Commonwealth Bank of Australia v Cheng [No 2] - [2021] WASC 291

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   COMMONWEALTH BANK OF AUSTRALIA -v- CHENG [No 2] [2021] WASC 291
CORAM:   SMITH J
HEARD:   28 APRIL 2021
DELIVERED          :   8 SEPTEMBER 2021
FILE NO/S:   CIV 2563 of 2013
BETWEEN:   COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
MARY YUEN SHAN CHENG
First named First Defendant
FRANCIS HUNG LAM
Second named First Defendant
ANDREA MAN YEE CHENG
Third named First Defendant
CHAN THANH LAM
Second Defendant
MARY YUEN SHAN CHENG
Plaintiff by Counterclaim
AND
COMMONWEALTH BANK OF AUSTRALIA
First Defendant by Counterclaim
FRANCIS HUNG LAM
Second Defendant by Counterclaim
ANDREA MAN YEE CHENG
Third Defendant by Counterclaim

Catchwords:

Practice and procedure - Strike out - Abuse of process - First named defendant and plaintiff by counterclaim's defence and counterclaim inconsistent with basis of claim and conduct in partnership proceedings - Whether attempt to litigate issues that were open to be pursued in the partnership proceedings - Relevant principles - Turns on own facts

Practice and procedure - Strike out - Party may not approbate and reprobate - Relevant principles - Turns on own facts

Practice and procedure - Strike out - Irrelevant, repetitive and not reasonably intelligible pleas - Turns on own facts

Legislation:

Nil

Result:

Whole of first named defendant and plaintiff by counterclaim's minute of proposed substituted defence and counterclaim struck out, with leave to replead refused

Category: B

Representation:

Original Action

Counsel:

Plaintiff	:	Mr S C M Wong
First named First Defendant	:	Mr M A Tedeschi
Second named First Defendant	:	Mr P G McGowan
Third named First Defendant	:	Mr P G McGowan
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Dentons
First named First Defendant	:	G A Lacerenza & Associates
Second named First Defendant	:	Johnstone Crouse Lawyers
Third named First Defendant	:	Johnstone Crouse Lawyers
Second Defendant	:	No appearance

Counterclaim

Counsel:

Plaintiff by Counterclaim	:	Mr G A Lacerenza
First Defendant by Counterclaim	:	Mr S C M Wong
Second Defendant by Counterclaim	:	Mr P G McGowan
Third Defendant by Counterclaim	:	Mr P G McGowan

Solicitors:

Plaintiff by Counterclaim	:	G A Lacerenza & Associates
First Defendant by Counterclaim	:	Dentons
Second Defendant by Counterclaim	:	Johnstone Crouse Lawyers
Third Defendant by Counterclaim	:	Johnstone Crouse Lawyers

Cases referred to in decision:

Cheng v Lam [No 2] [2018] WASC 199
Cheng v Lam [No 3] [2020] WASC 45
Cheng v Lam [No 4] [2020] WASC 175
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Evans v Bartlam [1937] AC 473, 483
High Time Investments Pty Ltd v Adamus Resources Pty Ltd [2012] WASC 295
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd No.3 [2014] WASC 162
Lee v Australia and New Zealand Banking Group Ltd [2013] QCA 236
Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) CLR 635
Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276
MPB v LGK [2020] EWHC 90
Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121
Skymist Holdings Limited v Grandlane Developments Limited [2018] EWHC 3504 (TCC)
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1

Table of Contents

1.0 The applications to strike out or alternatively to refuse leave to the plaintiff to file an amended defence and counterclaim and the result

2.0 History of the proceedings relevant to the application to an extension of time

3.0 Relevant principles of law

3.1 Pleadings and strike out applications

3.2 Abuse of process

3.3 The doctrine of approbation and reprobation

4.0 The history of these proceedings and the related proceedings in CIV 1706 of 2015 (the partnership proceedings)

4.1 The relationship between the defendants and the partnership to develop properties

4.2 Mary's pleaded case in these proceedings in the impugned pleading

4.3 The partnership proceedings

4.4 Would it be an abuse of process to allow Mary's pleaded case to proceed against the Bank and Frank and Andrea in these proceedings?

5.0 The Bank's alternative application to strike out particular paragraphs of the impugned pleading

6.0 Orders

SMITH J:

1.0 The applications to strike out or alternatively to refuse leave to the plaintiff to file an amended defence and counterclaim and the result

Without intending any disrespect after the defendants have been introduced, they will be referred to by their first names.
The plaintiff, the Commonwealth Bank (the Bank), commenced these proceedings by writ on 15 October 2013. It claims against the first defendants (Mary Yeun Shan Cheng, Francis Hung Lam (Frank) and Andrea Man Yee Cheng) and the second defendant (Chan Thanh Lam) amounts owing pursuant to loan agreements and mortgages. It also seeks possession of specified properties.
By way of background, the loans related to property developments that involved (among others) the defendants to these proceedings. In earlier, separate proceedings in this court before Chaney J (the partnership proceedings), Mary (the plaintiff) contended that Frank and Andrea (defendants) along with Chan (defendant by counterclaim) and Mary developed properties pursuant to an oral partnership agreement. Mary sought a declaration of the existence of the partnership and sought an account. Justice Chaney made findings as to the terms of the parties' agreements to develop the properties.[1] These findings formed the basis of an account that was later taken Registrar Whitbread and then adopted in part by Tottle J.
[1] Cheng v Lam [No 2] [2018] WASC 199.
These reasons relate to the Bank's application in these proceedings to strike out all, or parts of, Mary's proposed substituted defence and counterclaim dated 29 January 2021 (impugned pleading). Specifically, the Bank has applied to strike out:
(a)the entirety of the impugned pleading as an abuse of process, or alternatively, based on the doctrine of approbation and reprobation; or
(b)parts of the impugned pleading, on grounds set out in O 20 r 19 of the Rules of the Supreme Court 1971 (WA), which includes the ground of abuse of process.
Frank and Andrea oppose the filing of the impugned pleading on the same grounds as the Bank.
For the reasons that follow, I have found that, if necessary, leave should be granted to the Bank, Frank and Andrea to bring an application out of time to strike out the impugned pleading or parts of it. Further, I have found that the whole of the impugned pleading should be struck out on grounds that:
(a)all of the matters pleaded directly contradict the binding findings and final judgment orders made by Chaney J in the partnership proceedings, which Mary accepted by proceeding with an account of profits, and as such are an abuse of process; or
(b)alternatively, Mary engaged in acts or conduct of approbation by accepting that judgment and proceeding to an account by a registrar, and then engaged in acts of reprobation by the claims she pleads in these proceedings; and
(c)in addition, the plea of a failure by the Bank to mitigate is an abuse of process as such a similar plea by Mary was struck out in these proceedings by Martino J in Commonwealth Bank of Australia v Cheng on grounds of the principle that litigation has no role to play in an action for debt.[2]
[2] Commonwealth Bank of Australia v Cheng [2017] WASC 136, 45.
For these reasons also Mary should not be granted leave to replead.
Alternatively, if I were not to find that the entire impugned pleading should be struck out on the grounds set out in [5(b)] of these reasons I would strike out pars 22(b) ‑ (f), 22(g), 25(b) ‑ 25(i), 25(j), 25(k), 26, 30 ‑ 47, 47A and 47B, 48 - 75, 77, 79 - 88 and 103(c) and (d).
I have not had regard to Mary's complaints, made on her behalf by her solicitor in pars 3 - 9 of his affidavit dated 21 April 2021.[3] These paragraphs annex communications exchanged by the parties during conferral in respect of leave has not been obtain from the court to refer to such matters or to put the correspondence before the court. In any event, at the hearing of the applications on 28 April 2021 no application for an adjournment of the hearing was made on behalf of Mary on grounds that she had inadequate notice of the grounds of objection, or to respond to the submissions put on grounds of abuse of process and approbation and reprobation.
[3] Affidavit of Giuseppe Antonio Lacerenza, sworn 21 April 2021.

2.0 History of the proceedings relevant to the application to an extension of time

Pursuant to O 20 r 19(3) of the Rules of the Supreme Court 1971 (WA), an application to strike out a pleading must be brought within 21 days of the service of the impugned pleading to which the application refers.
Given the impugned pleading was only filed by Mary on 29 January 2021 and the court made programming orders on 4 February 2021 to program the applications for strike out for hearing, it cannot be found there was any delay.
However, if it could be said that these applications should have been made much earlier in the proceedings in respect of Mary's minute of proposed re‑amended statement of defence and counterclaim dated 25 January 2018, such that it is necessary for leave to be granted, I am satisfied that the Bank, and Frank and Andrea should be granted leave.
An extension of time is opposed by Mary. The principles that apply to an extension of time are generally that delay in bringing an application should be justified. But, irrespective of whether the delay can be justified, time should be extended if it can be established that the interests of justice require that extension because of, for example, irreparable prejudice to a party or prejudice to the trial process or the efficient utilisation of the resources of the parties and of the court.[4]
[4] Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1 [17] [19].
In this matter, I am satisfied that the delay has been adequately explained. Further, in any event where, as in this case, it is overwhelmingly clear that the matters pleaded by Mary in these proceedings are an abuse of process it is also clear that time to bring the applications to strike out her pleading should be extended.
Additionally, for the reasons given in 5.0 of these reasons there are so many pleading defects in the impugned pleading that it is in the interests of justice to extend time.
As to delay, the Bank's lawyer, Shane Edward Calalesina, sets out in an affidavit, sworn on 7 April 2021, the procedural history of the filing of documents in these proceedings including the filing by Mary of various iterations of a defence and counterclaim since she first filed a defence to these proceedings on 13 November 2013.[5]
[5] Affidavit of Shane Edward Calalesina, sworn 7 April 2021, par 4.
The relevant history of the progress of these proceedings is as follows.
On 20 December 2016, the Bank filed its first application to strike out Mary's further amended defence and counterclaim filed on 16 November 2016.[6]
[6] Commonwealth Bank of Australia v Cheng [2017] WASC 136 [1].
On 24 May 2017, after hearing the Bank's application, Martino J struck out a number of paragraphs of Mary's further amended defence and counterclaim together with her prayer for relief.[7] His Honour also made orders for Mary to file an application to amend her defence and counterclaim together with a minute of the proposed pleading.[8] Mary did not do so until 26 September 2017, following which on 3 November 2017 the Bank filed a document outlining its objections to Mary's minute of proposed re-amended statement of defence and counterclaim.[9]
[7] Commonwealth Bank of Australia v Cheng [2017] WASC 136.
[8] Affidavit of Shane Edward Calalesina, sworn 7 April 2021, par 4(z).
[9] Affidavit of Shane Edward Calalesina, sworn 7 April 2021, par 4(aa) and 4(ab).
On 25 January 2018, Mary filed a further minute of proposed re‑amended statement of defence and counterclaim. On 21 February 2018, Mary was granted leave to amend her defence and counterclaim in terms of the minute, and an order was made that it stand as the re‑amended defence and counterclaim.[10] Shortly thereafter, the trial of the partnership proceedings took place before Chaney J over seven days on and between 9 and 24 April 2018.
[10] Affidavit of Shane Edward Calalesina, sworn 7 April 2021, par 4(ad) and 4(ae).
At about that time, the parties in these proceedings agreed that no action should be taken until Chaney J had determined the partnership proceedings, the subsequent taking of the account by Registrar Whitbread had been completed, and a judge had determined whether that account should be adopted.[11]
[11] ts 13 September 2018, 63 – 64; ts 4 June 2020, 72 - 80.
On 22 May 2020, Tottle J published reasons for decision in which his Honour found that the report of Registrar Whitbread should be adopted in part.[12]
[12] Cheng v Lam [No 4] [2020] WASC 175.
On 4 June 2020, this matter was listed for directions. At the directions hearing, the Bank and Frank and Andrea (who were at that time self‑represented) foreshadowed a strike out application of Mary's pleaded case. Counsel for the Bank informed the court that there should be conferral between Mary and the Bank to ascertain what claims Mary now sought to raise against the Bank (in the further minute of proposed re-amended statement of defence and counterclaim dated 25 January 2018) given that at least some of the issues sought to be pressed by Mary in these proceedings had been the subject of findings in the taking of the account in the partnership proceedings.[13] In response, counsel for Mary sought to delay the matter until the accounts in the partnership proceedings had been referred to an independent expert.[14]
[13] ts 74 - 76.
[14] ts 76 - 77.
The parties then conferred over several months, and this resulted in Mary filing a further minute of proposed substituted defence and counterclaim on 2 November 2020. She subsequently abandoned this pleading as she later filed the impugned pleading on 29 January 2021.
Between 4 June 2020 and 4 February 2021,[15] the parties attended four directions hearings in these proceedings at which the progress of conferral about Mary's pleaded case and the Bank's and Frank and Andrea's applications were raised and discussed in detail.
[15] Programming orders were made on 4 February 2021 to program the Bank's application to strike out the minute dated 29 January 2021 and Frank and Andrea's application for the court to refuse leave to Mary for that minute to stand as her substituted defence and counterclaim.
In light of the agreement between the parties not to progress this matter until after the report of Registrar Whitbread had been considered by Tottle J, and the fact that extensive conferral between the parties occurred over a period of seven months about Mary's pleaded case, I am satisfied that the delay by the Bank, and Frank and Andrea in bringing these applications has been adequately explained.

3.0 Relevant principles of law

3.1 Pleadings and strike out applications

In Vantage Holdings Group Pty Ltd v Donnelly [No 4] I summarised the principles that apply to the requirements of a proper pleading and the grounds upon which a pleading may be struck out as follows:[16]
[16] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60]; approved on appeal in English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55].
(a)the essential functions of a pleading are to define and limit the issues for decision, to provide the basis for determining discovery and the admissibility of evidence for trial, and to ensure a fair trial by putting the other side on notice of the case it must meet;
(b)a statement of claim must not plead allegations at too high a level of generality. A pleading must be sufficiently particular to conform with one of the primary objects of pleadings, to inform the opposing party of the case that it must meet;
(c)a statement of claim must state specifically the relief or remedy claimed;
(d)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action. While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial;
(e)in alleging no reasonable cause of action:
(i)the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather, the question is whether it would be open to the party (on its pleadings) to prove facts at the trial which would constitute a cause of action; and
(ii)'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable;
(f)the mere fact that a case appears weak is not of itself sufficient to strike out the action;
(g)in considering a strike out application, it is now necessary to consider the role of pleadings in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and 4B of the Rules of the Supreme Court 1971 (WA) are often promoted by a clear and precise statement of the issues for decision;
(h)provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment;
(i)pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general; and
(j)irrelevant or unnecessary pleas in a statement of claim will be struck out on the grounds that they will prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues. (footnotes omitted)

3.2 Abuse of process

The general principles that apply to the determination of whether proceedings constitute an abuse of the process of the court were summarised by Vaughan J in Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd:[17]
What amounts to an abuse of the court's process is insusceptible of a formulation comprising closed categories. It extends to all categories of case in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Abuse of process occurs in any circumstance in which the use of the court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. However, the onus of satisfying the court that there is an abuse of process is a heavy one. The power to dismiss proceedings as an abuse of process should be exercised with caution and only in the most exceptional or extreme case. (footnotes omitted)
[17] Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [102].

The principles which are of particular relevance to claims that have been either brought in earlier proceedings or should have been resolved in earlier proceedings were referred to by Vaughan J in Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd as follows:[18]
The doctrine of abuse of process is informed in part by considerations of finality and fairness. The underlying public interest is twofold: there should be finality in litigation and a party should not be twice vexed in the same matter. Thus abuse of process may exist where a person seeks to re-litigate an issue already decided. There is a general public interest in the same issue not being litigated over again. It has been said that it would be a 'scandal to the administration of justice' if, a question having been disposed of by one case, the litigant were permitted to set up the case again by changing the form of proceedings.
For a step in a proceeding to amount to an abuse of process by reason of impermissible re-litigation of a dispute it is not necessary that one of res judicata, issue estoppel or Anshun estoppel be applicable.
The court is not only concerned with the effect of conduct on the parties but with 'the public interest which is in the maintenance of public confidence in the administration of justice'. The court acts to prevent misuse of its procedure which would 'bring the administration of justice into disrepute among right-thinking people'. Accordingly, as noted, the court may stay or dismiss matters as an abuse of process where a party seeks to re-litigate controversies which have already been decided. Similarly, there may be an abuse of process where a party seeks to re‑litigate an issue decided between it and a third party. There may also be an abuse of process where a defendant seeks to re-litigate an issue that was decided adversely to the defendant. The doctrine does not require identity of parties or mutuality. In short, the fact that the parties may not be identical, or the relief different, does not necessarily disentitle a party to relief under the doctrine of abuse of process.
In applying the principles of abuse of process the focus is on matters of substance rather than form.
Factors relevant to determining whether an attempt to re-litigate is an abuse of process were discussed in State Bank of New South Wales Ltd v Stenhouse Ltd. Those factors have been reproduced with apparent approval in a number of intermediate appellate court decisions. The task necessitates an evaluative judgment sensitive to all the facts and circumstances and informed by the public interest in preventing re‑litigation of disputes. The court conducts an 'overall balancing of justice' having regard, among other things, to the extent of the oppression and unfairness to the other party if the issue was re-litigated and the impact of the re-litigation on the principle of finality and public confidence in the administration of justice. (footnotes omitted)
[18] Patrick Jebb as trustee forThe Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [106] - [111] (footnotes omitted).
In respect of whether an abuse of process may arise on the basis that matters sought to be litigated should have been raised in earlier proceedings Vaughan J went on to observe:[19]
[19] Patrick Jebb v Superior Lawns Australia [111] - [114] (footnotes omitted).
Abuse of process may arise beyond the circumstance where a person seeks to re‑litigate an issue already decided. There may be an abuse of the process of the court in seeking to litigate matters which could and should have been litigated in earlier proceedings. That possibility was recognised by Lord Bingham in the House of Lords in Johnson v Gore Wood & Co:
The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied … that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings would be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before … (emphasis added)
That aspect of the doctrine of abuse of process has been accepted by various intermediate appellate courts in Australia including the Court of Appeal in Western Australia. It has also been expressly confirmed by four members of the High Court in Tomlinson v Ramsey Food Processing Pty Ltd:
… it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel … (emphasis added)
It must be unreasonable to stand by and not proceed in tandem with the earlier proceedings.
It is relevant to ask whether there is no reasonable justification, based on legitimate considerations of convenience, cost or the like, for commencing the second proceedings. Was it unreasonable not to raise the matter in the first proceedings? In a particular case it may be sensible to advance claims separately or for one claim to be deferred pending the determination of another. In that respect the doctrine of abuse of process has parallels with Anshun estoppel. There can be no such estoppel unless it appears that the matter relied on in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to have relied on it.

3.3 The doctrine of approbation and reprobation

In Mandurah Enterprises Pty Ltd v Western Australian Planning Commission, McLure JA explained the principle of equitable election of approbation and reprobation and considered some examples of authorities where the principle had been applied:[20]
[20] Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276 [108] ‑ [118], applied in Lee v Australia and New Zealand Banking Group Ltd [2013] QCA 236 [83] (McMurdo J, Fraser JA and Atkinson J agreed).
The doctrine of approbation and reprobation was initially part of Scottish law. Its English equivalent was the doctrine of equitable election between estates: Lissenden v CAV Bosch Ltd [1940] AC 412; Douglas‑Menzies v Umphelby [1908] AC 224; Elder's Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 at 617 - 618. The notion of approbation and reprobation is used interchangeably in the case law with election, waiver and estoppel. As a result, it is difficult to confidently identify from the cases the material elements of any independent doctrine of approbation and reprobation.
There is authority in Australian law for an independent doctrine of approbation and reprobation: Commonwealth v Verwayen (1990) 170 CLR 394, 421 - 422 (Brennan J); Fried v National Australia Bank Ltd [2000] FCA 910. The doctrine is summarised in Halsbury's Laws of Australia, Vol 190 [190-35] as follows:
'A person may not "approbate and reprobate", meaning that a person, having a choice between two inconsistent courses of conduct and having chosen one, is treated as having made an election from which he or she cannot resile once he or she has taken some benefit from the chosen course.'
In Halsbury's Laws of England, Vol 60 [962] the authors state:
'Thus a claimant, having two inconsistent claims, who elects to abandon one and pursue the other may not, in general, afterwards choose to return to the former claim and sue on it; but this rule of election does not apply where the two claims are not inconsistent and the circumstances do not show an intention to abandon one of them.'
Some examples may illustrate. Douglas‑Menzies v Umphelby is an example of equitable election. By two testamentary instruments called respectively a British will and an Australian will, a testator made a complete disposal of his estate. The testator's widow successfully challenged the British will but sought to claim the beneficial dispositions in her favour in the Australian will. The Privy Council held that the two instruments formed one will containing a coherent scheme of intention and that the widow, having elected to defeat the will in part, could not then claim under it and thus took no interest under the Australian will.
In Express Newspapers plc v News (UK) Ltd [1990] 3 All ER 376 the plaintiff instituted proceedings against the defendant for infringement of the plaintiff's copyright in the text of an exclusive interview. The defendant served a defence and counterclaim which was the exact mirror image of the plaintiff's claim, alleging the plaintiff had, subsequent to instituting proceedings, infringed the defendant's copyright in the text of an exclusive interview with another person. The plaintiff obtained summary judgment on its claim on the basis that copyright subsisted in the whole of the plaintiff's article. The defendant then applied for summary judgment on its counterclaim. The plaintiff said it had an arguable defence to the counterclaim (which would have been equally applicable to the plaintiff's claim). The court held that the defendant was entitled to summary judgment, applying the principle that a person may not approbate and reprobate and adopt two inconsistent attitudes towards another person but must elect between those attitudes and, having elected to adopt one stance, it could not thereafter be permitted to go back and adopt an inconsistent stance. Summary judgment being a final judgment, this decision may be supportable on the alternative ground of issue estoppel.
In Verschures Creameries Ltd v Hull and Netherlands Steamship Co Ltd [1921] 2 KB 608 the plaintiffs were precluded from bringing an action against the defendants for negligence and breach of duty as carriers. The plaintiffs had delivered goods to the carriers to be forwarded to a customer in another city. Before the goods had been delivered, the plaintiffs instructed the carriers not to deliver them to the customer but the goods were nevertheless delivered. The plaintiffs thereafter invoiced the goods to the customer and sued him and recovered judgment for the price of goods sold and delivered. The court held that in suing the customer for the contract price, the plaintiffs had adopted the act of the carriers and having sued the customer to judgment could not then elect to treat the delivery as unauthorised and sue the carrier. That case is better classified as an election between inconsistent rights, the plaintiffs having elected to ratify the unauthorised conduct of its carrier.
A Victorian case decided on the doctrine of approbation and reprobation is Bienvenu v Royal Society for Protection of Animals [1967] VR 656. The plaintiff, purporting to be a contributory of the defendant association, commenced proceedings against it. On the basis that the association's by‑laws were valid, the plaintiffs obtained interlocutory orders, including an order for costs which were subsequently paid. Subsequently, the plaintiff issued a writ claiming a declaration that the same by‑laws on which he had earlier relied were invalid as being beyond power. Starke J held that although the association's by‑laws were invalid, the plaintiff was not entitled to succeed because having relied on the validity of, and thereby approbated, the by‑laws in the earlier action and having been paid costs by the association, the plaintiff could not in the current action rely on the invalidity of, and thereby reprobate, the by‑laws. The doctrine of issue estoppel did not apply because the decisions were interlocutory.
…
Most of the above cases involved preventing a person from relying on a state of affairs which had formed the basis for a judgment or order.
…
The authorities support the contention that there is an independent doctrine of approbation and reprobation which falls outside the four categories of election to which I have referred. On any view, the independent doctrine requires that there be a choice between two inconsistent courses of conduct or claims.
The principles of approbation and reprobation have been summarised into three principles in the High Court of Justice in the United Kingdom in a recent matter[21] which are consistent with the observations of McLure JA in Mandurah Enterprises Pty Ltd v Western Australian Planning Commission. When these principles are considered together with the observations of McLure JA they can be said to be as follows:
(1)The appprobating party must have elected, that is made his or her choice clearly and unequivocal, by an appprobating act or conduct. This has the practical advantage of enabling a proper comparison to be made with the latter allegedly reprobating act, to see if the latter is truly inconsistent with the former.
(2)The party in question must have gained or taken some benefit from the approbation.[22]
(3)The reprobating act or conduct must be clearly inconsistent with the earlier approbating act or conduct.
[21] Skymist Holdings Limited v Grandlane Developments Limited [2018] EWHC 3504 (TCC) [61] (Waksman J).
[22] In the United Kingdom there is debate as to whether the approbating party must have gained a benefit or whether to do so is usual but not necessary; see Skymist Holdings Limited v Grandlane Developments Limited [2018] EWHC 3504 (TCC) [61] (Waksman J) and MPB v LGK [2020] EWHC 90 [58] (Veronique Buehrlen QC).
A judgment can be said to constitute a benefit to the successful party who, having accepted that benefit, cannot then challenge its validity.[23]

4.0 The history of these proceedings and the related proceedings in CIV 1706 of 2015 (the partnership proceedings)

4.1 The relationship between the defendants and the partnership to develop properties

[23] Evans v Bartlam [1937] AC 473, 483 (Lord Russell of Killowen).

Mary is an accountant, and the former wife of Chan, and Frank and Andrea are husband and wife. Frank is the brother of Chan.[24] Each were involved in investments in property developments over a period of 12 years between 2001 and 2012.
[24] Cheng v Lam [No 2] [2018] WASC 199 [3] and [70].
In the partnership proceedings, Mary as plaintiff, claimed against Frank as first defendant and Andrea as second defendant that projects were undertaken pursuant to an oral partnership agreement made in or about September 2001. Mary sought a declaration as to the existence of a partnership on the terms she specified, and for an order that the defendants account to her in relation to the partnership projects.
Frank and Andrea joined Mary, Chan and two others as defendants by counterclaim. However, Chan and the two other defendants by counterclaim filed notices of intention to abide the decision of the court and did not thereafter participate in the partnership proceedings, other than as witnesses called by Frank and Andrea.[25] Consequently, the contest in the partnership proceedings was as between Mary as plaintiff and Frank and Andrea as defendants and plaintiffs by counterclaim.
[25] Cheng v Lam [No 2] [2018] WASC 199 [11].
In these proceedings, the Bank is seeking possession of two of the properties offered as security for various loan accounts that the parties used in various projects undertaken by the partnership.
The Bank's case in these proceedings is about two outstanding loan debts, namely loan account number 511 031 108 (the first loan account) and loan account number 422 911 904 (second loan account) which were used by the defendants to develop a number of properties, which when developed were sold, and then new properties were purchased and developed. There are two remaining properties which have not been sold and are mortgaged by the Bank to secure those debts. The Bank seeks possession of these two properties. The first property is registered solely in the name of Mary (78C Edgecumbe Street, Como) and the second is registered in the names of each of the defendants in equal shares of 25% (167 Lockhart Street, Como).
The partnership proceedings were heard in April 2018 before Chaney J. His Honour published his reasons on 28 June 2018. Justice Chaney found that there were eight property investments in which Mary and Chan together with Frank and Andrea joined in the borrowings necessary to undertake the purchases of the properties on the basis that would entitle them to the agreed share of the project, including their proportionate share of the profit. Justice Chaney found that the discussions and understandings between the parties about the developments did not amount to a partnership between them on the terms pleaded by Mary. Rather, from time to time, as investment opportunities were identified, the parties agreed to jointly undertake the purchase and development of the property. The particular parties to each venture, and the interests each participant held, were determined and agreed in relation to each specific venture. The terms of those development agreements were those pleaded by Frank and Andrea, save as to the method of division of profit.[26]
[26] Cheng v Lam [No 2] [2018] WASC 199 [109], [112] and [114].
The eight properties that Chaney J found were developed under the development agreements were: 17 Darch Street, Yokine; 73 Main Street, Osborne Park; 111 Shakespeare Avenue, Yokine; 78 Edgecumbe Street, Como; 167 and 167A Lockhart Street, Como; 70 Edgecumbe Street, Como; 250 Ewen Street, Woodlands; and 82 and 84 Matlock Street, Mount Hawthorn. The development agreements related to the purchase, development and sale of these properties.
Importantly, in the partnership proceedings Chaney J found and ordered an account, and, if necessary, the realisation and distribution of partnership assets, whereby the proceeds of the development and sale of the properties were to be applied first in payment of any mortgage over the property.[27]

4.2 Mary's pleaded case in these proceedings in the impugned pleading

[27] Cheng v Lam [No 2] [2018] WASC 199 [132] and [133](1) and (3).

In these proceedings, the Bank pleads in its amended statement of claim dated 8 November 2016, read together with its substituted reply and defence to the re-amended defence and counterclaim dated 27 June 2018, that it held security for two loans at various times over the following properties, some of which were subdivided as they were developed: 17 Darch Street, Yokine (subdivided into 17 and 17A); 8 Spencer Avenue, Yokine; 111 Shakespeare Avenue, Yokine (subdivided into 1/111, 2/111 and 3/111); 78 Edgecumbe Street, Como (subdivided into 78A, 78B, 78C and 78D); and 172A McDonald Street Joondanna.
Mary's case against the Bank, Frank and Andrea is difficult to discern from the prolix, and in many parts almost incomprehensible, pleas in her further minute of proposed substituted defence and counterclaim dated 29 January 2021, the impugned pleading.
Part of the difficulty of understanding Mary's claims is that many of the paragraphs are vague, the pleas are repetitive, and transactions are identified but without a proper plea as to how those transactions are relevant to a particular claim. However, what appears to be Mary's defence and counterclaim in this pleading is as follows.

In the impugned pleading Mary admits that loan agreements were secured over 78 Edgecumbe Street, Como and 111 Shakespeare Avenue, Yokine (first loan agreement) and 17 Darch Street, Yokine.[28] She pleads a second loan agreement was secured over 17 Darch Street, Yokine; 8A Spencer Avenue, Yokine; 78 Edgecumbe Street, Como; 172A McDonald Street, Joondanna; and 111 Shakespeare Avenue, Yokine (the second loan agreement).[29] She also pleads that security was substituted over 2/111 Shakespeare Avenue, Yokine that was subject to a sale contract for 167 Lockhart Street, Como.[30]
[28] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 8(b) and 27.
[29] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 30(a), 30(b), 30(c), 30(d) and 30(e).
[30] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 18(a).
In these proceedings, Mary appears to advance a claim against the Bank on the basis that the proceeds of sales of a development should not have been used to fund other developments. Mary claims that she has no liability to the Bank for some of the borrowings necessary to fund the property developments of the partnership, and makes a counterclaim against the Bank on four grounds:
(1)Breach of contract, which raises the following:
(a)a veracity of signature claim in which she claims that the Bank was on notice as to the veracity of Mary's signature on discharge or refinance authority documents, being a breach of contract claim relating to discharge and refinance authority forms for 17 Darch Street, Yokine; 78A, 78B, and 78D Edgecumbe Street, Como; 172A McDonald Street, Joondanna; and 2/111 and 3/111 Shakespeare Avenue, Yokine;[31]
(b)the Bank discharged mortgages without informing or obtaining the consent of Mary;[32]
(c)Mary did not agree to vary the first loan agreement;[33]
(d)the Bank permitted Frank and Andrea to make redraws without Mary's written authorization.[34]
In respect of these alleged breaches of contract Mary pleads the Bank acted contrary to cls 3.7, 10.6, HL9.3 and HL9.4 of the Bank's usual terms and conditions for consumer mortgage lending and cls A16, A23, A24.1 and A.28 of the express terms of memorandum of common provisions. Mary, however, does not particularise how each of these provisions were breached.
(2)Unjust enrichment on grounds that the Bank facilitated Frank and Andrea to unjustly enrich themselves by releasing title securities for the subdivided properties at 17 Darch Street, 8 Spencer Avenue, 78A, 78B and 78D Edgecumbe Street, 172A McDonald Street and 111A, 111B and 111C Shakespeare Avenue, and allowed the properties to be sold by Frank and Andrea without retaining the proceeds of the sale towards the first loan agreement, and by increasing the burden of the parties' loans onto the property owned by Mary at 78C Edgecumbe Street, and the property partly owned by her at 167 Lockhart Street.[35]
(3)The Bank and its employees engaged in unconscionable conduct in relation to its financial dealings with Mary contrary to s 12CB of the Australian Securities and Investments Commission Act 2001(Cth) and/or in breach of s 20 and s 21 of the Competition and Consumer Act 2010 (Cth) and Schedule 2 of the Australian Consumer Law.[36]
(4)The Bank having obtained default judgment against Frank, Andrea and Chan on 26 August 2014 and the whole amount claimed, the Bank has not mitigated its loss and has failed to take any enforcement proceedings against Frank, Andrea and Chan to recover the judgment unreasonably and unnecessarily increasing the financial burden upon Mary in relation to the monies, if any, she may owe to the Bank (which is denied). Further, in not enforcing payment of monies owing by co-borrowers and co‑mortgagors against whom it has judgment and increasing the amount payable unnecessarily and unreasonably, the Bank engaged in unconscionable conduct contrary to s 20 and s 21 of the Competition and Consumer Act 2010 (Cth) and Schedule 2 of the Australian Consumer Law.[37]
[31] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 47, 47A, 47B, 47(2) to 48.
[32] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 22(b) to (f), 25(b), (c), (d), (f), (g), (h), (i).
[33] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 32, 33, and 34 (particulars 1 and 2).
[34] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 34 (particular 3), 35 and 46.
[35] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 53 - 62, 64, 65, 66, 78 - 85, 92 and 103(a); It is noted however, that Mary pleads no form of accessorial liability.
[36] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 70 - 72 and 86.
[37] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 74 - 75 and 87 and 88.
Mary seeks the following relief against the Bank:
(a)a set off against the claim by the Bank against Mary or payment of a sum of $2,671,337.36, being the balance of net sale proceeds it should have received but were released to Frank and Andrea, pleaded as 17 Darch Street; 78A, 78B and 78D Edgecumbe Street; and 2/111 and 3/111 Shakespeare Avenue;[38]
(b)damages for breach of contract, being the cls 3.7, 10.6, HL9.3 and HL9.4 of the Bank's usual terms and conditions for consumer mortgage lending and cls A16, A24.1 and A.28 of the express terms of memorandum of common provisions.[39] Part of the claim in contract appears to be that, in breach of the terms of the first and second loan agreements, the Bank allowed Frank and Andrea to make redraws (individually) without authorisation to do so, and in any event exceeded the redraw sums or accumulated special repayment amounts in the amount of $5,452,682.25 as pleaded in pars 47 to 52 thereby increasing Mary's liability in relation to the loans and mortgages (which is denied) rather than extinguishing her liability.[40]
(c)a declaration that Mary is entitled to discharges of the mortgages on the properties owned or partly owned by Mary at 78C Edgecumbe Street (100%) and 167 Lockhart Street (25%);[41]
(d)an order setting aside the mortgages on each of the properties in respect of which a declaration sought.[42]
[38] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, pars 103(a) and 92.
[39] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 103(b); par 101(b) refers paragraphs 22(b) to (f), 25(b), (c), (d), (f), (g), (h), (i), 32, 33, 46, 47, 50, 53, 89, 90, 91, 92, 93, and 100.
[40] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 77.
[41] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 103(c).
[42] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 103(d).
The Bank requested that Mary specify which paragraphs of the minute give rise to the relief sought in each paragraph of the prayer for relief. Mary's response was 'The prayer for relief follows from Mary's pleaded case.'[43] As the Bank points out in its written submissions dated 7 April 2021, Mary's response is unhelpful.
[43] First named First Defendant's Answers to Request for Further and Better Particulars dated 25 March 2021 par A18.
In her counterclaim against Frank and Andrea, Mary raises an allegation in a plea against the Bank that Frank and Andrea wrongfully converted an amount of $828,444.61 causing loss and damage to Mary in respect of the net proceeds of sale of 8 Spencer Avenue but does not raise a specific plea against Frank and Andrea.[44]
[44] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 80(d).
Mary specifically pleads against Frank and Andrea:
(1)In breach of their obligations under s 40(1) of the Partnership Act 1895 (WA) and in breach of their fiduciary duty, they derived benefits without the consent of Mary from transactions concerning the partnership and from the use of partnership property they received from the net sale proceeds of partnership assets of property given as security the sum of $5,880,292.14 on the first loan agreement and the second loan agreement, instead of applying the receipt of such monies to repayment of the amounts owing to the Bank or to repayment of the judgment sum, interest and cost to the Bank, or in the alternative, the Bank at settlement received $2,671,337.36.[45]
(2)In breach of their obligations under s 40(1) of the Partnership Act 1895 (WA) and in breach of their fiduciary duty to Mary and Chan:
(a)Frank and Andrea, after the Bank's letter dated 16 April 2012 (default notices in respect to the first and second loan account) sold and settled various properties, namely 78B Edgecumbe Street; 250B and 250D Ewen Street; 3/82 and 84, 4/82 and 84, 6/82 and 84 Matlock Street; and 70A Edgecumbe Street (for a total of $5,968,798.29) funded in part by the loan agreements; and
(b)Frank and Andrea refused and have not applied the net proceeds in payment of the loan agreements and/or the judgment sum, interest and costs.[46]
(3)In the alternative, Frank and Andrea received profits or withheld partnership property or money from Mary totalling $5,805,852.96 together with an amount of $600,487.40 and they wrongfully converted partnership property or money to their own use and benefit and have engaged in conduct in the course of trade or business which is unconscionable conduct contrary to s 11A of the Fair Trading Act 1987 (WA) and s 18 and s 19 of the Fair Trading Act 2010 (WA).[47]
[45] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 92.
[46] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 93.
[47] Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 100.
Mary seeks relief against Frank and Andrea by claiming:
(a)an entitlement to a portion of the sum of $2,886,462.22 as pleaded in par 22(b) ‑ (f), 25(b) - (d) and (f) - (i), being the proceeds of sale of 17 Darch Street, 78A Edgecumbe Street, 78B Edgecumbe Street, 78D Edgecumbe Street, 1/111 Shakespeare Avenue, 2/111 Shakespeare Avenue and 3/111 Shakespeare Avenue;
(b)the sum of $956,402.82 as pleaded in par 56 (in respect of which there is no sum referred to in par 56 but simply a plea of failing to consult Mary or give notice to Mary in respect to variations of the first loan agreement and the mortgages);
(c)damages by reason of breaches by Frank and Andrea referred to in pars 22 and 25.
When the applications presently before the court were heard, counsel for Mary informed the court that Mary's claim in damages against the Bank, and Frank and Andrea, was $8.8 million (being unauthorised redraws of the Bank loans).[48] However, as Mary's submissions progressed, the amount claimed in damages appeared not to be $8.8 million but $6,406,336.36, being amounts pleaded in pars 58, 59, 60 (tables 2 and 3), 92, 93 and 100 (in particular the amounts of $5,805,852.96 and $600,487.40 pleaded in par 100, being a total of $6,406,700.36).[49]
[48] ts 179.
[49] ts 192.
In pars 43, 43(1) ‑ (7), Mary pleads that between 16 January 2009 and 31 December 2011 the Bank permitted Frank and Andrea to make redraws contrary to the terms of the loan agreements without written requests and without authorisation from Mary in breach of the Banks usual terms and conditions for consumer lending and loan portability (cls 3.7, 10.6, HL9.3 and HL9.4). Mary particularises each alleged unauthorised redraw, which amount to a total amount of $4,153,869.[50] Mary claims these withdrawals are unauthorised redraws from the first loan agreement. In par 77 Mary makes a similar plea but claims the redraws as an amount of $5,452,682.25.
[50] pars 43(1) - (7).
In par 44 Mary pleads that between 1 July 2010 and 4 April 2011, the Bank permitted Frank and Andrea to make redraws contrary to the terms of the loan agreements and without authorisation from Mary in breach of cls 3.7, 10.6, HL9.3 and HL9.4 of the Banks usual terms and conditions for consumer mortgage lending and portability. Mary provides, in par 44(2), particulars of these redraws as transactions that total an amount of $281,000. In par 44(4) she claims that the Bank, without her request or authorisation, permitted redraws by Frank and or alternatively Andrea in the sums of $5,452,682.25 (first loan) and $3,427,292.81 (second loan), which amounts total $8,879,975.06. These amounts, however, are not supported by her particulars to her pleas in pars 43 and 44, as the total amounts particularised in both these paragraphs only amount to $4,434,869.00.
Consequently, it is not clear from Mary's pleaded case what is the total quantum of her claim of damage and loss against the Bank, and Frank and Andrea.
Further, some of the redraws pleaded by Mary in par 43(1) to (7) were the subject of amounts agreed as redraws by Mary in the taking of account before Registrar Whitbread.[51]

4.3 The partnership proceedings

[51] Cheng v Lam [No 3] [2020] WASC 45, 707, 710 and 720.

In the partnership proceedings, Frank and Andrea sought an order that the following preliminary issues be determined at trial:
(a)first, what were the terms of the agreements between the parties with respect to the purchase and development of the nine properties referred to in their pleadings.[52] The ninth property referred to was known as the Spencer Avenue property. During the course of the trial, a claim for an account by Frank and Andrea over that property was abandoned on the basis that they accepted that, upon the sale of the second of the two subdivided blocks resulting from the development of that property, all parties received their proper entitlements);[53]
(b)secondly, whether any of the agreements in respect of any of the developments constituted a partnership;[54] and
(c)thirdly, the entitlement of each of the parties to profits arising from the developments and the basis for the calculation of that proportionate entitlement.[55]
[52] Cheng v Lam [No 2] [2018] WASC 199 [12].
[53] Cheng v Lam [No 2] [2018] WASC 199 [9].
[54] Cheng v Lam [No 2] [2018] WASC 199 [12].
[55] Cheng v Lam [No 2] [2018] WASC 199 [12].
Mary opposed Frank and Andrea's application to split the trial. Mary's opposition was based on her assumption that, given both parties sought a full and general account of all assets; money; debtors; liabilities; and credits, the account would be taken and settled by the judge at trial. Subsequently, Mary, Frank and Andrea agreed that the preparation and settling of the account was a matter to be undertaken subsequent to the trial, in the light of the findings made by Chaney J at the trial.[56]
[56] Cheng v Lam [No 2] [2018] WASC 199 [12].
At the commencement of the trial the parties each provided a list of issues. Frank and Andrea identified two issues. The first was as to the terms of the agreement between the parties in respect of the various developments and the second was as to the meaning of capital contribution.[57]
[57] Cheng v Lam [No 2] [2018] WASC 199 [14].
Mary provided a list of nine issues, seven of which were different to those identified by Frank and Andrea. They were as follows:[58]
[58] Cheng v Lam [No 2] [2018] WASC 199 [15] - [16] (my emphasis and footnotes).
(3)How each property purchase was funded by the parties including:
(a)Individual cash contributions by the parties;
(b)Bank funding;
(c)Use of sale proceeds made by the parties from the sale of developed land;
(d)Repayment of any loans taken out to fund the purchase and development of the properties;
(e)The repayment of interest on any loans taken out to fund the purchase and development of the property;
(f)Whether the parties made a contribution towards the purchase of the properties as a result of the matters referred to in paragraphs 3(a) to (e) above.
(4)How each property development was funded by the parties including:
(a)Individual cash contributions by each of the parties;
(b)Bank funding;
(c)Use of sale proceeds made by the parties from the sale of developed lots;
(d)Repayment of any loans taken out to fund the purchase and development of the properties;
(e)The repayment of interest on any loans taken out to fund the purchase and development of property;
(f)Whether the parties made a contribution towards the purchase of the properties as a result of the matters referred to in paragraphs 4(a) to (e) above
(5)Whether in breach of the Partnership Agreement the First and Second Defendant drew monies from four Commonwealth Bank accounts numbers 702643203, 10747764, 422911904[59] and 511031108[60] and paid them into the Commonwealth Streamline saver personal account 100547872 in the names of the First and Second Defendants and if they did, the amount they drew.
(6)The destination and application of the settlement proceeds in respect to all the properties purchased and subsequently developed.
(7)The application of the net proceeds of sale paid to the parties after the development of the properties when those funds were paid and to who?
(8)Whether the parties received the transfer of a property or properties in specie from the net proceeds of the development of the eight properties and if so, when and in what proportions?
(9)Whether the First and Second Defendants received monies which were the property of the Plaintiff because of the sale and the settlement of sale of 8A Spencer Avenue and 17 Darch Street, Yokine and if so, the amounts.
[59] In these proceedings this loan account number is particularised as the first loan agreement; Amended Statement of Claim dated 8 November 2016, par 8(c); admitted by Mary; Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 7(g).
[60] In these proceedings this loan account number is particularised as the second loan agreement; Amended Statement of Claim dated 8 November 2016 par 16; emitted by Mary; Further Minute of Proposed Substituted Defence and Counterclaim of First Named First Defendant 29 January 2021, par 15.
His Honour found that some of the issues Mary raised were relevant to the determination of the nature and terms of the agreement under which the property developments proceeded. But, importantly, Chaney J found that for the most part, the matters raised by Mary were issues to be resolved in the context of the accounting process that is, in the taking of an account of the partnership by a registrar.[61]
[61] Cheng v Lam [No 2] [2018] WASC 199 [17].
Justice Chaney found that shortly prior to the purchase of the Darch Street property it was likely that Chan and Frank reached a general understanding that they might undertake a series of property transactions. Chan and Frank discussed the developments with their spouses from time to time, and at least in Chan and Mary's case, they agreed between themselves to participate in particular investments.

His Honour did not, however, find that those discussions and understandings amounted to a partnership agreement on the terms pleaded by Mary. His Honour found instead, from time to time as investment opportunities were identified, the parties reached agreements to jointly undertake the purchase and development of the identified property and that the interest to be held by the participants was to be determined in the context of each separate venture.[62] His Honour also found that different bank accounts and loans were used to fund investments, and that there appeared to have been a flexible intermingling of the proceeds of sales of one development in accounts used to fund other developments.
[62] Cheng v Lam [No 2] [2018] WASC 199 [109].
Of importance to this application, Chaney J found that:
(1)Mary and Chan joined in the borrowing necessary to undertake the purchases on the basis that that would entitle them to the agreed share of the project, including their proportionate share of the profit. His Honour rejected the evidence of the defendants to the effect that the profit was to be shared on the basis of contribution where contribution means only funds advanced towards a project other than by way of joint borrowings.[63]
(2)As between Frank and Chan or Mary, it is clear that Frank assumed responsibility for payment of some expenses such as interest on borrowings and outgoings on the properties and appears to have met a far greater proportion of those expenses than did Chan or Mary. Further, his Honour found, it may well be that Frank made those payments using sums from accounts containing proceeds of the sale of properties to which Mary and Chan had some entitlement - for example from the sale of units from the Shakespeare Avenue property, and 17 Darch Street.[64]
(3)In cross‑examination, Mary asserted that capital contributions were contributed equally through borrowing but accepted that if one party were to contribute a lesser amount of capital than the others, then that party would receive a lesser share of the profit.[65] She also said when cross‑examined that 'We said that we will borrow equally and will contribute equally'.[66] By this evidence her references to 'capital' and 'contribution' should be construed as a reference to joint borrowings.[67]
(4)The terms upon which each of the eight property investments proceeded were those pleaded by the defendants save as to the method of division of profit. That is, any proceeds realised from the sale of the relevant property was to be applied first in payment of any borrowings used to purchase or develop the property; second, in payment of all costs and expenses incurred in the purchase and development of the property; and third, in repayment of any amounts paid by any of the participants towards the maintenance or development of the properties. Any balance then remaining was to be divided between the participants to the project in proportion to each of their interests registered against the title to the project property at the time of its purchase.[68] In particular, his Honour found:
(a)in [133] that Frank and Andrea should account to Mary and Chan in relation to those parties' respective entitlements under partnership agreements relating to the purchase, development and sale of each of the eight properties;
(b)in [134(1)] that the accounts are to be prepared on the basis that each agreement giving rise to the interests of the parties to that agreement provided that the proceeds of the relevant development and sale of the property are to be applied first in payment of any mortgage over the property,[69] then in payment of all costs and expenses incurred in relation to the acquisition, development or sale of the property, and then in repayment of any payments made by a party to the agreement in discharge of such costs and expenses other than by use of the parties' joint funds or joint borrowings, with the balance to be divided in accordance with the interest of the parties as reflected on the title to the relevant property at the time of its purchase by the parties.
[63] Cheng v Lam [No 2] [2018] WASC 199 [111] - [112].
[64] Cheng v Lam [No 2] [2018] WASC 199 [113].
[65] Cheng v Lam [No 2] [2018] WASC 199 [72].
[66] Cheng v Lam [No 2] [2018] WASC 199 [74]
[67] Cheng v Lam [No 2] [2018] WASC 199 [75].
[68] Cheng v Lam [No 2] [2018] WASC 199 [114] and [134(1)].
[69] My emphasis.
On the same day Chaney J published his reasons for the primary judgment, by order he declared and ordered:
1.A declaration that the partnerships in relation to the projects referred to in paragraph 2 is dissolved from the date of commencement of this action.
2.An account be taken between the first and second defendants the plaintiff and the second defendant by counterclaim in relation to those parties' respective entitlements under partnership agreements relating to the purchase, development and sale of each of the following properties:
(a)17 Darch Street, Yokine;
(b)73 Main Street, Osborne Park;
(c)111 Shakespeare Avenue, Yokine;
(d)78 Edgecum[b]e Street, Como;
(e)167 and 167A Lockhart Street, Como;
(f)70 Edgecumbe Street, Como;
(g)250 Ewen Street, Woodlands; and
(h)82 and 84 Matlock Street, Mount Hawthorn.
3.Such account to be taken before a registrar of this Honourable Court.
4.The account is to be based on the following findings:
(a)The accounts are to be prepared on the basis that each agreement giving rise to the interests of the parties to that agreement provided that the proceeds of the relevant development and sale of the property are to be applied first in payment of any mortgage or borrowings over the property, then in payment of all costs and expenses incurred in relation to the acquisition, development or sale of the property, and then repayment of any payments made a party to the agreement in discharge of such costs and expenses other than by use of the parties joint funds or borrowings with the balance to be divided in accordance with the interest of the parties as reflected on the title to the relevant property at the time of its purchase by the parties.
(b)Entitlements and liabilities of either the Plaintiff or the Second Defendant by Counterclaim, whether separate or [joint], are to be treated in all cases as joint entitlements.
(c)The interest of parties other than the Plaintiff, First Defendant, Second Defendant, and Second Defendant by Counterclaim in any of the projects referred to are to be taken to have been settled upon completion of those projects so that there is no further liability to account in relation to those interests.
(d)For the purpose of the account, costs of development are to be brought to account on the basis of the lump sum building contract prices for the development applicable in each case. Any balance due in relation to a building contract which remains [unpaid] is to be taken as an expense of the partnership and be taken as payable from the net proceeds of sale of the properties concerned.
(e)Proceeds paid to the First and Second Defendants in the sum of $406,998 from the sale of 8A Spencer Avenue are not to be treated as a contribution by the Plaintiff and Second Defendant by Counterclaim to any of the other partnership projects referred to above. Proceeds paid to the First and Second Defendants from the sale of 8A Spencer Avenue are not to be treated as a contribution by the Plaintiff and Second Defendant by Counterclaim to any of the other partnership projects referred to above.
(f)Four accounting, there should be no distinction drawn between the developed properties which were sold, and those that are yet unsold. The value of the unsold properties are to be treated as a receipt of value of those properties in accordance with the interest of the parties as reflected on the title to the relevant property at the time of its purchase by the parties.
5.By 17 August 2018 the First and Second Defendants are to file and serve upon the Plaintiff and the Second Defendant by Counterclaim an account in relation to each partnership in accordance with the Orders made in paragraphs 2 and 4.
6.Within 28 days of service on the Plaintiff and the Second Defendant by Counterclaim of the accounts in relation to each partnership the Plaintiff and the Second Defendant are to apply to a Registrar for directions as to the way any dispute as to any item of the accounts is to be resolved.
7.Any party to the account found liable to the other party to the account do pay to that other party the amount due within 28 days of the Order being made that such party is liable to another party to make such payment.
8.Each party is to bear its own costs of the proceedings to the date of these orders.
9.The question of costs of the accounts is reserved to the Registrar dealing with the account.
Justice Chaney made specific findings of fact about the development of 17 Darch Street, Yokine; 111 Shakespeare Avenue, Yokine; 78 Edgecumbe Street, Como; 250 Ewen Street, Woodlands; 167 Lockhart Street, Como; and 82 and 84 Matlock Street, Mount Hawthorn, which unless he otherwise indicated he had extracted from the parties' Statement of Agreed Facts.
His Honour's factual findings in respect of 73 Main Street, Osborne Park, and 70 Edgecumbe Street, Como are not considered in these reasons because no transactions about these two properties are raised in these proceedings.
In summary, the relevant parts of his Honour's findings as to the facts of each of the six properties developed by the partnership and the facts found which are now sought to be challenged by Mary in these proceedings by her pleaded case are:
17 Darch Street, Yokine
(1)Justice Chaney found:
(a)This was the first project undertaken jointly between the parties. A loan from the Bank, being loan account 677 848 505, was used to purchase the property in the names of Mary and Frank, as tenants-in-common in equal shares. The loan was in the names of Mary, Chan, Frank and Andrea and was for a sum of $250,000. The property was subdivided creating two lots, 17 and 17A Darch Street, Yokine. Number 17A was sold and the proceeds deposited in loan account 677 848 505. Number 17 was also sold and the net proceeds of sale, being $877,764.14, were deposited into account a Commonwealth Bank of Australia bank account 10054782 in the names of Frank and Andrea.[70]
[70] Cheng v Lam [No 2] [2018] WASC 199 [19] - [20].
(b)There were payments out of loan account 677 848 505 in the amount of $231,000, and payments in from the sale of number 17A of $138,946.[71]
[71] Cheng v Lam [No 2] [2018] WASC 199 [20] and [47(1)].
(2)In these proceedings in par 22(b) of the impugned pleading, Mary pleads that the Bank partially discharged the mortgage on 17 Darch Street and received the amount of $877,814.14 at settlement with respect to the payment of the first loan agreement and contrary to the terms of the mortgage and without informing or obtaining the consent of Mary, and in breach of the consumer lending provisions and memorandum of common provisions. This plea is inconsistent with and challenges the findings made by Chaney J in [19] - [20], [47(1)] (which findings of fact were extracted from the parties Statement of Agreed Facts), [103], [113][72], [133] and [134(1)] in which his Honour made it clear that all relevant transactions are to be considered in the taking of an account for this property and the other properties.
[72] See [64] of these reasons.
(3)Mary also pleads in par 47A and 47B as part of her veracity of signature case that discharge or refinance authorities for 17 Darch Street, Yokine and 78A, 78B and 78D Edgecumbe Street had not been signed by her. This issue was raised in the trial before Chaney J on 17 April 2019 by counsel for Mary, and abandoned on the basis that Mary was not was seeking relief against Frank or Andrea as a result of any forgery, and that the account was to be made on the basis that (borrowings and proceeds of sale were traceable).[73]
[73] Affidavit of Francis Hung Lam sworn 18 February 2021; Attachment B, CIV 1706 of 2015; ts 348 - 350.
111 Shakespeare Avenue
(4)Justice Chaney found:
(a)This was the third project undertaken jointly by the parties. The property was purchased in the names of Mary and Chan as joint tenants as to one half, and Frank and Andrea as joint tenants as to one half, with each couple having an equal share in the property as tenants‑in‑common. A loan from the Bank, being loan account 422 911 904 (particularised as the second loan agreement in these proceedings), was obtained to purchase the Shakespeare Avenue property. The loan was in the names of Mary, Chan, Frank and Andrea. The property was subdivided into three lots, each of which was developed and subsequently sold. The net sale proceeds of number 111A were deposited into loan account 422 911 904, and part of the sale proceeds of number 111B and number 111C were deposited into loan account 422 911 904.[74]
[74] Cheng v Lam [No 2] [2018] WASC 199 [26] - [27] and [47(3)].
(5)In these proceedings in pars 25(b), (f) and (h) of the impugned pleading Mary pleads that the Bank received the net purchase price of each of the subdivided properties in breach of the terms of the second loan agreement and without informing or obtaining the consent of Mary. This plea is inconsistent with and challenges the findings made by Chaney J in [24] - [27], [47(3)] (which findings of fact were extracted from the parties Statement of Agreed Facts) [113], [103] - [104][75] [133] and [134(1)]. His Honour made it clear that all relevant transactions are to be considered in the taking of an account for this property and the other properties.
[75] See [64(2)] of these reasons.
78 Edgecumbe Street, Como
(6)Justice Chaney found:
(a)This was the fourth project undertaken jointly by the parties. It was purchased in the names of Mary, Frank and Andrea as tenants-in-common in equal shares. A loan from the Bank, in the names of Mary, Frank and Andrea, was obtained to purchase the property. The property was subsequently subdivided into four units.
(b)Number 78A was registered in the name of Andrea, number 78B was registered in the name of Frank, number 78C was registered in the name of Mary (and remains unsold), and number 78D was registered in the names of Mary, Frank and Andrea as tenants‑in‑common in equal shares.
(c)Number 78A was sold and part of the proceeds were deposited into loan account 422 911 904. Number 78B and number 78D were also sold and the net proceeds of sale were deposited into other accounts including some deposits into other bank accounts.[76] Of these deposits to other bank accounts some were made to accounts held by Frank and Andrea, one was made to a loan account in the names of Mary, Andrea and Frank, and one deposit was made to an account in the names of Mary and Chan.
[76] Cheng v Lam [No 2] [2018] WASC 199 [28] - [30] and [47(3), (8) and (9)].
(7)In these proceedings in pars 25(d), (g), (i) of the impugned pleading Mary pleads the Bank received the net purchase price of each of the subdivided properties in breach of the terms of the second loan agreement and without informing or obtaining the consent of Mary. This plea is inconsistent with and challenges the findings made by Chaney J in [28] - [30], [47(3), (4), (8) and (9)] (which findings of fact were extracted from the parties' Statement of Agreed Facts), [103] - [104],[77] [113], [133] and [134(1)]. His Honour made it clear that all relevant transactions are to be considered in the taking of an account for this property and the other properties.
[77] See [64(2)] of these reasons.
167 Lockhart Street, Como
(8)Justice Chaney found:
(a)The Lockhart Street property was purchased in the names of Mary and Chan as joint tenants, and Frank and Andrea as joint tenants, with each couple having an equal share in the property as tenants‑in‑common. The purchase of this property was made from two accounts, one of which was loan account 422 911 904 and the other was also a loan with the Bank and that was in the names of Mary, Andrea and Frank. The property was subdivided into two lots, number 167 and number 167A. Both subdivided properties were registered in the names of Mary and Chan as joint tenants, and Frank and Andrea as joint tenants, with each couple having an equal share in the property as tenants-in-common. The two properties remain unsold.[78]
[78] Cheng v Lam [No 2] [2018] WASC 199 [36] - [38] and [47(3) and (4)].
(b)Importantly, his Honour found that the value of unsold properties should be treated as, in effect, a receipt of value of those properties in accordance with the title ownership. His Honour said that how such interest might ultimately be adjusted, and whether properties need to be sold for that purpose, is a matter to be determined by the parties once the account is settled.[79]
[79] Cheng v Lam [No 2] [2018] WASC 199 [131].
(9)In these proceedings in par 18 of the impugned pleading Mary agrees that the second loan agreement was varied to substitute security over 2/111 Shakespeare Avenue, for 167 Lockhart Street. Mary's claims insofar as it applies to 167 Lockhart Street appears to be a claim by her in pars 55, 70(h) and 101 that by reason of breach of contract by the Bank she has suffered a loss by increasing the burden of the parties' loans on 167 Lockhart Street over which she has 25% ownership. This plea is inconsistent with the findings made by Chaney J in [36] - [38], [47(3) and (4)] (which findings of fact were extracted from the parties' Statement of Agreed Facts), and his Honour's findings in [131], [133] and [134(1)] which make it clear that all relevant transactions are to be considered in the taking of an account for this property and the other properties.
250 Ewen Street
(10)Justice Chaney found:
(a)The Ewen Street property was purchased in the names of Mary, Andrea and David (a brother of Chan and Frank) as tenants-in-common with 50% to Andrea, 25% to Mary and 25% to David. The parties agree that two loan were obtained from the ANZ in the name of Frank (for one loan) and Frank and his mother (for the other loan). Mary asserts that funds to purchase the property were sourced from a third loan from the Bank in the names of Frank, Mary and Andrea. Justice Chaney rejected Mary's assertion, reasoning that the two ANZ loans were sufficient to meet the cost of the purchase of property.[80]
[80] Cheng v Lam [No 2] [2018] WASC 199 [31] - [33].
(b)The property was subdivided into four lots, being number 250A, number 250B, number 250C and number 250D. Other than number 250C, the subdivided properties were sold. David received the net proceeds of sale of number 250A. The proceeds of sale of number 250B were applied to the ANZ loan accounts and no details had been provided as to the net sale proceeds of 250D.[81]
[81] Cheng v Lam [No 2] [2018] WASC 199 [34] ‑ [35] and [47(12) and (13)].
(11)In these proceedings in par 93 Mary pleads against Frank and Andrea that in breach of s 40(1) of the Partnership Act and in breach of their fiduciary duty to Mary and Chan, Frank and Andrea sold and settled various properties funded in part by the loan agreements which included 250B and 250D Ewen Street, and refused and have not applied the net proceeds they received in payment of loan agreements and/or the judgment sum. This plea is inconsistent with findings made by Chaney J in the partnership proceedings. His Honour's findings made it clear that all relevant transactions are to be considered in the taking of an account for this property and the other properties. Consequently, the issue pleaded in these proceedings about this property could have been pressed in the taking of the account by the registrar.
82 and 84 Matlock Street
(12)Justice Chaney found:
(a)82 and 84 Matlock Street were purchased in the names of Frank, Chan and David as tenants-in-common in equal shares. Three redraws were made towards the purchase price of the property. Two redraws were from loan account 422 911 904 (the first loan account) and the other redraw was from loan account 511 031 108 (the second loan account).[82]
(b)The Matlock Street property was subdivided into six lots, being units 1 to 6. Units 1 and 3 were registered in the name of Frank, units 2 and 4 were registered in the name of David, unit 5 was registered in the name of Chan, and unit 6 was registered in the names of Frank and David as joint proprietors. Units 1 and 2 remained unsold. Unit 3 was sold. According to Frank and Andrea, unit 4 was sold, and according to Mary, unit 5 was sold.[83]
(c)The source of the payment for the balance of the purchase price of the property is unclear, and the destination of the proceeds of sale of units 3, 4, 5 and 6 was unclear on the evidence.[84]
(13)In these proceedings in par 93 of the impugned pleading, Mary pleads that in breach of s 40(1) of the Partnership Act and in breach of their fiduciary duty to Mary and Chan, Frank and Andrea sold and settled various properties funded in part by the loan agreements which included the Matlock Street property, and refused and have not applied the net proceeds they received in payment of loan agreements and/or the judgment sum. This plea is inconsistent with the findings made by Chaney J in the partnership proceedings that all relevant transactions are to be considered in the taking of an account for this property and the other properties.

4.4 Would it be an abuse of process to allow Mary's pleaded case to proceed against the Bank and Frank and Andrea in these proceedings?

[82] Cheng v Lam [No 2] [2018] WASC 199 [39] - [40] and [47(3) and (4)].

[83] Cheng v Lam [No 2] [2018] WASC 199 [41] - [42] and [46(5)].

[84] Cheng v Lam [No 2] [2018] WASC 199 [47(12)].

As set out above it is clear that the issues pleaded in these proceedings about each of the properties that were the subject of Mary's claim for an account against Frank and Andrea in the partnership proceedings were either the subject of agreed facts or were issues that could have been pressed in the trial before Chaney J.
In the partnership proceedings, Mary proceeded to trial on the basis of the matters pleaded in her further re-amended statement of claim dated 21 March 2018. In that pleading, she sought in her prayer for relief, among other relief, a full and general account to be taken of all the assets, money, debtors, liabilities, and credits belonging to the partnership ventures as at the date of dissolution of the partnership or series of partnerships.[85] In the alternative, Mary sought repayment of all monies wrongfully converted by Frank and Andrea to their own use with interest at 6% per annum until payment or judgment (being a plea of wrongful conversion).[86] However, this alternative plea was not pursued at the trial before Chaney J, and was in effect abandoned by Mary.
[85] Affidavit of Mary Yuen Shan Cheng sworn 22 March 2021; Attachment MC1 (papers for the judge) 34.
[86] Affidavit of Mary Yuen Shan Cheng sworn 22 March 2021; Attachment MC1 (papers for the judge) 35.
When regard is had to the findings made by Chaney J in the partnership proceedings and the matters pleaded in those proceedings (and the matter abandoned by her) and the matters pleaded by Mary in these proceedings, it constitutes an abuse of process in these proceedings for Mary to raise issues about the borrowings and proceeds of sale in respect of 17 Darch Street, 111 Shakespeare Avenue, 78 Edgecumbe Street, 167 Lockhart Street, 82 and 84 Matlock Street, and 250 Ewen Street. To allow these issues to be litigated in these proceedings would allow Mary to put a case against the Bank and Frank and Andrea that is inconsistent with the case that she put in the partnership proceedings.
The only transaction which relates to a property that was not raised by any party in the partnership proceedings, and which was not considered by Chaney J in his judgment or his reasons for decision, is 172A McDonald Street, Joondanna. In the partnership proceeding, in answer to Frank and Andrea's request for further and better particulars of Mary's statement of claim, Mary describes[87] the McDonald street property as an unrelated property.[88]
[87] Cheng v Lam [No 2] [2018] WASC 199 [127] - [130].
[88] Affidavit of Mary Yuen Shan Cheng sworn 22 March 2021; attachment MC1 (papers for the judge) 72.
The only plea by Mary against the Bank in respect of this property is her plea in par 101 of the impugned pleading. By that paragraph, she pleads that she has suffered loss and damage, as part of the matters she raises in par 47. In par 30, Mary pleads that the Bank held security over the McDonald Street property as a fourth security to secure the second loan agreement for several months and then discharged the security, and released the title to Andrea and the proceeds of sale of that property without notice to Mary. In par 47(c) Mary appears to plead that the Bank breached the contractual terms of the second loan agreement by claiming that Mary did not authorise the release of funds after discharging a re‑finance authority in respect of this property, but she also claims in par 47(c) the discharge refinance authority was signed by her, Frank, Andrea and Chan. In pars 51 and 55 Mary pleads the McDonald Street property was released as a security, in breach of contract, and other than specifying what are said to be clauses of the contract does not specify how the contract was breached, but in any event the pleas made in par 47(c) and par 51 are unintelligible, given that Mary pleads that she signed the discharge authority. Further, and more importantly, Mary does not plead in these proceedings that she had any entitlement to any proceeds of sale of this property. Consequently, Mary's pleas in respect of this property do not disclose any reasonable cause of action. In any event, if this property was relevant to her claim in the partnership proceedings, she should have raised a claim to the proceeds of the sale of this property in these proceedings.
In her counterclaim against the Bank, Mary pleads in par 103(a) a set off, which includes net sale proceeds that it should have received but were released to Frank and Andrea as pleaded in par 92, which in turn refers to table 2 and table 3 of par 60. The McDonald Street property is not mentioned in table 3 but it is listed in table 2 as a property sold by Frank and Andrea on 13 May 2008 in respect of which the proceeds of sale were paid by the Bank into Frank and Andrea's personal account. In par 30(d) Mary pleads that the McDonald Street property was registered in the name of Andrea and that the Bank held security over the McDonald Street property, as a fourth security for the second loan (422 911 904) for several months and that on or about 26 March 2008 Andrea sold the property and at settlement received the net proceeds of the sale. The matters pleaded by Mary in par 60 are in support of a plea of unjust enrichment by Frank and Andrea. However, this is a plea made against the Bank, in respect of which a plea of accessorial liability is not raised, and nor does Mary plead any other recognised unjust factor which could found a claim in unjust enrichment. Consequently, insofar as the pleas relate to the McDonald Street property in these paragraphs they should be struck out.
I am also of the opinion that it would be an abuse of process to allow Mary's pleas in respect of this property to be litigated in these proceedings. If, as she claims, she has an entitlement to the proceeds of the sale of this property, this is an issue she should have raised, and that would have been open for her to raise, in the partnership proceedings.
In these proceedings Mary pleads in pars 25(e), 25(j), 30(b) and 55 of the impugned pleading in respect of the Spencer Avenue property that the proceeds of sale of this property were received by the Bank, in breach of contract and without informing her or obtaining her consent.
In respect of 8A Spencer Avenue, Frank and Andrea had made a claim for an account in relation to this property in the partnership proceedings. However, by the end of the trial, the only issue for determination was whether a payment of $406,998 was paid pursuant to an agreement as alleged by Frank, or whether there was no such agreement and the amount was paid as a contribution to the ongoing development projects by Mary and Chan.[89] It was alleged by Mary in her further amended reply and defence to counterclaim in the partnership proceedings that Chan paid $406,998 to Frank against his liability to pay Frank one third of the profit when 8A Spencer Avenue was sold. After considering the evidence of the parties in respect of the cost of purchase and development of this property, his Honour found that the sum of $406,998 should not be bought into account as a contribution by Mary and Chan to any of the other eight developments and also found that the agreement in relation to the Spencer Avenue property had been completely performed. To attempt to re-litigate this issue in respect of this property in these proceedings is an abuse of process.
[89] Cheng v Lam [No 2] [2018] WASC 199 [120].
Mary should not be allowed to run her defence and counter‑claim against the Bank (and Frank and Andrea) on the basis that she has no liability for some borrowings necessary to fund the property developments of the partnership whilst she simultaneously claimed in the partnership proceedings an entitlement to a share of the profit and an account on the basis that she undertook significant borrowing risk and joined in the borrowing with Chan, Frank and Andrea. If Mary wanted to claim that she did not join in borrowing any or some of the funds from the Bank she should have done so by raising this point before Chaney J in the partnership proceedings. Instead, she framed her case in the partnership proceedings on the basis of equal borrowing to fund each of the developments, and that the amounts borrowed from the Bank were to be regarded as, in effect, a cost of the development and to take those borrowings into account to ascertain profit.
The effect Chaney J's judgment is that Mary's entitlement to a share of profit in respect of any of the properties that had been developed is to be in proportion to the interest that she held in that property at the time of its purchase, after payment of any borrowings used to purchase or develop the property, payment of all costs and expenses incurred in the purchase of the development of the property, and then repayment of any amounts paid by any of the participants.
Mary's conduct in her counterclaim in these proceedings is in effect to claim a windfall by double recovery, by seeking (in these proceedings) a discharge of the mortgages against two properties that are yet unsold and at the same time seeking (in the partnership proceedings) the whole of her registered interest of the value of the unsold properties (being 100% of 78C Edgecumbe Street and 25% of 167 Lockhart Street).
As counsel for the Bank points out (and Frank and Andrea agree) this point, if pressed and if successful in the partnership proceedings, would have been a critical issue. It would have affected the ultimate determination of the partnership proceedings and whether an account should have been ordered, and the type of account ordered. Specifically, had Mary run a case in the partnership proceedings that she is not liable for what appears to be $8.8 million or $6.4 million worth of redraws, that is a fact and an issue that would have had an important bearing on whether an account would be ordered and the terms of the account.
To allow Mary to pursue any of these claims against Frank and Andrea could lead to the absurd result that in the partnership action Mary has sought to take the benefit of the accounting exercise after bringing to account the various loans and the dealings with Frank and Andrea and then in these proceedings to adopt a completely contrary position and avoid the consequences of the loans and by seeking to recover by way of damages, the benefit of the proceeds of the developments without the burden that flowed, namely, the borrowings that were necessary to achieve that outcome.
To allow Mary to now raise these matters in these proceedings would be a clear abuse of the court's procedures and would bring the administration of justice into disrepute.
Alternatively, it is not possible for Mary to approbate the pleaded position and her conduct in the partnership proceedings before Chaney J and to then reprobate this in these proceedings. Mary's approbating conduct is in seeking an order for an account before Chaney J, obtaining that order and then, for all practical purposes, enforcing that order by then pursuing the account before Registrar Whitbread. Mary has filed an appeal against Tottle J's adoption of the registrar's report. However, for the purpose of approbation and reprobation it is clear she has taken the benefit of the judgment in the partnership proceedings. She should be bound by the course that she took in the partnership proceedings.
The impugned pleading should be struck out in its entirety as an abuse of process on grounds that the matters raised in the pleading are inconsistent with the matters pleaded and her conduct in the partnership proceeding.
As set out above in [29] to [30] of these reasons, it is an abuse of process for a party to attempt to litigate an issue which should have been litigated in earlier proceedings, as well as to prevent attempts to relitigate issues which have, in substance, been litigated and determined in earlier proceedings.
It seems that the heart of the matters Mary attempts to plead by the impugned pleading is an allegation that Frank and Andrea diverted partnership funds from amounts borrowed from the Bank, and (insofar as she makes these claims) a claim for $8.8 million or $6.4 million in damages in her counterclaim, or her claim against the Bank in her defence that she has suffered loss in the sum of $6,406,340.36. In par 101 she appears to raise an allegation that Frank and Andrea used all of the funds borrowed by the Bank in these proceedings for their own purposes.
What can only be inferred by Mary's damages claim is that none of the funds borrowed from the Bank that the Bank claims in these proceedings as debts owing were used to fund the developments undertaken by the parties in the partnership proceedings. If such an allegation was to be properly made then it should have been made in the partnership proceedings when the matter was heard and determined by Chaney J.
In the trial of the partnership proceedings Mary did challenge the payment of some of the proceeds of sale of some properties into the accounts of Frank and Andrea, and Chaney J made findings in respect of each of these allegations.[90] The decision of Chaney J in the partnership proceedings was not subject of an appeal by either party. Consequently, the findings made by his Honour in those proceedings bind each of the parties.
[90] Cheng v Lam [No 2] [2018] WASC 199 [103] - [104] and [113] - [114].
Importantly, Chaney J was satisfied that Mary and Chan undertook significant borrowing risk and joined in the borrowing necessary to undertake the purchase of property on the basis they would be entitled to an agreed share of the development of that property, including their proportionate share of the profit. Thus, his Honour ordered an account to be taken in respect of eight properties that had been jointly developed on the basis that the proceeds would be applied first in payment of any mortgage or borrowing over the property is, and no distinction will be drawn between the developed properties which were sold, and those that were unsold. Mary is bound by the order made in the partnership proceedings by Chaney J. Further, Mary is bound by the finding that the mortgages and borrowings used to purchase and develop the properties were liabilities of the partnership. In these circumstances it is an abuse of process for Mary to claim otherwise in these proceedings against the Bank and Frank and Andrea.
As Registrar Whitbread points out in her reasons for decision in the taking of account, if Mary had wanted to run a case seeking an order of account on the basis of wilful default against Frank and Andrea she should have done so in the trial of the partnership proceedings in the hearing before Chaney J.[91] Mary, however, did not do so, and it is now not open for her to do so in these proceedings.
[91] Cheng v Lam [No 3] [2020] WASC 45 [72] - [89].
For these reasons, Mary should not be granted leave to replead.

5.0 The Bank's alternative application to strike out particular paragraphs of the impugned pleading

If I am wrong that the whole of the impugned pleading should be struck out on grounds of abuse of process or approbation and reprobation, I would strike out the following paragraphs.
(1)pars 22(b) to (f), on grounds that the specific clauses said to have been breached in the mortgages, consumer lending provisions and memorandum of common provisions are unclear. Mary's response in her 'answers to request for further and better particulars', dated 25 March 2021, at A1 and A2 does not assist, as no specific provisions of the contractual provisions are specified. The phrase in par 22(f) 'ought to have received payment' is vague;
(2)par 22(g), on grounds that the relevance of this paragraph as an alternative is not apparent, as only facts are pleaded without any impugned consequence pleaded;
(3)pars 25(b) to 25(i), on grounds that the specific clauses said to have been breached in the mortgages, consumer lending provisions and memorandum of common provisions are unclear. Mary's response in her 'answers to request for further and better particulars', dated 25 March 2021, at A3 does not assist as the matters stated do not provide particulars of the facts as to how the breaches are said to arise;
(4)par 25(j), on grounds that the phrase in par 22(j) 'ought to have received payment' of the net proceeds of $6,708,736.72 (being what appears to be the total of the net proceeds of the sale of properties of the partnership) is vague and Mary's response in her 'answers to further and better particulars', dated 25 March 2021, at A4 that the sums were received on discharge of mortgage does not assist. In addition, Mary confuses account numbers with the mortgage, namely, 422 911 904 is not a mortgage number but an account number;
(5)par 25(k), on grounds that the relevance of this paragraph as an alternative is not apparent;
(6)par 26, on grounds that Mary's claim that the loans had been repaid at the time the notice of default was issued by the Bank is inconsistent with her pleas in other paragraphs that the loans are outstanding. Further, the plea is vague and Mary's response in her 'answers to request for further better particulars', dated 25 March 2021, at A5 does not assist, as she simply repeats her answer in A4.
(7)par 30(b), on the grounds set out in [73] to [75] of these reasons and par 30(d)(iii), the plea of releasing a title without notice to Mary is not a particular of the fourth security;
(8)par 31, on grounds that the plea is insufficient to identify the basis for incorporation of terms into each document. Further, the plea refers to a class of documents being 'authorities to complete' without identifying the documents belonging to that class. Mary's response in her 'answers to request for further better particulars', dated 25 March 2021, at A6 does not assist as she simply refers to the pleas in 31, 32 and 33 of the impugned pleading;
(9)pars 32 to 34, on grounds that the pleas are embarrassing. The pleas do not identify each term, how each term was breached, and the consequences of each breach. Mary's pleas appear to raise an allegation that the Bank did not authorise any one of the borrowers individually to vary the loan contracts or to individually operate the loan contract accounts. In relation to cl 3.7, there is no plea of any requirement to sign a form of authority rendering any plea of an alleged breach of this term incomplete. In relation to cl 10.6, there is no plea that engages with the substance, being a change of loan type or splitting the loan into two or more accounts. There is no suggestion that the loan type was changed or the accounts split. Further, cl HL9.3 is incompletely pleaded. Further, it is not clear how cl HL9.4 is said to have been breached. The clauses pleaded in cl 32 of the memorandum of provisions are the Bank's powers and not obligations on the Bank. Consequently, it is not clear how these provisions are said to have been breached. Mary's response in her 'answers to request for further better particulars', dated 25 March 2021, at A7 does not assist as she simply refers to the pleas in pars 78, 79, 80, 84 and 86 of the impugned pleading. Further, her reference to answers given in 2016 in particulars do not assist as she has amended her pleadings and relief since 2016;
(10)par 35, on grounds that this plea is repetitive and an unnecessary introduction;
(11)pars 36, 37, 38, 39 and 40 on grounds that each of these paragraphs quote from documents. These are pleas of evidence not material facts. Further, par 40 is vague;
(12)pars 41 and 42, on grounds that the plea appears to raise an unauthorised redraws claim but is rolled up, generalised and does not identify each term, how each term of the loan agreements were breached, and the consequences of each breach. Further, par 41(ii) is unconnected to the balance of the paragraph and is meaningless, and par 42 refers to 'Statement 12', which reference is not clear and is also meaningless;
(13)par 43(1) to (7), on grounds that the plea of breach is rolled up and generalised. The particulars in par 43(1) identifies transactions but there is no comprehensible plea as to how the transactions constituted a breach. Further, the selective references to withdrawals without accounting for repayments in the same period is embarrassing and could be said to be vexatious in light of the findings made in the partnership proceedings that credits were made to the loan accounts. In addition, there is a confusing heading to par 43(2), 'Second Loan Agreement Particulars of Breach' followed by a list of transactions, and in par 43(4) the reference to a 'blank Authority form' is meaningless;
(14)par 44, on the same grounds as par 43;
(15)par 45, on grounds that the plea is at such a high level of generality that it is meaningless and does not appear to be relevant;
(16)par 46, on grounds that the plea is rolled up and generalised and does not identify each term, how each term is breach, and the consequences of each term. Each of the pleas in the subparagraphs are vague. Mary's response in her 'answers to request for further better particulars', dated 25 March 2021, in A8 does not assist as she simply refers to particulars given in 2016 and to the pleas in pars 78, 79, 80, 84 and 86 of the impugned pleading. Her reference to answers given in 2016 in particulars does not assist as she has amended her pleadings and relief since 2016. In par 46(1) and (1) Mary refers to a pleading of the Bank that is no longer current and as such is embarrassing and irrelevant;
(17)par 47 attempts to raise a veracity of signature claim. This paragraph should be struck out on grounds that the plea is rolled up and generalised and does not identify each term, how each term is breach, and the consequences of each term. In particular, the paragraph does not plead how the Bank had an obligation and what are the facts upon which it is pleaded that the Bank had notice. Further, the particulars constitute commentary on documents that appear to be irrelevant and, as such, are embarrassing;
(18)pars 47A and 47B, on the grounds set out in [68(3)] of these reasons;
(19)par 48, on grounds that the pleading that the Bank 'forwent' payment, that Mary is 'discharged from all liability', the Bank cannot 'take advantage' and the Bank is not 'entitled to make claims' are unintelligible;
(20)pars 49 to 55, on grounds that these paragraphs are repetitive of the breach of contract plea. Mary's response in her 'answers to request for further better particulars', dated 25 March 2021, at A10 does not assist as she simply refers to pars 27, 28, 29 and 30 of the impugned pleading;
(21)pars 56 to 67 attempt to raise a claim against the Bank of facilitating unjust enrichment. The pleas should be struck out on grounds that they are repetitive, rolled up and vague. No unjust factor is identified. The presence of an unjust factor is an indispensable requirement to demonstrate the facts upon which a party relies for a claim that another party had no right to retain the benefit and was unjustly enriched.[92] Further, unjust enrichment is not to be applied as a direct source of liability.[93] Mary's response in her 'answers to request for further better particulars', dated 25 March 2021, at A11 and A12 does not assist, as she simply lists numerous references to paragraphs of the impugned pleading;
[92] High Time Investments Pty Ltd v Adamus Resources Pty Ltd [2012] WASC 295 [185] (Edelman J).
[93] Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 at [51] (Edelman J); See also Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) 232 CLR 635 [79] (Gummow, Hayne, Crennan and Kiefel JJ).
(22)par 68 seeks to plead an incomprehensible plea of a set off of the additional interest fees and charges derived by the Bank and received from the co-borrowers in relation to the loans and mortgages from co-mortgagors;
(23)pars 69 and 70 attempts to plead that particular acts by Mary, Frank and Andrea were known by the Bank. These paragraphs should be struck out on grounds that the relevance of the matters that are pleaded to have been known by the Bank are vague, rolled up and repetitive, referring to pars 31 to 55 (being over 30 pages of pleadings). Paragraph 70 is also, circular and its relevance is not apparent;
(24)pars 71 and 72 attempt to raise a plea that the Bank and its employees engaged in unconscionable conduct in relation to its financial dealings with Mary. These paragraphs should be struck out on grounds they simply refer to the matters pleaded in pars 19(a) and (c), 21, 22(b) to 22(f), 25(b) to 25(j), 27, 28, 29, 30(a) to 30(e), 31, 32, 33, 35, 36 to 44, 47(1) to 47(8), 47A. and 47B and 50 to 60, 68 to 70, and as such the plea of unconscionable conduct is unintelligible;
(25)par 73, on grounds that the plea in this paragraph does not attempt to make clear how, or the basis upon which it can be claimed that the Bank by obtaining the default judgment against Frank, Andrea and Chan unjustifiably increase the interest claim. As such this plea is unintelligible;
(26)par 74, on grounds that a similar plea by Mary (going to mitigation) was struck out by Martino J in Commonwealth Bank of Australia v Cheng on grounds of the principle that litigation has no role to play in an action for debt;[94]
(27)pars 75, 87 and 88, on grounds that a plea of not enforcing a judgment against co-borrowers and co-mortgagors is unconscionable conduct, also raises the principle applied by Martino J in Commonwealth Bank of Australia v Cheng that litigation has no role to play in an action for debt. Further, this plea is contrary to the decision of Chaney J in the partnership proceedings that interest payable on the loans owed to the Bank is a partnership expense;[95]
(28)par 80, on grounds that the pleading is repetitive, vague and discloses no reasonable cause of action;
(29)pars 81 to 85, are an attempt by Mary to plead Mary wrongful conversion of the net proceeds of 17 Darch Street and should be struck out on grounds the pleading is repetitive and unintelligible;
(30)par 86 is an attempt by Mary to raise another repetitive unconscionable conduct claim against the Bank and its employees, by simply referring to matters pleaded in pars 22 (b) to (f), 25 (c) to (j), 31, 32, 33, 34, 46, 47, 50 and 53 is unintelligible; and
(30)the relief pleaded in pars 103(c) and 103(d) seeks a declaration an order that Mary is entitled to a discharge of the mortgages on the properties owned or partly owned by Mary at 78C Edgecumbe Street and 167 Lockhart Street. These subparagraphs should be struck out on grounds that it's not clear how the relief sort relates to the matters pleaded against the Bank. Mary's answer at A18 of Mary's answers to requests for further and better particulars dated 25 March 2021 that the prayer for relief follows Marys pleaded case, does not assist.
[94] Commonwealth Bank of Australia v Cheng [2017] WASC 136 [45] - [46].
[95] See the discussion on this point by Registrar Whitbread in Cheng v Lam [No 3] [2020] WASC 45 [91], [102] - [106] and [267] - [269].

6.0 Orders

Because I have found that the entirety of Mary's pleaded case should be struck out on grounds of abuse of process or on grounds of approbation and reprobation with no leave to replead, I will hear from the parties as to the orders that I should make to give effect to my findings, and as to costs.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.

XH
Associate to the Honourable Justice Smith

8 SEPTEMBER 2021

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COMMONWEALTH BANK OF AUSTRALIA -v- CHENG [No 2] [2021] WASC 291 (S)
CORAM:   SMITH J
HEARD:   8 SEPTEMBER 2021
DELIVERED          :   8 SEPTEMBER 2021
PUBLISHED           :   10 SEPTEMBER 2021
FILE NO/S:   CIV 2563 of 2013
BETWEEN:   COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
MARY YUEN SHAN CHENG
First named First Defendant
FRANCIS HUNG LAM
Second named First Defendant
ANDREA MAN YEE CHENG
Third named First Defendant
CHAN THANH LAM
Second Defendant
MARY YUEN SHAN CHENG
Plaintiff by Counterclaim
AND
COMMONWEALTH BANK OF AUSTRALIA
First Defendant by Counterclaim
FRANCIS HUNG LAM
Second Defendant by Counterclaim
ANDREA MAN YEE CHENG
Third Defendant by Counterclaim

Catchwords:

Practice and procedure - Orders made to strike out a proposed substituted defence and counterclaim with no leave to replead - Consequential orders made to strike out prior pleading - Turns on own facts

Legislation:

Nil

Category: B

Representation:

Original Action

Counsel:

Plaintiff	:	Mr S C M Wong
First named First Defendant	:	Mr M A Tedeschi
Second named First Defendant	:	Mr P G McGowan
Third named First Defendant	:	Mr P G McGowan
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Dentons
First named First Defendant	:	G A Lacerenza & Associates
Second named First Defendant	:	Johnstone Crouse Lawyers
Third named First Defendant	:	Johnstone Crouse Lawyers
Second Defendant	:	No appearance

Counterclaim

Counsel:

Plaintiff by Counterclaim	:	Mr G A Lacerenza
First Defendant by Counterclaim	:	Mr S C M Wong
Second Defendant by Counterclaim	:	Mr P G McGowan
Third Defendant by Counterclaim	:	Mr P G McGowan

Solicitors:

Plaintiff by Counterclaim	:	G A Lacerenza & Associates
First Defendant by Counterclaim	:	Dentons
Second Defendant by Counterclaim	:	Johnstone Crouse Lawyers
Third Defendant by Counterclaim	:	Johnstone Crouse Lawyers

Case(s) referred to in decision(s):

Commonwealth Bank of Australia v Cheng [No 2] [2021] WASC 291

SMITH J:

These reasons are supplementary to the reasons published on 8 September 2021,[96] in respect of applications made by the plaintiff and first defendant by counterclaim, the Commonwealth Bank (the Bank), and the second and third defendants by counterclaim (Francis Hung Lam (Frank) and Andrea Man Yee Cheng (Andrea)) to strike out, or alternatively not grant leave to the first named first defendant and plaintiff by counterclaim Mary Yuen Shan Cheng (Mary) to file a proposed substituted defence and counterclaim dated 29 January 2021 (the impugned pleading).
[96] Commonwealth Bank of Australia v Cheng [No 2] [2021] WASC 291.
In reasons published on 8 September 2021, I found that the whole of the impugned pleading should be struck out on grounds that all of the matters pleaded were an abuse of process or alternatively constituted a reprobation of acts or conduct in partnership proceedings between Mary, as plaintiff, and Frank and Andrea in CIV 1706 of 2015. I also found that Mary should not be granted leave to replead.
After hearing counsel from each of the parties on the publication of the judgment the following orders were made:
1.Leave is refused for the first named first defendant to file the proposed substituted defence and counterclaim dated 29 January 2021.
2.The first named first defendant's minute of proposed re-amended statement of defence and counterclaim dated 21 December 2017 (which stands as the re-amended defence and counterclaim pursuant to the court's orders on 21 February 2018) be struck out, with leave to replead refused.
3.The first named first defendant pay the plaintiff's costs of and incidental to the applications heard on 28 April 2021, to be taxed if not agreed.
4.The first plaintiff by counterclaim's counterclaim against the second and third defendants by counterclaim be dismissed.
5.The first plaintiff by counterclaim pay the second and third defendants by counterclaim costs of the action including reserved costs to be taxed if not agreed.
The supplementary reasons set out the reasons why these orders were made.
At the hearing, counsel for Mary did not oppose order 1 and order 3 but opposed orders 2, 4 and 5.
The reason why these orders were opposed by counsel for Mary is that it was argued on behalf of Mary that there was no application before the court that had been heard and determined which struck out Mary's pleading dated 21 December 2017, and that pursuant to the order made by the court on 4 February 2021 the only application before the court was the Bank's application to strike out the impugned pleading and the application by Frank and Andrea opposing the filing of the impugned pleading (the strike out applications).
This argument, however, is misconceived. The reason why the impugned pleading was filed as a minute was that I had mistakenly formed the impression that, pursuant to orders made by Martino J on 24 May 2017, it was necessary for Mary to file an application to amend her defence and counterclaim together with a minute of the proposed pleading and this order had not been satisfied. Although a minute had been filed by Mary on 26 September 2017, and a further minute was filed by Mary on 25 January 2018 (being the pleading dated 21 December 2017), I had overlooked the fact that an order had been made by Chaney J on 21 February 2018 granting Mary leave to amend her defence and counterclaim in the terms of the minute dated 21 December 2017, and ordering that it stand as Mary's re-amended defence and counterclaim.
Even though I was under this mistaken view, Mary's lawyers did not bring the order made by Chaney J to my attention until after the strike out applications were listed for hearing.
Mary's lawyers had an opportunity to bring this order to my attention on 10 December 2020 and did not do so.[97] Prior to the directions hearing on that day, Mary's lawyers had filed a minute of proposed orders on 10 November 2020 seeking, among other orders, an order that a minute of proposed substituted defence and counterclaim dated 2 November 2020 stand as Mary's substituted defence and counterclaim. This order was refused after it was put to counsel who appeared for Mary at the directions hearing on 10 December 2020 that pursuant to the order made by Martino J on 24 May 2017, before an order could be made that the minute dated 2 November 2020 stand as Mary's substituted defence and counterclaim, it would be necessary to resolve the objections made to the proposed pleading by the Bank, Frank and Andrea.
[97] ts, 10 December 2020, 115 - 116.
Mary subsequently abandoned the minute dated 2 November 2020, by filing the impugned pleading on 29 January 2021. Prior to a directions hearing on 10 December 2020, Mary's lawyers filed a minute of proposed orders on 9 December 2020 in which an order was sought that Mary file a minute of proposed substituted defence and counterclaim on or before 29 January 2021 to stand as her substituted defence and counterclaim. Counsel who appeared for Mary on 10 December 2020 again did not bring the order made by Chaney J to my attention.
On 10 December 2020, in the following exchange between the court and counsel for Mary, counsel made it clear to the court that Mary sought to rely upon a new pleading:[98]
SMITH J: Well, Mr Lacerenza, I don't accept that it seemed to be blocked. I mean, the difficulty is your client has had, since 2017, since the order was made by Martino J in October 2017, to file a minute of proposed defence and counter-claim. And it has now taken some three years, and you're still looking at - not in a position where you can say to the court, 'Well, this is our final position. We will run with this'. So I wouldn't have thought that you could make any claim that your client's efforts have been blocked in any way whatsoever.
LACERENZA, MR: Ma'am, we have filed our final documents.
SMITH J: Well, you're - but you're now saying that you want further time to consider whether you need to perhaps make some amendments to the document which was filed on - - -
LACERENZA, MR: Well, the way we aim to put it, your - well, yes, your Honour, because it was the plaintiff who raised issues with the defence and the counter-claim. And having accepted what they've said and discussed it with them, considered it, we have then proposed a substituted defence and counter-claim, which doesn't materially alter our claim.
SMITH J: All right. Well, Mr Lacerenza, I'm not going to argue with you any further about this. But what is important and, as Mr Lam has pointed out, we need to progress this matter. But before this matter can be substantially progressed and moved forward, then your client needs to present a document to the court, which is the plaintiff by counter-claim's proposed substituted defence and counter-claim.
Now, I'm not prepared to make any orders to allow any document to stand as your client's substituted defence and counter-claim. All I'm prepared to do is to make an order that your client have until 29 January to file any further minute of proposed substituted defence and counter-claim, and then after that is filed, can then come back. And I can - and if – Mr Lam and Ms Cheng, if you wish to pursue, at that point in time, having seen the final document, an application to strike out parts of the substituted defence and counter-claim - although the order I'm going to make is simply leave to provide a - to file a further minute.
[98] ts, 10 December 2020, 115 - 116.
The order made by Chaney J on 21 February 2018 did not come to my attention until it was referred to in an outline of submissions filed on behalf of Mary on 22 April 2021 and a submission was made that Mary did not need leave to file the impugned pleading under the Rules of the Supreme Court 1971 (WA).[99] The fact that the order had been made was also referred to in an affidavit filed by the Bank in support of the strike out application.[100]
[99] ts, 28 April 2021, 160.
[100] Affidavit of Shane Edward Calalesina, sworn 7 April 2021.
At least since the filing of the impugned pleading, Mary lead the court, the Bank, Frank and Andrea to form the opinion that the impugned pleading was intended to be substituted for the pleading dated 21 December 2017.
Most importantly, what was pleaded in Mary's pleading dated 21 December 2017 was wholly replicated in the impugned pleading. This was made very clear to the court when the orders were made to program the strike out applications on 4 February 2021, in the following exchange between the court and counsel for Mary:
SMITH J: Yes. Mr Lacerenza, you will need to - maybe either be a bit closer to the phone or speak up a bit, because you're a bit - not very clear. And, first of all, can you confirm that the documents that your client now seeks to rely on, in effect, to use Mr Wong's words, by nailing your colours to the mast is the minute that has been filed on 29 January.
LACERENZA, MR: Yes, your Honour. If I can briefly state that that minute that was filed on the - in January actually reflects most, if not all, of the original pleadings that's already filed, which was filed pursuant to Martino Js orders. And it was filed on the 25.01.18. The first - the paragraphs numbers 1 to 86, which is subject to the relief, are identical to the new - to the new minute which we filed on the 29th. All that we did in respect to paragraphs 1 to 86 is we made certain amendments and changes to only a few parts of those pleadings in order to reflect the conferral that occurred in 2020 between the bank's solicitors and ourselves concerning a number of issues they had raised with us, which they thought ought to be looked into. We looked into those and amended, as best as we understood we had to do, their concerns. Insofar as the balance of the new pleadings in the substituted one we put in at the end of January, that is only paragraph 86 to 102 and fundamentally those additional pleadings really add additional material facts concerning breaches of fiduciary duties against the defendants by counter-claim on the basis that they are not subsumed in the dissolution proceedings, nor formed any part of the accounts – or the hearing of the accounts taken by the Registrar. I can understand that if Mr McGowan wishes to make a claim he's perfectly entitled to do so, but we do say that the pleadings substantially have not altered. I confirm that the original minute filed in October of last year was completely different to - in format and in numbering to the one that had been already filed pursuant to the order of Martino J. That pleading wasn't accepted for filing and having looked at it again more closely it was decided to stick with the original pleadings, amend those bits and pieces that we believed the bank sought from us and added some additional material facts concerning the claim against - and the counter-claim against the defendants. That's all I wish to say, your Honour.
SMITH J: What about the orders that you seek, Mr Lacerenza?
LACERENZA, MR: Well, I - I took into account the orders sought by the plaintiff, by the bank, and considered that they were fair and I assumed they were based on having received the recent minute we filed 29 January. And, therefore, sought to adjust or add to their minute some additional paragraphs that also reflected what the - what Mary, the first named first defendant, would also seek in order to bring clarity to the orders that you would be making this morning. We worked on the basis that the application today would be based on whether our further minute filed the 29th of this month should be accepted by way of substitution of that that was filed on 21 January 2018, your Honour.
Mary's lawyers reiterated the contention made by Mary that the impugned pleading replicated what was the whole of Mary's pleading dated 21 December 2017, in par 4 of an outline of submissions filed in opposition to the strike out applications dated 22 March 2021 as follows:
Mary's Minute of the 29th January, 2021 (the Minute) repeats the prior pleading filed the 25th January, 2018 paragraphs 1 to 85 and further has amended the said pleadings by way of additional clauses being paragraphs 86 to 103.
This concession was repeated in subsequent submissions filed on behalf of Mary on 22 April 2021 in the context that the Bank required leave to extend time to bring a strike out application, and had not provided a reasonable explanation for the failure to bring any application within time on grounds that the Bank had three years within which to apply to strike out any parts of Mary's pleading that it objected to (on the basis that the impugned pleading was a repetition of the pleading filed on 25 January 2018).
At the hearing on 8 September 2021, a submission was made that the matters pleaded in the pleading dated 21 December 2017 were similar but not exactly the same as the matters pleaded in the impugned pleading (leaving aside the additional matters pleaded to in the impugned pleading). Even if this was so, such an argument does not assist Mary because it is conceded by Mary that each of the causes of action pleaded in the pleading dated 21 December 2017 are the same and concern the same properties particularised in the impugned pleading.
In light of the fact that each of Mary's pleadings pleaded the same causes of action against the Bank, Frank and Andrea, there would be no utility in the court reconsidering the findings that had been made in the reasons for decision published on 8 September 2021 in the strike out applications in respect of an earlier pleading which had been replicated in the impugned pleading.
Further, there would be no utility in reapplying the findings that I have made in respect of abuse of process and the doctrine of approbation and reprobation to a pleading that Mary had by her conduct led the Bank, Frank and Andrea to form the opinion that there was no necessity to bring an application to strike out this pleading as it had in effect been substituted by the impugned pleading.
In light of the fact that I found that Mary's counterclaim against Frank and Andrea was an abuse of process and offended the doctrine of approbation and reprobation, and that leave to re-plead should be refused, the proper orders to reflect the consequences of these findings are that Mary's counterclaim against Frank and Andrea should be dismissed, and that Frank and Andrea should be awarded their costs of the action, in defending the counterclaim.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

XH
Associate to the Honourable Justice Smith

10 SEPTEMBER 2021