Bozic v Billis
[2021] WASC 88 (S)
•28 MAY 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BOZIC -v- BILLIS [2021] WASC 88
CORAM: ALLANSON J
HEARD: 25 MARCH 2021
DELIVERED : 7 APRIL 2021
FILE NO/S: CIV 2557 of 2017
BETWEEN: FRANJO BOZIC
Plaintiff
AND
ANTON BILLIS
First Defendant
TRIBUNE RESOURCES LTD
Third Defendant
PHANATCHANKORN WICHAIKUL
Fourth Defendant
Catchwords:
Practice and procedure - Pleading - Requirement to plead necessary particulars of fraud - Pleading of immaterial and irrelevant issues - Turns on own facts
Legislation:
Rules of the Supreme Court 1971
Result:
Application granted
Paragraphs of statement of claim struck out
Category: B
Representation:
Counsel:
| Plaintiff | : | J C Yeldon |
| First Defendant | : | T J North QC |
| Third Defendant | : | P Ward |
| Fourth Defendant | : | T J North QC |
Solicitors:
| Plaintiff | : | Westmont Legal |
| First Defendant | : | Armeli & Molony Lawyers |
| Third Defendant | : | Nova Legal |
| Fourth Defendant | : | Armeli & Molony Lawyers |
Case(s) referred to in decision(s):
Australian Automotive Repairers' Association (Political Action Committee) Inc v NRMA Insurance Limited [2002] FCA 1568
Banque Commerciale S.A., en Liquidation v Akhil Holdings Ltd. (1990) 169 CLR 279
Bhagat v Global Custodians Ltd [2002] FCAFC 331
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563
Nadinic v Drinkwater [2017] NSWCA 114
Pinson v Lloyds & National Foreign Bank Ltd [1941] 2 KB 72
Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262
SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189
Technip Oceania Pty Ltd v Cutmere Pty Ltd [2019] WASC 478
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
ALLANSON J:
Introduction
The first and fourth defendants apply to strike out three paragraphs of the plaintiff's further amended statement of claim on the basis that they:
(a)fail to disclose a reasonable cause of action;
(b)are scandalous, frivolous or vexatious;
(c)may prejudice, embarrass or delay the fair trial of the action.
The first defendant, Anton Billlis, is the husband of the fourth defendant, Phanatchankorn Wichaikul. The subject matter of the action is 224,000 fully paid ordinary shares in the third defendant, Tribune Resources Limited.
The second defendant, Rand Mining Limited, and Tribune Resources have advised the court that they do not wish to be heard on the application. The only relief sought against Rand Mining is 'the orders sought by the Plaintiff in CIV 2485 of 2018'.
In these reasons I will refer to the first and fourth defendants, collectively, as the defendants.
Procedural background
The plaintiff, Franjo Bozic, commenced the action by writ with endorsement of claim, filed 15 September 2017.
The statement of claim was filed on 3 November 2017.
The defendants filed defences in April 2020.[1]
[1] It is not necessary for present purposes to detail the reason for the delay in progress of the action.
On 30 June 2020, the plaintiff filed an amended writ. Relevantly, the endorsement now claimed damages or compensation for fraud by the first, third and fourth defendants in 2010 and 2011 when 224,000 shares in Tribune Resources were transferred to the first defendant, then to the fourth defendant, without the plaintiff's consent, acquiescence or knowledge. Notwithstanding that indorsement, the plaintiff has pleaded no allegations of fraud against the fourth defendant.
The plaintiff filed minutes of amended statement of claim on 30 June 2020 and 25 September 2020, and filed the Further Amended Statement of Claim, which is the subject of the present application, on 5 November 2020.
The defendants filed amended defences on 30 July 2020.
The defendants brought this application by summons filed on 12 November 2020.
The challenged pleading
The plaintiff pleads that he is the registered holder of 250,000 shares in Rand Mining 'and ought to be the registered holder of 224,000 shares in the Third Defendant': [5].
He pleads that in 1996 Tribune Resources offered him an opportunity to subscribe for 1 million shares in Tribune Resources. The plaintiff accepted the offer but the third defendant only issued him 224,000 shares: [16] ‑ [17].
In the three paragraphs which are challenged, the plaintiff alleges:
21.Further, on or about 8 March 2010, the First Defendant, his agents or servants,[2] instructed the share registry of the Third Defendant to transfer the Plaintiff’s 224,000 shares to the Fourth Defendant.
[2] The plaintiff seems to have ignored the admissions that the first defendant has already made, including that he instructed the share registry of Tribune Resources to transfer the plaintiff’s 224,000 shares to him, and that the shares were transferred by him to the fourth defendant.
Particulars
The instruction was in writing.
Insofar as it is in writing it is comprised of a standard transfer form purporting to transfer 224,000 shares held by the plaintiff (incorrectly described as Franjo Boznic) to the fourth defendant for nil consideration dated 8 March 2010 (the Standard Transfer Form) which does not contain the plaintiff’s handwriting or signature.
The Standard Transfer Form was not signed by the plaintiff, and the plaintiff did not know of its existence until recently.
That this instruction was signed by the first defendant using the name F Boznic without the plaintiff’s authority and acquiescence should be inferred since:
(i)The 224,000 shares were referred to under the Plaintiff's name in all of the Third Defendant’s Annual Reports between 2000 and 2009.
(ii)The Plaintiff did never consent to his shares being sold or transferred and did not know this had occurred until after he met with the First Defendant in Ghana in 2014.
(iii)The 224,000 shares are not referred to under the Plaintiff's name in the Third Defendant’s 2010 Annual Report when by reason of the prior year’s reference, if the shares had not been transferred, they should have been shown.
(iv)The First Defendant is the Managing Director of the Third Defendant and in the position to arrange for the transfer.
(v)The 224,000 shares were transferred under the Standard Transfer Form to the First Defendant's wife, the Fourth Defendant, without the Plaintiff's knowledge, consent or acquiescence and the Fourth Defendant is shown to be the holder of the said shares in the 2011 Annual Report of the Third Defendant.
(vi)In Ghana in 2014 in a meeting between the Plaintiff and the First Defendant, the First Defendant purported to inform the Plaintiff that the Plaintiff was not the F Bozic referred to in the Annual Reports of the Third Defendant between 2000 and 2009 and purported to inform the Plaintiff that he had never held shares in the Third Defendant that this was a different person with the same name.
(vii)Contrary to the Standard Transfer Form, the 224,000 Shares were never held on trust by the Plaintiff for the Fourth Defendant at any time and no trust relationship ever existed between the Plaintiff and the Fourth Defendant.
22.The Share registry of the Third Defendant carried out the instructions of the First Defendant his servants and agents and transferred the Plaintiff’s 224,000 shares to the Fourth Defendant.
Particulars
This should be inferred since the Fourth Defendant is shown to be the holder of the 224,000 Shares in the 2011 Annual Report of the Third Defendant. Further particulars will be provided on discovery or subpoena of the share registry record. The Plaintiff otherwise repeats the particulars to paragraph 21 herein hereof.
23.The instructions given by the Plaintiff his servants or agents pleaded in paragraph 21 hereof were fraudulent.
Particulars
(i)The 224,000 shares were referred to under the Plaintiff’s name in all of the Third Defendant’s Annual Reports between 2000 and 2009.
(ii)The Plaintiff did never consent to his shares being sold or transferred to any person and he did not sign the Standard Transfer Form.
(iii)The 224,000 shares are not referred to under the Plaintiff’s name in the Third Defendant’s 2010 Annual Report when by reason of the Shareholder Information of the Top 20 Shareholders they should have been since the Plaintiff’s 224,000 shares would have meant he was a top 20 Shareholder.
(iv)The First Defendant is the Managing Director of the Third Defendant.
(v)The 224,000 shares were transferred to the First Defendant’s wife, the Fourth Defendant, without the Plaintiff’s knowledge, consent or acquiescence and the Fourth Defendant is shown to be the holder of the said shares in the 2011 Annual Report.
(vi)In Ghana in 2014 in a meeting between the Plaintiff and the First Defendant, the First Defendant purported to inform the Plaintiff that the Plaintiff was not the F Bozic referred to in the Annual Reports of the Third Defendant between 2000 and 2009 and purported to inform the Plaintiff that the Plaintiff had never held shares in the Third Defendant because this was a different person with the same name.
(vii)Further particulars may be given after discovery or subpoena of the share registry records.
Contrary to the Standard Transfer Form, the 224,000 Shares were never held on trust by the Plaintiff for the Fourth Defendant at any time and no trust relationship ever existed between the Plaintiff and the Fourth Defendant.
The plaintiff pleads that by reason of the matters pleaded in [23], he is entitled to a declaration against Tribune Resources that he is 'is legally and beneficially entitled to the 224,000 shares in the third defendant held by the Plaintiff [sic]'.
The claims in the prayer for relief include:
(1)against the first defendant, a declaration that the transfer of the plaintiff's shares 'was a fraud carried out by the first defendant his servants or agents on the plaintiff', and damages or compensation in equity for fraud;
(2)against Tribune Resources an order for the rectification of the share register to show the plaintiff is the registered holder of 224,000 fully paid ordinary shares; and
(3)against the fourth defendant the declaration that she holds 224,000 shares on trust for the benefit of the plaintiff; the disgorgement of full profits obtained from her holding of the shares or for her to account, as if trustee, for those profits; and an order that she transfer the shares to the plaintiff.
The principles
The issues which have been raised in this application call for consideration of fundamental pleading rules in Order 20 of the Rules of the Supreme Court 1971 (WA).
First, every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for its claim or defence.[3] A fact is material if it is an essential element of the cause of action: Australian Automotive Repairers' Association (Political Action Committee) Inc v NRMA Insurance Limited [2002] FCA 1568 [13].
[3] O 20 r 8.
Second, a pleading must contain the necessary particulars of any claim, defence or other matter pleaded including particulars of any fraud on which the party pleading relies.[4] While the use of particulars to fill in gaps in an otherwise bad pleading has been described as a 'pernicious practice',[5] the distinction between material facts and particulars is often not strictly observed.
[4] O 20 r 13.
[5] Pinson v Lloyds & National Foreign Bank Ltd [1941] 2 KB 72,75
The principles applied on an application to strike out are well settled, and were recently set out by Smith J in Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60].[6] It is unnecessary to repeat them.
[6] On appeal, Murphy and Vaughan JJA referred to her Honour's synthesis of principle as comprehensive and correct: English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55].
The present application calls upon a further well established principle: what is needed to satisfy the requirement for a clear statement of the case will depend upon the nature of the allegations made. Fraud must be pleaded distinctly and with particularity: Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 [25] ‑ [26]; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573; Banque Commerciale S.A., en Liquidation v Akhil Holdings Ltd. (1990) 169 CLR 279, 285, 295.[7] 'It is quite inappropriate and unacceptable to make an allegation of fraud without proper particulars of the conduct relied upon'.[8]
[7] See also O19 r 13(1)(a), which requires a pleading to contain the necessary particulars of 'any misrepresentation, fraud, breach of trust, wilful default or undue influence on which the party pleading relies'.
[8] Bhagat v Global Custodians Ltd [2002] FCAFC 331, [13].
An allegation of fraud must not only be pleaded distinctly and with particularity, but established by clear and cogent proof. There must be a finding that the fraudulent conduct alleged has in fact occurred.[9]
[9] See Sgro v Australian Associated Motor Insurers Ltd(2015) 91 NSWLR 325; [2015] NSWCA 262 [54].
I will refer further to these principles in consideration of the challenged plea.
Consideration
Does the plea disclose a reasonable cause of action
It is impossible to state the elements that must be pleaded for every cause of action in fraud - fraud has been described as 'infinite in variety'.[10] Claims in fraud may be made in law or in equity.
[10] See SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189 [8] ‑ [10], where the Court noted that recent decision in the Court respecting fraud concerned criminal law, the tort of deceit, registered design law, the law of agency, statutes of limitation, and dealing in Torrens title land. The list is not exhaustive.
In Nadinic v Drinkwater[2017] NSWCA 114 [22], Leeming JA said:
… as Gleeson CJ said in Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 at [17], 'the concept of 'fraud' is wider in some legal contexts than in others'.For present purposes, it will suffice to distinguish the two senses in which 'fraud' is used in civil litigation which correspond to different meanings at law and in equity. The difference turns on the state of mind of the person said to have committed fraud. At common law, 'fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false': Derry v Peek (1889) 14 App Cas 337 at 374. The contrast with equity was explained by Viscount Haldane LC in Nocton v Lord Ashburton [1914] AC 932 at 953-954: '[i]n Chancery the term ‘fraud’ thus came to be used to describe what fell short of deceit, but imported breach of a duty to which equity had attached its sanction'. His Lordship emphasised that a person who misconceived the extent of the obligation which a court of equity imposed upon him or her, 'however innocently because of his ignorance', was taken to have violated an obligation which he was taken by the Court to have known, and with the result that the conduct was labelled fraudulent. He said of fraud in this sense at 954 that:
'What it really means in this connection is, not moral fraud in the ordinary sense, but breach of the sort of obligation which is enforced by a Court that from the beginning regarded itself as a Court of conscience.'
The relief sought by the plaintiff, including equitable compensation and disgorgement of profits, points to a claim in equity. In Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015) [12‑050], the authors list six examples of fraud in equity, commenting on the difficulty of extracting any common factor. Because of that variety, clarity and particularity in pleading the allegation is essential.
The material facts (excluding particulars) pleaded by the plaintiff are patently insufficient. The plaintiff pleads no more than that:
(1)the first defendant, his agents or servants, instructed the share registry of the third defendant to transfer the plaintiff's shares to the fourth defendant;
(2)the share registry of the third defendant carried out the instructions;
(3)the instructions given by the plaintiff [sic] were fraudulent.
The particulars include the following which should have been pleaded as material facts: the instruction was given by a standard transfer form; that form was not signed the plaintiff; and it was signed without his knowledge, consent or acquiescence.
It is not clearly alleged that the first defendant signed the form. The plaintiff alleges that fact 'should be inferred', but by reference to seven particulars which are of little relevance to who signed the transfer form.
The balance of what are described as particulars in pars 21 and 23 are often repetitive, pleadings of evidence and, to some extent, argument.
In short, I accept the submission made by the defendants that the pleading of fraud is the assertion of a conclusion without a proper statement of the material facts on which the plaintiff relies.
The plea regarding the fourth defendant is worse. There is no allegation that she knowingly participated in a breach of duty by the first defendant, or that she otherwise committed any wrongdoing. The plea does not identify any basis on which the fourth defendant would be liable to account or disgorge benefits.
Would the plea prejudice, embarrass or delay the fair conduct of the proceedings
In Technip Oceania Pty Ltd v Cutmere Pty Ltd [2019] WASC 478 [18], I summarised some of the authorities relating to whether a pleading should be struck out under O 20 r 19(1)(c):
Pleadings that raise immaterial or irrelevant issues, or fail to confine the issues or state the case of the party in question with reasonable particularity, may be struck out on the ground that they may prejudice, embarrass or delay the fair conduct of the proceedings. A defendant may not plead 'irrelevant facts, opinions, arguments, reasons or rhetoric under the guise of background facts or narrative'. The pleading of such matters may improperly enlarge the ambit and range of discovery and make it difficult to determine the admissible evidence which a party is entitled to adduce at the trial.
I have set out the particulars to pars 21, 22, and 23 of the statement of claim. They demonstrate the vices of pleading irrelevant facts (what the first defendant is alleged to have said in Ghana in 2014; whether the plaintiff should have been in the top 20 shareholders in 2010), and argument (what should be inferred from other facts which are pleaded as particulars).
It is unnecessary to also consider whether the challenged paragraphs are scandalous or vexatious. They should be struck out.
I will hear the parties on the form of the orders to give effect to these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Associate to the Honourable Justice Allanson
7 APRIL 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BOZIC -v- BILLIS [2021] WASC 88 (S)
CORAM: ALLANSON J
HEARD: ON THE PAPERS
DELIVERED : 28 MAY 2021
PUBLISHED : 28 MAY 2021
FILE NO/S: CIV 2557 of 2017
BETWEEN: FRANJO BOZIC
Plaintiff
AND
ANTON BILLIS
First Defendant
TRIBUNE RESOURCES LTD
Third Defendant
PHANATCHANKORN WICHAIKUL
Fourth Defendant
Catchwords:
Costs - Where plea of fraud struck out on application of defendants - Indemnity costs - Turns on own facts
Costs - Whether costs order should be made in favour of party who did not participate in application
Legislation:
Nil
Result:
Costs order made for first and fourth defendants
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Westmont Legal |
| First Defendant | : | Armeli & Molony Lawyers |
| Third Defendant | : | Nova Legal |
| Fourth Defendant | : | Armeli & Molony Lawyers |
Case(s) referred to in decision(s):
Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
ALLANSON J:
Introduction
On 7 April 2021, on the application of the first and fourth defendants, I ordered that three paragraphs of the plaintiff's further amended statement of claim, filed on 5 November 2020, be struck out.
The defendants applied for orders as to costs. The first and fourth defendants sought costs on an indemnity basis. Accordingly, I made orders programming submissions with the issue to be decided on the papers.
The decision to strike out
The strike out application was brought pursuant to O 20 r 19(1)(a) and (c) of the Rules of the Supreme Court 1971 (WA). At the heart of the dispute, and of my reasons for decision, was whether the plaintiff had pleaded an allegation of fraud distinctly and with the required particularity.
In summary, the plaintiff pleaded that the first defendant gave instructions for shares owned by the plaintiff to be transferred to the fourth defendant, and the instructions were fraudulent. The plaintiff pleaded that he did not consent to or know of the transfer. He did not, however, plead any facts material to the conclusion that the transfer was fraudulent, including any facts relating to the knowledge or other state of mind of the defendants.
Costs principles
It is not disputed that the plaintiff should pay the costs of the first and fourth defendants. The issue is the basis on which those costs should be assessed or taxed.
The purpose of an order for costs is to compensate the successful party against the expense to which that party has been put by reason of the legal proceedings: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [25] and Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 543.
Special costs orders, including orders for indemnity costs, may be made to more fully or adequately compensate the successful party where there has been some 'relevant delinquency' by the unsuccessful party - that is, some delinquency relevant to the conduct of the case. Examples of conduct giving rise to an order for indemnity costs include where a party persists in what should on proper consideration be seen to be a hopeless case; or where the inference may be drawn that proceedings constitute an abuse of process because they have been instituted or maintained for a collateral purpose. An award of indemnity costs may also be appropriate where a party has made an allegation of fraud with no proper foundation.
Submissions of the first and fourth defendants
The first and fourth defendants put their application for indemnity costs on the grounds that the plaintiff persisted with his pleading of fraud when, properly advised, it should have seen that plea to be hopeless. They further refer to:
(1)a letter from the solicitors for the first and fourth defendants to the solicitors for the plaintiff, dated 22 May 2020, in which the defendants drew attention to the deficiencies in the statement of claim and their intention to apply to strike out unless the plaintiff remedied the defects in the plea;[11]
[11] Affidavit of Anita Zaba-Czader, sworn 6 May 2021, AZ-1.
(2)the correspondence that followed between the solicitors in the following months, the statement of claim that was amended in September 2020, and finally on 5 November 2020;
(3)the further amended statement of claim added particulars, but did not address basic defects in the pleading of fraud.
The defendants have also provided evidence estimating their actual costs, including the engagement of senior counsel at an hourly rate above scale.
Plaintiff
The plaintiff submits that there is no sufficient reason to depart from the usual rule of party/party costs. The plaintiff further submits that the allowances under the scale are more than sufficient to compensate the defendants for their costs.
Consideration
I am not satisfied that the conduct of the plaintiff was such that it should be regarded as relevantly delinquent, so as to justify an order for indemnity costs. The pleading was not adequate, but I am not satisfied that the plaintiff pleaded fraud for a collateral purpose, or without any basis for making that allegation. At the heart of the plaintiff's action is the claim that the first defendant caused shares that were registered in the plaintiff's name to be transferred to the fourth defendant, the first defendant's wife. The allegation of fraud needs to be properly pleaded but, on the material currently before the court, I am not satisfied that the plaintiff has acted improperly in bringing it.
Further, item 10 of the Legal Profession (Supreme Court) (Contentious Business) Determination 2016 allows for two days preparation for proceedings in chambers. In my opinion, the allowance in the determination, for an argument regarding a short statement of claim, and a relatively confined point, is sufficient to adequately compensate the defendants for their costs. That the defendants chose to use senior counsel at a rate above that allowed in the determination is not a cost which the plaintiff should be required to meet.
I should also note that the hearing of the application was combined with an application by the plaintiff in related proceedings (CIV 2485 of 2018) to join a further party. The hearing of the strike out application took approximately 30 minutes, most of the morning being devoted to the related action.
The plaintiff should pay the costs of the first and fourth defendants, to be taxed if not agreed. There will not be a special costs order.
The submissions of the third defendant
The third defendant did not challenge the statement of claim, and was excused from appearing at the hearing of the strike out application. It submits that it incurred costs arising out of the application, and that the plaintiff should pay its costs of and incidental to the application. I am not satisfied that I should order the plaintiff to pay the third defendant's costs of an interlocutory application, in which it was excused from attendance and did not participate. I will make no order as to the third defendant's costs on the strike out application.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Associate to the Honourable Justice Allanson
28 MAY 2021
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