Interstar Pty Ltd v Halston Capital Pty Ltd - [2022] WASC 105

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   INTERSTAR PTY LTD -v- HALSTON CAPITAL PTY LTD [2022] WASC 105
CORAM:   ARCHER J
HEARD:   22 MARCH 2022
DELIVERED          :   22 MARCH 2022
PUBLISHED           :   28 MARCH 2022
FILE NO/S:   CIV 1830 of 2021
BETWEEN:   INTERSTAR PTY LTD
Plaintiff
AND
HALSTON CAPITAL PTY LTD
First Defendant
SCOTT MICHAEL JAMES MUNDELL
Second Defendant
PETER ANDREW FIORE
Third Defendant
FIORE GROUP PTY LTD
Fourth Defendant
CLAUDIO IVAN STRNADICA
Fifth Defendant

Catchwords:

Application to strike-out parts of statement of claim - 'Knowingly involved' - Unlawful means conspiracy - Turns on its own facts

Legislation:

Nil

Result:

Some paragraphs struck out and the balance of the application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	MD Cuerden SC
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	KA Dundo
Fifth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Hotchkin Hanly
First Defendant	:	Hammond Legal
Second Defendant	:	Hammond Legal
Third Defendant	:	Chris Biris Barrister & Solicitor
Fourth Defendant	:	KD Legal (Perth)
Fifth Defendant	:	Not applicable

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

3meg.com Pty Ltd v TM & SM Pike Pty Ltd [2012] WASCA 128; (2012) 43 WAR 350
Australian Rail, Tram and Bus Industry Union v Railtrain Pty Ltd [2019] FCA 1740
Australian Wool Innovation Ltd v Newkirk [2005] FCA 290
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Central Exploration Pty Ltd v Zuks [2020] WASC 46
Central Exploration Pty Ltd v Zuks [No 2] [2020] WASC 316
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
F & G Nominees Pty Ltd v Verdell Pty Ltd [2003] WASCA 290
Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456
Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 483
Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6
Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 1501, 25 August 1986
Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255
Re HIH Insurance Ltd (in liq) [2016] NSWSC 482
Trackem Pty Ltd v Revenue Partners [2021] WASC 245
Vantage Holdings [2021] WASCA 47
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
Wendt v Yogesh Jogia Diamonds Pty Ltd (1993) 11 WAR 455
Whitby v ZG Operations Australia Pty Ltd (No 2) [2019] FCA 201
Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661

ARCHER J:

(This judgment was delivered extemporaneously on 22 March 2022 and has been edited to correct matters of grammar, add headings and include complete references.)

These reasons deal with an application by the fourth defendant (Fiore Group) to strike out parts of the amended statement of claim filed in December 2021.[1] Although delivered orally, I intend to publish them, as there are a number of other defendants involved in these proceedings.
[1] Filed 22 December 2021.

Overview

At an ex parte hearing on 27 August 2021, I made freezing orders in relation to the third, fourth and fifth defendants (Freezing Orders). I had previously made freezing orders in relation to the first and second defendants.[2]
[2] On each occasion, I gave oral reasons extemporaneously, but did not publish the reasons.
At an inter partes hearing on 31 August 2021, Fiore Group unsuccessfully opposed the continuation of the Freezing Orders.[3]
[3] I gave extemporaneous oral reasons, but did not publish the reasons.
Fiore Group submitted that the affidavit evidence provided by the plaintiff did not disclose any involvement of Fiore Group in the relevant events prior to July 2021.[4] Fiore Group submitted that the third defendant (the Father) was not acting on its behalf, that the only director of Fiore Group was and is its sole registered director, Mr Jonathan Fiore (the Son), and that the Father is not a director of, and has no authority from, Fiore Group.
[4] ts 76.
I found that there was a good arguable case that the Father was acting on behalf of Fiore Group when (on the plaintiff's case) the Father sent an email on 15 March 2021 directing that certain funds paid by the plaintiff be sent to Dubai.[5]
[5] ts 82 - 83.
Subsequently, Fiore Group made another application to discharge the Freezing Orders, on the basis of the material filed after the August hearing. I gave leave to make that application and it was listed to be heard on 22 March 2022.
Later still, the Fiore Group brought the application seeking to strike out parts of the amended statement of claim. That application was also listed to be heard on 22 March 2022.
The plaintiff submits that Fiore Group requires leave to bring an application to strike out those parts of the pleading that were not amended, as it is out of time. Fiore Group disputes that it requires leave. I am inclined to the view that Fiore Group does need leave. However, it is unnecessary to resolve this as, if it does need leave, I would give leave, for two reasons. First, the delay in bringing the application does not appear to have worked any injustice. Second, as I will explain, I consider the pleading to be deficient.
The strike out application asserts that the challenged pleadings
(a)disclose no reasonable cause of action; and/or
(b)may prejudice, embarrass or delay the fair trial of the action; and/or
(c)are otherwise an abuse of process of the Court.
However, with the exception of the challenge to paragraph 29 of the amended statement of claim, Fiore Group's written submissions allege that the challenged pleading does not disclose a reasonable cause of action.
Fiore Group further submits that, if the plaintiff is given leave to re-plead, it should be conditional on the plaintiff first filing a minute of any new pleading.
After receiving Fiore Group's written submissions, the plaintiff prepared a further amended pleading (ASOC). Fiore Group maintained that the ASOC did not address any of its concerns.

Legal framework

Pleadings generally[6]

[6] This section reproduces or draws upon aspects of my judgment in Trackem Pty Ltd v Revenue Partners [2021] WASC 245 [25] - [27].

A pleading must define the issues to be tried and disclose an arguable claim. This will provide the basis for determining what needs to be discovered and what evidence will be admissible. A pleading must also inform the other party of the case that has to be met. When determining the adequacy of a pleading, these purposes should be kept in mind.[7]
[7] See Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [4].
In Barclay Mowlem Construction Ltd v Dampier Port Authority,[8] Martin CJ observed that contemporary case management techniques and processes leave very little opportunity for ambush at trial. At the time Barclay Mowlem was decided, the evidence of witnesses was generally contained in a witness statement filed prior to trial. Now, the evidence is usually adduced orally. However, an outline of the evidence‑in‑chief of lay witnesses must be disclosed pre‑trial, reducing the risk of ambush to the same degree as a witness statement. In addition, in many cases in the CMC list, the parties will be required to identify, pre‑trial, the issues that will need to be determined by the trial judge.
[8] Barclay Mowlem [5] ‑ [6].
This does not mean that the need for proper pleading can be ignored. The pleading must still fulfil its basic functions.[9] A pleading will not, for example, inform the opposing party of the case it must meet unless it includes every material fact which, if not pleaded, might take an opposing party by surprise.[10]

Allegations of fraud

[9] Barclay Mowlem [7].

[10] F & G Nominees Pty Ltd v Verdell Pty Ltd [2003] WASCA 290 [135] - [136]; 3meg.com Pty Ltd v TM & SM Pike Pty Ltd [2012] WASCA 128; (2012) 43 WAR 350 [73].

Allegations of fraud or which effectively are of fraud must be clearly pleaded and particularised.[11]

Applications to strike out

[11] Forrest v AustralianSecurities and Investments Commission [2012] HCA 39; (2012) 247 CLR 483 [26] (French CJ, Gummow, Hayne and Kiefel JJ); Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 [36], endorsed in English v Vantage Holdings Group Pty Ltd [2021] WASCA 47[116] and footnote 94 (Murphy and Vaughan JJA).

In Vantage Holdings Group Pty Ltd v Donnelly [No 4], Smith J set out the principles relevant to a strike out application as follows (citations omitted):[12]
[12] Vantage Holdings Group Pty Ltd v Donnelly [No 4][2019] WASC 398 [60]. While this decision was reversed on appeal, the Court of Appeal nonetheless endorsed Smith J's synthesis of the relevant principles: see Vantage Holdings [2021] WASCA 47 [55] - [56].
(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.
In evaluating an allegation that a pleading fails to disclose a reasonable cause of action, all of the facts alleged in the pleading must be accepted as true.[13]

The factual background

[13] Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 1501, 25 August 1986, 6, cited in Neilson and Anor v City of Swan [2006] WASCA 94 [18].

The parties helpfully compiled a chronology identifying the relevant factual background, much of which is not in dispute. The matters in dispute were identified by being in italics.
The following parts of the chronology are not in dispute:

14 March 2019	Fiore Group is incorporated. [The Son] is its sole director and shareholder, and its principal place of business is 52 The Esplanade. [The Father] resides at 52 The Esplanade. [The Son] resided at 52 The Esplanade until January 2020.
8 December 2019	[The first defendant Halston Capital Pty Ltd (Halston)] pays the sum of $18,000 to Fiore Group. At the time of the deposit the depositor is not disclosed to the Fiore Group as being Halston[.] [The Father] advises [the Son] that the sum of $18,000 received by Fiore Group was for [the Father's] benefit to assist [the Father] to deal with Court proceedings that [the Father] was involved with at that time.
18 May 2020	Halston pays the sum of $50,000 to Fiore Group. At the time of the deposit the depositor is not disclosed to Fiore Group as being Halston. [The Father] advises [the Son] that the sum of $50,000 received by Fiore Group was for [the Father's] benefit to assist [the Father] to deal with Court proceedings that [the Father] was involved with at that time.
In or about early March 2021	A director of [the plaintiff], Mr Stanley Noel Bird, attends a meeting at Clancy's City Beach with [Mr] Strnadica and Mr Brad Kidd. [Mr] Strnadica advises Mr Bird that he and Mr Kidd have identified an investment opportunity with Halston, which was attempting to raise $4 million to take part in a short term private placement program with Rothschild New York, which would return 100% on investment in 30 days.
A few days later	Mr Bird attends a further meeting at Clancy's City Beach with [Mr] Strnadica. [Mr] Strnadica provides Mr Bird with a written agreement for [the plaintiff] to invest the sum of $850,000 with Halston to facilitate investment into a managed AUD $4,000,000 Rothschild & Co (Global Equities New York) Short Term Private Placement Program. The Rothschild & Co (Global Equities New York) Short Term Private Placement Program does not exist. Shortly after this meeting, Mr Bird informs his daughter, Kim Knight, that he has decided to make the investment and asks her to transfer the funds to the account specified in the document.
12 March 2021	[The Son] causes a payment to be made by Fiore Group to the payee being BSB: [**-]99 Account: [*******]50 in the sum of $70,070 on behalf of [The Father]. The payee was [Mr] Strnadica.
17 March 2021	[The plaintiff] transfers the sum of $850,000 to Halston. Halston transfers the sum of €525,000 to the Maiolo Account.
31 May 2021	Bearcat transfers the sum of $15,000 to Fiore Group. The transfer appears on Fiore Group's bank statement as a transfer from Bearcaresoupt Consulting. [The Father] informs [the Son] that he had arranged for the funds to be deposited and that they were for his (ie. [the Father's]) benefit. [Mr] Strnadica is the sole director and shareholder of Bearcat.
2 June 2021	Bearcat transfers the sum of $15,000 to Fiore Group. The transfer appears on Fiore Group's bank statement as a transfer from Bearcaresoupt Consulting. [The Father] informs [the Son] that he had arranged for the funds to be deposited and that they were for his (ie. [the Father's]) benefit.
21 June 2021	Andeo transfers the sum of $25,000 to Fiore Group. The transfer appears on Fiore Group's bank statement as a transfer from Andeoholdipt Consulting. [The Father] informs [the Son] that he had arranged for the funds to be deposited and that they were for his (ie. [the Father's]) benefit. [Mr] Strnadica is the sole director and shareholder of Andeo.
A few days after 4 July 2021	Mr Bird attends a meeting at Clancy's City Beach with [Mr] Strnadica, who introduces Mr Bird to [the Father]. In the presence of [the Father], [Mr] Strnadica informs Mr Bird that: (a) he had arranged for [the Father] to pay the funds owed to Mr Bird by Halston, and that [the Father] was going to take care of Mr Bird's problems with Halston; (b) he and [the Father] would meet with solicitors that day to arrange preparation of the paperwork for an assignment of [the plaintiff's] agreement with Halston.
15 July 2021	Mr Bird receives emails from Frances Lai of KD Legal, advising that they have been instructed to act for Fiore Group, and providing Mr Bird with a copy of a document entitled "Deed of Assignment" and containing terms providing for an assignment of [the plaintiff's] rights under its agreement with Halston to Fiore Group. The emails are copied to [the Father].
Between 21 July 2021 and 5 August 2021	Mr Bird exchanges emails with Ms Lai regarding the Deed of Assignment. From time to time Ms Lai copies [the Father] into her emails to Mr Bird. The "Deed of Assignment" was never finalised or executed by the parties.
1 September 2021	Fiore Group's Principal Place of Business is changed to 84B Woolwich Street, West Leederville[.]

The plaintiff's pleaded case against Fiore Group

The Fiore Direction

One of the factual matters that is in dispute is the plaintiff's allegation that on 15 March 2021 the Father sent an email to Mr Mundell (the second defendant) attaching details of the transfer by the plaintiff to Halston of $850,000, 'for Euro 525 000.00 to Orlando in Dubai' and that the email attached account details for the Maiolo Account.
The plaintiff refers to this as the 'Fiore Direction'.[14]
[14] ASOC [28].
The plaintiff alleges that the Father gave the Fiore Direction acting for and on behalf of the Fiore Group.[15] Paragraph 29 of the ASOC identifies those matters from which the plaintiff invites the Court to infer that that is so.
(a)A.Fiore was a director of Fiore Group as pleaded in paragraph 6C herein.
(a)B.Further or alternatively to particular (a)A herein, particulars (c) to (f) of paragraph 6A above and particulars (a) and (b) herein reveal a pattern of conduct in which Fiore dealt with Halston and Strnadica on behalf of Fiore Group rather than in his (Fiore's) personal capacity.
(a)At a meeting in or about July 2021 between Fiore, Strnadica, and Interstar's Mr Bird at Clancy's City Beach, Strnadica said to Mr Bird in the presence of Fiore words to the effect that Fiore would take an assignment of the Rothschild Agreement, and was meeting with solicitors that day to arrange preparation of the paperwork.
(b)On or about 15 July 2021, solicitors acting for Fiore Group prepared a Deed of Assignment pursuant to which Fiore Group was to take an assignment of the Rothschild Agreement and, on from 15 July 2021, communicated by email with Interstar and its solicitors regarding the Deed of Assignment, from time to time copying such emails to Fiore.
[15] ASOC [29].
I will refer to the assignment referred to in these paragraphs as the 'Proposed Assignment'.

The allegation that the Father was a director of Fiore Group

The plaintiff acknowledges that the Son was the sole registered director and shareholder of Fiore Group. However, it bases its plea in paragraph 6C that the Father was a director on the matters it pleads in paragraph 6A (which it describes as a 'shadow director' plea) and the matters it pleads in paragraph 6B (which it describes as a 'de facto director' plea). Those matters include the relationship between the two of father and son, the principal place of business being the Father's residence even after the Son moved out, the transactions on the Fiore Group's bank account, and the allegation that the Father spent money on a fit out of premises for Fiore Group in circumstances that were alleged to be more consistent with him being in control of Fiore Group.

Involvement pleas

The plaintiff pleads in paragraph 32 of the ASOC that Fiore Group was knowingly involved in the fraudulent misrepresentations of the fifth defendant, alternatively the first and second defendants.
In relation to the fifth defendant, three representations are alleged, namely the Strnadica Program Representation, Strnadica Investment Representation and the Own Money Representation.[16] Each of the three is said to have been made in early March, orally. The first two are said to have also been made at a meeting on 11 March 2021, orally and, by providing the Rothschild Agreement, in writing and by conduct.
[16] ASOC [15] - [17].
In relation to the first and second defendants, there are two representations alleged - the Halston Program Representation and the Halston Investment Representation. Each is said to have been made on 11 March 2021 in writing by the Rothschild Agreement which was signed by Mr Mundell for and on behalf of Halston, and given to the plaintiff at a meeting.
The plaintiff pleads in paragraph 34 of the ASOC, further or alternatively, that Fiore Group was involved in the misleading or deceptive conduct of the fifth defendant, alternatively the first and second defendants, in that the Fiore Group:
(a)aided and abetted the contraventions;
(b)further or alternatively, was knowingly concerned in the contraventions;
(c)further or alternatively, conspired with Mr Strnadica or Halston and Mr Mundell to effect the contraventions.[17]
[17] These are included in the definition of 'involved' in Competition and Consumer Act 2010 (Cth) sch 2, Australian Consumer Law (ACL) s 2. The definition provides:
A person is involved, in a contravention of a provision of this schedule or in conduct that constitutes such a contravention, if the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced, whether by threats or promises of otherwise, the contravention; or
(c)has been in any way, directly or indirectly, knowing concerned in, or party to, the contravention; or
(d)has conspired with others to effect the contravention.
The plaintiff alleges that the relevant knowledge and involvement is established because
(a)the Father's knowledge is taken to be the knowledge of the Fiore Group (the Father's knowledge is said to be inferred from the allegation that he gave the Fiore Direction and the matters alleged in paragraph 29 of the ASOC in relation to the Proposed Assignment);
(b)further or alternatively, it is to be inferred from the fact of the Fiore Direction and the fact that the Father gave the Fiore Direction for and on behalf of Fiore Group, the pattern of conduct in which Fiore dealt with Halston and Mr Strnadica on behalf of Fiore Group rather than in his (the Father's) personal capacity, and the matters alleged in paragraph 29 of the ASOC in relation to the Proposed Assignment.

Conspiracy plea

The plaintiff pleads in paragraph 36 of the ASOC that Fiore Group and others combined in an 'unlawful means' conspiracy.[18]
[18] ASOC [32], [34], [36].

Analysis

The allegation that the Father was a director of Fiore Group

Until the most recent amendment, the statement of claim[19] was deficient. In my view, the amendments cured the deficiency in relation to how it was contended that the Father had been acting on behalf of Fiore Group when he allegedly made the Fiore Direction. The plaintiff now expressly pleads that the Father was a director of Fiore Group.
[19] Amended Statement of Claim filed 22 December 2021. An 'unlawful means' conspiracy is one in which the participants combine together to perform acts which are themselves unlawful. This is discussed further later.
In its written submissions, filed before the most recent amendment, Fiore Group submitted that paragraph 29 of the statement of claim should be struck out as there was not a sufficient basis provided for the allegation.
After receiving the most recent amendment, Fiore Group maintained that the ASOC did not address any of its concerns.
The ASOC plainly addressed the concerns expressed in Fiore Group's written submissions in paragraphs 8 to 11, 14(a) and 15. What remained were paragraphs 12 and 14(b).
In paragraph 14(b), Fiore Group alleged, in effect, that it was necessary for the plaintiff to plead the matters it (Fiore Group) had set out in its submissions at paragraph 12. In paragraph 12, Fiore Group asserted that (footnotes omitted):
It was held in Grimaldi v Chameleon Mining NL (No 2) at [51] - [52] that four propositions must be considered in drawing any conclusion as to whether a person was a de facto director:
[and then four propositions were set out]
In paragraphs 51 and 52 of Grimaldi, the Full Court of the Federal Court set out how the matter had proceeded at first instance and the submissions that had been made on the appeal.[20] It then explained why it rejected those submissions.[21]
[20] Grimaldi v Chameleon Mining NL (No 2)[2012] FCAFC 6.
[21] Grimaldi [53] - [59].
Later in that decision, the Court does set out some observations in relation to de facto directors in the context of the Corporations Act 2001 (Cth). While useful, these observations are not directed to what must be pleaded, nor do they indicate, directly or indirectly, that the plaintiff's latest pleading on this aspect is still deficient. I also note that the Court pointed out in paragraph 60 that there is not one single decisive test of when a person will be found to be a de facto director.
After these matters were raised with Fiore Group during the hearing, it withdrew its submission in relation to Grimaldi.
In oral submissions, Fiore Group submitted that paragraph 6A of the ASOC was embarrassing as it pleaded 'at all material times'. Fiore Group noted that the particulars referred to events outside of the periods of time in which the events alleged in paragraphs 32 to 34 and 37 of the ASOC occurred. It submitted that paragraph 6A was therefore contradictory to the later pleading.
I do not accept this. Paragraph 6A is directed at alleging that this was how the actors behaved. Its timeframe need not be, and plainly is not alleged to be, limited to the times at which other things occurred.
Fiore Group also submitted that some of the particulars were contradicted by evidence (which I observe is untested) and so were 'frivolous' and should be struck out.
I do not accept that the particulars are frivolous. Whether or not the plaintiff will establish them is a different question.
Fiore Group submitted that, if paragraph 6A was struck out, then paragraph 6B and particulars (a)A and (a)B of paragraph 29 would also fall away. However, for the reasons I have given, I would not strike out paragraph 6A.
Fiore Group further submitted that particulars (a) and (b) of paragraph 29 did not support the pleading.
Fiore Group says this follows in relation to paragraph 29(a) because it alleges that the Father said he (the Father) would take an assignment, not that Fiore Group would. The particulars need to be read together and in light of the other pleadings. When this is done, particularly having regard to paragraph 29(b), I consider paragraph 29(a) does support the pleading.
Fiore Group says this follows in relation to paragraph 29(b) because it alleges something that occurred in July, not March. This does not prevent it being, if proved, a circumstance which could, in combination with other circumstances, permit an inference to be drawn about the capacity in which the Father did something in March.

Conclusion on paragraph 29 of the ASOC

Accordingly, I reject Fiore Group's submissions in relation to the pleading at paragraph 29 of the ASOC. The pleading now discloses with sufficient particularity the case Fiore Group must meet.

Knowingly involved in fraudulent representations - paragraph 32 of the ASOC

In relation to the allegations of fraudulent representation, Fiore Group asserts[22] that the plaintiff has not pleaded how it says that Fiore Group was knowingly involved.
[22] Fiore Group's Submissions [18].
I do not accept some of the matters set out in Fiore Group's submissions. For example, the plaintiff does not need to identify if it alleges 'actual or constructive knowledge of or was recklessly indifferent as to the falsity of the alleged representations'. Rather, as the ASOC recognises, the plaintiff must prove actual knowledge of the person alleged to have been knowingly involved.
Other aspects of the submissions have now fallen away - in particular, those that relate to what needed to be pleaded if the plaintiff did not allege that the Father was a director of Fiore Group.[23]
[23] See, for example, Fiore Group's Submissions [21].
However, having reviewed the pleadings for the purposes of evaluating Fiore Group's submissions, it appeared to me that the pleading was inadequate in some respects. As the plaintiff has indicated it will amend the pleading in light of my concerns, it is unnecessary to do more than briefly identify what I consider needs to be pleaded and which may be better pleaded by pleading each element separately.

The elements

Two elements are required to prove knowing involvement in fraudulent representations: knowledge and participation.

Knowledge

In relation to the knowledge element, the plaintiff is required to plead that Fiore Group had knowledge of each of the essential elements of the contravention[24] - in this case, that is the fraudulent representations said to have been committed by others.
[24] As to this, see Whitby v ZG Operations Australia Pty Ltd (No 2) [2019] FCA 201 [29], cited in Australian Rail, Tram and Bus Industry Union v Railtrain Pty Ltd [2019] FCA 1740 [14]. And see Wendt v Yogesh Jogia Diamonds Pty Ltd (1993) 11 WAR 455.
The plaintiff must plead that Fiore Group knew,[25] in relation to each representation, at the time the representation was made:[26]
(a)the representation had been made;
(b)the representation was false; and
(c)the representation was intentionally false.
[25] Actual knowledge is required, but can be inferred.
[26] As to this, see Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 [234], cited in Australian Rail, Tram and Bus Industry Union [13].
The plaintiff does not plead that Fiore Group knew any of these things. In the particulars, the plaintiff alleges that the Father's knowledge is taken to be the knowledge of Fiore Group. But the allegation against the Father is no better.[27]
[27] See ASOC [31].
The plaintiff must also plead a basis from which it could be concluded that Fiore Group knew these things.

Participation

Participation requires some positive act or something to help, encourage or induce.[28] That is, an act done with the intention of helping.
[28] Re HIH Insurance Ltd (in liq) [2016] NSWSC 482 [22].
The plaintiff is required to identify:
(a)the nature of the participation (for example, is it alleged Fiore Group was an aider or that Fiore Group counselled or procured the conduct, or some other basis, or multiple bases?); and
(b)the content of the participation (that is, what it is alleged Fiore Group actually did).

Conclusion on paragraph 32 of the ASOC

I would strike out paragraph 32 of the ASOC.

Knowingly involved in misleading or deceptive conduct - paragraph 34 of the ASOC

The position is similar in relation to the allegation that Fiore Group was 'involved in'[29] the misleading or deceptive conduct of others, given that it is alleged that the representations said to constitute the misleading or deceptive conduct were false.
[29] Defined in s 2 of the ACL.
The plaintiff must plead[30] that Fiore Group knew, in relation to each representation, at the time the representation was made:
(a)the representation had been made; and
(b)the representation was false.
[30] See the references set out in relation to the elements of being knowingly involved in fraudulent representations and Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661, 667 - 668.
The plaintiff is required to identify the same matters as I identified in relation to the allegation of knowing involvement in the alleged fraudulent representations.

Conclusion on paragraph 34 of the ASOC

I would strike out paragraph 34 of the ASOC.

Conspiracy - paragraphs 36 and 37 of the ASOC

In its written submissions in relation to the conspiracy plea, Fiore Group asserted[31] that the plaintiff had not pleaded that Fiore Group was sufficiently aware of the surrounding circumstances. During the hearing, Fiore Group indicated it had made this assertion relying on the following observation of Hely J in Australian Wool Innovation Ltd v Newkirk:[32]
All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert.
[31] Fiore Group's Submissions [42(a)].
[32] Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 [68].
This was not a statement that such a thing needs to be pleaded and I do not accept it does need to be pleaded.
Fiore Group further asserted[33] that the plaintiff had not pleaded that the conspirators had the sole or dominant intention of injuring the plaintiff. This is not an element when the acts to be performed are themselves unlawful (as they are alleged to be here).
[33] Fiore Group's Submissions [42(b)].
Next, Fiore Group asserted[34] that the plaintiff had not pleaded the particulars of any conduct of Fiore Group to show how such conduct was capable of injuring the plaintiff. In its oral submissions during the hearing, Fiore Group explained that the only conduct of Fiore Group relied upon by the plaintiff related to the Proposed Assignment. It submitted that the Proposed Assignment would actually have helped the plaintiff, not harmed it.
[34] Fiore Group's Submissions [42(c)].
This submission does not allow for the context in which these alleged events are alleged to have occurred. In that context, it may be that, when all of the circumstances are considered, the Proposed Assignment was simply part of an ongoing scheme to deceive the plaintiff.
Fiore Group further said that the plaintiff does not plead that the Son did anything that would harm it. This is true. But the plaintiff's case is clear. It does not allege any dishonesty or involvement by the Son. Its case is against the defendants, and, in respect of Fiore Group, its case is based on its allegation that the Father was acting on behalf of Fiore Group.
Fiore Group further submits[35] that the plaintiff has failed to clearly and properly identify the object of the alleged conspiracy.
[35] Fiore Group's Submissions [43].
I do not accept this. The object is clearly identified as the plaintiff.
Fiore Group asserts[36] that the only overt act pleaded by the plaintiff is the preparation of the Deed of Assignment. Fiore Group asserts that the plaintiff has failed to plead any material facts or any overt acts carried out by Fiore Group with the intention to injure the plaintiff.
[36] Fiore Group's Submissions [37].
As made plain by the ASOC, the plaintiff relies on the conduct of the Father, allegedly acting as a director of Fiore Group, to draw Fiore Group into the alleged conspiracy.
For these reasons, I reject Fiore Group's submissions.
Nevertheless, I have considered the pleading.
There are useful discussions in two decisions of Allanson J: Central Exploration Pty Ltd v Zuks and Central Exploration Pty Ltd v Zuks [No 2].[37]
[37] Central Exploration Pty Ltd v Zuks [2020] WASC 46; Central Exploration Pty Ltd v Zuks[No 2] [2020] WASC 316 [18]. See also Douglas M, 'Pleading Tortious Conspiracy' (2020) 48 Australian Bar Review 306.
In the first Zuks decision, Allanson J observed (footnotes omitted):[38]
[38] Zuks [2020] WASC 46 [119] - [120].
119.The elements of the tort of conspiracy and the matters which must be pleaded are conveniently summarised in the reasons of Ferguson J in CC Containers Pty Ltd v Lee [[2011] VSC 537 [11] - [14]]:
Conspiracy may take one of two forms:
(1)an 'unlawful means' conspiracy in which the participants combine together to perform acts which are themselves unlawful; and
(2)a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant.
The learned authors of Bullen & Leake & Jacob's Precedents of Pleadings identify the necessary elements that must be pleaded where the tort of conspiracy is alleged:
(a)a combination or agreement between two or more individuals (required for both types of conspiracy);
(b)an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type (2) above);
(c)pursuant to which combination or agreement and with that intention certain acts were carried out;
(d)resulting loss and damage to the claimant.
A conspiracy can be proved without evidence of an express agreement:
A court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert.
An intention to injure is an important part of establishing the tort of conspiracy. In this regard, a conspiracy to injure a person is distinguishable from an agreement to do an unlawful act that results in damage to that person.
120.I have earlier referred to the general principle that a statement of claim should define with clarity and precision the issues or questions which are in dispute, and that an allegation that a party is liable as a knowing participant in a dishonest or unlawful conduct must be pleaded clearly and particularised. Specifically, a defendant is entitled to know the precise factual basis upon which the plaintiff contends that he was party to an unlawful conspiracy. I would, with respect, adopt the statement of O'Keefe J in Johnston v Smith [[2002] NSWSC 409 [25]]:
A pleading in conspiracy … should set out facts which show the making of an actual agreement between the conspirators, on one occasion or on a number of occasions, or show acts done by them pursuant to a common purpose or with a common end from which the making of the agreement is to be inferred. Alternatively, the facts pleaded may show that the conspiracy was constituted by the doing of acts with the necessary common purpose. Whatever the basis on which the conspiracy is sought to be established, the plaintiff must allege and prove common purpose between the alleged conspirators.
In Zuks [No 2], Allanson J observed (footnotes omitted):
18.In the earlier application, I struck out the conspiracy plea on the basis that it had a circularity which made it embarrassing. I did not intend to suggest, and it would be wrong to do so, that a party cannot plead and prove an antecedent agreement from the acts later done in furtherance of it. A court may infer an express agreement from the overt acts pleaded. As the court said in Chong v CC Containers Pty Ltd [[2015] VSCA 137 [133]]:
As conspirators will ordinarily conceal their unlawful agreement, it will often be the case that there is no direct evidence of the combination. The conspiracy may be proved without direct evidence of an express agreement or understanding as to the common design. It is generally a matter of inference deduced from certain acts of the parties done in pursuance of the apparent purpose in common between them. The overt acts done in furtherance of the combination may support the inference that there was such an agreement or understanding to further the common unlawful object of the combination. Separate acts of co‑conspirators may be relied upon which have such a concurrence of time, character, direction and result as naturally leads to the inference that these separate acts were the outcome of pre-concert or some mutual contemporaneous engagement evidencing the common object of the combination. A mere co-incidence of separate acts however, which by their conjoined effect cause damage, will not suffice. The evidence must be such as to permit it to be inferred that the acts were undertaken in pursuit of the common object so that it may be said that the actors acted in concert towards the common end.
[noting that the phrase 'concurrence of time, character, direction and result' is from the decision of Isaac J in R v Associated Northern Collieries (1911) 14 CLR 387, 400]

The ASOC pleads in a single paragraph, at paragraph 36, three of the elements (without identifying which particulars relate to which element), namely:
(a)agreement;
(b)intention to injure; and
(c)unlawfulness.
The alleged conspiracy is said to be inferred in relation to the Father solely on the basis that:
(a)he gave the Fiore Direction (on 15 March 2021);
(b)he was at the meeting in July in relation to the Proposed Assignment; and
(c)Fiore Group's solicitors prepared a deed and communicated with the plaintiff and, from time to time, would copy the Father into the communications.
It is said to be inferred in relation to Fiore Group on the basis that:
(a)the matters pleaded against the Father (set out in the previous paragraph);
(b)the Father was a director of Fiore Group; and
(c)the Father dealt with Halston and Mr Strnadica on behalf of Fiore Group.
The action and damage elements are separately pleaded in paragraphs 37 and 38 of the ASOC. Although the action element refers to matters that are not actions (by simply repeating paragraphs 8 to 35 of the ASOC), it is sufficiently clear what actions are relied upon - in particular, orchestrating the investment and making the representations.
Given the factual background to this matter and the plaintiff's pleaded case, the critical question is whether there is sufficient 'concurrence in time, character and direction of the conduct' pleaded by the actors to permit the inference that they were acting in pursuit of a common object in carrying them out.[39] In assessing this, the facts alleged in the ASOC must be assumed to be true.
[39] To adopt the language of Allanson J in Zuks [No 2] [20].
I am satisfied that there is.
First, there is the timing of the critical events alleged.
(a)The alleged fraudulent representations are said to have been made in or about early March.
(b)There were the two meetings at Clancy's City Beach in early March, one of which is pleaded to have been on or about 11 March.
(c)The alleged Fiore Direction was said to have occurred on 15 March 2021.
(d)The plaintiff paid the money on 17 March.
That is, all of these alleged events occurred within 17 days or so.
Second, there is the clear connection between the alleged Fiore Direction and the alleged content and purpose of the representations.
(a)The plaintiff alleges false representations were being made to get the plaintiff to pay $850,000 to Halston.
(b)The Fiore Direction allegedly directed Halston to pay that sum to the Dubai Account.
Third, the subsequent events in July 2021 further support the Father's (and therefore allegedly Fiore Group's) involvement in the scheme. Although these events were four months later, it would be open to infer, assuming the alleged facts are true, that the Father engaged in this conduct on behalf of Fiore Group in July because of the agreement that had been made in March.
That said, the pleading might be improved if the first three elements were separately pleaded.[40]

Conclusion on paragraphs 36 and 37 of the ASOC

[40] After delivering my reasons and making a costs order, there was then some further discussion as to the way in which the pleadings might be amended. I indicated that I accepted that an alternative may be to simply separately identify the matters relied upon in relation to each element. See ts 329 - 330.

I would not strike out paragraph 36 of the ASOC. But I would invite the plaintiff to re-plead it.
There is no reason to strike out paragraph 37.

Leave to re-plead conditional?

In my view, it is appropriate to give leave to re-plead. The substance of the case is plain and the pleading struck out is being struck out for reasons not raised, or at least not clearly raised, by Fiore Group.

Orders

Accordingly, I would make the following orders:
1.Paragraphs 32 and 34 of the ASOC are struck out.
2.Fiore Group's application to strike out the pleading is otherwise dismissed.
3.The plaintiff has leave to re-plead.
I will hear from the parties as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AG
Associate to the Honourable Justice Archer
28 MARCH 2022