Bridge Bar Investments v Dog At the Bridge (No 2)
[2016] VSC 455
•5 AUGUST 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2014 04877
| BRIDGE BAR INVESTMENTS PTY LTD (ACN 154 906 377) AND ANOR | Plaintiffs |
| v | |
| DOG AT THE BRIDGE PTY LTD (ACN 161 759 959) AND ORS | Defendants |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 20 JULY 2016 |
DATE OF JUDGMENT: | 5 AUGUST 2016 |
CASE MAY BE CITED AS: | BRIDGE BAR INVESTMENTS v DOG AT THE BRIDGE (No 2) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 455 |
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PRACTICE AND PROCEDURE – Summary judgment – Whether statement of claim fails to disclose a reasonable cause of action and the defect cannot be cured by amendment – Whether proceeding should be dismissed because plaintiff failed to comply with an order to provide further particulars – Plaintiff amended statement of claim rendering particulars otiose – Whether claims in the proceeding are an abuse of process, and/or are frivolous, vexatious and embarrassing, and/or may prejudice and delay the fair trial of the proceeding – Whether further particulars should be ordered – Conspiracy to injure – Breach of fiduciary duty – Knowing receipt and knowing assistance Barnes v Addy claims – Claims between parties to failed joint venture – Civil Procedure Act 2010 s 63, Supreme Court (General Civil Procedure) Rules 2015 r 23.01, r 24.02.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A Herskope | JBT Lawyers |
| For the First Defendant No appearance by the Second to Sixth Defendants | Mr A M J Meagher | Blue Rock Partners |
HIS HONOUR:
The application
In this application, the first defendant (‘Dog at the Bridge’) seeks cascading relief. First, it applied for summary judgment pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 (the ‘Rules’) and s 63 of the Civil Procedure Act 2010 (the ‘Act’). The application for summary judgment is predicated on a submission that the statement of claim fails to disclose any reasonable cause of action and the defect cannot be cured by amendment.
In summary, Dog at the Bridge submitted that the allegations in the plaintiffs’ Second Further Amended Statement of Claim dated 10 June 2016 (‘the statement of claim’) have no prospect of success, are an abuse of process, and/or are frivolous, vexatious and embarrassing and are incapable of being saved by amendment. Dog at the Bridge submitted that the plaintiffs’ rights are alleged to arise from a joint venture to which neither plaintiff provided any consideration or contribution, and accordingly the plaintiffs have no standing to enforce the alleged interests and rights.
Alternatively, Dog at the Bridge applied for the proceedings against it to be dismissed pursuant to r 24.02 of the Rules on the ground that the plaintiffs failed to comply with paragraph 3 of the orders of Almond J made 11 March 2016. The plaintiffs were ordered to give further particulars of any consideration paid by the second plaintiff (‘McMurray’) to Ezi-Rapid Solutions (Vic) Pty Ltd (‘Ezi Rapid’) and of any contribution alleged to have been made by McMurray pursuant to the joint venture agreement as set out in paragraph 11(d) of the statement of claim. It is common ground that the plaintiffs have not provided those particulars.
Further, in the alternative, Dog at the Bridge applied for paragraphs 10, 10(f), 11A, 12(a), 16, 16A, 17, 18, 19, 21, 21A, 21B, 22, 23 and 24 to be struck out pursuant to r 23.02 on the grounds that the claims are an abuse of process, and/or are frivolous, vexatious and embarrassing, and/or may prejudice and delay the fair trial of the proceeding.
Finally, in the alternative, Dog at the Bridge sought orders that the plaintiffs provide further and better particulars of the allegations contained in paragraphs 10(f), 11(d), 21B(b), 21B(c), 21B(d) and 22(b) pursuant to r 13.11 of the Rules. These paragraphs relate to the payment of any consideration or contribution by the plaintiffs to the joint venture and the knowledge of the sixth defendant (‘Cook’) concerning the existence of the joint venture and any fiduciary obligations affecting assets purchased by Dog at the Bridge. Cook was the sole director, secretary and shareholder of Dog at the Bridge at the material time.
Appropriately on a pleading summons, Dog at the Bridge did not press an application seeking to invoke s 18 of the Civil Procedure Act 2010.
The pleaded allegations
The first plaintiff is an incorporated company, holding 49 out of 100 ordinary shares in Sugar Loaf Corporation Pty Ltd (in liquidation) (now deregistered) (‘Sugar Loaf’). The second plaintiff, McMurray, is the sole director and shareholder of the first plaintiff and holder of 6 out of 12 ordinary shares in Bridge Bar Hospitality Holdings Pty Ltd (ACN 150 920 004) (in liquidation) (‘Bridge Bar’). McMurray was one of the three directors of Sugar Loaf and Bridge Bar.
Sugar Loaf as lessee entered into a Deed of Agreement for Lease dated 16 December 2010 with the Plenary Group (South Wharf F & B) Pty Ltd (‘Plenary Group’) in respect of premises situated at Sheds 8 and 9, 29 South Wharf Promenade, South Wharf. In December 2011, McMurray, the second defendant (‘McKirdy’) (for himself and on behalf of the third defendant (‘Boyle’)), Mr John McDonald (‘McDonald’) and Mr Geoffrey Tattam (‘Tattam’) agreed on a joint venture (the ‘JV Agreement’) for the purposes of taking an assignment of the lease of the premises, fitting out the premises as a restaurant and bar, and conducting a business (the ‘Business’).
The JV Agreement is alleged to be partly oral, partly in writing, and partly implied. It is particularised as constituted by conversations between McMurray and Boyle taking place in or about November/December 2011 and by an agreement found in a document entitled ‘The Bridge at South Wharf Agreement’ dated 14 or 19 December 2011, which incorporated a further document entitled ‘The Bridge at South Wharf Terms and Conditions’ dated 12 December 2011. Further, terms that are not specifically identified are implied by reason of the conduct of the relevant parties in entering into the JV agreement (whatever that constituted) and in order to give business efficacy to the JV Agreement.
Of present relevance are the following alleged terms of the JV Agreement:
(a) one corporate entity, Sugar Loaf, would hold the lease of the premises and a liquor licence for the Business;
(b) a second corporate entity, Bridge Bar, would act as the trading entity in respect of the Business;
(c) 49% of the beneficial interest in the Business would be transferred to McMurray, McDonald and Tattam and 51% would remain held by McKirdy (for himself and on behalf of Boyle);
(d) in lieu of payment of money and as consideration for their interest in the joint venture and the joint venture assets (including the lease and fit out of the premises, trading stock and the liquor licence) (the ‘JV assets’) McMurray, McDonald and Tattam and/or Ezi Rapid would complete the fitout works required at the premises to enable the Business to commence operations on the basis that a sum capped at $350,000 (‘Capped Construction Cost’) would be repaid to McMurray and/or Ezi Rapid. McMurray was the Construction Manager and Tattam was the General Manager of Ezi Rapid; and
(e) 75% of the profit of the Business was to be paid to McMurray and/or Ezi Rapid until the Capped Construction Cost was paid.
The plaintiffs allege that Ezi Rapid incurred construction costs of $435,120.60 in completing the fitout, with a certificate of occupancy issued on 30 December 2011. Thereafter, Bridge Bar commenced trading the business and was the custodian for the joint venturers of the Business.
The plaintiffs allege that McMurray and/or Ezi Rapid was entitled to payment from the joint venture vehicles, Sugar Loaf and Bridge Bar, of the full sum for the Capped Construction Cost.
The plaintiffs allege that it was a term of the JV Agreement that the joint venturers would cause a unit trust to be created in which their respective unit holdings would reflect their agreed interests. It appears to be common ground that the joint venturers fell into dispute before that unit trust was created. The plaintiffs allege that when the joint venturers fell into dispute the JV assets were trust property held by Sugar Loaf and Bridge Bar as custodians for the benefit of the joint venturers.
McMurray claims that in March 2012, following a breakdown in their relationship, McKirdy and Boyce prevented him from further participating in the Business. They refused to provide him with any trading or financial information in respect of the Business, and Sugar Loaf and/or Bridge Bar failed to pay the Capped Construction Cost to McMurray or Ezi Rapid.
On or about 27 September 2012, Ezi Rapid served a statutory demand on each of Sugar Loaf and Bridge Bar. Sugar Loaf and Bridge Bar failed to apply to set aside the statutory demands or to comply with them. On 2 November 2012, Ezi Rapid applied to wind up each of Sugar Loaf and Bridge Bar.
The subsequent events are the basis of the plaintiffs’ causes of action. Firstly, it is alleged that the defendants conspired and combined amongst themselves for the purpose, and with the intention of, injuring the plaintiffs by depriving them of their interest in the joint venture and the JV assets. Secondly, that McKirdy and Boyle each owed fiduciary duties to each of the plaintiffs that were breached in the circumstances. Those circumstances constituted a dishonest and fraudulent design on the part of McKirdy and Boyle to secretly and wrongfully deprive the plaintiffs of their interest in the joint venture or the JV assets. Thirdly, that Cook and the insolvency practitioners were aware of and knowingly involved in McKirdy and Boyle’s dishonest and fraudulent design when Dog at the Bridge contracted to purchase the business from the administrators. Fourthly, by reason of Cook’s knowledge of and participation in these circumstances, Dog at the Bridge was aware of and knowingly involved in McKirdy and Boyle’s dishonest and fraudulent design. Dog at the Bridge knowingly received the JV assets in breach of trust.
The plaintiffs claim against the first defendant, Dog at the Bridge, a declaration that it holds a 49% interest in the Business on a constructive trust for the plaintiffs, an account of profits and damages and/or equitable compensation; against the second to sixth defendants damages for conspiracy and/or equitable compensation; and against the fourth and fifth defendants disgorgement of the remuneration paid to them in connection with their appointment as joint administrators of Sugar Loaf and Bridge Bar.
For the summary judgment application it is unnecessary to set out in detail the conspiracy and breach of fiduciary duty allegations, but a short summary will provide a context for considering the submissions made on this application. I will say more later when considering the other applications.
The plaintiffs allege that McKirdy and Boyle, without the plaintiffs’ knowledge or consent or any disclosure to the plaintiffs, agreed to hold for Cook a 7.5% beneficial interest in some or all of the JV assets.
Following service of the statutory demands, McKirdy, Boyle, and Cook met with the fourth and fifth defendants (Shady and Lindholm) who are insolvency practitioners (collectively ‘the conspirators’) and others including an advisor, a Mr Gullquist. The plaintiffs allege that the conspirators and Gullquist discussed how to defeat the impending winding up applications and agreed that the insolvency practitioners should be appointed as administrators of the companies on the basis that a deed of company arrangement would be effected by which the Business would be sold to a new company controlled by Cook and to no other prospective purchaser. That new company was the first defendant, Dog at the Bridge. Cook was the sole director, secretary and shareholder of Dog at the Bridge from its incorporation on 21 December 2012 until 7 March 2013. The insolvency practitioners would be remunerated from the proceeds of sale and McKirdy and Boyle would, with Cook, continue to run the Business at the premises through the new company. McKirdy and Boyle would later take up equity in the new business structure.
Thereafter, the conspirators obtained an assurance from the lessor that the lease of the premises would be transferred to Cook’s new company and resolutions were passed appointing the insolvency practitioners jointly as administrators of the companies. The plaintiffs allege that the insolvency practitioners conducted a perfunctory sale campaign concluding on 20 December 2012 that was intended to ensure that the administrators could sell the Business to Cook’s new company.
On 21 December 2012, after some negotiations, the insolvency practitioners accepted an offer put by Dog at the Bridge to purchase the Business for $125,000 plus stock at cost and net cash on hand at settlement, with the purchaser assuming liability for accrued employee entitlements. On 24 December 2012, Dog at the Bridge contracted with the administrators to purchase the Business on different terms, although those differences are not presently relevant. The insolvency practitioners subsequently reported, at the second meeting of the creditors of the companies, that the sale was a bona fides arm’s length transaction at the highest achievable price.
As the plaintiffs have not yet delivered particulars of loss, I cannot determine whether any dividend was paid under the deed of company arrangement and for present purposes I will infer that the purchase price received by the companies was used to pay the fees and disbursements of the administrators.
At some later point in time it appears that Cook sold his shares in Dog at the Bridge to purchasers who had no involvement in, or knowledge of, the events that I have described.
I now turn to Dog at the Bridge’s application for summary judgment.
Summary judgment
Rule 23.01 of the Rules provides:
(1) Where a proceeding generally or any claim in a proceeding –
(a) is scandalous, frivolous or vexatious; or
(b) is an abuse of the process of the Court –
the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.
Sections 63 and 64 of the Act relevantly provide:
63 Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a) on the application of a plaintiff in a civil proceeding;
…
64 Court may allow a matter to proceed to trial
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.
The parties agreed about the applicable legal principles, particularly the test for summary judgment which the Court of Appeal in Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd stated to be that the respondent to the application for summary judgment must have a ‘real’ as opposed to ‘fanciful’ chance of success.[1] This test is to be applied by the statutory language without paraphrase or comparison with the language used in earlier authorities. Further, the power of summary termination should be exercised with caution and should not be exercised unless it is clear that there is no real question to be tried.
[1](2013) 42 VR 27, 40 [35] (Warren CJ and Nettle JA, with Neave JA in agreement).
Dog at the Bridge argued that the plaintiffs’ rights arising from the alleged joint venture were unenforceable because neither plaintiff had provided any consideration or contribution to the alleged joint venture.
Dog at the Bridge submitted that the absence of these allegations was a fatal omission in the claims made against it because fiduciary obligations do not automatically arise pursuant to a joint venture. The plaintiffs consideration or contribution must be identified in order to determine the nature of the fiduciary obligations binding the vendor of the Business acquired by Dog at the Bridge allegedly knowing of the vendor’s breach of such obligations.
Dog at the Bridge reasoned[2] from the oft-quoted passage in Norberg v Wynrib,[3] when McLachlin J observed:
The foundation and ambit of the fiduciary obligation are conceptually distinct from the foundation and ambit of contract and tort. Sometimes the doctrines may overlap in their application, but that does not destroy the conceptual and functional uniqueness. In negligence and contract the parties are taken to be independent and equal actors, concerned primarily with their own self-interest. Consequently the law seeks to balance between enforcing obligations by awarding compensation when those obligations are breached, and preserving optimum freedom for those involved in the relationship in question. The essence of a fiduciary relationship, by contrast, is that one party exercises power on behalf of another and pledges himself or herself to act in the best interests of the other.
[2]Citing RK Property Holdings Pty Ltd v BCOOL Pty Ltd [2015] VSC 754.
[3][1992] SCR 226, 272; cited by the majority (McHugh, Gummow, Hayne and Callinan JJ in Pilmer v Duke Group Limited (2001) 207 CLR 165, 196-7 [71].
Here, the plaintiffs alleged that the joint venture arose from a written agreement and in order to have binding effect that written agreement must satisfy the fundamental essentials of a contract. It will not be legally binding and enforceable unless the requirements in respect of the formation of a contract, including the provision of consideration, are alleged and proved.[4]
[4]Citing Ambridge Investments Pty Ltd (in liq) v Baker & Ors [2010] VSC 59, [39]-[41].
Dog at the Bridge submitted that the plaintiffs lacked standing to sue on the rights and obligations arising from the JV Agreement because they could not particularise the consideration or contribution they had made to the venture. No legally binding and enforceable joint venture agreement could be demonstrated.
Dog at the Bridge submitted that the plaintiffs have not given the particulars of the consideration provided by them to the joint venture as required by Almond J’s order of 11 March 2016. Rather, the plaintiffs amended the material allegation by deleting the allegation that McMurray had caused Ezi Rapid to incur the cost of completing the fit out works. Further, the plaintiffs did not allege that Ezi Rapid, who completed the construction and fitout works and claimed to be entitled to the Capped Construction Cost, was a party to the joint venture, or a joint promisee and it is not a party to the proceeding. Dog at the Bridge submitted that Appleson v H Littlewood Ltd[5] stood as authority for the proposition that the court may order summary judgment where an action is brought upon a contract where clearly none existed between the parties.
[5][1939] 1 All ER 464.
However, two important aspects of the fiduciary relationship appear to be pertinent when considering this submission.
First, engagement in a joint venture may be a sufficient, but is not a necessary, condition for accepting that a fiduciary relationship may exist between joint venturers. In United Dominions Corporation Ltd v Brian Pty Ltd, [6] Mason, Brennan and Deane JJ observed:
The term “joint venture” is … apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a “joint venture” and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred. Thus, where one party contributes only money or other property, it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to the profits made by the other. One would need a more confined and precise notion of what constitutes a “joint venture” than that which the term bears as a matter of ordinary language before it could be said by way of general proposition that the relationship between joint venturers is necessarily a fiduciary one. The most that can be said is that whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken.
[6](1985) 157 CLR 1, 10-11 (citations omitted).
Further, Dawson J in United Dominions observed:[7]
Although the relationship between participants in a joint venture which is not a partnership will be governed by the particular contract rather than extrinsic principles of law, the relationship may nevertheless be a fiduciary one if the necessary confidence is reposed by the participants in one another. Of course, in a partnership the parties are agents for each other and this may constitute a separate reason for the fiduciary character of a partnership. There may be no such agency between participants in a joint venture but, as Dixon J pointed out in Birtchnell v Equity Trustees, Executors & Agency Co. Ltd, even in a partnership it is really the mutual confidence between partners which imposes fiduciary duties upon them and the same confidence may, in appropriate circumstances, be found to exist between participants in a joint venture.
[7](1985) 157 CLR 1, 16.
Secondly, contractual and fiduciary relationships may coexist but the fiduciary relationship must be consistent with and conform to the terms of the contract.[8]
[8]Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41, 97.
The plaintiffs responded that their claims were not predicated on the existence of an enforceable written contract, such that each alleged term of the joint venture agreement is enforceable as a matter of contract law. Rather the plaintiffs’ claims were founded on the misapplication of property entrusted to custodians (Bridge Bar and Sugar Loaf) that would, on completion of the joint venture agreement, have no beneficial interest in the JV assets because the assets would be beneficially held for the joint venturers by a unit trust of which Bridge Bar and Sugar Loaf would be trustees. The plaintiffs allege that fiduciary duties arose from contributions made in connection with the partially executed joint venture agreement. The plaintiffs referred to the following passage from United Dominions as explanatory of the principle being invoked by the material facts alleged:[9]
A fiduciary relationship can arise and fiduciary duties can exist between parties who have not reached, and who may never reach, agreement upon the consensual terms which are to govern the arrangement between them. In particular, a fiduciary relationship with attendant fiduciary obligations may, and ordinarily will, exist between prospective partners who have embarked upon the conduct of the partnership business or venture before the precise terms of any partnership agreement have been settled. Indeed, in such circumstances, the mutual confidence and trust which underlie most consensual fiduciary relationships are likely to be more readily apparent than in the case where mutual rights and obligations have been expressly defined in some formal agreement. Likewise, the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavour will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation.
The plaintiffs submitted, and I agree, that such observations are applicable where an agreed joint venture undertaking commences but fails before it is fully executed.
[9](1985) 157 CLR 1, 12 (Mason, Brennan, Deane JJ).
Although the terms of the agreement for a joint venture are material to the causes of action pleaded by the plaintiffs, ultimately the joint venture agreement only evidences the basis on which the plaintiffs allege that Bridge Bar and Sugar Loaf, the vendors of the alleged JV assets to Dog at the Bridge, acquired and held such assets.
The allegations made by the plaintiffs in the statement of claim make sufficiently clear that Bridge Bar and Sugar Loaf only acquired the alleged JV assets as custodians pending the creation of the unit trust by which 49% of the beneficial interest in the lease of the premises, the fit out, trading stock and the liquor licence would be held by McMurray, McDonald, and Tattam and 51% of the beneficial interest in those assets would be held by McKirdy[10]. The plaintiffs allege that Boyle had procured, and contributed, an agreement with the owner of the premises to enter into a lease with Sugar Loaf. The plaintiffs also allege that McMurray and Tattam were managers of Ezi Rapid, which would expeditiously complete the fit out in return for later payment, out of the profits of the business, of the Capped Construction Cost to either McMurray or Ezi Rapid.
[10]On behalf of himself Boyle and Cook.
The crux of Dog at the Bridge’s concerns is that the plaintiffs have not pleaded the nature of the arrangements between McMurray, McDonald, and Tattam, on the one part, and Ezi Rapid on the other. No doubt, at trial, those arrangements may be the subject of evidence and may be disputed by Dog at the Bridge. Those arrangements are no more than facts relevant to the facts in issue, which define the obligations of Bridge Bar and Sugar Loaf in respect of the JV assets.
I am not persuaded the plaintiffs’ allegations of the existence of fiduciary obligations are fanciful and that the proceeding ought to be summarily dismissed. The plaintiffs clearly allege how Bridge Bar and Sugar Loaf came to possess title to the joint venture assets and that the expeditious completion of the fit out at a capped cost that was less than the actual construction cost was not contributed by McKirdy, Boyle or Cook. The plaintiffs allege that Bridge Bar and Sugar Loaf possessed title to the joint venture assets for the purpose of a unit trust that was to be formed in completion of the joint venture agreement. Once that occurred, the rights and obligations between the parties would be governed by the terms of the trust deed save for the ongoing obligation for the trustees to repay the Capped Construction Cost to McMurray or Ezi Rapid. The statement of claim plainly alleges that the original position of the JV parties cannot be restored as the construction and fitout works are complete, have not been paid for by the joint venture vehicles, Bridge Bar and Sugar Loaf, who have – and thus and the parties to the JV Agreement have also – benefited from the Business having commenced trading.[11]
[11]Yarra Valley Spring Water Pty Ltd v Paterson and Anor [2012] VSC 135, [151] (Mukhtar AsJ) citing Alati v Kruger (1955) 94 CLR 216, 223-4.
There appears to be a curious red herring. The plaintiffs allege that by 27 September 2012, Ezi Rapid considered the Capped Construction Cost to be immediately due and payable to it by Bridge Bar and Sugar Loaf. Bridge Bar had commenced trading, effectively, from about 2 March 2012. No allegation is made about the profitability of the Business in its first six months of operation, but is seems most improbable that the Business had earned in excess of $350,000 in profit. Was the debt that was the subject of the statutory demands in fact presently due and payable? Having regard to the alleged terms of the JV Agreement, why Bridge Bar and Sugar Loaf did not apply to set aside the statutory demands may be a relevant matter for trial. The submissions of Dog at the Bridge on this application appear to assume that Bridge Bar and Sugar Loaf were indebted to Ezi Rapid and not to McMurray. That assumption does not follow from the pleaded allegations.
The plaintiffs contended, alternatively, that if they are required to plead and establish the existence of consideration moving from McMurray to McKirdy (and/or Boyle), the following terms in paragraph 10(f) and 11(d) of the statement of claim establish the provision of consideration:
10(f)In lieu of payment of money and as consideration for their interest in the Joint Venture and the JV Assets, that McMurray, McDonald and Tattam, and/or Ezi Rapid (of which McMurray was the Construction Manager and Tattam was the General Manager at the time) would complete the construction of the fitout works required at the Premises to enable the Business to commence operations on the basis that only a sum capped at $350,000 (“Capped Construction Cost”) would be repaid to McMurray and/or Ezi Rapid.
…
11(d)Pursuant to the term of the JV Agreement referred to at paragraph 10(f) above, Ezi Rapid completed the construction and fitout works required at the Premises to enable the Business to commence trading, which it did by at least 1 January 2012 (alternatively 2 March 2012), at a cost which exceeded the Capped Construction Cost.
The plaintiffs allege that Ezi Rapid was a joint promisee with McMurray. The promise was made collectively to McKirdy[12] and the plaintiffs intended to hold McMurray, McDonald and Tattam’s interest in the joint venture. The plaintiffs submitted that such allegation was not fanciful, relying on the New South Wales Court of Appeal decision of Mitchell v Leafs Gully Farm Pty Ltd[13] where it was found that the nominee of the grantee under an option deed was a joint promisee, notwithstanding that the nominee was not identified in the option deed and was only incorporated shortly before the nomination was made. Being satisfied that the plaintiffs’ claims cannot be characterised as fanciful for the reasons already stated, I need not deal with this question, which can be reserved to the trial judge.
[12]Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460, 493 (Windeyer J).
[13][2016] NSWCA 92.
I would add that I may have declined to order summary judgment in this proceeding for a further reason, but it is not necessary to reach a concluded view about it, because there is a real question to be tried that excludes the exercise of the power of summary determination. I will however briefly identify the issue.
The JV Agreement is a significant component of the factual matrix of the plaintiffs’ claim. The terms of the JV Agreement have been alleged since the commencement of the proceeding in 2014 and Dog at the Bridge has pleaded defences in response to these allegations, Dog at the Bridge made earlier applications to strike out the plaintiffs’ statement of claim that could have, but did not, seek summary judgment on the basis advanced in this application.
Dog at the Bridge brought a strike out application returnable on 29 May 2015 in respect of an amended statement of claim dated 5 February 2015. The court granted the plaintiffs leave to file an amended pleading in a form that had been exchanged approximately two weeks prior to the 29 May hearing with liberty reserved to the defendants until 5 June 2015 to object to the amended pleading. No objection was taken. That should have completed the process of objection to the statement of claim. Yet Dog at the Bridge later brought a strike out application in respect of that further amended statement of claim, which was part-heard on 12 February 2016 and determined on 11 March 2016.
On 26 May 2016 the court, inter alia, granted leave to the plaintiffs to file and serve a second further amended statement of claim, which they did on 10 June 2016. Despite these prior opportunities, Dog at the Bridge first raised with the plaintiffs an issue about the enforceability of the joint venture by issuing this application. It gave no satisfactory explanation of its failure to advance on prior occasions its present contentions for summary dismissal.
Giving effect to the overarching purpose in relation to civil proceedings in facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute between the parties is not achieved by a party making interlocutory applications in a piecemeal fashion. By failing to put the above submissions in support of summary judgment on earlier occasions, Dog at the Bridge may not have been enabling the efficient conduct of the business of the court and the efficient use of judicial and administrative resources. The timely determination of the proceeding may be prejudiced because of delay and the relationship between the progress of interlocutory steps in the proceeding and the complexity or importance of the issues in dispute might be compromised. I make no findings in respect of such matters.
The application for summary judgment will be dismissed. I turn now to the application that the proceeding be dismissed for non-compliance with a court order.
Dismissal for non-compliance with an order
Rule 24.02 provides:
Failure to obey order
(1)Where a party fails to comply with an order to give particulars of any pleading or with an order for the discovery or inspection of documents or for answers to interrogatories, the Court may order—
(a) if the party is the plaintiff, that the proceeding be dismissed;
Dog at the Bridge submitted that the plaintiffs have failed to comply with paragraph 3 of the orders of Almond J made 11 March 2016. Paragraph 3 ordered that:
The plaintiffs provide further and better particulars of the allegation that the second plaintiff in his capacity as construction manager for Ezi Rapid, caused Ezi Rapid to complete the construction and fitout works required at the premises, including particulars of any consideration paid by the second plaintiff to Ezi Rapid and particulars of any contribution allegedly made by the second plaintiff pursuant to the joint venture agreement, as set out in paragraph 11(d) of the further amended statement of claim dated 27 May 2015.
The plaintiffs, rather than incorporating particulars in the current amended statement of claim, deleted the allegation that the second plaintiff had caused Ezi Rapid to perform the fitout. The allegation became that Ezi Rapid completed the fitout for the purpose of the use of the premises for the Business. The amendment was in the following form:
11(d) Pursuant to the term of the JV Agreement referred to at paragraph 10(f) above,
McMurray in his capacity as construction manager forEzi Rapid,caused Ezi Rapid to thecompleted the construction and fitout works required at the Premises to enable the Business to commence trading, which it did by at least 1 January 2012 (alternatively 2 March 2012), at a cost which exceeded the Capped Construction Costoperations.
Dog at the Bridge contended that the deletion represents a failure to abide by an order of this Court. Further, Dog at the Bridge put, as grounds for dismissal pursuant to r 24.02, the same arguments in respect of summary judgment, which I have already set out and considered.[14] Dog at the Bridge submitted that the plaintiffs’ deletion of the allegation that McMurray caused Ezi Rapid to provide the consideration alleged meant that no obligations and rights enforceable by the plaintiffs could possibly arise pursuant to the JV Agreement.
[14]Further discussed below at [64]-[65].
The plaintiffs submitted that the allegation that McMurray ‘caused’ the construction and fitout works was not material to the plaintiffs’ pleaded causes of action, nor do the plaintiffs allege that consideration under the JV Agreement was to be provided by Ezi Rapid. The plaintiffs otherwise repeated their submissions in opposition to summary judgment. The plaintiffs accepted that the particulars ordered had not been provided, but in lieu of providing particulars, the plaintiffs had amended the material allegation that was the subject of particulars.
I do not accept the submission made by Dog at the Bridge. The contention that in the circumstances the plaintiffs failed to obey an order of the court necessarily involves ignoring the amendment made to the material allegation in paragraph 11(d). Rendering an obligation to provide particulars of a material allegation otiose by withdrawing the allegation does not constitute a failure to obey the relevant order. There has been a material change in the circumstances. Further, for the reasons set out above, I do not accept the proposition that the plaintiffs failure to maintain the allegation that McMurray caused Ezi Rapid to provide a part of his contribution to the JV assets alleged withdraws a fundamental plank of the causes of action alleged by the plaintiffs in the proceeding, without which the proceedings cannot possibly succeed.
The first defendant’s application for dismissal of the proceeding for non-compliance with the order of Almond J dated 11 March 2016 is refused.
I now turn to the application that particular paragraphs of the statement of claim be struck out under r 23.02.
Strike out application
Rule 23.02 of the Rules provides:
Striking out pleading
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
The strike out application challenged three aspects of the pleaded allegations, the joint venture, Cook’s interest in the JV agreement, and Cook’s knowledge as alleged in the Barnes v Addy claims.
Joint Venture allegations
In submitting that various paragraphs of the statement of claim alleging the JV Agreement should be struck out, Dog at the Bridge relied on its submissions for summary judgment, set out above, to contend in the alternative that by reason of the plaintiffs’ failure to allege consideration passing from the second plaintiff, the plaintiffs have no standing to sue on the JV Agreement. In consequence, those paragraphs of the pleading that are reliant on the JV Agreement are said to be vague, embarrassing and liable to be struck out. Further, Dog at the Bridge submitted that there was no proper basis shown to allege an enforceable JV agreement was entered into and consequently the allegations of rights and obligations arising pursuant to it were frivolous and vexatious. Citing Batistatos v Roads and Traffic Authority (NSW); Batistatos v Newcastle City Council,[15] Dog at the Bridge invited me to conclude that issuing proceedings seeking to recover relief reliant on an unenforceable JV agreement is, ‘productive of serious and unjustified trouble and harassment’ and is properly within the ambit of ‘the court’s procedures … [being] invoked for an illegitimate purpose’, an abuse of process.
[15](2006) 226 CLR 256, 266-267 [14]–[15].
This submission fails for the reasons already expressed in response to the summary judgment application. The crucial allegations are that the joint venturers agreed that Bridge Bar and Sugar Loaf would together carry on the Business and hold the JV assets, including the lease, the fitout, trading stock and the liquor licence on their behalf. As consideration for their interest in the Joint Venture and the JV assets, McMurray, McDonald and Tattam, (and/or Ezi Rapid which employed McMurray and McDonald) agreed to complete the fitout to enable the Business to commence operations on the basis that the Capped Construction Cost would be repaid to McMurray and/or Ezi Rapid. Ezi Rapid completed the fitout at a cost exceeding the Capped Construction Cost. Sugar Loaf became the leasee of fitted out premises and Bridge Bar traded the Business from those premises. Sugar Loaf and Bridge Bar did not hold the beneficial interests in the JV assets but were custodians for the benefit of the joint venturers.
At trial, McMurray may be found to have given adequate consideration by procuring Ezi Rapid to immediately complete the fit out for a fixed cost to be repaid out of trading profits. This allegation is not fanciful and is capable of being a contribution to a joint venture. Dog at the Bridge has not persuaded me that McMurray could never be found to have standing in connection with the JV Agreement or standing to assert that fiduciary obligations were owed to him by the proposed joint venture vehicles. The pleading alleges tenable claims that the vendors of the JV assets to Dog at the Bridge owed fiduciary duties to the plaintiffs arising out of the acquisition without consideration by those companies of assets subject to executory obligations to hold the beneficial interest in those assets on behalf of unit holders in a unit trust.
Cook’s interest
Next, Dog at the Bridge submitted that paragraphs 16 and 16A ought be struck out. These paragraphs identify the alleged basis on which Cook commenced his participation in the affairs of the joint venture.
16.Further, at a time in 2011, the precise date of which is unknown to the Plaintiffs, Cook acquired a 7.5% beneficial interest in the Business (“Cook’s interest”), which was held by McKirdy on Cook’s behalf.
[Particulars follow but are not set out here]
16A.Cook’s interest was not disclosed to the Plaintiffs by either of Cook, Boyle or McKirdy at the time of the parties entering into the JV Agreement as alleged in paragraph 10 above.
The significance of these allegations lies in the fact that Cook was, at the time when Dog at the Bridge purchased the JV assets, its sole director and shareholder, and his participation in the affairs of the joint venture prior to the service of the statutory demand is material to the issue of the knowledge of Dog at the Bridge about the fiduciary obligations of Sugar Loaf and Bridge Bar when the JV assets were purchased by it from the administrators. I will come back to this issue, but for present purposes I do not accept that the allegations have no relevance.
Dog at the Bridge correctly submitted that the allegation about what Cook acquired is vague or confused. First, the pleaded allegation is limited to the acquisition of an interest in the Business, which is only a part of the JV assets. On its face, the allegation limits the beneficial interest acquired by Cook to a 7.5% share in Bridge Bar as that was the JV asset to be held and managed by Bridge Bar. The acquisition would not involve equity participation in Sugar Loaf. However, the particulars state that:
Cook’s interest was to be held by McKirdy once the relevant shares in Bridge Bar and Sugar Loaf were transferred to McKirdy, which occurred on 1 December 2011 in respect of Sugar Loaf and in or about March 2012 in respect of Bridge Bar.
The inconsistency between the material allegation and the particulars of it is embarrassing. Further, the confusion flows into and affects the allegation pleaded in paragraph 16A.
Secondly, the particulars to paragraph 16 allege acquisition by an agreement although the material allegation being particularised is an acquisition of an interest rather than an agreement. If the plaintiffs are alleging that the interest was acquired pursuant to an agreement, Dog at the Bridge is entitled to the usual particulars of that agreement. If the plaintiffs merely allege the fact of acquisition, as opposed to the manner in which it was achieved, any underlying agreement related to that acquisition is not realised as a material fact requiring particulars. It may be that the full circumstances of the acquisition of the interest are not known to the plaintiffs and they may not be able to allege or particularise an agreement, but it is not clear whether the plaintiffs intend to allege an agreement and acquisition or merely an acquisition.
Because it is not clear how the plaintiffs might resolve the ambiguity and uncertainty, whether by amending the material allegations being made or the particulars that are given of them, I will strike out paragraphs 16 and 16A, with leave to replead.
Cook’s knowledge
Dog at the Bridge submitted that the plaintiffs’ allegations did not sufficiently identify its knowledge of trust obligations affecting the property that it purchased from Sugar Loaf and Bridge Bar.
The plaintiffs structured their allegation that Dog at the Bridge knowingly received the JV assets in breach of trust in the following way. Sugar Loaf and Bridge Bar, when controlled by the administrators, dealt with the JV assets in breach of the terms of the JV Agreement and in breach of trust by putting into effect the conspiracy and by the alleged breaches of fiduciary duty. McKirdy and Boyle’s dishonest and fraudulent intention to secretly and wrongfully deprive the plaintiffs of their interest in the Joint Venture and/or the JV assets is pleaded as the ‘Fraudulent Design’. Cook was aware of and knowingly involved in the Fraudulent Design and was a knowing participant in the conspiracy.
The material allegations that the plaintiffs make in paragraph 21B are these.
By reason of the foregoing:
(a)the conduct of McKirdy and Boyle in attending and participating in the First and Second Meetings as alleged and by engaging in the Overt Acts to the extent referred to above, gave rise to a breach by each of them of the Fiduciary Duties (“the Breaches of Fiduciary Duty”);
[Particulars follow but are not set out here]
(b)the Breaches of Fiduciary Duty constituted a dishonest and fraudulent design on the part of McKirdy and Boyle to secretly and wrongfully deprive the Plaintiffs of their interest in the Joint Venture and/or the JV Assets (“the Fraudulent Design”);
(c)Cook, Shady and Lindholm were aware of and knowingly involved in the Fraudulent Design;
[Particulars follow but only the particulars of Cook’s knowledge are reproduced ]
(ii)The fact that Cook was aware of and knowingly involved in the Fraudulent Design is to be inferred by and from:
A.Cook’s attendance and participation in the First and Second Meetings;
B.Cook engaging in the conduct referred to in paragraph 18(d) above;
C.email from Cook to Boyle dated 17 November 2012 enclosing a PowerPoint presentation titled “Summary Presentation for Lawyers” in which:
(i)under the heading “Timeline” it states that in December 2011 “Ezi Rapid threaten to pull out of project unless granted 49% of The Bridge” and “New contract signed for a 49% share in The Bridge”;
(ii)under the heading “Resolution” it states “Contrary to the Agreement signed by Ezi Rapid & Luke McKirdy on the 12-Dec-11, Ezi Rapid have not contributed the 350K as promised. Their contribution is only 153K. Therefore under the partnership agreement, Ezi Rapid should only be entitled to 153K/350K x 49% share = 21% share”;
D.email from Cook to Gullquist dated 26 November 2012 in which Cook writes [certain matters that need not be reproduced].
Copies of the emails and documents referred to above are in the possession of the Plaintiffs’ solicitors and may be inspected by prior appointment.
(d) Cook knew that:
(i)the business to be sold to the First Defendant comprised the JV Assets and/or trust property; and
(ii)the receipt by the First Defendant of the JV Assets occurred as a consequence of the Breaches of Fiduciary Duty by McKirdy and Boyle, alternatively was a misapplication of trust property;
Particulars
The Plaintiffs refer to and repeat the particulars in paragraph 21B(c)(ii) above as to the fact of Cook’s knowledge of the matters alleged.
(e)the First Defendant was, from the date of its incorporation and at all material times thereafter, aware of and knowingly involved in the Fraudulent Design.
Apart from documents, Cook’s knowledge is particularised (in C(ii)(a)) as based on his attendance at and participation in two meetings and his conduct in causing Dog at the Bridge to make an offer to purchase the Business and to enter into a contract when that offer was accepted. The pleading is confused and ambiguous in its cross-referencing of the two meetings because the plaintiffs allege a number of meetings, most of which are alleged as particulars of the conspiracy, but the last of which is pleaded as an overt act in furtherance of the conspiracy.
However, there are not two, but three particular ‘meetings’ that might be the subject of the plaintiffs’ cross referencing. First in time are conversations, that are not described as meetings, between Gullquist and Boyle, together with either or both of McKirdy and Cook in the last week of November 2012. The content of these conversations is set out in paragraph (II)(aa) of the particulars to paragraph 17. Next, a meeting took place at the premises in the week prior to 3 December 2012 when McKirdy Boyle, Cook and Gullquist discussed with the insolvency practitioners the matters they had earlier discussed with each other. For the purposes of the particulars to paragraph 21B, counsel invited me to regard this as ‘the first meeting’ and to regard a meeting referred to in paragraph 18(a) as ‘the second meeting’. At the second meeting, the conspirators and Gullquist discussed the same matters with the landlord.
The matters that were discussed at the first meeting are alleged in paragraph (II)(b) of the particulars to paragraph 17. In summary, McKirdy, Boyle and Cook met with the insolvency practitioners to discuss a strategy to deal with the winding up application brought against Sugar Loaf and Bridge Bar. The strategy agreed was that, in order to ensure that the plaintiffs had no interest in the business, it would be transferred to a new company controlled by Cook by means of a sale by the insolvency practitioners appointed as administrators. Those present at the meeting agreed that although the administrators would go through the motions of an arm’s length sale, Cook’s company would be the purchaser.
As I have noted, the plaintiffs also allege that Cook participated in earlier conversations in the last week of November 2012 involving the adviser Gullquist when the existence of the joint venture was discussed and the proposal that was put to the insolvency administrators was developed. The plaintiffs allege that Cook participated in a conversation when words to the following effect were stated:
If the JV Assets were transferred to a new company controlled by Cook, Boyle and McKirdy would receive their interest in the JV Assets free of the Plaintiffs’ interest and it would be “untraceable” as Cook had never been a director of, or shareholder in, either of Bridge Bar or Sugar Loaf.
The second meeting involved the participants from the first meeting with two representatives of the landlord. The plaintiffs allege that the purpose of this meeting was to ensure that the landlord would assign the lease to Cook’s new company once the business was purchased and that in that conversation the substance of what had been said to the insolvency administrators (as particularised in paragraph (II)(b) of the particulars to paragraph 17) was repeated to the representatives of the landlord.
Other meetings are alleged in the pleading and the cross-referencing is clearly confusing. For present purposes, it would be open to the plaintiffs to cross-reference the meetings referred to in paragraph 21B to refer to both the first and second meetings and the prior conversations, each of which would seem to be material. Clearly, the objection can be met by amendment and I will grant the plaintiffs leave to amend paragraphs 17, 18 and 21B and the particulars thereto to reinsert appropriate cross-referencing to precisely identify which conversations at what meetings are alleged to permit the inference that Cook was aware of and knowingly involved in the Fraudulent Design.
Dog at the Bridge submitted that the material allegations set out in paragraphs 21B and 22 failed to give particulars of Cook’s knowledge of the joint venture, the fiduciary obligations arising pursuant to it and the breaches of those obligations or that the Business was a joint venture asset. I reject this submission. As I have set out, paragraph 22 is cross-referenced to paragraph 21 which in turn is cross-referenced to earlier allegations in the particulars to paragraphs 17 and 18. Putting to one side that Dog at the Bridge is entitled to unambiguous and specific cross-referencing, which can be provided by further amendment, the substance of the submission cannot withstand analysis.
On this application I must assume that the plaintiffs will be able to establish at trial the pleaded allegations as particularised. I am satisfied that there is a question for trial because it is open for a court to infer from the plaintiffs’ evidence in support of these particulars Cook’s knowledge of the joint venture, the fiduciary obligations arising from the circumstances in which Sugar Loaf and Bridge Bar acquired the assets, and of the interests of the joint venturers in those assets. It would be open to a court to draw such inferences from the whole of the circumstances that are alleged. Dog at the Bridge puts submissions about the inferences that might be drawn from particular facts. I do not accept those submissions and I do not accept that the adequacy of the particularised allegations can be assessed in that manner.
The Victorian Court of Appeal recently restated what the High Court laid down in Chamberlain v The Queen (No.2)[16] about the proper approach to evaluation of a circumstantial case. In Marriner v Australian Super Developments Pty Ltd,[17] the Court said:
The questions of whether an inference is open as a matter of probability and whether that inference is the more probable one are to be determined by considering the combined weight of all the relevant established facts rather than by considering each fact sequentially and in isolation from the other facts.
A like approach is appropriate when considering the adequacy of particulars of a circumstantial case.
[16]153 CLR 521.
[17][2016] VSCA 141, [75]; citing Chamberlain v R (No. 2) (1984) 153 CLR 521, 535–6.
A further submission put by Dog at the Bridge was that the particulars did not identify the nature of Cook’s knowledge, meaning that it was not possible to discern what category of knowledge was being relied on to establish the knowing assistance claim. This submission references the High Court’s declaration in Farah Constructions Pty Ltd v Say-Dee Pty Ltd[18] that the requirement of knowledge in the second limb of Barnes v Addy is as stated by the Court in Consul Development Pty Ltd v DPC Estates Pty Ltd,[19] namely:
(i) actual knowledge; (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; or (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man.
[18](2007) 230 CLR 89, 162-164 [171]-[178].
[19](1975) 132 CLR 373.
I have already set out how the allegations of knowledge are structured in the pleading. The material facts as particularised provide a proper basis for an allegation that Cook knew that the joint venture existed, of the plaintiffs’ interest in the joint venture, that Sugar Loaf and Bridge Bar were the joint venture vehicles, that the sale of the JV assets was intended to breach fiduciary obligations to some of the joint venturers and that the business being purchased by Dog at the Bridge was a joint venture asset.
I do not accept the premise that an intelligent reader of the pleading cannot discern that at least one of the applicable categories of knowledge is being relied on. That said, it is not a legitimate criticism of the pleading to assert that it is not possible to discern which category of knowledge identified in Consul Development is being alleged. The submission misconceived what was made clear by Gleeson CJ in Goldsmith v Sandilands:[20]
The facts in issue in a civil action case emerge from the pleadings, which, in turn, are framed in the light of the legal principles governing the case. Facts relevant to facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but "to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial". The function of evidence is to advance, or cut down, the case of a party in accordance with the rules of statute or common law that determine the nature of the information a court will receive. The primary rule of evidence is that a court will receive, and will only receive, evidence that is relevant to the issues as defined by the pleadings.
[20](2002) 190 ALR 370, 371 [2].
The plaintiffs allege that Cook was aware of and knowingly involved in the Fraudulent Design. That allegation, if proved at trial, is sufficient to establish knowing assistance under the second limb of Barnes v Addy. Precisely how knowledge is put by the plaintiff, as a question of law, will be a matter for submission at trial. The plaintiffs’ allegations are not fanciful and Cook’s knowledge as a fact in issue in the cause of action under the second limb of Barnes v Addy will be made out if the allegations as pleaded are made out at trial. The particulars fill in the picture of the plaintiffs cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. The legal characterisation of the evidence of knowledge to be led at trial is a matter for submissions not pleadings.
Further and better particulars
Finally, Dog at the Bridge alternatively submits that the plaintiffs be ordered to provide further and better particulars of –
(a) In relation to paragraphs 10(f) and 11(d), any consideration or contribution provided by either Plaintiff pursuant to the alleged joint venture.
(b) Cook’s knowledge of the alleged joint venture and JV assets as alleged in paragraphs 21B(b) and 21B(c).
(c) Cook’s knowledge alleged in paragraph 21B(d).
(d) Cook’s state of mind and knowing involvement alleged in paragraph 22(b).
For the reasons set out above, and subject to the need for some further amendment as noted, I am satisfied that the particulars provided of each of these matters are adequate to put Dog at the Bridge on guard as to the case it has to meet and to enable it to prepare for trial. Dog at the Bridge is alleged to be infected with Cook’s knowledge as its sole officer and controlling mind. I was informed that Cook has since sold his interest in Dog at the Bridge to its current owners and that he is not presently available to assist them to understand the practical implications for Dog at the Bridge of the issues raised by the pleadings as particularised. To the extent that Cook’s inaccessibility creates a difficulty for Dog at the Bridge, it cannot be solved by this application. The issues are sufficiently defined to enable preparation for a trial.
Conclusion
The applications by paragraphs 1, 2, 4, and 5 of the summons filed on behalf of Dog at the Bridge on 22 June 2016 will be dismissed and the application pursuant to paragraph 3 of that summons will be allowed in part. I will order that paragraph 16 and 16A of the statement of claim be struck out, with liberty to replead, and I will grant the plaintiffs leave to amend paragraphs 17, 18 and 21B and their particulars to reinsert appropriate cross-referencing as discussed above. Otherwise, the application pursuant to paragraph 3 of that summons is also dismissed.
Liberty to replead may be exercised by the plaintiffs serving on the defendants a proposed third further amended statement of claim on or before 17 August 2016. Unless the defendants serve on the plaintiffs a skeleton outline of contentions in opposition to the further amendment on or before 24 August 2016, the plaintiff shall thereafter be at liberty to file and serve a third further amended statement of claim in the form served.
The proceeding will be listed at 9:30 am on 26 August 2016 before me for submissions in respect of costs, orders on this application, and for further directions.
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