Di Palma v Chimmalee

[2019] NSWSC 864

Supreme Court

New South Wales

Medium Neutral Citation:	Di Palma v Chimmalee [2019] NSWSC 864
Hearing dates:	19 June 2019
Date of orders:	11 July 2019
Decision date:	11 July 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1. Pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW), strike out the following paragraphs of the plaintiffs’ statement of claim: [12A], [13], [15], [16], [17A], [19], [19A], [19B], [20], [21], [22], [23], [24], [25], [25A], [26], [27], [28], [29], [30], [31], [32(iii)]-[32(iv)] and [33]. 2.   Direct the plaintiffs to serve any proposed amended statement of claim on the defendants within 21 days. 3.   Direct the defendants to notify the plaintiffs in writing within 14 days thereafter if there is any reasoned objection to the grant of leave to file the proposed amended statement of claim, stating with particularity the basis of that objection. 4.   If the defendants notify the plaintiffs within the time specified, that there is no objection to the filing of the proposed amended statement of claim, grant leave for the proposed amended statement of claim to be filed within seven days of such notification. 5.   If the defendants notify the plaintiffs within the time specified, that there is an objection to the filing of the proposed amended statement of claim, direct both parties to notify my Associate accordingly and, within seven days, to forward brief written submissions to my Associate on the objection(s) raised by the defendants, with a view to determining on the papers whether such leave should be granted. 6.   Order the plaintiffs to pay the first to fourth defendants’ costs of the notice of motion filed 29 May 2018 and of the hearing of the strike-out application on 17 June 2019. 7.   Stand the matter over for directions before me at 9.30am on 30 August 2019.
Catchwords:	CIVIL PROCEDURE – Pleadings – Striking out
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 56, 57, 58 Civil Procedure Act 2010 (Vic) Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law Uniform Civil Procedure Rules 2005 (NSW), rr 14.7, 14.28, 17.3
Cases Cited:	Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27; (2009) 258 ALR 14 Arthur Young v Tieco International (1995) 182 LSJS 367 Barnes v Addy (1874) LR 9 Ch App 244 Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 Bond Corp Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 Brand v Monks [2009] NSWSC 1454 Bruce v Odhams Press Limited [1936] 1 KB 697 CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd (2017) 55 VR 62; [2017] VSCA 11 Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413 Collier v Country Women’s Association of New South Wales [2016] NSWSC 1361 Collier v Country Women’s Association of New South Wales [2017] NSWCA 22 Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676 Dey v Victorian Railway Commissioners (1949) 78 CLR 62; [1949] HCA 1 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 Gunns Limited v Marr [2005] VSC 251 Hastie Group Ltd (in liq) v Bourne; Hastie Group Ltd (in liq) v Moore [2017] NSWSC 709 Ingot v Macquarie [2004] NSWSC 1136 Itex Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104 McGuirk v University of New South Wales [2009] NSWSC 1424 Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591 Northam v Favelle Favco Holdings Pty Ltd (Supreme Court (NSW) 7 March 1995 unrep) Patronis v New South Wales [2018] NSWSC 516 PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407 Ratcliffe v Evans (1892) 2 QB 524 Re Bega Co-operative Society Ltd & Anor v The Milk Authority of the Australian Capital Territory & Anor [1997] FCA 200 Rubenstein v Truth and Sportsman Limited [1960] VR 473 S1 v The Trustees of Marist Brothers [2016] NSWSC 970 Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited [2017] NSWSC 1406 Steiner v Strang [2016] NSWSC 9 Trau v University of Sydney (1989) 34 IR 466 Travel Compensation Fund v Blair [2003] NSWSC 720 Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 Wride v Schulze [2004] FCAFC 216
Category:	Procedural and other rulings
Parties:	Lamai Di Palma (First Plaintiff) Antonio Di Palma (Second Plaintiff) Siriluck Fatima Chimmalee (First Defendant) Michael Roger Evans (Second Defendant) Sydney Organic Supplier Pty Ltd (Third Defendant) Real Money Transfer Pty Ltd (Fourth Defendant) International Pacific Group 1992 Pty Ltd (Fifth Defendant)
Representation:	Counsel: P Afshar (Plaintiffs) J Lee (First to Fourth Defendants)   Solicitors: Spinks Eagle Lawyers (Plaintiffs) Ren Zhou Lawyers (First to Fourth Defendants)
File Number(s):	2018/00246696
Publication restriction:	Nil

Judgment

1. HER HONOUR: Before me for hearing on 19 June 2019 was an application, by notice of motion filed on 17 May 2019 by the first to fourth defendants in these proceedings (to whom I will refer collectively as the applicants), seeking to strike out certain paragraphs of the plaintiffs’ statement of claim filed on 26 April 2019 pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The fifth defendant has not filed an appearance or taken any active step in these proceedings.

2. By way of background it should be noted at the outset that this is the second such application brought by the applicants. On 5 April 2019, I heard their application (by notice of motion filed 29 January 2019) to strike out various paragraphs of the Points of Claim that the plaintiffs had filed on 13 August 2018. On that occasion, having indicated the various difficulties I considered there were in relation to the way in which the plaintiffs’ claim was articulated in the Points of Claim, I directed the plaintiffs to file and serve a verified statement of claim by 26 April 2019 and the applicants to file and serve a verified defence by 24 May 2019. I considered that that would effectively dispose of the notice of motion filed 29 January 2019 and I ordered that the costs of the motion filed by the applicants on 29 January 2019 be the first to fourth defendants’ costs in the cause.

3. Regrettably, rather than (as I had intended and anticipated) this facilitating the progress of the matter with a view to the just, quick and cheap resolution of the real issues in dispute, this has only lead to a further strike-out application based on further pleading complaints, largely revisiting the issues that were debated in April this year. To say that this is an unsatisfactory outcome is an understatement. The plaintiffs have already had ample opportunity to plead their claim(s), and since April this year this has been with the benefit of the criticisms made by the applicants and my observations as to the force of those criticisms. It would appear that no real account has been taken by the plaintiffs of those criticisms; the explanation for the current state of the pleading being that an assumption had been made that “the pleading was viewed within the confines of this case and where we are at” (i.e., as I understand it, that the statement of claim that I directed be filed had to conform to the format of the existing Points of Claim in some fashion) (see T 26), rather than the pleading having been critically reviewed afresh and the claims properly pleaded.

4. The position of the plaintiffs, as was their position in April this year and as is apparent from the submissions on the present application, is that the applicants’ strike-out applications in effect are motivated by an attempt to withdraw what are said to be “the extensive admissions” that they have made in their Points of Defence dated 21 September 2018. The applicants do not concede, as I understand it, that the Points of Defence contain such “extensive admissions” but in any event, I fail to see why the plaintiffs will be unable in due course to rely on any admissions that they can establish have in fact already been made by one or more of the applicants in the Points of Defence (and to argue that unless leave is granted those admissions cannot be withdrawn) even though, from a pleading point of view, the Points of Defence will by then have been superseded by a verified defence in response to the verified statement of claim (assuming the plaintiffs are ever able properly to plead such a statement of claim). I thought I had indicated as much in the course of argument on 5 April 2019.

5. What should have been clear to the plaintiffs back in April 2019 was that it was incumbent on them to file a statement of claim in which the case against each of the particular defendants was made perfectly plain. It is trite to note that the purpose of pleadings is to ensure that the defendant knows what case he she or it has to meet. In Re Bega Co-operative Society Ltd & Anor v The Milk Authority of the Australian Capital Territory & Anor [1997] FCA 200 at [24], Neaves J summarised the relevant principles and noted that not only must all material facts be pleaded (those being all facts necessary for the purpose of formulating a complete cause of action) but they must be pleaded with a sufficient degree of specificity, having regard to the general subject matter of the claim, to convey to the opposite party the case that party has to meet (there citing Ratcliffe v Evans (1892) 2 QB 524 at 532; Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413 at 417.

6. It is not an answer to say that the case can be divined from the evidence that has been filed; nor is it an answer to say that any deficiencies may be supplied by particulars (see Bruce v Odhams Press Limited [1936] 1 KB 697 (Odhams Press) at 712-713; Brand v Monks [2009] NSWSC 1454 at [406]–[420]). In Odhams Press at 712-713, Scott LJ considered the function of particulars as distinct from the requirement to plead material facts, the latter comprising what was necessary for the purpose of formulating a complete cause of action and the former having the function of filling in the picture of the cause of action with information sufficiently detailed to put the defendant on his (or her) guard as to the case the defendant has to meet and to enable preparation for trial, though recognising that in practice it is often difficult to distinguish between a “material fact” and a “particular” piece of information which it is reasonable to give the defendant in order to tell the defendant the case it has to meet (“hence in the nature of things there is often overlapping”).

7. Nor, in my opinion, is it an answer that the applicants must know the case against them because they were able to file Points of Defence and have already served evidence in the matter. As to this contention, it is readily apparent from a review of the Points of Claim and Points of Defence that they are not models of perfection in terms of the articulation of either side’s case; and, as I indicated in April this year, there are aspects where the two documents do not marry up together terribly well – see at T 19, 5 April 2019, where I refer to the pleading that particular amounts had been “received” by the defendants.

8. That may be due to the way in which the matter ended up with Points of Claim, rather than pleadings from the outset. It appears that the proceedings were commenced with some haste (and I do not say this critically), being brought before the duty judge in equity on 10 August 2018on an application by summons for urgent ex parte relief by way of injunctions and freezing orders. The material that was put to the duty judge on that occasion apparently included some points of contention or draft points of contention. Counsel for the plaintiffs on the present application informs me that the duty judge (Rein J) requested the provision of points of claim, on the basis of which, and on the evidence then before his Honour, freezing orders were subsequently made on an ex parte basis). An interlocutory regime was agreed, without admissions, on 16 August 2018, until further order of the Court; and on 28 September 2018 a defence to the Points of Claim was filed.

9. It would appear that at some point after this, the view was taken by the applicants (or more probably by their legal representatives), that the Points of Claim did not adequately ‘plead’ the case against them – most relevantly in relation to the position of the second defendant, because there was then the first of the strike-out applications.

10. On 5 April 2019, following the hearing of the first strike-out motion, I made orders which had the effect that the matter is to continue on pleadings. I did so because I was concerned (as I made clear in the course of oral argument) that the Points of Claim did not adequately put the applicants on notice of the case they had to meet (and notwithstanding that they had filed Points of Defence responding to the inadequate Points of Claim and had filed evidence at least going to the continuation or otherwise of the interlocutory orders that had been made).

11. I remain firmly of the view that the applicants (and indeed not just the applicants but all of the defendants, although the fifth defendant does not appear to wish to take an active role in defending the claim) are entitled to know with particularity the case that is put against them and to which they must respond. It would have been wholly unsatisfactory, in my opinion, for this case to go to a contested hearing on the basis of the Points of Claim given the deficiencies to which the applicants pointed to in April 2019. Further, as will be seen below, I am not persuaded that the present statement of claim is much of an improvement. I am fortified in that view by the fact that Counsel for the plaintiffs was not able satisfactorily to articulate in oral submissions before me precisely the basis of certain aspects of the claim as presently pleaded (critically, the contract claim pleaded against the second defendant). That highlights, in my opinion, the inappropriateness of allowing the matter to proceed to a hearing as it is currently pleaded. The trial judge, whoever he or she may be, should not have to “muddle through” and be faced with pleading points raised at the hearing of the kind that have now been twice debated. Nor should the defendants be left in any doubt as to the claim made against them. As Einstein J said in Travel Compensation Fund v Blair [2003] NSWSC 720 (at [29]):

Of course an applicant for leave to amend must satisfy the court that an arguable case has been properly pleaded. It may be taken as a given that "the plainest and most fundamental of all the rules of pleading" is that "all the material facts constituting the cause of action ought already to have been plainly stated in the pleading itself". [Pinson v Lloyds and National Provincial Foreign Bank Limited [1941] 2 KB 72 at 75; see also H 1976Nominees Pty Limited v Galli (1979) 40 FLR 242 at 246-7]

12. Those observations are apposite here (notwithstanding that this is an application to strike-out not an application for leave to amend as such). What was said by Lander J in Arthur Young v Tieco International (1995) 182 LSJS 367 at 370 (approved by McDougall J in Ingot v Macquarie [2004] NSWSC 1136 at [46]) is also apposite, namely that:

Whether the material facts and whether sufficient particulars have been pleaded must depend upon the cause of action, the complexities of the case and the whole of the circumstances of the case. None of those matters can be considered in isolation any more than each of the paragraphs of the pleading can be considered in isolation.

When the Court considers a pleading it will not consider the pleading with the same degree of scrutiny which the courts are required to give to an Act of Parliament. With the complexities of modern litigation, a pleader can usually point to some deficiency in the opponent's pleadings. One can usually, if one approaches the matter with a critical eye, identify some failing in a pleading. But that is not the approach that in this age ought to be adopted. A court would not sit down in the manner of a nineteenth century pleader seeking to find an error capable of sending a party away to re-plead his claim or defence. Such a technical approach is inconsistent with modern litigation and inconsistent with the court’s function which is to try to arrive at a just result. A successful result, if arrived at, after too great an expense may not be considered by even the successful party to be a just result. A court ought to approach a consideration of the adequacy of a pleading seeking to answer the ultimate question; does the pleading give fair notice of the case to be made against the other party at trial, thereby minimising the risk of injustice resulting from surprise. [my emphasis]

13. Having referred to the above, as I explain below by reference to the particular parts of the pleading that the applicants seek to have struck out, the applicants’ motion should be upheld and the impugned parts of the pleading struck out. The only question then is as to whether the plaintiffs should have a further opportunity to plead their claim. Counsel for the plaintiffs seeks such an opportunity and submits that the claim could be repleaded “anew” in a “shortish time frame”. The applicants in their notice of motion sought orders that the relevant paragraphs be struck out without leave to replead as against the second defendant.

14. Ordinarily, where parts of a pleading are struck out an opportunity to replead will be given (see for example Rubenstein v Truth and Sportsman Limited [1960] VR 473 where Adam J considered that the preferable course, where there had been a clear infringement of the rule as to stating all material facts and not merely a failure to give sufficient particulars of facts which have been pleaded, was to strike out the offending pleading (albeit with liberty to amend) rather than to order particulars). The exercise of the discretion to grant or refuse liberty to replead (as against the second defendant) must be in accordance with the “dictates of justice” (see ss 56, 57 and 58 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act)). This will generally require consideration of the nature and degree of any prejudice that may be suffered by the grant or refusal of the application (as recognised in the context of an application for leave to amend pleadings in Itex Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104).

15. In the present case, where it cannot be said on the pleadings as they currently stand that there would be no tenable claim, I do not consider that the prejudice likely to be suffered at this stage of the proceedings if leave is given to the plaintiff to replead the claims sought to be made against the second defendant (and no particular prejudice was pointed to by the second defendant) would be likely to outweigh the prejudice to the plaintiffs of being denied such an opportunity. However, there must be a limit to the number of times a plaintiff is given the opportunity to replead (having regard to the overriding mandate for the just, quick and cheap resolution of the real issues in dispute and applying the principles articulated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27; (2009) 258 ALR 14). As Gleeson CJ observed in Trau v University of Sydney (1989) 34 IR 466 at 475 (quoted with approval in Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at [49] per Tadgell and Ormiston JJ (with whom Brooking J agreed)):

If one sees that a plaintiff’s lawyers are experiencing extreme difficulty in formulating with clarity and particularity their client’s cause of action, then that is often a very good indication that there is no cause of action.

16. In the present case, as I have noted, the plaintiffs have already had an opportunity to plead their case properly and it could hardly be said that their attention had not been drawn to the then perceived deficiencies of the Points of Claim that would need to be addressed. To have squandered that opportunity is most unfortunate. However, I am persuaded that a final opportunity to rectify the pleading defects should be allowed, subject to the applicants not being prejudiced from a costs point of view; not least because there was no articulation in correspondence by the applicants before the present application was brought as to the deficiencies in the pleading (another unfortunate aspect of the situation in which the parties now are).

17. In that regard, I should note that the reason that the lack of a complaint in advance as to the perceived deficiencies in the pleading should not in my opinion deprive the applicants of their costs of this application is that, even appraised of the applicants’ position – by the service of the notice of motion and affidavit in support, and by the detailed written submissions served on this application – the plaintiffs maintained in their argument before me that the pleading was adequate. Hence, I could not be satisfied that any correspondence before the filing of the notice of motion would have produced any different result in terms of obviating the need for the present hearing.

Relevant principles

18. The principles pertaining to the application of r 14.28 of the UCPR are well-settled and do not need here to be restated in any detail. As the plaintiffs note, the power under r 14.28 must be exercised in light of the overriding purpose as set out in the Civil Procedure Act and with a view to resolving the real issues in dispute (referring to Patronis v New South Wales [2018] NSWSC 516 at [48]ff per McCallum J (as her Honour then was)).

19. As made clear in the introductory comments above, pleadings must state all of the material facts that are necessary to constitute a complete cause of action and the relief sought with sufficient particularity to inform the other party of the case it is required to meet and to enable the eventual trial to be conducted fairly to all parties (see Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited [2017] NSWSC 1406 at [71]).

20. Particulars, even those that are clear and unambiguous, cannot rectify a deficiency in pleadings (see McGuirk v University of New South Wales [2009] NSWSC 1424 (McGuirk) at [33]; Hastie Group Ltd (in liq) v Bourne; Hastie Group Ltd (in liq) v Moore [2017] NSWSC 709 (Hastie v Bourne) at [237]). The purpose or function of particulars is not to take the place of necessary facts or matters which should form part of the pleading (see McGuirk at [33]).

21. A pleading is embarrassing if it is unintelligible, ambiguous, or (relevantly in the present case) so imprecise in its identification of material factual allegations as to deprive the opposing party of proper notice of the real substance of the claim or defence.

22. What is required, in a nutshell, is that it clearly set outs the material facts, which the plaintiff asserts make good its claim with sufficient particularity to enable any eventual trial to be conducted fairly to all parties (see Gunns Limited v Marr [2005] VSC 251 at [57]).

The claim as presently pleaded

23. The statement of claim pleads the following by way of factual background (at [1]-[8]), matters that, as I understand it, are common ground between the parties.

24. The first plaintiff (Lamai Di Palma) is the sole director and shareholder of the third plaintiff (Best Baht Pty Ltd) (statement of claim at [1]). Mrs Di Palma is the wife of the second plaintiff (Antonio Di Palma) (statement of claim at [2]).

25. The first defendant (Siriluck Fatima Chimmalee) is the sole director and shareholder of the fourth defendant (Real Money Transfer Pty Ltd) and a shareholder of the third defendant (Sydney Organic Supplier Pty Ltd) (statement of claim at [4]).

26. The second defendant (Michael Roger Evans) is the sole director, and a shareholder, of the third defendant (statement of claim at [5]). I was informed that Ms Chimmalee is the de facto partner of Mr Evans.

27. It is alleged, though I am not certain whether or not this is admitted, that at all relevant times the first defendant was a de facto or shadow director of the fifth defendant (International Pacific Group 1992 Pty Ltd) (statement of claim at [8A]).

28. Turning then to the substantive allegations, not all of which can be said to be common ground, the structure of the pleading is that it contains: allegations under the heading “[f]irst contact and proposal” (statement of claim at [9]-[10]), relevantly as to an Exchange Proposal and a Remitter Arrangement; allegations as to the terms of the “Exchange Proposal”, its implementation “at least initially” and the second defendant’s knowledge thereof and partaking in its implementation (statement of claim at [11]-[12A]); a paragraph alleging the making of certain representations (statement of claim at [13]); an allegation as to the operation of the Remitter Arrangement (statement of claim at [14]); allegations as to the participation of the first and second plaintiffs in the Exchange Proposal (statement of claim at [15]-[17]) and the receipt, control or possession of certain funds by the first and second plaintiffs (statement of claim at [17A]); the failure of the “defendants” to return moneys to the plaintiffs (statement of claim at [18]); and then the various causes of action to which those alleged facts are said to give rise – namely, breach of contract (statement of claim at [19]-[23]); constructive trust (statement of claim at [24]-[25D]); implied or resulting trust (statement of claim at [26]-[29]); a claim for moneys had and received (statement of claim at [30]); a claim in conversion (statement of claim at [31]); a claim for breach of s 18 of the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law (statement of claim at [32]-[35]) (Australian Consumer Law); and then the claimed relief (statement of claim at [36]-[43]).

Complaints made as to the adequacy of the pleading

29. Before turning to the particular complaints made by the applicants as to the adequacy of the pleading, in essence they appear largely to concern the failure to identify precisely what allegations are made as against particular defendants in the context of a pleading that in places refers to the defendants collectively and where the plaintiffs do not always make clear what is drawn from earlier parts of the pleading in amplification of the allegations in other parts of the pleading. Those complaints are in my view well-founded as will appear from the following analysis of the pleading.

30. By way of further explanation, those paragraphs of the statement of claim which include an alphabetical designation ([8A], [12A] and the like) are the additions to what formerly appeared in the Points of Claim. The other aspects of the pleading remain the same as appearing in the Points of Claim.

31. The paragraphs of the pleading sought to be struck out are identified in the notice of motion as [12A], [13], [15], [16], [17A], [19], [19A], [19B], [20], [21], [22], [23], [24], [25], [25A], [26], [27], [28], [29], [30], [31], [32(iii)]-[32(iv)] and [33].

Paragraph [12A] of the statement of claim

32. At [12A] the plaintiffs plead that:

The second defendant knew about the matters set out in paragraph 11 above and partook in the implementation of the Exchange Proposal in concert with the first defendant in accordance with paragraph 12 above.

33. Each of [11] and [12] appeared in the Points of Claim.

34. Leading up to the allegation at [12A], are the allegations about the first contact and proposal; the Exchange Proposal and Remitter Arrangement; and the initial implementation of the Exchange Proposal.

35. The plaintiffs allege that in or about September 2017, the first defendant contacted the first plaintiff for the first time (statement of claim at [9]); and (at [10]) that during the first and subsequent communications between them, the first defendant proposed to the first plaintiff that the first plaintiff:

a.   would take part in an arrangement whereby she would provide funds in Australian Dollars to the defendants, with which the defendants would bulk buy Thai Baht at lower rates than otherwise available through retail banks and exchange service providers and that the defendants would return the first plaintiff’s funds at a better exchange rate to her (Exchange Proposal); and

b.   would, in time, become a remitter of funds from individuals in Australia, who wished to remit funds to individuals in Thailand (Remitter Arrangement).

36. The plaintiffs allege at [11] that the Exchange Proposal had “the following elements”, there pleading four so-called “elements”, including (at (a)) that the first defendant would ask the first plaintiff to deposit Australian dollars “into bank accounts held or controlled by the defendants” and would quote a rate at which the defendants would bulk purchase Thai Baht (Purchase Rate); and (at (b)) that the first defendant would also quote a rate at which the Australian dollars deposited by the first plaintiff would be returned to the first plaintiff in Thai Baht (Return Rate) “with a view to the first plaintiff obtaining the benefit of the margin between a lower Purchase Rate and a higher Return Rate as a profit”.

37. Pausing here, it is noted that although there is a pleading of the “elements” of the Remitter Arrangement (statement of claim at [14]), no claim is subsequently made by the plaintiffs in reliance upon it, and hence the applicants have put this aside for the purposes of this notice of motion.

38. The allegation at [12] is that the Exchange Proposal was implemented “at least initially” in the manner set out at (a)-(c), namely, that: the first and second plaintiffs transferring funds into bank accounts held or controlled by the defendants in Australian Dollars; the defendants bought Thai Baht using the Australian Dollars “they had received from the plaintiffs and others” in bulk at rates substantially better than normal daily rates offered by retail banks and exchange services in accordance with arrangements with third parties (of which the plaintiffs are said to be unaware and which the defendants did not disclose to the plaintiffs); and, at the end of the Return Period, the Thai Baht being transferred to accounts held or controlled by the plaintiffs in Thai Baht.

39. Pausing here, what is clear from the pleading so far is that the “first contact” was between the first plaintiff and the first defendant; that the making of the Exchange Proposal was by the first plaintiff; that by the Exchange Proposal the first plaintiff was proposing an arrangement in which “the defendants” (without differentiation) would participate; that the proposal would involve the deposit of funds (at the first defendant’s request) into (unidentified) bank accounts of or controlled by the defendants (again without differentiation between the defendants); and that the allegation of initial implementation of the Exchange Proposal is by the transfer of moneys into the said bank accounts and by the purchase by the (undifferentiated) defendants of Thai Baht using Australian dollars received from the plaintiffs and the transfer by the (undifferentiated) defendants of Thai Baht into accounts held or controlled by the plaintiffs.

40. The applicants note that there is no pleading that the third or fourth defendant had any involvement in or knowledge of either the Exchange Proposal or Remitter Arrangement.

41. As to the allegation at [12A] of knowledge of the second defendant and his partaking in the implementation of the Exchange Proposal, the applicants identify three problems.

42. First, that there is no identification of the material facts upon which the plaintiffs rely to support those “bald conclusions” (as they say is required by r 14.7 of the UCPR).

43. Second, that (as became a constant refrain throughout the submissions) that there are 128 separate transactions relied upon by the plaintiffs (as listed in Exhibit 1, that being a list of transactions taken from the affidavit sworn 10 August 2018 of the second plaintiff). The applicants complain that there is no identification of which transactions each of the first defendant or second defendant is said to have been involved in, and how they were so involved. It is submitted that this highlights the necessity for the plaintiffs to plead “each individual contract”. Pausing here, the plaintiffs (somewhat inconsistently with the pleading at [19]) say that there is only one contract here alleged (pursuant to which there were various transactions) not 128 separate contracts. That gave rise to a difficulty in identifying precisely what constituted the acts giving rise to the formation of that single contract and when precisely it was concluded as between which of the parties.

44. Third, it is said that the pleading itself does not disclose a reasonable cause of action (see further below at [83]).

45. As to the complaint made by the applicants in relation to [12A] of the statement of claim, the plaintiffs say that [12] has already been admitted in the Points of Defence without any qualification (see [5] of the Points of Defence). The plaintiffs further contend that the applicants have already admitted the facts that underlie the allegation as to “how” the Exchange Proposal was implemented. The plaintiffs say that the second defendant’s knowledge of the matters alleged at [11] (i.e., of the “elements” or terms of the Exchange Proposal) arises from [12] (i.e., the implementation of the Exchange Proposal). Further, they say that the second defendant’s implementation of the Exchange Proposal is consistent with the admission he has already made.

46. In that context, it is submitted that the complaints made by the applicants (in their submissions at [39]-[43]) are unfair and self-serving. It is noted that, in their first strike-out application, the applicants complained that the second defendant had not been identified as having partaken in the Exchange Proposal. The plaintiffs say that, now, he is identified. It is said that it is clear from the rest of the pleading (including [17A] and [19]) that the allegation against the second defendant is in relation to all of the (128) transactions. (And it is said that the contention that [12A] of the statement of claim does not set out a cause of action fails to take account of the rest of the pleading and should be rejected.)

47. The significance of the complaint as to [12A], interposing here, is that it forms the basis of, or perhaps more accurately is relied upon as the basis for, the allegations of breach of contract later made in the statement of claim.

Consideration of complaint as to [12A]

48. In simplistic terms (and approaching the matter in conventional contractual terms) what seems to be alleged to this point of the pleading, is that: an offer was made by the first defendant to the first plaintiff; that offer contemplated that the “defendants” would take certain steps in relation to funds transferred into bank accounts held or controlled by them; that the second defendant knew about the offer; and that the defendants (including, expressly, the second defendant by partaking “in concert with the first defendant” in the implementation of the proposal the subject of the offer) “implemented” the Exchange Proposal (at least initially) by taking the steps pleaded at [12]. In terms of offer and acceptance, it seems to be alleged that acceptance by one or more of the defendants (of an offer made to the first defendant alone) was by way of their conduct in the implementation of the Exchange Proposal.

49. What is not made clear is when it is said that the contract was formed. Was it the first occasion when funds were transferred into an account held or controlled by one of the defendants (bearing in mind that it is said, and seemed to be accepted by the plaintiffs, that the second defendant did not control all of the bank accounts into which funds were allegedly transferred pursuant to this Exchange Proposal)? Nor is it clear how it is alleged that acts taken by the second defendant with knowledge of a proposal made to the first defendant (or acts taken by the third or fourth defendants, who are not alleged to have any knowledge of the making of the Exchange Proposal) are said to constitute acceptance of an offer not made to him in the first place. Is it, for example, contended that the offer was made to the first defendant acting in some kind of representative capacity for the second defendant and the second defendant by his conduct accepted that offer or ratified the first defendant’s acceptance of that offer on his behalf? Or is it alleged that the second defendant somehow by his conduct held out that he would be bound by an arrangement entered into between the first defendant and the first plaintiff such that he would now be estopped from denying the existence of a contract binding him to the terms of the Exchange Proposal.

Paragraphs [13], [32], [33] and [34] of the statement of claim

50. These paragraphs of the pleading contain allegations as to a number of representations (express or implied) constituted by: the making by the first defendant of the Exchange Proposal; and by the implementation of the Exchange Proposal by the first and second defendants (statement of claim [13]). (Seemingly, no representation is therefore alleged to have been made by the second defendant in relation to the making of the Exchange Proposal as such.)

51. The alleged representations which the plaintiff contends were made are pleaded at [13] of the statement of claim. The pleaded representations are to the effect pleaded at [13(a)-(d)] and relate to matters concerning all of the defendants (without differentiation). See, for example, at [13(a)-(c)]:

a.   the defendants would hold the monies the plaintiffs paid them or they received (whether directly or indirectly) that were paid to any of them by the plaintiffs, in accordance with the Exchange Proposal;

b.   the defendants had not rights to monies the plaintiffs paid them or they received (whether directly or indirectly) that were paid to any of them by the plaintiffs;

c.   the defendants would return the monies the plaintiffs paid them or they received (whether directly or indirectly) that were paid to any of them by the plaintiffs, at the end of the Return Period at the Return Rate or, if that Return Rate could not be obtained, at a rate applicable at the time the Return Period ended

…

52. I note the ambiguity in the concept of receipt of moneys “directly or indirectly”. It is not clear what is meant by that in the context of this pleading. Is it alleged that moneys received in bank accounts held or controlled by the first defendant, for example, are moneys received indirectly by any of the remaining defendants; and, if so, on what basis?

53. The applicants complain that the pleading is prejudicial and embarrassing in failing to identify in the statement of claim: which of the first and second defendants made any such representation by implementing the Exchange Proposal (and how); whether such representations were express or implied (as it is accepted appears to be contemplated by the pleading); what material facts are relied upon to support the conclusion that the second defendant was involved in implementing the Exchange Proposal; and which of the 128 separate transactions it is alleged each of the first defendant and second defendant was involved in for the purposes of implementing the Exchange Proposal. The applicants say that they cannot proceed to trial without knowing precisely by whom the representations are said to have been made, and how and when they were made.

54. In particular, it is submitted that the plaintiffs are required properly to articulate the material facts which they rely upon to support the proposition that the first defendant and second defendant were involved in implementing the Exchange Proposal in relation to each of the 128 transactions in question.

52. The complaints made as to [13] of the statement of claim flow on to the allegations at [32]-[34] of the statement of claim, which contain the allegations (further and in the alternative to the preceding claims) to the effect that the making of the representations was conduct that was misleading or deceptive or likely to mislead or deceive in breach of s 18 of the Australian Consumer Law. With the exception of the representation at [13(d)], it is alleged that the representations were as to a future matter and were made without reasonable grounds, thus being taken to be misleading (see [32]) and that each of the representations was false and misleading at the time it was made “as the defendants have failed or never intended to return any of the […] Funds to the plaintiffs” (see [33]). It is alleged that the plaintiffs relied on those representations ([32]) and that they would not have given the funds to the defendants had they been aware of the matters alleged at [33].

53. As to the particulars of the representations (see the particulars to [32]), it is said that they were made by the first defendant orally and/or in writing as set out in the plaintiffs’ affidavits made 10 and 13 August 2018; and made by the “defendants implementing the Exchange Proposal” – as to the latter it is said that the representations were “implicit in the defendants’ conduct in implementing the Exchange Proposal”).

54. As to the complaints made in relation to [13], [32], [33] and [34] of the statement of claim, the plaintiffs say that the matters that the applicants claim should have been identified in the statement of claim (see applicants’ submissions at [46], summarised at [55] above) are matters of particulars (but that they are, in any event, provided in [32] of the statement of claim).

55. As to the balance of the applicants’ submissions at [44]-[47] (as I read them the balance being only the proposition that there has been a failure properly to articulate the material facts relied upon to support the proposition that the first and second defendants were involved in implementing the Exchange Proposal in relation to each of the 128 transactions relied upon), the plaintiffs say that these paragraphs “sound hollow” in light of the fact that this (and the earlier strike-out) application have been made after the applicants have served all of their evidence in chief relating to those matters.

Consideration of complaints as to [13], [32], [33] and [34]

59. The significance of the complaint as to lack of identification of the making of the alleged representations goes, as I understand it, to the claims made for loss and damage in reliance upon the particular representations. Counsel for the applicants posed the hypothetical example that the relevant representations were made on the 126th transaction, saying that the loss arising from the Australian Consumer Law claim could then only be in respect of the 126th-128th transactions (see T 5.50).

60. I consider that there is force to the complaints made by the applicants in this respect, in circumstances where there were multiple transactions and not all the funds were deposited in bank accounts controlled or held by the particular defendants.

Paragraphs [15]-[16] of the statement of claim

61. The plaintiffs allege that in the period November 2016 to December 2017, the first and second plaintiffs participated in the Exchange Proposal “by transferring their own funds” to the defendants ([15]). It is noted that no identification is made of how and when those funds were transferred; nor to whom they were paid.

62. At [16] of the statement of claim, the plaintiffs further allege (again, the applicants say, without any identification of the identity of the persons or entities or the amounts of money in question) that unidentified third parties transferred their funds (which are not quantified) to the first and second plaintiffs who used those funds to implement the Exchange Proposal ([16]).

63. The applicants complain that the pleaded allegations in [15]-[16] of the statement of claim contend that (through unidentified conduct on unidentified dates), the first and second plaintiffs transferred unquantified amounts of funds to the defendants, without identification of which defendant (if any) received funds.

64. The pleading, in the applicants’ submission, must state the material facts upon which the claim for relief is founded; and that the pleaded allegations at [15]-[16] of the statement of claim fail to do so in that the allegations are vague and lack any form of particularity.

65. In response to the complaints as to [15] and [16] of the statement of claim, the plaintiffs say that these should be rejected “especially in light of” the applicants’ response to those same paragraphs in their Points of Defence at [8] and the fact that extensive evidence has already been served in chief by the plaintiffs as to the sources of those funds.

Consideration of complaints as to [15]-[16]

66. The response to the Points of Claim in the Points of Defence is to the effect that the defendants do not know and cannot admit the allegations in [15]-[16] (see at [8]-[9]), and similar complaint is there made that the amount said to have been transferred is not pleaded. It is unclear to me how it is that this assists the plaintiffs in their submission that the complaints should be rejected. It seems to me consistent with the complaint here being made, which is that there has been no material fact pleaded as to the times, dates, amounts and identities of parties.

67. It is submitted by the applicants that if the pleading is in accordance with the schedule (Exhibit 1), then that should be pleaded “and consistently it should be pleaded in relation to each individual contract entered into so the defendants can properly understand how they are said to have been involved in each transaction”. It is further submitted that the moneys in question cannot possibly have been transferred to all defendants (since the defendants do not have joint accounts).

68. Particularly in circumstances where there are claims made of the holding of moneys on constructive trust and of conversion, it is clear that there should be a proper pleading of what moneys were transferred to which of the defendants (transaction by transaction). The fact that this detail may emerge in affidavits is not sufficient to meet the requirement for a proper pleading.

Paragraph [17A] of the statement of claim

69. At [17A], in the section headed “[p]articipation in the Exchange Proposal”, the plaintiffs plead that the “first and second defendants received, controlled or had possession of the Plaintiff’s Own Funds and the Others’ Funds”.

70. The applicants criticise this as a rolled up conclusion not supported by any pleading of material facts. They point out that this is an allegation that two separate persons received, controlled or had possession of funds received in 128 separate transactions.

71. In particular, the applicants identify two problems with that pleading.

72. First, that there is no pleading of any material fact to support the pleaded conclusion (noting, once again, that there were 128 different transactions which are relied upon by the plaintiffs). The applicants say that it is not possible for the first and second defendants to understand how each is said to have received, controlled or had possession of all of those moneys, in the absence of the material facts being pleaded.

73. Second, that the pleaded allegations against each of the first and second defendants should be set out separately. The applicants complain that it is impermissible, and unhelpful, to “roll up” allegations against multiple defendants in the same paragraph.

74. As to the complaint made about [17A] of the statement of claim, the plaintiffs’ response is that all the defendants (in the Points of Defence) have admitted [12] of the Points of Claim (to which I have referred above), namely that the first and second plaintiffs transferred funds into bank accounts held or controlled by the defendants in Australian dollars. As to the number of transactions, the plaintiffs repeat that they have already served their evidence in chief as to the sources of the funds and that the defendants have similarly served their evidence in chief.

Consideration of complaint as to [17A]

75. In the Points of Defence, there is a non-admission as to [15]-[17] of the Points of Defence, which relevantly includes the allegations as to the transfer of the plaintiffs’ own and third parties’ funds into bank accounts controlled or held by the defendants. Again, insofar as receipt of particular funds is alleged to give rise to allegations of constructive trust and conversion, these allegations should be properly pleaded. There is force in my opinion to the complaint articulated in oral submissions as follows:

That pleading pleads a rolled‑up conclusion that the first and second defendants received, controlled or had possession of the plaintiff’s own funds and the others’ funds. In my submission, there are two problems with that pleading. The first problem is that there is no pleading of how it is said each of the first and second defendant had that relevant receipt, possession and control of each amount transferred. Again, 128 different transfers. For example, if the fifth defendant received the amount of half a million dollars, a company it is not pleaded the second defendant had anything to do with, how is it said that he received, had possession or control of those moneys? That’s why, in my submission, it has to be properly pleaded out.

The second is that each of the pleadings in respect of that receipt, possession and control should be distinguished and separated as between the first defendant and second defendant.

76. At [18], for example, the plaintiffs allege that $1.2m of their funds and $1.3m of third parties’ funds were transferred to the defendants, who have failed to return those funds. The defendants in their Points of Defence acknowledge receipt of “the repayment of $2.5m” but go on to say that “they only received $2.5 million as particularised by the plaintiff in the affidavit” and that they “never actually received the other $2.5 million from the plaintiffs” (these being, as I understand it, sought to be relied upon by the plaintiffs as admissions); and further they say that “funds received from, or on behalf have all been returned to those parties, or at their direction, in Thailand”. The very fact that the plaintiffs seek to rely on matters of this kind as admissions points to the need for proper pleading of the particular transfers alleged in respect of each of the respective defendants.

Paragraphs [19]-[23] of the statement of claim

77. The contractual claim for damages is pleaded at [19]-[23] of the statement of claim.

78. At [19], the plaintiffs plead that:

Each of the transactions that are set out in paragraph 26 of the affidavit of [the second plaintiff] made on 10 August 2018 was effected pursuant to a contract between the first and second defendants and the first and second plaintiffs (Contracts).

79. At [19A] it is alleged that the terms of the “Contracts” were as set out in [11] and [12] (though [12] in its terms alleges implementation of the proposal and is not a term of the proposal as such). At [19B] a further term of the “Contracts” (that the plaintiffs would transfer funds also into bank accounts in the name of the third, fourth and fifth defendants) is pleaded.

80. It is alleged that the plaintiffs entered into the Contracts: “[i]nsofar as it [sic] concerned” their own funds, as principals ([20]) and “[i]nsofar as it [sic] concerned the Others’ Funds as agents or received the Others’ Funds on trust” ([22]).

81. It is alleged that by failing to return or ensure the return of the said funds, the defendants breached the “Contracts”, causing loss or damage being the full amount of the funds that would have been received had the Contracts been performed ([23]); and that the plaintiffs are entitled to recover the “Others’ Funds” as agents of the third parties or as trustees ([23]).

82. The applicants say that there are two fundamental issues with the form of the breach of contract claim. First, that the Exchange Proposal is only pleaded to have been negotiated between the first plaintiff and first defendant. The applicants say that there is a complete absence of any material fact which purports to explain how the second defendant is a party to each individual contract. Second, that there is no identification of what “each separate” transaction is; and no material facts as to the parties, dates, times or amounts are pleaded.

83. In those circumstances, it is submitted that the pleading of the contractual claims is prejudicial, embarrassing and, in relation to the second defendant, fails to disclose a reasonable cause of action.

84. To the extent that the plaintiffs rely upon the pleading at [12A] to explain the pleading at [19] that the second defendant as a party to “each contract”, it is submitted that even if [12A] were to stand it does not have the effect that the second defendant becomes a party to each separate transaction.

85. The applicants say that their primary complaint in respect of the pleading at [20]-[23] flows from the complaints made in respect of [19] and that, if [19] is struck out, the plaintiffs should be ordered properly to plead their contractual claims in relation to each individual contract which is relied upon by them.

86. As to the complaint made in relation to [19]-[23] of the statement of claim, the plaintiffs point out that [19] is pleaded by reference to a schedule in the second plaintiff’s affidavit that sets out each transaction and its details; and hence they say that the complaint made as to lack of identification of each “separate” transaction (see the applicants’ submissions at [57]) is without proper basis.

87. The plaintiffs point out that [19A] refers back to [11] and [12]; and that the defendants have admitted [12] in their Points of Defence and the first defendant has made certain admissions in relation to [11]. It is said that [12A] pleads the second defendant’s knowledge of the Exchange Proposal.

88. The plaintiffs dismissively characterise the criticism made in the applicants’ submissions (at [54]-[60]) as to this part of their pleading as “point taking based on form”. It is said that the statement of claim: has claimed a contract ([19]); has identified the parties to the contract ([19]; [21]; [22]); has set out its terms ([19A], by reference to [11] and [12]); has pleaded a breach ([22]); and has pleaded that damages have flowed from the breach ([23]). Thus, it is said that a reasonable cause of action has been pleaded and is clearly understandable on the face of the statement of claim.

89. It is, thus, said that the applicants’ complaints are baseless, especially in light of the fact that: they have already pleaded to these allegations; they have never sought particulars; and they have had the benefit of extensive evidence relating to the plaintiffs’ claims.

Consideration of complaints as to [19]-[23]

90. The fundamental difficulty I have with the pleading of the contractual claim is that I am not satisfied that there is a clear articulation of the material facts on which reliance is placed for the allegation that a contract was formed (including as to how and when it was formed; and between whom it was formed). The pleading at [19] exacerbates this problem by suggesting that what is being alleged is a series of individual contracts (i.e., that each of the transactions was effected pursuant to a contract), in circumstances where the defined term used is in the plural.

91. In oral submissions the plaintiffs’ case was said to be that there was only one contract, pursuant to which each of the 128 transactions was effected. I accept that use of a plural noun by way of definition may simply be infelicitous but the problem it highlights is in identifying from the pleading precisely when, how and by whom it is alleged that the contract was formed.

92. As the balance of the paragraphs in this section flow from that, they should all be struck out and repleaded, as the applicants contend.

Paragraphs [24]-[25D] of the statement of claim – constructive trust

93. As noted above, the plaintiffs also contend, in the alternative, that the defendants received the moneys (the plaintiffs’ own funds and the Others’ Funds) on trust for the plaintiffs (the plaintiffs being either beneficial owners of their own funds or as trustees holding the Others’ Funds on trust for third parties ([24])). It is alleged that, in the circumstances set out herein (presumably the pleading as a whole) it would be unconscionable for the defendants to retain the said funds “and in the premises the funds transferred are held on constructive trust for the plaintiffs”.

94. At [25A]-[25D] of the statement of claim, it is alleged that: any moneys that any of the defendants received (comprising the said funds) “and which were paid to any of the other defendants (including the second defendant) or to other parties otherwise than in accordance with the Exchange Proposal were paid in breach of trust ([25A]); that each of the defendants that received moneys in accordance with [25A] received such moneys in breach of trust ([25B]); that each of the defendants received the moneys knowing that the moneys were paid to them in breach of trust ([25C]); and that, to the extent that the third to fifth defendants paid moneys in breach of trust, the first and second defendants knowingly assisted in those breaches of trust ([25D).

95. The applicants say that the pleading fails to identify how any trust was formed, whether it is institutional or remedial, and which of the defendants is alleged to hold what quantum of funds on trust for benefit of which plaintiff. Complaint is made that the “rolled up” allegation of a constructive trust is not permissible as it does not fairly expose the basis of the claim to the defendants.

96. Three other problems are identified with this part of the pleading.

97. First, the allegation at [25A]-[25B], that any moneys received by any defendant which were then paid to another defendant were paid in breach of trust and any receiving defendant therefore received those moneys in breach of trust. The applicants say that that claim is inconsistent with the pleading at [17A] (that the first and second defendants received, controlled or had possession of the said funds), but in any event that there is no pleading of which funds or transfers the plaintiffs are here relying upon. It is submitted that if there is a basis to plead the claim at all, then the plaintiffs ought to be required to plead out what transactions they rely upon in support of the claim.

98. Second, that it is pleaded at [25C] that each of the defendants received moneys knowing those moneys were paid in breach of trust. The applicants complain that there is no pleading, or particulars, of any such knowledge. It is submitted that, to understand the pleaded claim, the applicants must be appraised of how it said that each had knowledge of any breach of trust.

99. Third, that it is pleaded at [25D] that, to the extent the third to fifth defendants paid moneys in breach of trust, the first and second defendants assisted those breaches. It is noted that there is no pleading in that paragraph of: what transactions are relied upon; how the first and/or second defendant effected each of those transactions; or how those transactions constituted payments made in breach of trust.

100. In response to the criticisms made of [24] to [25D] of the statement of claim, the plaintiffs say that the complaint made in the applicants’ submissions at [62] (see [95] above) should not be accepted in light of the allegations made by the plaintiffs at [11], [12], [12A] and the applicants’ admissions in the Points of Defence in respect of those allegations.

101. It is said that the complaints as to the allegations contained in [25A] and [25D] miss the important words “otherwise than in accordance with the Exchange Proposal”. It is said that the transfers of the “Plaintiffs’ Own Funds” and “Others’ Funds” are matters of which only the applicants have knowledge (noting that there has been no discovery yet) and that the applicants have claimed that they have returned all of the moneys to various other parties “the payments to whom has been the subject of hundreds of pages of evidence by the applicants”.

93. It is submitted that the knowledge of the arrangements that made up the Exchange Proposal has been set out in [11]-[12A] of the statement of claim and hence that the complaint as to the lack of a pleading as to knowledge (see the applicants’ submissions at [65]) lacks substance and ought to be rejected.

Consideration of complaints as to [24]-[25D]

103. I do not accept all of the criticisms made of these paragraphs. In particular, I do not consider that it is incumbent on the pleader to plead as to whether an alleged constructive trust is institutional or remedial (a taxonomic debate over which academic and judicial minds may differ). That said, an allegation of Barnes v Addy liability based on knowledge of a breach of trust requires more than the bare allegation of knowledge here contained. Which of the payments, if any, are alleged to have been paid in breach of trust and what are the circumstances relied upon for that conclusion? What are the material facts (beyond the mere allegation of knowledge of the terms of the Exchange Proposal) that are relied upon for the allegation that each of the defendants has knowledge of a breach of trust of any one or more (and which) of the other defendants?

104. The rules as to the pleading of knowledge are clear. This pleading fails to meet those requirements.

Paragraphs [26]-[29] of the statement of claim – implied or resulting trust

105. The alternative claim that moneys are held on implied or resulting trust is pleaded at [26]-[29] of the statement of claim.

106. The applicants say that the pleading seeking the imposition of an implied or resulting trust: relies upon a mutual understanding between unidentified parties; does not plead the material facts giving rise to that mutual understanding; and relies upon a mutual intention that funds transferred by one or more plaintiffs to one or more defendants would be impressed with a trust, but fails to identify how that intention arose and between which parties, including which defendants are said to hold the funds on trust.

107. The applicants say that this is not a proper way to plead the trust claim. They say that they have to know how it said that the mutual intention or understanding arose, between which parties and, in addition, which defendants are said to hold moneys on trust for the purposes of the claims made in these proceedings.

108. The response by the plaintiffs to the complaints made in relation to [26]-[29] of the statement of claim, is that: [26] identifies the transactions and the nature of the mutual understanding between the parties; [27] sets out an additional term of that mutual understanding; and those paragraphs are to be considered in light of the rest of the pleadings, including [11] and [12], which it is said set out the material facts that give rise to the understanding between the parties.

Consideration of complaints as to [26]-[29]

109. In my opinion, this part of the pleading is also deficient. Apart from anything else, there is nothing in these paragraphs to confine the circumstances alleged to give rise to the alleged mutual understanding to what is alleged at [11] and [12]; and even if read as so limited, there is nothing to identify who is alleged to have held the mutual understanding (insofar as that is attributed to the corporate defendants) nor as to how the second defendant is said to have reached a mutual understanding of the kind alleged and with whom. If what is being alleged is some kind of Quistclose purpose trust, then the pleading fails to make this clear.

Paragraphs [30]-[31] of the statement of claim – moneys had and received/conversion

110. The alternative claim that moneys have been had and received by the defendants and the claim for conversion are pleaded at [30]-[31] of the statement of claim.

111. The primary complaint the applicants make in relation to those paragraphs is that it is not pleaded which defendant has received which funds. Reliance is placed by the applicants on the fact that there has been no response to a Notice to Admit Facts served on the plaintiffs on 15 November 2018, requiring them to admit that the second defendant had not received any funds transferred by any plaintiff. (It is said that the pleading identifies all the funds the subject of these proceedings as funds said to have been transferred and that there is no allegation that any plaintiff provided any defendant funds other than by transfer.) The applicants note that as there has been no response to the Notice to Admit Facts, it must be taken to be common ground that the second defendant has not been transferred any funds by any of the plaintiffs (relying upon UCPR 17.3(2)).

112. The applicants submit that if, as they contend is now an admitted fact, the second defendant has not been transferred any funds by any of the plaintiffs (being the sole basis upon which the evidence reveals funds were advanced), then no reasonable cause of action can be maintained against him for moneys had and received. It is said that this illustrates the importance of the plaintiffs being required properly to plead the claims as against each of the defendants.

113. The plaintiffs’ response to this criticism of [30]-[31] of the statement of claim, is to point to the admission in their Point of Defence of the facts pleaded in [12] and to the content of the contract claims against the first and second defendants. The plaintiffs say that this criticism of the pleading should be rejected.

Consideration of complaints as to [30]-[31]

114. The admission as to [12] of the Points of Claim goes to the allegation that “at least initially” the Exchange Proposal was implemented by the taking of the steps there alleged. The difficulty I see with the reliance placed on this is that the allegation is a broad brush reference to “the defendants” and it is by no means clear what is being admitted by [5] of the Points of Defence. In any event, if there is to be an allegation of moneys had and received or of conversion, it is incumbent on the plaintiffs to identify with precision what funds are said to have been received to the use of each defendant or converted by each defendant.

115. I consider the criticism of these paragraphs also to be well founded.

Determination

116. In Collier v Country Women’s Association of New South Wales [2016] NSWSC 1361 (from which leave to appeal was refused – see Collier v Country Women’s Association of New South Wales [2017] NSWCA 22), McCallum J (as her Honour then was) refused leave to amend a pleading by the annexure thereto of an affidavit. Relevantly, her Honour referred (at [10]) to what had been said by Bryson J in Northam v Favelle Favco Holdings Pty Ltd (Supreme Court (NSW), 7 March 1995, unrep) as to what a pleading is to contain and as to the requirement for particularity of pleading extending to all causes of action; and referred to his Honour’s explanation as to the unfairness to a defendant if the defendant is required “to flesh out general expressions or indirect allusions by piecing together information in other documents such as affidavits or experts’ reports”. Insofar as the plaintiffs have throughout the course of submissions responded by reference to material to be found in the affidavit evidence, that is not a satisfactory means of pleading their claims.

117. In Hastie v Bourne, I considered the pleading requirements. I noted there (at [237]) that pleadings must state all of the material facts that are necessary to constitute a complete cause of action and the relief sought (see Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591 (Mitanis v Pioneer Concrete) at 44,151-44,152; Wride v Schulze [2004] FCAFC 216 at [25]); and that particulars, even those that are clear and unambiguous cannot supplant the deficiency in pleadings (Bond Corp Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 223 (French J, then sitting in the Federal Court); Mitanis v Pioneer Concrete (Goldberg J at 44, 154); and PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407 at [46] (Campbell J, as his Honour then was)).

118. In the present case, the difficulty I have already noted with the pleading of the contractual claim is that it is unclear whether one contract or a series (128 in total) of separate contracts is being pleaded; and as to what facts are asserted as the basis for the allegation of each such contract, including the parties thereto and how and when the contract was formed.

119. As to the claim based on the alleged representations, the complaint is that at [13], which is where the representations are pleaded, there is no identification of any such representation which was made by either the first or second defendant when implementing the exchange proposal; there is only a pleading that representations were made by that implementation. The making of the Exchange Proposal by the first defendant and the implementation of the Exchange Proposal by the first and second defendants are alleged to have constituted a number of representations. I accept the submission that the date on which the alleged representations were made goes directly to reliance and loss.

120. A further problem with the pleading is the “rolled‑up conclusion” that the first and second defendants received, controlled or had possession of the plaintiffs’ own funds and the others’ funds. There is no identification of who, as between the first and second defendants is alleged to have had the receipt, possession and control of each amount transferred. Further, there are various allegations made in relation to the receipt or transfer of moneys (encompassing some 128 separate transactions) without differentiation between the respective defendants. The applicants ask, rhetorically (but understandably) how it is alleged that if the fifth defendant received a particular amount, the second defendant is alleged to have received had possession or control of those moneys (given that the fifth defendant is a company in respect of which it is not alleged that the second defendant had any association).

121. I have also referred to the allegations based on knowledge or mutual understanding that have not in my opinion been properly pleaded in accordance with the rules.

122. The difficulty with the pleading can be illustrated by my attempts to ascertain in the course of oral submissions precisely what was being alleged by way of contract. The position, I was informed, was that the plaintiffs are alleging a single contract (though, unhelpfully, the pleading defines each transaction as a separate contract). I was told that (at [10]) there is a pleading of the Exchange Proposal by the first defendant to the first plaintiff; that acceptance of that proposal is pleaded at [12] (i.e., by the implementation of it). In other words, it is said that there is an offer made, the terms of which are set out at [11], and the allegation at [12] is that acceptance of that offer occurs by conduct by the implementation of the proposal. Acceptance by conduct is not an untenable allegation but the issue then arises as to how the second defendant is alleged to become bound by a contract in circumstances where it is not alleged that the proposal or offer was made to him (or that it necessarily involved him) but simply that he had knowledge of it. The knowledge on behalf of the second defendant is said to arise solely from his admission of [12] that he was involved in the implementation of the proposal.

123. There seems to be no pleading of the material facts on which it is alleged that the second defendant had that knowledge. The plaintiffs point to [12A] and the admission by the defendants that the first and second plaintiffs transferred the funds into bank accounts controlled by (all of) the defendants. However, it is not clear how it is said that knowledge of the Exchange Proposal plus transfer of moneys into the second defendant’s account or accounts controlled by him of itself is said to establish knowledge of the terms of an offer put forward by the first defendant to the first plaintiff. The plaintiffs then rely upon the next steps (that the defendants bought Thai Baht using the funds and transferred them at the end of the Return Period), without identifying which defendant or what amounts. Arguably, the Exchange Proposal might be a standing offer capable each time funds were accepted of giving rise to a separate contract but it is not clear that this is what is intended to be pleaded (and this was disavowed by the plaintiffs). How then, and at what time, relevantly, is it alleged that the single contract was formed and how did the second defendant become bound thereby? In that regard the allegation that the second defendant acted “in concert” with the first defendant is also unclear. What facts are relied upon to support that conclusion?

124. None of the defendants should be in any uncertainty as to what is being alleged against him, her or it. Each is entitled to know what case he, she or it has to meet. So, for example, [12A], as I read it, does not adequately tell the second defendant what case the second defendant has to meet. It is an allegation of knowledge about certain matters. There is not an adequate pleading of the particular facts relied upon for the allegation of knowledge. If knowledge by the second defendant of the matters set out in [11] is to be inferred from the fact that certain steps were taken by the second defendant then that should be clearly pleaded.

125. As noted above, at [19], each transaction is said to be effected pursuant to “a contract” but then the transactions appear to be defined as “contracts” (see the use of “contracts” (plural) and the plural term is used in [19A]-[22]). I was informed that the allegation is that there is one contract pursuant to which 128 different transactions occurred not 128 separate contracts. Asked when the single contract was formed, the response was that [12] is the reference point and that that speaks of the implementation of the proposal. I was then told that the contract is alleged to have been formed the first time some funds were transferred into the account (or perhaps the first time that a transaction was made pursuant to a contract). It was said that “[t]he contract was made when the exchange proposal, as defined, began to be implemented by the parties. Then the transactions were made pursuant to those terms of the exchange proposal”.

126. As I understand it, what is intended by way of the pleaded claim is that there was an offer by the first defendant to the first plaintiff (the Exchange Proposal), acceptance of which (by both the first and the second defendants) was by implementation of the Exchange Proposal. It is accepted that there were several bank accounts into which the funds were placed but it is said that ultimately they are controlled by the first and second defendants (though none of that appears to be pleaded). I was told that the date the contract first came into existence was the day that there was a payment to a bank account in implementation of the proposal but what is not clear is how it is alleged that payment into one defendant’s account (say, the fourth defendant) is acceptance by a defendant (say, the second defendant) who did not control the account.

127. At [12], it is simply pleaded that funds were transferred into bank accounts “held or controlled” by the defendants but it is accepted, as I understand it that the second defendant did not control all of the bank accounts (in particular that he did not control the bank account of the fourth defendant). Asked, how, if the second defendant did not control the fourth defendant's bank account, it was said that a contract came into existence between the plaintiffs and the second defendant by reference to moneys being paid into the fourth defendant's account, the answer was that the “contract is an overarching contract between those parties”.

128. Therefore, as distilled in the course of argument, the steps in the analysis seem to start with the allegation that between the first and second plaintiffs and the first and second defendants there was a contract ([19]); that the exchange proposal was that moneys would be transferred into accounts controlled by the first and second defendants, and they would invest it, and they would return the funds to the plaintiffs; and that it was admitted that they implemented that exchange proposal. The contracts are not claimed as between the first and second plaintiffs and each of the recipients of the funds. The contract is claimed to have been between the first and second plaintiffs and the first and second defendants. The conduct relied upon is said to be conduct that amounts to acceptance of a proposal made to somebody else, the first plaintiff. The allegation at [12A] is simply that the second defendant was aware of the terms of the proposal and had knowledge of the terms the proposal and the elements of it. It is said that “that paragraph links him to the bases on which he went on to implement the exchange proposal, which again he has admitted”.

129. It is submitted by the plaintiffs that the Points of Defence have admitted various facts; that those have been accepted for months in this proceeding, and that extensive evidence has been already led by the parties on these same issues. It is said that the payments are particularised, and have been accepted and referred to as particularised by the defendants (and the plaintiffs point to the allegation by the defendants in the Points of Defence that the payments have been returned as directed).

130. I am, however, not persuaded that the matter should go forward to trial based on the pleading as it currently stands (having regard to the difficulties that have been identified in the pleading). The defendants are entitled to know precisely what case they have to meet; and the trial judge, whoever he or she may ultimately be, must be able to discern from the pleadings precisely what matters are in issue. For those reasons, I am persuaded that the impugned paragraphs of the statement of claim should be struck out.

131. The applicants argued that no leave should be granted to replead the claims against the second defendant on the basis that the plaintiffs have now had two attempts at properly articulating a claim, based on material facts, against the second defendant, and have been unable to do so.

132. I considered in Hastie v Bourne submissions as to the discretion to permit a party to replead (see from [267]). There, the plaintiffs had pointed to the admonition by the High Court that a plaintiff should not be denied the right to prosecute a claim unless it is clearly demonstrated that there is no arguable cause of action (referring to General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; [1964] HCA 69 (Barwick CJ) and Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1 (Dixon J)); and had noted that it is well established that the plaintiff’s case should be taken at its highest on a pleading application such as an application for leave to amend (referring to S1 v The Trustees of Marist Brothers [2016] NSWSC 970 (S1) at [11]). The plaintiffs had there contended that leave to replead ought be granted unless the Court takes the view that the proceeding is frivolous or vexatious or no reasonable cause of action is disclosed (referring to Steiner v Strang [2016] NSWSC 9 at [26]-[27], [49]; S1 at [51]-[52]) or that the case sought to be put is “hopeless” or “manifestly groundless” (referring to Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 at 536; and Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676 at [254]-[256]).

133. Reference was there also made to CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd (2017) 55 VR 62; [2017] VSCA 11 at [24], where the Victorian Court of Appeal said that leave to replead will only be refused if the amendments raise a claim that has no prospects of success, in the sense of being fanciful, in accordance with the criteria for summary dismissal set out in the Civil Procedure Act 2010 (Vic) and that the Court of Appeal there recognised (at [27]) that evidence adduced at trial may shape the case in ways that have not been anticipated despite the best efforts of litigants and their lawyers.

116. In the present case, although the criticisms made of the pleading are well-founded I consider that a final opportunity should be allowed for those deficiencies to be rectified. I will make directions for the service of any proposed amended statement of claim within a short time period; for the defendants to notify the plaintiffs if there is any reasoned objection to it being filed; and for the filing of brief written submissions if there is an objection to the filing of the proposed amended statement of claim, with a view to determining on the papers whether such leave should be granted.

117. So that there is no doubt, I am certainly not encouraging the defendants to make continuing objection to the pleadings or to take unnecessary pleading points. If I form the view that this is the case, there will be costs consequences. They, as much as the plaintiffs, must conduct litigation in accordance with the overriding purpose mandated under the Civil Procedure Act and their legal representatives owe professional obligations to the Court in that regard. I expect a sensible and co-operative approach to be taken to the question of any further amendments to the statement of claim in light of my reasons on the present application.

118. As to costs, it was submitted that the plaintiffs should pay the defendants’ costs of the notice of motion. I agree. I see no reason for costs not to follow the event in the ordinary course.

Conclusion

137. For the above reasons I make the following orders:

1. Pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW), strike out the following paragraphs of the plaintiffs’ statement of claim: [12A], [13], [15], [16], [17A], [19], [19A], [19B], [20], [21], [22], [23], [24], [25], [25A], [26], [27], [28], [29], [30], [31], [32(iii)]-[32(iv)] and [33].

2. Direct the plaintiffs to serve any proposed amended statement of claim on the defendants within 21 days.

3. Direct the defendants to notify the plaintiffs in writing within 14 days thereafter if there is any reasoned objection to the grant of leave to file the proposed amended statement of claim, stating with particularity the basis of that objection.

4. If the defendants notify the plaintiffs within the time specified, that there is no objection to the filing of the proposed amended statement of claim, grant leave for the proposed amended statement of claim to be filed within seven days of such notification.

5. If the defendants notify the plaintiffs within the time specified, that there is an objection to the filing of the proposed amended statement of claim, direct both parties to notify my Associate accordingly and, within seven days, to forward brief written submissions to my Associate on the objection(s) raised by the defendants, with a view to determining on the papers whether such leave should be granted.

6. Order the plaintiffs to pay the first to fourth defendants’ costs of the notice of motion filed 29 May 2018 and of the hearing of the strike-out application on 17 June 2019.

7. Stand the matter over for directions before me at 9.30am on 30 August 2019.

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Decision last updated: 11 July 2019