Hesse v Hardie [No 2] - [2025] WASC 427

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   HESSE -v- HARDIE [No 2] [2025] WASC 427
CORAM:   MASTER RUSSELL
HEARD:   9 OCTOBER 2024
DELIVERED          :   7 OCTOBER 2025
FILE NO/S:   CIV 1011 of 2021
BETWEEN:   GEOFFREY ERIC HESSE
Plaintiff
AND
VERONICA MARIE HARDIE
First Defendant
B.C.H. NOMINEES PTY LTD as trustee for THE B.C.H. FAMILY TRUST
Second Defendant
KEIAN HOLDINGS PTY LTD
Third Defendant

Catchwords:

Practice and procedure - Pleadings - Strike out application - Application to strike out re-amended statement of claim - Order 20 rule 19 Rules of the Supreme Court 1971 (WA) - Whether matters pleaded disclose reasonable cause of action - Whether matters pleaded may prejudice, embarrass or delay fair trial of the action - Where aspects of pleaded case pleaded at high level of generality - Turns on own facts

Equity - Fiduciaries - Trusts - Accessorial liability - Liability of third parties for breach of fiduciary duty - Barnes v Addy - Second limb - Knowing assistance and participation in breach of fiduciary duties - Requirements of knowledge of dishonest and fraudulent design

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 19, O 20 r 19(1)(a), O 20 r 19(2)

Result:

Defendants' application to strike out parts of re-amended statement of claim granted
Plaintiff to have leave to replead

Category: B

Representation:

Counsel:

Plaintiff	:	D I Connor
First Defendant	:	C V Eastwood
Second Defendant	:	C V Eastwood
Third Defendant	:	C V Eastwood

Solicitors:

Plaintiff	:	Connor Legal
First Defendant	:	Eastwood Law
Second Defendant	:	Eastwood Law
Third Defendant	:	Eastwood Law

Cases referred to in decision(s):

Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43; (2018) 265 CLR 1
Barnes v Addy (1874) LR 9 Ch App 244
Bridgetown/Greenbushes Friends of the Forest Inc v Department of Conservation and Land Management (1997) 18 WAR 126
Byrnes v Kendall [2011] HCA 26; (2011) 243
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Farah Construction Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) FCR 296
Gunns Ltd v Alishah [2009] TASSC 45; (2009) 19 Tas R 38
Hesse v Hardie [2023] WASCA 173
Horwood v Davenport [2014] WASC 436
Sancho Bakery Pty Ltd (In Liquidation) v Durolek [2024] WASC 81
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
Westpac Banking Corporation v Anderson [2017] WASC 106
Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; (2005) 219 ALR 112

MASTER RUSSELL:

Introduction

The plaintiff, Geoffrey Eric Hesse, is the only child of the late Brian Cuthbert Hesse, who died in 2018. With no disrespect to the plaintiff, the deceased or others referred to in these reasons, once identified, I will refer to them by their first names.
Geoffrey is a 'Specified Beneficiary' and a 'General Beneficiary' of the B.C.H. Family Trust (Trust), which was created by deed dated 2 September 1976 (Trust Deed). Brian was the instigator of the Trust.
The first defendant, Veronica Marie Hardie, was Brian's de facto partner and is also a 'Specified Beneficiary' and a 'General Beneficiary' of the Trust. She lost capacity in about mid-2021 and defends the proceeding by her guardian ad litem (her son), Paul Andrew Hardie.[1]
[1] Pursuant to orders made on 14 September 2021.
The second defendant, B.C.H. Nominees Pty Ltd (BCH), is and was, at all material times, the:
(a)trustee of the Trust (Trustee); and
(b)owner of all issued shares in the third defendant, Keian Holdings Pty Ltd (Keian), the principal asset of the Trust.
The Trust was varied in 2011 (2011 Variation) to provide for the maintenance and support of Veronica and Geoffrey after Brian's death. Pursuant to the 2011 Variation, Veronica and her two children, Paul and Mark Anthony Hardie, and Geoffrey are named as the beneficiaries of the Trust.
Relevantly, the Trust provides that, after Brian's death, Geoffrey was to be paid the first $72,000 of the yearly income of the Trust by monthly instalments of $6,000. This is defined in the statement of claim as the 'Annuity'.
In essence, Geoffrey claims that BCH owes duties to him as Trustee, including to take steps to ensure that the Trust generates or receives income for distribution. He alleges breaches of duty by BCH and Veronica and knowing participation by Veronica and Keian. He claims to have been deprived of the Annuity because of the way in which the Trust and associated entities, BCH and Keian, have been administered.
Geoffrey commenced this proceeding by originating summons on 11 January 2021. Orders were made on 9 March 2021 that the matter proceed as if it had begun by writ. A statement of claim was filed on 25 March 2021. It was first amended on 5 August 2021 (Amended Statement of Claim).
Following service of the Amended Statement of Claim, the defendants applied for summary judgment pursuant to O 16 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC), alternatively to strike out the Amended Statement of Claim in its entirety pursuant to O 20 r 19(1) RSC.[2] That application was heard and determined by Master Sanderson, who delivered his reserved decision on 9 May 2022[3] and, on 17 May 2022, made orders granting the defendants' application for summary judgment and dismissing the action.
[2] By chamber summons filed on 5 October 2021.
[3] Hesse v Hardie [2022] WASC 156.
Those orders were set aside on appeal[4] by orders made on 4 December 2023 and the defendants' application was otherwise remitted to the General Division for determination. Among other things, the Court of Appeal, stated:[5]
In our view, while amendments would appear to be required to the pleadings, the claims sought to be raised by Geoffrey are reasonably arguable and are not doomed to fail.
[4] See Hesse v Hardie [2023] WASCA 173 (Appeal Decision).
[5] Appeal Decision [67].
Upon the defendants' application being remitted to the General Division, the defendants initially sought to re-open their earlier strike out application (2021 Strike Out Application). However, following filing and service of a re-amended statement of claim by the plaintiff on 9 April 2024 (Re-amended Statement of Claim), orders were made for the defendants to file and serve a defence or amended defence (as applicable),[6] or to make any application to strike out the Re-amended Statement of Claim or any parts of it by 14 May 2024.[7]
[6] The second and third defendants filed a defence to the earlier statement of claim on 21 May 2021. No defence has been filed by the first defendant.
[7] Orders made on 16 April 2024.
These reasons concern the defendants' application to strike out parts of the Re-amended Statement of Claim[8] (2024 Strike Out Application).
[8] By chamber summons filed on 14 May 2024.
For the reasons that follow, the 2024 Strike Out Application is granted and paragraphs 2(e.2), 2(h)(i) - (v), 3(d)(i) - (v), 25(a) ‑ (b), 26(a) - (e), 29(a) - (f), 30, 31, 32(a) - (g), 33(a) - (c), 34(a) - (f), 35, 36(a) - (c) and 37(a) - (d) of the Re‑amended Statement of Claim will be struck out. Geoffrey will have leave to re-plead by filing and serving a further re-amended statement of claim or a substituted statement of claim.

Factual background and overview of Geoffrey's claim

The factual background to Geoffrey's claim, details of the Trust and the relevant provisions of the Trust Deed are set out in the Appeal Decision,[9] which I refer to and incorporate in these reasons without repeating.
[9] Appeal Decision [1] - [2], [6] - [44].
By way of brief overview, as outlined in the Appeal Decision,[10] Geoffrey alleged in the Amended Statement of Claim that:
(a)amendments made to the Trust Deed by the 2011 Variation, which purported to include Veronica, Paul and Mark, as 'Specified Beneficiaries' and 'General Beneficiaries', and gave effective control of the Trust to Veronica, were invalid;
(b)BCH breached its duties as Trustee, including by failing to properly administer Keian's financial affairs so as to provide an income to the Trust; and
(c)BCH should be removed as Trustee.
[10] Appeal Decision [2] - [3].
In addition to the observations in the Appeal Decision, I have had the benefit of written and oral submissions to assist in navigating Geoffrey's pleading. At the heart of Geoffrey's complaints is the way in which the Trust has been administered, and in particular by Veronica in the period from 2015 to 2021, as controller of BCH and sole director of Keian. In that regard, the Amended Statement of Claim alleged (and the Re-amended Statement of Claim continues to allege) that:
1.Veronica was purportedly appointed as a co-director of BCH by Brian on 16 September 2016.[11] She also acted as trustee de son tort of the Trust at all times between 16 September 2016 and 1 March 2021.[12]
[11] Re-amended Statement of Claim [2(e.1)].
[12] Re-amended Statement of Claim [2(e.2)].
2.Veronica, whilst acting as a director of BCH, whether validly appointed as such or not, owed BCH fiduciary duties to ensure that BCH carried out its duties as Trustee.[13] She also owed fiduciary duties to the beneficiaries of the Trust, including Geoffrey, while she was acting as trustee de son tort of the Trust.[14]
[13] Re-amended Statement of Claim [2(g)].
[14] Re-amended Statement of Claim [2(h)].
3.BCH as Trustee[15] and Veronica, while acting as a director of BCH (whether validly appointed or not)[16] and as trustee de son tort of the Trust,[17] owed the following fiduciary duties to Geoffrey as a beneficiary of the Trust:
[15] Re-amended Statement of Claim [3(d)].
[16] Re-amended Statement of Claim [2(g)].
[17] Re-amended Statement of Claim [2(h)].
(i)to disclose to and provide the beneficiaries of the Trust (including Geoffrey) with certain information and documents;
(ii)to avoid conflicts of interest;
(iii)to act impartially and fairly between the beneficiaries of the Trust;
(iv)to act properly and in good faith in administering the businesses, assets and liabilities of the Trust; and
(v)exercise the discretions conferred on them by the Trust Deed in good faith and in accordance with the purposes for which the discretions were conferred.
4.Between 13 May 2018 and 8 July 2019, Keian sold commercial properties it owned for a total value of $4,565,000.[18]
[18] Re-amended Statement of Claim [19].
5.BCH paid Geoffrey $6,000 in November 2018 said to be for the accounting period ending 30 June 2018 and has made no further payments of the Annuity to Geoffrey for the financial years ending 2019, 2020, 2021 and 2022.[19]
[19] Re-amended Statement of Claim [20].
6.In November 2019, Keian purchased an apartment in Booragoon (Booragoon Apartment) for $649,000, which Veronica subsequently made her home and became BCH's and Keian's registered office.[20]
[20] Re-amended Statement of Claim [21].
7.The defendants advised Geoffrey in November 2018 that BCH as Trustee was not able to consider making any distributions to beneficiaries of the Trust because BCH did not own any income producing assets, and Keian would not make any distributions of income to BCH for the 2018 ‑ 2019 financial year.[21]
[21] Re-amended Statement of Claim [22].
8.In November 2020, the defendants advised Geoffrey that BCH as Trustee would not pay Geoffrey the Annuity or any part of it because, in effect, it had no income to distribute.[22]
[22] Re-amended Statement of Claim [23].
9.On 16 February 2021, Veronica ceased to purport to be an officeholder of BCH and Keian and her sons, Paul and Mark, were appointed as the directors of BCH and Keian.[23]
[23] Re-amended Statement of Claim [24].
10.BCH breached its fiduciary duties as Trustee, by failing or refusing to do each of the things pleaded.[24]
[24] Re-amended Statement of Claim [25], [26].
11.Veronica[25] and Keian[26] knowingly participated in BCH's alleged breaches of duty and trust.
12.Veronica, while acting as trustee de son tort of the Trust, breached her duties by administering and directing the financial affairs of Keian such that her own interests, the interests of the beneficiaries of the Trust and the interests of Keian were in conflict, as pleaded.[27] In essence, it is alleged that Veronica (as sole director of Keian) directed or failed to direct Keian in such a way as to distribute, generate and invest income with the result that Geoffrey (and other beneficiaries) were deprived of Trust income, including in Geoffrey's case, the Annuity. This included:
(a)failing to direct Keian to lease its commercial properties in the period 2015 - 2019;
(b)directing Keian to sell its income producing properties such that no income was available for distribution to the Trust; and
(c)Keian's purchase of the Booragoon Apartment in 2019 for Veronica's sole use.
13.While acting as director of BCH from mid-2015 (when not formally appointed to act as such), Veronica wrongfully caused BCH, without the consent of the Guardian of the Trust, to transfer Trust money totalling $803,126.31, which she is liable to return to BCH, as pleaded.[28] This includes an amount of $8,571.42 alleged to have been transferred to Geoffrey in 2017/2018.[29]
14.Keian, as the corporate creature, vehicle or alter ego of Veronica, owed fiduciary duties to the beneficiaries of the Trust that were co-extensive with those owed by the Trustee or trustee de son tort, in particular in relation to its financial dealings and affairs.[30]
15.Keian breached its fiduciary duties owed to Geoffrey as a beneficiary of the Trust by acting or failing to act as pleaded.[31] In essence, it is alleged that Keian favoured Veronica's interests and conducted its affairs in such a way as to deprive Geoffrey of the Annuity.
[25] Re-amended Statement of Claim [29].
[26] Re-amended Statement of Claim [30].
[27] Re-amended Statement of Claim [32], [33].
[28] Re-amended Statement of Claim [34], [35].
[29] Re-amended Statement of Claim [34(f)].
[30] Re-amended Statement of Claim [36].
[31] Re-amended Statement of Claim [37].
With one exception, which I will outline, the Re-Amended Statement of Claim does not seek to expand the scope of the duties alleged to be owed by Veronica and BCH but to characterise them as 'fiduciary and/or trust duties'[32] (emphasis added). The exception is that the alleged duty to act properly and in good faith in administering the businesses, assets and liabilities of the Trust has been amended to include 'a duty to invest Trust property'.[33]
[32] Re-amended Statement of Claim [2(h)], [3(d)].
[33] Re-amended Statement of Claim [2(h)(iv)]; [3(d)(iv)].
The pleas concerning BCH's alleged breach of duty have also been amended in the Re-amended Statement of Claim to refer to breaches of 'fiduciary and/or trust duties'.[34] The pleading of the following alleged breaches of duty have also been amended:
(a)'duty to administer assets and invest';[35]
(b)'duty to act impartially',[36]
in each case, including to add (although not as separate and distinct paragraphs) pleas as to the circumstances in which it is alleged the breaches arose and the consequence; and
(c)'duty to act in good faith'.[37]
[34] Re-amended Statement of Claim [25], [26].
[35] Re-amended Statement of Claim [26(a)].
[36] Re-amended Statement of Claim [26(b)].
[37] Re-amended Statement of Claim [26(c)].
Further material facts have been pleaded in the Re-amended Statement of Claim in relation to Veronica's and Keian's alleged knowing assistance and participation in BCH's alleged breaches of duty, albeit under a heading 'Particulars of Knowing Assistance and Participation'.[38]
[38] Re-amended Statement of Claim [29(a)] - [29(f)].
In the prayer for relief, Geoffrey claims:
(a)a declaration that the 2011 Variation of the Trust Deed is void;
(b)a declaration that cll 1b, 1c and 1d of the Deed of Variation of the Trust Deed are void;
(b)orders that BCH and Keian provide him with certain documents and financial records;
(c)an order that BCH pay Geoffrey the Annuity backdated to 1 July 2018 and continuing;
(d)the removal and replacement of BCH as Trustee;
(e)equitable damages against Veronica and Keian; and
(f)an order that Veronica repay BCH (as Trustee) the amount of $803,126.31 that she is alleged to have wrongfully caused to be paid out of Trust money.[39]
[39] Although, in his outline of submissions in opposition to the 2024 Strike Out Application, Geoffrey only refers to payments totalling $742,118.90 paid to Brian having been paid wrongfully because BCH had no director and payment was not authorised under the terms of the Trust Deed: Plaintiff's outline of submissions filed on 26 July 2024 (Plaintiff's submissions) [5], [42].

Applicable principles

An application under O 20 r 19 RSC to strike out a pleading must be made within 21 days of service of any pleading to which the application refers. The court has a discretion to extend the time in which an application under O 20 r 19 RSC is brought.
The 21-day limit to bring an application to strike out a pleading reflects the view that such applications should be brought promptly and at an early stage of the proceeding, before unnecessary expense is incurred. Ordinarily, where there is a delay, it should be explained, and the onus is on the applicant to demonstrate that it is justifiable in the circumstances.[40]
[40] See Westpac Banking Corporation v Anderson [2017] WASC 106 [38] (Pritchard J) and the authorities referred to, which also apply to an application under O 16 RSC and the same principles apply to an application under O 20 r 19 RSC.
The legal principles relating to a strike out application are well established. They were comprehensively set out by Smith J in Vantage Holdings Group Pty Ltd v Donnelly [No 4],[41] and affirmed by the Court of Appeal in English v Vantage Holdings Group Pty Ltd,[42] as follows:
[41] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60].
[42] English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55] - [56] (Murphy and Vaughan JJA), [163] (Mitchell JA agreeing).
The principles relevant to the strike out application are as follows:
(a)the essential functions of a pleading are to define and limit the issues for decision, to provide the basis for determining discovery and the admissibility of evidence for trial, and to ensure a fair trial by putting the other side on notice of the case it must meet;
(b)a statement of claim must not plead allegations at too high a level of generality. A pleading must be sufficiently particular to conform with one of the primary objects of pleadings, to inform the opposing party of the case that it must meet;
(c)a statement of claim must state specifically the relief or remedy claimed;
(d)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action. While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial;
(e)in alleging no reasonable cause of action:
(i)the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather, the question is whether it would be open to the party (on its pleadings) to prove facts at the trial which would constitute a cause of action; and
(ii)'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable;
(f)the mere fact that a case appears weak is not of itself sufficient to strike out the action;
(g)in considering a strike out application, it is now necessary to consider the role of pleadings in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and 4B of the Rules of the Supreme Court 1971 (WA) are often promoted by a clear and precise statement of the issues for decision;
(h)provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment;
(i)pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action 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; and
(j)irrelevant or unnecessary pleas in a statement of claim will be struck out on the grounds that they will prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues.
(citations omitted)

To the extent the strike out application is made on the ground that the statement of claim discloses no reasonable cause of action, pursuant to O 20 r 19(1)(a) RSC, no evidence is admissible.[43]
[43] RSC O 20 r 19(2).

The 2024 Strike Out Application

The 2024 Strike Out Application is brought pursuant to O 20 r 19(1) RSC, alternatively pursuant to the Court's inherent jurisdiction, to strike out certain paragraphs of the Re-amended Statement of Claim on the grounds that they disclose no reasonable cause of action or may prejudice, embarrass, or delay the fair trial of the action.
The defendants do not seek to strike out any of the paragraphs associated with Geoffrey's claim that the 2011 Variation are invalid. The challenge to the Re-amended Statement of Claim is directed to the pleading of the alleged breaches of duty of each of the defendants, and in particular the lack of correlation between the content of the duties pleaded and the allegations of breach. The defendants' position is, in essence, that rather than resolve the difficulties surrounding those matters, the Re-amended Statement of Claim compounds them.
The defendants do not press the part of the 2024 Strike Out Application that sought to strike out paragraphs 2(e.1) and 2(g) of the Re-amended Statement of Claim. The paragraphs they seek to have struck out are paragraphs 2(e.2), 2(h)(i) - (v), 3(d)(i) - (v), 25(a) - (b), 26(a) - (e), 27, 29(a) - (f), 30, 31, 32(a) - (g), 33(a) - (c), 34(a) - (f), 35, 36(a) - (c) and 37(a) - (d).
The defendants submit that the 2024 Strike Out Application is brought primarily on the basis that the paragraphs in question either disclose no reasonable cause of action or may prejudice, embarrass or delay the fair trial of the action. In respect of paragraphs 29(e) and 29(f), the defendants submit that those pleas ought to be struck out on the grounds they are scandalous, frivolous or vexatious.
Geoffrey opposes the 2024 Strike Out Application on procedural and substantive grounds. The procedural grounds are an alleged failure to confer and that 'the bulk of the application is 3 years out of time'. It was submitted on behalf of Geoffrey that the latter applies to all but paragraphs 26 and 29. This is on the basis that the other amendments now sought to be challenged were included in the Amended Statement of Claim, which was filed on 5 August 2021. The defendants proceeded on the basis that the application before Master Sanderson was a summary judgment application to dismiss the whole claim and did not pursue the 2021 Strike Out Application.[44]
[44] Plaintiff's submissions filed [16].
I have considered the parties' submissions in relation to the procedural issues raised. I do not consider that the 2024 Strike Out Application should be dismissed for want of conferral or because of the delay in bringing the application. Although several of the challenged pleas were introduced in the Amended Statement of Claim filed on 5 August 2021 and were not directly pressed in the 2021 Strike Out Application before Master Sanderson, given the intervening appeal and the subsequent course of the proceedings, there have been no other procedural steps in the intervening period.
Although a significant amount of time has passed, the application is still brought at an early stage of the proceedings from a pleading and procedural perspective. The 2024 Strike Out Application was brought within the time provided in the orders made on 16 April 2024. In the circumstances, I am satisfied that the time for bringing the 2024 Strike Out Application should be extended to the date of filing.

The challenged paragraphs of the Re-amended Statement of Claim

I will deal with each of the challenged paragraphs of the Re‑amended Statement of Claim in the order they appear. As noted, a copy of the Re-amended Statement of Claim is attached as Attachment A.

Paragraphs 2 and 3

Paragraph 2 contains pleas relating to Veronica, including positions held by her at the material times, and duties she is alleged to have owed in her various capacities. Paragraph 3 contains pleas relating to BCH. The challenged paragraphs are 2(e.2) and 2(h)(i) ‑ (v) and 3(d)(i) - (v).

Paragraph 2(e.2)

Paragraph 2(e.2) of the Re-amended Statement of Claim is in the following terms:
… further, [Veronica] acted as trustee de son tort of the Trust at all times between 16 September 2016, and 1 March 2021;
In relation to paragraph 2(e.2), the defendants' complaint is, in essence, that it does not disclose a cause of action because no material facts are pleaded to support the plea that Veronica acted as trustee de son tort. It merely states as a conclusion that she acted as such.
The defendants referred to Horwood v Davenport,[45] in which Acting Master Gething (as his Honour then was) considered the application of equitable principles under which a third party may be liable for breach of a fiduciary duty by a trustee.[46] Amongst the principles his Honour considered was where a person standing in the shoes of a trustee becomes a trustee de son tort. In that case, Gething AM (as his Honour then was) stated:[47]
Perhaps the leading definition of a trustee de son tort is found in the judgment of Smith LJ in Mara v Browne [1896] 1 Ch 199:
What constitutes a trustee de son tort? It appears to me that, if one, not being a trustee and not having authority from a trustee, takes upon himself to intermeddle with trust matters or to do acts characteristic of the office of trustee, he may thereby make himself what is called in law a trustee of his own wrong, that is, a trustee de son tort, or as it is also termed, a constructive trustee (209).
[45] Horwood v Davenport [2014] WASC 436.
[46] Horwood v Davenport [76] - [83].
[47] Horwood v Davenport [80].
As observed in Horwood v Davenport,[48] liability as a trustee de son tort arises out of two distinct stages. The first is the intermeddling which gives rise to the status of trustee, and the second is the breach of duty.
[48] Horwood v Davenport [2014] WASC 436 [82], referring to R P Austin, 'Constructive Trusts', Essays in Equity (ed Finn) (1985, Law Book, Sydney), 210.
As submitted by the defendants, paragraph 2(e.2) does not plead the facts as to how it is said that Veronica acted as a trustee de son tort of the Trust. It pleads the conclusion - that she did so act, but not how it is said she intermeddled in the Trust or did acts characteristic of the office of trustee of the Trust.
It was submitted on behalf of Geoffrey, in effect, that paragraphs 2(e.1) and 2(e.2) should be read together, as denoted by 'further' at the beginning of paragraph 2(e.2), which make clear that the reason Veronica acted as trustee de son tort is because, in purporting to act as sole director of BCH, the administration of the Trust by BCH as Trustee was in her hands.
Based on the oral submissions made on behalf of Geoffrey, it appears his case on this issue is to the effect that:
1.Because of Brian's mental incapacity from at least mid‑2015, BCH had no director until Paul and Mark were appointed as its directors on 16 February 2021.
2.Veronica purported to act as director of BCH between 16 September 2016 and 1 March 2021.
3.By acting as if she were the sole director of BCH in that period, she acted as if she was the director of the Trustee (BCH) and performed duties as trustee without being properly appointed to act in either capacity.
4.In doing so she intermeddled in the Trust and therefore was a trustee de son tort of the Trust.
The difficulty with the plea in paragraph 2(e.2), even read together with 2(e.1), is the absence of material facts as to what specific acts Veronica is said to have engaged in or what specific conduct on her part is said to have amounted to her intermeddling in the Trust. To merely say because she was purporting to act as BCH's director is, in my view, at too high a level of generality, and should be struck out in its current form.
As will be developed, several of the other challenged pleas suffer from similar deficiencies. However, whilst this and other parts of the pleading are deficient as presently drafted, as stated in the Appeal Decision, the claims sought to be raised by Geoffrey are generally reasonably arguable and are not doomed to fail. If the facts said to give rise to Geoffrey's claims are properly pleaded and made out, it appears Geoffrey has a genuine grievance, which he should be permitted to pursue.
In the circumstances, Geoffrey should be allowed to remedy this, and the other deficiencies identified later in these reasons, by further re-amending or substituting the statement of claim.
In relation to what is sought to be pleaded by paragraph 2(e.2), this will require pleading the material facts said to give rise to Veronica acting as trustee de son tort of the Trust.
By including all the pleas relating to Veronica in paragraph 2, the pleading does not follow a logical sequence and lacks clarity as to the material facts alleged to make up the elements of the cause of action, and the source and content of the alleged duties (the subject of the subsequent challenged paragraphs).
Perhaps this and other aspects of the challenged pleas, would have been more comprehensible had a more conventional approach to pleading been adopted. For example, by first clearly pleading (in separate numbered paragraphs) the material facts said to give rise to each of the duties alleged to have been owed. Then, having identified the source of the duty, as separate and distinct pleas by reference to the relevant pleaded facts:
(a)each of the duties alleged to be owed by each of the defendants;
(b)the facts and circumstances (acts or conduct of each of the defendants) alleged to give rise to each breach of duty;
(c)the alleged breaches of duty, including which specific duty is alleged to have been breached by each of the defendants because of the acts or conduct pleaded, as applicable; and
(d)the alleged consequence of each of the alleged breaches of duty.

Paragraphs 2(h)(i) - (v) and 3(d)(i) - (v)

Paragraphs 2(h)(i) - (v) and 3(d)(i) - (v) each plead duties alleged to have been owed by Veronica and BCH to the beneficiaries of the Trust, including Geoffrey. The amendments to paragraphs 2(h)(i) - (v) were introduced in the Amended Statement of Claim and effectively mirror the duties alleged to be owed by BCH in paragraphs 3(d)(i) - (v), which were included in the original statement of claim.
As noted, the further amendments introduced by the Re‑amended Statement of Claim to paragraphs 2(h)(i) ‑ (v) and 3(d)(i) - (v) are to describe the duties alleged to have been owed in each case to 'fiduciary and/or trust duties'. Also, in each case, the duty alleged in sub‑paragraph (iv), to act properly and in good faith in administering the businesses, assets and liabilities of the Trust, has been expanded in the Re-amended Statement of Claim by adding 'including a duty to invest Trust property'.[49]
[49] Re-amended Statement of Claim [2(h)(iv)], [3(d)(iv)].
The defendants take issue with the addition of 'and/or trust' such that the duties alleged are described as 'fiduciary and/or trust duties'. It was submitted on behalf of the defendants that the pleas are embarrassing because it is not clear which of the duties are said to be a fiduciary duty and which are said to be a 'trust duty'. They are rolled-up. Nor is it clear what a' trust duty' is.
The defendants say that the lack of clarity further compounds the lack of correlation between the duties alleged to be owed and the alleged breaches. Their position is to the effect that without first establishing the content and character of the alleged duty, the problem of then rolling together the alleged breaches in the later paragraphs is further compounded and the defendants are unable to fully understand the claim they are to meet and respond to.
In oral argument, counsel for Geoffrey confirmed that the term 'trust duty' is not intended to refer to any specific duty arising under the terms of the Trust Deed. Rather, the duties are said to be those of a trustee. It appears the addition of 'and/or trust duties' is intended to capture any duties of a trustee that are not fiduciary duties but which 'arise under the general law'.[50] When asked if it was suggested such duties were different to fiduciary duties, counsel said, in his view, they are the same but there appeared to be differing views. He said they are duties owed by trustees, some of which are fiduciary duties.[51]
[50] ts 237.
[51] ts 238.
Ultimately, it seems to me that rather than use the rolled-up phrase of 'fiduciary and/or trust duty' Geoffrey should instead set out in the pleading, as observed, the material facts said to give rise to each of the duties alleged to be owed by Veronica as trustee de son tort or by BCH as Trustee. Then, in pleading the alleged duties, state which are said to be fiduciary duties, and which are said to be other duties owed and on what basis they are said to arise.
Whether the alleged duty is delineated as a fiduciary duty or otherwise, the content of the duty alleged should be sufficiently clear so that the defendants may understand the case they have to meet. The content of the alleged duty will also inform the pleas as to the circumstances said to give rise to the alleged breaches of duty and the alleged breaches.
As to the addition of the alleged duty to invest Trust property, the defendants maintain their position as to whether any such duty arises at law or in equity but, in light of the Appeal Decision, do not seek to strike out the plea on that basis.
In the Appeal Decision, although the Court of Appeal did not consider that Geoffrey's case fell within any of the examples provided in Byrnes v Kendall,[52] referred to by the parties in the appeal, it expressed that caution should be exercised not to stifle the development of the law by summarily rejecting a novel claim.[53] Having considered the claim as outlined on Geoffrey's behalf in the appeal,[54] the Court of Appeal expressed their view that, whilst there may be an element of novelty to Geoffrey's claim that a trustee may be under a duty of the kind sought to be advanced, it is reasonably arguable.[55] It was also observed that amendment may be required to properly plead the claim.[56]
[52] Byrnes v Kendall [2011] HCA 26; (2011) 243 CLR 253 [119].
[53] Appeal Decision [54] ‑ [55], citing Bridgetown/Greenbushes Friends of the Forest Inc v Department of Conservation and Land Management (1997) 18 WAR 126, 188 ‑ 189, cited with approval in Gunns Ltd v Alishah [2009] TASSC 45; (2009) 19 Tas R 38 [23].
[54] Appeal Decision [56] - [59].
[55] Appeal Decision [60].
[56] Appeal Decision [61].
The defendants' primary complaint is that the content of the duty alleged in paragraphs 2(h)(iv) and 3(d)(iv) is not precisely articulated. What is the duty to invest Trust property alleged to include?
Further, the defendants say it is not clear precisely what is alleged to be 'Trust property'. There are no specific pleas that clearly identify what the Trust property is said to be.
In that regard, the argument advanced on behalf of Geoffrey, at least orally, is to the effect that, because BCH owns all the shares in Keian, all property of any nature owned by Keian is property of the Trust. In the Appeal Decision,[57] the Court of Appeal said that paragraphs 3(b) and 3(c) was clearly a plea that all issued shares in Keian were held by BCH in its capacity as Trustee. It also said that the financial statements for the Trust show the Keian shares to be assets of the Trust.
[57] Appeal Decision [36].
The Re-amended Statement of Claim does not separately plead or identify the Trust property the subject of the alleged duty to invest. Although, the pleading does refer elsewhere to certain commercial properties owned by Keian that were sold in 2018 and 2019,[58] and to the purchase of the Booragoon Apartment in November 2019, which Veronica subsequently made her home.[59]
[58] Re-amended Statement of Claim [19].
[59] Re-amended Statement of Claim [21].
Paragraph 26(a) of the Re-amended Statement of Claim, considered later in these reasons, which alleges breach of the 'duties to administer and invest' pleaded in paragraph 3(d)(iv), also refers to assets and sources of income of the Trust. However, they are not clearly identified and pleaded in one place. This is just one of several difficulties with the structure and content of the pleading, which makes it unclear and difficult to follow, and should be re‑visited and re‑pleaded.
For these reasons, paragraphs 2(h)(i) - (v) and 3(d)(i) - (v) should be struck out, with leave to amend or to file a substituted statement of claim addressing this and the other deficiencies identified in these reasons.

Paragraphs 25(a) and 25(b)

Paragraphs 25(a) and 25(b) of the Re‑amended Statement of Claim concern BCH's alleged breach of its duty, as pleaded in paragraph 3(d)(i), to provide beneficiaries with accurate information concerning the administration of the Trust and to permit examination of documents relating to the Trust and its administration. Each of these paragraphs are in the same terms as pleaded in the original statement of claim except for the addition in the introductory words of paragraph 25 'and/or trust' duties, as follows:
25.[BCH] has breached its fiduciary and/or trust duties referred to at paragraphs 3(d)(i) herein in that:
…
For the same reasons as outlined in relation to the plea of the duties in paragraphs 2(h) and 3(d), the defendants say the plea is embarrassing because it is not possible to ascertain whether the duty breached is a fiduciary duty or a trust duty.
I have already addressed the use of the combined phrase 'fiduciary and/or trust duties'. The same issues arise in relation to its use in this and other paragraphs.
The defendants also say that the allegation in paragraph 25(a) is redundant as the documents referred to were provided to Geoffrey on 22 June 2021.[60]
[60] Defendants' outline of submissions filed on 10 July 2024 (Defendants' submissions) [55], referring to Affidavit of Paul Andrew Hardie sworn on 5 October 2021 [12].
That argument is not one I consider can or should be determined as part of the 2024 Strike Out Application. Nor is it one that warrants striking out the plea. Of course, if Geoffrey accepts that the documents pleaded have been provided and that aspect of the claim is no longer pressed, those pleas should be removed. Otherwise, if the pleas remain and it is the defendants' case that all the relevant documents have been provided to Geoffrey, they can plead such in their defence.
The defendants also submit that paragraph 25(b) fails to plead any material facts giving rise to BCH's entitlement to request the documents referred to from Keian, or which give rise to a duty on the part of BCH to provide the documents to Geoffrey, and fails to disclose a cause of action.
It was submitted on behalf of Geoffrey, in effect, that it is not open to the defendants to challenge this plea on the basis it discloses no cause of action because, in the Appeal Decision, the Court of Appeal said that if the claim relating to BCH's breach of duty to direct Keian is established, they were not persuaded that a correlative duty of BCH to provide information about the management of Keian does not arguably arise.[61]
[61] Appeal Decision [61].
The Appeal Decision related to the grant of summary judgment dismissing the action and did not directly consider the adequacy or otherwise of the pleadings. Although, the Court of Appeal expressed a view that amendments would appear to be required to the pleadings. In my view, whilst this aspect of Geoffrey's claim may be reasonably arguable, as presently pleaded, it does not adequately disclose the cause of action sought to be asserted.
The duty pleaded in paragraph 3(d)(i), relied upon in paragraph 25(b), does not include any duty in relation to documents of Keian. Paragraph 3(d)(i) merely refers to a duty to provide beneficiaries of the Trust with accurate information concerning the administration of the Trust and to permit examination of documents relating to the Trust and its administration. It says nothing about any duty to provide information and to permit examination of documents relating to Keian. Nor is it clearly pleaded on what basis any such duty may be said to arise.

For these reasons, paragraphs 25(a) and (b) should also be struck out, with leave to re‑plead.

Paragraphs 26(a) - (e)

The chapeau to paragraph 26, as re-amended, states as a conclusion that BCH has breached its 'fiduciary/and or trust duties' in paragraphs 3(d)(ii) - 3(d)(v). Sub-paragraphs (a) - (c) then plead the failures alleged to give rise to breaches of the duties pleaded in paragraphs 3(d)(iii) - 3(d)(v). However, no allegations of breach are made in relation to the duties to avoid conflicts of interest alleged in paragraphs 3(d)(ii).
The difficulties already identified arising from the use of the combined phrase 'fiduciary and/or trust duties' also apply to paragraph 26 generally.
Paragraph 26(a) pleads that BCH breached the duties pleaded in paragraph 3(d)(iv), described as 'duty to administer and invest', by failing to:
(i)procure Keian to take steps to place itself in a position to generate dividends to the extent that it was capable of doing so; and/or
(ii)to place Keian into a members' voluntary liquidation so its property could be distributed to BCH and used by it to generate income for the Trust.
As noted by the defendants, those amendments appear to largely replicate the observations made by the Court of Appeal in their analysis of the plaintiff's claim in the Appeal Decision, without more.[62]
[62] Appeal Decision [66].
As both the alleged duty and alleged breach are presently pleaded, it is not clear whether the duty to administer and invest are said to be some combined duty or two or more separate duties and, if more than one, which is said to have been breached.
Further, as observed in the outline of Geoffrey's claims earlier in these reasons, pleas have been added (although not as separate and distinct paragraphs) as to the circumstances in which it is alleged the breaches arose and the consequence of the alleged breaches. The facts said to give rise to the alleged duty to invest, should be pleaded separately so they are not rolled up with the pleading of breach.
A similar form of pleading is adopted in paragraph 26(b), which pleads failures of BCH alleged to amount to its breach of the duty pleaded in paragraph 3(d)(iii) – to act impartially in its management of the Trust.
As submitted on behalf of the defendants, it is incumbent on the plaintiff to plead clearly and with precision the circumstances giving rise to the duty in each case. For the reasons already outlined, I accept the defendants’ submissions to the effect that the manner of pleading in paragraphs 26(a) and (b) and the other sub‑paragraphs of paragraph 26 makes it difficult to follow and to plead to.
The pleading lacks clarity as to the scope and content of the alleged duties and the further amendments do not adequately address the lack of correlation between the content of the duties pleaded and the allegations of breach.
Paragraph 26 as a whole is unclear and confusing and should be struck out, with leave to re-plead.

Paragraph 27

Paragraph 27 of the Re‑amended Statement of Claim does not plead any material facts. It merely states that the plaintiff will contend that it would be expedient to remove BCH as Trustee pursuant to s 77 of the Trustees Act, or as an exercise of the Court's inherent jurisdiction on the grounds stated in the paragraphs that follow it. It is introductory. The pleas that follow in paragraph 28 are not challenged.
Ordinarily, such a plea would follow allegations made to ground a claim for relief in those terms. However, the form of the plea is not such, in my view, to warrant striking it out, particularly in the circumstances where no objection is taken to the pleading concerning the grounds relied upon in paragraph 28.

Paragraphs 29(a) - (f) and paragraph 30

Paragraphs 29 and 30 concern allegations that Veronica and Keian knowingly participated in BCH's alleged breaches of duty. Paragraph 29 contains the pleas relating to this aspect of Geoffrey's claim against Veronica. Paragraph 30 merely pleads, without more, that Keian 'knowingly participated in BCH's breaches of trust referred to in paragraph 25 and sub-paragraphs 26(a), 26(b), 26(c) and 26(e)'.
The chapeau to paragraph 29 is in the following terms:
29.[Veronica] knowingly participated and procured [BCH] to breach its duties owed to the beneficiaries of the Trust referred to at paragraph 3(d)(i) - (iv) as particularised at paragraphs 25 and 26 herein, and in breach of her fiduciary duties pleaded in sub-paragraph 2(g) herein.
It was accepted on behalf of Geoffrey that the words 'and procured' in the first line should be struck out and, presumably, the opening words amended such that the allegation is that Veronica knowingly participated in BCH's breach of its duties. Geoffrey's counsel also clarified that the words at the end 'and in breach of her fiduciary duties pleaded in sub-paragraph 2(g) herein.' should also have been deleted.
The remaining parts of paragraph 29 are included as particulars of knowing assistance and participation, rather than having been pleaded as material facts. This of itself could be remedied by removing the heading. However, the content of the sub-paragraphs that follow is also the subject of challenge.
It was submitted on behalf of Geoffrey that this part of the statement of claim concerns Geoffrey's claim that Veronica and Keian are responsible for BCH's various breaches of duty on the basis that they knowingly participated in them. The principal breach of duty by BCH that it is alleged Veronica and Keian participated in is BCH's alleged failure to direct the affairs of Keian to produce income to pay Geoffrey the Annuity.
In oral submissions, it was submitted that Veronica directed all the players and arranged the affairs of BCH, Keian and the Trust so that Geoffrey did not receive the Annuity, and to favour her own interests and those of the other beneficiaries of the Trust, as varied, her sons and grandchildren.
Paragraph 29(a) alleges, in effect, that it was the design of Veronica whilst she was acting as the sole director or sole de facto director of BCH, and while acting as the sole director of Keian that:
(a)Geoffrey receive no or no substantial distributions of income or capital of the Trust or payment of the Annuity;
(b)Veronica and/or the other beneficiaries receive distributions of income or capital or other benefits from the Trust.
It is then alleged, in effect, that because Veronica was the sole director or de facto director of BCH, the alleged designs were also the designs of BCH.
The defendants say that paragraph 29(a) is vague, generalised and conclusionary, and does not articulate the intention or precise nature of the design or the basis upon which it is said the design of Veronica was the design of BCH. Nor does it expressly plead Veronica's knowledge of the design. They say the pleading is confusing as to whether the alleged design was that of Veronica or BCH.
The defendants also challenge the adequacy of sub‑paragraphs (b) to (d), describing them, amongst other things, as impenetrable rolled-up pleas which they say, in effect, make it impossible to understand precisely what duties are alleged to have been breached and how Veronica and Keian are alleged to have assisted or participated in them.
Issue is also taken with paragraphs 29(e) and (f), which the defendants contend should be struck out on the grounds they are scandalous, frivolous or vexatious and an abuse of process because:
(a)paragraph 29(e) alleges that BCH's design and conduct was dishonest and fraudulent without properly pleading the factual basis for the alleged fraud and dishonesty; and
(b)paragraph 29(f) makes allegations about Veronica, unsupported by pleading a factual foundation, that she was well aware and had actual knowledge of the circumstances constituting the design and breaches of trust or wilfully shut her eyes to the obvious breaches of trust.
In relation to paragraph 29(f), the defendants submitted that the allegations appear to be made for the purpose of abusing or injuring Veronica and are offensive and scandalous.
The reference to breaches of trust in paragraph 29(f) is presumably intended to refer to breach of one or more of the alleged duties but, as presently drafted, is not clear. It appears that Geoffrey's counsel has disavowed any claim arising from a breach of trust per se or a breach of any provision of the Trust Deed.[63]
[63] See Appeal Decision [57], footnote 59, referring to primary ts 90. See also transcript of the hearing of this Application, ts 249 - ts 250, ts 267.
In any pleading, the elements of the relevant cause of action should be clearly and sufficiently pleaded. The elements of a claim based on the second limb of Barnes v Addy[64] for knowing assistance in a breach of fiduciary duty are:
(a)the existence of a fiduciary duty owed by the fiduciary;
(b)a dishonest and fraudulent design on the part of the fiduciary;
(c)assistance by the third party in that design; and
(d)knowledge on the part of the third party of the circumstances constituting that design.[65]
[64] Barnes v Addy (1874) LR 9 Ch App 244.
[65] Sancho Bakery Pty Ltd (In Liquidation) v Durolek [2024] WASC 81 (Sancho Bakery) [130] (Tottle J), citing Farah Construction Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 (Farah v Say-Dee) [160] (Gleeson CJ, Gummow , Callinan , Heydon and Crennan JJ).
In Farah v Say-Dee, the High Court stated, referring to the second limb of Barnes v Addy:[66]
As conventionally understood in Australia, the second limb makes a defendant liable if that defendant assists a trustee or fiduciary with knowledge of a dishonest and fraudulent design on the part of the trustee or fiduciary.
[66] Farah v Say-Dee [160].
The requirement of 'knowledge in a dishonest and fraudulent design' was also considered in Farah v Say-Dee.[67] The High Court concluded that 'dishonest and fraudulent designs' can include not only breaches of trust but also breaches of fiduciary duty, but any breach of trust or breach of fiduciary duty relied on must be dishonest and fraudulent.[68]
[67] Farah v Say-Dee [171] - [179].
[68] Farah v Say-Dee [179].
In relation to a breach of fiduciary duty, Gageler J (as his Honour then was), explained in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd:[69]
Knowing participation by a non-fiduciary in a dishonest and fraudulent breach of fiduciary duty is conduct which is regarded in equity as itself unconscionable and as attracting equitable remedies against the knowing participant of the same kind as those available against the errant fiduciary. Knowing participation in a dishonest and fraudulent breach of fiduciary duty includes knowingly assisting the fiduciary in the execution of a "dishonest and fraudulent design" on the part of the fiduciary to engage in the conduct that is in breach of fiduciary duty. The requisite element of dishonesty and fraud on the part of the fiduciary is met where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour. Correspondingly, the requisite element of knowledge on the part of the participant is met where the participant has knowledge of circumstances which would indicate the fact of the dishonesty on the part of the fiduciary to an honest and reasonable person. (citations and footnotes omitted)
[69] Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43; (2018) 265 CLR 1 (Ancient Order of Foresters) [71].
It is the dishonest or fraudulent breach of fiduciary duty which gives the character of unconscionability to the knowing assistance or participation, and which exposes the knowing participant, the accessory, to equitable remedies.[70] As stated in Ancient Order of Foresters:49
The reference to the liability of a knowing assistant as an "accessorial" liability does no more than recognize that the assistant's liability depends upon establishing, among other things, that there has been a breach of fiduciary duty by another. …
[70] Ancient Order of Foresters [76].
The knowledge required to be established is such as to generally fall into one of the following categories:[71]
(a)actual knowledge;
(b)wilfully shutting one's eyes to the obvious;
(c)wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make; and
(d)knowledge of circumstances which would indicate the facts to an honest and reasonable person.
[71] Farah v Say-Dee [174] - [178].
Given the requirement for knowledge, to the requisite degree, of a dishonest and fraudulent design, I do not find paragraphs 29(e) and (f) to be scandalous, frivolous or vexatious. However, as presently pleaded, with the proposed deletion of 'and procured', it is unclear precisely what is alleged. It appears that paragraph 29(a) seeks to allege that Veronica knowingly participated in BCH's breach of duties owed to the beneficiaries of the Trust referred to in paragraphs 3(d)(i) - (iv), as particularised in paragraphs 25 and 26. This is at too high a level of generality.
Nor is it clear how the knowing participation is said to arise. The plea commences by alleging that Veronica knowingly participated in BCH's breach of its duties but then pleads that the design was Veronica's. It is later pleaded that the design alleged in sub‑paragraphs (a) and (b) is described as a design of both Veronica and of BCH.
The duties that Veronica is alleged to have caused BCH to breach, and the breaches of duty, are pleaded by reference to the pleas I have determined should be struck out and re-pleaded, for the reasons stated concerning the lack of clarity as to the alleged duties, and the alleged breach of duty. This further compounds the difficulties with the pleading.
Given the serious nature of the allegations in paragraph 29, whilst it is relatively clear what Geoffrey's case is from the submissions made, and, as so expressed, is reasonably arguable, the pleading of the knowing participation claim as it stands is not, in my view, sufficiently clear.
As stated by Tottle J in Sancho Bakery, allegations of participation in a dishonest and fraudulent design is a serious allegation that must be specifically pleaded and particularised. In Sancho Bakery, his Honour referred to Yeshiva Properties No 1 Pty Ltd v Marshall,[72] in which the New South Wales Court of Appeal stated:
Where an equitable claim is based on alleged dishonesty, or otherwise on Barnes v Addy (1874) LR 9 Ch App 244, it is inappropriate that there should be anything less than a fully distinct statement in the pleading of what it is in substance that is charged against the alleged accessory.
[72] Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; (2005) 219 ALR 112 [14] (Mason P, Beazley and Bryson JJA).
It follows from a review of the authorities referred to above that the pleading of Geoffrey's claim for relief for knowing assistance or participation in an alleged breach of trust or fiduciary duty by Veronica and Keian should be in clear and unequivocal terms, and clearly identify the alleged:
(a)duty or duties owed by the trustee or fiduciary, including identifying which duties are alleged to be owed, by whom and in what capacity;
(b)dishonest and fraudulent design on the part of the trustee or fiduciary;
(c)assistance or participation by Veronica and Keian, as applicable, in that design, clearly stating how they are alleged to have assisted or participated; and
(d)knowledge on the part of Veronica and Keian, as applicable of the circumstances constituting that design such as to give rise to liability as an accessory,
and plead in clear terms the material facts upon which the pleas and claim are based. As presently pleaded, paragraph 29 does not achieve this.
In relation to paragraph 30, I accept the defendants' submission that this paragraph should be struck out on the ground it is embarrassing. Nor does it disclose a cause of action. Leaving aside the reference to paragraphs 25 and 26, which are to be struck out, the paragraph does not plead any material facts to support the allegation that Keian knowingly participated in the breaches of BCH referred to.
For these reasons, the whole of paragraphs 29 and 30 should be struck out, with leave to re-plead.

Paragraph 31

There is no direct plea as to the alleged consequence of the knowing participation alleged in paragraphs 29 and 30.
Paragraph 31 of the Re‑amended Statement of Claim merely pleads that particulars of the loss and damage suffered by Geoffrey resulting from the matters pleaded in those paragraphs will be provided after he obtains access to the documents sought in paragraph 25 and discovery. Presumably it includes the loss of the Annuity and other distributions to him from the Trust, but as presently pleaded, there is no plea to the effect that loss and damage has been suffered by Geoffrey.
I accept the defendants' submission that this plea is embarrassing and should be struck out.

Paragraphs 32(a) - (g) and 33(a) - (c)

Paragraphs 32(a) - (g) and 33(a) - (c) of the Re‑amended Statement of Claim allege breaches of the duties alleged to be owed by Veronica as trustee de son tort, as pleaded in paragraph 2(h).
These paragraphs suffer the same difficulties as identified in relation to the pleas concerning the duties alleged to be owed and the correlation between such duties and the alleged breaches, and should be re-pleaded together with each of the other impugned paragraphs.

Paragraphs 34 and 35

Paragraph 34 concerns the alleged wrongful transfer of funds caused by Veronica while she was acting as director of BCH. It sets out what appears to be the financial year in which funds were transferred, the amount of the transfer and to whom it was made. It states that Geoffrey will contend that the dispositions of Trust money was wrongful and that Veronica is liable to return the amounts set out to BCH.
However, as submitted by the defendants it does not plead on what basis the transfers are said to be wrongful or the basis upon which Veronica is liable to return the amounts to BCH.
Paragraph 35 is in the following terms:
35.Further, the dispositions of the Trust sums to the Deceased referred to at 34(a), 34(b) and 34(d) were made without the consent of the Guardian of the Trust as required by clause 13.201 which [Veronica] knew or ought to have known.
No further allegations are made in relation to this to indicate the relevant cause of action and alleged consequence. Nor is it clear what, if any, relief is sought in respect of the allegation.
By way of submission, Geoffrey's counsel explained that the transfer of funds pleaded in paragraph 34 was wrongful in two respects. First, if Veronica was not validly appointed as a director of BCH, she had no authority to cause the payments to be made. Second, whatever Veronica's status, she should not have caused the payments to be made to Brian because such was a breach of cl 13.201 of the Trust Deed, as there was no guardian to consent to the distributions due to Brian's mental incapacity.[73]
[73] Plaintiff's submissions [42].
It was conceded on behalf of Geoffrey that paragraphs 34 and 35 and paragraph (i) of the prayer for relief require further amendment, including to make clear that such claim is only brought against Veronica in her alleged capacity as trustee de son tort and only in relation to funds transferred to Brian.[74]
[74] Plaintiff's submissions [43], ts 277.
As has been accepted, as presently pleaded, paragraphs 34 and 35 do not adequately plead the claims sought to be advanced. They are also embarrassing and do not plead a cause of action. As such, they will also be struck out. However, as with the other pleas, Geoffrey will have leave to re-plead or to address this along with the other pleading issues in a substituted statement of claim.

Paragraphs 36(a) - (c) and 37(a) - (d)

Paragraph 36 alleges that, at all material times, Keian owed fiduciary duties to the beneficiaries of the Trust that were co‑extensive with those owed by BCH as Trustee or Veronica as trustee de son tort. It is alleged that, because Keian was the corporate creature, vehicle or alter ego of Veronica, it was subject to the same duties as Veronica and/or BCH, being duties to:
(a)act impartially and fairly between the beneficiaries of the Trust in its financial dealings and affairs;
(b)act in good faith towards the beneficiaries of the Trust in the administration of its assets and affairs;
(c)provide the beneficiaries of the Trust with accurate information concerning its administration, assets and affairs and to permit examination of documents relating to such.
Paragraph 37 pleads Keian's alleged breaches of the fiduciary duties pleaded in paragraph 36.
The defendants challenge paragraphs 36 and 37 on a number of bases, including that paragraph 36 does not plead or refer to the material facts relied upon for the conclusion stated that Keian was the corporate creature, vehicle or alter ego of Veronica. Nor is it clear on what basis it is alleged, or on what basis it could be contended, that Keian independently owed fiduciary duties to the beneficiaries of the Trust.
In response, Geoffrey's counsel referred in submissions to various parts of the Re-amended Statement of Claim from which it says the fiduciary obligations arise, including a number which are to be struck out.[75]
[75] Plaintiff's submissions [44], referring amongst others to the pleas in paragraphs 2(e.2), 29(a)(i), 29(c)(iv), 29(c)(ii), 33.
Counsel for the defendants and for Geoffrey each referred in their submissions, at a high level, to Grimaldi v Chameleon Mining NL (No 2).[76] In that case, relevantly, the Full Federal Court considered bases upon which a third party's participation in another's breach of trust or fiduciary duty could render that third party accountable in equity.[77] One of the bases referred to was where the third party is the corporate creature, vehicle, or alter ego of wrongdoing fiduciaries who use it to secure the profits of, or to inflict the losses by, their breach of fiduciary duty.[78]
[76] Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) FCR 296 (Grimaldi).
[77] Grimaldi [242] - [247].
[78] See Grimaldi [243] and the authorities referred to.
The Full Federal Court stated in Grimaldi:[79]
… the corporate vehicle is fully liable for the profits made from, and the losses inflicted by, the fiduciary's wrong. The liability itself is explained commonly on the basis that "company had full knowledge of all of the facts" …; it is the alter ego of the fiduciary with a "transmitted fiduciary obligation" … ; or that it "jointly participated" in the breach …
(citations omitted)
[79] Grimaldi [243].
It was submitted on behalf of Geoffrey, in effect, that Keian's liability arises because it was the corporate creature or vehicle used to engage in the conduct amounting to the breaches of duty. It was the manipulation of Keian's affairs that was the wrongdoing in breach of the duties owed.[80]
[80] Plaintiff's submissions [45] - [46], ts 266 - 270.
As pleaded, Geoffrey's case against Keian in this respect is not sufficiently clear. It also relates back to earlier pleas that are to be struck out. It is not immediately apparent on the facts, as pleaded, whether there is a claim of the kind outlined. However, it is not an unarguable case, in my view, and although these paragraphs should also be struck out, Geoffrey should have leave to re-plead.

Conclusion and orders

For these reasons, the Application is granted and paragraphs 2(e.2), 2(h)(i) - (v), 3(d)(i) - (v), 25(a) - (b), 26(a) - (e), 29(a) - (f), 30, 31, 32(a) - (g), 33(a) - (c), 34(a) - (f), 35, 36(a) - (c) and 37(a) ‑ (d) of the Re-amended Statement of Claim are struck out.
As stated, whilst I make no comment at this stage as to their merit, I consider Geoffrey's claims, as articulated in the submissions made, are reasonably arguable. As such, he should be given and will have leave to re‑plead by further re‑amending the statement of claim, or it may be preferable to file a substituted statement of claim, so that his claims may be appropriately and clearly pleaded.
As observed earlier in these reasons, the pleading of the claims said to arise from the alleged breaches of duty, any knowing assistance or participation in such breaches, or other accessorial liability, would be much clearer if all the material facts said to give rise to each are clearly and separately pleaded in a logical sequence. This would also minimise much of the repetition and address the lack of clarity in the pleading as presently pleaded.
I will make orders that the defendants have leave to bring the 2024 Strike Out Application, the time for which is extended to the date of filing, and striking out paragraphs 2(e.2), 2(h)(i) - (v), 3(d)(i) - (v), 25(a) - (b), 26(a) - (e), 29(a) - (f), 30, 31, 32(a) - (g), 33(a) - (c), 34(a) - (f), 35, 36(a) - (c) and 37(a) - (d) of the Re‑amended Statement of Claim, with leave to re-plead.
I will hear from the parties as to whether those parts of Geoffrey’s claim are to be re-pleaded by further re-amending the statement of claim or filing and service of a substituted statement of claim. I will also hear from the parties in relation to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SC
Associate to Master Russell
7 OCTOBER 2025