New South Wales Supreme Court CITATION : Drabsch v Switzerland General Insurance Co Ltd [1999] NSWSC 460 revised - 31/08/99 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 3008/93 HEARING DATE(S) : 14 May 1999 JUDGMENT DATE : 17 May 1999 Neil Gregory Drabsch (P) Switzerland General Insurance Co Ltd (D1) PARTIES : Andrew Chua (D2) Peter Edward Lepparde (D3) Allan Robert Whitehead (D4) Michael John McErlane (XD to 3rd XC) JUDGMENT OF : Hamilton J A B Shand QC and C E Moore (P) COUNSEL : J E Marshall and R S Hollo (D1) D G Charles (D2-4) S Rares SC and G Nell (XD to 3rd XC) Brock Partners (P) SOLICITORS : Minter Ellison (D1) Clayton Utz (D2-4) Levingstons (XD to 3rd XC) CATCHWORDS : PROCEDURE [93], [95] - Procedure under Supreme Court Rules - Pleadings - General - Purpose of particulars - Whether claim adequately particularised - Whether enlargement of particulars ought be allowed during trial - Summary disposal - General principles - Summary dismissal of part of claim refused. Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 Coles Myers Ltd v Bowman [1996] 1 VR 457 Dare v Pulham (1982) 148 CLR 658 Dey v Victorian Railways Commissioners (1949) 78 CLR 672 CASES CITED : General Steel Industries Inc v The Commissioner for Railways (NSW) (1964) 112 CLR 125 McSpedden v Harnett (1942) 42 SR(NSW) 116 Philliponi v Leithead (1959) SR(NSW) 352 Sims v Wran [1984] 1 NSWLR 317 Webster v Lampard (1993) 177 CLR 598 Wickstead v Browne (1992) 30 NSWLR 1 DECISION : Applications for summary dismissal or striking out of part of cross claim dismissed. Application to enlarge particulars of cross claim refused. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J MONDAY, 17 MAY 1999 3008/93 NEIL GREGORY DRABSCH v SWITZERLAND GENERAL INSURANCE CO LTD & 3 ORS JUDGMENT - On Application by Drabsch for Relief under Pt 13 r 5 or alternatively Pt 15 r 26, and by SGI to amend particulars, see pp 708 and 709 of Transcript His Honour: 1 Application has been made on behalf of the plaintiff in proceedings 3008/93, Neil Gregory Drabsch ("Drabsch"), for relief under Pt 13 r 5 or alternatively Pt 15 r 26 of the Rules of the Supreme Court in relation to portions of the cross claim against him by Switzerland General Insurance Co Ltd ("SGI"). That is currently before me in the form of the sixth further amended first cross claim filed on 26 March 1999 ("the cross claim"). A seventh further amended first cross claim is being brought forward and will, I understand, without controversy, be filed in Court in due course, but the differences between the sixth and seventh versions are, as I understand it, not material to the application now before me. 2 Portions of the cross claim which are material to this application are as follows. Par 4 alleges a term of Drabsch's contract of employment stipulating the circumstances in which he might be summarily dismissed. By par 6 of the cross claim the cross claimant alleges that the conduct of Drabsch specified in the schedule to the cross claim constitutes breaches by Drabsch of contractual obligations to the cross claimant. By par 9 it is alleged that by reason of Drabsch's breaches of his employment contract or other wrongful acts, SGI suffered loss and damage and, in particulars appended to that paragraph, it is alleged that SGI made the payments or incurred the expenses referred to in, inter alia, "Item A (both sub-paragraphs (1) and (2) thereof)". This removal of matters of detail into a schedule was at an earlier stage submitted to be inappropriate, but that proposition was not found to be correct by Windeyer J in a judgment of 14 November 1997 to which I shall have occasion to return. In general terms, I respectfully agree with what his Honour said: the removal in an appropriate way of matters of detail into a schedule may help keep a pleading a reasonably concise statement of causes of action or the case sought to be made out, instead of it being a mishmash of hundreds of pages of narrative which does not tell anything very shortly or clearly. 3 Section A in the schedule is, in this case, headed, "Business Expense Reimbursement". It is divided into two sections. Paragraph (1) deals, under six headings, with a comparatively small number of instances of wrongful reimbursement. Although these items were initially complained of by Mr Shand, of Queen's Counsel for Drabsch, in moving the present motion, he later, if I may say so, wisely, withdrew from that and conceded that the matters in (1) had been pleaded and particularised in a way which was comprehensible and where it really was impossible for him to contend that there ought be summary relief of either of the kinds now sought. Paragraph (2) proceeded by reference to what has become known in this case as the "Item A Table". That sets out 410 numbered items, most of them individually small, in respect of which it is said that Drabsch either took wrongful reimbursement or authorised the taking of wrongful reimbursement by McErlane ("McErlane"), also a party to this suit, who was his predecessor as the CEO of SGI. In relation to McErlane's expenses, Drabsch, although his inferior, as second in command, was the authorising authority. The allegation made in par (2) is as follows: "(2) SGI refers to the Item A table which the pleading incorporates by reference (comprising 51 pages and dated 18 August 1997) and says: (a) First of all that the expenses recorded in the Item A table were not business expenses which ought properly to have been claimed and/or authorised as they were not expenses reasonably incurred by Drabsch and/or McErlane in the course of Drabsch's and/or McErlane's employment by SGI and/or were not incurred for and on behalf of SGI and/or were not reasonably necessary for Drabsch and/or McErlane to incur or authorise in the performance of their duties in accordance with the terms and conditions of their employment with SGI; and (b) by reason of the matters in (a), the conduct of Drabsch to the extent of making the claims for reimbursement that he made and in authorising the reimbursement of expenses claimed by McErlane was in breach of the obligations pleaded in Para 4 of the cross claim (which refers to clause 3(a)(v) of the 1/1/90 written agreement) and/or the implied terms of his Employment Contract." The form of the Item A Table is that it comprises 12 columns in which, in addition to the item number, are set out the date of the item; whether it was incurred by Drabsch or McErlane; whether it was authorised by Drabsch or McErlane; the item description; the "attendees" (the bulk of these claims being for entertainment, and others for travel or car hire); a page number cross reference to the supporting documentation; and the type of expense, stipulated by a tick in boxes in three columns headed "Meal", "Alcohol" and "Other" respectively. In many cases the attendees are not stipulated and, so far as restaurant meals are concerned, those meals were claimed by both Drabsch and McErlane with considerable frequency, so that there were often several restaurant meals claimed as entertainment expenses in the one week. 4 Mr Marshall, of counsel for SGI, has, at my request, in arguing in support of the pleading, very usefully prepared a document headed, "Item A Table Categories" ("the Categories document"). This, for the first time, so far as I am aware, comprehensively sorts the items into 13 categories (with a 14th category for items no longer pressed). The categories are not mutually exclusive, so that an item may appear in more than one. Whatever it does, the Categories document, or some refinement of it, will be extremely useful in attempting to deal in a methodical way with this multifarious claim, insofar as it is allowed to proceed by the judgment that I am in the process of delivering. However, it does other things as well. It states in narrative form, under the headings of the various categories, the way in which those categories are sought to be made out. In a number of instances, that again will be useful in the conduct of the trial, so far as the Item A Table is allowed to proceed. However, the terms of that narrative have, in a number of instances, raised a problem. Mr Shand has said that some of the ways in which SGI's case in respect of the Item A Table matters is by the Categories document sought to be made out are outside the particulars earlier given. Insofar as this is so, the case will not be allowed to proceed on that basis unless an amendment to the particulars can be obtained at this stage. 5 In coming to a conclusion on the Pt 13 r 5 and Pt 15 r 26 applications, it is important that I determine the ambit of the existing particulars as such determination is necessary to define the subject matter I am dealing with in those applications. There is history to this matter. Earlier attempts have been made by other judicial officers in this Division to deal with the particulars problem in this somewhat unruly cross claim. The matter was dealt with in one part of a judgment of Master Macready on 1 March 1995. Probably no more need be said about the learned Master's judgment at this stage. However, it was again dealt with on 14 November 1997 in the judgment I have earlier referred to of Windeyer J. His Honour said: "The other matters in the notice of motion, so far as any claims for particulars are concerned [sic]. I am not satisfied that any additional matters or particularisation is required other than to record that the claim of the cross claimant is that all the items in the item A list were expenses which were not properly claimed. So that in so far as the notes to the item A table state that they were excessive, the claim is not made that any particular item is for an excessive amount, but rather that the claim is made that the items were not properly claimed as business expenses. There were complaints to some notes to the item A Table. Those are, in effect, argumentative and might lead one to the misconception that it is not claimed that all the amounts in the table were not claimed as being inappropriate expense reimbursements. The position is that it is claimed that none of the items on the account were properly charged up to SGI, as expenses of Mr Drabsch or were expenses of McErlane which required authorisation by Mr Drabsch. In those circumstances, I have directed that those notes be removed from the schedule and that has been done." The notes, having been removed, are not before me in the substantive proceedings. They have, however, been tendered upon this application. Paragraph 1 of the notes contains the words: "The number of expenses claimed by Drabsch and McErlane in the meal category over the relevant period were excessive. In several cases the claim for reimbursement was made without the Expense Reimbursement Form being properly completed as required by Group Standard 12.2." 6 The material, or formulation of SGI's case, that Mr Shand complains of, is typified by the narrative relating to restaurant meals set out under the heading "Category 12" in the Categories document. These, incidentally, number more than 200 out of the 410 items in the Item A Table. I shall not set out that narrative in this judgment nor attempt to state it compendiously. However, it does constitute a claim that Drabsch's conduct in relation to restaurant meals is a breach of contract not simply in taking meals, which it is said it will be established by evidence in the case had no business connection, but by relying on breaches of contract said to be constituted by his not filling out, in accordance with the company regulations, claim forms for the expenses which included the names of the persons entertained; procuring reimbursement for the meals without that information entering the company records; and authorising expenditures by McErlane for restaurant meals which suffered the same alleged vices. It has been submitted that a case of this sort has not been pleaded or particularised adequately by the particulars as they are before me, the essential features of which I have set out above. It seems to me that what fairly may be taken to be alleged by the pleading and particulars is that Drabsch in his own case took - and in the case of McErlane authorised - reimbursement of items of expense which were not truly business expenses, but expenses of a private nature. I bear in mind, in saying what I am about to say, that, on the case as it has been opened, not only is there some form of wrapped up allegation of misconduct now sought to be inferred from these many instances of insufficiently documented claims, but an actual claim is made for reimbursement sounding in the judgment of the Court in respect of each and every one of the items particularised in the Item A Table. Bearing that in mind, it seems to me that the case upon the particulars which the cross claimant has communicated to Drabsch and undertaken to prove is that it established upon the balance of probabilities in respect of each and every one of the items that that item was of a private nature and lacking in any business connection. 7 In pressing on me that the wider case now sought to be made out should be regarded as being encompassed in the particulars on the present state of the documentation, Mr Marshall has tendered the notes to the Item A Table removed by Windeyer J, and drawn my attention to the portion of them set out in [5]. He says that they indicate that a case of the sort that he now seeks to make out was in contemplation of the parties and the Court when the matter was in 1997 before Windeyer J and that, read in the light of this portion from the removed notes, the judgment of Windeyer J is to be so understood. 8 I cannot, of course, enter into his Honour's mind. I must read and construe his Honour's words objectively. In reading his Honour's words and the documentation which I am now called upon to construe, I must bear in mind the primary objects of particulars. One of those objects that is particularly material in the present case is that the particulars are to prevent surprise by giving the opposing parties sufficient information to make plain to them the nature of the case that they may be required to meet at the trial: see generally Ritchie's Supreme Court Procedure [16.0.0]; McSpedden v Harnett (1942) 42 SR(NSW) 116 at 117; Philliponi v Leithead (1959) SR(NSW) 352 at 358; Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 220 - 1; Dare v Pulham (1982) 148 CLR 658 at 664; Sims v Wran [1984] 1 NSWLR 317 at 321 - 2. To prevent surprise and show the case which is to be made out, particulars must be clear. They must be clear primarily to opposing parties, who may have to meet the evidence led in support of the allegations made, or themselves lead evidence in answer. It is true that in this case, according to modern practice, much of the evidence to be brought is available to all sides, before the trial commences, in the form of affidavits, which supplant oral evidence-in-chief, and bundles of documents, which are prepared in cases such as these, and have been prepared in this case. Indeed, I already have the benefit of between 10,000 and 20,000 pages of them. However, that does not remove the possibility of other evidence being brought in, in various ways, by the propounding party during the trial, for instance, by cross examination of the witnesses of the opposing party, or, indeed other parties, in this multi-party litigation. Even more importantly, where not just the propounding party's, but everybody's, evidence is directed be brought to court ahead of time in written form, the opposing party must know just what evidence it needs to bring. Otherwise it may be prevented from bringing that evidence by the Court's very practice of requiring evidence in chief of witnesses to be made available in written form ahead of time. Orders precluding the calling of additional evidence in chief at a late point of time are certainly not an unknown feature of litigation in these days, as opposed to the practice in the old days, when no party, even in commercial actions, had to specify its witnesses ahead of time and could simply call viva voce whatever witnesses it desired to call, up to the close of its case. To me, the significance of the notes to the Item A Table is, not so much what they contain as perhaps reflecting upon somebody's state of mind in 1997, but that they were at that time removed from the record by Windeyer J, and are not part of the record as it now is before me. What matters most is the record as it is now before me, rather than anything that Windeyer J said in giving reasons for an interlocutory judgment in November 1997. It seems to me that upon the proper reading of par A(2) of the schedule to the cross claim, looking at the words themselves, and bearing in mind the conjunction between sub-pars (a) and (b) required by the word "and" at the end of sub-par (a) and the opening words of sub-par (b) "by reason of the matters in (a)", the burden of the complaint is that each of the items in the Item A Table was itself a private expense without any or any sufficient relation to the business of the company to justify its being charged to the company's account. 9 Those are the particulars on which the matter has been brought to trial. In my view, it was not plain that there was some case that SGI intended to bring by reference to the Item A Table, beyond that which I have stated above. Nor, fairly reading my brother Windeyer's judgment of November 1997, do I see that his Honour's words indicate otherwise. Indeed, read in the context of his Honour's direction of the removal of the notes, in my view, insofar as it matters, his Honour's words support rather than detract from the view that I have just expressed. Let me make it clear that the core of the view by reference to which I am proceeding is that it was not on the documents made plain to Drabsch or, indeed, to McErlane, who is also a party to the suit and concerned in the Item A Table matters, that a case of unsatisfactory procedure or practice, or arising from the sheer bulk of expenses in some particular period, was of itself to be relied on to make out a case of breach of contract or breach of duty against either of them. I also bear squarely in mind that I am informed by Mr Shand that counsel did not come to Court prepared to meet such a case. I have no reason, of course, to doubt that that is so. And it is hardly surprising that it is so, upon the understanding of the particulars which I have set out above as being, in my view, what they convey. 10 I now turn to the application made by Mr Shand in the light of this constricted view of the case able to be made out under the Item A Table. This application, on behalf of Drabsch, is made late in the proceedings. Unlike the rules in some other courts, the Rules of this Court do not impose any limitation as to the time at which an application for summary dismissal, or, indeed, the striking out of pleadings or parts, may be made. Nonetheless, it is usual for such applications to be made at an earlier time than a quarter of the way through the trial. It should, however, be said in fairness to Drabsch, and those advising him, that they have not been, up to this point of time, silent about the problem. The matter came to me for case management, at a late stage, after I had been assigned to it as the trial Judge. It is not necessary to go into detail, but in directions hearings before me difficulties arising out of this same subject matter were agitated. They were debated when an order of trial was being established. Mr Shand was desirous that SGI's case on its cross claim have all the evidence upon it presented before Drabsch was available to be cross examined, and that, in part, by reference to the problems arising from features of the Item A Table which are now under discussion. I made it plain that I should not accede to ordering the trial to permit that to occur. Another reason, perhaps, why the application has been made now rather than earlier, is because, now the affidavits have essentially all been read and the bulk of the written material tendered, it is plain what material there is in support of SGI's Item A Table case, whether viewed in the more constricted way that I have ruled it should be viewed or viewed in the broader way in which Mr Marshall has sought to put it. 11 All I need say about the timing of this application is that I should not and do not refuse it simply by reference to the time at which it is brought. However, applications for summary dismissal are difficult to succeed in whenever brought. The principles have been laid down in the High Court in cases such as Dey v Victorian Railways Commissioners (1949) 78 CLR 672; General Steel Industries Inc v The Commissioner for Railways (NSW) (1964) 112 CLR 125 and Webster v Lampard (1993) 177 CLR 598. They were, in my view, felicitously summarised by Charles JA in the Victorian Court of Appeal in Coles Myers Ltd v Bowman [1996] 1 VR 457 at 459. The additional difficulties that stand in the way of the success of summary dismissal applications in multi-defendant or multi-party cases, such as this is, were adumbrated in the New South Wales Court of Appeal in Wickstead v Browne (1992) 30 NSWLR 1, esp per Handley and Cripps JJA at 11-12. I am the trial Judge in this matter and the trial is under way. It is not desirable that I express unnecessarily any views about the strength or weakness of material in this matter. In the light of that exigency I intend to say no more than that, in my view, looking at the claim or part of the claim attacked, upon the constricted basis on which I have ruled that it may proceed, I am not of the view that it is so clearly untenable that it cannot possibly succeed. By reason of that conclusion, I propose to dismiss Drabsch's application under Pt 13 r 5. Whilst applications in relation to claims under Pt 15 r 26 in respect of the same pleading sometimes turn on rather different considerations from summary dismissal applications, I do not think that that is so in this case. In this case the conclusion that I have come to upon the tenability of the portions of the claim attacked leads also to the conclusion that the relevant portions of the pleading and particulars appended to it are not so embarrassing that they ought be struck out and the application to strike out any portion of the cross claim is therefore also refused. 12 The orders of the Court are: (1) I grant to the plaintiff leave to file in Court in proceedings 3008/93 the notice of motion dated 17 May 1999. (2) I order that that notice of motion be dismissed. (3) I reserve the costs of the application. …oOo… 13 Mr Marshall now applies to have the Categories document, which was put in evidence in Drabsch's application for summary dismissal and to strike out, stand as further particulars of the SGI case under the first cross claim in the proceedings. He applies alternatively that SGI be allowed to expand in some other way, if some other way be deemed more suitable, its particulars so as to permit a case to be made out by it as set out in the Categories document, going beyond the pleading and particulars as they stand. I have already traversed, in dealing with Drabsch's application this morning, the history of these particulars. The view that I have expressed is that the particulars, as they stand after being dealt with by Windeyer J on 14 November 1997, could not be fairly read as giving notice of a case of the kind now sought to be made out. The matter proceeded from November 1997 to the commencement of the trial before me late in April 1999 without any attempt to enlarge the particulars or give notice in any clear way of the claim now sought to be made. It may well be that claims of the type now propounded would necessitate the bringing of further evidence on behalf of Drabsch, and perhaps on behalf of McErlane also. I am of the view that, if this amendment were allowed and an adjournment of the trial were sought on behalf of other parties, it would have to be granted. Although I wish to say as little as possible concerning the merits of any part of the matter, speaking only of the additional claims now sought to be put forward, I see considerable difficulty in their way upon the material now before me, which is the bulk of the written material to be presented in the case. Bearing in mind the time that has passed and all the circumstances of the matter, I do not think it appropriate to allow the particulars to be enlarged in this way at the present time. The application made by Mr Marshall on behalf of SGI is refused. Costs of that application also are reserved. …oOo… Last Modified: 06/30/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.