Henderson v Templeton

[2004] WASC 192

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HENDERSON -v- TEMPLETON & ANOR [2004] WASC 192

CORAM:   COMMISSIONER ZILKO SC

HEARD:   24 AUGUST 2004

DELIVERED          :   3 SEPTEMBER 2004

FILE NO/S:   CIV 2234 of 2000

BETWEEN:   CATHERINE FRANCES HENDERSON

Plaintiff

AND

SUSAN RITA TEMPLETON
First Defendant

REGISTRAR OF TITLES
Second Defendant

Catchwords:

Practice and procedure - Application to amend statement of claim to include new causes of action and to allege fraud and dishonesty by defendant - Need to particularise allegations of fraud or dishonesty

Legislation:

Supreme Court Rules, O 21 r 5

Result:

Leave to amend provisionally granted subject to filing of fresh minute with requisite particulars

Category:    B

Representation:

Counsel:

Plaintiff:     Mr M L Bennett

First Defendant             :     Mr M J McCusker QC & Mr L Buchbinder

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Bennett & Co

First Defendant             :     Bowen Buchbinder Vilensky

Second Defendant         :     No appearance

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

Associated Leisure Ltd v Associated Newspapers Ltd [1970] 2 All ER 754

Baumgartner v Baumgartner (1987) 164 CLR 137

Garcia v National Australia Bank Ltd (1998) 194 CLR 395

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125

Giumelli v Giumelli (1999) 196 CLR 101

Kais v Turvey (1994) 11 WAR 357

Legione v Hateley (1983) 152 CLR 406

Lloyd v Tedesco (2002) 25 WAR 360

Mahoney v Purnell [1996] 3 All ER 61

Muschinski v Dodds (1985) 160 CLR 583

Shiloh Spinners Ltd v Harding [1973] AC 691

Yerkey v Jones (1939) 63 CLR 649

Case(s) also cited:

Atkinson v Fitzwalter [1987] 1 All ER 483

Barclays Bank plc v O'Brien [1994] 1 AC 180

Baume v Commonwealth (1906) 4 CLR 97

Bride v Peat Marwick Mitchell (1989) WAR 383

Dalgety Australia Ltd v Rubin, unreported; FCt SCt of WA; Library No 5485; 24 August 1984

David Securities Pty Ltd v CBA (1992) 175 CLR 353

Hooker Corp Ltd v Commonwealth (1986) 65 ACTR 32

Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548

Roxborough v Rothmans of Pall Mall Ltd (2001) 185 ALR 335

State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 154

Stone James v Pioneer Concrete (WA) Pty Ltd (1985) WAR 233

Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323

Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] NSWSC 987

1. COMMISSIONER ZILKO SC:  This is an application by the plaintiff to amend the writ of summons and the statement of claim.  It is relevant to note at this juncture the history of the proceedings and the nature of the relief sought by the plaintiff prior to this application.

2. On 14 September 2000 the plaintiff commenced the action.  The indorsement of claim in the writ of summons filed by her discloses that the plaintiff sought:

   (1)the taking of accounts between the plaintiff and the defendant;

   (2)a declaration that the defendant holds her interests in the property at 7 Fortview Road, Mt Claremont ("the Mt Claremont property") and 6 Long Street, Hilton Park ("the Hilton property") on trust for the plaintiff;

   (3)an order that the defendant transfer to the plaintiff the defendant's right, title and interests in the Mt Claremont property and the Hilton property;

   (4)an order that the defendant make good the detriment suffered by the plaintiff;

   (5)equitable compensation;

   (6)any capital gains tax, other taxes, or goods and services tax payable in accordance with A New Tax System (Goods and Services Tax) Act 1999 on the items of claim or compensation generally.

3. Thereafter the plaintiff filed a statement of claim on 5 October 2000 which did not refer to the Hilton property.  The statement of claim was directed entirely to the purchase of the Mt Claremont property and the relief sought in the statement of claim was essentially that the defendant held her interest in the Mt Claremont property on constructive trust for the plaintiff.  Other relief was also sought arising from the plaintiff's equitable ownership of that property.  By amended statement of claim filed on 18 January 2001 amendments were made which are not important for present purposes.  Amendments were again made by the filing of a minute of re‑amended statement of claim on 21 August 2001 but, as with the previous amendments, these are not relevant for present purposes.  On 23 March 2004 the present application was made by the plaintiff.  Rather than further amending the writ of summons and the statement of claim, the plaintiff has in fact filed a minute of proposed substituted writ of summons and a minute of proposed substituted statement of claim.  Each is dated 13 April 2004.  However, by the time the application came to be heard the plaintiff had filed a further minute of proposed substituted statement of claim on 16 August 2004 and it is that minute ("the proposed claim") which has been the subject of the application.  I should add for the sake of completeness that at some time between the commencement of the action and the hearing of this application the Registrar of Titles was joined as a defendant to the action such that the existing defendant was designated the first defendant and the Registrar of Titles was designated the second defendant.

4. In considering the merits of the application, I have had regard to the affidavits of Fabienne Rebecca Sharbanee sworn 23 March 2004 and 13 August 2004, the affidavit of the first defendant sworn 11 June 2004 and the affidavit of the plaintiff sworn 16 August 2004.  Aside from the oral submissions of counsel for the plaintiff and the first defendant, I have also had regard to and been assisted by the written submissions of the plaintiff dated 30 April 2004 and 16 August 2004 and the written submissions of the defendant dated 9 June 2004.

5. Although leave is sought to substitute the writ of summons as well as the statement of claim, both the written and oral submissions of the parties were directed only to the proposed claim and accordingly I will not concern myself with the proposed substituted writ of summons.  It seems to me that if the amendments to the statement of claim are allowed, the substitution of the writ of summons will follow as a matter of course but perhaps with some further amendment to recognise the matters pleaded and the relief sought in the proposed claim.

6. When one compares the proposed claim with the previous statements of claim in their respective forms, one immediately sees three significant differences.  First, the proposed claim pleads a course of conduct on the part of the plaintiff and the first defendant which, it is alleged, enabled the first defendant to purchase the Hilton property.  As I have already observed, although the Hilton property was referred to in the writ of summons as originally filed in September 2000, it did not thereafter find its way into the statement of claim.  Second, there are new allegations by the plaintiff alleging either dishonest, fraudulent or unconscionable conduct on the part of the first defendant and in particular I refer to pars 38.3 (deliberate concealment of monies), 41A (the giving of deliberately false advice), 43 (the fraudulent creation of a document), 44 (fraudulent conduct), 51 (imposing psychological pressure upon the plaintiff) and 52 (threatening the plaintiff).  Third, the plaintiff pleads for the first time that her execution of the transfer document for the Mt Claremont property was procured by the first defendant's undue influence over the plaintiff whereby the plaintiff has suffered loss and damage.

7. The first defendant says that if the plaintiff wishes to raise such entirely new factual issues, she should explain on oath why those matters have not been raised previously.  No authority was cited for this novel proposition and I do not consider the lack of a sworn explanation by the plaintiff to be a valid reason for refusing to consider the proposed amendments, particularly as the action has not yet been entered for trial.  In determining whether or not to grant leave to amend a pleading, the court is always guided by the need to balance the competing interests of the parties and, if necessary, to take account of any prejudice to the public interest which may be caused by giving leave to make belated amendments.  In this case there are no public interest issues that I need to consider.

8. In weighing up the respective interests of the plaintiff and the first defendant, I am required to identify any prejudice to the first defendant by my granting the plaintiff leave to amend.  Of some concern in this regard is the allegation that the first defendant's father entered into a loan arrangement with the plaintiff.  This has not been previously pleaded in its present form and unfortunately the first defendant's father passed away in May 2003, that is, between the filing of the current statement of claim and the making of this application.  The first defendant says she is significantly prejudiced by the proposed pleading of the loan arrangement, coming as it does after her father's death.

9. It is true that the alleged arrangement between the plaintiff and the first defendant's father has not been previously pleaded in the way now disclosed in the proposed claim. However, it was certainly a matter that was raised, albeit indirectly, in earlier pleadings. In particular, I refer to par 11 of the amended statement of claim dated 21 August 2001 where it is pleaded that the first defendant's father had provided the funds for the purchase of the Mt Claremont property, and par 5 of the reply and defence to counterclaim dated 31 January 2002 where this allegation is fleshed out to some degree. In response to my enquiries during the hearing Mr McCusker QC, senior counsel for the first defendant, advised me that as a result of the reference to a loan in earlier pleadings the first defendant's solicitors had taken the precaution of obtaining a sworn statement of evidence from the first defendant's father prior to his death. Mr McCusker conceded that having obtained a sworn statement from the deceased prior to his death, there was probably little, if any, prejudice to the first defendant by reason of matters pertaining to the loan arrangement being raised in the proposed claim because almost certainly the sworn statement of the deceased will be admitted into evidence at the trial pursuant to the provisions of s 79C of the Evidence Act 1906.  Mr McCusker was unable to point to any other prejudice which the first defendant will suffer if the plaintiff's application to amend the statement of claim is successful.  In the circumstances, I am not satisfied that there will be any demonstrable prejudice to the first defendant if I should permit the plaintiff to amend her statement of claim.

10. The first defendant's more substantial objections are those referred to in par [6] above. With regard to the Hilton property it is said that the proposed claim discloses no reasonable cause of action against the first defendant and that if this is so, leave to include that part of the claim should be refused. Insofar as the particularisation of the proposed claim is concerned, the first defendant points to deficiencies in a number of paragraphs, especially those alleging dishonesty, fraud and unconscionable conduct. I have mentioned the particular paragraphs already in these reasons. Finally, the first defendant contends not only that the plea of undue influence is not adequately supported by the facts pleaded in the proposed claim but also that the undue influence claim seeks a form of relief, damages, which is not recognised by the law. The first defendant says that for these reasons leave to introduce the undue influence claim should be refused. There were other matters raised in the written submissions filed on behalf of the first defendant but these have been largely addressed in the amendments now contained in the proposed claim.

The Hilton Property

1. In relation to the Hilton property the proposed amendments plead that it would be unconscionable for the first defendant to retain the benefit of the plaintiff's financial support of the first defendant over a long period of time and her contribution to the purchase of the Mt Claremont property which it is said collectively enabled the first defendant's purchase of the Hilton property.  Alternatively, the plaintiff pleads that the first defendant holds the Hilton property upon a constructive trust in favour of the plaintiff to the extent to which the plaintiff paid for or contributed to the payment of the Hilton property.  The first defendant complains that there are no material facts pleaded to support the proposition that the first defendant's purchase of the Hilton property was made possible by the plaintiff's financial support of the first defendant or her contribution to the purchase of the Mt Claremont property in the way pleaded.  Senior counsel for the first defendant points out in particular that there is no plea that the plaintiff made contributions specifically to enable the first defendant to purchase the Hilton property, rather that the first defendant was able to purchase the Hilton property because the plaintiff supported her in relation to their living arrangements over several years and by reason of the plaintiff's contribution towards the purchase of the Mt Claremont property.  Senior counsel for the first defendant says that this does not provide a basis for a claim of unconscionability or for the creation of a constructive trust in favour of the plaintiff.  As against this proposition, counsel for the plaintiff, Mr Bennett, submitted that there was enough in the pleading to support a finding of unconscionability and the making of a constructive trust, and that the strength or otherwise of that aspect of the claim remains to be determined at trial.

2. As a general rule a plaintiff is entitled as of right to have his or her case heard, to have the facts found and then to argue the questions of law as they arise before the trial Judge upon the facts as found.  The amendment relating to the Hilton property arises out of the same factual circumstances relating to the existing claims and in order to refuse the amendment I would have to be satisfied that the cause of action in relation thereto was, in effect, hopeless (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125). In my opinion that is not the case here. Support for the plaintiff's argument can be found in those cases where the courts have recognised that equity will impose a constructive trust on a party in the position of the first defendant regardless of the actual or presumed agreement or intention of the parties to the extent necessary to preclude assertion of beneficial ownership of property in circumstances where such assertion is unconscionable (Muschinski v Dodds (1985) 160 CLR 583 at 614 ‑ 615, 619 ‑ 620; Baumgartner v Baumgartner (1987) 164 CLR 137 at 148; Kais v Turvey (1994) 11 WAR 357 at 361). Whilst it is probably correct to say that mere cohabitation of the parties without more would not suffice to attract the protection of equity (compare Lloyd v Tedesco (2002) 25 WAR 360), in the present case the plaintiff points to a course of conduct which entailed her financially supporting the first defendant over a long period of time in circumstances where the first defendant was thereby enabled to purchase the Hilton property.

3. Whilst it is arguable at this early stage that the claim in respect of the Hilton property is somewhat tenuous, I have not, of course, had the benefit of hearing all of the evidence that may be put before the trial Judge in support of or against the relief sought by the plaintiff.  The findings of fact are critical in a case of this kind.  By a process of establishing each link in the chain of events pleaded in the proposed claim, the plaintiff may be able to demonstrate a connection between her extended financial support of the first defendant on the one hand and the purchase of the Hilton property on the other.  The category of cases in which relief will be granted for unconscionable conduct is certainly not closed (Shiloh Spinners Ltd v Harding [1973] AC 691 at 722 ‑ 723; Legione v Hateley (1983) 152 CLR 406 at 424 and 447) and whether equity will intervene to protect particular claimants "will depend upon the multitudinous circumstances of different cases" (Lloyd v Tedesco, supra at par [8]). In light of these principles, it would be wrong, in my view, to shut the plaintiff out of the Hilton property claim before the whole factual scenario pertaining to the relationship between the plaintiff and the first defendant is known.

Lack of Particulars

1. In so far as the lack of particularity is concerned, there is merit in what the first defendant says.  I am especially concerned to see that serious allegations of dishonesty and fraud are made against the first defendant with little or no particularisation.  A party should not be compelled to defend legal proceedings involving allegations of dishonesty or fraud unless such allegations are clearly and succinctly particularised.  Indeed, as a matter of good practice allegations of this kind should never be pleaded unless there is clear evidence in the possession of the party concerned to support them (Associated Leisure Ltd v Associated Newspapers Ltd [1970] 2 All ER 754 at 757 ‑ 758). With regard to this aspect of the matter, I was advised by counsel for the plaintiff that the requisite evidence does exist and that particulars can be provided.

2. There are, aside from the allegations of fraud, dishonesty and unconscionable conduct to which I have already referred, other matters pleaded in the proposed claim which call for particulars, especially as this amendment comes some four years after the action was commenced.  The other paragraphs requiring particularisation are pars 45.2, 49.1, 49.2, 50 and 54.  It was suggested by counsel for the plaintiff that these particulars could be called for and provided in the usual way if leave was given to amend in terms of the proposed claim.  However, as the particulars are central to a number of the allegations made by the plaintiff, the better course is to require those particulars to be provided as part of the amended claim.

The Allegation of Undue Influence

1. Finally, there remains to be considered the plea of undue influence in par 54.  The first defendant contends that the facts pleaded in par 54 do not support a plea of undue influence, that no loss or damage is particularised (although I have dealt with that issue in the previous paragraph) and that there is no Australian or English authority to support a claim for damages where undue influence has been established.  There is no presumption of influence by a husband over his wife (Yerkey v Jones (1939) 63 CLR 649; Garcia v National Australia Bank Ltd (1998) 194 CLR 395) and in the circumstances there is little doubt that no such presumption exists in respect of the parties to a de facto relationship.  That being so, the plaintiff must establish the undue influence for which she contends without the benefit of any presumption in her favour.  Whilst the facts pleaded in relation to the alleged undue influence are relatively sparse, undue influence like other species of unconscionable conduct depends for its existence on the evidence led at trial.  I am not prepared to say that this plea cannot be made out and, as with the Hilton property claim, it would be wrong to deny the plaintiff her right to pursue this aspect of her claim before all of the factual issues have been ventilated at trial.

2. Insofar as damages are claimed by the plaintiff, it is true that as a general proposition transactions tainted by undue influence will usually give rise to a right of rescission in the innocent party.  In this regard see the discussion in Meagher, Gummow and Lehane's, "Equity Doctrines and Remedies" 4th ed at [15‑155].  However, in the circumstances of this case there can be no question of rescission of the transaction whereby the Mt Claremont property was purchased because such an order would affect the rights of the vendor who I assume has no connection with the dispute between the plaintiff and the first defendant.  Notwithstanding these apparent difficulties, there are alternative views regarding the question of whether damages or equitable compensation may be awarded on a finding of undue influence (see, for example, Mahoney v Purnell [1996] 3 All ER 61 at 86 ‑ 91) and one cannot exclude further development and clarification of the law in this context. What can be said with some certainty is that if the allegation is made out, the court will seek to fashion the appropriate remedy depending upon the true nature of the plaintiff's loss (Giumelli v Giumelli (1999) 196 CLR 101).

1. For the above reasons I do not accept the first defendant's objections which relate to the Hilton property and the undue influence claim.  I do, however, accept her objections in relation to the lack of particularity in the proposed claim.  If it had been adequately particularised, I would have granted the plaintiff leave to amend in the terms of the proposed claim.  Nevertheless, the deficiencies can be remedied by the filing of a fresh minute.  On the understanding that any further minute will incorporate the particulars identified by me as presently lacking in the proposed claim, I am prepared to make the following orders:

   (1)within 21 days of the date hereof the plaintiff have leave to file and serve a further minute of proposed substituted writ of summons and proposed substituted statement of claim;

   (2)within seven days of service of the further minute, the first defendant have leave to file and serve any objections thereto confined to particularisation of pars 38.3, 41A, 43, 44, 45.2, 49.1, 49.2, 50, 51, 52 and 54 of the proposed claim;

   (3)the plaintiff's application for leave to amend be relisted for hearing before me on a date to be fixed shortly after the expiration of the period referred to in par (2) above.

2. If there are no further issues with the fresh minute, leave can be granted to the plaintiff to amend in the terms thereof without further argument.  Alternatively, if argument is required it can take place at that time.  I will hear the parties as to costs.