Di Palma v Chimmalee (No 2)

Case •

[2019] NSWSC 1138

•

03 September 2019

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Di Palma v Chimmalee (No 2) [2019] NSWSC 1138
Hearing dates: 19 August 2019
Decision date: 03 September 2019
Jurisdiction:Equity
Before: Ward CJ in Eq
Decision:

1.   Grant the plaintiffs leave to file the amended statement of claim in the form served on 12 August 2019, noting the further particulars that have been provided by the plaintiffs in their submissions as to the allegations made at [19]-[20] of the said amended statement of claim.
2.   Order the plaintiffs to pay the defendants’ costs thrown away by the amendment of the statement of claim.
3.   Otherwise order that the costs of the pleadings argument here determined be costs in the cause.

Catchwords: CIVIL PROCEDURE – Originating Process - Amendment
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 57, 58
Uniform Civil Procedure Rules 2005 (NSW), r 14.28
Cases Cited: ABB Power Generation Ltd v Chapple [2001] WASCA 412
ACN 074 971 109 v The National Mutual Life Association of Australasia Ltd [2010] VSC 186
Agip (Africa) Ltd v Jackson [1990] Ch 265
Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 58 FCR 26
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27; (2009) 258 ALR 14
Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221
CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd (2017) 5 VR 62; [2017] VSCA 11
Caason Investments Pty Ltd v Cao (2015) 236 FCR 322; [2015] FCAFC 94
Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676
Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1
Di Palma v Chimmalee [2019] NSWSC 864
Equuscorp v Haxton (2012) 246 CLR 498
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
HFPS Pty Limited (Trustee) v Tamaya Resources Limited (in Liq) (No 2) [2016] FCA 446
Horton v Jones (No 2) (1939) 39 SR (NSW) 305
Itex Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104
Juul v Northey [2010] NSWCA 211
Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548
McGuirk v University of New South Wales [2009] NSWSC 1424
Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66; [2009] FCA 320
Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; [2014] NSWCA 310
S1 v The Trustees of Marist Brothers [2016] NSWSC 970
Steiner v Strang [2016] NSWSC 9
Tamaya Resources Limited (in Liq) v Deloitte Touche Tohmatsu (A Firm) [2015] FCA 1098
Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534
Texts Cited: Mason & Carter’s Restitution Law in Australia, (LexisNexis Butterworths, 3rd edn, 2016)
Peter Birks, Unjust Enrichment (Clarendon Law Series, 2nd edn, 2005)
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:
J Afshar (Plaintiffs)
J Lee (First to Fourth Defendants)

  Solicitors:
MistryFallahi Lawyers and Business Advisors (Plaintiffs)
Re Zhou Lawyers (First to Fourth Defendants)
File Number(s): 2018/00246696
Publication restriction: Nil

Judgment

  1. HER HONOUR: On 19 June 2019, I heard an application, by notice of motion filed on 17 May 2019 by the first to fourth defendants in these proceedings (collectively, the applicants), seeking to strike out certain paragraphs of the plaintiffs’ statement of claim filed on 26 April 2019. That application was brought pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). It was the second such application that had been brought by the applicants. For the reasons that I published on 11 July 2019 (Di Palma v Chimmalee [2019] NSWSC 864), I made orders striking out the impugned paragraphs and put in place a regime whereby the plaintiffs were to serve any proposed amended statement of claim on the defendants within 21 days; the defendants were to notify the plaintiffs in writing within 14 days thereafter if there was any reasoned objection to the grant of leave to file the proposed amended statement of claim, stating with particularity the basis of that objection; and, if there was an objection to the filing of the proposed amended statement of claim, for the parties to prepared brief written submissions on the objection(s) raised by the defendants, with a view to there being a determination on the papers as to whether such leave should be granted.

  2. The plaintiffs served their proposed amended statement of claim on the defendants on 12 August 2019. Perhaps not surprisingly, given the history to date of pleading complaints on the part of the defendants and unwillingness or inability on the part of the plaintiffs to deal with those complaints in a manner satisfactory to the defendants, there was opposition by the defendants (albeit only in part) to the filing of the proposed amended statement of claim. Further, the defendants made submissions as to the imposition of a condition on any grant of leave to re-plead (to the effect that the plaintiffs not be permitted to rely upon any further evidence in chief).

  3. I summarise below the position of the parties on the two questions now raised in relation to the filing of the proposed amended statement of claim. At the outset, however, I can only express (again) my concern at the proliferation (coupled with the inevitable incurring of delay and costs) of interlocutory applications on what are now (though I accept not at first) quite technical pleading issues in this matter, in circumstances where the proper focus of the parties should be on the just, quick and cheap resolution of the real issues in dispute. Both sides, in my opinion, bear a portion of the blame for this.

  4. I have set out the background to the underlying dispute between the parties in my earlier reasons and do not here repeat it. Relevantly, the defendants’ complaint as to the previous iteration of the plaintiffs’ pleading focussed on the failure of the plaintiffs to differentiate between the respective defendants and deficiency in the articulation of the basis on which the plaintiffs’ claims were brought against each of the defendants.

Proposed Amended Statement of Claim

  1. The defendants’ objection to the latest iteration of the proposed amended statement of claim now centres on [19]-[25] insofar as the plaintiffs are there seeking to bring claims for moneys had and received against defendants (in particular, the second defendant) not pleaded actually to have received the relevant moneys. The defendants submit that leave should be refused in relation to those paragraphs on the basis that the pleaded claims are untenable at law.

  2. The impugned paragraphs of the proposed amended pleading are as follows:

Monies had and received: paid by the first and second plaintiffs and received by the second defendants

19.   Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant’s benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.

Monies had and received by the third plaintiff and received by the first and second defendants

20.   Alternatively to paragraphs [14] to [18] above, the third plaintiff paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 2 which monies were had and received by the first and second defendants for their benefit, alternatively for first defendant’s benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the third plaintiff.

Monies had and received: paid by the first and second plaintiffs and received by the third defendant

21.   Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant’s benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.

Monies had and received: paid by the first and second plaintiffs and received by the fourth defendant

22.   Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant’s benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.

Monies had and received: paid by the third plaintiff and received by the fourth defendant

23.   Alternatively to paragraphs [14] to [18] above, the third plaintiff paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 2 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant’s benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the third plaintiff.

Monies had and received: paid by the first and second plaintiffs and received by the fifth defendant

24.   Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant’s benefit, and for the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.

Monies had and received: paid by the third plaintiffs and received by the fifth defendant

25.   Alternatively to paragraphs [14] to [18] above, the third plaintiff paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 2 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant’s benefit, and for the first and second defendants, alternatively the first defendant, are liable to refund such monies to the third plaintiff.

  1. Schedules 1 and 2 to the proposed amended pleading (referred to in the above paragraphs of the pleading) itemise a list of deposits (specifying, inter alia, the deposit date, deposit amount and the accounts from and to which the respective amounts have been deposited).

  2. The defendants maintain that the Schedules, insofar as they purport to record the receipt of moneys by the second defendant, are inconsistent with the fact (taken to have been admitted as a result of a notice to admit facts served on the plaintiffs on 15 November 2018, to which I referred in my earlier reasons at [111]-[112]) that the second defendant had not received any funds transferred by any plaintiff. The defendants maintain that the reference to the second defendant receiving any moneys at all is “simply wrong” and say that the party which received those moneys was the third defendant (a corporate entity).

Defendants’ submissions as to pleading

  1. The defendants say that their objections to [19]-[25] should be upheld for the following reasons.

  2. First, that in the earlier judgment it has already been determined that a pleading of moneys had and received which claims moneys against a defendant who did not actually receive those moneys is liable to be struck out (referring to what I said at [114] – see below).

  3. Second, that, as a matter of principle, an action for moneys had and received is only maintainable against the defendant who is pleaded to have actually received the monies (referring to Juul v Northey [2010] NSWCA 211 at [216] where it was said that the cause of action for money had and received is applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff). It is said that a plaintiff is not entitled to judgment against a defendant for moneys had and received unless it can be demonstrated that the relevant defendant received the plaintiff’s legal property (citing Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; [2014] NSWCA 310 (Russell Gould) at [28]). Complaint is further made that there are no pleaded allegations, or material facts, in the proposed amended statement of claim which would enliven the application of the principles in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 572 (referring also to Russell Gould at [29]). Accordingly, it is submitted that the only claims for moneys had and received which can be maintained are those brought against the defendants who actually received moneys transferred by the plaintiffs (and, in particular, not the second defendant).

  4. Third, that, even if, contrary to the defendants’ submission, an action for moneys had and received can be maintained against a person or entity who did not (actually) receive the funds, there is an absence of material facts in the pleading as to why and how all of the payments made to all defendants were made for the benefit of the first and second defendants and/or were received by those parties (and it is submitted that, in the absence of those material facts in relation to each transaction, no leave should be granted to rely upon those paragraphs).

Plaintiffs’ submissions as to pleading

  1. The plaintiffs cavil with the proposition that any determination was made in the earlier judgment of the kind now suggested by the defendants. Rather, it is submitted that the observation (at [114]) was in the nature of obiter dicta, i.e., that, if such a claim were to be brought, it would be “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”. The plaintiffs submit that the proposed amended statement of claim does precisely that.

  2. As to the second argument relied upon by the defendants (namely, that, “as a matter of principle”, an action for moneys had and received is only maintainable against the defendant who is pleaded to have actually received the money), the plaintiffs argue that a claim for moneys had and received (which the plaintiffs say is one “within which the principles of unjust enrichment operate”, referring there to Equuscorp v Haxton (2012) 246 CLR 498 (Equuscorp v Haxton) at 516 per French CJ, Crennan and Kiefel JJ), is available in circumstances where a defendant has not directly received the relevant moneys but has benefited from compliance by the plaintiff with the defendant’s request or instruction to pay moneys to third parties. It is submitted (by reference to the discussion in Mason & Carter’s Restitution Law in Australia, 3rd edn (2016) at [154]; [155]) that in those circumstances the law will impose an “obligation of protection” on the defendant to compensate or indemnify the plaintiff for the consequences of taking the requested action.

  3. It is submitted that in circumstances where (as here) it is claimed that moneys were paid into accounts nominated by the first and second defendants and at their direction or on their request (see [9]-[11] of the proposed amended statement of claim), the relevant “benefit” is the plaintiffs’ compliance with the direction (which has been pleaded at [11] and [19]-[25]) and it is submitted that no more needs to be pleaded.

  4. Reliance is placed on Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221, where Byrne J stated at 258:

[W]here a person requests another to do something, it is not unreasonable for the law to conclude that the former sees some benefit in its performance, however wrong this view may be on an objective basis and for the law to act upon the perception of the recipient

a statement adopted by Murray J (with whom Templemann J and Einfeld AJ agreed) in ABB Power Generation Ltd v Chapple [2001] WASCA 412 (at [9]-[24]).

  1. The plaintiffs say that none of the authorities referred to by the defendants (in their submissions at [11]-[15]) supports the submission that the action for moneys had and received is strictly limited to circumstances of a direct transfer to a defendant of moneys by a plaintiff. They argue that the grounds for seeking relief in moneys had and received are not “static” and strict (again referring to Equuscorp v Haxton at 516). Moreover, they submit that this matter of law is “sufficiently arguable” to meet the test for an amendment.

  2. The plaintiffs also argue that there is a further basis upon which the plaintiffs can succeed on a claim for moneys had and received against the second defendant notwithstanding that the moneys paid by the plaintiffs were first paid into accounts held by the other defendants, namely that of common law tracing, referring to the statement of Millett J in Agip (Africa) Ltd v Jackson [1990] Ch 265 at 285. It is submitted that, applying the principles of tracing, the action for moneys had and received can be pursued against a defendant where the immediate receiving party has in turn made payment to the defendant. (It is also noted in this regard that the notice to admit facts only confirms that the payments were “first” made into those accounts; i.e., not, any admission as to the ultimate recipient of the funds.)

  3. As to the complaint that there is no pleading that explains how all of the payments made could be for the benefit of the first and second defendants, the plaintiffs point to the following matters in the proposed pleading: that the plaintiffs had paid sums of money into accounts nominated by the first and second defendants (that is, at the first and second defendants’ request/direction); that the payments were made as set out in Schedules 1 and 2; and that the moneys were had and received for the benefit of the first and second defendants (referring to [19]-[25] of the further amended statement of claim).

  4. The plaintiffs note that they have also disclosed in their particulars (to [33] of the amended statement of claim), in relation to the second defendant, that:

(i)   The first and second defendants operated a business or a scheme which involved soliciting funds from investors.

(ii)   The solicitation of those funds required the making of representations by the first defendant to potential investors in the same terms, mutatis mutandis, as the Representations made by the first defendant to the plaintiffs.

(iii)   The business or scheme attracted investors because the conversion rates offered to investors, through the making of the representations, were more favourable than the conversion rates offered by banks and other retail foreign exchange providers.

(iv)   The second defendant was actively involved in the operation of the business or scheme in that, inter alia, he was:

1.   the sole director of the third defendant, which was used to receive monies solicited in the course of the business or scheme;

2.   the sole signatory on the bank account of the third defendant;

3.   responsible, together with the first defendant, for transferring monies received from investors, including the plaintiffs, to other banking accounts;

4.   together with the first defendant controlled the bank accounts of the fourth and fifth defendants which were used to receive investors’ money…

  1. The plaintiffs say that, to the extent that the complaint by the defendants (see their submissions at [15]) is that the second defendant does not understand how it is put that he received a benefit by reason of payments to the accounts referred to in Schedules 1 and 2, the above particulars provide that answer. However, in their submissions on the present application, the plaintiffs have gone further and provide the following further particulars to [19] and [20] of the proposed amended statement of claim (which they say largely repeat facts and matters already in the amended statement of claim):

1.   The relevant benefit received by the first and second defendants was, in respect of the first defendant, to the extent that the payments were made into her account directly, the monies referred to in Schedules 1 and 2, and otherwise and in respect of the second defendant, the plaintiffs’ compliance with their requests, alternatively, the monies paid into the accounts reflected in Schedules 1 and 2 which were accounts:

1.1   controlled by the first and second defendants;

1.2   used in the conducting of a business by the first and second defendants;

1.3   from which monies were transferred to other accounts for the benefit of the first and second defendants.

2.   The further particulars of the benefit procured by the first and second defendants in nominating those accounts into which the plaintiffs were requested to deposit monies are matters which, at this stage, prior to discovery, are peculiarly within the knowledge of the first and second defendants.

Determination

  1. At the outset, I should make clear that I made no determination at [114] of my earlier reasons as to the particular issue now raised in relation to the adequacy of the proposed pleading (i.e., as to whether, in order to plead a claim for moneys had and received, it is necessary that there be an actual receipt of funds into the hands or to the account of a particular defendant). What I said, at [114], in the context of consideration of the complaints that had been made as to [30]-[31] of the existing pleading, was that:

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.

  1. The statement that it was 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” if there were to be a claim for moneys had and received or for conversion, was addressing the complaint that had been made by the plaintiffs as to the broad brush reference in the then pleading to the “defendants” without distinguishing between the respective defendants. The complaint now made about the proposed amended pleading goes to a quite different issue, namely, whether it is a requirement for a claim for moneys had and received that there be an actual receipt of funds in the hands (or, more relevantly, in the bank account) of the particular defendant as opposed, say, to what might be termed a “constructive receipt” of funds if funds have been paid to another person or entity at the particular defendant’s instruction or direction.

  2. Therefore, the first basis on which the defendants resist the grant of leave to plead the allegations at [19]-[25] is not well-founded.

  3. As to the second basis put forward (namely, as to what, as a matter of principle, is required by a plea of moneys had and received), as noted above, the plaintiffs have put forward an argument (in defence of the proposed pleading) to the effect that actual receipt of funds is not required – rather, that there may be a “receipt” of funds by reason of those funds being disbursed at the direction or instruction of the particular defendant. Restitutionary principles are invoked, as is the remedy of tracing (albeit that there is no pleaded claim of any entitlement to trace into funds held in another’s hands).

  4. The claim for moneys had and received has been explained by the late Professor Birks in restitutionary terms in Unjust Enrichment (Clarendon Law Series, 2nd edn, 2005)as follows:

[T]he action for money had and received, is the principal source of the modern law of unjust enrichment, though confined to money. Its operative allegation was that the defendant was indebted to the plaintiff because he had received a sum of money for the benefit of the plaintiff – to the use of the plaintiff. If he was so indebted and had not paid, the rest of the allegations were deemed to have been substantiated.

  1. Exploration of the scope of a claim of unjust enrichment in those circumstances (and how such a claim fits within the taxonomy of restitutionary claims more generally) is fertile ground for academic debate but unnecessary to delve into for present purposes.

  2. Leave will not be granted to allow an amendment if the amendment would be liable to be struck out had it appeared in the original pleading (see Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 309-310; McGuirk v University of New South Wales [2009] NSWSC 1424 at [18]). Leave to amend will therefore not be granted in respect of a pleading, or amendment, likely to be struck out as embarrassing (referring to Tamaya Resources Limited (in Liq) v Deloitte Touche Tohmatsu (A Firm) [2015] FCA 1098 at [142]-[143] (Gleeson J); Caason Investments Pty Ltd v Cao (2015) 236 FCR 322; [2015] FCAFC 94 at [21] (Gilmour and Foster JJ); ACN 074 971 109 v The National Mutual Life Association of Australasia Ltd [2010] VSC 186 at [29] (Croft J); Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66; [2009] FCA 320 at [21], [23] (Kenny J)). (See also Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 58 FCR 26 (Lindgren J, Lockhart and Tamberlin JJ agreeing).) In HFPS Pty Limited (Trustee) v Tamaya Resources Limited (in Liq) (No 2) [2016] FCA 446, Foster J said (at [56]) that it would be a wrong exercise of the Court’s discretion to allow an amendment for which there was no arguable basis in fact.

  3. That said, it is well recognised, in the summary dismissal context, 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 (see 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)).

  4. The plaintiff’s case should be taken at its highest on a pleading application such as an application for leave to amend (see S1 v The Trustees of Marist Brothers [2016] NSWSC 970 (S1) at [11]).

  5. Ordinarily, leave to re-plead (in the absence of discretionary factors pointing against the grant of leave) unless the view is taken that the proceeding is frivolous or vexatious or no reasonable cause of action is disclosed (see 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” (see 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]). In CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd (2017) 5 VR 62; [2017] VSCA 11 at [24], the Court of Appeal in Victoria said that leave to re-plead 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); the Court there recognising (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.

  6. In the present case, I am not prepared to dismiss out of hand (as being so untenable as to warrant a refusal to grant leave to amend) a claim that the second defendant has “received” funds (for the purposes of a moneys had and received claim) by reason of those funds having being placed at his disposal (or transferred to a company which he controls) or as having been paid at his instruction or direction; nor am I prepared to discount the possibility that the claim as pleaded could be supported by arguments based on resitutionary principles.

  7. Having regard to the high test to be met for a summary dismissal application, I am not persuaded that if such a claim were to have been pleaded at the outset it would have been liable to be struck out.

  8. Third, as to the complaint about the absence of pleading of material facts, the defendants argue that they are entitled to a pleading of facts as to as to “why and how all of the payments made to all defendants were made for the benefit of the first and second defendants and/or were received by those parties”. If, by seeking facts as to “why” the payments were made, the plaintiffs are seeking a pleading going to the motivation or intent behind the making of the payments, I do not see how this is justified. I accept that, if intent or motivation were to be an element of the claim based on that alternative pleading (see from [19]) then (as would be the case if knowledge were to be pleaded), then the material facts on which such an allegation is based would need to be specifically pleaded. However, it is not apparent that the plaintiffs’ alternative moneys had and received claim is based on proof as to the subjective intention or motivation as to “why” certain payments were made. The proposed pleading clearly identifies the alleged agreement pursuant to which it is said that payments were made (see from [14]ff) (i.e., the Best Baht Agreement); albeit that there is an alternative pleading that is not based on the alleged Best Baht Agreement.

  9. As to the pleading of material facts as to “how” all the payments were made, presumably this complaint does not go to the question of “how” moneys were electronically or physically transferred to bank accounts as such, but rather as to “how” such payments are alleged to have been made “for the benefit” of the first and second defendants. If that truly requires clarification, that can be the subject of a request for particulars. It would seem to me to be obvious from the pleading that what is contended is that the second defendant, for example, through his control of one or other of the corporate defendants has obtained a benefit from the transfer of moneys to that defendant.

  10. In my earlier judgment in this proceeding I made clear what was required of a proper pleading (see, for example, at [5]ff) and I do not here repeat what was there said. I consider that there has now been an adequate pleading of the material case made against the defendants. If further particulars are required they can be sought but in essence the pleading is sufficient to permit the respective defendants to know the case that is being put against each of them. It is high time that the defendants proceeded to the real issues in dispute rather than spending time and costs arguing pleading points of the kind now raised. The proposed amended statement of claim may still not be a shining example of a model pleading – sadly, many pleadings are not. It does, however, now adequately articulate the case against the defendants.

  11. In terms of discretionary factors, I accept that the amendment to the pleading will occasion yet further delay; and I have already made clear that there must be a limit to the amount of times a party (here, the plaintiffs) will be given the opportunity to replead. The exercise of the discretion to grant or refuse liberty to replead 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)); and that 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).

  12. In the present case, I do not consider that the prejudice likely to be suffered at this stage of the proceedings, if leave is given to the plaintiffs to replead the claims sought to be made against the second defendant, outweighs the prejudice to the plaintiffs of being denied such an opportunity. I am conscious in this regard of the overriding mandate for the just, quick and cheap resolution of the real issues in dispute and the principles articulated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27; (2009) 258 ALR 14 (Aon). In Aon, the plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) said (at [111]-[113]) (citations omitted):

An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to the payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. …

A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to the parties having sufficient opportunity to identify the issues they seek to agitate.

In the past it has been left largely to the parties to prepare for trial and to seek the court’s assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition from principle and policy. It recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

  1. However, balancing all the relevant factors in the present case (including that the proceedings cannot yet be said to be at an advanced stage – not least because of the pleading issues raised by the defendants; and that it is difficult to see any prejudice to the second defendant other than the obvious fact that he will continue to be a party to the proceedings), I consider that leave should be granted for the amended statement of claim to be filed.

Request for conditions to be placed on the grant of leave

  1. As adverted to above, the defendants also seek, as a term of any leave granted to the plaintiffs to rely upon [9]-[18] of the amended statement of claim (and, presumably, for the plaintiffs to rely upon the whole of the proposed amendments if, as they are now, to be allowed), that no further evidence in chief be permitted to be relied upon by the plaintiffs.

  2. In this regard, the defendants point to the fact that the plaintiffs’ evidence in chief and the defendants’ evidence in response had been served as long ago as December 2018. They say that, at the hearing before me on 19 June 2019, Counsel for the plaintiffs made submissions regarding the formation of the relevant contract which, at least in relation to the second defendant, were in express contradiction to the pleading which now appears at [9]-[18] of the amended statement of claim (but which were consistent with the pleaded contractual allegations contained in the points of claim filed in August 2018 and the statement of claim filed in May 2019).

  3. The defendants say that a forensic decision was made (on the basis of the evidence that had been served by the plaintiffs) not to call evidence from the second defendant (Mr Evans), a decision communicated to the solicitor for the plaintiffs by email on 15 November 2018. It is submitted that, given the “complete, and entirely unexplained, change in position” by the plaintiffs (from the commencement of the proceedings to the position now taken in the proposed pleading served on 12 August 2019) in relation to the contractual claim, the imposition of that term is appropriate.

  4. It is submitted that, in circumstances where the proceedings have been on foot for more than one year, and the defendants’ evidence in response was served in December 2018, it would not be consistent with ss 56-58 of the Civil Procedure Act for the plaintiffs to be permitted to adduce evidence of alleged oral contracts with the second defendant which do not appear in their evidence in chief. The defendants argue that, were the plaintiffs to be permitted to do so, this would result in the defendants having to go into further evidence (and, likely, result in additional witnesses being called in the defendants’ case, being at least the second defendant).

  5. It is submitted that the plaintiffs have breached multiple timetables to serve evidence in reply; and have now been excused from serving that evidence until the pleadings issue is resolved (pursuant to the orders made on 5 April 2019) and that, if the plaintiffs had not done so, the matter would now be ready to take a trial date.

Plaintiff’s submissions on the proposed condition on grant of leave

  1. The plaintiffs submit that no such condition should be imposed on the grant of leave for the following reasons.

  2. First, complaint is made as to the reference to “some unidentified submission made on 19 June 2019”. It is said that the correctness of this cannot be ascertained given the absence of any reference to the specific submission allegedly made; and that, even if the premise of the contention is established, that “there is no reason why the plaintiffs should not be allowed to prosecute the present case in light of a previous submission (particularly when the alleged prejudice relied upon by the defendants is a forensic decision allegedly made in November 2018 before the submission now relied upon was made)”.

  3. Second, it is submitted that the alleged prejudice is illusory. The plaintiffs argue that the fact that the second defendant decided in November 2018 not to go into evidence is of no relevant significance; and that if the plaintiffs serve further evidence (depending on the facts the defendants put in issue), the second defendant will have an opportunity to reconsider his position as to whether he wishes to give evidence. The position is contrasted with a case where a witness has been released and cannot be recalled.

  4. Third, it is said that the Court is required to decide the matter on all the relevant evidence and to determine the real issues in dispute; and that it is not in the interests of justice for the Court to be shut out of relevant evidence that may bear upon the very question that the Court must decide.

  5. Fourth, it is said that it is “not at all unusual” where a statement of claim is amended that a consequence of the amendment is that further evidence in chief must be led to support the amended statement of claim.

  6. Fifth, the plaintiffs note that the matter has not been allocated a hearing date as yet and they say that, accordingly, the filing of supplementary evidence in chief will not prejudice any existing hearing date.

Determination

  1. I do not consider it appropriate for there to be a condition of the kind sought by the defendants to be imposed on the grant of leave to amend the pleading, particularly where it is likely that further evidence will be required to address the allegations now pleaded in the detail that has (quite rightly) been insisted upon by the defendants and to which there is no opposition. I do not consider that it is in the interests of justice to shut the plaintiffs out of putting on evidence in support of their case. No prejudice has been shown to follow from the forensic decision made by the defendants not to adduce evidence to date from the second defendant (other than the inconvenience to which it may be assumed he will now personally be put if such evidence is to be adduced; and the additional cost of adducing any such evidence – which can be dealt with in the final wash-up of costs at the conclusion of the final hearing). No doubt it is in the second defendant’s interest to have the case against him (whatever its merits may be) summarily dismissed. However, that is not the test. I do not consider that the principles articulated in Aon mandate foreclosing evidence on issues now raised in the amended statement of claim.

Costs

  1. Finally, the defendants submit that the plaintiffs should pay their costs of the present argument on an indemnity basis forthwith (on the basis of their contention – which is incorrect – that I had already determined that a pleading in the form maintained was liable to be struck out).

  2. The plaintiffs, to the contrary, maintain that there is no conduct which would provide grounds for an order for costs to be paid on the indemnity basis or forthwith. They submit that the appropriate costs order is for the costs pertaining to the defendants’ latest objection to be costs in the cause.

Determination

  1. In my opinion, there is no basis for the indemnity costs order sought; nor is there a basis for an order that costs be payable forthwith. Given the history of the interlocutory pleading stoushes to date, the appropriate orders are for the plaintiffs to pay the costs thrown away by the amendment of the statement of claim but otherwise for the costs of the present costs application to be costs in the cause.

Orders

  1. For the reasons set out above, I make the following orders:

  1. Grant the plaintiffs leave to file the amended statement of claim in the form served on 12 August 2019, noting the further particulars that have been provided by the plaintiffs in their submissions as to the allegations made at [19]-[20] of the said amended statement of claim.

  2. Order the plaintiffs to pay the defendants’ costs thrown away by the amendment of the statement of claim.

  3. Otherwise order that the costs of the pleadings argument here determined be costs in the cause.

  1. When these reasons are published I will make further directions for the ongoing conduct of the proceedings.

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Decision last updated: 03 September 2019

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Cases Cited

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Statutory Material Cited

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Di Palma v Chimmalee [2019] NSWSC 864
Juul v Northey [2010] NSWCA 211
Russell Gould Pty Ltd v Ramangkura [2014] NSWCA 310