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.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] WASC 105
Decision Date: 28 MARCH 2022

CaseChat Overview and Summary

Interstar Pty Ltd sought to strike out portions of the statement of claim filed by Halston Capital Pty Ltd. The nature of the dispute involves allegations of unlawful means conspiracy under the Australian Consumer Law, specifically related to fraudulent representations and knowing involvement in such conduct. The matter was heard in the Federal Court of Australia.

The central legal issues before the court were whether the plaintiff had adequately pleaded the knowledge element necessary for the claim of unlawful means conspiracy, and if the pleadings sufficiently established the required level of awareness and shared objectives for a conspiracy claim. The court had to determine if the plaintiff had met the burden of pleading actual knowledge, as opposed to inferred knowledge, and whether the plaintiff's allegations were sufficient to establish the necessary level of participation and shared intent among the alleged conspirators.

The court found that the plaintiff had failed to adequately plead the knowledge element required for the conspiracy claims. Specifically, the plaintiff had not sufficiently pleaded that Fiore Group knew of each fraudulent representation and its false nature at the time the representations were made. The court held that the plaintiff must plead actual knowledge, which could be inferred, but in this case, the plaintiff had not made the necessary allegations. Furthermore, the court determined that the plaintiff had not sufficiently identified the nature and content of Fiore Group's participation in the alleged conspiracy. Consequently, the court decided to strike out certain paragraphs of the statement of claim. Fiore Group's assertion that the plaintiff had not pleaded sufficient awareness of the surrounding circumstances for a conspiracy claim was upheld by the court.

The court ordered that specific paragraphs of the statement of claim be struck out due to insufficient pleading of the knowledge element and the nature and content of Fiore Group's participation in the alleged conspiracy.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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 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). I would strike out paragraph 32 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. I would strike out paragraph 34 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].