the defendants’ argument for the application of this proviso within cl 11 is not one which could justify the summary dismissal of this part of B&B’s case.
- A further argument for the defendants is that the loss which has been claimed by B&B could not be recovered as damages for these breaches of contract. In essence, that is because the expenditure by B&B was the result of its ignorance of what it says were the breaches of clauses 2(a) and 3, rather than the result of those breaches themselves. Had clauses 2(a) and 3 been performed, B&B would have spent as much as it now claims to have wasted in its efforts to conclude a gas sale agreement. There was no term which required the defendants to inform B&B that it was breaching those provisions, or at least not a term which is pleaded by B&B. Therefore, the defendants submit, the claim for damages for breach of contract must fail.
- The alleged loss and damage from the breach of cl 2(a) is pleaded as follows:
“46.As a result of the breach of clause 2(a) of the MOU the second plaintiff has suffered loss and damage in that the second plaintiff continued to negotiate with the defendants in circumstances where, had it known of the breach, it would have ceased to do so and would not have incurred any further costs, particulars of which are set out in paragraph 72 herein.”
In paragraph 72, there are particulars of the alleged loss and damage which commenced with the following:
“B&B incurred expenses associated with negotiating the [Gas Sale Agreement], which were wasted. In terms of quantification, such loss and damage is in the sum of approximately $750,000 comprised as follows …”
- The claim for loss and damage from the alleged breach or breaches of cl 3 is in identical terms. Again, the wasted expenditure is claimed upon the basis that this would not have been spent had B&B known of the breach.
- There is no plea that but for these breaches of cl 2(a) or cl 3, there would have been at least a prospect of securing a gas sale agreement. It is not alleged that the amount of the wasted expenditure is a fair measure of the loss of the benefit of the performance of the contract. But that would have to be alleged if, at a trial, B&B intended to rely, as it does in its present submissions, upon the reasoning in Commonwealth v Amann Aviation Pty Ltd.
- In that case, the respondent company entered into a contract with the Commonwealth to provide services for a limited period. The Commonwealth repudiated the contract and the respondent terminated it and claimed damages. The High Court upheld an award in its favour of damages for breach of contract which were quantified in the amount expended by it in preparing to perform the contract. The relevant expenditure was to acquire the equipment which was necessary for the respondent’s performance of the contract. The same equipment could have been used by the company also in performing a renewed contract upon the expiry of that which was terminated. The Commonwealth had been under no obligation to grant a renewal. But had the subject contract been performed, there was at least a prospect of a renewal being granted. That prospect was regarded as part of the benefit of the contract upon which the Commonwealth was sued.
- The damages which were awarded in Amann Aviation represented an amount which, as best could be done, compensated the respondent for the benefits which it had lost from the loss of its contract. This was a case where it was not possible to predict what the plaintiff’s position would have been had the contract been fully performed.
- In such a case, how is a plaintiff to be placed, as far as possible, in the position it would have been had the contract been performed? Mason CJ and Dawson J said:
“[T]he law considers the just result in such a case is to allow a plaintiff to recover such expenditure as is reasonably incurred in reliance on the defendant’s promise. In this case, the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed. It will still be open to a defendant, however, to argue that, notwithstanding the fact that it is impossible to assess what profits, if any, the plaintiff would have made had the contract been fully performed, the expenditure claimed by a plaintiff would nevertheless not have been recovered. … In essence, such an argument is to the effect that, far from being impossible to predict what the result of the contract would have been, if fully performed, it is possible to demonstrate that performance of the contract would not even have resulted in the recovery by the plaintiff of reasonable expenses incurred.”
- Their Honours described the relevance of the defendant’s prospect of renewal of its contract to this assumed correlation between expenditure and the benefit of performance:
“The prospect of renewal was an important commercial benefit which would then have accrued to the contractor. Amann was looking to that commercial benefit as well as revenue receipts arising under the original contract as the reward which it would obtain under that contract. In other words, it was a contract which enabled the contractor to recoup part, if not all, of its expenditure during the currency of the original contract and placed the contractor in a favourable position to secure a renewal of the contract and earn substantial profits under any renewed contract. On this score alone it was a case in which, it being natural and appropriate for Amann to sue to recover its wasted expenditure by way of reliance damages, the onus rested on the Commonwealth of establishing that the reliance expenditure would have been wasted even if the contract had been performed.”
- Therefore the prospect of a renewed contract with the Commonwealth was part of the lost benefit of the subject contract, so that it was assumed, unless the Commonwealth proved otherwise, that Amman would at least have recovered its expenditure with the benefit of the existing and a renewed contract. Similarly, if there was the prospect of the conclusion of a gas sale agreement, that constituted the relevant benefit to B&B of performance of the MOU. That would have been so although the defendants were not obliged to enter into a gas supply agreement (just as the Commonwealth was not obliged to enter into a renewed contract with Amann).
- But by its pleaded case of deceit and misleading and deceptive conduct, B&B alleges that it was never the intention of the defendants to perform the MOU and to enter into a gas supply agreement with B&B. B&B’s case is that, unknown to it, there was no prospect of concluding a gas sale agreement. Therefore, the alleged breaches of the MOU could not have deprived B&B of the benefit of the MOU because its apparent benefit, being the prospect of a gas sale agreement, was not in truth a prospect at all.
- The s 52 and deceit claims thereby explain the absence of a plea of an essential fact to engage the reasoning in Amann Aviation, namely that the plaintiff was deprived of a benefit which was at least equal to the plaintiff’s wasted expenditure. The absence of that plea is not an apparent oversight. Rather, it results from the plaintiff’s case that, in truth, there was never a prospect of its securing a gas supply agreement with the defendants, even if they had not breached the exclusivity and confidentiality provisions.
- Instead B&B pleads that it has suffered loss and damage, not from the loss of the benefit of due performance of the MOU, but from its having spent money in ignorance of that non-performance. There is no alleged contractual obligation by which that non-performance had to be disclosed to B&B. It does not claim a sum which in any way corresponds with what is necessary to place it in the position it would enjoy had the contract been performed. In my conclusion, the defendants’ argument as to this part of the pleading must be upheld. It follows that this new claim by B&B for damages for breach of contract must be struck out.
- I should discuss also a further argument in relation to the alleged breaches of the confidentiality terms, which is that the matters which are pleaded could not amount to a breach of those terms. Paragraph 47(b) of the current draft would plead as follows:
“47.In breach of clause 3 of the MOU the defendants disclosed:
(a)the terms of the MOU or information concerning, relating to and in connection with the Gas Supply Agreement (as that term is used in the MOU) to Stanwell; and
The plaintiffs repeat and rely upon paragraphs 42(k), 42(m) and 42(o) herein.
(b)the terms of the MOU or information concerning, relating to and in connection with the Gas Supply Agreement (as that term is used in the MOU) to AWE,
The plaintiffs repeat and rely upon paragraphs 42(n) and 42(o) herein.
(the ‘breach of confidence’).”
- Paragraph 42(k) pleads that there were certain discussions between representatives of the defendants and Stanwell at a relevant time. Paragraph 42(m) pleads that, at a relevant time, the managing director of the first defendant discussed with the first plaintiff the prospect of Stanwell taking an equity position in the first defendant and Stanwell being provided with some land for a gas power station. Paragraph 42(n) pleads that, at about the same time, the defendants made an offer to AWE in terms which indicate that AWE had been provided with the MOU. And paragraph 42(o) pleads that the minutes of a board meeting of the first defendant record that at a relevant time, there were ongoing dealings with AWE and Stanwell.
- But in none of these paragraphs is there an allegation that the defendants disclosed to AWE or Stanwell anything meeting the description “Confidential Information” within cl 3(a) of the MOU. Unambiguously, cl 3 used that term to refer to information “disclosed by one party (the ‘Disclosing Party’) to the other (the ‘Recipient’)”. The content of the MOU would not meet that description. Nor do the other pleaded facts relate to anything which B&B had disclosed to the defendants. For this reason also, the claim for damages for a breach or breaches of cl 3 is unsustainable and should be struck out.
B&B’s misleading and deceptive conduct case
- Because this case was not within the original claim, B&B must obtain leave under r 377(1)(c) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). The new claim was pleaded in the Further Amended Statement of Claim which was filed on 10 April 2015. The defendants applied to strike out those parts of the pleading and opposed the grant of leave to amend the originating process, arguing that this claim could not be added because the limitation period for it had expired. In response, B&B argued that the claim can and should be added because this new claim is within r 376(4).
- The defendants also contended that the allegations of a contravention of s 52 of the TPA were deficiently pleaded. But they now concede that those deficiencies would be rectified by the (later) draft Second Further Amended Statement of Claim.
- The defendants also challenged that part of this claim under which, in the alternative, B&B seeks relief in the nature of an account of profits, purportedly under s 87 of the TPA.
- The s 52 case, as set out in the draft statement of claim, describes conduct of two kinds. The first comprises some seven representations alleged to have been made by the defendants and together described as the “MOU Representations”. The first of them relies upon the defendants’ conduct in executing the MOU which provided, by cl 1.1, that “[t]he parties have identified the need to enter into the deed to record the arrangement between them for the development of the Gas Supply Agreement”. The plaintiffs plead that by “evincing a willingness to and by entering into the MOU” with that term, the defendants represented that they “had entered into the MOU to facilitate the development of a gas supply agreement with gas sourced from ATP 626P”. It is alleged that this conduct was misleading or deceptive, or likely to mislead or deceive, contrary to s 52 of the TPA in this way:
“58.By making the first MOU representation the defendants engaged in misleading or deceptive conduct or conduct likely to mislead or deceive contrary to section 52 of the Act:
(a)in that the defendants did not intend, at the time they entered into the MOU, to facilitate the development of a gas supply agreement with gas sourced from ATP 626P; and
(b)the defendants’ lack of intention pleaded in subparagraph (a) may be inferred from the fact that immediately after execution of the MOU the defendants commenced discussions with third parties in relation to Competing Proposals:
(i)with AWE as pleaded in paragraphs 42(e), 42(f)(ii), 42(g), 42(h) and 42(n) such discussions being in relation to a Competing Proposal for the reasons pleaded in paragraph 43 herein;
(ii)with Stanwell as pleaded in paragraphs 42(i), 42(j) and 42(k) and to be inferred from the facts pleaded in paragraphs 42(q), 42(r) and 42(s) herein, such discussions being in relation to a Competing Proposal for the reasons pleaded in paragraph 44 herein; and
(ii)with CS Energy as pleaded in paragraph 42(p), such discussions being in relation to a Competing Proposal for the reasons pleaded in paragraph 45 herein.”
- Like that “first MOU representation”, each of the other MOU Representations is said to have been made by the defendants evincing a willingness to be bound by the MOU. The respective terms of these other representations correspond with different promises within cll 2 and 3 of the MOU. These six other representations are pleaded as representations as to future matters and in each case, there is an allegation that the representation was misleading or deceptive by reference to s 51A of the Act. But each representation is also said to have been misleading because the defendants had no intention of complying with the relevant promise.
- As the defendants now appear to concede, s 52 could be contravened by a corporation’s conduct in making a contractual promise which it did not intend to perform.
- The other contravening conduct which is alleged by B&B is the “silence” of the defendants. B&B alleges that by reason of clauses 2(a) and 3 of the MOU, the defendants were under “a duty” to inform B&B that they:
“(i)had no intention of pursuing a gas supply agreement with B&B;
(ii)were not negotiating exclusively with the plaintiffs in relation to a GSA;
(iii)were negotiating with other persons in relation to Competing Proposals; and/or
(iv)were not preserving the confidentiality of the MOU and the negotiations for a GSA.”
It is alleged that the defendants failed to inform the plaintiffs of those matters and that such “silence” was misleading or deceptive. It is further alleged that the defendants “deliberately refrained” from advising B&B of any of those matters.
- It may not be correct, or at least necessary, for B&B’s case to be pleaded in terms of a “duty” to inform B&B of these matters. It would be sufficient if the defendants’ conduct was misleading or deceptive.
- This “silence” case should be seen as an ingredient of a claim that the defendants’ conduct from and during the life of the MOU misled B&B in the respects which are alleged. On its face, that is a tenable claim for a contravention of s 52 of the TPA.
- The loss which B&B claims to have suffered by this conduct is identical to its alleged loss or damage for breach of the MOU, namely its wasted expenditure of approximately $750,000. For this claim, that is a tenable claim for damages for a loss by the alleged conduct.
- B&B further pleads that:
“73.As a result of the breach of confidence and/or the misleading and deceptive conduct of the defendants and/or the breach of fiduciary duty, the defendants acquired the benefits.”
The so-called “benefits” are pleaded in paragraph 71 as follows:
“71.By reason of the MOU the defendants obtained the following benefits:
(a)independent certification of the gas on ATP 626P; …
(b)market funding of $2.21 million through Phillip Capital;
(c)market support, broker support, shareholder support and further funding opportunities arising from association with B&B; …
(d)from in or about May 2008 Icon’s share price increased;
(e)Icon was able to make share placements that raised $2.8 million in June 2008 and $2.717 million in September 2008;
(f)the competitive tension created by the existence of the MOU with B&B, including its disclosure to other potential purchasers of gas from ATP 626P, enabling the defendants to negotiate with those other purchasers for terms of a GSA or like agreement[s] that were more advantageous to the defendants;
(g)Stanwell, AWE and CS Energy all entered into negotiations with the defendants in relation to gas sales agreements and/or Farm-in agreements; and
(h)Icon entered into the Farm-in agreement with Stanwell on 24 December 2008 pursuant to which Stanwell paid the sum of $13,868,000”.
- It can be seen then that the alleged loss and damage was suffered in a period which began no earlier than June 2008 and ended no later than December 2008. The alleged “benefits” occurred no earlier than 28 May 2008 and, it would appear, by the end of December 2008.
- As already noted, the defendants submit that the alleged benefits cannot be the subject of relief against them under the TPA. Because I accept that submission, it is unnecessary to consider the impact of the allegations within this “benefits” case, which were not within B&B’s case before the Further Amended Statement of Claim was filed on 10 April 2015. The question of whether UCPR r 376(4) is engaged can be considered by reference to the claim under s 82 of the TPA for the alleged loss of $750,000. The relevant limitation period, according to s 82(2) of the TPA, was six years from the accrual of the cause of action. Therefore, the period had not expired when this proceeding was commenced in April 2014. But it is common ground that it expired prior to the introduction of this claim in the Further Amended Statement of Claim filed in April this year. It follows that, according to r 376(1), the amendment is to be permitted only according to r 376.
- The defendants accept that a claim may be amended pursuant to r 376(4) to add a cause of action under s 82, although the limitation period has expired: Ramsey v McElroy.
- Rule 376(4) provides:
“(4)The court may give leave to make an amendment to include a new cause of action only if -
(a)the court considers it appropriate; and
(b)the new cause of action arises 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 by the party applying for leave to make the amendment.”
- Does this new cause of action arise out of the same facts or substantially the same facts as a cause of action for which relief had already been claimed? Clearly there are new facts from which the s 52 case arises which were not within the facts from which any of the previously pleaded claims arose. But the addition of some facts does not preclude the operation of r 376(4) because the facts for the new cause need only be substantially the same as those for an existing claim. In Draney v Barry, Thomas JA said at 164:
“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. In short, this particular requirement should not be seen as a straightjacket.”
- I accept, as B&B argues, that the conduct which is alleged involves the same or substantially the same facts as had been pleaded previously for B&B’s contractual claim. This is because the so-called MOU Representations are said to have been made by the defendants’ contracting in terms of the MOU. And the “silence” of the defendants had been effectively pleaded previously in support of a claim for the same alleged losses of approximately $750,000. But the same cannot be said of the facts by which B&B alleges that this conduct was misleading or deceptive. Although, of course, the defendants’ agreement in terms of the MOU had been previously pleaded, it had not been alleged that the defendants entered into that contract with no intention of performing it. The defendants’ states of mind is to be proved, on this s 52 case, by inferences from the defendants’ conduct from almost immediately after the making of the MOU. But the fact or facts of the defendants’ states of mind at the time of making the MOU were not the basis of a case which was already pleaded.
- The introduction of this factual allegation, which is that on which the new case of deceit is also based, involves more than what Thomas JA described as a “changed focus with elicitation of additional details”. In Althaus v Australia Meat Holdings Pty Ltd, the plaintiff sought to add to an existing case of the misuse of confidential information, claims for a contravention of s 52, negligent misstatement and in deceit. Those claims were held not to arise out of substantially the same facts for the purposes of r 376(4). Keane JA, with whom McMurdo P and Holmes J agreed, said:
“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.
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.
As this Court made clear in Thomas v State of Queensland:
‘Of course, ‘the story’ [referred to by Thomas JA in Draney v Barry referred to at para  above] is a shorthand reference to the matters that the plaintiff has to prove.’
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.
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:
‘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.’
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.
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.”
- B&B’s argument seeks to distinguish Althaus, upon the basis that in the present case the facts constituting the relevant conduct of the defendants had been pleaded for an existing cause of action. I accept that there is that difference but Althaus nevertheless provides an authoritative guidance in the present case. In particular, there is the emphasis by Keane JA that in that case, as in the present, “[r]eckless or dishonest disregard for the truth was not one of the facts that [the plaintiff] sought to prove [previously] … .” In this case, the introduction of a factual case that the defendants acted with a fraudulent intent effectively precludes, in my view, the operation of r 376(4).
- Consequently, B&B should not have leave to amend its claim to add its s 52 case because to do so would defeat the availability of a defence that the claim was statute barred. Rule 387(1) provides that if a document is being amended under Part 3 of the UCPR, the amendment takes effect on and from the date of the document being amended. Therefore, the amendment of the claim, without some further order, would relate back to a date which was within the limitation period. In cases which are not within r 376(4), an amendment may be permitted but on terms that it take effect from the order giving leave or from some other time, so as not to prejudice a possible limitation defence. But there was no alternative submission for B&B that leave to amend might be granted upon such terms. That was no doubt because of B&B’s concession that the s 52 case was clearly out of time when it was raised in the April 2015 pleading.
- This makes it unnecessary to consider the question of whether B&B could claim, under s 87 of the TPA, relief in the nature of a payment by the defendants equivalent to the so-called “benefits”. But it may become relevant for me to express my conclusion, which is that such a claim is unsustainable, upon the proper interpretation of s 87 which relevantly provides:
“(1)… where … the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … in contravention of a provision of Part …V … the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, … make such order or orders as it thinks appropriate against the person who engaged in the conduct … if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.
(1A)… the Court may:
(a)on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of … Part V …
make such order or orders as the Court thinks appropriate against the person who engaged in the conduct … if the Court considers that the order or orders concerned will:
(c)compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or
(d)prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person.
(2)The orders referred to in subsections (1) and (1A) are:
(c)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;
(d)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;
(e)an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the person who engaged in the conduct to the person who suffered, or is likely to suffer, the loss or damage;
- The relevant entitlement to relief is pleaded as an entitlement to “other relief by way of an account of profits or recovery of the benefits obtained by the defendants pursuant to section 87 of the Act”. Yet there is no plea that beyond the so-called benefits obtained by the defendants, there were distinct profits which were derived. Still the difficulty in obtaining either under s 87 is the same, namely that relief under s 87 is granted for the purpose of compensating a person for the loss or damage suffered as a result of a relevant contravention or for the purpose of preventing or reducing such loss or damage.
- In Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd, Gyles J said that an account of profits was not a remedy which was available under s 87, because according to the decision of the majority of the High Court in Marks v GIO Australia Holdings Ltd, orders to be made pursuant to s 87 must be compensatory in their nature. Gyles J said that the remedy or an account of profits fell outside s 87 because such a remedy is “not compensation but rather an award to prevent unjust enrichment”, citing Dart Industries Inc v Décor Corporation Pty Ltd.
- In Multigroup Distribution Services, the applicant sought support from Munchies Management Pty Ltd v Belperio, as B&B does here. But as Gyles J noted, the Full Court of the Federal Court there left the question open and that case provided no authority in support of the applicant’s argument. The judgment of Gyles J in this respect was followed by Foster J in Wang v Anying Group Pty Ltd (No 3).
- In Marks v GIO Australia Holdings Ltd, McHugh, Hayne and Callinan JJ said:
“If loss or damage is shown to have been suffered or to be likely to be suffered, orders of the kind prescribed by s 87 may be made. Proof of loss or damage (actual or potential) is therefore the gateway to the s 87 remedies. But the identification of loss or damage is important in the operation of s 87 not only for this reason but also because the power to make orders under s 87 is limited to making orders ‘if the Court considers that the order or orders concerned will compensate … in whole or in part for the loss or damage or will prevent or reduce the loss or damage …’ (s 87(1) and (1A)). That is, the Court can make orders under s 87 only in so far as those orders will compensate (or will prevent or reduce) the loss or damage that is identified.”
That passage has been applied many times, including in the judgment of Kenny, Stone and Logan JJ in Rafferty v Madgwicks.
- There is no suggested correspondence between the “alleged benefits” to the defendants and any loss or damage of B&B. It is not suggested, for example, that this is a case where the benefits to the wrongdoer fairly represent what would have been enjoyed by the other party in the absence of the wrongdoing.
B&B’s fiduciary duty claim
- This new case is pleaded in the simple terms as follows:
“67.By reason of the entry into the MOU, and in particular clauses 2(a) and 3 thereof:
(a)the defendants entered into a relationship of trust and confidence with the second plaintiff:
(i)to deal with the second plaintiff exclusively; and
(ii)not breach the second plaintiff’s confidence; and consequently;
(b)the defendants owed the second plaintiff a fiduciary duty:
(i)to deal with the second plaintiff exclusively; and
(ii)not breach the second plaintiff’s confidence,
(the ‘fiduciary duty’).
- The defendants breached the fiduciary duty.
The second plaintiff repeats and relies upon paragraph 42 herein.
- As a result of the breach of fiduciary duty, the defendants obtained the benefits set out in paragraph 71 herein.”
- The existence of this duty is attributed solely to the entry into of the MOU and the content of the duty is identical to the defendants’ obligations under clauses 2(a) and 3 of the MOU. There is no pleaded obligation of the defendants to subordinate in some way their interests to those of B&B. Instead, the contractual duties are simply given a new description as fiduciary duties. The basis for the intervention of equity is not revealed. In particular, it is not alleged that there was a certain vulnerability of B&B to misconduct by the defendants which required more than the protection of the contract itself.
- In Hospital Products Ltd v United States Surgical Corporation, Mason J said that it had never been doubted that contractual and fiduciary relationships might co-exist between the same parties and that the “existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship”. But his Honour also said:
“The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf Phipps v Boardman), viz, trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions ‘for’, ‘on behalf of’, and ‘in the interests of’ signify that the fiduciary acts in a ‘representative’ character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.”
- That feature of the subordination of the fiduciary’s personal interest was discussed by Barrett JA (with whom Meagher and Ward JJA agreed), in Streetscape Projects (Australia) Pty Ltd v City of Sydney as follows:
“The Supreme Court of Canada emphasised in Galambos v Perez  SCC 48;  3 SCR 247 that a fact-based fiduciary duty cannot arise unless one party undertakes, expressly or impliedly, to act in the particular factual context solely in the interests of the other. The word ‘solely’ deserves particular emphasis. That essential requirement shows why fiduciary duties, of their nature, do not ordinarily attend bargains struck at arm’s length between sophisticated parties with equal bargaining power who, in pursuing their own financial ends, take care to document their respective rights and obligations in a comprehensive way. A person of that kind who makes such a bargain in that way safeguards his or her own interests and aims to achieve the particular advantage sought for the person’s own benefit. The contract may import implied duties of good faith performance. One party may have a clear interest in fostering the ability of the other to perform and in seeing that other derive the advantages that the contract is intended to confer. A relationship with a contented counterparty is usually more productive than a relationship with a hostile one. But none of this alters the reality that each party’s role is a selfish role, not one of self-denial and subordination of personal interest.”
- In the present case, the MOU, to the extent that it had contractual force, had an evident purpose of promoting negotiations between the parties which would be conducive to the conclusion of the gas sale agreement. In that process, each side was entitled to pursue its own self-interest. The notion that the defendants were, at least in some respects, obliged to subordinate their self-interest to that of B&B is difficult to reconcile with the nature of this contract. The present case is not unlike that in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd, where the plurality held that there was no relevant vulnerability of the party to whom the fiduciary duty was said to be owed which would warrant the imposition of that duty, because the only vulnerability “was that which any contracting party has to breach by another”.
- By B&B’s own pleading, it is acknowledged that the content of this alleged fiduciary duty was no different from that of the defendants’ contractual obligations. It is not said, for example, that the defendants were under some further or more extensive duty in their performance of those contractual obligations. There is therefore no basis for superimposing the law of fiduciaries upon the operation of this contract. In Re Goldcorp Exchange Ltd (In Receivership), Lord Mustill, delivering the judgment of the Privy Council, said:
“But the essence of a fiduciary relationship is that it creates obligations of a different character from those deriving from the contract itself. Their Lordships have not heard in argument any submission which went beyond suggesting that by virtue of being a fiduciary the company was obliged honestly and conscientiously to do what it had by contract promised to do. Many commercial relationships involve just such a reliance by one party on the other, and to introduce the whole new dimension into such relationships which would flow from giving them a fiduciary character would (as it seems to their Lordships) have adverse consequences far exceeding those foreseen by Atkin LJ in In re Wait  1 Ch 606. It is possible without misuse of language to say that the customers put faith in the company, and that their trust has not been repaid. But the vocabulary is misleading; high expectations do not necessarily lead to equitable remedies.”
- In my conclusion, the fiduciary duty case is so clearly without merit that leave to amend to add that claim should be refused and the relevant parts of the pleading should be struck out.
B&B’s deceit claim
- B&B pleads that each of the so-called MOU Representations was false and was made with knowledge of that falsity or with reckless indifference to its falsity. This case corresponds with the s 52 case in that it is based on the conduct of the entry into the MOU. The claim is for damages in the amount of the wasted expenditure of approximately $750,000 together with exemplary damages.
- In their submissions at the hearing, the defendants suggested certain deficiencies in the pleading of this case. But after a subsequent re-pleading of the case in the draft Second Further Amended Statement of Claim, the defendants now concede that their remaining concerns about this part of the pleading can be addressed by a request for particulars.
- B&B seeks leave to amend the originating process in respect of this cause of action. For the reasons given in relation to the s 52 case, the amendment is not permissible under r 376(4). But in any case, the operation of r 376 as a whole is unclear, because it is far from clear that the relevant limitation period for this cause of action has expired. Section 38 of the Limitation of Actions Act 1974 (Qld) provides that where a cause of action based upon the fraud of the defendant is itself concealed by the fraud of that person, the period of limitation does not begin to run until the plaintiff discovers the fraud or could with reasonable diligence have discovered it. Therefore if the defendants plead that this cause of action is statute barred, it is possible that B&B would plead a case in reliance upon s 38. The merit of that case cannot be fairly assessed within this interlocutory hearing.
- During the hearing I suggested that this was a case where the uncertainty as to the limitation period made it appropriate to give leave to amend from a date corresponding with the disclosure of this proposed cause of action to the defendants. That course was acceptable to each side. It precludes the possibility of the defendants being deprived of a limitation defence, by the amendment relating back to the filing of the originating proceeding. The outcome is that B&B will have leave to amend the claim to claim damages, including exemplary damages, for deceit according to the case pleaded in paragraphs 64, 65, 66 and 84 of the draft Second Further Amended Statement of Claim.
The first plaintiff’s claim
- The claim by first plaintiff, Mr Baldwin, is for damages for breach of his agreement with the first defendant dated 1 May 2008. On his case, the agreement was wholly in writing although he argues that the court should not interpret that agreement without the benefit of evidence of the relevant circumstances in which it was made and that this evidence should be assessed at a trial.
- The relevant terms of the agreement upon which he sues are as follows:
Icon Energy Limited (ICON) is seeking a buyer for prospective quantities of gas (CSM) to be produced by it, in a field identified as ATP 626P.
Ronald William Baldwin (Baldwin) has agreed to endeavour to obtain contracts for the sale of the ICON gas.
The terms and conditions of this Contract are:
- If Baldwin is able to introduce ICON to a buyer or Buyers for its CSM in the quantities and generally on the conditions set out in item 1 hereof, ICON will pay to Baldwin, at the end of reach Calendar year of the sales contract, a commission at the rate of 5% of the well-head sale price of all gas sold by ICON to the Buyer or Buyers in that year.
- When a Contract of Sale for CSM is negotiated, ICON will immediately issue to Baldwin or his nominee an option to purchase 10,000,000 shares in ICON at a price of 10 cents each with the option able to be exercised at any time from the date of issue to 31st December 2010.
- This contract can be terminated by either party giving three months written notice to the other party at any time after 30th June 2009. In the event of termination, any commission payable on any sales contract will continue until the sales under that contract cease.”
- Mr Baldwin pleads that between 12 June 2008 (the date of the MOU) and 8 August 2008, as agent for the first defendant he “negotiated terms of a GSA with B&B in the course of pursuing the requirements of clause 2” of his agreement. That allegation is particularised by reference to Mr Baldwin’s review of documents and his discussions with Mr Ramos of B&B within this period.
- Mr Baldwin then pleads that upon its proper construction, cl 2 of his agreement had the result that “by completing the negotiations for a draft GSA and draft Development Agreement” and by forwarding those drafts to the first defendant on 11 August 2008, Mr Baldwin “had negotiated for the purposes of cl 2 … a contract of sale for CSM …”. He then alleges that pursuant to cl 2 of the agency agreement, the first defendant was required to issue to him (or his nominee) an option to purchase 10 million shares in the first defendant at a price of 10 cents each with the option exercisable at any time until 31 December 2010. He pleads that the first defendant wrongly failed to issue him with those shares, notwithstanding his demand for them in May 2009 and that he terminated the agency agreement in July 2009. His claim is for damages for breach of contract, quantified in the sum of $4 million which he says is the profit he would have made on those shares by paying 10 cents a share and being able to sell them for an average price of 50 cents per share.
- The defendants’ submission is that this claim is inconsistent with any reasonable construction of cl 2 of the agency agreement and should be summarily dismissed.
- For Mr Baldwin it is submitted that there should be no conclusive determination of the effect of the agency agreement without the benefit of relevant evidence to be adduced at a trial. That argument cites a passage from the judgment of Gleeson CJ in International Air Transport Association v Ansett Australia Holdings Ltd, where his Honour said:
“In giving a commercial contract a businesslike interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract, and the objects which it is intended to secure: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 589 ; Lake v Simmons  AC 487 at 509 per Viscount Sumner. An appreciation of the commercial purpose of a contract calls for an understanding of the genesis of the transaction, the background, and the market: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462 ; Reardon Smith Line Ltd v Yngvar Hansen-Tangen  1 WLR 989 at 995-996;  3 All ER 570 at 574; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 350.”
More recently, in Electricity Generation Corporation v Woodside Energy Ltd, French CJ, Hayne, Crennan and Kiefel JJ said:
“The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] of the market in which the parties are operating’.”
- Therefore, it may be accepted that there could be evidence which is relevant to the interpretation of this contract by proving, if there is a factual issue about these matters, the surrounding circumstances known to the parties at the time of the contract and the facts from which the commercial purpose or objects to be secured by the contract can be ascertained. Mr Baldwin has pleaded what appears to be his case about the relevant factual context as follows:
“76A.Clause 2 of the Agency Agreement is to be construed in the following context:
(i)there was little knowledge or expertise in relation to Coal Seam Methane gas (CSM);
(ii)the first plaintiff had experience in relation to the commercialisation of CSM;
(iii)the defendants sought the first plaintiff’s expertise in relation to CSM production as pleaded in paragraphs 2 and 5(a) herein;
(iv)the defendants wished to engage the first plaintiff as a consultant as pleaded in paragraph 5(b) herein; and
(v)to achieve a gas sale agreement in relation to ATP 626P the defendants did not have, as at the date of execution of the Agency Agreement, any other alternative other than to rely upon the assistance of the first plaintiff; and
(b)in the premises, the purpose of the Agency Agreement was that the first plaintiff would use his commercial expertise to find a buyer for gas to be produced from ATP 626P and to negotiate the commercial and technical terms of a gas sale agreement.”
- Paragraph 76A(a)(v) would suggest that the purpose of the agency agreement was “to achieve a gas sale agreement”. That indicates what is meant, in paragraph 76A(b), by the terms “buyer” and “negotiate”. Paragraph 76A seems to be more consistent with the defendants’ case. The defendants argue that a contract of sale was “negotiated” for the purpose of cl 2 when such a contract was made. Mr Baldwin’s argument is that absent any contract of sale being made, he became entitled to an option to purchase 10 million shares by the occurrence of negotiations, albeit unsuccessful negotiations.
- Clause 2 obliged the first defendant to immediately issue to Mr Baldwin an option upon the happening of an event, namely the negotiation of the contract of sale. It is in the nature of negotiations that, more often than not, they involve more than a single occurrence or event. In the present case, as Mr Baldwin pleads, the relevant negotiations occupied a period of two months. He pleads that during that period he “negotiated terms of a GSA with B&B …”. His case seems to be that he reached the point at which he was entitled to the option by “completing the negotiations for a draft GSA … and by forwarding the draft … to Icon on 11 August 2008”.
- Clause 1 of the agency agreement provided for a distinct entitlement to commission. Mr Baldwin’s entitlement, at least in that respect, was dependent upon the making of a gas sale agreement. In that respect at least, the agency agreement would conform with the usual basis upon which an agent for a seller is rewarded for the introduction of a buyer.
- A curious feature of Mr Baldwin’s case is that the negotiations with B&B were “completed” by 11 August 2008 whilst B&B pleads that (as far as it was then aware) the negotiations continued until the end of October 2008 and that at least some of those negotiations involved the participation of Mr Baldwin. This makes it difficult to understand what is meant in Mr Baldwin’s case by “completing the negotiations” in paragraph 77 of the pleading. There may be a difference between the respective cases of the plaintiffs as to when the negotiations (or apparent negotiations) ended. But these allegations are made within the one statement of claim by the same counsel and solicitors. Presumably, the case to be conducted for Mr Baldwin at any trial of his claim would accept that the negotiations continued for some time after 11 August 2008. Just why that point in time in the negotiations was the occurrence which engaged cl 2 of Mr Baldwin’s agreement is not explained by Mr Baldwin’s pleading or his argument. For example, it is not said that at that point in time, the parties had reached a consensus upon all of the terms of the gas sale agreement although they had not become contractually bound.
- The essential difficulty of the present pleading of Mr Baldwin’s case is in identifying the meaning of the expression “completing the negotiations” in paragraph 77. Until that is clarified (if it can be), the pleading is deficient because it fails to inform the defendants of Mr Baldwin’s case. In particular, it fails to inform of the particular construction of cl 2 which Mr Baldwin advances and of the facts by which he says he became entitled to an option under that clause, if, as his counsel would contend at the trial when putting B&B’s case, the negotiations continued with his participation.
- Until the plaintiffs’ case is so clarified, it would not be appropriate to reach any binding determination of the construction of cl 2. For the moment however, paragraphs 77 and 77A of the pleading should not be allowed. And so far as the pleading as presently filed is concerned, paragraph 77 of that pleading is in different terms and apparently not intended to be pursued in Mr Baldwin’s case. It alleges simply that:
“The MOU and the negotiations with B&B regarding the GSA and Development Agreement satisfied Item 2 of the Agency Agreement.”
- On Mr Baldwin’s claim, the defendants’ strike-out application should succeed. But because I have not conclusively determined the proper construction of cl 2, it will be open to Mr Baldwin to attempt to re-plead.
- The orders will be as follows:
- On the plaintiffs’ application filed on 12 May 2015:
- the plaintiffs will have leave to amend the claim by adding claims for damages and exemplary damages for deceit;
- the plaintiffs will have leave to amend the Further Amended Statement of Claim to plead that claim for deceit, substantially in accordance with the terms of the pleading of that cause of action in a draft Second Further Amended Statement of Claim delivered by the plaintiffs to the defendants on 17 July 2015;
- the application be otherwise dismissed.
- On the defendants’ application filed on 15 May 2015:
- paragraphs 42 to 84 of the Further Amended Statement of Claim be struck out;
- the first plaintiff will have leave to re-plead his case consistently with these reasons for judgment;
- the second plaintiff will have leave to re-plead its case in deceit according to the above order.
- On the plaintiffs’ application filed on 12 May 2015:
 Baldwin & Anor v Icon Energy Ltd & Anor  QSC 12.
 Further Amended Statement of Claim filed 10 April 2015.
 Exhibited at TCJ-15 to the affidavit of T C Jones sworn 24 June 2015.
 The terms of cl 2 are set out in the previous judgment at  QSC 12, 5 .
 Paragraph 47 of the draft Second Further Amended Statement of Claim.
 Baldwin & Anor v Icon Energy Ltd & Anor  QSC 12, 21-22 .
 Defendants’ outline of submissions filed 5 June 2015 .
 Draft Second Further Amended Statement of Claim .
 Draft Second Further Amended Statement of Claim .
 (1991) 174 CLR 64;  HCA 54.
 Ibid 86.
 Ibid 90.
 That being the relevant legislation at the time of the events in question.
 Draft Second Further Amended Statement of Claim [49(a)].
 Draft Second Further Amended Statement of Claim .
 See eg Futuretronics International Pty Ltd v Gadzhis  2 VR 217, 239-241 (Ormiston J); Concrete Constructions Group v Litevale Pty Ltd (2002) 170 FLR 290, 336, 345-347 (Mason P); Coles Supermarkets Australia Pty Ltd v FKP Ltd  FCA 1915, 29  (Gordon J).
 Draft Second Further Amended Statement of Claim [63(b)].
 Draft Second Further Amended Statement of Claim .
 Discussed below at -.
  1 Qd R 667;  QCA 208.
  1 Qd R 145, 164 ;  QCA 491, 15 .
  1 Qd R 493;  QCA 412.
 Althaus v Australia Meat Holdings Pty Ltd  1 Qd R 493, 500-501;  QCA 412, 9-10.
 Ibid 501 .
 By UCPR r 387(1), the amendment would take effect from the date of the claim and therefore relate back to a date within the limitation period.
 Middleton v O’Neill (1943) 43 SR (NSW) 178, 186, Fibreglass Pool Works (Manufacturing) Pty Ltd v ICI Australia Pty Ltd  1 Qd R 149, Henry v Calamvale Estates Pty Ltd, Unreported, Muir J, SC No 437 of 1994, 22 October 1997;  QSC 200; Air Link Pty Ltd v Patterson (No 2) (2003) 58 NSWLR 388, 400; Mokrzecki v Popham  QSC 123.
 Draft Second Further Amended Statement of Claim , [63(j)].
 (2001) 109 FCR 528, 546  (‘Multigroup Distribution Services’).
 (1998) 196 CLR 494;  HCA 69.
 Multigroup Distribution Services (2001) 109 FCR 528, 546 .
 (1993) 179 CLR 101, 123;  HCA 54.
 (1988) 58 FCR 274, 287-288.
 Multigroup Distribution Services (2001) 109 FCR 528, 546 .
  FCA 1380, 5-6 .
 (1998) 196 CLR 494, 513 ;  HCA 69 .
 (2012) 203 FCR 1, 56 .
 (1984) 156 CLR 41;  HCA 64.
 Ibid 97.
 Ibid 96-97.
 (2013) 85 NSWLR 196, 219 ;  NSWCA 2, 38-39 .
 (2010) 241 CLR 1;  HCA 19.
 Ibid 34 .
  1 AC 74.
 Ibid 98, cited in Streetscape Projects (2013) 85 NSWLR 196, 216 - (Barrett JA).
 Draft Second Further Amended Statement of Claim .
 Draft Second Further Amended Statement of Claim [77A].
 (2008) 234 CLR 151, 160 .
  HCA 7; (2014) 251 CLR 640, 656-657 .
 Draft Second Further Amended Statement of Claim [76B].
 Further Amended Statement of Claim filed 10 April 2015.
- Published Case Name:
Baldwin & Anor v Icon Energy Ltd & Anor (No 2)
- Shortened Case Name:
Baldwin v Icon Energy Ltd (No 2)
 QSC 286
15 Oct 2015
No Litigation History