Lake v Crawford

[2010] NSWSC 232

CITATION:	Lake v Crawford [2010] NSWSC 232
HEARING DATE(S):	16 December 2009 and 19 March 2010
JUDGMENT DATE :	31 March 2010
JUDGMENT OF:	Harrison J
DECISION:	1. Grant leave to the plaintiff to amend the statement of claim in the form of the document described as the amended statement of claim, which for identification I have initialled, dated 30 March 2010 and placed with the papers. 2. Order the plaintiff to pay the defendant's costs thrown away or occasioned by reason of the amendment. 3. Dismiss the defendant's motion for security for costs with no order as to costs.
CATCHWORDS:	PRACTICE & PROCEDURE - pleadings – application to amend statement of claim – where defendant received $3.9M in payments made by plaintiff's wife – where capacity and authority to do so in issue – whether defendant unjustly enriched by payments - whether reasonable cause of action disclosed – whether amendment futile – amendment allowed – COSTS – security for costs – where plaintiff sues by tutors residing outside the jurisdiction – no indication that recovery of costs will be compromised - application refused.
LEGISLATION CITED:	Civil Procedure Act 2005 Powers of Attorney Act 2003
CATEGORY:	Principal judgment
CASES CITED:	Adams v Buckland (1705) 2 Vern 514 [23 ER 929] Barnes v Addy (1873-74) LR 9 Ch App 244 City of Canada Bay Council v F & D Bonaccorso Pty Ltd [2007] NSWCA 351; (2007) 156 LGERA 294 Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51 Didisheim v London & Westminster Bank [1900] 2 Ch 15 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Ford Motor Co Ltd v Amalgamated Union of Engineering and Foundry Workers [1969] 2 QB 303 Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423 Guthrie v Armstrong (1822) 5 B & Ald 628 [106 ER 1320] Holt (1983) 12 A Crim R 1 In re W (Enduring Power of Attorney) [2000] Ch 343 and [2001] Ch 609 McGuirk v The University of New South Wales [2009] NSWSC 1424 McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; (1904) 1 CLR 243 Quek v Beggs (1990) 5 BPR 11,761 The Margaret Mitchell (Stiles, Master) (1858) Sw 382 [166 ER 1174]
TEXTS CITED:	B Collier and S Lindsay, Powers of Attorney in Australia and New Zealand (1992) The Federation Press
PARTIES:	Desmond Kenneth Lake by his tutors Gregory Grant Shand and Helen Keilar Ngaope Hoia Crawford (aka Sonny Crawford) (First Defendant) Delcort Investments Pty Ltd (Second Defendant)
FILE NUMBER(S):	SC 2009/295057
COUNSEL:	C J Freeman (Plaintiff) J Drummond (First Defendant)
SOLICITORS:	Goldbergs Lawyers (Plaintiff) Steven J Doran, Solicitor (First Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HARRISON J

31 March 2010

2009/295057 Desmond Kenneth Lake by his tutors Gregory Grant Shand and Helen Keilar v Ngaope Hoia Crawford (aka Sonny Crawford) and Delcort Investments Pty Ltd

JUDGMENT

1 HIS HONOUR: This is an application by notice of motion filed by the plaintiff on 28 August 2009 to amend his statement of claim. It would appear to be a response by the plaintiff to the defendant's original notice of motion filed on 24 August 2009 seeking an order striking out an earlier version of the statement of claim pursuant to UCPR 13.4 or alternatively 14.28. That motion also sought security for costs against the plaintiff in the sum of $25,000 upon the basis that his tutors are not ordinarily resident in New South Wales but reside in New Zealand and Victoria respectively. The defendant opposes the application to amend and persists with the claim for security for costs.

Background

2 Desmond Kenneth Lake is the plaintiff and a well-known former jockey. He is presently under a legal incapacity within the meaning of s 3 of the Civil Procedure Act 2005 and sues by his tutors Gregory Grant Shand and Helen Keilar. Mr Shand is Mr Lake's brother-in-law and is the brother of Dianne Lake. Mrs Lake died on 21 November 2008. Ms Keilar is Mr Lake's sister. Mrs Lake was Mr Lake's wife.

3 Mr Shand and Ms Keilar along with Mrs Lake were purportedly appointed as Mr Lake's enduring guardians on 27 October 2006 pursuant to an instrument of Appointment of Enduring Guardians and as his attorneys pursuant to a General Power of Attorney dated that day. However, Mr Lake contends that he was not then of sufficient mind, memory or understanding to comprehend the nature and effect of these instruments and says that they are void and of no effect. The plaintiff says that for many years, and at least from December 2006, Mrs Lake was an alcoholic, had a substance abuse disorder, a dysthymic personality disorder and was cognitively impaired. The plaintiff contends that by reason of these matters Mrs Lake was unable adequately to look after herself and required a high degree of personal assistance.

4 These matters are said to be significant because the plaintiff wishes to plead that from as early as 1998 until 2008 when she died, the first defendant Sonny Crawford was Mrs Lake's carer but that she was fearful of him and had been subjected to physical and verbal abuse by him. She was said in these circumstances to be partially dependent upon him. The plaintiff alleges that he was the sole owner and beneficially entitled to all of the money in a term deposit with the National Australia Bank at Liverpool. Between December 2006 and 2008 Mrs Lake effected a series of transactions on this account purportedly on behalf of the plaintiff, which were in favour of Mr Crawford. These transactions were valued in total at $3.9M. Mrs Lake purported to authorise the transfer of $2.8M to Mr Crawford's bank account on 20 November 2007, $100,000 on 15 January 2008 and $1M on 30 January 2008.

5 The plaintiff wishes to recover this money from Mr Crawford or the value of these transactions in his favour. The plaintiff wishes to argue that Mrs Lake did not have title to the money and did not have the authority to pay it beneficially to Mr Crawford. Alternatively, the plaintiff wishes to contend that Mrs Lake did not understand these transactions, and was incapable of understanding them, because of her mental, physical and emotional problems or was acting under Mr Crawford's undue influence as her carer. The plaintiff also says that Mrs Lake was in a position of special disadvantage in relation to Mr Crawford of which he either knew or ought to have known, so that it was and remains unconscientious for him to maintain that the payments were valid gifts.

6 As a further and separate alternative the plaintiff wishes to contend that Mrs Lake operated under a mistaken belief that she had the authority to pay the money to Mr Crawford beneficially and/or if the power of attorney given to her by the plaintiff was valid and enforceable, each of the payments was either alone or were together not reasonable gifts within the meaning of the Powers of Attorney Act 2003. The plaintiff wishes to argue that Mrs Lake would not have made these payments but for that mistaken belief.

7 The plaintiff also wishes to join a second defendant Delcort Investments Pty Ltd. That company is alleged to have purchased a property at Bringelly for the sum of $1.345M. The plaintiff alleges that the entire purchase price was provided to the company by Mr Crawford using moneys that came from the plaintiff. The company would appear to have been acquired by Mr Crawford on 30 November 2009 and he is its sole director and shareholder.

Consideration

8 Prior to the defendant's application to strike out the earlier statement of claim, his solicitors wrote a letter dated 13 July 2009 to Goldberg Lawyers, the solicitors for the plaintiff. The letter contains a series of factual statements that are potentially presently relevant and its terms are set out in full:

"GREGORY GRANT SHAND & ANOR v NGAOPE HOIA CRAWFORD (aka Sonny Crawford)

SUPREME COURT OF NSW COMMON LAW PROCEEDINGS NO. 13214 0F 2009

We refer to the Statement of Claim in the above proceedings which was served on our client by you on 3 July 2009.

In the proceedings Gregory Grant Shand and Helen Keilar being the donees of a Power of Attorney alleged to have been granted by Desmond Kenneth Lake on 27 October 2006 seek to bring proceedings against the defendant based upon an alleged agreement made by Dianne (aka Deanne) Gaye Lake with the defendant in or about January 2008. The plaintiffs allege that pursuant to that agreement Dianne Gaye Lake lent to the defendant $1 million on a " at call basis ".

Clearly the proceedings are proceedings brought on behalf of Dianne Gaye Lake, the deceased, who died on 21 November 2008.

The last will and testament of the deceased dated 27 October 2008 named the first plaintiff as the executor of that estate. It was only if the first plaintiff failed to take out a grant of probate that the will provided for the deceased's former solicitor, Kelly-Anne Stanford, to be named executrix.

We have made contact with Kelly-Anne Stanford who has indicated that she does not and will not seek a grant of probate of the estate of the deceased.

We note that to date the first plaintiff has not sought any grant of probate of the estate of the deceased.

Accordingly, and by reason of the foregoing including the first plaintiff's failure to apply for a grant of probate, on behalf of our client we have filed with the Supreme Court of NSW, Probate Division on 10 June 2009, a summons seeking Letters of Administration of the estate of Dianne (aka Deanne) Gaye Lake, the defendant being the principal recipient of that estate.

Clearly as neither the [sic] Gregory Grant Shand nor Helen Keilar are the appointed legal representatives of Dianne (aka Deanne) Gaye Lake, neither of the plaintiffs have any locus standi to bring the proceedings for or on behalf of the deceased.

We therefore request that you withdraw the statement of claim filed in the Supreme Court of NSW, Common Law Division.

If you fail to withdraw the statement of claim we have instructions to file on behalf of the defendant a notice of motion a copy of which is enclosed.

In that notice of motion you will see that we also seek security for costs pursuant to Part 42, rule 42.21(1)(a) and (e) of the Uniform Civil Procedure Rules on the basis that neither the first nor second plaintiffs reside in the State of New South Wales but are persons who are normally resident outside that State.

In our view there cannot be any issue that neither the first nor second plaintiffs have any standing to bring the present proceedings. Accordingly we would request that you give due consideration to this letter and withdraw the statement of claim. We look forward to hearing from you."

9 The statement of claim referred to in that letter has been overtaken by events, presumably a reflection of the plaintiff's recognition that some of the defendant's criticisms may have been valid. Be that as it may, the version that is presently being considered formulates a claim in restitution, as opposed to the previous claim for breach of an agreement. Briefly stated, the proposed version now pleads that Mr Crawford retains $2.555M and the second defendant retains $1.345M as money received from the plaintiff in each case at the expense of the plaintiff in circumstances which have thereby caused an injustice to the plaintiff without repayment to him. The plaintiff pleads that $3.9M and $1.345M is respectively money had and received by the defendants to the use of the plaintiff, which they are obliged to repay.

10 On 14 December 2009 Mr Crawford filed an affidavit sworn by him. That affidavit contains a wealth of factual material that locates the present dispute within a somewhat unusual but not unique interpersonal setting. It is arguably contextually relevant to the allegations upon which the plaintiff now wishes to rely. It will also undoubtedly be particularly relevant to what is likely to occur at any final hearing. Portion of that affidavit is as follows:

"3 I was born [in] 1960 in ... New Zealand.


*****


9 In late 1979 and whilst I was still employed in the entertainment/hospitality industry I met Mr Richard Scott. Mr Richard Scott was a licensed horse trainer. Mr Scott trained horses at [a] property … in Bringelly. …

10 From late 1979 until 1981, I continued my employment with Mr Richard Scott as a strapper.

11 Mr Scott leased [a] farm … located at … Elizabeth Drive, Kemps Creek…[which then] comprised approximately 300 acres upon which Mr Des Lake and his wife Deanne Lake conducted a horse training and racing business.

12 Following Mr Scott moving his horse racing business to [Kemps Creek] I commenced to reside in a small house located on [the property]. In addition to that small house there were two main residences … one of which was occupied by Mr Desmond Lake and his wife Dianne ('Deanne') Lake. The main residence in which Mr and Mrs Lake resided consisted of approximately four bedrooms a number of bathrooms and large living areas. The premise [sic] in which I was then residing comprised three bedrooms and was situated approximately 100 to 150 metres from the main residence occupied by Mr and Mrs Lake.

13 In either late 1980 or early 1981 and whilst I was performing my duties in exercising a number of horses trained by Mr Scott, Mr Desmond Lake approached me …

14 Later that day Mr Desmond Lake came back to me and said words to the following effect:

D Lake : I have spoken to Scotty and he has agreed that you can now ride for me.

S Crawford : Very well.

15 At that time I was aware that Mr Desmond Lake, who was a former well-known jockey, was in addition to Mr Scott, training and racing thoroughbred racehorses on [the property at Kemps Creek].

*****


17 The next day I commenced to ride horses for Mr Desmond Lake. At that time I ceased my employment with Mr Scott.

18 Several weeks later and whilst I was unsaddling a horse in the stables Mr Desmond Lake approached me and said words to the following effect:

D Lake : Maddie do you want and [sic] come and live with Deanne and I in the main house? There is not enough room where you are now.

S Crawford : Why not, it would be a lot easier.

19 Although I occupied part of the manager's residence there were 2 other employees of Mr Scott who also resided in that home.

20 Shortly thereafter I moved to reside with Mr and Mrs Lake in the main residence on [the property].

21 Initially when I moved into the main homestead on [the property] I was allocated a separate bedroom from that occupied by Mr and Mrs Lake.

22 Shortly following my move to in [sic] the main homestead on [the property] Desmond Lake and his wife, Deanne and I became very good friends. Mr and Mrs Lake were the kindest and most generous human beings that I have ever had the privilege of knowing.

23 Approximately three months after I had moved to reside in the main homestead … Mr Desmond Lake approached me and said words to the following effect:

D Lake : Why don't we all get undressed and go to bed together?

24 Desmond Lake, his wife Deanne and I then took off our clothes and got into bed together. From that time forward I continued to sleep with Mr and Mrs Lake in their bed until 1998. During the whole of that period Desmond Lake, his wife Deanne and I became lovers and had a sexual relationship.

25 In 1998 Desmond Lake was suffering from depression and attempted suicide whilst in Liverpool Hospital. . .

*****


30 From 1998 onwards I provided care to Desmond Lake 7 days per week generally as required throughout the whole of the day and evening. During the period from 1998 until 2007 I rarely took holidays, but if I did I would arrange for a replacement carer to be present to assist Desmond Lake…

31 Following his attempted suicide in 1998 I observed Deanne Lake to attend to all of the financial matters regarding the training and racing of the horses on [the property] as well as the expenses of maintaining the home and that property."

The defendant's submissions

11 The defendant provided detailed written submissions under various headings. It is important that his position be recorded. The submissions are to the following effect.

Declaration that Power of Attorney is void and of no effect

12 The Powers of Attorney Act came into operation on 16 February 2004. It applied to all powers of attorney executed after that date. As the power of attorney was executed by Mr Lake on 26 October 2006 it is subject to the Act. It contained a certificate by a "prescribed person", being Kelly Stanford. It therefore was a "prescribed power of attorney" as it complied with the requirements of s 19(1)(b) and s 19(1)(c) of the Act.

13 The law presumes that Mr Lake was capable and that the power of attorney was valid. That presumption continues until rebutted. The onus of establishing incapacity lies on the party who seeks to rebut the presumption: In re W (Enduring Power of Attorney) [2000] Ch 343 at 347-348 and [2001] Ch 609 at 615-616. Leaving aside the issue of fact as to whether the experts retained by the plaintiff apply the correct test and thereby establish the relevant lack of capacity, matters inappropriate to be determined at this stage, the relief sought, that the power of attorney be declared void, raises a number of issues in respect of which the proposed amended pleading is said to be deficient.

14 First, the power of attorney is described as "joint and several". The law generally presumes the authority to be joint: Ford Motor Co Ltd v Amalgamated Union of Engineering and Foundry Workers [1969] 2 QB 303. As regards the term "joint", the death of one attorney terminates the power: Adams v Buckland (1705) 2 Vern 514 [23 ER 929]; Berna Collier and Shannon Lindsay, Powers of Attorney in Australia and New Zealand (1992) The Federation Press at 213. By adopting the term "and", the power was granted to "all or any of them": Guthrie v Armstrong (1822) 5 B & Ald 628 [106 ER 1320]. In regard to the term "and several" it is arguable that the power of attorney continues beyond the death of one of them: Collier and Lindsay at 214. If the power of attorney is held to be joint and/or dependent upon the survival of each attorney, it has already terminated so that the relief sought concerning the precise point at which it became invalid has no utility.

15 Secondly, for the power of attorney to be void for incapacity it must be established that Mr Lake's incapacity was known by each of the persons who procured its execution: McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; (1904) 1 CLR 243 at 274; Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423 at 439. The proposed amended pleading fails to plead the requisite knowledge and the basis of such knowledge on the part of Mrs Lake, Mr Shand and Ms Keilar. This creates certain difficulties for both Mr Shand and Ms Keilar as a consequence of their past reliance upon both the power of attorney and the Appointment of Enduring Guardians, the prior pleadings and their conduct exercising the powers based upon the validity of both powers.

16 Thirdly, if it is held that the power of attorney was not terminated by the death of Mrs Lake in November 2008, the proper course is to seek a review pursuant to s 28 and s 32 of the Act. No such application is presently made pursuant to those provisions or otherwise.

17 Fourthly, if the power of attorney was declared void ab initio it would have the consequence that each and every exercise of that power by each of the donees of the power would be set aside, unless, for example, protected by indefeasibility: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [192]; City of Canada Bay Council v F & D Bonaccorso Pty Ltd [2007] NSWCA 351 at [83]; (2007) 156 LGERA 294 at 318. Persons or parties having an interest in such transactions and affected thereby are required to be joined: UCPR 6.24. The plaintiff is not entitled to pick those transactions he seeks to set aside leaving the balance unaffected. If the power of attorney is void ab initio all transactions entered into and agreements made by each and every attorney are thereby set aside. As each attorney owes fiduciary obligations to Mr Lake, each is a trustee of his property. By disposing of that property in the absence of a valid power of attorney, each has acted in breach of trust and is liable to make good that loss: The Margaret Mitchell (Stiles, Master) (1858) Sw 382 [166 ER 1174]; Holt (1983) 12 A Crim R 1 at 14. The problems of declaring the power of attorney void ab initio are therefore considerable.

18 Fifthly, the proposed amended pleading does not plead with any clarity whether the payments by Mrs Lake to Mr Crawford were unauthorised by reason of the power of attorney being void. It also fails to make clear the effect, if any, that the declaration sought would have upon those payments. If it is assumed, however, that the payments were made without authority, the pleadings fail to make clear whether the payments were a breach of s 11 of the Act (unreasonable benefit – see Schedule 3) or whether the payments were made without power by reason of the alleged invalidity.

19 Sixthly, the proposed amended pleading fails to plead with any sufficient particularity that the subject payments sought to be impugned were made by Mrs Lake pursuant to the power. Clearly Mrs Lake had authority to operate Mr Lake's accounts with the National Australia Bank. No reference to the source of that authority is to be found in the pleading. One is left to assume that the authority to operate that account has as its source the power of attorney. As Mrs Lake had managed Mr Lake's affairs for many years, the source of the authority needs to be carefully and precisely pleaded.

Alleged incapacity of Mrs Lake

20 The plaintiff alleges that Mrs Lake lacked the requisite capacity to manage Mr Lake's affairs between December 2006 and her death on 21 November 2008. Apart from this pleading being extremely general and unspecific, it involves issues far broader than the relief sought. It also fails to address the powers of review available for the termination of the power of attorney provided by the Act.

21 The proposed amended pleading also fails to make clear, in the absence of any application to remove Mrs Lake or terminate the power of attorney, the basis upon which her requisite incapacity was known by Mr Crawford so as to put him on notice that she did not herself have sufficient capacity to direct the bank to make the payments as she did. This is said to leave the defendants in the position of guessing what, if any, incapacity Mrs Lake was under in relation to each payment.

Claim of undue influence

22 The plaintiff also pleads a claim based on restitution arising from Mr Crawford's alleged undue influence. The pleading fails to take account of or to recognise that the money paid to him was trust property in the hands of Mrs Lake. The recovery of property paid to third parties in breach of trust is to be determined by the principles set down in Barnes v Addy (1873-74) LR 9 Ch App 244. At 251-252 Lord Selborne LC said:

"But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers … unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees."

23 This passage is the source of the familiar "knowing receipt" and/or "knowing assistance" limbs of Barnes v Addy: see Say-Dee at [111] and [112]. For a person to be chargeable under the first limb, it must be established that he or she received trust property with notice of the breach of trust. The proposed amended pleading contains no specific pleading or adequate particulars to support a claim based upon either the first or second limb. It proceeds on the basis that, if established, a claim based on undue influence entitles the plaintiff to restitution. The first and second limbs of Barnes v Addy were developed to prevent third parties being held to be constructive trustees where there has been a breach of trust in respect of trust property. The High Court unanimously rejected restitution as an alternative to knowledge under the first limb (Say-Dee at [130] to [158]). As stated at [151], a claim of restitution based upon unjust enrichment does not include "recipient liability for breach of trust". If permitted it would make it "unnecessary" for the plaintiff to prove knowledge of the breach of the fiduciary duties (see [139]) among other things. The Court confirmed the need to establish notice if a third party was to be held liable as a constructive trustee under the first limb of Barnes v Addy.

24 The claim of undue influence applies to dispositions of property by holders of the legal and beneficial interest (see Quek v Beggs (1990) 5 BPR 11,761), not a trustee acting in breach of trust. If capable of establishment, certain aspects of the claim of undue influence would, if pleaded, fall within the second limb of Barnes v Addy.

25 In addition to the above, the proposed amended pleading fails to particularise any conduct on the part of either defendant said to constitute undue influence at the time of the relevant transactions. This is said to be of particular significance in circumstances where the evidence demonstrates that the transfer of funds was undertaken by Mrs Lake providing instructions directly to the bank. It therefore fails to plead a reasonable cause of action.

Claims against second defendant Delcort Investments Pty Ltd

26 No claim of undue influence is pleaded against Delcort. Paragraphs 24(b) and 26 of the proposed amended pleading appear to be based on a claim in restitution for "money had and received". In essence the claim appears to be one based upon the first limb of Barnes v Addy. If not, for the reasons discussed earlier, that would appear to be the only basis for such a claim. A claim based on the first limb of Barnes v Addy is not sustainable in the absence of actual or moral turpitude (Bonaccorso at [83]. The pleading contains no allegation of either "fraud or moral turpitude" or any conduct on the part of Delcort to maintain a claim under the first limb of Barnes v Addy. No claim is made under the second limb.

Consideration

27 It can be anticipated with some confidence that there will be a lively dispute about the propriety or otherwise of Mrs Lake's monetary dispositions and about the precise circumstances in which they were made. This will necessarily include a significant issue as to Mrs Lake's capacity at the time of the transfers. The relationships between and among Mr and Mrs Lake and the defendant will also no doubt require examination at some length. It will also be apparent from the thrust of the defendant's arguments, which I have attempted to encapsulate above, that there will be considerable controversy about the appropriate legal principles and debate about how they should be applied in this case.

28 In McGuirk v The University of New South Wales [2009] NSWSC 1424 at [37] - [39], Johnson J set out the relevant principles as follows:

"[37] A very clear case is required before a litigant is prevented from pleading a case upon the basis that no reasonable cause of action is disclosed, and this power should be sparingly employed: Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; [1965] ALR 636; Webster v Lampard (1993) 177 CLR 598 at 602-3; [1993] HCA 57. The test is not whether the Plaintiff would probably fail in his action against the Defendant, it is whether the material before the Court demonstrates that the action should not be permitted to go to trial in the ordinary way because it is apparent that it must fail: Webster v Lampard at 602. The fundamental principle is that prima facie a plaintiff is entitled to have his case come to trial, and that an application to deprive him of that right will succeed only in the clearest of cases: Brimson v Rocla Concrete Pipes Limited (1982) 2 NSWLR 937 at 944. Usually, a party is not to be denied the opportunity to place his case before the Court in the ordinary way, and after taking advantage of the usual interlocutory processes. For a plaintiff to be shut out upon the basis that no reasonable cause of action is demonstrated, a high degree of certainty is required about the ultimate outcome of the proceeding, if it were allowed to go to trial in the ordinary way: Agar v Hyde (2000) 201 CLR 552 at 575-6.

[38] For practical purposes, the present Defendant undertakes the burden of establishing that there is no triable issue by contending that there is no reasonable cause of action so that the amendment ought not be allowed: Wickstead v Browne (1992) 30 NSWLR 1 at 11. The General Steel test remains the primary touchstone for such an application. The mere fact (if it be the case) that a plaintiff's prospects of success might be characterised as slim, would not be enough to strike out a pleading: Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1995-1997) 188 CLR 241 at 271; Preston v Star City Pty Limited [1999] NSWSC 1273 at [31]. The question for determination is whether a reasonable cause of action is disclosed, that is a cause of action which has some chance of success, or which could conceivably give the plaintiff a right to relief, or which, although weak, is properly debatable, and has some apparent legitimate basis, if the facts upon which it is alleged to be based are made good: Preston v Star City Pty Limited at [37].

[39] The summary disposal procedure may be used even though a difficult question of law is invoked, and extensive argument is necessary to demonstrate that the case is so plainly untenable that it cannot succeed: General Steel at 130."

29 Applying these principles to the present case, it is not apparent to me that the plaintiff's case must necessarily fail. Howsoever one might feel inclined to characterise the claim, I do not consider that the plaintiff's prospects of success are slim. Whether or not that preliminary view survives a final hearing is presently not relevant and not something about which I should be taken to have expressed an opinion. It is sufficient to observe that this is not a clear case at the moment and the defendant should not be entitled to prevent it from going to trial in the ordinary way. The plaintiff has pleaded a case that discloses a reasonable cause of action with some legitimate basis if the facts upon which it is allegedly based are made good.

30 The plaintiff has formulated his case as one falling within the current learning on restitutionary principles. There may be some room yet for debate about those principles as well, particularly in the way that they should apply to the resolution of the present dispute. In Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51 Mason CJ said this at [41]:

"[41] Restitutionary relief, as it has developed to this point in our law, does not seek to provide compensation for loss. Instead, it operates to restore to the plaintiff what has been transferred from the plaintiff to the defendant whereby the defendant has been unjustly enriched. As in the action for money had and received, the defendant comes under an obligation to account to the plaintiff for money which the defendant has received for the use of the plaintiff. The subtraction from the plaintiff's wealth enables one to say that the defendant's unjust enrichment has been 'at the expense of the plaintiff' (43 Birks, (1985), op.cit. at 23-24), notwithstanding that the plaintiff may recoup the outgoing by means of transactions with third parties."

31 In Say-Dee at [150] - [151] the High Court emphasised the following:

"[150] First, whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category. In David Securities Pty Ltd v Commonwealth Bank of Australia , Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality. No such factor was identified in the present case by the Court of Appeal beyond what was identified as the breach of fiduciary duty by Mr Elias and by Farah. But Mrs Elias and her daughters owed no fiduciary duty to Say-Dee. Further, principles respecting fiduciary duty have been said to be foreign to unjust enrichment notions because the unjust factors are commonly concerned with vitiation or qualification of the intention of a claimant.

[151] Unjust enrichment is not a 'definitive legal principle according to its own terms'. If it were not so, as Gummow J pointed out in Roxborough v Rothmans of Pall Mall Australia Ltd :

'[S]ubstance and dynamism may be restricted by dogma. In turn, the dogma will tend to generate new fictions in order to retain support for its thesis. It also may distort well settled principles in other fields, including those respecting equitable doctrines and remedies, so that they answer the newly mandated order of things. Then various theories will compete, each to deny the others. There is support in Australasian legal scholarship for considerable scepticism respecting any all-embracing theory in this field, with the treatment of the disparate as no more than species of the one newly discovered genus.'

This prediction about the consequences of unjust enrichment for the distortion of equitable doctrines is illustrated by the Court of Appeal's approach in this case. The areas in which the concept of unjust enrichment applies are specific and usually long-established. Recipient liability for breach of trust or fiduciary duty has not been one of them."

32 It is pertinent to observe that both the plaintiff and the defendant sought variously to draw upon these comments for different purposes and with differing emphases. It will undoubtedly be necessary to hear detailed argument from both sides, in particular after factual findings have been made, before a final decision can be reached. However, the resolution of the legal and factual competition between the parties in this case should not in my opinion be transposed into the outcome of an interlocutory application.

Security for costs

33 The Court retains a discretion to order security for costs where a plaintiff resides outside New South Wales: UCPR 42.21(1)(a). Where a tutor resides outside the jurisdiction, he or she may be required to provide security for costs: see Didisheim v London & Westminster Bank [1900] 2 Ch 15 at 43. Each of Mr Shand and Ms Keilar resides outside New South Wales.

34 The defendant submitted that "when regard is had to the past conduct in the preparation of this matter and the principles applicable under s 56 of the Civil Procedure Act, it is … appropriate that the Court should order security". No content is given to that submission.

35 In my opinion this is not a case in which it is appropriate to order that the plaintiff provide security for costs. There is no suggestion that either Mr Shand or Ms Keilar is impecunious or otherwise unlikely to satisfy any costs order that may be made against either of them. The practical consequences that may flow from the need to enforce a costs order in Victoria or New Zealand do not strike me in today's climate of electronic communication, particularly in the absence of some compelling suggestion that such an order will be avoided, as sufficient to warrant security being provided at this stage. I would however be prepared to entertain an application pursuant to UCPR 42.7(2) to "order otherwise" concerning the costs of the application to amend the statement of claim if asked to do so.

Orders

36 Accordingly, I make the following orders:

1. Grant leave to the plaintiff to amend the statement of claim in the form of the document described as the amended statement of claim, which for identification I have initialled, dated 30 March 2010 and placed with the papers.

2. Order the plaintiff to pay the defendant's costs thrown away or occasioned by reason of the amendment.

3. Dismiss the defendant's motion for security for costs with no order as to costs.

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