In the matter of Combined Projects (Arncliffe) Pty Ltd

[2018] NSWSC 649

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Combined Projects (Arncliffe) Pty Ltd [2018] NSWSC 649

Hearing dates:

10 May 2018

Date of orders:

11 May 2018

Decision date:

11 May 2018

Jurisdiction:

Equity

Before:

Leeming JA

Decision:

1. Order the first defendant within 7 days to provide particulars in answer to questions 29 and 30 in the plaintiff’s solicitor’s letter to Minter Ellison dated 6 March 2018.

 

2. Direct the first defendant to file and serve amended points of defence within 7 days of today.

 

3. Otherwise dismiss the interlocutory process filed 12 April 2018.

 4. Reserve the costs of the interlocutory process filed 12 April 2018.

Catchwords:

CORPORATIONS LAW – access to company’s books by member – Corporations Act s 247A – whether available as interlocutory relief – whether supported entitlement to answers to questions – whether common law right was consistent with restrictive provision in company’s Constitution – whether analogous to beneficiary’s right to trust documents

  PRACTICE – pleadings – particulars – dispute about entitlement to particulars – parties already exchanged substantial affidavit evidence – limited particulars ordered

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56
Corporations Act 2001 (Cth), ss 140, 247A
Uniform Civil Procedure Rules 2005 (NSW), rr 14.7, 14.8

Cases Cited:

Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 Qd R 606
Biala Pty Ltd v Mallina Holdings [1990] WAR 371
Edman v Ross (1922) 22 SR(NSW) 357
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46
Frazer v Macquarie Airports Management Ltd [2009] NSWSC 1057; 74 ACSR 312
Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265; [2009] NSWCA 372
Hearne v Street (2008) 235 CLR 135; [2008] HCA 36
London City Equities Ltd v Penrice Soda Holdings Ltd [2011] FCA 674
Majestic Resources NL v Caveat Pty Ltd [2004] WASCA 201
Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84
Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] UKPC 26

Category:

Procedural and other rulings

Parties:

Sayour Holdings Pty Ltd atf Sayour 2 Family Trust (Plaintiff/Applicant)
Combined Projects (Arncliffe) Pty Ltd (First Defendant/Respondent)
Deiri Nominees Pty Ltd (Second Defendant)
Fouad Deiri (Third Defendant)

Representation:

Counsel:
DA Smallbone, J Wheeldon (Plaintiff/Applicant)
V Bedrossian (First Defendant/Respondent)

  Solicitors:
Adams & Partners, Lawyers (Plaintiff/Applicant)
Kreisson Legal Pty Ltd (First Defendant/Respondent)

File Number(s):

2017/180712

Judgment

1. HIS HONOUR: There is a tendency for litigation to feed on itself. Basten JA commenced his judgment in Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 with that adage. The application I heard yesterday for just over three hours may be a more extreme example. It is a tendency which courts should at all times be vigilant to guard against.

2. The portion of the interlocutory process which was set down yesterday concerned, as between the plaintiff and first defendant, an application by the plaintiff to strike out 17 sub-paragraphs, or portions of sub-paragraphs, in points of defence constituting 345 paragraphs responding to the plaintiff’s points of claim, and to seek some 20 particulars of 9 paragraphs of the points of defence and written answers to 8 questions.

3. The first component of the application was either entirely, or almost entirely, resolved by the plaintiff’s acceptance of a proposal made a week earlier (prior to the motion being set down).

4. “Unduly technical and costly disputes about non-essential issues are clearly to be avoided”, as French CJ, Kiefel, Bell, Gageler and Keane JJ said in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [57]. The second component, which occupied the largest portion of the written submissions, and to which much of the evidence was directed, falls within that description. The three-fold purposes of the “just, quick and cheap” resolution of the real issues in the proceedings, mandated by s 56 of the Civil Procedure Act 2005 (NSW), may often be in tension (see for example Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265; [2009] NSWCA 372 at [28] and [93]), but not in the present case. This component cannot advance the resolution of any real issue in the litigation, and can only make that resolution more protracted and more expensive than it should be.

5. The third component of the plaintiff’s application is without foundation.

Background

6. The first defendant (“Arncliffe”) owns land in the Sydney suburb of that name which is the subject of a large development of 234 apartments and 6 retail shops. The lots are in the process of being marketed and sold. The plaintiff owns 10 of Arncliffe’s 20 issued shares; the second defendant owns the remainder. The third defendant is the sole director and shareholder of the second defendant, as well as owning the building company which has been contracted to undertake the development. He is also the sole director of Arncliffe.

7. The plaintiff commenced proceedings in 2017 seeking to wind up Arncliffe. That application was abandoned (I was told that the plaintiff came to appreciate that the appointment of a liquidator would trigger default provisions in a loan facility).

8. The current originating process is a Further Amended Originating Process filed 27 October 2017, which seeks orders (a) convening a general meeting to consider resolutions that Ms Yesmine Sayour be appointed a director of Arncliffe, that members be permitted to inspect Arncliffe’s accounting records “pursuant to cl 42.5 of the Constitution” and that there be an annual general meeting, (b) permitting the inspection of various classes of Arncliffe’s documents and (c) injunctions restraining the payment of dividends other than in equal shares to the two members and preventing payments to the building contractor without first giving notice.

9. The pleading contains serious allegations, including of fabricating minutes of shareholders’ meetings which, so it is said, did not occur. The underlying allegations are not without interest, but I shall refrain from dwelling upon them. I was able to do so because notwithstanding that the process was primarily directed to the “pleadings”, it is plain that the plaintiff’s case is highly advanced. A large court book was provided to my chambers two days prior to the hearing. It turned out that it had not been provided to the other side. It should be elementary for any solicitor involved in litigation in any court that material in contested litigation should not be provided to the court without the knowledge and consent of the other side. I should not be taken to be suggesting that counsel briefed by the plaintiff were aware of what occurred. The court book included two large affidavits (the third and fourth) of Ms Yesmine Sayour, which with their exhibits occupied 290 pages and 126 pages respectively, and a 94 page affidavit of Mr Moustafa Sayour. The affidavits also make it plain that the plaintiff has consulted, and some time ago, with a “forensic accountant”, so as to examine the accounting treatment of revenue and expenses of the development.

10. Ultimately, a significant portion of that court book was tendered. For its part, the first defendant – hampered by not being advised in advance as to the materials on which the plaintiff would seek to rely – in turn tendered many pages of documents. Its court book included a lengthy (slightly in excess of 200 pages) affidavit of the third defendant, which was sworn more than 10 months ago.

11. In large measure, the reliance of both parties was directed to the ultimate issues in this litigation: was there a sound basis for thinking, as the plaintiff maintained, that aspects of the first defendant’s accounting should be questioned? Alternatively, as Arncliffe maintained, had it already provided far more by way of documents and explanation to the plaintiff than was required?

12. The fact that the parties’ submissions were directed to the ultimate issues, and the volume of material they were able to deploy to that end, reinforced the underlying aridity of the debate about pleadings and particulars. The orthodox approach of pleadings and if necessary particulars crystalising the issues and identifying the parties’ cases has been reversed in the way this litigation has developed. That is not unusual, particularly where litigation commences with an urgent application. But it very much calls into question the utility of having lengthy arguments about “pleadings” at a relatively late stage prior to the matter being heard on a final basis.

13. After a contested hearing in the middle of 2017, the parties agreed, in around October 2017, to exchange points of claim and points of defence. The points of claim are very long – 345 paragraphs. It is to be recalled that the basic rules of Judicature pleading are that “the party’s pleading must contain only a summary of the material facts on which the party relies”: UCPR r 14.7, and “a pleading must be as brief as the nature of the case allows”: r 14.8. It may be doubted that the document complies with those rules.

14. The points of claim and points of defence were not pleadings. However, an order was made on 26 March to the effect that they stand as pleadings. It may be that one purpose, and perhaps even the sole purpose, of that order was to enhance the plaintiff’s prospects on this application to strike out certain subparagraphs of the document, and to obtain particulars. That purpose is suggested by some of the statements in the correspondence preceding this hearing, and paragraph 10 of the plaintiff’s written submissions. To the extent that that was the purpose, it would be a spectacular example of litigation feeding upon itself – an application itself ancillary to an interlocutory application to strike out and to obtain particulars of small portions of the document the subject of the application, and far removed from any real issue in the proceedings.

15. Both parties’ submissions proceeded in reverse order on the paragraphs of the interlocutory process that continued to be pressed. I shall follow the same course.

Paragraph 7 – Application for information

16. Paragraph 7 of the interlocutory process seeks written answers to eight questions contained in a solicitor’s letter dated 16 March 2018. The questions relate to ongoing sales of units in the development. They are how many lots have settled, what settlement funds have been received, if settlement funds have been received by anyone other than the company, the costs payable in relation to legal costs of settlement, agents’ commissions, any extraordinary or unusual payments or disbursements, how settlement funds have been utilised and whether it was the first defendant’s intention to declare a dividend.

17. This application was not said to be for a grant of leave to administer interrogatories, or to request production of a particular document in the pleading. The plaintiff maintained that it was “made under s 247A of the Corporations Act, the common law, and the Court’s inherent jurisdiction”. Mr Smallbone seemed primarily to rely upon s 247A, which provides:

“Order for inspection of books of company or registered managed investment scheme

(1) On application by a member of a company or registered managed investment scheme, the Court may make an order:

(a) authorising the applicant to inspect books of the company or scheme; or

(b) authorising another person (whether a member or not) to inspect books of the company or scheme on the applicant's behalf.

The Court may only make the order if it is satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose.”

18. Mr Smallbone submitted that it was not in issue, for present purposes, that his client was making the application in good faith and for a proper purpose, and that this was precisely the sort of information of which a 50% shareholder in a building project would expect to be told. Mr Bedrossian, appearing for Arncliffe, seemed to maintain that he could put good faith and proper purpose in issue without confronting the plaintiff’s witnesses with this. I do not accept that that is so, but in any event I did not understand his oral submissions to develop this in any way.

19. Mr Smallbone relied on Biala Pty Ltd v Mallina Holdings [1990] WAR 371, especially passages to the effect that the predecessor to s 247A was engaged when a reasonable shareholder would “wish to know what occurred in relation to this transaction” or would conclude “that there is a case for investigation”.

20. Mr Smallbone acknowledged that s 247A contemplated an order for the production of the books of the company, while his application was for certain questions to be answered. He submitted that that the Court could, in the exercise of discretion, make “orders suitably conforming the Plaintiff’s request to the terms of the statute”. He invoked what had been said in Majestic Resources NL v Caveat Pty Ltd [2004] WASCA 201 at [21], which is directed to restricting the particular classes of documents made available for inspection to a member. At one stage Mr Smallbone said, in answer to my question, that he would apply to amend the relief he sought so as to include the production of documents (T 27.25). No amendment was formulated. No amendment had any been anticipated in advance of the hearing. Mr Bedrossian, whose submissions on this aspect of the application were very concise, emphasised that he still did not know precisely what relief was sought (T 41.26). No further articulation was provided in Mr Smallbone’s reply, nor was any application to amend made.

21. Section 247A confers a discretion upon the Court to make an order authorising a member to inspect company books, qualified by the Court being satisfied that the member is acting in good faith and for a proper purpose.

22. There are two reasons for not acceding to the plaintiff’s submissions. Section 247A authorises the grant of final relief to a shareholder, in the form of providing access to the company’s books. The application before me is interlocutory, not final, and it is not for the access to particular books, but rather to answer eight specified questions.

23. First, relief under s 247A is final. As White J said in Frazer v Macquarie Airports Management Ltd [2009] NSWSC 1057; 74 ACSR 312 at [54], “once inspection was given, the application would have been completely dealt with”; see also London City Equities Ltd v Penrice Soda Holdings Ltd [2011] FCA 674 at [11]. The point is acute here, because the large majority of final relief sought in the further amended application is the production of numerous classes of documents. Indeed some of those documents sought by way of final relief reflect what Mr Smallbone placed heavy reliance upon, the front pages of contracts for sale of the individual lots in the development. I fail to see how in the guise of an interlocutory application, which has been run on an interlocutory basis, the applicant can achieve the relief it seeks on a final basis. It is to be borne in mind that s 247A is discretionary, and as presently advised the discretion is not circumscribed and is apt to be informed by the Court’s assessment of the entirety of the evidence and submissions at a final hearing. It is also to be borne in mind that s 247A confers a qualified right upon a member to obtain documents, which thereafter may be used for any purpose. This is quite different from documents obtained upon compulsion in litigation which may only be used (until tendered) for the purposes of the litigation.

24. Against this, Mr Smallbone sought to characterise the relief he sought as interlocutory:

“HIS HONOUR: Is there anything you want to say about the nature of relief either directly under 247A or conforming to 247A being final rather than something you can get today?

SMALLBONE: Yes, your Honour. Relief under 247A can be considered as final. Of course for the purpose of these proceedings there are other aspects of the case to which the information obtained in relation to the settlements and the distribution of funds could be relevant as information that we could wish to use at trial and therefore could be required to be produced in an interlocutory basis. If your Honour looks at prayers 6 to 7(b) there are a number of prayers sought to prevent in effect the unequal distribution of profits or surplus and the payment to related parties of the second and third defendants, in that case without 14 days prior notice.

HIS HONOUR: I don’t disagree with you, but I’m not dealing with, say, a notice to produce that’s issued out of a pending interlocutory Mareva application.

SMALLBONE: But your Honour could order the production of that material because under 247A satisfied that it would assist in progressing the matter to trial and that would in substance be of an interlocutory character.”

25. With respect, I regard those responses as conflating the distinction between production pursuant to the Court’s processes (of discovery, subpoena and notice to produce) and subject to the ordinary constraints (proper forensic purpose, and the so-called “implied undertaking” (more accurately the enforceable obligation considered in Hearne v Street (2008) 235 CLR 135; [2008] HCA 36)) and the rights conferred upon members by statute.

26. Secondly, and equally fatal to the application, s 247A is limited to the production of books. It does not extend to the provision of information – the bringing into existence of a document recording the answers to questions asked by the plaintiff’s solicitors, or compelling some officer or agent of the company to respond. It is one thing for a member of a company (which may have, as in this case, two members, or in some other case may have hundreds of thousands of members) to obtain access to a document. It is an entirely different thing for some officer or agent of the company to be required to answer a question. The same distinction is recognised, in a litigation context, between discovery and interrogatories.

27. Mr Smallbone also relied on what were said to be a member’s rights at common law. He pointed to what Street J had said in Edman v Ross (1922) 22 SR(NSW) 357 at 358 and, properly, drew attention to the fact that in Barrack Mines Ltd v Grants Patch Mining Ltd [1988] 1 Qd R 606 at 616 Andrews CJ said that s 265B (a predecessor provision to s 247A) had “liberalised” the position compared to the common law right of access. I respectfully agree. The fact that the plaintiff is not entitled to the orders sought in paragraph 7 of its interlocutory process under the more liberal regime in s 247A suggests that to the extent that any separate right under common law survives (a point as to which I express no view), relief will not be available there.

28. A further reason compels the conclusion that relief dehors the statute is not available. Both parties accepted that the Constitution of Arncliffe, and in particular cl 42.5, mentioned in the resolution which is the subject of final relief in this litigation, is restrictive of the rights of members to documents, in substance that, subject to law, no documents were to be provided without a formal resolution. The statutory contract created by s 140 of the Corporations Act is thus inconsistent with any common law right on the part of a member to obtain documents absent a resolution. The former would seem to prevail over the latter.

29. Reliance was also placed in Mr Smallbone’s written submissions, although not orally, on the qualified rights of beneficiaries to obtain documents from trustees. It was maintained that the plaintiff was in a similar position as a beneficiary. The opposite is true. There is unquestionably a fiduciary obligation owed by trustee to beneficiary. A company owes no fiduciary obligations to its members. Further, the conventional principle underlying the “right” to access by the beneficiary of a fixed trust to documents was the beneficiary’s proprietary interest in the trust property. A shareholder has no proprietary interest in the property of the company, save insofar as the shareholder is entitled to participate in a surplus in a winding up. (I am conscious of a controversial line of authority to the contrary, associated with Schmidt v Rosewood Trust Ltd [2003] 2 AC 709; [2003] UKPC 26. No reliance was placed on this. In light of the absence of oral submissions on beneficiaries’ rights of access to documents, and the tenuousness of the analogy, I take this point no further.)

25. In support of his submissions based on the inherent jurisdiction, Mr Smallbone put that the Court had a jurisdiction to supervise the conduct of fiduciaries. Let that be assumed, despite the fact that the full width of that proposition is probably controversial. This takes the matter no further. The interlocutory process is directed to the company, not its director.

26. This aspect of the application is not made out.

Paragraph 4 – Request for particulars

32. I turn to paragraph 4 of the interlocutory process, which seeks particulars. It is based on a solicitor’s letter dated 6 March 2018. It was accepted that the application should not be treated as a dispute about discovery or a notice to produce or a call for a particular document referred to in a pleading, and that the main principle guiding whether the request is proper was the need to understand the case being propounded by the other side (T 37.47-37.8).

33. Particulars of a party’s case are especially important where pleadings have been exchanged shortly after commencement, and if there are no affidavits or witness statements. This litigation is completely different. There has already been the substantial exchange of affidavits. Mr Smallbone said that, save for some minor “gap-filling”, his client’s evidence in chief had been served. He said that he hoped that the entirety of that evidence could be served in a matter of weeks (T 45.10). This informs the approach to be adopted with the request for particulars.

Paragraph 4(a)

34. The first five requests concern paragraphs 3(b) and 5 of the points of defence. Those paragraphs admit that the plaintiff and the second defendant are proprietary companies each of which own 10 of the 20 fully paid ordinary shares in the first defendant but then go on to assert, relevantly, that the plaintiff “has not provided any of the finance or funding required by Arncliffe to undertake its business nor assumed the risk of arranging or guaranteeing those debt facilities” and that the second and third defendants “have arranged all funding required by Arncliffe to undertake its business, including by guaranteeing Arncliffe’s debt owed to the ANZ bank”. Those responses have given rise to requests as to the amounts and timing of finance and funding required by Arncliffe; when, how and by whom each such requirement was communicated to the plaintiff; to whom on behalf of the plaintiff each such requirement was communicated and how the financing and funding in fact was acquired by Arncliffe on each occasion.

35. The plaintiff submits that:

“The Plaintiff infers that the First Defendant may seek to argue that the alleged failure of the Plaintiff to provide any of the finance and funding required by Arncliffe qualifies or affects the entitlements to which the Plaintiff would otherwise be entitled as the holder of 50% of the issued capital in Arncliffe. It is difficult to understand why this would be so, and the plea may be vexatious, but as it stands it would appear to be relied on to impeach in some way the plaintiff’s claim as a shareholder for information and for relief in respect of a meeting.”

36. I do not accept this as a valid approach to the entitlement to particulars. The approach to particulars is not to infer or hypothesise some (admittedly highly problematic) case which might be concealed in the pleading, and then to seek particulars as to the inference or hypothesis. The basic question is whether further particulars are needed to fairly apprise the plaintiff of the nature of this aspect of the case.

37. The allegation in the points of defence is that the plaintiff has done nothing, and the second and third defendants have done everything, in the nature of financing and funding of the business operated by the first defendant. In order to understand that case, it is not necessary for the plaintiff to have precise details of all aspects of the finance and funding. Still less do the allegations in the points of defence carry with them any implicit allegation that a request or a “requirement” was made of the plaintiff for funding or finance. I conclude that none of those requests is proper.

Paragraph 4(b)

38. The second suite of requests relate to a minute of a shareholders meeting held in Tripoli, Lebanon on 8 January 2015. Paragraphs 21, 124 and 130 of the points of defence make positive allegations about both the form of the minute and the substance of the meeting.

39. The first request sought identification of the form of the notice (if any) given in respect of the meeting, the identities of the recipients and the manner and date on which it was given. But no allegation is made in relation to notice, if any notice was given, of that meeting. The only allegation in the defence which mentions any notice is paragraph 130, and that alleges that there was a general meeting of Arncliffe’s shareholders which was “a meeting held without formal notice and by consent of Jamil Sayour (for the plaintiff) and the third defendant (for the second defendant)”. It cannot be that an allegation which positively asserts that a meeting was held without formal notice requires particularisation by reference to the form of notice, the identities of the recipients of notice, the manner in which notice was given and the date on which notice was given. This is not a proper request for particulars.

40. The next four requests which are found in the interlocutory process are 9, 10, 11 and 12. The latter two were not pressed at the hearing (T 35.40, 36.1). The first two ask “what are the promises that it is alleged the 8 January 2015 minute recorded” and whether it is alleged those promises had contractual effect. The points of defence make no allegation about any “promises”. The points of claim refer to the “Purported 8 January 2015 Minute” and assert that it “purported to record assertions, both express and implied”. In response, the points of defence assert that the minute recorded an agreement between Arncliffe’s shareholders, but go on to say that the plaintiff has communicated that it denies the 8 January 2015 agreement, and that the second defendant has communicated that it has agreed not to seek to enforce the 8 January 2015 agreement. The first defendant’s formal stance in this litigation is that it “does not propose to give effect to the 8 January 2015 agreement”.

41. The plaintiff submits that it does not understand “the supposed ongoing practical implications of the Minute, which, despite concessions that it does not record a legally enforceable agreement, continues to be relied on in some way in the Defences”. Nor do I. But that is not the question. I think it is very much to be doubted that the plaintiff is entitled to these particulars at this stage in the litigation, when it has been made clear that no effect is to be given to the “agreement”, in order to understand Arncliffe’s case. But it is not necessary to go so far. Mr Bedrossian said:

“As long as that's not put against me [scil, that the initial allegation was false], I don't need to rely upon 130(b), and I’m perfectly content to withdraw any reliance upon it. 130(b) of the points of defence was intended, I say, plainly on the document just to be responsive to the points of claim. It’s no positive assertion on our part that resolves this case.”

42. I think s 56 of the Civil Procedure Act confirms that an approach which embraces the consensual resolution of any part of this ancillary dispute should be adopted. Paragraph 130(b) is acknowledged (correctly in my view) to be unnecessary and will be deleted when amended points of defence are filed.

Paragraph 4(c)

43. The next request concerns paragraph 132 of the points of defence, which is an admission of the allegation that no funds in the order of $14,000,000 had been advanced by the second and third defendants in January 2015, and a further positive allegation that as at 30 June 2015 and 2016 respectively, “the F Deiri family trust had advanced to Arncliffe loans totalling” somewhat more than $7 million and $14 million respectively. The plaintiff requests a copy of any loan agreements, in the absence of which particulars of the terms, dates, purpose, interest rate, security, repayments and principal amounts outstanding. The plaintiff’s submission is:

“The Plaintiff infers that the First Defendant may intend to argue that the Second and Third Defendants made substantial financial contributions to the First Defendant, far in excess of those made by the Plaintiff, and that these contributions are relevant in some way to the disposition of the Plaintiff’s claim and the Plaintiff’s entitlement to a pro rata share of any dividends or surplus on winding up.”

44. That is not a proper request for particulars. There is nothing confusing or ambiguous about the allegation, once it is accepted that all parties seem to be proceeding on the basis that a trust is a legal entity which is capable of advancing funds. Once again, a basis for a proper request is not established by an inference as to what is said might be intended by a party.

Paragraph 4(d)

45. Paragraph 225 of the points of claim alleges that:

“Jamil Sayour caused the payment of the said $1.75 million to be made on account of Sayour Holdings Pty Ltd as trustee for the Sayour 2 family trust.”

46. In response, Arncliffe’s points of defence:

“(a) admit that Jamil Sayour lent Arncliffe the sum of $1.75 million on 21 November 2014;

(b) says that on 24 November 2014 it repaid $1,560,000 of that amount;

(c) otherwise does not admit paragraph 225 of the [POC].”

47. There are three requests made in respect of this paragraph: the basis for alleging that Jamil Sayour was the person who lent $1,750,000 to Arncliffe, particulars of the loan agreement, and particulars of the repayment.

48. What is plain from the pleading is that there are two points in issue. Whereas the points of claim refer to the causing of a payment of $1,750,000, the points of defence positively assert that the payment reflected a loan and that the lender was Jamil Sayour. Previous allegations made in the points of claim are that Jamil Sayour withdrew $1,750,000 which was money held as an asset of the Sayour Family Trust without authority.

49. Mr Bedrossian’s response seemed to me to fail to grapple with the significance of the facts that the transfer of funds was alleged by Arncliffe to be a loan, and that it was a loan from Jamil Sayour. There were exchanges in which it was first said that “we admit that Jamil gave us the money” (T 47.25). That was withdrawn, but a different submission was then made: “I withdraw the word ‘gave’ and I apologise for that lack of specificity. We admit that Jamil Sayour caused the money to be provided” (T 47.40). It was then said “that Jamil Sayour lent/caused payment of the funds to us and that we returned 1.56 million of that amount on the specified date. And that is the way the pleading should be read” (T 49.2). Despite these various submissions, it is clear that it was asserted that funds were lent by Mr Jamil Sayour to Arncliffe. Hence I said:

“Your pleaded case introducing a new issue is that there is a loan. The lender was Jamil. You were the borrower. And you deny any obligation to provide particulars of that loan. That’s as I understand the position.”

50. The response was to rely upon bank statements previously provided which evidenced the transfer of funds, and a solicitor’s letter saying that there was no written agreement. All that may be accepted, but I do not accept that that is an answer to the request. There is a pleaded allegation of an (unwritten) loan agreement. The bank statements identified the transfer of funds. They do not identify the legal nature of the transfer.

51. I conclude that the plaintiff is entitled to the particulars requested by questions 29 and 30 of the letter dated 6 March 2018. The plaintiff is not entitled to the particulars requested in question 31 of that letter, which relate to factual matters concerning the payment of $1,560,000 three days later.

Paragraph 4(e)

52. The next request flows from the admission in the points of defence of the allegation that the financial statements and other information supplied by the first defendant to the plaintiff do not identify to whom commissions were paid or the basis of the first defendant’s liability to pay those commissions. The points of defence go on to say that the commissions relate to pre-sales of apartments and that they were paid to agents engaged by Arncliffe on arms’ length terms to sell apartments in the project. That has led to a request for particulars of the commissions, including a copy of any agreement giving rise to the obligation to pay commissions and the identities of the agents to whom commissions were paid and the dates of such payments.

53. There is nothing unclear about this. Once again, the plaintiff’s submission conflates two things. It is said that “We cannot understand this line of defence, or test it, without better particulars of the commission arrangements entered into by the First Defendant and pleaded in its defence”. There is no difficulty with understanding what is said. Whether a matter is capable of being tested is not the test for the provision of particulars.

Paragraph 4(f)

54. The requests found in paragraph 4(f) of the interlocutory process were not pressed (T 40.22).

Paragraph 1 – Strike out

55. Paragraph 1 of the interlocutory process sought to strike out 17 subparagraphs or portions of subparagraphs of the points of defence. Paragraph 97 of Mr Smallbone’s written submissions dated 9 May advised that in relation to 16 of those points he was content to adopt the course proposed in Arncliffe’s solicitor’s letter dated 3 May 2018, which involved Arncliffe not placing any reliance on the words, or some of the words, in paragraphs 18, 21(c), 48(c), 150(a), 323, 324 and 336(b). The written submissions pressed a complaint as to paragraph 262(b), as to which Arncliffe’s solicitor’s letter had said that “we do not understand the difficulty with this paragraph”. No oral submissions were made on this point.

56. It is probable that this aspect of the process should be treated as not pressed. If that be wrong, paragraph 262 of the points of claim asserted that there was no explanation in the documents provided as to why Arncliffe had borrowed funds from “The F Deiri Family Trust” or how those funds were applied by Arncliffe or why the extant loan facility was not used for those payments. The points of defence admitted in paragraph 262(a) that the financial statements provide no such explanation, alleged in paragraph 262(b) that paragraphs 32-44 of the third defendant’s affidavit sworn on 26 June 2017 in these proceedings contained an explanation of the funding of the affidavit including why and how funds advanced by entities associated with him had been applied by Arncliffe, alleges in paragraph 262(c) that no explanation had been requested prior to the service of the points of claim, and otherwise denies the paragraph.

57. There is no basis for striking out what is said in paragraph 262(b) as to the explanation which is said to have been provided in paragraphs 32-44 of the third defendant’s affidavit. To be clear, whether or not that amounts to any explanation, or a satisfactory explanation, is neither here nor there for present purposes; it is not liable to be struck out.

Orders

58. When this application was mentioned before the Corporations List Judge on Monday, the second and third defendants were excused on the basis that there was an agreement as to the outcome of a similar dispute with the other parties, insofar as concerned the particulars sought in paragraph 5(a) and (c) and 6(a) and (c) of the interlocutory process. Those paragraphs are identical requests to those addressed above under the headings 4(a) and 4(c). I have concluded that the plaintiff is not entitled to those particulars.

59. In light of the abandonment of a small number of subparagraphs, it is probably less confusing to accede to the plaintiff’s proposal that amended points of defence be filed reflecting the concessions made prior to and during the hearing. Arncliffe must provide particulars of paragraph 225 of its points of defence.

60. The plaintiff has been substantially unsuccessful. Much of its limited success was conceded a week prior to the hearing. I remain troubled by the attitude of both sides, in part as to the extent to which swathes of irrelevant material were sought to be tendered on the application – to which no reference was later made – and in part by the willingness to contest issues that are so far removed from the real issues in the proceedings. The unprompted abandonment of some of the allegations in the points of defence, and some of the requests for particulars, tends to confirm that two thirds of a day in court was not called for.

61. I shall reserve costs, so that when the litigation is heard, a better assessment of whether this interlocutory process was entirely devoid of utility may be made. My preliminary view is that there should be no order as to costs, with the intention that the parties bear their own costs of the interlocutory process.

62. The proceeding is already listed for directions in the Corporations List on Monday week. On that occasion, the plaintiff should be able to identify how much longer, if at all, it requires before its evidence is complete, and the defendants should be able to advise how long they require for any further evidence, with a view to the final hearing of his proceeding occurring as soon as may be.

63. I make these orders:

1. Order the first defendant within 7 days to provide particulars in answer to questions 29 and 30 in the plaintiff’s solicitor’s letter to Minter Ellison dated 6 March 2018.

2. Direct the first defendant to file and serve amended points of defence within 7 days of today.

3. Otherwise dismiss the interlocutory process filed 12 April 2018.

4. Reserve the costs of the interlocutory process filed 12 April 2018.

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Decision last updated: 11 May 2018