Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 7]

[2014] WASC 441

FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 7] [2014] WASC 441

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2014] WASC 441
Case No:	CIV:2765/2010	Heard:	ON THE PAPERS
Coram:	ALLANSON J	Delivered:	25/11/14
No of pages:	15	Judgment Part:	1 of 1
Result:	Application allowed in part Plaintiffs have leave to re-plead
Category:	B
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Parties:	ANGELA CECILIA THERESA FRIGGER ANGELA CECILIA THERESA FRIGGER AND HARTMUT FRIGGER IN THEIR CAPACITIES AS TRUSTEES OF THE FRIGGER SUPERANNUATION FUND HARTMUT HUBERT JOSEF FRIGGER MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
Catchwords:	Practice and procedure Application to strike out pleadings Whether no reasonable defence to counterclaim Whether prejudice, embarrass, delay trial of the action Whether abuse of process Application allowed in part
Legislation:	Corporations Act 2001 (Cth), s 588FA, s 588FC, s 588FE Personal Property Securities Act 2009 (Cth) Property Law Act 1969 (WA), s 89 Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 20 r 8(2)
Case References:	Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51 Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [2013] WASC 229 Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 2] [2013] WASC 394 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85; (1999) 166 ALR 129 Murchison Zinc Company Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167 Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360 Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 Re Suco Gold Pty Ltd (In Liq) (1983) 33 SASR 99 Tobin v Dodd [2004] WASCA 288 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 7] [2014] WASC 441 CORAM : ALLANSON J HEARD : ON THE PAPERS DELIVERED : 25 NOVEMBER 2014 FILE NO/S : CIV 2765 of 2010 MATTER : Section 78 of the Trustees Act 1962 and Section 1321 of the Corporations Act 2001 BETWEEN : ANGELA CECILIA THERESA FRIGGER

ANGELA CECILIA THERESA FRIGGER AND HARTMUT FRIGGER IN THEIR CAPACITIES AS TRUSTEES OF THE FRIGGER SUPERANNUATION FUND
HARTMUT HUBERT JOSEF FRIGGER
Plaintiffs

AND

MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
First Defendant

COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
Second Defendant

Catchwords:

Practice and procedure - Application to strike out pleadings - Whether no reasonable defence to counterclaim - Whether prejudice, embarrass, delay trial of the action - Whether abuse of process - Application allowed in part

Legislation:

Corporations Act 2001 (Cth), s 588FA, s 588FC, s 588FE

Personal Property Securities Act 2009 (Cth)
Property Law Act 1969 (WA), s 89
Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 20 r 8(2)

Result:

Application allowed in part

Plaintiffs have leave to re-plead

Category: B

Representation:

Counsel:

Plaintiffs : No appearance
First Defendant : No appearance
Second Defendant : No appearance

Solicitors:

Plaintiffs : In person
First Defendant : Holborn Lenhoff Massey
Second Defendant : Holborn Lenhoff Massey

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

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62
Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [2013] WASC 229
Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 2] [2013] WASC 394
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101
Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998)
Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85; (1999) 166 ALR 129
Murchison Zinc Company Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167
Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360
Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Re Suco Gold Pty Ltd (In Liq) (1983) 33 SASR 99
Tobin v Dodd [2004] WASCA 288
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387



1 ALLANSON J: This is the latest in a series of interlocutory decisions in this action. I will not set out the background again. It may be found in Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [2013] WASC 229, and Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 2] [2013] WASC 394.

2 To some extent the present application stems from the way in which these proceedings have grown from modest beginnings. The plaintiffs initially applied by originating summons for orders regarding the beneficial ownership of two pieces of land, the entitlement to a bank term deposit, and the entitlement to repayment of a taxing fee.

3 The factual issues regarding those four items of property are complicated enough: the Armadale land has been the subject of earlier litigation which proceeded up to the Court of Appeal; and the plaintiff's claims of ownership cannot be separated from issues regarding the operation of the Frigger Superannuation Trust. Since the proceedings began, many other issues have emerged, both in the claim, and by defence and counterclaim. The counterclaim pursues multiple claims against Mr and Mrs Frigger to recover assets which the defendants say are owned by the second defendant, Computer Accounting & Tax Pty Ltd (the Company).

The current application

The re-amended substituted defence and counterclaim

4 On 8 July 2014, the defendants filed a re-amended substituted defence and counterclaim. The effect of the defence is that:

1. The Company owns the Perth and Armadale properties in its own right.

2. Alternatively, if the Company owns or owned those properties or other property as a trustee, it is entitled to be indemnified or exonerated out of the trust property with respect to debts, liabilities, costs and expenses it incurred in connection with, or in or about the execution of, trust powers, and that right is an asset available for the creditors of the Company: see pars 17, 22, 24, and 43B.

3. The two specific amounts claimed by Mrs Frigger (a term deposit and a taxing fee in this court, both of which she paid) were loans to the Company, and Mr Frigger is an unsecured creditor for those amounts.

5 In these respects, the defendants' current pleading amplifies what they had previously pleaded, but does not change it in substance.

6 In relation to the Armadale property, the defendants now plead a further claim based on estoppel by representation, as well as pleading an estoppel arising by law by reason of curial determinations in other proceedings: pars 18A to 18D.

7 The defendants also now plead that:

1. the effect of the contract for the purchase of the Armadale property was that the service station business conducted on the property was part of the subject matter purchased by the Company with the land, and is an asset of the Company;

2. since 1 July 2009, the plaintiffs have retained, or alternatively have excluded the Company from receiving, the income revenue and profits derived from the use and operation of the service station business and the Armadale property; and

3. the plaintiffs have not paid rent either at market value or at all: see pars 137A to 137E.

8 The counterclaim claims damages against Mr and Mrs Frigger for breach of duty, as a result of which the Company has suffered loss and damage relating to the operation of the service station business.

9 More generally, by counterclaim, the defendants allege that:

1. Mr and Mrs Frigger had a loan account with the Company, and owe the Company a substantial sum: pars 116 - 117;

2. the Company was insolvent, nearly insolvent or of doubtful solvency in 2009 (alternative dates between January 2009 and October 2009 are pleaded), and that certain transactions, including transfers out of the loan account and transfers of the Perth and Armadale properties, are voidable under the Corporations Act 2001 (Cth) as unfair preferences or insolvent transactions, or are voidable under s 89 of the Property Law Act 1969 (WA) as transactions to defraud creditors: pars 111 - 115, 118 - 124; and

3. Mr and Mrs Frigger breached their duties as directors of the Company in causing it to make payments, including payment to each of them or to the Frigger Superannuation Fund: pars 130 - 137.

The substituted reply and defence to counterclaim

10 On 22 July 2014, the plaintiffs filed a substituted reply and defence to counterclaim. In part this was in response to the amendments in the defendants' pleading, but significant parts of the plea may be found, in substance, in earlier versions.

11 The defendants say that the plaintiffs' pleading fails to disclose a valid defence to the counterclaim; may prejudice, embarrass or delay the fair trial of the action; and is otherwise an abuse of process. They seek to strike out the substituted reply and defence to counterclaim in its entirety, or alternatively, to strike out pars 8, 14 to 20, 21, 22, 27, 29 (in part), 34, 36, 40, 52 to 58, 59, 60, 61, 78 (in part) and 85 of the plea. If the specified paragraphs, or the majority of them, are struck out, the plaintiffs will need to re-plead as some of the paragraphs that are not challenged need to be read with those that are.

The principles

12 On an application to strike out pleadings, there is a tension between competing principles. The court must apply case management principles and attain the objects set out in O 1 r 4B of the Rules of the Supreme Court 1971 (WA). It is also necessary to consider the role of pleadings in the context of case management techniques, including the pre-trial exchange of witness statements and documents: see Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [8]. Providing a pleading fulfils its basic function by identifying the issues, disclosing an arguable cause of action or defence, and apprising the other party of the case it has to meet at trial, then the action should proceed: Murchison Zinc Company Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167 [38]; Barclay Mowlem [5], [9].

13 The court will only strike out in a clear case: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 - 130; Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91. In this application, where it is contended that the pleading does not disclose a reasonable defence to the counterclaim, the question is whether it would be open to the plaintiffs, on the facts they have pleaded, to prove facts at the trial which would constitute a defence to the matters raised in the counterclaim: Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405, 414; Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54].

14 The alternative ground in the strike out application is that the defence to counterclaim, or particular pleas in it, may 'prejudice, embarrass or delay the fair trial of the action'. It is a composite phrase. Pleadings may be struck out on this ground

because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general.

Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) (Murray J) 8 - 9.

15 I must also have regard to the fact that the plaintiffs are unrepresented, although they have regularly had the benefit of legal representation and, from what Mrs Frigger has said during hearings in chambers, they intend to be represented at trial. The role of the judge in civil proceedings where a party is not represented was discussed in detail in Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85; (1999) 166 ALR 129 [26] [30]; and see Tobin v Dodd [2004] WASCA 288 [14] - [15]. I will not repeat those discussions. I approach this application trying to ensure that there is no viable defence that is obfuscated by the form or expression of a document prepared by a self-represented litigant.

The challenged paragraphs

16 Paragraph 8, although formatted as a separate paragraph, is apparently intended to be particulars of the plea in the preceding paragraph or paragraphs.

17 In pars 3 and 7, the plaintiffs plead that the Company traded as a vehicle for various enterprises and investments conducted by Mr and Mrs Frigger, and that the Company and Mr and Mrs Frigger agreed that rental income from investments would be paid directly to Mr and Mrs Frigger for the payment of the expenses of the Perth and Armadale properties and part payment of loans obtained for the purchase of those properties.

18 Paragraph 8 simply states that the plaintiffs will rely on the documents produced by BankWest in earlier proceedings (CIV 2265 of 2006). The documents are not otherwise specified.

19 This is not a pleading of material fact, nor does it serve any useful function as particulars. The plaintiffs do not have to plead the evidence on which they will rely. But if they wish to plead that the effect of any document is material, the effect of the document must be briefly stated: O 20 r 8(2) of the Rules of the Supreme Court. To simply refer to the documents produced by a third party in another action can only engender uncertainty and lead to delay. Paragraph 8 is not a proper plea and it should be struck out.

20 Paragraphs 14 to 20, 27 and 29. Paragraphs 14 to 20 must be understood in the context of earlier paragraphs, and the plea made in par 27.

21 The plaintiffs plead matters relating to proceedings by the Company against Professional Services Australia Pty Ltd and Martin Paul Banning. Those proceedings resulted in a judgment in favour of the Company. Professional Services Australia and Mr Banning appealed from that judgment (CACV 76 of 2008).

22 The effect of the challenged plea is that:

1. In 2003, Mrs Frigger gave the Company notice of the plaintiffs' intention to commence the claim, that any judgment would be paid to Mr and Mrs Frigger, and that Mrs Frigger would pay the legal costs: par 10.

2. The Company resolved to ratify the matters in the notice and that became an enforceable contract between the Company and Mr and Mrs Frigger: par 11.

3. In July 2008, judgment was entered in favour of the Company in the amount of $967,202.50 (the judgment debt).

23 Professional Services Australia went into administration before the judgment debt was paid. A deed of company arrangement (DOCA) was made in the administration: par 14. Under the DOCA, the Company would be paid the sum of $1,106,027.26, and interest on that sum, by no later than 30 August 2009; and, if the appeal in CACV 76 of 2008 resulted in a reduction in the judgment, the reduction was to be repaid to Banning Holdings Pty Ltd: par 15 (a) and (d).

24 The Company was paid $1,165,661.54 on 8 June 2009, and received no further payments under the DOCA. The Company paid those funds to Mr and Mrs Frigger under the contract.

25 The Court of Appeal subsequently reduced the judgment debt, and made orders requiring the Company to repay part of the judgment sum: par 23.

26 In paragraph 27, the plaintiffs plead that the judgment and orders of the Court of Appeal were contrary to the terms of the DOCA; and that Professional Services Australia and Mr Banning had no right to apply for a liquidator to be appointed to the Company, because the Company was entitled to retain the judgment sum pursuant to the DOCA.

27 In that way, pars 14 to 20 and 27 mount a collateral challenge to the decision of the master ordering that the Company be wound up in insolvency for failure to comply with two statutory demands, and probably to the orders made in the Court of Appeal: see Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93.

28 Paragraph 29 contains the extraordinary plea that Mr and Mrs Frigger acted in compliance with their duties as directors of the Company in refusing to cause the Company to comply with the appeal judgment.

29 The defendants submit that these paragraphs are irrelevant and are vague and embarrassing.

30 The plaintiffs support these pleadings as a defence to the defendants' claim under the trustee's right of indemnity and exoneration. I will refer to it as the right of indemnity. In their written submissions, the plaintiffs say:

In their Defence, the defendants make a claim under a trustee's right of indemnity and exoneration on behalf of Professional Services of Australia Pty Ltd and the Estate of Martin Paul Banning (PSA/Banning), the entities that sought and obtained the appointment of the first defendant and who are still clients of Mr Lenhoff [the solicitor for the liquidator].

In those circumstances, Mr and Mrs Frigger are entitled to raise any defence against such a claim, including that those entities are not entitled to repayment of the judgment sum which they did not pay in the first place.

31 The plaintiffs further submit that the liquidator can only make a claim to the trustee's right of indemnity if it has an assignment from Banning Holdings of the right to be paid any sum ordered by the Court of Appeal. They say their plea is not an attack on the decision of the Court of Appeal, but that the order of the court could only be effective if the parties named in the order had a right to repayment. Accordingly, they submit, as the defendants claim the right of indemnity on behalf of Professional Services Australia or the estate of Mr Banning, which have no right to repayment, the orders of the Court of Appeal are ineffective, the liquidators appointment is invalid, and the liquidators claim 'on behalf of PSA/Banning' is invalid.

32 The submission, in my opinion, is misconceived. If that is the purpose of the plea, it cannot stand.

33 The defendants claim the right of indemnity as an asset in the liquidation. If the Company held property in trust, it may be entitled to be indemnified from those trust assets against expenses for which it became liable in conducting the business of the trust. For the purpose of enforcing the indemnity, it possesses a charge or right of lien over those assets: Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367. The right of indemnity gives a beneficial interest in the assets of the trust which passes to the liquidator and is property of the company in the liquidation: Octavo Investments (370); Re Suco Gold Pty Ltd (In Liq) (1983) 33 SASR 99, 102. The fact that Professional Services Australia or the estate of Mr Banning may be able to prove debts in the liquidation of the Company does not make the claim to that right a claim 'on behalf of' either or both of them. No question of assignment by Banning Holdings of the amount ordered to be paid by the Court of Appeal arises.

34 I am satisfied that pars 14 to 20, 27 and 29 may prejudice, embarrass or delay the fair trial of the action, and should be struck out on that ground. They seek to raise issues which are immaterial and irrelevant, and disclose no arguable defence to the counterclaim.

35 Paragraph 27 should also be struck out as an abuse of process to the extent that it is a collateral challenge to earlier decisions of this court.

36 While the plaintiffs will generally have leave to re-plead, they should understand that any plea that challenges the decision of the Court of Appeal, or the decision to wind up the Company, will inevitably be challenged and will be struck out.

37 Paragraphs 21 and 22 plead a fixed deed of charge executed on 10 September 2009 by the Company and Mr and Mrs Frigger 'to secure current and future loans to a maximum of $2,000,000 provided by Mr & Mrs Frigger to [the Company]'. Under the deed of charge, the secured assets included 'all of the judgment sum pre-judgment and post-judgment interest legal costs enforcement costs owing and payable to [the Company]' in specified legal proceedings, a term deposit at the St George bank, and units in a Fund (the Becton Office Fund).

38 The deed of charge was registered under the Personal Property Securities Act 2009 (Cth) on 23 October 2009 (the day the Court of Appeal gave judgment in the appeal, the effect of which was to require the Company to repay approximately $800,000, plus interest).

39 In par 78(c), the plaintiffs plead that the judgment debt in the proceedings between the Company and Professional Services Australia was charged by the Company in favour of Mr and Mrs Frigger.

40 These paragraphs are to be read together with pars 59 to 61, where the plaintiffs plead that Mr and Mrs Frigger gave notice of seizure of assets the subject of the charge, and notice of a proposal to retain collateral in those assets. Those notices were given in April and June 2014. The plaintiffs plead that any interests which the Company had in the judgement debt were extinguished on 21 June 2014.

41 The defendants challenge these pleadings on several grounds, including that it introduces a claim which is beyond the scope of the originating summons, and is a new cause of action. They submit that it cannot be raised as a defence to counterclaim. Further, some of the matters pleaded arose after the date of the originating summons.

42 The plea of the charge is, in my opinion, properly made as a defence to counterclaim. The originating summons was confined to particular property. The defendants, by their counterclaim, have substantially altered the issues in the proceedings, and in particular the property which will be affected by the orders made in the action. One of the substantial assets in issue is the judgment sum paid by Professional Services Australia. The counterclaim asserts that the transactions by which the plaintiffs transferred money out of the loan account, including the transfer of the judgment sum or $900,000 out of the judgment sum, are unfair preferences, insolvent transactions, and voidable transactions under s 588FA, s 588FC and s 588FE of the Corporations Act. Whether, and to what extent, Mr and Mrs Frigger were secured creditors of the Company for those amounts must be decided in order to resolve those claims.

43 The defendants also submit that the plea regarding the charge has other defects:

1. the current and future loans secured by the charge have not been pleaded;

2. the material terms of the charge have not been pleaded;

3. it purports to include costs orders that had not then been made or which were later set aside; and

4. as a fixed charge, it could not apply to items that were not assets of the Company at the date of the charge.

44 I agree that the material terms of the charge should be pleaded, and the plaintiffs should give particulars of the current and future loans secured. The other complaints are matters that, in my opinion, can be dealt with at trial. I will not strike out pars 21, 22, 59, 60, 61 and 78(c), but will make orders for particulars and require the plaintiffs to plead the material terms of the charge.

Paragraph 36

45 The plaintiffs plead that:

In the premises of the matters in this document and [statement of claim], trust and debt relationships existed concurrently over the Perth Property in the First Primary Trust and the Armadale Property in the Second Primary Trust.

46 The defendants challenge this plea on the basis that it is vague and embarrassing. They submit that the plaintiffs fail to identify what are the various matters relied upon in the introductory words 'in the premises'. Further, as I understand the submission, they complain that the pleading does not say how trust relationships and debt relationships existed concurrently, and how together with the other material facts they establish a valid cause of action or defence.

47 The plaintiffs respond that they have pleaded a Quistclose trust and, by definition, both trust and debt relationships are created. Specifically, they referred to the plea that the two properties were purchased under a loan between the plaintiffs and the Company, and that the properties were purchased with the object of being in specie contributions to the Frigger Super Fund.

48 While the plea is vague, I cannot see that it will in any way prejudice or delay the fair trial of the action. I will not strike it out.

49 Paragraph 78(a) pleads that Mr and Mrs Frigger were entitled to the judgment sum when it was paid 'pursuant to the Contract'. The defendants seek to strike the plea out, as vague and embarrassing, for failure to identify the Contract referred to. This is nit-picking. Paragraph 78(a) and (b) refer to the contract pleaded in paragraphs 10 and 11, and referred to as the Contract in pars 18 and 19. The defendants cannot have been confused by the plea.

Paragraphs 34, 40, 52 to 58 and 85 - unconscionable conduct

50 The plaintiffs' reply and defence to counterclaim is replete with allegations that the conduct of the liquidator was unconscionable. The plaintiffs submit that they make no claim arising from unconscionable conduct, and thus are not seeking to introduce a new claim into the defence to the counterclaim, but the conduct is pleaded in support of a defence of equitable estoppel.

51 In par 34, the plaintiffs plead that the first defendant's conduct in swearing an affidavit on 17 March 2010 was unconscionable. The affidavit was sworn in the proceedings under the Corporations Act in which the court ordered that the Company be wound up as insolvent.

52 In par 40, the plaintiffs plead that 'in the premises of the matters in paragraphs 3, 5, 7, 9, 16 - 22, 26 - 27, 29, 30 - 34, 39 any claim by the defendants for the Armadale Property and the Perth Property is unconscionable'.

53 There is a difficulty in this plea because pars 14 to 20, 27 and 29 will be struck out. Further, the plea overlaps with the plea in pars 30 to 34, and 39.

54 In pars 52 to 58, the plaintiffs plead, in substance, that the conduct of the liquidator in incurring liquidation costs and entering into a litigation funding agreement is unconscionable. They rely also on the paragraphs identified in par 40. In particular, the plaintiffs assert that the costs and expenses of the litigation 'were incurred solely in investigating and pursuing Mr & Mrs Frigger': par 56.

55 Finally, par 85 has a number of different allegations:

1. That Mr and Mrs Frigger relied upon the previous conduct of the Company pursuant to its Usual Mode of Business Operations and assumed that conduct would continue: par 85(a) to (c).

2. That the conduct of the defendants pleaded in pars 34, 40, 51, 57, 58 and 73(c) was unjust and unconscionable: par 85(d).

3. That the Company no longer has rights or obligations in certain proceedings: par 85(e). I simply do not understand this plea.

4. That the counterclaims by the defendants 'which now total in excess of $14,004,341' are unconscionable: par 85(f).

56 Paragraph 85(g) and (h) then assert that Mr and Mrs Frigger have suffered detriment and will suffer detriment by the defendants' unconscionable conduct and unjust change of position, and the defendants are estopped from making a counterclaim.

57 The plaintiffs do not, in my opinion, sufficiently plead a case in equitable estoppel, by reference to the principles in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 428 - 429. First, there is the particular problem that some of the paragraphs on which they rely will be struck out. Second, and more fundamentally, the assertion that the liquidator's conduct in making an affidavit in the proceedings to wind up the Company (par 34), or in entering into a litigation funding agreement (par 58), was unconscionable does not advance the plaintiffs' case in estoppel.

58 In Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51, Gleeson CJ said:

[U]nconscionability is a legal term, not a colloquial expression. In everyday speech, 'unconscionable' may be merely an emphatic method of expressing disapproval of someone's behaviour, but its legal meaning is considerably more precise [7].

Conduct such as entering into a litigation funding agreement is not unconscionable in the relevant sense.

59 It is the detrimental reliance by the plaintiffs on an expectation to which the defendants' conduct gave rise that that would make it unconscionable for the defendants to resile from a promise or representation, or to attempt to go back on assumptions which were the foundation of their dealings with the plaintiffs. It is unconscionability in that sense that would invite the intervention of the court: see Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 [35].

60 I am particularly concerned in this instance with the need to ensure that I do not preclude a viable defence that is inadequately pleaded by a litigant in person. The plaintiffs' plea, as a whole, does contain the kernel of a case in estoppel that is not so unarguable that it should be summarily dismissed.

61 While pars 34, 40, 52 to 58 and 85 are not sufficient to support a defence of estoppel, as they are currently pleaded, the plaintiffs will have leave to re-plead that defence. I understand they have access to legal assistance. Using that assistance now, rather than waiting for the trial, could prove more economical in the end.

Conclusion

62 Paragraphs 8, 14 to 20, 27, 29, 34, 40, 52 - 58, and 85 will be struck out. I will not strike out pars 21, 22, 59, 60, 61 and 78(c), but will make orders for particulars and require the plaintiffs of the loans secured under the deed of charge pleaded in those paragraphs, and to plead the material terms of the charge. Paragraphs 36 and 78(a) will not be struck out.

63 The plaintiffs will have leave to re-plead.