Fletcher v St George Bank Limited - [2010] WASC 75

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FLETCHER (as Trustee of the BRIAN FLETCHER FAMILY TRUST) -v- ST GEORGE BANK LIMITED [2010] WASC 75

CORAM: MARTIN CJ

HEARD: 31 MARCH 2010

DELIVERED : 20 APRIL 2010

FILE NO/S: CIV 2186 of 2006

BETWEEN: BRIAN FLETCHER (as Trustee of the BRIAN FLETCHER FAMILY TRUST)
Plaintiff
AND
ST GEORGE BANK LIMITED
First Defendant
JOHN HOOPER
Second Defendant

Catchwords:

Application to amend statement of claim - Rule in Weldon v Neal - Turns on its own facts

Legislation:

Limitation Act 1935 (WA)
Limitation Act 2005 (WA)
Rules of the Supreme Court 1971 (WA), O 21 r 5

Result:

Application allowed in part

Category: B

Representation:

Counsel:

Plaintiff:     Mr B M Singh
First Defendant             :     Mr B Dharmananda
Second Defendant         :     Mr M H Zilko

Solicitors:

Plaintiff:     Chris Stokes & Associates
First Defendant             :     Gadens Lawyers
Second Defendant         :     Arns & Associates

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

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18
Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431
General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Hospitals Contribution Fund of Australia Ltd v Hunt (1982) 44 ALR 365
Knox v Gye (1872) LR 5 HL 656
Morgan v Banning (1999) 20 WAR 474
Weldon v Neal (1887) 19 QBD 394

MARTIN CJ:

Introduction

The plaintiff, Mr Brian Fletcher, applies to amend his statement of claim in proceedings which he has brought against St George Bank Ltd (the Bank) and Mr John Hooper. Each of the defendants opposes his application for various reasons. It will be necessary to address each of the proposed amendments in detail, in order to appreciate the grounds of opposition. However, before undertaking that exercise it is appropriate to set the context for the application to amend and to set out the general principles which I will apply in ruling on the amendments proposed.

Background

The statement of claim endorsed on the writ

These proceedings were commenced by a writ issued on 3 November 2006. The statement of claim was endorsed on the writ. It is that statement of claim which Mr Fletcher now applies to amend. Because each of the Bank and Mr Hooper oppose Mr Fletcher's application to amend on the ground that the amendments would introduce new causes of action which are time‑barred under the provisions of the Limitation Act 1935 (WA), contrary to the rule in Weldon v Neal (1887) 19 QBD 394, it is necessary to identify the scope of the action commenced by the writ: see Morgan v Banning (1999) 20 WAR 474, 485 ‑ 487 (Wheeler J).
In general terms, the statement of claim endorsed on the writ contains the following assertions. Mr Fletcher is said to have been, and to continue to be, the trustee of the Brian Fletcher Family Trust and the managing director and shareholder of Baysilk Holdings Pty Ltd (Baysilk). He was also said to have been the proprietor of land in Wheatley Drive, Bull Creek (the Bull Creek property) between 9 August 1955 and 17 July 2001. It is further asserted that Baysilk, as lessee of Mr Fletcher, conducted the business of a health club on the Bull Creek property until 1 January 1997.
It is further asserted that Mr Hooper was at all material times the sole director and manager of Ould Pty Ltd (Ould) (a company which was deregistered on 17 March 2006), and had total control over its activities, such that Ould was essentially his 'alter ego'.
Mr Fletcher claims that in July 1995, he mortgaged his interest in the Bull Creek property to Ould by a first registered mortgage which secured a loan of $50,000 made by Ould to Baysilk.
Mr Fletcher further asserts that in August 1995, he and Baysilk accepted an offer of three loan facilities from the Bank, and transferred all their accounts and Banking business to the Bank. The loan facilities were secured by a registered second mortgage over the Bull Creek property. However, by a Deed of Postponement, Ould agreed that the Bank's mortgage would have priority over the Ould mortgage and rank first in payment of all moneys owing by the plaintiff or Baysilk to the Bank.
Mr Fletcher further asserts that it was agreed with the Bank that the monthly rental paid by Baysilk for the use of the Bull Creek property would be paid into an account with the Bank, and applied against the instalments of interest and principal payable under the loan facilities granted by the Bank. He further asserts that at the time this arrangement was made, he informed officers of the Bank that he depended on the rental payments made in respect of the Bull Creek properties to service the loan facilities granted by the Bank.
Mr Fletcher further asserts that on 7 June 1996, he repaid the debt to Ould in full, but Ould failed to discharge the mortgage, which remained registered against the title to the Bull Creek property.
In 1997, the health club business conducted on the Bull Creek property, and the lease of that property, were assigned to another company associated with a person who happened to be an ex‑employee of the Bank. Under the assignment of lease, the monthly rental payments increased. The arrangements made in respect of the payment of the rental to the Bank in order to meet instalments of interest and principal due under the loan facilities granted by the Bank remained in place.
Mr Fletcher asserts that the various facilities granted by the Bank were altered over the years to the point where, by July 2000, his indebtedness to the Bank was approximately $2.3 million, secured by charges against properties, including the Bull Creek property, having a value of not less than $4.5 million. The debt and accumulating interest was to be repaid by monthly instalments of $17,479.26.
Mr Fletcher asserts that in July 2000, Ould made demand upon him for payment of approximately $89,000 which Ould wrongly claimed was due and owing, and secured by the mortgage in favour of Ould. He further asserts that in or about August 2000, he advised an officer of the Bank that Ould had demanded payment but that in fact no money was owing. He then commenced proceedings in this court seeking a declaration that no debt was owing, and an injunction to restrain Ould from proceeding with the proposed sale of the property. Mr Fletcher was granted an interlocutory injunction restraining Ould from proceeding with the sale of the Bull Creek property, on condition that he pay $75,000 into court by 31 January 2001. As Mr Fletcher did not satisfy that condition, the injunction lapsed.
Mr Fletcher further asserts that after the injunction lapsed, he advised an officer of the Bank of that fact and asked to be informed if the Bank became aware of any further attempt by Ould to sell the Bull Creek property, so that he could then take steps to prevent the sale. He further asserts that an officer of the Bank assured him that no sale of the Bull Creek property could take place without notice to the Bank, because the Bank held the duplicate certificate of title to the Bull Creek property, and further stated that the Bank would advise Mr Fletcher of any proposal by Ould to sell the property. He asserts that further undertakings to a similar effect were given by another officer of the Bank. He further asserts that these assurances placed him in a position of vulnerability, in relation to the Bank and that he relied upon them by not taking any further steps to prevent Ould from selling the property. Therefore, he asserts that the Bank knew that if it failed to fulfil its assurances, he would be unable to restrain Ould from completing the sale, and would thereby suffer damage, if not notified in accordance with the assurances given.
Mr Fletcher asserts that in February 2001, Ould agreed to sell the Bull Creek property for $1.7 million. He further asserts that the Bank was aware of that fact, and attended settlement of the sale of the property where it produced the duplicate certificate of title to the Bull Creek property and a discharge of the mortgage to the Bank, enabling the sale to proceed. He further asserts that he did not become aware of the sale of the property until after it had occurred, with the result that he was precluded from taking steps to prevent the sale occurring.
Mr Fletcher asserts that by reason of the facts set out in his statement of claim, the Bank owed him a duty to promptly inform him of all steps taken by Ould of which the Bank became aware relating to the sale of the Bull Creek property, to ensure that he was given reasonable notice of that sale, and to refuse to attend on settlement of the sale of the property or to produce the duplicate certificate of title and a registrable discharge of the mortgage to the Bank. It is further asserted that the same facts give rise to a promissory estoppel binding on the Bank, or in the alternative, a fiduciary duty to take those steps.
The statement of claim asserts that by reason of the Bank's breaches of duty, Mr Fletcher suffered loss in the form of the sale of the Bull Creek property at less than true value (which is said to have been $2.4 million at the time of sale), the loss of rental income from the Bull Creek property until the expiry of the lease in 2010 and costs incurred in refinancing the balance of the loans owed to the Bank at a higher interest rate because of his inability to continue to service the loans from the rental received in respect of the Bull Creek property.
The statement of claim further asserts that Mr Hooper caused Ould to make the wrongful demand and to sell of the Bull Creek property at a time when he knew the loan to Ould had been repaid in full and that Ould therefore had no right to exercise a mortgagee's power of sale and that he deliberately caused Mr Fletcher to suffer the loss and damage already referred to.

The vacated trial

The case was listed for trial over three days commencing on 2 March 2010. Various pre‑trial directions were made to enable the trial to occur at that time. Mr Fletcher and his solicitors failed to comply with many of those directions and, in the week prior to the commencement of the trial, foreshadowed an amendment to the statement of claim to introduce a claim for damages in respect of lost capital appreciation on other properties which he proposed to assert he was obliged to sell as a consequence of the losses he had suffered. The matter came before me on 26 February 2010. It was clear that by reason of the various failures to perform the pre‑trial directions made by the court, the trial could not proceed on 2 March 2010 without causing prejudice to the defendants. I therefore vacated the trial dates and ordered Mr Fletcher's solicitors to pay the costs thrown away on an indemnity basis, on the ground that no reasonable explanation for the failure to comply with the pre‑trial directions had been provided. On the same day, I heard and rejected an application to amend the statement of claim to include the claim for damages in respect of lost capital appreciation on properties other than the Bull Creek property. I rejected the amendments on the ground that they did not disclose an arguable cause of action, at least on the face of the amended pleading as it then stood. However, I granted leave to make a further application to amend. It is that application which is now before me.

General principles

Limitation issues

As the causes of action asserted by Mr Fletcher arose prior to the commencement of the Limitation Act 2005 (WA), they are governed by the Limitation Act 1935. Under that Act, to the extent that Mr Fletcher asserts breaches of duty owed at common law, the relevant limitation period is six years. To the extent that Mr Fletcher asserts a breach of equitable duties owed by the defendants, those duties appear to me to be analogous to common law duties in tort or contract and therefore the same limitation period applies by analogy (Knox v Gye (1872) LR 5 HL 656, 674 (Lord Westbury); BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 at [77] – [79] (Steytler J).
On the basis of the facts asserted in the writ, the causes of action advanced by Mr Fletcher arose on 20 July 2001, when settlement of the sale of the Bull Creek property took place without notice to him. Accordingly, the limitation period applicable to those causes of action expired in July 2007. Because any amendment to the statement of claim would date back to the date of the issue of the writ in November 2006, under the rule in Weldon v Neal, no amendment should be allowed which would introduce a new cause of action which would have the effect of defeating the provisions of the Limitation Act and of denying the Bank and Mr Hooper the opportunity to rely on defences under that Act.
However, the strictness of the approach taken by the courts in the application of the rule in Weldon v Neal in some of the older cases has been ameliorated by rules of court, including in this court, by O 21 r 5 Rules of the Supreme Court 1971 (WA) which provides that an amendment may be allowed notwithstanding the expiry of any relevant period of limitation, even if the amendment would add or substitute a new cause of action, provided that the new cause of action arises out of the same facts, or substantially the same facts, in respect of which relief has already been claimed in the action.
The Rules of the Supreme Court must, of course, be construed so as to be consistent with the Limitation Act. The judges of the court do not have the power to promulgate rules of court which would amend or modify the operation of laws enacted by the Parliament. It follows that the Rules of the Supreme Court should be construed so as to fall within the scope of the rule making power conferred upon the judges, which does not extend to the amendment and modification of the substantive law to be applied by the court.
In the case of O 21 r 5, consistency with the Limitation Act is achieved by construing the expression 'cause of action' to mean the basket of facts giving rise to the right to relief claimed in the proceedings: Morgan v Banning, 476 (Owen J). Construed in this way, if the cause of action added by the amendment arises from the same or substantially the same basket of facts as the facts giving rise to the cause or causes of action previously asserted, it falls within the scope of the proceedings as constituted prior to the amendment, and the operation of the Limitation Act is not modified or defeated. On the other hand, if the cause of action sought to be added does not arise from the same or substantially the same facts, O 21 r 5 will not apply, and the rule in Weldon v Neal will preclude the amendment, thereby maintaining the operative efficacy of the Limitation Act.
Obviously when determinations have to be made as to whether a particular cause of action arises from the same or substantially the same facts as a cause of action previously asserted, value judgments must be made which will turn upon questions of fact and degree to be evaluated in the particular circumstances of the case. When value judgments of that kind fall to be made, it is not possible to draw hard and fast lines, or to enunciate rigid principles which can be applied so as to determine mechanistically the outcome of a particular application.
That is not to say that it is impossible to identify the cases which will lie at the outer limits of the spectrum of cases in which an application might be made in reliance upon O 21 r 5. So, where an applicant seeks to amend, outside the limitation period, to introduce a significant number of additional facts said to constitute separate and independent acts and omissions by a defendant in breach of a duty owed to a plaintiff, the amendment will not be allowed: see Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431. On the other hand, where the amendment proposed makes no change to the facts asserted to give rise to an entitlement to relief, but merely recharacterises the legal grounds upon which relief is sought, the amendment will be allowed. However, within those parameters lies an infinitely variable range of particular facts and circumstances which will create a need to make a value judgment of the kind to which I have referred.

Late amendment

Mr Fletcher's application to amend the statement of claim comes late in the life of these proceedings. It would be wrong in principle to approach his application on the basis of an entitlement to amend, subject to payment of costs by way of compensation to the defendants: see Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. All factors relevant to the exercise of the discretion to permit amendment must be weighed including the fact of substantial delay by Mr Fletcher in bringing these amendments before the court, the wasted costs which the amendments might produce, and the effect of the amendments upon the defendants, who have already lost their opportunity to have this case tried on previously fixed dates because of the plaintiff's conduct of these proceedings. Consideration must also be given to the explanation, if any, for the delay in applying for the amendment, the impact of the amendments upon the likely timetable for the resolution of the case, the nature and importance of the amendment to the party applying, its effect upon the breadth of the evidentiary matters to be investigated in the case, and the impact of the amendments upon the limited resources of the court, having regard to the interests of other litigants in the efficient utilisation of those limited resources. This list of considerations is, of course, not meant to be exhaustive, as the breadth of the discretion to be exercised and the variety of circumstances in which applications to amend may be made preclude the prescription of all the factors that might be relevant to all cases.
The consideration that would appear to me to be most germane to the exercise of the discretion in the present case is the fact that the proceedings have now been on foot for more than three years, and would by now have been tried, but for the failure of Mr Fletcher and his solicitors to comply with directions made by the court. Also very significant is the fact that the proceedings concern events which took place more than nine years ago. This gives rise to a presumptive inference of prejudice to the Bank and Mr Hooper to the extent that they might now be required, for the first time, to investigate and prepare new factual issues for trial. Also pertinent is the failure of Mr Fletcher to proffer any satisfactory explanation for the lengthy delay in moving these amendments.
On the other hand, if and to the extent that Mr Fletcher relies upon the amendments proposed to advance his case at trial, the disallowance of the amendments would prejudice him by preventing him from presenting the case which he now wishes to have determined by the court. Further, as the trial has now been adjourned, if the amendments do not raise new factual issues of a substantial kind (as they must to fall within the scope of Order 21 Rule 5), the impact upon the defendants and the progress of the case to trial should be limited.
It must also be noted that each of the Bank and Mr Hooper were prepared to go to trial on the basis of a statement of claim which was cast in very general terms, and which failed to enunciate with particularity or clarity the causes of action asserted against them. The complaints which they now raise in relation to lack of particularity and uncertainty should be viewed in the light of the statement of claim which they were prepared to have tried. Given the late stage which these proceedings have reached, the defendants should not be permitted to use Mr Fletcher's application to amend as a pretext for the advancement of arguments which could and should have been brought in support of an application to strike out the statement of claim endorsed on the writ (the time for any such application being brought without leave of the court having long since expired). However, the interests of case management identified by the High Court in Aon, and of the efficiency of the trial process require Mr Fletcher to enunciate his case with sufficient particularity and certainty for it to be understandable by both defendants and the court.

There are no considerations in this case which would justify departing from well‑established principles relating to the amendment of pleadings, including the principle that while no amendment will be allowed which does not disclose an arguable cause of action or defence (see General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125), the rule of pleading will not be allowed to stifle the development of common law or equity by the advancement of claims which, although not sanctioned by authority, might have some arguable prospect of success (see Hospitals Contribution Fund of Australia Ltd v Hunt (1982) 44 ALR 365).
The various considerations particular to this case to which I have referred lead me to conclude that the amendments moved by Mr Fletcher should not be allowed at this late stage of the proceedings if they do not, on their face and without need for further particulars, clearly identify the case which he seeks to put at trial and the causes of action which he asserts. When an amendment is moved at a late stage of the proceedings, it will not generally be acceptable for counsel for the moving party to say, as counsel for Mr Fletcher does in this case, that any uncertainty in the case being advanced can be cured by a properly framed request for particulars. Rather, it is incumbent upon the party moving the amendment to provide all necessary and appropriate particulars within the amendment proposed.

The proposed amendments

Unfortunately in the present case there is no alternative to a serial consideration of the particular amendments proposed. I will undertake that consideration by reference to the paragraph numbers used in the proposed amended pleading.

Paragraph 3

Two amendments are proposed to this paragraph. The first asserts that Ould had a paid up share capital of $2, did not carry on any business and had no assets. To the extent that these are material facts, and not evidence (which is doubtful), they do not appear to me to materially alter the case advanced on behalf of Mr Fletcher. No particular objection is taken to them, and they should be allowed.
The second amendment to par 3 would introduce a sentence in the following terms (after the assertion that Ould was the alter ego of Mr Hooper):
The acts of Ould were in fact the acts of Hooper and in all the circumstances Ould was at all material times the agent of Hooper rendering Hooper liable for the wrongdoings of Ould.
The assertion that the acts of Ould were in fact the acts of Mr Hooper seems to me to be simply another way of stating the 'alter ego' plea contained in the existing pleading and is therefore otiose and unnecessary. The plea that Ould was at all material times the agent of Mr Hooper is a radically different way of enunciating the claim brought by Mr Fletcher against Mr Hooper. It may be that it is nothing more than a different legal characterisation of the facts relied upon in support of the claim already advanced. However, it is impossible to assess that proposition because the assertion suffers the additional defect of being entirely devoid of any particulars setting out the facts said to give rise to the agency relationship asserted. If those facts are the same as those asserted in support of the 'alter ego' plea, there is an impossible tension between the two assertions. The 'alter ego' plea is essentially to the effect that Mr Hooper and Ould should be regarded as one and the same entity. The assertion of agency, however, presupposes two separate entities, one acting as agent for the other. But if the facts relied upon in support of the agency plea are different to those advanced in support of the 'alter ego' plea, on the face of it the claim sought to be enunciated against Mr Hooper would not be based on the same, or substantially the same, facts so as to fall within O 21 r 5, and the amendment should be disallowed in accordance with the rule in Weldon v Neal. For these reasons, I would allow the first part of the amendment proposed to par 3, but would disallow the second part of the amendment proposed.

Paragraph 4

The amendments proposed to this paragraph can be considered in three parts. The first would recast the advance of $50,000, currently asserted to have been made by Ould to Baysilk, as a loan from Mr Hooper to Mr Fletcher. It does not seem that anything turns upon this characterisation. Rather, the material fact for Mr Fletcher's case is his assertion that there was no debt secured by the mortgage in favour of Ould at the time Ould purported to exercise the power of sale under that mortgage. That fact is unchanged by the alteration of the parties to the loan which, on his case, was repaid in full, whoever the parties were. This amendment should be allowed.
The second part of the amendment to this paragraph asserts that Mr Fletcher later signed security documents which he was told by Mr Hooper were to secure the loan. Mr Hooper objects to this amendment on the basis that it is not at all clear why the statements attributed to him would be relevant and, if so, how, and if not, why they are now included. I accept that objection and would not allow this part of the amendment.
The third part of the amendment to this paragraph differently describes the securities granted in support of the Ould loan to include a debenture granted by Baysilk. Nothing seems to turn upon that additional security, and as neither defendant takes particular exception to it, I would allow this part of the amendment.

Paragraph 5

The amendment proposed to this paragraph would alter the assertion that Mr Fletcher and Baysilk accepted the offer of loan facilities from the Bank, to an assertion that Baysilk alone accepted that offer. The Bank objects to this amendment on the basis that it introduces a new fact, outside the limitation period, and in particular on the ground that is presumably relied upon as the basis of a duty of care owed to Baysilk (introduced by the amendments proposed to par 37 of the statement of claim). I will deal with the amendment to par 37 which would introduce an allegation of a duty to Baysilk (which is not a party to these proceedings) below. In the context of par 5, it does not seem to me that the amendment which characterises the agreement for the loan facilities as one between Baysilk and the Bank, as compared to an arrangement between Mr Fletcher and Baysilk, and the Bank materially alters the cause of action asserted by Mr Fletcher, which is based on a duty of care owed to him. I would therefore allow that amendment.

Paragraph 6

Mr Fletcher proposes to amend this paragraph to introduce a reference to other securities granted to support the loan facilities provided by the Bank. The Bank objects to the amendment on the basis that it would introduce new facts after the expiry of the Limitation Act. However, the precise extent of the securities granted by Mr Fletcher, and entities associated with him, as support for the funds advanced by the Bank, above and beyond the mortgage over the Bull Creek property, does not appear to me to be of great materiality to the cause of action he has asserted. Accordingly, it seems to me that the facts asserted by this proposed amendment are substantially the same as the facts previously asserted. Nor would those facts give rise to any particular difficulties of investigation at this late stage of the proceedings, as they are all said to be documentary securities which either exist or do not exist. Accordingly, I would allow the amendment proposed to this paragraph.

Paragraph 16

The amendment proposed to this paragraph is similar to the amendment proposed to par 6, in that it would extend the enunciation of the securities granted in favour of the Bank. The Bank takes the same objection, but for the reasons given in the previous paragraph, I would allow the amendment proposed.

Paragraph 35

Mr Fletcher seeks to amend this paragraph by adding the following sentence:
The sale of the Bull Creek property by Ould and/or Hooper, with the assistance and active participation of St George, was wrong, was without any legal basis, and caused the plaintiff loss and damage as pleaded below.
To the extent that this paragraph makes an allegation against Ould and/or Mr Hooper, it is repetitive of the allegation made in the paragraph currently numbered 39 in the statement of claim. As such, it is otiose and embarrassing. To the extent that there is an assertion that the Bank assisted and actively participated in the sale, it is impossible to know whether that assertion is an assertion of a material and substantially new fact, such as to take the amendment outside the scope of O 21 r 5, or alternatively, a characterisation of facts already pleaded because of the further defect that the facts relied upon, and which are said to constitute assistance and active participation are not particularised. For these reasons I would not allow this amendment.

Paragraph 36

It is proposed to amend this paragraph to include the words 'and/or Hooper' after the references to Ould. This amendment seems to me to be consistent with the existing plea to the effect that Ould was the 'alter ego' of Mr Hooper and does not appear to raise any new issue. Mr Hooper takes no particular objection to the amendment, which I would allow.

Paragraph 37

As currently pleaded, this paragraph asserts that by reason of the facts previously pleaded in the statement of claim, the Bank owed to Mr Fletcher a fiduciary duty to promptly inform him of the agreement to sell the Bull Creek property or, in the alternative, is estopped from denying that it owed such a duty to Mr Fletcher. By the amendments proposed, Mr Fletcher would seek to introduce twelve additional facts in support of that plea. I will set them out in turn:
(i)The relationship between St George, Baysilk Holdings Pty Ltd and the Plaintiff was that of Banker-Customer-Surety respectively; and St George owed a duty of care to both Baysilk and the Plaintiff.
The relationship of Banker, customer and surety is established by the facts already pleaded and needs no repetition. The allegation that the Bank owed a duty of care to Baysilk is irrelevant, firstly, because Baysilk is not a party to the proceedings and, secondly, because the paragraph pleads a fiduciary duty and an estoppel, not a common law duty of care. For the latter reason, the allegation that the Bank owed the plaintiff a common law duty of care is also irrelevant and embarrassing to the plea which it is said to support. I would not allow this sub-paragraph.
(ii)On 1 August 1995, when the Bank offered credit facilities totaling $1,550,000.00 to Baysilk on the security of 2 properties, personal guarantees and company charge, it knew that Ould had registered a mortgage on the Bullcreek property to secure a loan of $50,000.00.
This assertion is irrelevant, because it refers to a point in time (August 1995) which is not material to the duty said to be owed in 2001, and otiose, because it repeats assertions earlier made. I would not allow it.
(iii)At all material times, the Bank had declared that the Banker-Customer-Surety relationship would be a 'mutually beneficially [sic] relationship'.
This assertion goes to a characteristic of the relationship which could be relevant to the fiduciary duty asserted. It would not appear to be a substantially different fact to the facts already asserted in relation to the character of that relationship. However, it has not been adequately particularised. Before an amendment of this kind is allowed, adequate particulars should be given.
(iv)In 1996, the Plaintiff informed St George that he had paid off the Ould loan but St George, failed, refused and/or neglected to take steps to have Ould's mortgaged [sic] removed from the title or advised the Plaintiff to have it removed.
The difficulty with this assertion is that it is impossible to see, on the face of the plea or by reference to established legal principle, why the Bank had any obligation to take steps to have the Ould mortgage removed, or to advise Mr Fletcher to have it removed. I would not allow this amendment.
(v)From 1995 to June 2000, the Plaintiff bought and sold several properties but always retained the Bullcreek property. At one time, the Plaintiff owned 6 properties, all of which were mortgaged to St George.
To the extent that this is a material fact and not evidence (which is doubtful), it seems to me to be an incident of the Banker‑customer relationship which could be relevant to the ascertainment of the fiduciary duty asserted. The existence of that relationship, and its general character has always been relied upon by Mr Fletcher. This assertion does not appear to me to add any new fact which is substantial or significant and I would allow the amendment.
(vi)In or about July 2001 the Plaintiff owned 4 properties all of which were mortgaged to St George. The total loans outstanding then was $2,450,000.00 and the 4 properties were valued at $3,470.000.
This plea essentially takes the allegations already made in par 16, as to the state of the debt and sureties forward from July 2000 to July 2001. It does not seem to me to materially alter the nature of the case advanced by Mr Fletcher and I would allow the amendment.
(vii)At all material times, since June 1996, St George knew that the Plaintiff did not owe any money to Ould and that Ould did not have any right to sell the Bullcreek property under the mortgage that continued to be registered on the property.
There is a very significant difference between the fact currently asserted to the effect that Mr Fletcher had stated to the Bank that he was not indebted to Ould under the mortgage, and a plea to the effect that the Bank knew that assertion to be correct, and therefore knew that Ould had no right to sell the property under the mortgage. These assertions of knowledge are not particularised, but more importantly, significantly alter the nature of the case advanced against the Bank from a case of failure to inform, to a case of wilful and knowing participation. A case based on that factual assertion is not a case based on the same, or substantially the same, facts as the cause of action presently asserted and would defeat the operation of the Limitation Act. Accordingly, the rule in Weldon v Neal should be applied to disallow this amendment.
(viii)At all material times St George knew that all the proceeds of sale from a sale of the Bullcreek property would be paid to them and that Ould's intention in selling the property was for some other reason than to recover money owed to it.
To the extent that the first part of this assertion is a plea that the Bank knew it would receive the proceeds of sale from the Bull Creek property, it is repetitive of assertions made earlier in the pleading to the effect that the Bank had first priority as secured creditor, and its debt exceeded the sale price of the property. To the extent that the plea asserts that the Bank had actual knowledge of improper or extraneous purposes on the part of Ould, it has the same character as the immediately preceding assertion, in that not only is it inadequately particularised, but it also materially alters the nature of the case advanced against the Bank. It should not be allowed.
(ix)At all material times, St George knew that:
(1)Ould had set a reserve price of $1.9m. in the intended auction sale;
(2)No valuation had been obtained by Ould prior to the sale;
(3)The conditions in the Contract for sale were not beneficial to the Plaintiff or to St George.
These are entirely new allegations of actual knowledge which are unparticularised and which would significantly alter the character of the case advanced against the Bank. They should not be allowed for the reasons previously given.
(x)At all material times, St George knew that the amount which Ould claimed to be owed was $112,000.00 and that the amount was insignificant compared to the level of security the Bank held.
This is an unparticularised allegation of actual knowledge which, in addition, seems to me to be irrelevant. I would not allow it.
(xi)At all material times, St George knew that Ould had lodged a caveat against all 4 properties owned by the Plaintiff.
As with the preceding assertion, this is an allegation of actual knowledge which is inadequately particularised and, in any event, irrelevant. It should not be allowed.
(xii)At all material times, St George knew that, if the Plaintiff had to sell any of his properties, the last one he would sell is the Bullcreek property.
Again, this is an inadequately particularised assertion of actual knowledge which is, in any event, irrelevant. It should not be allowed.

Conclusion – par 37

For these reasons, I would disallow all the amendments proposed to par 37 save for those proposed in subpars (v) and (vi). The assertion contained in subpar (iii) might be allowed if adequately particularised.

Paragraph 38

This paragraph is entirely new. It asserts that by reason of the facts previously pleaded, the Bank owed to Mr Fletcher a duty of care which included the following duties:
(a)a duty to act reasonably and equitably at all times;
(b)a duty to protect, preserve and protect [sic] the plaintiff's equity of redemption of all the properties belonging to the Plaintiff which it had taken as security;
(c)a duty to act in the best interests of the Plaintiff in his position as surety;
(d)a duty to make sure that any sale of any of the mortgaged properties by Ould or St George as mortgagee is at the true market value;
(e)a duty to prevent and stop the sale of the Bullcreek property in all the circumstances; in particular, when it had been told by the Plaintiff that he did not owe any money to Ould under the mortgage;
(f)a duty to duly inform the Plaintiff of any steps taken by Ould to sell the Bullcreek property; [and]
(h)a duty to seek the Plaintiff's consent whether to allow any intended sale by Ould to take place and participate in such sale.
There are a number of difficulties with duties cast in these terms. Some are cast in extremely broad and general terms, and there is no other pleading proposed which would identify with any precision or particularity how it is said that the duties have been breached. Duties falling within this class are those particularised as subpars (a), (b) and (c). Another, that enunciated in subpar (d), is irrelevant to the extent that it refers to properties other than the Bull Creek property, and to sales by the Bank as mortgagee, given that the Bank did not in fact sell the Bull Creek property as mortgagee on Mr Fletcher's case. The assertion in subpar (e) that the Bank had a duty to stop the sale of the Bull Creek property merely because Mr Fletcher had asserted he was not indebted to Ould, appears to me to be unarguable on the authorities dealing with the responsibilities of a secured creditor. The question of whether there was any debt secured by the Ould mortgage was a question that arose between Mr Fletcher and Ould, and I can see no basis upon which it could be argued that the Bank had a duty to intervene in that relationship merely on the basis of assertions made by Mr Fletcher.
The duty, enunciated in subpar (f), to inform Mr Fletcher of the steps taken to sell the property, is repetitive of the duty currently pleaded in par 36 and unnecessary and embarrassing.
The duty pleaded in subpar (h), to the effect that the Bank was obliged to seek Mr Fletcher's consent to allow the sale by Ould to take place, is unsupported by any authority which has been cited or of which I am aware, and appears to presuppose some obligation to intervene in the relationship between Mr Fletcher and Ould. It does not appear to me to be arguable.
For these various reasons, I would not allow the amendment to introduce any of the duties asserted in par 38.

Paragraph 39

By the amendments to this paragraph, the damages claimed are reparticularised. The amendments are essentially a different way of formulating the precise loss claimed. No new proposition is introduced by the amendments and they are of a kind which is routinely allowed. Neither the Bank nor Mr Hooper has taken particular objection to these amendments. I would allow them.

Paragraphs 40 and 41

These are new paragraphs proposed in the following terms:
40.At all material times up to the date that the Bullcreek property was wrongfully put up for sale by Ould Pty Ltd no money was owing by the Plaintiff to Ould Pty Ltd and Hooper, as sole director and a shareholder with sole control and responsibility for the acts of Ould Pty Ltd, knew or ought to have known that no monies were owing, and knew or ought to have known that Ould Pty Ltd and/or Hooper had no right to sell the Bullcreek property, but proceeded in any event to wrongfully cause the Bullcreek property to be sold.
41.Hooper sold the Bullcreek property recklessly and maliciously for $1.7 million knowing full well that the entire proceeds of sale (apart from the sale costs) would be paid to the first defendant and realize no funds for Hooper.
These paragraphs, if allowed, would introduce various allegations as to different states of mind on the part of Mr Hooper, including actual knowledge, constructive knowledge, recklessness and malice. They are entirely unparticularised, but more significantly, would substantially alter the presently pleaded basis of the claim advanced against Mr Hooper by introducing, long after the expiry of any relevant limitation period, pleas as to his state of mind which are presumably relied upon to sustain a cause of action against him. Those are substantially new and different facts, which could not be said to be the same, or substantially the same, as the facts previously asserted against him. The rule in Weldon v Neal precludes these amendments.

Paragraph 42

This paragraph is proposed to be amended to include reference to pars 40 and 41, which I have already disallowed, and to introduce a plea of malice. I would therefore disallow the amendment. It should be disallowed for the same reasons as pars 40 and 41.

Paragraph 43

This paragraph is a new paragraph in the following terms:
In the circumstances of this case the acts of Ould were in fact the acts of Hooper who knew that the sale of the Bullcreek property was wrong and the corporate veil ought to be lifted in the interests of justice.
To the extent that this paragraph asserts that the acts of Ould were the acts of Mr Hooper, and exhorts the lifting of the corporate veil, it is repetitious of the 'alter ego' plea already contained in par 3 and, to that extent, embarrassing and irrelevant. To the extent that it pleads a state of mind on the part of Mr Hooper, it must be disallowed for the reasons given above.

Paragraph 44

It is also proposed to introduce a new par 44 in the following terms:
Alternatively in all the circumstances of this case Ould was at all material times the agent of Hooper rendering Hooper liable for the wrongdoings of Ould.
For the reasons I have already given, this proposed amendment must fall with the amendment proposed to introduce an allegation of agency into par 3, and should be disallowed.

The prayer for relief

The plaintiff also proposes to amend the prayer for relief to seek damages against both defendants jointly and severally. This seems to be an excess of caution, as such a claim might in any event have been implied. In any event, neither defendant objects to the amendment, which should be allowed.

Summary

For the reasons set out above, I would allow some of the amendments proposed, but disallow a substantial portion of those proposed. I would expect that the plaintiff, and those advising him, would wish the opportunity to prepare and file a further revised minute of amendments to the statement of claim taking account of these reasons. Orders allowing the pleading to be amended should be deferred until that minute has been produced. I will allow 21 days from the date of publication of these reasons for the plaintiff to file and serve such a minute. I will allow each defendant 14 days within which to file and serve notice of opposition to any of the amendments proposed in the revised minute. In the event that there is any opposition to the revised minute of proposed amendments, I will allow the plaintiff 10 days within which to file and serve an outline of submissions in support of the amendments proposed, after which the matter will be relisted for further hearing before me.
The orders I make are:
(1)Reasons published in relation to the plaintiff's application for leave to amend his statement of claim.
(2)The plaintiff to have 21 days from the date of publication of these reasons within which to file and serve a revised minute of proposed statement of claim in accordance with these reasons.
(3)Each defendant to have 14 days from the date of service of the revised minute of proposed amendment to the statement of claim within which to file and serve notice of objection to the proposed amendments, together with short submissions in support of any such objections.
(4)In the event of objection being taken to the revised minute of proposed amendments to the statement of claim, the plaintiff is to have 10 days from receipt of notice of such objection within which to file and serve a short outline of submissions in support of the proposed amendments.
(5)The matter is to be relisted for hearing and for further directions before me on Wednesday, 23 June at 9.30 am.