Astral Land Pty Ltd v Wellington Parkland Pty Ltd
[2012] WASC 273
•31 JULY 2012
ASTRAL LAND PTY LTD -v- WELLINGTON PARKLAND PTY LTD [2012] WASC 273
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 273 | |
| Case No: | CIV:2518/2011 | 23 MARCH & 14 JUNE 2012 | |
| Coram: | KENNETH MARTIN J | 31/07/12 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Leave to amend in terms of minute refused | ||
| B | |||
| PDF Version |
| Parties: | ASTRAL LAND PTY LTD LIAS ARIPIN WELLINGTON PARKLAND PTY LTD LUAN MAY WONG |
Catchwords: | Practice and procedure Pleadings Application to add plaintiff Minute of substituted statement of claim Embarrassing plea regarding repayment of investment in shares and reinvestment Confusing basis for trial Leave refused |
Legislation: | Nil |
Case References: | Carmody v Priestley & Morris Perth Pty Ltd [2005] WASC 120; (2005) 30 WAR 318 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
LIAS ARIPIN
Second Plaintiff
AND
WELLINGTON PARKLAND PTY LTD
First Defendant
LUAN MAY WONG
Second Defendant
Catchwords:
Practice and procedure - Pleadings - Application to add plaintiff - Minute of substituted statement of claim - Embarrassing plea regarding repayment of investment in shares and reinvestment - Confusing basis for trial - Leave refused
Legislation:
Nil
(Page 2)
Result:
Leave to amend in terms of minute refused
Category: B
Representation:
Counsel:
First Plaintiff : Mr S M Davies SC & Mr J D Maclaurin
Second Plaintiff : Mr S M Davies SC & Mr J D Maclaurin
First Defendant : Mr M L Bennett
Second Defendant : Mr M L Bennett
Solicitors:
First Plaintiff : Hotchkin Hanly
Second Plaintiff : Hotchkin Hanly
First Defendant : Bennett & Co
Second Defendant : Bennett & Co
Case(s) referred to in judgment(s):
Carmody v Priestley & Morris Perth Pty Ltd [2005] WASC 120; (2005) 30 WAR 318
(Page 3)
1 KENNETH MARTIN J: This matter returned to me for further directions on Thursday 14 June 2012 in the aftermath of an earlier interlocutory hearing on Friday 23 March 2012.
Background
2 At the 23 March hearing I struck out Astral's (the then sole plaintiff) re-amended statement of claim (RASOC) of 20 March 2012, but gave leave to re-plead.
3 Prior to that special appointment there were several iterations of Astral's statement of claim; namely, a minute of proposed statement of claim (filed 4 October 2011), a statement of claim (filed 19 December 2011), an amended statement of claim (filed 10 January 2012) and then the RASOC of 20 March 2012.
4 Numerous concerns were raised by the defendants over Astral's pleading. But the most fundamental grievance seemed to be that on its own pleading, Astral had suffered no loss.
5 The defendants say that on Astral's pleading, Astral paid $1.4 million in August 2005 for shares in Wellington, an amount much greater than the shares were worth. However, Astral's money was returned in full in November 2007, with Astral then causing the funds to be repaid to its director Mr Lias Aripin, the person who had loaned Astral the funds for the purchase of the shares in Wellington in the first place (see also Mr James Aripin's affidavit of 10 November 2011, pars 34 - 35). Mr Lias Aripin then personally paid Ms Wong, the second defendant, $1.4 million for the shares.
6 If Astral and Mr Lias Aripin had been repaid (or substantially repaid) their investment (and loan in Mr Aripin's case) and Mr Lias Aripin had made a fresh investment in Wellington shares in 2007, then Astral's case was either wholly or very substantially misconceived in its formulation.
7 On 23 March 2012 my view was that Astral's formulation of what is a critical issue (re-investment in 2007 by Mr Lias Aripin personally), was confused and hopelessly deficient. I expressed my view (ts 54) that Astral should 'basically start again', 'from scratch' (ts 55), with Mr Lias Aripin as a co-plaintiff. Due to time constraints (see ts 136), the costs of the defendants' strike out application were effectively reserved for another day.
(Page 4)
8 On 30 April 2012 Astral filed a further re-amended statement of claim (FRASOC) - albeit I had directed on 23 March 2012 Astral file a substituted statement of claim. My direction to re-plead from scratch, with Mr Lias Aripin as co-plaintiff, was not followed; what was filed on 30 April 2012 was a modestly amended FRASOC, not a wholesale repleading.
9 On 12 June 2012 Astral filed a chamber summons seeking leave to add Mr Lias Aripin as an plaintiff pursuant to Rules of the Supreme Court 1971 (WA) (RSC) O 18 r 4, alternatively O 18 r 6. The same day Astral filed a minute of proposed further re-amended writ of summons (naming Mr Lias Aripin as second plaintiff).
10 On 12 June 2012 Astral also filed what is called a minute of proposed substituted statement of claim (but confusingly dated 30 April 2012) (MOPSSOC). The minute endeavours to plead on the basis of Mr Aripin's joint participation with Astral in the action as a second plaintiff. Although not marked up, and called a substituted pleading, analysis shows that it does not start from scratch. It adds alternative pleas involving Mr Aripin. The MOPSSOC abandons nothing as regards Astral's originally pleaded claims that caused the conceptual problem I identified on 23 March 2012.
11 On Wednesday 13 June 2012 the court received by email (after conferral between solicitors) a marked up version of the MOPSSOC. The mark up confirms that the MOPSSOC is not a wholesale revision. Unfortunately, the addition of Mr Lias Aripin as the second plaintiff appears only to have multiplied potential alternative claims, rather than simplified matters.
12 On 14 June 2012 an affidavit was filed by a solicitor for Astral in support of the applications to join Mr Lias Aripin and to file a substituted statement of claim (see affidavit of Gandhi affirmed 13 June 2012). Leave to add Mr Lias Aripin was not opposed. So, on 14 June 2012 I granted leave to join Mr Lias Aripin.
13 Also on 14 June 2012, I granted leave for the proposed further re-amended writ of summons to be filed, albeit on the basis that the insertion of the words 'further or alternatively' would be inserted into headings concerning the second plaintiff's claims against the first defendant and his claims against the second defendant. I expressly preserved for the defendants any accrued limitation of action rights they
(Page 5)
- may hold at this time against Mr Aripin as regards the new causes of action.
Core issue
14 The remaining issue concerns the opposed application for leave to amend in accordance with the MOPSSOC filed on behalf of both plaintiffs. Leave is opposed by the defendants, essentially because:
(a) the return of $1.4 million to Mr Lias Aripin in November 2007 point is still said to be inadequately and confusingly addressed under the proposed revised pleading; and
(b) the defendants say that the MOPSSOC now fails to recognise the necessarily alternative character of the causes of action as between Astral and Mr Aripin, thereby creating an unsatisfactory doubling up of possible loss and damage and hence unnecessary confusion. This, it is put, renders the proposed pleading still inappropriate as a basis for a trial to proceed.
15 The nub of the 35 page proposed pleading relates to the investment in Wellington shares. The investment was on the basis that Wellington would be a land owning corporate investment vehicle for the speculative acquisition and holding of 22 lots at Maddington, Western Australia (the Maddington Properties) (par 10 of the pleading).
16 The essential grievance appears to be that Astral (or Mr Lias Aripin) paid too much for the Wellington shares (Astral being incorporated in August 2004). Astral was Mr Lias Aripin's Australian corporate vehicle for making investments in Western Australian real property, as recommended by the second defendant, Ms Wong (par 7 of the MOPSSOC).
17 The directors of Astral were Mr Lias Aripin, together with his son James and his daughter Ervi. Mr Lias Aripin was the major shareholder in Astral.
18 The plaintiffs say that Astral acquired 20% of the shares in Wellington for $1.4 million on or about 18 August 2005 (par 17).
19 The key grievance complained of concerns an alleged 2005 misrepresentation by Ms Wong. It is asserted that the 20% shareholding in Wellington was not worth $1.4 million when acquired in 2005. The assertion of undervalue is seemingly formulated on a pari passu return to
(Page 6)
- shareholders' analysis, upon the hypothesised sale of Wellington's land in 2005, based on the 2005 worth of the Maddington Properties.
The $1.4 million purchase of a 20% shareholding in Wellington
20 According to par 12 of the statement of claim, during a car journey on 3 April 2005 Ms Wong made some oral statements to Mr Lias Aripin in the presence of Ms Wong's husband (Mr Howard Sugiarso), Mr James Aripin and Ms Sumiati Herianto. (Sumiati Herianto is an unexplained person mentioned only in the particulars at pars 11(a), (b) and 12(i) of the statement of claim.) These statements were in the context of several conversations that had taken place between Ms Wong and Mr Lias Aripin over March to April 2005 (par 11), in which Ms Wong recommended that Astral invest in Wellington, a company that she and her son, Mr Andrew Sugiaputra, were directors of (par 3(c) and 28(b)).
21 There is pleaded to have been oral misrepresentations to Mr Aripin (on behalf of Astral) by Ms Wong as to the value of the Wellington shares (at $1.4 million, by reference to the value of the Maddington Properties) and also as to the true identity of the vendor of the Wellington shares. It is alleged to have been wrongly represented that the vendor of the shares was Ms Wong's nephew, Mr John Aryananda (when the true vendor is later said to be someone else) (the First Representations).
22 It is pleaded that the First Representations influenced Astral to pay $1.4 million for a 20% shareholding in Wellington. Astral paid by cheque made payable (par 16) to Wellington, delivered to Ms Wong on or about 18 August 2005, at which time Ms Wong is said to have told Mr Aripin that Astral owned '20% of Wellington' (par 17).
23 Importantly, it is earlier pleaded by Astral at par 8(d) that, to the extent Astral had any financial capacity to make investments in real property in Western Australia, its capacity only arose as a consequence of Mr Lias Aripin putting Astral in funds. Clearly it was Mr Lias Aripin who put up all the money on 18 August 2005 for Astral to purchase the 20% shareholding in Wellington (confirmed in James Aripin's affidavit, at pars 9(a) and 9(b)).
24 It is then pleaded (par 21) that between 11 November 2005 and 6 November 2006 Astral, as 20% shareholder in Wellington, paid over (presumably to Wellington), on the basis it was responsible for 20% of Wellington's expenses (par 20), a further $87,800.
(Page 7)
Mid-2006 to-ing and fro-ing over Astral's $1.4 million share acquisition
25 Paragraphs 22 and 23 of the statement of claim assert that in or about early June 2006 someone acting on behalf of Wellington and Ms Wong (a Mr Steven Tay) told Mr James Aripin (on behalf of Astral) that Astral's August 2005 payment of $1.4 million to Wellington ought not to have been made to Wellington, and instead should have been paid to Ms Wong.
26 Mr Tay is alleged to have then said that the situation could be 'rectified' (par 22) by Wellington issuing a cheque to Astral for $1.4 million and Astral then paying $1.4 million to Ms Wong's personal bank account. Mr Tay's advice is said to have been acted upon by the issue of cheques payable by Wellington to Astral on 6 June 2006 in the amount of $1.4 million, then the issue of Astral's cheque for $1.4 million payable to Ms Wong (handed to Mr Tay) on 7 June 2006 (par 23).
27 These June 2006 matters are pleaded to constitute what is referred to as 'the Second Representation'.
28 On their face, particularly by the deliberate use of the word 'rectified', the paragraphs seem to constitute a plea that, on 6 and 7 June 2006, the initial 2005 investment of $1.4 million by Astral was repaid to Astral by Wellington, followed by the same amount of money then, on 7 June 2006, being paid by Astral to Ms Wong (par 23).
29 So it appears that Astral still held its 20% shareholding in Wellington.
30 Around this time (par 25) it is pleaded that a deed of agreement document, shown to Mr Lias Aripin around 9 June 2006, stated that the $1.4 million had been paid to acquire a 20% Wellington shareholding, on the basis that the party receiving the purchase money was a 'Lionto Gunawan'. Astral executed this deed (par 27).
31 Hence it is put that the true vendor of Astral's 20% acquired shares in Wellington was not Ms Wong's nephew, Mr John Aryananda (par 26). But Mr Lias Aripin, and through him Astral, obviously knew this as of 9 June 2006.
November 2007: More to-ing and fro-ing over the $1.4 million payment for Wellington shares
32 In November 2007 (pars 28 - 32A), Ms Wong is pleaded to have told Mr James Aripin (on behalf of Astral) that the $1.4 million payment made to her in June 2006 'had to be rectified' (par 28(a)). This was said to be
(Page 8)
- because 'Division 7A had been applied on' her. This appears to be a reference to a taxation liability arising out of a soft loan by a company to a director. As to div 7A of the Income Tax Assessment Act see, by way of background, Carmody v Priestley & Morris Perth Pty Ltd [2005] WASC 120; (2005) 30 WAR 318 [9] - [15] (Hasluck J).
33 In November 2007 Mr Andrew Sugiaputra is also pleaded to have told Mr James Aripin that the situation had to be 'rectified' (the Third Representation, par 28(b)).
34 What then is pleaded to have occurred is (par 31):
(a) on or about 20 November 2007 Astral accepted (par 31(a)) from Ms Wong $1,548,756, paid from Ms Wong's personal bank account, which represented a return of $1.4 million plus interest and tax Astral would have to pay for interest earned (see par 28(b)(i);
(b) on 22 November 2007 Astral issued two cheques payable to Mr Lias Aripin totalling $1,506,044.40 (par 31(b)); and
(c) on or about 29 November 2007 Mr James Aripin requested on behalf of Astral that Mr Lias Aripin issue a personal cheque to Ms Wong in the amount of $1,506,044.40 (par 31(c)). That request was acceded to by a cheque drawn on Mr Lias Aripin's account favouring Ms Wong in that sum (par 32).
The Astral claim
35 What impact do these events of 2006 and 2007 have on the possible causes of action of Astral (or Mr Lias Aripin) against the defendants, as regards the fundamental grievance of Astral paying too much in August 2005 for 20% of the shares in Wellington?
36 At par 32A of the FRASOC of 30 April 2012 it is pleaded:
[Astral] says:
(a) It was not intended by [Wellington], [Ms Wong], Astral or by Lias Aripin that the payments pleaded in paragraph 31 hereof [in other words the November 2007 payments] would effect a repayment to Astral in respect of investment in [Wellington] or a re-investment by Lias Aripin in [Wellington].
(b) The payments pleaded in paragraph 31 hereof were made at the request of [Ms Wong] on her own behalf, and at the request of
- Ms Wong and [her son Andrew] Sugiaputra on behalf of [Wellington] for their own purposes which purposes were not explained to [Astral].
- (c) Lias Aripin made the payment to Ms Wong on 29 November 2007 on behalf of [Astral].
(d) Following the payments pleaded in paragraph 31 hereof [Astral] continued to be the legal and beneficial owner of the Shares. (my emphasis in bold)
37 The MOPSSOC seeks to reorder par 32A of the FRASOC. Essentially that is by re-arranging the ordering of its subparagraphs so that par 32A(c) would become par 32A(a); par 32A(a) would become par 32A(b); par 32A(b) would become par 32A(c); with par 32A(d) unaltered.
38 There are some further ingredients. The particulars in par 13(e) and par 33(i)(D) of the FRASOC say that in March 2008 Ms Wong 'admitted' to Mr Lias Aripin that the Wellington shares were not worth $1.4 million at the time they were purchased by Astral and that Astral was entitled to a refund. It is said that a partial refund of $387,141.56 (presumably out of the $1.4 million) was then made by Ms Wong to Lias Aripin (on behalf of Astral) on or about 29 March 2008.
39 As there is no clear plea of a sham or something similar, the FRASOC would seem to suggest that, after the initial August 2005 acquisition on behalf of Astral in the amount of $1.4 million for 20% of the Wellington shares, the $1.4 million was repaid, then re-advanced in June 2006 (pars 22 and 23) via Astral to Ms Wong. That position then looks to have changed again, in November 2007 (pars 28 and 31) effectively by the repayment of $1.4 million by Ms Wong to Astral, followed by Astral's return of funds to Mr Lias Aripin. These were the funds first loaned to Astral by Mr Lias Aripin to enable the 2005 purchase of Wellington shares in the first place (see Mr James Aripin's affidavit, par 9(a)).
40 Mr Lias Aripin then proceeded in November 2007 to directly invest funds himself by issuing a personal cheque to Ms Wong. Paragraph 32A(c) of the FRASOC asserts that a payment on 29 November 2007 was by Mr Lias Aripin 'on behalf of' Astral.
41 The ownership of the 20% Wellington shareholding is not said to have altered in the period up to November 2007. It may be that some sort of trust arises between Mr Lias Aripin and Astral, as regards Astral's
(Page 10)
- continued holding of 20% of Wellington's shares, notwithstanding the to-ing and fro-ing of 2006 and 2007. If that is relevantly contentious (and there is no suggestion that it is), it is a matter for Mr Lias Aripin and Astral to solve.
42 However, that prima facie assessment of the pleading is heavily blurred by par 32A(a) of the FRASOC (proposed in the MOPSSOC to be par 32A(b)) by the opaque plea as to what was 'not intended' by Wellington, Ms Wong, Astral and Mr Lias Aripin. See also the following plea at par 32A(b) of the FRASOC as to Ms Wong, her son and Wellington's (unstated) 'own purposes … which … were not explained to the plaintiffs'.
43 MOPSSOC pars 32A(a) and (b), howsoever ordered, are confusing, unclear and still highly unsatisfactory from a perspective of providing a viable platform for a trial to be run in the future. To me these pleas seem to me to obscure the rectifying payment events of 2007. Worse, there still remains a wholly nonsensical plea (par 37(d) MOPSSOC) that Astral suffered damage and is (somehow) out of pocket by reason of funds it (re)paid to Mr Lias Aripin in November 2007. Bearing in mind the earlier plea by Astral as to Mr Lias Aripin being the person who was responsible for putting Astral in funds to make the purchase of Wellington shares in the first place, that aspect of the plea of loss presents as wholly untenable.
44 The basal problem remains: Astral will not acknowledge or sufficiently deal with the pleading deficiency responsible for causing its pleading of 20 March 2012 to be struck out on 23 March 2012.
45 Mr Lias Aripin might hold a claim to being out of pocket and sustaining damage by reason of a less than represented value of the 20% Wellington shareholding (assessed by reference to the value of its main asset, the Maddington Properties), at the time that personal investment was made by him in November 2007. Some earlier representations of 2005 as to the value of those shares might still been operative upon Mr Lias Aripin's decision to advance funds again, in November 2007. But his investment (or Astral's, if it was made by him on Astral's behalf) needs to be assessed in terms of its value when it was made, in November 2007.
46 Moreover, the Second (June 2006) and Third (November 2007) Representations (relating to 'rectification' of the investment in the Wellington shares), go nowhere. There does not seem to be any attempt to falsify these Representations in the pleading. They appear to have been
(Page 11)
- acted upon by Astral and Mr Lias Aripin. On the pleading, these rectifying payment arrangements were fully implemented.
47 Apart from what appears to be a partial refund of the $1.4 million investment in March 2008 in the amount of $387,141.56 (par 13(f)), the balance of the MOPSSOC does not provide any further insights as to a receipt by Astral and Mr Lias Aripin of loan funds, dividends or any returns of capital from Wellington upon subsequent sales of the Maddington Properties (or lots). Consequently, there is nothing to enable any assessment of whether the November 2007 investment in shares of Wellington turned out to be profitable or not. This should be clarified so the dimensions of any loss or damage arising out of an approximately $1 million ($1.4 million minus $387,141.56) purchase of Wellington shares in November 2007 can be evaluated.
48 The MOPSSOC seeks to add a par 32B expressing, in the alternative to par 32A, a plea that Mr Lias Aripin's payment of 29 November 2007 was made in reliance upon the influence of representations 1(a), 1(c), 1(d) and the Third Representations. This is more understandable, albeit the Third Representations are not sought to be falsified, or if they are it is not clear to me how that is.
49 It looks to me that the rectifications called for by the Third Representations are the starting premise of par 32B. (I repeat as well that it does not seem to be the case that the so-called Second Representation (par 22) is attempted to be falsified by the pleading, or if it is this is not at all made clear).
50 As regards the asserted falsity of an April 2005 book value (First Representation), I note that nothing is pleaded about the 'market value' of the Maddington Properties in August 2005, June 2006 or November 2007.
51 Proposed pars 37(c), (d) and (e) of the MOPSSOC (and the FRASOC) say this:
(c) Further, if which is not accepted, [Astral's] loss is to be calculated having regard to the exchange of cheques pleaded in paragraph 23 hereof [ie on 7 June 2006], the sum of $1.4 million paid to Wong as pleaded in paragraph 23.
(d) Further, if which is not accepted, the loss is to be calculated having regard to the exchange of cheques pleaded in paragraph 31 hereof, the sum of $1,506,044.40 paid by [Astral] to Lias Aripin as pleaded in paragraph 31.
(Page 12)
- (e) Further particulars of loss will be provided after discovery and interrogatories.
52 The par 37(c) and (d) references to an exchange of cheques, linked to the phrase 'which is not accepted', is unacceptably confusing as regards Astral's claim. That is particularly so when read with par 32A(b) of the MOPSSOC, as regards what was 'not intended' by the parties (ie instead of what was intended). Par 32A(b)'s shadowy technique of negative pleading only piles obscurity on top of obscurity.
53 The suggestion at par 37(c) of the MOPSSOC that Astral could be out of pocket by $1.4 million from its 2006 advance of funds to Ms Wong, having just received (par 23) a cheque from Wellington for $1.4 million, also makes little sense. Nor does the plea at par 37(d) of the MOPSSOC that Astral could be out of pocket and have suffered damage by the amount it paid over to Lias Aripin. That again is wholly untenable, even viewing those amendments on their questionable premise of what is 'not accepted'. The plea that further particulars are to follow upon discovery and interrogatories (par 37(c)), framed in such a tenuous context, simply draws attention to the deficiency, rather than offering any tangible hope of future elucidation.
54 These pleas are also found in the FRASOC as filed on 30 April 2012. I would strike them out as embarrassing. There is no prospect of a viable trial proceeding on the basis of the confusion and false issues that these pleas deliver. It goes without saying that I will not allow the same pleas to be part of the MOPSSOC.
55 The MOPSSOC contains proposed further pleas at pars 39A and 39B as regards the loss and damage asserted by Mr Lias Aripin (as the second plaintiff). Paragraph 39A may stand. If the rectifying scenarios of 2006 and 2007 stand, one rationalisation is that Astral, to the extent that it is still holder of a 20% shareholding in Wellington, holds the shares on a bare trust or resulting trust for Mr Lias Aripin. There is no suggestion that this would not follow if Mr Lias Aripin were to call for the shares from Astral to be transferred to him.
56 But par 39B, asserting a plea for exemplary damages, cannot stand as presently formulated (by reference to pars 33 - 35). There is nothing pleaded in these paragraphs as regards Mr Lias Aripin personally to sustain a claim that there was a contumelious disregard for his personal rights. The obfuscatory nature of the earlier pleas put in the alternative and including Astral have ultimately undermined this plea.
(Page 13)
57 Cluttered concluding prayers for relief, first by Astral against Wellington, then against Ms Wong, followed by Mr Lias Aripin's claims against Wellington then Ms Wong, are drafted in wide terms, without much apparent thought towards appropriate end relief, which now looks to have multiplied exponentially in ambit.
58 In my overall view the continuing inadequate acknowledgement of the conceptual deficiency identified on 23 March 2012 has again provided a justifiable basis for the defendants to successfully object to leave being granted to allow the MOPSSOC as it is presently formulated. The defendants are prima facie entitled to their taxed costs associated with their successful opposition to the MOPSSOC in its current form. The plaintiffs shall have 21 days to bring in a further minute which addresses the deficiencies identified in these reasons.
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