H Stanke & Sons Pty Ltd & Anor v Frederick John Von Stanke & Ors

Case •

[2007] SASC 51

•

20 February 2007

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

H STANKE & SONS PTY LTD & ANOR v FREDERICK JOHN VON STANKE & ORS

[2007] SASC 51

Reasons of Judge Lunn a Master of the Supreme Court

20 February 2007

PROCEDURE

Pleadings under R 46A - degree of particularity required - fair notice to other parties - when pleading of further material facts to be ordered under R 46A.09(1) - pleading of evidence R 46A.02(b) - pleading of conclusions from unparticularised facts - pleading of statutory provisions relied upon R 46A.03(d).

WILLS, PROBATE AND LETTERS OF ADMINISTRATION - OTHER MATTERS

Application to remove executor for alleged misconduct or neglect of duty held beyond power unless done through an application to revoke the probate.

H STANKE & SONS PTY LTD & ANOR v FREDERICK JOHN VON STANKE & ORS
[2007] SASC 51

Reasons on the plaintiff’s application to strike out the defence of the 2nd defendant and the 1st defendant’s application to strike out the contribution notice of the 2nd defendant.

  1. JUDGE LUNN: These applications raise a number of issues about the proper interpretation and application of R 46A which governs the pleadings in this action. It is convenient to commence with a survey of the relevant provisions of R 46A.

    PLEADING UNDER R 46A.

  2. Although it was not the approach taken by Besanko J in Marini v MLH Insurance Brokers Pty Ltd, 2 December 2004, Judgment no [2004] SASC 400, unreported (“Marini’s case”), the proper resolution of the issues of pleading in these applications are best dealt with by interpreting R 46A as a new, and in some respects radical, method of pleading. While there are some similarities and analogies to the previous pleading rules, R 46A is essentially an innovation in pleading and not merely variations tacked on to the old pleading rules. Its interpretation should principally come from the construction of its terms and not from the application of cases decided on the superseded rules of pleading.

  3. The purpose of civil pleadings, whatever system is used, is to provide a structure for the action designed to promote a just outcome and to give the parties “fair notice of the case to be made against them at trial thereby minimising the risk of injustice resulting from surprise”: Williams v Australian Tele-communications Commission (1988) 52 SASR 215 at 216; Marini’s case above at [13]. As stated in R 2.01 of the 1987 Rules the purpose of the rules, including R 46A, is “establishing orderly procedures for the conduct of litigation in the Court and of promoting the just and efficient determination of such litigation”. The primary focus of R 46A is the conduct at a future time of a fair trial between the parties. Essential to achieving that fairness is that well in advance of the trial both the Court and the other parties are made sufficiently aware of the cases to be made by the respective parties at the trial so that all can be properly prepared for the trial and no party is disadvantaged through not having a proper opportunity to present his or her case to the Court at a trial which proceeds expeditiously.

  4. The relevant parts of R 46A are:

    46A.02 All pleadings are to:

    (a)be as brief as the nature of the case permits;

    (b)plead only the material facts relied upon and not the evidence or arguments by which they are to be proved;

    …..

    (e)bear the following certificate signed by a legal practitioner except where the party has no solicitor on the record:

    ‘Certificate:

    This pleading is put forward in accordance with the instructions of the [nature of party/parties] [name(s)] by [name of file principal], who certifies that it complies with the Rules concerning pleadings.

    [Signed]

    Print name

    Date’

    …..

    46A.05 …..

    (2)`[Contents of Defence]  The defence must plead, but plead only:

    (a)what parts, if any, of the Statement of Claim are admitted;

    (b)the material facts (relied) upon to constitute any ground of defence on which the defendant bears an evidentiary or a legal onus of proof;

    (c)such further material facts as are necessary to give other parties fair notice of the defendant’s case which they will have to meet;

    (d)any defences in law; and

    (e)any statutory provisions to be relied upon by the defendant.

    …..

    46A.09 (1) No order is to be made that any further material facts are to be pleaded other than where the material facts pleaded do not disclose facts sufficient to give the other parties fair notice of the case which they will have to meet and the party seeking them would be significantly prejudiced in the conduct of its case by not having them. (The intent of Rule 46A is that parties should include all material facts in their pleadings as initially filed so that there is no unfairness to another party by any lack of particularity and if they have not done so the trial Judge may refuse to allow that party to present a case which is outside the terms of its pleading.)

    (2)No pleading is embarrassing for want of particularity unless the missing particulars would be ordered under (1).

    (3)Where an order is made under (1) the pleading is to be amended.

    (4)No costs are to be allowed to the party making any amendment under (3) in respect of it unless the Court or a taxing officer for good reason allows them.

    …..

    46A.10 (1) At trial a party is not without leave of the Court to cross-examine witnesses (other than on credit) or to adduce evidence about matters not properly raised on the pleadings where that course would be likely to prejudice or embarrass other parties in the conduct of their cases.

    (2)In determining what issues are properly raised on the pleadings the Trial Judge:

    (a)will act with undue technicality and with regard to the substantial merits of the case so that no party suffers any injustice thereby; and

    (b)in considering whether another party is likely to suffer prejudice or to be embarrassed may have regard to the contents of any Affidavit of Loss, experts’ reports or discovered documents, but they are not to be treated as if they were pleadings.

    (There are similar provisions for statements of claim and replies as are in R46A.05(2) for the contents of defences. For brevity I will confine myself to R46A.05(2), but what I say about it is equally applicable to R 46A.03 on the contents of statements of claim and R 46A.06(2) on the contents of replies and defences to counterclaim).

  5. A defendant is only required to plead the matters set out in subr (2)(a)-(e).  “But plead only” in the preamble to subr (2) means that nothing else should be pleaded, and in particular no denials or non admissions:  JHV Stanke Property Pty Ltd v H Stanke & Sons Pty Ltd, Lunn M, 22 December 2006, [2006] SASC 391, unreported. A pleading under R 46A.05(2)(b) (“(2)(b)”) deals with pleaded facts constituting any ground of defence and one under R 46A.05(2)(c) (“(2)(c)”)deals with pleading what will constitute fair notice of the defendant’s case. As Besanko J said in Marini’s case at [14] on the equivalent R 46A.03(b) …..

    “(it) deals with those facts which in fairness should be pleaded in order to prevent surprise and therefore delay at trial.  It is impossible to generalise about the nature of such facts because it can be said that in assessing the question of what constitutes fair notice, the Court is entitled to take into account the scope of the investigation and preparation the defendant will be required to undertake if further material facts are not provided.”

    In what is pleaded in a defence a defendant is not required to differentiate between what is pleaded pursuant to (2)(b) and what is pleaded pursuant to (2)(c): Macks v Tucker (2005) 240 LSJS 104. Thus a pleading in a defence cannot be challenged as not disclosing a ground of defence if there is any reasonably possible basis for it being a proper pleading under (2)(c).

  6. What is required by R 46A.05(2) is no more than a simple exercise of making any admissions, pleading the material facts constituting any ground of defence, giving fair notice of the defendant’s case and anything required under subr (2)(d) and (e).

  7. The major differences in R 46A from the previous pleading practice, which are relevant in these applications, include:

    ANo joinder of issue is required or permitted:  JHV Stanke Properties Pty Ltd v H Stanke & Sons Pty Ltd above. Far too much time and expense was consumed under the old pleading practice in attempting to achieve a joinder of issue, which often was not wholly successful. The problem was compounded under the original R 46 of the 1987 Rules which required a joinder of issue on the particulars as well as on the pleading of the substantive issues. The course taken by R 46A was not to revert back to the pre-1987 pleading practice on joinder of issue, but to abolish the practice entirely. Regrettably many pleaders still attempt to plead in terms of joinder of issue, but it is unnecessary and undesirable. As a result there should no longer be any complaint that a pleading is evasive or an insinuated affirmative case. (The issue only arose in JHV Stanke Properties Pty Ltd v H Stanke & Sons Pty Ltd above because the pleader had expressly pleaded denials and non admissions). Under R 46A there may be issues of whether what is pleaded constitutes an admission, but it would rarely amount to an embarrassing pleading. If the other party cannot properly rely upon what is pleaded as an admission, it can prove at the trial its allegation on the basis that it is not an admission, although possibly on notice to the other party that it will be seeking costs under R 46A.15.

    BIssues of pleading with insufficient particularity are primarily to be dealt with by the trial Judge, and not on an interlocutory basis.  In Morgan v Roberts, 27 January 2006, [2006] SASC 15, I said at [5]-]6]:

    One of the changes made by R 46A to the former pleading rules was to recognise that Masters or Judges on interlocutory applications are often in a poor position to assess what is required for fair notice to another party in the context of a future trial. This is recognised by the sentences in parentheses in R 46A.09(1). The trial Judge is the best person to assess whether parties have discharged their obligations under R 46A to give fair notice to opposing parties of the case which they seek to make out at trial. That Judge has much more material available to him or her about what are the real issues between the parties which need to be determined at the trial. Thus RR 46A.09 and 46A.10 make it clear that a party will not be permitted to present a case at trial if there is unfairness to other parties in not having had proper notice of evidence and contentions to be led against them and in being prejudiced by not having had a reasonable opportunity to prepare their case to answer such contentions and evidence. The primary remedy provided by RR 46A.09 and 46A.10 against a party not pleading with sufficient particularity is the disallowance of its evidence at the trial. While R 46A.09(1) envisages that some orders for particulars will be made at an interlocutory stage of the action it is not, because of the pre-condition or significant prejudice, a complete remedy for all breaches, and it is not intended to fetter the control to be exercised by the trial Judge over the admissibility of evidence. Thus the old practice in which a Master at an interlocutory stage of the action was required to decide as best could then be done on what fairness required has been has been substantially changed. Under R 46A.09(1) a Master will make an order where on the material then before the Court the criteria under subr 465A.09(1) is satisfied, but there will be many instances where the issue will be left to the trial Judge. The trial Judge can then disallow evidence where a lack of particularity causes at least ordinary prejudice to another party.

    RR 46A.03(b) and 46A.09(1) place the obligation on the pleader to ensure that opposing parties are given fair notice of the pleader’s case. It is not for the Court in interlocutory processes to ensure that parties have necessarily complied with their obligations to give fair notice to the other parties. R 46A.09(1) allows the Court to intervene in some cases at an interlocutory stage, but ultimately the intent of RR 46A.09(1) and 46A.10 is that the parties will have to take the consequences at trial if their pleadings have not discharged their obligations to give fair notice to the other parties. Unlike the former practice, a party can no longer necessarily expect to be rescued by the Court from a breach of its obligations to plead properly by the Court determining at an interlocutory stage whether it has given sufficient particulars.

    CInterlocutory orders for the pleading of further material facts under (2)(c) can only be obtained where significant prejudice is shown.  In Coonawarra Premium Vineyards Ltd v Nugan Group Pty Ltd 18 January 2006 [2006] SASC 5, I said at [7] and [8]:

    R 46A.09 is limited to breaches of subparagraph R 46A.05(2)(c). R 46A.09(1) comprises a serious restriction on an opposing party’s ability to have a breach of subparagraph (c) remedied in that such a party must establish that it would be “significantly prejudiced in the conduct of its case by not having the further facts pleaded”. The mischief R 46A.09(1) was designed to remedy was the considerable expense and delay which was regularly encountered under the old rules on arguments about additional particulars which had no importance in the overall conduct of the trial: Jones v Nuske (2003) 227 LSJS 331 at [6] and cited with apparent approval by the Full Court in Salena Estate Wines Pty Ltd v Devitol (92 SASR 360). R 46A.09(1) sought to overcome this mischief in two ways: firstly, by making it clear that party was obliged to properly plead everything which should be pleaded in its initial pleading without having to be told by the Court what it should plead and, secondly, by giving the trial Judge power under R 46A.10(1) to exclude evidence which is outside the pleadings.

    The party seeking an order for further material facts under R 46A.09(1 ) must satisfy both legs of a two-fold test, namely that the facts pleaded do not disclose facts sufficient to give it fair notice of the case which it will have to meet and in addition that it would be significantly prejudiced in the conduct of its case by not having them. Merely to show that the facts pleaded are not sufficient to give it fair notice of the case which has to meet will not justify such an order. It must also establish that the absence of such pleaded material facts will cause it significant prejudice in the conduct of its case. Ordinary prejudice is not sufficient. Ordinary prejudice is presumably dealt with under the latter part of R 46A.10(1) by the trial Judge refusing to allow the party in default to present a case which is outside the terms of its pleadings.

    DR 46A is intended to minimise interlocutory pleading arguments. In Jones v Nuske (2003) 227 LSJS 331 I said:

    As this action was commenced after 3 June 2000 its pleadings are governed by the new R 46A. Much of the old law on pleadings and particulars have been superseded by the provisions of R 46A. Rule 46A is to be viewed and interpreted in the light of the mischief which it was designed to overcome. Under the former Rules it was notorious that substantial delays and costs were generated in actions by detailed requests for particulars, and arguments about them, when the resulting amended pleadings contributed little, if anything, to the just and expedient resolution of the action. Rule 46A is intended to limit disputes about proper particularity and pleadings to situations where the lack of particularity would significantly prejudice another party. The old practice also encouraged pleaders to give as little particularity as possible, and hope either the opponents would not request better particulars or the Court would not order them. The new Rules are intended to counteract this.

    (This passage was cited with approval by the Full Court in Salena Wine Estates v Devitol above at 369.)

  8. In dealing with R 46, which applied to actions which were commenced before June 2003, I held in Norris v McNair (1992) 167 LSJS 389 that particulars under those rules provided an inner, as well as an outer, limit on the evidence which could be adduced at trial. I said at 396-7:

    The real issue is whether her pleading of injuries in that generality entitles her to have findings made of more specific injuries which are encompassed by that generality. “Containing sufficient particulars” in R 46.04(f) is to be given a different meaning from “particulars which may be necessary” in the former 019 R4. 019 R4 generally only placed an outer limit or ambit on the evidence which could be adduced in accordance with the pleadings: Doonan v Beacham (1953) 87 CLR 346 at 351; TPC v George Weston Foots Pty Ltd (1979) 39 FLR 182 at 189. Under the old rules anything coming within the generality of the pleading would be covered by it: Herrmann v BHP (1984) 117 LSJS 210 at 213-214. This encouraged pleaders to couch their allegations in wide, vague, generalised and nebulous terms so as to give the party as much room as possible to manoeuvre at the trial within the scope of its pleadings unless their opponent took the trouble to pin them down to something more explicit by a request for better particulars. This is partly why the old style of pleadings were so uninformative. However, “sufficient” in R 46.13 also places an inner limit on the evidence which can be adduced in accordance with the pleadings. (While this was recognised to a limited extent under the old Rules: Miles v Commercial Banking Company of Sydney (1904) 1 CLR 470 at 476-7; American Flange v Rheem (1963) NSWLR 1121 at 1126, it takes a much more prominent role under the new Rules). Without being pedantic or unfair it means that the party pleading is precluded from putting forward a case at trial which is significantly more particularised and detailed than that which it has pleaded: Akerman v John Fairfax & Sons Ltd (1992) 163 LSJS 267).

    I consider that similar considerations apply to R 46A. What is not “fair notice” can be not only what is not stated at all, but what is insufficiently stated in a general statement. This is implicitly recognised in the cases of Miles v Commercial Banking Co of Sydney and American Flange Co Inc v Rheem Australia Pty Ltd referred to in the quotation from Norris v McNair above. Where parties plead under (2)(c) too generally they run the risk that the trial Judge will not allow evidence to be led on the topic which is more specific than what was pleaded. Where the significant prejudice test in R 46A.09(1) is satisfied an interlocutory order can be made for more specific pleading of the facts.

  9. Whether an interlocutory order will be made at a particular stage of an action for the pleading of more material facts under (2)(c) is in part discretionary. The Court can take into account, if it be the case, that the opposing party has not as yet filed its responding pleading. (There is no equivalent in R 46A of R46.16(1) about particulars before defence.) The Court may well consider that the pleadings should be closed before issues under (2)(c) relating to the conduct of the trial are addressed so that they can be assessed in the light of what has been admitted and otherwise pleaded. Where the pleadings have not closed the significant prejudice for R 46A.09(1) would be directed primarily to the prejudice in filing a responding pleading, but that is likely to be very rare. In determining whether an appropriate stage of the action has been reached for any interlocutory order to be made under R 46A.09(1) the Court can take into account whether the pleading party should have the benefit of discovery from the other parties , and possibly under R 60 against strangers to the action, before being required to put forward its final pleading under (2)(c): ETSA v Union Insurance Co Ltd, Perry J 9 July 1997, Judgment no S 6241;  Chapman v Conservation Counsel of SA Inc, Debelle J, 27 November 1998, Judgment no S 6973, unreported. 

    Pleading of Evidence.

  1. Mr Wells QC for the plaintiffs submitted that much of what is pleaded in the defence was objectionable as being the pleading of evidence contrary to R46A.02(b) (which is quoted above).  He relied principally upon the decision of Crossman J re Dependable Upholstery Ltd [1936] 3 All ER 741. There Crossman J said:

    ….. The important question is whether the respondents to the summons, the directors, are entitled to the particulars given to them by para 1 of the order: “of the facts relied upon in support of the” two allegations that the two dividends were paid out of capital. ….. Ord 19, r 4, which is the material rule, ….. says:

    ‘Every pleading shall contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which they are to be proved.’

    Then RSC Ord 19, r 5, provides for the form of pleading.  Rule 6 is:

    “In all cases in which the party pleading relies upon any misrepresentation, fraud, breach of trust, wilful default, or undue influence and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading.”

    I think that this case would come within the words “Where the party pleading relies on breach of trust.”  It seems to me that that rule means that where such particulars as are required to be stated in the pleading are not stated in the pleading, an order should be made that those further particulars shall be given.  One is thrown back on rule 4 to see what in fact is required by “in the pleading.”  There I find:

    “Every pleading shall contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence.”

    In the present case the material fact on which the applicant, the official receiver, relies, is the alleged fact that each of the two dividends was in fact paid wholly out of the capital of the company.  But it is suggested by ….. the directors that you have to go behind that allegation and find out the allegations or facts upon which that statement is based.  It seems to me if one begins there, I do not know where one would end in the particulars which would have to be ordered; because the fact that each of the dividends was paid wholly out of the capital of the company is the fact on which each party relies in the claim or defence.  The facts which lead up to that are, in my view, really the evidence of the fact that the dividends were in fact paid wholly out of the capital of the company.  It seems to me, as the first piece of evidence of that, that the court might be asked again to order something which leads up to that piece of evidence, and so on ad infinitum.  But the main point, to my mind, which I feel compels me to come to the conclusion that this order ought not to have been made, is that the payment of these dividends wholly out of the capital of the company is a fact, and the fact upon which the parties pleading relying for claim or defence.  I do not think in these circumstances I ought to make an order, in the general terms made by this order, that the liquidator shall give particulars of the facts relied on in support of the allegation, that is to say, facts relied upon in support of the material fact.  The facts relied upon in support of that can, to my mind, only mean the evidence which leads one to the conclusion that that is the fact.

    This decision is distinguishable on the wording of the rules which were being applied, and is an example of why R 46A should not be viewed merely as a variation of the previous pleading practice. R 46A.02(b) refers to the pleading of the “material facts relied upon”. I do not consider that this is confined to material facts pleadable under R 46A.05(2)(b), but also extends to material facts pleaded under (2)(c). Both R46A.05(2)(b) and (c) require the pleading of the “material facts”, but material facts directed to different purposes. Thus any material facts properly pleaded under (2)(c) cannot merely be the pleading of evidence which is barred by R 46A.02(b). That subrule by its terms only bars the pleading of evidence which goes beyond the pleading of the material facts. Insofar as any pleading under (2)(b) or (2)(c) could be categorised as the pleading of evidence it is not barred by R 46A.02(b). (In one sense all pleading of material facts can be viewed as the pleading of evidence). What was said by Crossman J does not address the specific requirements of (2)(c). Alternatively, if there is a conflict between R 46A.02(b) and R 46A.05(2)(c), subr (2)(c) should prevail as being a more specific provision than the general R 46A.02(b). Mr Wells QC also relied upon East-West Airlines Operations Ltd v Commonwealth of Australia (1983) 49 ALR 323, but that is distinguishable for similar reasons based on the particular provisions of R 46A.

  2. A good illustration of the operation of (2)(c) is in relation to similar fact evidence.  In subparagraph 31.3 of the defence (see [25] below) a different transaction was pleaded between similar parties which the 2nd defendant seeks to rely upon on the issues of what common assumptions there may have been between the parties in their mutual dealings.  Such similar fact evidence would be admissible at the trial as being logically probative of a matter in issue: Grivas v Brooks (1997) 69 SASR 543. The plaintiffs’ counsel did not suggest that such evidence would not be admissible. His argument was that it was merely the pleading of evidence and so should be struck out. His position was that the 2nd defendant did not have to give any notice by its pleading to the plaintiffs of its intention to make this property transaction part of its case at trial.  However, this is contrary to the intent and purpose of (2)(c).  A fair and expeditious trial requires that parties should have made discovery of documents on this issue and should have ready at the trial their witnesses and arguments about it.  If the issue is only first raised at the trial when the 2nd defendant leads the evidence, there is a serious potential for injustice and an adjournment of the trial.  Subr (2)(c) applies to similar fact evidence where the pleading of its subject matter is necessary for fairness to the other parties.

    Pleading of conclusions from unparticularised facts.

  3. Mr Wells QC made a number of objections that various parts of the defence were merely statements of a conclusion without the pleading of the necessary material facts to support that conclusion. While particular instances will be dealt with later a number of general comments need to be made. Many pleadings are mixed assertions of fact and law, eg an agreement was made, a person was an agent, etc. Whether further facts need to be pleaded depends on the circumstances of the case and the context of the pleading. It may be an instance of where the generality of the pleadings operates as an inner limit on the evidence which can be adduced in support of it, as discussed above at [12]. Usually the pleading of a mixed assertion of fact and law is not struck out as being objectionable, and whether an interlocutory order will be made for further material facts will depend in part on whether substantial prejudice can be established under R 46A.09(1).

  4. On several occasions counsel for the plaintiffs and the 1st defendant asked a rhetorical question in denigrating a particular part of the 2nd defendant’s pleading of “How can I plead to that?” The question must mean plead according to R46A, which is very different from pleading under the old rules. The only issues the responding pleader has to address are whether anything needs to be stated in compliance with R 46A.05(2)(a)-(e). The answering pleading only needs to deal with the degree of particularity in the pleading: if further material facts are subsequently pleaded it will be by way of amendment which gives the pleader the opportunity to address in an amended responding pleading those new material facts. If the pleading under consideration is intelligible and relevant, there should usually be no dilemma in formulating any necessary appropriate responding pleading.

    Application to strike out defence of 2nd defendant – unclean hands defence.

  5. In paragraph 111 the 2nd defendant pleads:

    In answer to the whole of the plaintiff’s claim, Mrs O’Meara says that the plaintiffs are disentitled to any equitable relief because they approach the Court with unclean hands as a result of the following matters.”

    (There followed an extensive pleading of a number of matters).  The plaintiffs seek to strike out paragraph 111 on the basis that it is irrelevant because they say none of the relief which they seek is equitable relief.

  6. In the prayer for relief in Part 2 of the statement of claim the plaintiffs seek five declarations about their entitlements through estoppel or resulting trusts to various land.  In paragraph 6 of Part 2 they seek:

    6An order that the plaintiffs be registered on the titles to the Base Block and the Further Land as tenants-in-common of a fee simple interest or otherwise as those companies shall direct. (“paragraph 6”)

    No other substantive relief apart from costs is claimed. R 46A.03 requires that the plaintiffs must plead in their statement of claim:

    (c)the general nature of the legal causes of action;

    (d)any statutory provisions relied upon.

    In relation to the declarations sought and paragraph 6 the plaintiffs have not pleaded anything under (d).  It was not disputed that their claim to the declarations was under s 31 of the Supreme Court Act.  They did not plead this, but it is not fatal to their claim as the 2nd defendant has not taken the point or claimed any prejudice as a result of it: Agtrack (NT) Pty Ltd v Hatfield (2005) 218 ALR 677 at 685-6. In his submission the plaintiffs’ counsel asserted that the relief in paragraph 6 was sought pursuant to s 64 of the Real Property Act 1886, which provides:

    64In any proceedings in the Court respecting any land ….. it shall be lawful for the Court to direct the Registrar General to cancel, correct, record, substitute, issue, or make any certificate, or any memorial entry in the register book ….. or otherwise to do such acts and make such entries as may be necessary to give effect to any judgment ….. of such Court ….. and the Registrar General shall obey every such direction.

    Counsel for the 2nd defendant indicated he had not had any prior notice that paragraph 6 was being sought under s 64.  The plaintiffs are relying upon s 64 in that it is a particular head of jurisdiction for the Court to make the order sought.  Subr (d) is wider than subr (c) and is not confined to statutes conferring a cause of action and extends to any statute which the plaintiff invokes to obtain any particular kind of relief.  There seems no doubt that the Court can make orders under s 64 to give effect to declarations relating to entitlements to land:  Andrew Garrett Wines Resorts v National Australia Bank Ltd (No 6) (2005) 92 SASR 419. By not pleading s 64 as required by subr (d) the plaintiffs have not confined the relief sought in paragraph 6 to statutory relief under s 64. As pleaded, it is at large and could encompass a claim for equitable relief. If the plaintiffs were to amend and confine paragraph 6 to a claim under s 64, it would then be open to the 2nd defendant to plead, if it sees fit, that s 64 is discretionary and should not be applied where equitable remedies for the same purpose would be denied because of unclean hands.  Thus I do not accept the plaintiffs’ contention that their claim as pleaded is entirely for statutory relief and so the claim of unclean hands is irrelevant.

  7. The plaintiffs further contend that the pleas in paragraph 111 do not constitute any reasonable ground of defence in that they are merely allegations of “general depravity” of the plaintiffs and are not sufficiently directed to the actions of the plaintiffs qua the 2nd defendant:  Myers v Casey (1913) 17 CLR 90; FAI Insurance Ltd v Pioneer Concrete Ltd (1987) 15 NSWLR 522 at 557-561. The whole action involves a conglomeration of parties and legal and equitable interests so that the actions of the plaintiffs have indirect, but potentially significant, consequences for many members of the wider von Stanke family and their respective companies. I do not consider that the matters pleaded in paragraph 111 are so remote that if they are found in favour of the 2nd defendant, they could not reasonably constitute some equitable defence of unclean hands to at least some parts of the plaintiffs’ claims.

  8. The plaintiffs further contend that the matters pleaded in paragraph 111 are similar to matters pleaded in action 1565/05 between JHV Stanke Properties Pty Ltd v H Stanke & Sons Pty Ltd, Cape Banks Processing Company Pty Ltd and various members of the von Stanke family which is a members’ oppression action under the Corporations Act 2001 in relation to Cape Banks Processing Company Pty Ltd.  The mere fact that the 2nd defendant pleads similar issues to those raised in another action between different, although related, parties does not in itself constitute an abuse of process.  As I have found in the preceding paragraph that there is a reasonable basis for the plea of unclean hands in this action, it cannot be said that it has been introduced to this action for the wrongful purpose of having the trial of this action proceed in conjunction with the trial of 1491/05.  Whether there is to be any such joint trial is a matter to be determined by Justice Sulan. 

    Defences of laches and acquiescence.

  9. Paragraph 112 of the defence pleads:

    112In answer to the whole of the plaintiffs’ case, Mrs O’Meara says that the plaintiffs are disentitled to any equitable relief because of their laches and/or acquiescence in the following respects:

    112.1At no time between their incorporation in 1965 and the institution of this proceeding in 2005, did the plaintiffs or any other person acting on their behalf assert that Hercules was not entitled to leave his interest in the land registered in his name to Fred, Bob, and Jack nor that Fred, as executor, was constrained from transferring Hercules’ beneficial interests in that land by reason of the equitable entitlement of the plaintiffs to that land;

    Particulars

    112.1.1 Mrs O’Meara repeats sub-paragraphs 33.1.1, 33.2.1, 33.3.1, 33.4.1, 33.5.1, 33.6.1, and 33.7.1 above.

    112.2At no time between their incorporation in 1965 and the institution of this proceeding in 2005 did the plaintiffs of any of their directors assert any entitlement of the plaintiffs to any of the land to which Fred was a registered proprietor prior to the deaths of Jack, Bob, Fred or Jim.

    112.3By refraining from making any such allegations until 15 years after Jack’s death, 11 years after Bob’s death and a decade after the deaths of Fred and Jim, the plaintiffs have been guilty of unreasonable and inexcusable delay which has caused detriment to the defendants other than the third defendant in that they have been denied the opportunity to adduce the best evidence which was previously available to defeat the claim;

    112.4If the plaintiffs had made the allegations contained in the within proceedings to jack, Bob, Fred or Jim during their respective lifetimes they would have been able readily and conveniently to adduce from oral and documentary evidence to defeat such a claim.  By refraining from making such allegations until a decade after Fred’s death the plaintiffs have been guilty of unreasonable and inexcusable delay which has caused detriment to Fred and Jim’s estates and to Mrs O’Meara in that they have been denied the opportunity to adduce the best evidence which was previously available to defeat the plaintiffs’ claim.

  10. The plaintiffs object to subpara 112.1 as not raising a reasonable ground of defence to the plaintiff’s claim. See [5]. It can stand as part of the 2nd defendant’s case under (2)(c).  It is reasonably arguable that the matters pleaded in subparas 112.1 and 112.2 are sufficiently related to refuting the plaintiff’s case of common assumption that the pleas should be allowed to stand.  They are not merely a plea of evidence.

  11. There is sufficient pleaded for the plaintiffs to plead a reply. See [13]. No significant prejudice has been shown at this stage (see [7] B and C.) to justify any order for the pleading of further material facts. I do not accept the plaintiff’s contention that subparas 112.3 and 112.4 are only pleas of potential prejudice, and not of actual prejudice. Each pleads “has caused detriment”. If the 2nd defendant can only establish potential detriment, as distinct from actual detriment, the plea will fail:  Barker v Duke Group Ltd (2005) 91 SASR 167 at [123]-[140], but that will be for the trial Judge to determine on the evidence.

  12. The plaintiffs object to the pleading in subpara 112.4 of “Jack, Bob, Fred or Jim during their respective lifetimes” as being embarrassing because Fred, Bob and Jack were the family business.  I accept the argument of the defendant’s counsel that the definition of the “family business” in paragraph 22 only makes the business that of Fred, Bob and Jack until 1965, and thereafter it is made up of other related entities.

  13. The plaintiffs seek to strike out paragraphs 19-21 of the defence as being embarrassing in that they insinuate an affirmative case without pleading it.  They read:

    19In answer to paragraph 19, Mrs O’Meara says that at various times after Fred acquired the land referred to in paragraph 14 above, his father (“Hercules”), his sisters Alice and Myra and his brothers Powis, Bob, Jack Jim and their families also moved to Carpenter Rocks and lived there for many years thereafter.

    20In answer to paragraph 20, Mrs O’Meara says that for many hears after Fred’s acquisition of the land referred to in paragraph 14 above, Hercules, Fred, Powis, Bob, Alice, Myra, Jack, Jim and their families were all involved in fishing and related activities at Carpenter Rocks but not in the way alleged by the plaintiffs in paragraph 20 as “the family business”.

    21In answer to paragraph 21, Mrs O’Meara refers to paragraph 20 above and says that the particulars of the activities, growth and development of the alleged “family business” are incorrect in numerous respects which are dealt with in the succeed paragraphs of this defence.

    These paragraphs are a legitimate pleading under (2)(c).  There is no joinder of issue with the plaintiff’s pleading to create any negative pregnant or the like.  Merely to say in paragraph 20 “but not in the way alleged by the plaintiffs in paragraph 20 as the ‘family business’” is no more than making it clear that paragraph 20 does not adopt the plaintiff’s allegations about the “family business”.  The reference in paragraph 21 to “are incorrect in numerous respects which are dealt with in the succeeding paragraphs of this defence” does no more than incorporate the contents of subsequent paragraphs into the answer to paragraph 21.  These paragraphs are not to be struck out.

  14. The plaintiffs seek to strike out subparagraphs 22.4.2, 22.10.3, 22.10.4, 22.10.5, 22.11.3 and 22.14.1 as embarrassing as there is alleged to be an ambiguity about the reference to “the executor” in each of those paragraphs.  The term is not defined in the defence.  In the summons Frederick John von Stanke is named as the 1st defendant in his capacity as the executor of the estate of Frederick William von Stanke and as the 3rd defendant in no designated special capacity, and therefore in his personal capacity.  Although there are other defendants sued as executors, it is clear from a reading of the whole of the statement of claim and the defence of the 2nd defendant that the executor referred to in these subparagraphs is the 1st defendant, Frederick John von Stanke.  The plaintiffs contend that the references to the executor are ambiguous because it is unclear whether allegations are being made against Frederick John von Stanke as the 1st defendant in his capacity as executor or in some other capacity.  It is quite clear that the reference in these subparagraphs are to the 1st defendant.  These subparagraphs are not to be struck out.

  1. The plaintiffs seek to strike out paragraphs 22.5, 22.7, 30, 42.1-4.23, 45-50 and 66-68 as being assertions based on unidentified and unparticularised material facts. (See [12]). They can stand as proper pleas under (2)(c). Alternatively, the plaintiffs seek further material facts of these pleas. (See [5] and [10]). There is no proper basis for any such further material facts before the pleading of a reply. The plaintiffs have not shown any significant prejudice in not having such further material facts at this stage of the action. In many instances the 2nd defendant has indicated further material facts will be pleaded after discovery.

  2. The plaintiffs seek to strike out paragraph 31 which reads:

    31    In answer to paragraph 31, Mrs O’Meara says that nothing which Fred did or said at any time constituted the holding out and/or representation by implication and/or inducement and/or procurement and/or encouragement of any person to adopt or act upon an assumption and/or the acquiescence in and/or assent to the adoption and action upon the assumption, in relation to the land referred to in paragraph 14 above, and/or that such land was dedicated to the use by any person indefinitely such that any person other than Fred was entitled to enjoy exclusive possession, control and use of and exercise all of the rights of the holder of the fee simple in the land referred to in paragraph 14 above, for the purposes of the alleged “Family Business”, as alleged in sub-paragraph 31.7 of the statement of claim.  Mrs O’Meara says that Fred did and said many things during his lifetime which were inconsistent with the alleged assumption.

    Particulars

    31.1At all time prior to his death Fred held out that his beneficial interest in the land referred to in paragraph 14 above was in accordance with his legal interest as described in the relevant certificates of title;

    31.2In 1967 the companies suffered a liquidity crisis and entered into a scheme of arrangement.  The scheme of arrangement documents included statements on oath by Fred that the land was owned solely by him;

    31.3In 1988, Fred, Bob and Jack decided to subdivide the whole of the land comprised in Certificate of Title Register Book Volume 3167 Folio 139 and identified as section 501 (“s 501”) which they held as tenants-in-common into three separate allotments [see sub-paragraph 33.7.4 below];

    31.4In 1994 Fred informed the companies and their directors that he was considering a proposal to transfer portions of the land upon which houses occupied by family members had been constructed to their occupants.  No objection to this proposal was raised by the companies or any of their directors, nor was it suggested by any person that the land was not Fred’s to deal with or dispose of as he saw fit.

    What is pleaded is the case which the 2nd defendant seeks to put forward on the topic of paragraph 31 of the statement of claim.  It is not a plea of a denial of the assumption, but merely the case which the 2nd defendant will put forward to refute the plaintiffs’ pleaded case on the assumption. As it is a proper plea under (2)(c) it is not an impermissible pleading of evidence. See [5] and ]10]. Insofar as the plaintiffs want further material facts pleaded they should not be ordered before the close of pleadings and they have not shown the necessary significant prejudice. As to subparas 31.3, see [11]. Paragraph 31 will not be struck out.

  3. The plaintiffs seek to strike out paragraph 32.  That application fails for similar reasons given for paragraph 31.  However, it is necessary to deal with two particular issues on para 32.

  4. It was contended that paragraphs 32.4, 32.6, 32.9 and 32.12 were an abuse of process in that they were put forward without any proper foundation or instructions.  The relevant subparagraphs each refer to various entities having had the benefit of legal advice from Judith Choate.  The plaintiffs submitted that the 2nd defendant cannot know what legal advice was sought and obtained. The defence bears a certificate as required by R 46A.02(e) from the 2nd defendant’s solicitor stating that the pleadings were put forward in accordance with instructions.  It is not for the Court at this stage of the action to conduct an investigation into whether the 2nd defendant has any proper basis to make these assertions about legal advice from Ms Choate.  The case cited by the plaintiff’s counsel of La Compagnie v Peter & Son Pty Ltd (1985) 38 SASR 550 is not applicable as that relates to misnomers and to instituting proceedings, and not to the pleading of particular allegations.

  5. The plaintiffs further contend that these pleadings about legal advice from Judith Choate are an abuse of process in that they are an attempt to obtain a waiver of the legal professional privilege relating to such advice from Ms Choate.  I do not accept this.  The fact that the 2nd defendant has pleaded this material does not waive any privilege as it is not her privilege.  The pleas are no more than that legal advice had been obtained: they are not pleas of the nature or content of the advice.  That evidence could be given without infringing any privilege: Cross on Evidence 6th Australian Edition [25, 225].  The 2nd defendant is entitled to make it part of her case that various persons had obtained legal advice, and it is proper to give notice of that by this pleading.  It is for the plaintiffs to consider how they might respond to this and to give fair notice to the 2nd defendant if they need to plead anything about it.  Paragraph 32 will not be struck out.

  6. The plaintiffs seek to strike out paragraph 33 of the defence on the grounds that it is the pleading of evidence. See [10]. I am satisfied that paragraph 33 is a proper pleading under (2)(c). It is not to be struck out.

  7. The plaintiffs seek to strike out subparagraph 33.7 as an abuse of process because it duplicates issues raised by the 2nd defendant in her counterclaim in 645/05.  For the reasons given in [41] below in relation to a similar issue on the contribution notice issued by the 2nd defendant, it is premature to deal with this issue.

  8. The plaintiffs seek to strike out paragraph 34 on the grounds that it is a pleading of an insinuated affirmative case and it is the pleading of a conclusion not supported by material facts.  Paragraph 34 reads:

    34In answer to paragraph 34, Mrs O’Meara says that nothing that Fred said or did at any time constituted his procurement and/or encouragement and/or acquiescence of any of the matters alleged in subparagraphs 34.1, 34.2 or 34.3 of the statement of claim, or that Fred knew of and/or was aware of and/or induced and/or procured and/or encouraged and/or acquiesced in and/or held out and/or represented any of the matters alleged in subparagraphs 34.4, 34.5 or 34.6 of the statement of claim.

    Particulars

    34.1Mrs O’Meara repeats the particulars pleaded at paragraphs 32 and 32 above.

    The plea merely puts the case of the 2nd defendant.  The repetition of the particulars for paragraphs 31 and 32 raise those matters as the affirmative case which the 2nd defendant wishes to make out on the issues raised in paragraph 34 of the statement of claim.  There is no basis for any other insinuated affirmative case.  It is a pleading of material facts.  See [7]A and [B].  Paragraph 34 will not be struck out.

  9. The plaintiffs seek to strike out paragraphs 77-87 of the defence in that they rely upon the pleadings contained in paragraphs 32 and 33.  As I have allowed those paragraphs to stand there is no basis to challenge paragraphs 77-87.  Paragraphs 77-87 are not to be struck out.

  10. Accordingly, subject to adjourning the challenge to paragraph 33.7, the whole of the plaintiff’s application to strike out the defence and for the pleading of further material facts is refused.

    APPLICATION BY 1ST DEFENDANT TO STRIKE OUT THE CONTRIBUTION NOTICE OF THE 2ND DEFENDANT.

  11. On 3 February 2006 the 2nd defendant filed a contribution notice against the 1st defendant.  On 21 December 2006 Sulan J gave leave to the 2nd defendant to file an amended contribution notice.  Such an amended contribution notice was filed on 7 January 2007.  In its paragraph 72 she sought the following orders:

    72The orders and declarations sought are:

    72.1An order that the executor be removed as Executor and Trustee of each of Fred and Gwen’s estates and that Bruce James Carter or some other appropriately qualified and independent person be appointed in his place.

    72.2An order that the executor pay equitable compensation or equitable damages to the estates of Fred and Gwen and/or Mrs O’Meara, the quantum to be assessed.

    72.3That the executor account to Fred and Gwen’s estate and to Mrs O’Meara for all profits or other benefits derived by him and his immediate family.

    The 1st defendant has applied to strike out the amended contribution notice or alternatively some paragraphs of it.  The primary relief sought in the contribution notice is the removal of the 1st defendant as the executor of the estate of Frederick William von Stanke for misconduct or neglect of duty.  The 1st defendant challenged the power of this Court to make such an order, and I accept his contention.

  12. The central point is whether this Court has the power to remove an executor to whom probate has been granted by this Court in its testamentary causes jurisdiction, and to appoint another executor in his place, without also revoking the grant of probate.  S 18 of the Supreme Court Act confers upon this Court the probate jurisdiction which was exercisable by the Court of Probate in England which includes the inherent jurisdiction of that Court of Probate:  re Edwards (1981) 28 SASR 380; re Shephard (1982) 29 SASR 247. There was no inherent jurisdiction in the English Court of Probate to remove an executor for misconduct or neglect of duty: Monty Financial Services Ltd v Delmo [1996)] 1 VR 65 at 77; Dimos v Skaftouros (2004) 9 VR 584 at [83] per Dodds-Streeton AJA with whom the other members of the Full Court agreed. In Western Australia, which apparently has similar statutory provisions, it has been held that the Court can only remove executors by a revocation of the grant of probate: Phelan v Booth (1941) 43 WALR 460; Porteous v Rinehart (1998) 19 WAR 495. No case was cited where an executor had ever been removed for misconduct or neglect of duty other than by the probate being revoked.

  13. The 2nd defendant relied upon a statement of Besanko J in Estate of Crane (2005) 93 SASR 198. The issue in that case was whether this Court had jurisdiction to pass over one of two joint executors nominated by the Will and to grant probate solely to the other executor on the grounds that there was a substantial potential conflict of interest of the executor to be passed over in acting as executor and a potential for misconduct by him. Besanko J held that this Court had such jurisdiction. He did not have to directly consider the question of whether this Court had the power to remove an executor who had already been granted the probate because of misconduct by him, but he considered in his reasoning the effect of misconduct by an executor. At [23] he said:

    In my opinion, this Court does have jurisdiction in limited circumstances to pass over an executor named in a well.  That jurisdiction is given to this Court by s 18 of the SCA and the provisions of the Administration and Probate Act.  This Court also has the power to remove an executor who has been given a grant of probate.  (underlining added)

    The underlined sentence is only dicta.  At [25] he said:

    There are a large number of English cases where the Court of Probate has passed over an executor or revoked a grant of probate. …..

    He then cited 9 cases in England, but in none of them was an executor removed without the revocation of an existing probate.  He then reviewed three Australian authorities. The first was Bates v Messner (1967) SR (NSW) 187 which was an application to revoke a grant of probate for misconduct by the executors. The second case of Bowler v Bowler in the Supreme Court of NSW, Young J, 7 June 1990) was not a case where probate had already been granted.  I have not been able to access a report of that judgment.  The third case was Uniting Church v Millane (Supreme Court of New South Wales, Windeyer J, [2002] NSWSC 1070) which was also an application to pass over a named executor before probate was granted. At [8] Windeyer J said:

    I should add to this that if the defendant were to misconduct himself as an executor then he could be removed.  If he did not consent to the other executors bringing proceedings against him on behalf of the estate, then there is no doubt that the court would allow proceedings to be brought by the other executors or by the beneficiaries on behalf of the estate, if those executors refused to bring appropriate proceedings.  (underlining added)

    This dicta is the only other authority known to me that an executor could be removed for misconduct without revoking the probate.  Neither the statement to that effect by Besanko J nor that by Windeyer J was apparently made after any review of the authorities on the point or in the knowledge of the cases mentioned above which have held to the contrary.  It is likely that those dicta should be interpreted as a shorthand way of expressing that the Court has jurisdiction to remove an executor for misconduct by the means of revoking the probate.  The 2nd defendant has not made out a reasonably arguable case that this Court has power to remove the 1st defendant as an executor other than by the process of revoking the probate.  Thus the pleaded claim for the removal of the 1st defendant as executor in the contribution notice must be struck out.

  14. In the course of his submissions counsel for the 2nd defendant mounted an alternative argument for the removal of the 1st defendant based on the power given by s 36 of the Trustee Act 1936 for the Court to remove a trustee and on the definition of trustee in s 4(1) of that Act including “a representative of a deceased person”. For the reasons in [15] above any such claim under s 36 would have to be pleaded by the 2nd defendant, but it has not been. S 36(3) of that Act says:

    Nothing in this section shall give power to appoint an executor or administrator.

    Thus, it even if an executor could be removed under s 36, there would be no corresponding power to appoint an alternative executor. A similar argument based on comparable provisions of legislation in Western Australia was rejected in Porteous v Rinehart above.  The 2nd defendant can seek to amend to plead a claim under s 36 if she is so advised.

  15. If the 2nd defendant now seeks to pursue the removal of the 1st defendant by a revocation of his probate, it will produce major procedural complications.  What I now say is put forward for the consideration of the parties, but is not an adjudication by me on the points.

  16. Any proceeding to revoke the probate would be a “probate action” under s 18 of the Supreme Court Act, R 104 of the 1987 Rules and R 205 of the Supreme Court Civil Rules 2006.  If such a probate action was added into the existing contribution notice, it would be governed by R 104.  Although I have not researched the point, I have serious doubts whether it is possible to pursue a probate action in a contribution notice.  (S 23 of the Supreme Court Act giving the power to mount third party claims is limited to equitable and legal causes of action.)  If the 2nd defendant seeks to pursue a probate action against the 1st defendant by a new action, it would be governed by R 205 of the 2006 Rules. 

  17. Paragraph 72.1 of the amended contribution notice is to be struck out.  I will hear counsel on whether this means that any other paragraphs of the contribution notice should also be struck out.

  18. It is not appropriate to pursue at this time the balance of the 1st defendant’s application for striking out.  If the 2nd defendant seeks to amend the contribution notice, or to institute a fresh probate action, the other grounds sought for striking out should be dealt with in the context of the totality of all the proceedings which are being pursued by the 2nd defendant against the 1st defendant.  (However, if the 2nd defendant does not seek to amend the contribution notice or to institute any new probate action within a reasonable time which I will fix after hearing counsel, I will then proceed to determine the balance of the 1st defendant’s application).

  19. I will hear the parties on what orders should be made on the basis of these reasons.

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Cases Cited

22

Statutory Material Cited

0

Marini v MLH Insurance Brokers Pty Ltd [2004] SASC 400
H Stanke & Sons Pty Ltd v O'Meara [2007] SASC 246
H Stanke & Sons Pty Ltd v O'Meara [2007] SASC 246