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4People Pty Ltd v Pocock[2012] QDC 210

4People Pty Ltd v Pocock[2012] QDC 210

DISTRICT COURT OF QUEENSLAND

CITATION:

4People Pty Ltd v Pocock [2012] QDC 210

PARTIES:

4PEOPLE PTY LTD (ACN 108 047 383)

(Plaintiff/respondent)

v

GREGORY KEITH POCOCK

(Defendant/applicant)

FILE NO:

BD2394/2011

DIVISION:

Applications

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane

DELIVERED ON:

10 August 2012

DELIVERED AT:

Maroochydore

HEARING DATE:

3 July 2012

JUDGE:

Long SC, DCJ

ORDER:

Leave granted for withdrawal of deemed admissions to paragraph 29 of the statement of claim.

LEGISLATION

Uniform Civil Procedure Rules 1999, r 166 (1), (3), (4), (5), r 188

CASES

Barker v Linklater [2008] 1 Qd R 405.

Bowes v Chaleyer (1923) 32 CLR 159.

Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd [2008] QSC 302.

Elderslie Property Investments No 2 Pty Ltd v Dunn [2008] QCA 158.

Groves v Australian Liquor Hospitality and Miscellaneous Workers Union and Anor [2004] QSC 142.

Hollis v Vabu Pty Ltd (2001) 207 CLR 21.

Robinson v Laws & Anor (2001) QCA 122. 

Ridolfi v Rigato Farms [2001] 2 Qd R 455.

CATCHWORDS:

PROCEDURE – PLEADING – DEFENCE – where the defendant applies for declarations in respect of deemed admissions purported by the respondent – where respondent contends that certain denials and non-admissions in the defence are defective because they do not contain a direct explanation for the defendant’s belief that the relevant allegation is untrue or cannot be admitted – whether defence fails to comply with r 166 of the Uniform Civil Procedure Rules 1999 (Qld).

PROCEDURE – PLEADING – DEFENCE  - where the respondent applies alternatively for leave to withdraw any deemed admission pursuant to r 188 of the Uniform Civil Procedure Rules 1999

COUNSEL:

N.H. Ferrett with J Sheenan on behalf of the applicant.

P.A. Travis on behalf of the respondent.

SOLICITORS:

McKelvey & Hu Lawyers on behalf of the applicant.

Hopgood Ganim on behalf of the respondent.

Introduction

  1. [1]
    By application filed on 27 June 2012, the applicant, who is the defendant in existing proceedings before the court, applies for declarations as to the effect of the responses made to four aspects of the statement of claim in the existing proceedings and so as to clarify and avoid any consequence of deemed admission pursuant to the Uniform Civil Procedure Rules 1999 (“UCPR”).  Alternatively, the application is for leave to withdraw any such admissions, under UCPR 188.
  1. [2]
    In the existing proceedings before the Court, the respondent claims the following relief:

“1. Damages for breach of contract in the amount of $169,390.38;

  1. Damages pursuant to s 82 of the Trade Practices Act 1974 (Cth), or s 99 of the Fair Trading Act 1989 (Qld), in the amount of $155,092.84;
  1. Compensation pursuant to s 87 of the Trade Practices Act 1974 (Cth), or s 100 of the Fair Trading Act 1989 (Qld), in the amount of $155,092.84; or
  1. Equitable compensation in the amount of $330,428.57; and
  1. An injunction pursuant to s 69(2) of the District Court of Queensland Act 1967 (Qld), restraining the defendant from:
  1. (a)
    Initiating direct solicitation of any sale client for the purpose of providing restrained services; and
  1. (b)
    Disclosing the contents or terms of the sale agreement or any information or documents received by the defendant in connection with the negotiation of the sale agreement or pursuant to the provisions of the sale agreement – except as permitted under the sale agreement;
  1. Interest pursuant to s 47 of the Supreme Court Act 1995 (Qld) at the rate of 10%, or at such other rate prescribed by the regulations, from the date of filing of the statement of claim;
  1. Costs.
  1. Such other relief as the court deems meet.”
  1. [3]
    Reference to the statement of claim indicates that the essence of those claims is that it is asserted that after entering into an agreement in respect of the sale to the respondent, of the applicant’s financial planning and advisory business, the applicant breached the restraint of trade terms of that sale agreement, by soliciting clients of the business who had been identified as “sale clients” for the purpose of the agreement, with the result that the plaintiff lost the custom of those clients.
  1. [4]
    In addition, the statement of claim pleads the abovementioned breaches of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1989 (Qld) on the basis of alleged representations made to some of the solicited clients which are alleged to have been misleading and deceptive.  Further the statement of claim includes a cause of action in promissory estoppel, based upon the asserted pre-contractual representations of the applicant to the effect that he was retiring from the financial planning industry and had no intention of re-entering that industry at any time after the completion of the proposed sale and was going to pursue other interests.
  1. [5]
    The notice of intention to defend was filed on 2 August 2011 and a reply was filed on 18 August 2011.

The Application

  1. [6]
    On 27 February 2012 the respondent filed an amended statement of claim which most relevantly for present purposes, included an addition, at paragraph 29(f), of additional sale clients alleged to have been solicited in breach of the agreed restraint of trade and a particular which asserted that the defendant had admitted on 27 July 2011 to soliciting, during the restraint period, the clients referred to in paragraphs 29(a) and (b) of the statement of claim.
  1. [7]
    The applicant accepts that in the amended defence, filed on 6 March 2012, there was no response made in respect of the sale clients added by paragraph 29(f) and in that respect, he requires leave to withdraw the admission deemed by UCPR 166(1).
  1. [8]
    Accordingly and as a particular focus of this application is upon sub-paragraphs 29 (c)-(f) of the statement of claim, it is desirable to set out paragraph 29 and the responses. That is best done by reference to the further amended statement of claim filed on 1 May 2012, the further amended defence filed on 3 May 2012 and the reply to the further amended defence, filed on 22 May 2012.
  1. [9]
    First in the “further amended statement of claim” it is alleged:

29.   At a time to be further particularised following disclosure but, in any case, (d) During the Restraint Period, the Defendant initiated direct solicitation of the following persons for the purpose of providing Restrained Services:

  1. (a)
    June Porter;
  1. (b)
    Joseph and Andrea Altoff;
  1. (c)
    Edward Verdi and Joyce Cooper;
  1. (d)
    Bill and Robyn Henderson; and
  1. (e)
    Bob and Beryl Mann; and
  1. (f)
    John and Susanne Lacy.”

The clients solicited by the defendant will be referred to as the Solicited Clients.”

  1. [10]
    The response in the “further amended Defence” is:

“6. As to the allegations in paragraph 29 of the statement of claim:

  1. (a)
    The defendant denies that, within the restraint period, he solicited any of Edward Verdi, Joyce Cooper, Bill Henderson, Robyn Anderson, Bob Mann and Beryl Mann because he did not approach any of those persons to become his clients until the end of the restraint period;

(aa) (Subject to leave being obtained given the failure previously to plead directly to the allegation), the defendant denies that he solicited John Lacy before the end of the restraint period because he made no such approach;

  1. (b)
    The defendant admits that he solicited Susanne Lacy, Joseph and Andrea Altoff and June Porter on or about 5 November 2010 (“the admitted solicitations”);
  1. (c)
    At the time that the defendant engaged in the admitted solicitations, the defendant misapprehended the extent of the restraint period, having believed that the restraint period began on the Effective Date (as that term is defined in the contract, was the terminus of the restraint period).
  1. [11]
    Then, in the “reply to the further amended defence”, it is asserted:

“The Defendant is deemed to have admitted those allegations pleaded by the plaintiff at paragraphs 28, 29(c)-(f) and 49 of the amended statement of claim.  Those deemed admissions cannot be withdrawn without leave of the court, and any purported attempt by the Defendant to unilaterally withdraw those deemed admissions without leave is ineffective.”

  1. [12]
    It can be noted that each of these documents has been filed since the order made by Robin QC DCJ, on 17 April 2012, for further and better particulars of paragraph 29 of the amended statement of claim. Although some of the issues raised in this application were raised on the earlier application before Robin QC DCJ, they were not decided by His Honour.
  1. [13]
    Apart from adding an additional allegation in paragraph 30A, another purpose of the further amended statement of claim was to include the further and better particulars for paragraph 29, as required by the order of Robin QC DCJ.
  1. [14]
    The extract set out above from the reply to the further amended defence, is referable to that part of the further amended defence, which is double underlined and set out above and reflects the position of the respondent taken before Robin QC DCJ and on this application.
  1. [15]
    The applicant contends that:

Only the amendment made to sub-paragraph 6(a):

  1. (a)
    requires a grant of leave; and
  1. (b)
    The amendment made to sub-paragraph 6(a) is actually unnecessary and only made in order to attempt to satisfy the respondent’s concerns but otherwise serves to demonstrate what would be sought to be done with leave to amend, if that be required.
  1. [16]
    As it was understood, the respondent did not seek to contend that, subject to any necessary leave being granted, this form of the response to paragraph 29 was deficient by reference to UCPR 166 or otherwise.
  1. [17]
    Accordingly, the first question arising for determination is as to whether the response in subparagraph (a) in the absence of the double underlined words[1], is to be regarded as non-compliant with UCPR 166(4) and therefore pursuant to UCPR 166(5), a deemed admission of sub-paragraphs 29(c), (d) and (e) of the statement of claim. 

The Principles

  1. [18]
    On the application, particular reference was made to the decision of Daubney J in Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd[2].  Having regard to the reasoning of His Honour in that case, the following relevant propositions may be distilled:
  1. (a)
    A significant change to the practice of pleading in civil cases in Queensland, effected by the introduction of the UCPR, is the requirement in UCPR 166(4) that a denial or admission of an allegation of fact by a party, must be accompanied by a direct explanation:
  1. (i)
    In the case of the denial, for the party’s belief that the allegation is untrue; and
  1. (ii)
    In the case of a non-admission, for the party’s belief that the allegation cannot be admitted.[3]
  1. (b)
    That it is important that the “direct explanation” not be elided with the obligations on a defendant under UCPR 149(1)(b) and (c) to state all the material facts relied upon and to specifically state any matter that, if not specifically stated, may take another party by surprise.  This is because a proper denial or non-admission might allow evidence in contravention of an allegation but not a positive case in rebuttal, unless the necessary material facts for that rebuttal are also pleaded;[4]
  1. (c)
    That what is required is what is stated.  That is “a direct explanation for the belief”[5], with this requirement fulfilling two important functions:

“1. It compels the responding party to expose, at an early stage of the proceeding, its rationale for a joinder of issue on a particular allegation;

  1. It necessarily compels the responding party to formulate that rationale.  In other words, the party must ask itself, and be able to answer the question, ‘Why am I denying this fact?’”; and
  1. (d)
    The direct explanation itself is not a statement of material fact.[6]
  1. [19]
    As to this approach to UCPR 166, Daubney J observed:

“[30] This approach to rule 166, in my view, reflects the scheme of pleadings introduced by the UCPR to achieve early comprehensive disclosure of the cases to be mounted by each party. The requirement for parties who are responding to allegations to turn their minds to making appropriate admissions and articulating their direct explanation in connection with denials and non-admissions is directed to the early and efficient identification of the ‘real issues’ which require ‘just and expeditious resolution…at a minimum of expense’, and thereby observing the aspirational statement of purpose expressed in rule 5.”[7]

  1. [20]
    Also and earlier in his judgment[8], His Honour makes specific reference to the observations of de Jersey CJ in Robinson v Laws & Anor[9], to the effect that the UCPR are premised on the need for early and comprehensive definition of the cases being mounted by the parties and the objective of early definition of the points at issue and where it is possible to do so, the limitation of such points to the “real issues”.

Deemed admission?

  1. [21]
    Accordingly, the first question to resolve is whether there was, in the amended defence [10], non-compliance with UCPR 166(1) or (4), such as to amount to a deemed admission and now require leave for withdrawal. [11]
  1. [22]
    It is conceded that in respect of subparagraph 29(f) of the amended statement of claim, there was, through oversight, such a deemed admission pursuant to UCPR166(1) and it will be necessary to consider at least this aspect, in terms of the alternative application for leave to withdraw that deemed admission.
  1. [23]
    A different consideration arises in respect that sub-paragraphs 29(c), (d) and (e), in that there is a stated denial of the allegations but the contention is of no direct explanation, as required by UCPR166(4).
  1. [24]
    Whilst it may be accepted that, as submitted by the applicant, the rule does not prescribe any manner in which an explanation is to be given [12] and that it may not be necessary to follow the form, which includes the word “because”[13], the problem without the addition of the double underlined words in paragraph 6(a) of the further amended defence, is that the explanation is left to implication from what was otherwise provided in sub-paragraphs (b) and (c).  However it does not follow that the explanation now proffered in the further amended defence was the only implication to have been drawn on the face of what appeared as paragraph 6 in the amended defence.  It can be noted that the proffered double underlined words make it clear that the issue is only as to whether solicitation occurred, as alleged, in the restraint period. 
  1. [25]
    However, and having regard to the considerations which have been set out above, the real difficulty is that there was no direct explanation provided for the denial in sub-paragraph (a) and sub-paragraphs (b) and (c) were concerned with making admissions and providing an explanation for why the admitted conduct occurred.
  1. [26]
    Accordingly, it must be concluded that the effect of the response in the amended defence was that there were deemed admissions of the allegations in sub-paragraphs 29(c), (d), (e) and (f) of the amended statement of claim and that the applicant now requires the leave of the Court to withdraw these deemed admissions, as proposed in the further amended defence.
  1. [27]
    It is also necessary to consider the position in respect of paragraphs 28 and 49 of the amended statement of claim. These paragraphs and the responses have not been amended in any of the versions of the pleadings. Paragraph 28 is pleaded as part of the claim for breach of contract and paragraph 49 under the promissory estoppel claim and they appear as follows:

“28. The plaintiff fully performed all of its obligations under the Sale      Agreement.

.....

  1. The multiple of 3.5 for each Sale Client represented a premium for the goodwill of the Business, as defined in the Sale Agreement.”
  1. [28]
    The respective responses in the defence are:

“5.  The defendant does not admit the allegation in paragraph 28 of the Statement of Claim because the truth of the allegation is beyond his knowledge.

....

  1. The defendant does not admit the allegation in paragraph 49 of the Statement of Claim because it raises a question of construction of the contract.”
  1. [29]
    Dealing first with the contention that there is a deemed admission of paragraph 28 of the statement of claim, the essence of the respondent’s contention is that there is lack of compliance with UCPR 166(4), in that there is no explanation for the applicant’s belief that the allegation cannot be admitted, such as to comply with the requirements of UCPR 166(3).
  1. [30]
    In response, the applicant contends that the allegation in paragraph 28 of the statement of claim is one of law rather than fact and points out that UCPR 166 and particularly 166(4) is only concerned with denial and non-admission of an allegation of fact. The applicant asserts that the allegation “identifies no particular act and merely sets out a conclusion of law”.
  1. [31]
    That contention should not be accepted. While there may be aspects of law involved in determining whether or not an agreement has been performed, such a conclusion also involves and may primarily involve factual considerations. That is particularly where, as here an allegation is directed at establishing executory consideration for the agreement which contained the restraint of trade. In this sense and while the allegation is stated as a conclusion which may depend on a mixed question of law and fact, it is to be properly and ordinarily regarded as a conclusion expressed as fact and therefore treated as a statement of fact.[14]
  1. [32]
    Whilst it may usually be expected that a pleading in response will be exactly that and be responsive to the manner in which the alleger has framed an allegation, one difficulty that may confront a responder, is the obligation in UCPR 150(4). There are remedies for such a problem, if there is difficulty in setting out a response within the requirements of the rules. For instance, further and better particulars of an allegation may be sought and in an appropriate case, a party may plead “another matter”, which might conceivably include a response identifying a question of law.[15] 
  1. [33]
    Secondly, the applicant contends that even if the allegation is one of fact, there has been no contravention of UCPR 166, because the applicant “explains that he simply does not know whether all the obligations were performed”. The applicant provided examples of obligations “not obviously to be performed in full view of the defendant”.
  1. [34]
    Also the applicant seeks to rely on the “presumption of regularity”, as referred to by Muir JA, in a similar context in Barker v Linklater[16] and where his Honour observed:

“[47]Paragraph 10 of the defence states:

‘The defendants do not admit the allegations in paragraphs 18 to 28, inclusive, on the grounds that the defendants are unable to attest to the truth or otherwise save for their knowledge that, with reference to 23.3.5, the [applicant] did purchase a freezer that remained her property at Pearl’s death.’

[48]In my view the primary judge’s revised ruling was correct. The non-admission in paragraph 10 of the defence was accompanied by “a direct explanation for the party’s belief that the allegation ... can not be admitted”. The explanation, which paid scant heed to grammatical rules and was not felicitously expressed, was that the respondents “are unable to attest to the truth or otherwise” of the allegations. The paragraph also makes an admission concerning one of the many allegations in paragraph 23, showing that the respondents had turned their minds to the question of what should or should not be admitted.

[49]Despite its lack of clarity, I consider that a fair construction of the paragraph is that it means “The truth of the allegations is not within the knowledge or means of knowledge” of the respondents.

[50]The pleading should be construed in light of the requirements of sub-rules (3) and (6) and with regard to the presumption of regularity. There is no implicit requirement in subrule (4) that a pleaded non-admission recites or adverts expressly to the requirements of subrule (3). Compliance with subrule (3) is a precondition of the right to plead the non-admission. In his submissions to the primary judge, the appellant’s counsel did not suggest that there had been non-compliance with those provisions. The argument was based entirely on the wording of paragraph 10. Another consideration relevant to the construction of paragraph 10 is the fact that many of the matters alleged in paragraph 23 were highly likely to be matters peculiarly within the knowledge of the appellant.” (citations omitted)

  1. [35]
    However the circumstances of this case are different. The response does not extend beyond an assertion of lack of knowledge of the applicant and on this application it became clear that the applicant seeks to maintain his position on the basis of limitation of his obligation to his knowledge, as derived from his own personal experience. Any presumption of regularity cannot avail the applicant, because UCPR 166(3) is not concerned with knowledge on such a limited basis. The pre-condition to pleading a non-admission set out in UCPR 166(3) is premised on a party remaining “uncertain as to the truth or falsity of the allegation” after having made reasonable enquiries “to find out whether the allegation is true or untrue”.
  1. [36]
    Further it can be noted that UCPR 166(6) provides that:

“A party making a non-admission remains obliged to make any further inquiries that may become reasonable and, if the results of the inquiries make possible the admission or denial of an allegation, to amend the pleading appropriately. 

  1. [37]
    Here the response in issue has remained in the same form since the notice of intention to defend was filed on 2 August 2011 and therefore in the amended defence filed on 6 March 2012 and in the further amended defence filed on 3 May 2012.”
  1. [38]
    Also it can be noted that UCPR 165(2) provides:

“A party who pleads a non-admission may not give or call evidence in relation to a fact not admitted, unless the evidence relates to another part of the party's pleading”.

  1. [39]
    In the course of oral submissions on this application, it was pointed out and conceded on behalf of the applicant that this issue may be of little moment because of the “strong implicit concession of the enforceability of the restraints” in the defence and particularly to the extent that breaches of the restraints are admitted.
  1. [40]
    In these circumstances it should be concluded that there is a deemed admission of paragraph 28 of the statement of claim. Having regard to the concession recorded in the previous paragraph, it was not understood that leave is sought to withdraw this admission.[17]
  1. [41]
    Although the applicant’s response to paragraph 49 of the statement of claim was to plead a non-admission, the direct explanation provided the reason that “it raises a question of the construction of the contract”. Accordingly, it was the applicant’s contention that this raised a question of law and not fact and therefore UCPR 166 had no application.[18]
  1. [42]
    The respondent contended, however, that the allegation is one of fact. I do not accept that proposition. Any conclusion as to whether or not the purchase price for the business included a component or “premium” for goodwill, strictly depends upon the objective construction of the agreement and is therefore a question of law.[19] Further and as a question of law, it remains a matter for the Court and may not be determined by concession of the parties.[20]
  1. [43]
    Therefore it should not be concluded that there has been a deemed admission of paragraph 49 of the statement of claim.

Withdrawal of deemed admissions?

  1. [44]
    It is therefore necessary to consider whether leave should be granted to allow the applicant to withdraw the deemed admissions in respect of paragraph 29 of the statement of claim, pursuant to UCPR 188.
  1. [45]
    Although expressed in reference to a cognate situation arising under UCPR 189, the following observations of de Jersey CJ in Ridolfi v Rigato Farms[21], inform the exercise of discretion:

"[19]Asked to exercise the discretion under rule 189(3), a court would ordinarily expect sworn verification of the circumstances justifying a grant of leave. Those circumstances may include why no response to the notice was made as required, the response the party would belatedly seek to make, and confirmation that the response would accord with evidence available to be led at a trial. Here none of those matters was so verified. Issues of prejudice may also fall for consideration upon the hearing of such an application.

[20]There is no principle that admissions made, or deemed to have been made, may always be withdrawn "for the asking", subject to payment of costs. The discretion is broad and unfettered, as exemplified by Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 and Equuscorp Pty Ltd v Orazio [1999] QSC 354.

  1. [46]
    This issue can be considered in the context that the suggestion of deemed admissions to paragraph 29 of the statement of claim was first raised before Robin QC DCJ, with the result being the order made on 17 April 2012 for the respondent to give further and better particulars of that paragraph. It can be noted that his Honour said:

Mr Travis relies on Hansen Construction Materials Pty Ltd v. Norlis Pty Ltd [2010] QSC 34 as establishing that deemed admissions of the kind he says occur here require the court's leave before they can be withdrawn. In that case, the outcome was summary judgment in favour of the plaintiff which, reading the reasons for judgment, had established by proof of relevant documents and transactions the liability of defendants as guarantors.

There is no application by Mr Travis for any relief and I feel sure that the defendant in the circumstances of paragraph 6 could present a strong case for leave to withdraw in respect of 29(c), (d) and (e) in which respects an affidavit of the defendant might well not be required, although the case for requiring one in respect of (f) is plainly stronger.

These considerations are perhaps not directly relevant when one considers the relief which the defendant is seeking. Its position, I think, is that the plaintiff simply has not got a case in respect of ‘29(c) to (f)’ which has, in the circumstances, to be amended to delete (f). This is because the plaintiff gives no particulars. Those sought as alternative relief in the application have for some time been sought by the defendant's solicitors, attracting the response that ‘the particulars your client seeks are within your client's knowledge and your client is in the unique position of being able to answer your own inquiries.’”

  1. [47]
    Then in further reference to the order then made for the provision of further and better particulars of paragraph 29 of the statement of claim, His Honour said:

“It is my view that if the plaintiff cannot produce the particulars requested, which may well be its situation, and to its disappointment as its pleading in various places opined that better particulars could be given after disclosure, an expectation apparently frustrated in the event, the plaintiff ought to give other particulars which support an inference of breach of contract by soliciting. An obvious fact from which such an inference might be drawn would be that particular sale clients became customers of the defendant. The defendant has acknowledged as much in respect of some sale clients.

If the plaintiff's situation is that it cannot by evidence it can muster establish solicitation and damage, then the plaintiff will fail in that regard. It is not for the defendant to produce the evidence for the plaintiff.”

  1. [48]
    However and despite the apparent force of these observations as has been noted above, matters have since progressed and the pleading issues have been brought to a head by the further amended pleadings filed since the decision of Robin QC DCJ and consequently, this application.
  1. [49]
    The applicant seeks leave to withdraw the deemed admissions by having his response in the further amended defence allowed. In support of this application he relies upon the affidavit of his solicitor in explanation of the oversight in respect of subparagraph 29 (f) and his own affidavit in support of the double underlined additions to subparagraphs 6 (a) and (b) of the further amended defence.
  1. [50]
    The respondent opposes such leave being granted, essentially contending that it has not been demonstrated that there is a genuine dispute about the issue sought to be denied and relies on the decision in Hanson Construction Materials Pty Ltd v Norlis & Ors [22] in support of the contention that leave should be refused on that basis.
  1. [51]
    The respondent particularly directs criticism at part of the applicant’s affidavit. It is necessary to set out what is effectively contained in that short affidavit. Leaving aside the usual formalities, the applicant deposes:

“2.I have read the plaintiff’s Statement of Claim (as amended).  I understand that the plaintiff relies on a restraint period under the relevant contract which is alleged to have commenced 17 November 2008 and ended 16 November 2010. 

3.I note that in paragraph 29 of the second further Amended Statement of Claim, it is alleged that during the restraint period, I solicited a number of people who were clients of the plaintiff to leave the plaintiff and become my clients.  As I have previously admitted, I had solicited certain people towards the end of the restraint period because I had misunderstood the terms of the contract and thought that the restraint period had already ended.  However, I did not, at any stage during the restraint period, approach any of the persons named in paragraphs 29(c) to (e) or Mr John Lacy referred to in paragraph 29 (f) of the pleading for any commercial purpose.  I would have had contact with some of those persons for social purposes during the restraint period, as I had developed friendships with them when they had previously been my clients.

  1. [52]
    The respondent in his written submissions draws particular attention to the words which are emphasised by shading in the extract set out in the previous paragraph and in respect of that extract, the respondent contends:

“13.Thus, the defendant’s statement introduces the terms ‘approach’, ‘commercial purpose’, and speaks of ‘contact’ with ‘some of those persons’ for ‘social purposes’.   The affidavit raises more questions than answers.  Why didn’t the defendant at least deny initiating direct solicitation for the purposes of providing restrained services?  What does ‘approach’ mean?  Is it the same thing as ‘initiate directly’ that contact that is implied by ‘solicitation’?  What does ‘commercial purpose’ and ‘social purpose’ mean in the context of solicitations?  Did he tell friends (and former clients) where he was now working, how great the place is, and that they should come over for a lunch and meet his new friends at his new workplace?  When the plaintiff sought to have these matters clarified by the evidence surrounding the issue, the plaintiff was rebuffed and this application was filed.

14.The defendant has failed to provide evidence surrounding the issue the subject of the admission.  The statement provided by the defendant is vague, evasive, and raises more questions than it answers.  A simple denial of the matters alleged in paragraph 29(f), on oath, with some elaboration of the context, would have been sufficient.  It is not for the plaintiff to speculate why the defendant failed to provide any affidavit material in support of his unsuccessful summary judgment application, and offers only a vague affidavit in support of an application to withdraw deemed admissions.  But without any satisfactory explanation, on oath, from the defendant, there are insufficient grounds for this Court to withdraw the deemed admissions of paragraph 29(f) of the amended Statement of Claim.” [23]

  1. [53]
    One difficulty with the respondent’s contentions is that the highlighted words must be considered in the context of the introductory part of the affidavit and in the context of the amendment proposed as a response to paragraph 29 in the further amended defence. Also it cannot be overlooked that the respondent bears the onus of proof in respect of the allegation of breach of the restraint of trade agreement and that he had chosen to allege such breach on the basis that the defendant initiated “direct solicitation of” the sale clients named in paragraph 29. Further this choice of allegation is to be considered in the context that clause 6.1 of the sale agreement relevantly provides:

“During the Restraint Period, the [applicant] must not:

(a)solicit, canvass or entice away or attempt to solicit, canvass or entice away from the Buyer any Sale Client in respect of Restrained Services;

(b)accept business from any Sale Client in respect of Restrained Services;

(c)encourage a Sale Client not to give the buyer its custom in respect of Restrained Services;

....”

And where the term “Restrained Services” was defined in the agreement as:

Restrained Services means services which are identical to, similar to, or of the general nature or type of services provided by the seller to Sale Clients in the twelve month period preceding the Completion Date including the provision of financial advice and financial planning services.” [24]

  1. [54]
    The particulars to paragraph 29 are set out in the further amended statement of claim, as follows:

“(a) The defendant obtained an Authorised Representative Certificate on 1 November 2010;

  1. (b)
    Mr Altoff told Mr Audet that Mr Altoff had been in contact with the Defendant since October 2010, and that the Defendant has advised Mr Altoff to wait until a restraint period had expired before taking his business from the Plaintiff and giving it to the Defendant;
  1. (c)
    The defendant admitted on 27 July 2011 to soliciting Mr and Mrs Altoff and Ms Porter during the Restraint Period;
  1. (d)
    The Defendant solicited Mr and Mrs Lacey during the Restraint Period;
  1. (e)
    The Defendant solicited the Solicited Clients in or about October 2010 and the first week of November 2010;
  1. (f)
    The Defendant in the course of asking Mr Verdi to transfer his and his partner’s accounts from the Plaintiff to the Defendant, stated to Mr Verdi over the telephone words to the effect that the Plaintiff had “got a lot of clients and did very well from the acquisition” and that the Plaintiff “would not suffer financially from the loss of their business”;
  1. (g)
    The Defendant, in the course of asking Mr Henderson to transfer his and his wife’s accounts from the Plaintiff to the Defendant, stated to Mr Henderson over the telephone words to the effect that the Plaintiff “had a big business and that his leaving would not hurt [the Plaintiff] financially”;
  1. (h)
    The Defendant, in the course of asking Mr Altoff to transfer his and his wife’s accounts from the Plaintiff to the Defendant, stated words over the telephone to a similar effect to those stated by Mr Verdi (see paragraph (f) above) and Mr Henderson (see paragraph (g) above);
  1. (i)
    The Solicited Clients closed their account with the Plaintiff shortly after the Restraint Period and transferred their accounts to the Defendant;
  1. (j)
    By a letter of authority dated 5 November 2010, Mr and Mrs Altoff appointed financial advisors at KR Securities, including the Defendant as her financial advisors;
  1. (k)
    By letter of authority dated 3 November 2010, Mrs Porter appointed financial advisors at KR Securities, including the Defendant, as her financial advisors;
  1. (l)
    On or about 16 November 2010, the Macquarie Bank advised the Plaintiff by email that the Plaintiff was no longer the advisor for the Lacy account maintained with Macquarie Bank;
  1. (m)
    An email from the Macquarie Bank was received by the Plaintiff on or about 16 December 2010, which email pertained to change of advisor from the Plaintiff to the Defendant on Ms Porter’s accounts;
  1. (n)
    The defendant approached other Sale Clients who declined to accept the Defendant’s solicitation.”[25]
  1. [55]
    In these circumstances and quite apart from the potential for there to be an issue of interpretation as to the breadth of the meaning of “solicit” in clause 6.1 of the sale agreement[26] and having regard to the framing of the allegation on the basis of “direct solicitation” and the emphasis on directness and commerciality of approach to the respective sale clients, in the particulars provided, the respondent’s criticisms of the applicant’s affidavit material is not borne out.  That material is sufficient to demonstrate that there is genuine dispute of the respondent’s allegation. 
  1. [56]
    Accordingly leave will be granted for the applicant to withdraw the deemed admissions in respect of paragraph 29 of the statement of claim.

Orders

  1. [57]
    I will hear the parties as to the formal orders to be made and as to costs.

Footnotes

[1]Which is the form of response in the amended defence filed on 6 March 2012. 

[2][2008] QSC 302. 

[3]Ibid at [12] and [19]-[22].

[4]Ibid at [26], [29] and [36].  Reference may also be made to UCPR 150(4).

[5]Ibid at [27] and the underlining is His Honour’s emphasis.

[6]Ibid at [29] and [34].

[7]Ibid at [30].

[8]Ibid at [12].

[9](2001) QCA 122 at [52].

[10]That is, looking at the extract set out in paragraph [10] above, without reference to any of the marked amendments.

[11]The amendments marked in the extract set out above in paragraph [10], indicate what is contemplated, if such leave were granted.

[12]It can be noted that in the Cape York Airlines case, at [29] Daubney J observes that in appropriate circumstances, it may suffice to simply state that an allegation is untrue or that an alleged event did not occur or, in other circumstances, it may be appropriate to make a statement as to the true state of affairs.

[13]See form 17 and cf UCPR 975 and s 49 of the Acts Interpretation Act 1954.

[14]See per Mackenzie J in Groves v Australian Liquor Hospitality and Miscellaneous Workers Union and Anor [2004] QSC 142 at [15] and cf. Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd [2008] QSC 302 at [24].

[15]Such as partly occurred here, in response to paragraph 49. 

[16][2008] 1 Qd R 405.

[17]Although and if this was not understood correctly I will hear the parties further in accordance with the further orders to be considered upon the publication of these reasons. 

[18]Eg: See the discussion in Lewison v Hughes  The interpretation of contracts in Australia, Law book Co 2012, at [4.01].

[19]Eg: See Elderslie Property Investments No 2 Pty Ltd v Dunn [2008] QCA 158 at [20].

[20]Bowes v Chaleyer (1923) 32 CLR 159 at 172 and Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at [31].

[21][2001] 2 Qd R 455 at [19] – [20].

[22][2010] QSC 34.

[23]See the respondent’s outline of argument filed on 3 July 2012, noting that these arguments put in relation to paragraph 29(f) were specifically adopted as also applying to any other deemed admissions found in respect of paragraph 29 of the statement of claim: see paragraph [26] of the outline.

[24]See affidavit of Stephen William Ungerer filed on 29 March 2012, Exhibit “SWU-1”.

[25]Further Amended Statement of Claim filed 1 May 2012, paragraph 29. 

[26]Eg: in the Macquarie Dictionary, Fifth Edition, two alternative definitions for the term “solicit” are: “to seek for by entreaty, earnest or respectful request, formal application etc” and “to seek to influence or invite to action, especially unlawful or wrong action”. 

Close

Editorial Notes

  • Published Case Name:

    4People Pty Ltd v Pocock

  • Shortened Case Name:

    4People Pty Ltd v Pocock

  • MNC:

    [2012] QDC 210

  • Court:

    QDC

  • Judge(s):

    Long SC DCJ

  • Date:

    10 Aug 2012

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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