Fudlovski v JGC Accounting & Financial Services Pty Ltd - [2013] WASC 153

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FUDLOVSKI -v- JGC ACCOUNTING & FINANCIAL SERVICES PTY LTD [2013] WASC 153

CORAM: KENNETH MARTIN J

HEARD: ON THE PAPERS

DELIVERED : 1 MAY 2013

FILE NO/S: CIV 2239 of 2012

BETWEEN: NICOLA FUDLOVSKI
First Plaintiff
ROSEMARY FUDLOVSKI
Second Plaintiff
FUDLOVSKI INVESTMENTS PTY LTD
Third Plaintiff
BLUE CHIP ENTERPRISES PTY LTD
Fourth Plaintiff
AND
JGC ACCOUNTING & FINANCIAL SERVICES PTY LTD
First Defendant
JUSTIN GEORGE COPPIN
Second Defendant
NIGEL WILLIAM HART
Third Party

Catchwords:

Practice and procedure - Request for further and better particulars of the defence - Defendants' objection - Request for evidence - Relevance of request - Turns on is own facts

Legislation:

Nil

Result:

Objection to request for further and better particulars upheld

Category: B

Representation:

Counsel:

First Plaintiff                :     No appearance
Second Plaintiff            :     No appearance
Third Plaintiff               :     No appearance
Fourth Plaintiff             :     No appearance
First Defendant             :     No appearance
Second Defendant         :     No appearance
Third Party                   :     No appearance

Solicitors:

First Plaintiff                :     Solomon Brothers
Second Plaintiff            :     Solomon Brothers
Third Plaintiff               :     Solomon Brothers
Fourth Plaintiff             :     Solomon Brothers
First Defendant             :     Williams & Hughes
Second Defendant         :     Williams & Hughes
Third Party                   :     Corser & Corser

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

Nil

KENNETH MARTIN J: This matter was admitted to my CMC list on 18 February 2013. A disputed issue concerning a request for further and better particulars of the defendants' defence has arisen. The parties are agreed I should determine this on the papers.
The request for further and better particulars of the defence was issued by the plaintiffs through their solicitors on 3 December 2012. It drew an objection, as regards request 4, on 5 February 2013. The defendants objected on the basis that the request was an illegitimate request for evidence. Objection was also raised on the basis of irrelevance.
The pleadings have altered since that exchange, but not in any material way relevant for this application. There was an amended statement of claim filed by the plaintiffs on 14 March 2013, followed by an amended defence on behalf of the defendants on 16 April 2013. Ensuing amendments and conferral have been unable to resolve this particular issue concerning request 4.
I commence by referring to what was par 28 and is now par 35 of the amended statement of claim. The plaintiffs' statement of claim refers to the first defendant JGC Accounting & Financial Services Pty Ltd as 'JGC'. For convenience, I will adhere to that terminology.
The plaintiffs' amended statement of claim runs to 71 pages. It is a manifest over‑simplification to observe the plaintiffs appear to be attacking JGC over financial losses they sustained wholly or in part, by reason of investing their funds in the (failed) SAS Global Group of companies allegedly on JGC's recommendation.
It is said that between 2003 and March 2010 the plaintiffs engaged JGC, for reward, as their accountant and tax and business adviser and that JGC (through the second defendant Justin Coppin (Mr Coppin)), provided accounting, tax and business advisory services (see par 8 of the amended statement of claim).
Paragraph 35 of the amended statement of claim states:
35.At all material times, JGC:
35.1was engaged by SAS Global and other companies comprised in the SAS Global Group, for reward, as their accountant;
35.2was engaged by Anthony Beamish, a director of SAS Global and other companies comprised in the SAS Global Group, for reward, as his accountant;
35.3received fees and/or commissions from SAS Global and/or other companies comprises in the SAS Global Group.
In response, the now amended defence at par 29 says (relevantly):
29.As to par 35 of the statement of claim, JGC and Mr Coppin:
29.1say that JGC was engaged to act as the tax agent for a number of the entities associated with SAS Global;
Fifteen SAS Global corporations are then identified in particulars, which together are defined as SAS companies. Paragraph 29 continues as follows:
29.2say that as tax agent for the SAS companies JGC was responsible for the preparation of business activity statements and tax returns;
29.3say that JGC was not engaged to prepare annual financial statements or provide any accounting services for the SAS companies;
29.4say that JGC received fees in relation to its engagement as the tax agent of the SAS companies;
29.5…
29.6…
29.7deny that JGC has ever received any commissions from SAS Global and/or companies comprised in the SAS Global Group;
29.8otherwise deny each and every allegation contained therein.
Most relevantly to the present disputation, the plaintiffs' solicitors (on 3 December 2012) issued request 4 in respect of what was then, and remains without alteration, par 29.4 of the defence. It said:
4.As to par 29.4 of the defence, state the amount of fees that JGC received from each of the SAS companies for each financial year from the date of its engagement(s) by each of them.
Request 4 drew this from the defendants, on 5 February 2013:
4.This is not a proper request for particulars. It is a request for evidence. An answer to the request is not necessary to allow the Plaintiffs to know the case they must meet at trial. The Defendants also object to the request on the grounds of relevance.
This matter was heard on the papers. Each side filed written outlines of submissions. The plaintiffs' submissions were received on 28 March 2013, with the defendants' response received on 16 April 2013.
The plaintiffs' submissions go to some considerable length in seeking to explain why receiving information upon the quantum of fees is said to be most relevant to an argued breach of fiduciary duty. The argument is put the basis of the plaintiffs' claim for equitable relief against the defendants. But an underlying motive for seeking information does not provide any relevant legal touchstone towards assessing whether or not a party is lawfully entitled to further and better particulars. Paragraph 11 of the plaintiffs' written submissions reads:
The quantum of fees that the first defendant received is relevant to, and probative of, the nature of the relationship between the first defendant and SAS Global companies ie whether the fees received by the first defendant were indeed received for tax agency services or whether they are indicative of some other arrangement or relationship between the first defendant and SAS Global companies. This in turn means that the quantum of fees received by the first defendant is relevant to, and probative of, whether the relationship between the first defendant and SAS Global companies was such as to give rise to fiduciary obligations owed by the first defendant to SAS Global companies.
The plaintiffs are seeking to pursue action against the first defendants on a basis that fiduciary duties are said to be owed both to the plaintiffs and to the SAS Global Group companies, and that a clash of duties owed by JGC resulted in a conflict of interest scenario for JGC. The plaintiffs then claim JGC preferred its own interests (or the interests of the SAS Global Group companies) over the plaintiffs' interests, in giving recommendations and advice which resulted in them losing money by investing in the SAS Global Group companies (see par 7E of the plaintiffs' written submissions).

Disposition

In responding to what is now par 35 of the amended statement of claim, the defendants (at par 29.4 of the amended defence) make what is a limited admission concerning the asserted receipt of fees, by the averment at par 35.3 of the amended statement of claim. Other pleas in par 29 of the amended defence are further admissions, or go on to raise a joinder of issue upon the question of commissions being received by JGC from SAS Global (see par 29.7 of the amended defence). Paragraph 29.8 indicates remaining averments which have not been specifically addressed in par 29 of the defence, are denied.
Here, it is the plaintiffs who first make the averment as seen at par 35.3 that JGC has 'received fees' from SAS Global or other companies in the SAS Global Group. The defendants, in responding, make a limited admission accepting a receipt of fees (but not commissions). For the plaintiffs to seize upon that limited admission and to seek particulars about the quantum of fees presents as illegitimate. In truth, it pursues evidence rather than seeking the legitimate clarification of what is admitted at par 29.4 of the amended defence.
Paragraph 29.4 also pleads in defence an asserted nexus as between the admittedly received fees, with their receipt being said to be 'in relation to [JGC's] engagement as the tax agent of the SAS Companies'. It would have been legitimate to probe the asserted nexus plea by a request for particulars. But to ask the defendants to elaborate over the quantum of fees it has received, in circumstances where it is the plaintiffs who first raise (by the plea at par 35 of the amended statement of claim) the receipt of fees assertion, is not legitimate. The request traverses into a pursuit of evidence, which is objectionable.
The defendants have raised a legitimate objection to this request for particulars.
The application will be dismissed and the plaintiffs should bear responsibility for the defendants' taxed costs of a failed application.