4People Pty Ltd v Pocock[2012] QDC 82

[2012] QDC 82

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 2394 of 2011

BRISBANE 

DATE 17/04/2012

ORDER

HIS HONOUR:  The application before the court is one by the defendant seeking (1) leave to withdraw his admission of paragraph 30 of the statement of claim; (2) summary judgment on so much of the claim as relates to alleged solicitation of persons identified in paragraphs 29(c) to (f) of the amended statement of claim, alternatively, the striking out of those paragraphs under rule 171 and alternatively to that again, an order for further and better particulars of paragraph 9, including "(a) the date of each active solicitation alleged to have taken place by the plaintiff; (b) the means of each such solicitation; and (c) to the extent that any such solicitation involved any conversation the parties to that conversation and the words spoken in that conversation or the effect thereof."

The plaintiff purchased from the defendant or an entity of his a financial advisory business. Completion occurred on 1 December 2008, so that the restraint period of two years, as it is called, ran from that date.

There were at the time of the contract of purchase so-called "sale clients". The list of them was, it seems, omitted from the sale agreement but the defendant, the court is told, accepts that the plaintiff could probably obtain rectification to incorporate the list.

The plaintiff contends that the defendant acted in breach of the restraint. It seeks damages for breach of contract of nearly $175,000, damages in a sum of some $20,000 less under section 82 of the Trade Practices Act 1974 of the Commonwealth or section 99 of the Fair Trading Act 1989 of Queensland, the same amounts are being sought as compensation under sections 87 and 100 of those Acts, respectively.

Equitable compensation in an amount exceeding $330,000 is claimed. Likewise, an injunction restraining the defendant from initiating direct solicitation of any sale client or disclosing certain other matters. Equitable damages in the same sum as the equitable compensation are sought in lieu of the injunction.

The first item was not pursued. Paragraph 30 alleged that "the Solicited Clients are persons identified as Sale Clients in the Sale Agreement", an allegation specifically admitted in paragraph 1 of the amended defence.

Paragraph 29 of the amended statement of claim filed on 27 February 2012 alleges that "at a time to be further particularised following disclosure but, in any case, during the Restraint Period, the defendant initiated direct solicitation of the following persons for the purpose of providing Restrained Services."  Six numbered paragraphs follow identifying clients, in some cases being couples, and a definition provision:  "The clients solicited by the defendant will be referred to as the solicited clients."  In the amended statement of claim, the couple in paragraph (f) were added to the list.

3. (a)
   Mr Pocock's original defence in paragraph 6 pleaded: "As to the allegations in paragraph 29 of the statement of claim; (a) the defendant denies that, within the restraint period, he solicited any of EV, JC, BH, RH, BM and BM [initials being used to avoid identifying individuals named].
4. (b)
   The defendant admits that he solicited J and AA and JP on or about 5 November 2010 ('the admitted solicitations').
5. (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 Effective Date (as that term is defined in the contract) was the terminus of the restraint period."

That belief appears to be based on a misconstruction of the effect of the definition of "Effective Date" in the contract which was to be 1 November 2008 if completion occurred on or prior to 17 November 2008, otherwise 1 December 2008.

Paragraph 6 has been retained in identical form in the amended defence filed 6 March 2012. Mr Ferrett, for the defendant/applicant, accepts that this appears to involve a deemed admission in respect of the couple identified in paragraph 29(f) of the statement of claim about whom the amended defence says nothing.

Mr Travis's contention on behalf of the plaintiff, which resists the present application, is that notwithstanding the limited scope of the express submission in paragraph 6 there is an admission by default under rule 166(5) because the denial of allegations is not accompanied by a direct explanation for the defendant's belief that the allegation is untrue.

There has been reference to Cape York Airlines Pty Ltd v. QBE Insurance (Australia) Limited [2009] 1 Qd R 116 and, in particular, at paragraphs 28 and following.

Mr Ferrett's submission is that there has been compliance with rule 166(4) in the circumstances, that what is admitted of paragraph 29 effectively explains the express denial in respect of paragraphs (c) to (e) inclusive, (f) being in a special category for reasons given above.

The contention of Mr Travis is that the approach urged in Cape York Airlines would require the defendant to distinctly plead that the event alleged by the plaintiff did not happen. I am not certain of that. I think it would suffice to assert that the statement of claim allegations were untrue but the defendant's pleading does not do that. This comes in circumstances that caused the court some concern because the formula explaining denial of other allegations in the statement of claim that "they are untrue" is used in other places in the pleading, such as paragraphs 8 and 9; see also paragraphs 15 and 16. Another formula used by the pleader is found in paragraph 5 to support a non-admission "because the truth of the allegation is beyond his knowledge."

A question arises why such a formula was not used in paragraph 6. Resisting any suggestion that this was a tactical pleading of which the court would disapprove, Mr Ferrett asks rhetorically why the defendant would be making the admissions that he does in paragraph 6(b) which, the court is told he has done from the outset, if bent on pleading in a tactical way.

I think Mr Travis, however, is taking too much from the state of the amended defence and that is particularly so in respect of its failure to mention the content of paragraph 29(f) which the court readily accepted was due to a mistake or oversight. One can be sure in the circumstances that the defendant would not have intended to leave that paragraph unanswered. That mistakes, and legitimate mistakes, can occur, the consequences of which parties should be given a fair opportunity to overcome is, I think, illustrated by the mistake in the plaintiff's own pleading where the all too common mistake of referring to the plaintiff as the defendant occurs.

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."

The court is not favoured with any information as to whether the plaintiff would be in a position to provide the particulars, or some of them, itself. The practicalities are that it is unlikely to be able to do that but I am inclined to think the plaintiff should have to concede as much. The request for particulars is in a familiar enough form. There is perhaps some uncertainty as to what is the meaning of "solicitation" and whether it applies to steps taken to attract business or is limited to steps taken to attract business which succeed.

The lengthy discussion that has occurred this afternoon regarding the sufficiency of the pleading by the plaintiff has, I think, elicited a revelation that there ought to be more particulars, perhaps alternatively to those which the defendant has been seeking under rule 157.

There has been reference to rule 150 subrule (2) which requires any fact from which the matters mentioned in subrule (1) is claimed to be an inference must be specifically pleaded. One of the matters mentioned in subrule (1) is "breach of contract or trust" in paragraph (a). That is what the plaintiff alleges against the defendant.

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. Mr Ferrett says the plaintiff fails in respect of the (c) to (e) sale clients. Of course, this case is being decided for today's purposes on pleadings as they stand with no or limited particulars given.

Reliance was placed on what was said in Bernstrom v. National Australia Bank Limited [2003] 1 Qd R 469 at [39]. In relation to rules 292 or 293, the latter of which is relevant here, "The power to enter summary judgment exists where the Judge concludes that the evidence taken at its highest is such that a properly directed jury could not possibly reach the necessary factual conclusion."

The court is invited to assume that the evidence remains as it is. The difficulty is that we have no evidence at all, so that the court is being asked to dismiss a plaintiff's claim as to a substantial part of it on the basis of the state of pleadings.

I do not think that this is a suitable occasion for the court to exercise its discretion under rule 293(2) to give judgment for the defendant. This is not a deciding consideration but doing so would not finally resolve the proceeding; far from it.

I suppose what could have been done to give effect to rule 293 in the circumstances would have been to follow some indirect process along the lines of striking out paragraph 29(c) to (e), accompanied by some intimation that the plaintiff was precluded from presenting a case based on matters to do with the sale clients identified there.

That brings us to the alternative claim for relief under rule 171 which would apply if the court took the view that the relevant part of the pleading "(a) discloses no reasonable cause of action."

It is somewhat difficult to make such a harsh judgment in the circumstances but what I think ought to occur is that the thinness of this aspect of the amended statement of claim should be acknowledged and the plaintiff should be required to give further and better particulars to identify the case which it makes. For the moment, it savours to me of a case being fished out.

I propose making an order that the plaintiff give further and better particulars of paragraph 29 of the amended statement of claim, including (a), (b) and (c) as set out in paragraph 4 of the application filed 29 March 2012 and also (d), "Any fact from which solicitation is claimed to be an inference."

Should the plaintiff fail to give those particulars, then the court may find itself in a position to make an order under rule 613, including a judgment similar in effect to the one which the defendant fails to get under rule 293. Obviously, a time for provision of the particulars must be indicated.

I should make it clear that it may be a sufficient response to the order for particulars, as to parts of it in any event, that the plaintiff is unable to give the particulars required by the order. The plaintiff has not yet said anything to that effect. In the future it might be the case that the response to the order does, in some fashion, reveal that the plaintiff, in the limited respects in issue today, does not have a case which is fit to proceed to trial.

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HIS HONOUR:  This appears to me to be a situation in which the pleadings on both sides are revealed to be ones that do not comply with the requirements of the rules. It is left intriguingly open, as it was in the Cape York Airlines case, what the consequences of that might be.

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HIS HONOUR:  I think the costs ought to follow the outcome of claims that there was solicitation of the 29(c), (d) and (e) clients but for today I think I would reserve them with that intimation which may or may not persuade another Judge down the track.

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