Alico Tradings Pty Ltd v Houri

[2023] NSWSC 1268

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Alico Tradings Pty Ltd v Houri [2023] NSWSC 1268

Hearing dates:

26 October 2023

Date of orders:

26 October 2023

Decision date:

26 October 2023

Jurisdiction:

Equity

Before:

Elkaim AJ

Decision:

I make the following orders:

1. The plaintiff has leave to join Petrolco Pty Ltd as a defendant to the proceedings.

2. The plaintiff has leave to file a second further amended statement of claim in the form which appears from p 423 of the Court Book within 14 days.

3. The plaintiff is to pay the defendants’ costs of the notice of motion filed on 10 August 2023 together with any costs thrown away by reason of the amendment.

Catchwords:

PRACTICE AND PROCEDURE – application to join defendant to proceedings – where allegation of misappropriation of funds – requirements for particulars under r 15.3 Uniform Civil Procedure Rules 2005 (NSW)

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), r 15.3

Cases Cited:

Butterfield Services Pty Ltd v Bentley [2013] NSWSC 1217

Category:

Procedural rulings

Parties:

Alico Tradings Pty Ltd (Plaintiff)
Robbie Houri (First Defendant)
Houri Industries Pty Ltd (Now Jamisontown Holdings Pty Ltd) (Second Defendant)
Calypo Pty Ltd (Third Defendant)
Jet Acquisitions Pty Ltd (Fourth Defendant)
Houco Pty Ltd (Fifth Defendant)
Houri Holdings Pty Ltd (Sixth Defendant)
RLEZ Pty Ltd (Seventh Defendant)

Representation:

Counsel:
Mr R Alkadamani (Plaintiff)
Mr J Pearson (Defendants)

Solicitors:
Patterson Houen & Commins (Plaintiffs)
William James (Defendants)

File Number(s):

2022/192422

JUDGMENT

1. The plaintiff (Alico Tradings Pty Ltd), by a notice of motion filed on 11 August 2023, seeks leave to file an amended statement of claim which includes the joining of an extra defendant (Petrolco Pty Ltd). The proposed pleading is to be found at p 423 of the court book and is headed “Second Further Amended Statement of Claim”.

2. The motion is supported by the following affidavits:

1. Mr Rodney Commins dated 10 August 2023;

2. Mr Ramsay Houri dated 30 August 2023;

3. Mr Ramsay Houri dated 8 September 2023; and

4. Mr Lachlan Commins dated 23 October 2023.

3. Mr Rodney Commins is the plaintiff’s solicitor. He is assisted from time to time by Mr Lachlan Commins who is otherwise a sole practitioner. Mr Ramsay Houri is the son of Mr Ali Houri, who is the sole shareholder and director of the plaintiff. He is also the brother of the first defendant.

4. There is no affidavit evidence from the defendants.

5. The defendants consent to most of the amendments. Contention remains in respect of the joinder of Petrolco Pty Ltd (Petrolco), and in particular the amendments commencing at paragraph 294AQA.

6. The proposed allegations against Petrolco, in the simplest of terms, are as follows:

1. the plaintiff derived revenue from businesses which included petrol stations and retail shops;

2. the first defendant (Mr Robbie Houri) was employed by the plaintiff from about 2006. Part of his duties included the banking of the plaintiff’s revenue;

3. instead of banking the revenue into the plaintiff’s accounts, the first defendant deposited them into Petrolco’s account(s). The first defendant is the sole director of Petrolco;

4. Petrolco transferred some money back to the plaintiff to enable the plaintiff to pay its suppliers;

5. the amounts transferred back to the plaintiff were less than the plaintiff’s revenue that had been paid to Petrolco;

6. accordingly, Petrolco retained monies that belonged to the plaintiff;

7. Petrolco did not have the plaintiff’s authority to retain the above monies; and

8. therefore, Petrolco should be ordered to account to the plaintiff for the monies it retained.

7. The defendants submit that the allegation of a misappropriation of funds by Petrolco is an allegation of fraud. This means the allegation should be pleaded with considerably more detail and specificity than appears in the proposed pleading.

8. Rule 15.3 of the Uniform Civil Procedure Rules 2005 (NSW) says:

A pleading must give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies.

9. I was specifically taken to the decision of Button J in Butterfield Services Pty Ltd v Bentley [2013] NSWSC 1217 from [23]. I note that the passage quoted from Kirby P at [23] requires that “particulars of the fraud claimed must be exactly given” but the balance of the sentence refers to the standard of proof to be applied in the final hearing and is not relevant to this stage of the proceedings.

10. The proposed pleading identifies the proposed defendant and states that the first defendant is its sole director and controlling mind (paragraphs 32D and 32E).

11. In its first attempt at drafting a new pleading, the only other references to Petrolco were in paragraphs 294AS and 294AT. The nature of the allegation is in paragraph 294AS:

“Further, and alternatively, from about November 2008 revenue from Alico’s businesses was banked into Petrolco’s bank account(s) or other accounts held by Robbie or companies of which he was the controlling mind.”

12. Paragraph 294AS is an umbrella statement providing no detail, and certainly not the particularity required of a fraud or breach of trust allegation.

13. There is correspondence from the plaintiff’s solicitor to the defendants’ solicitor suggesting that the allegation being made is not one of fraud (letter dated 20 October 2023). The assertion is a little surprising having regard to the plaintiff’s written submissions which state, at [11]:

“Alternatively, Robbie’s conduct amounted to a fraudulent and dishonest design and the attribution of Robbie’s knowledge of that conduct to Petrolco would indicate to an honest and reasonable person Robbie’s fraudulent and dishonest design.”

14. The deficiencies in the pleading were pointed out by the defendants which led to a fresh proposed pleading and then ultimately to the current proposal which was attached to an email from the plaintiff’s solicitors dispatched on 20 October 2023. This document contains a good deal more detail.

15. Paragraphs 294AQA through to 294AQP provide particulars satisfying the requirements of r 15.3, but with one caveat. My reservation is that I do not consider it appropriate for particulars to be given by way of a reference to the contents of an affidavit, as occurs in paragraph 294AQB.

16. While I would normally require the particulars to be contained in the pleading I think, in this case, that is not necessary because it would incur yet further costs stemming from this attempt to amend the statement of claim and, in any event, a forensic accounting report is foreshadowed which will presumably contain all of the relevant particulars.

17. Finally, a particular matter that I should also mention arises from the frank concession by the plaintiff that not all of its own bank accounts have yet been identified. The defendants made the valid point that the identification of these bank accounts could reveal the location of the allegedly missing funds. In that case, the amendments are premature and should await the finding of these accounts.

18. The plaintiff responded that theoretically the suggestion was correct, but in practice was likely to be of little significance because the “main” bank accounts had been identified. Although perhaps a little unsatisfactory, I accept that it is nevertheless appropriate to allow the amendment at this stage on the basis that the first defendant was directing the depositing of the plaintiff’s revenue and then, for no apparent reason, returning some monies back to the plaintiff.

19. In this regard the defendants submitted that the overall picture was one of a family business in which funds might flow between companies without there being any untoward transfers. The difficulty with this submission is that the plaintiff and Petrolco are distinct corporate entities respectively owned and operated by different persons. The submission would have been significantly more attractive if, for example, the first defendant was a director and/or shareholder of the plaintiff, or, conversely, if Mr Ali Houri was a director and/or shareholder of the first defendant.

20. In relation to the costs of the motion, the defendants appropriately consented to most of the amendments and took issue with the then plainly incomplete allegations concerning Petrolco. This led to the preparation of a better pleading, but only served very recently, namely on 20 October 2023. Although consent to this pleading could have been forthcoming, I think the plaintiff, which is seeking the indulgence, should pay the defendants’ costs of the motion.

21. I make the following orders:

1. The plaintiff has leave to join Petrolco Pty Ltd as a defendant to the proceedings.

2. The plaintiff has leave to file a second further amended statement of claim in the form which appears from p 423 of the Court Book within 14 days.

3. The plaintiff is to pay the defendants’ costs of the notice of motion filed on 10 August 2023 together with any costs thrown away by reason of the amendment.

**********

Amendments

15 November 2023 - Jurisdiction amended to Equity

Decision last updated: 15 November 2023