Lamers v Lamers (No 3)
[2019] VSC 63
•14 February 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
S CI 2015 05124
| ANDREW JOHN LAMERS | Plaintiff |
| v | |
| JOHANNES ANTONIUS LAMERS | First Defendant |
| ORANA PARK PTY LTD (ACN 087 109 985) both in its own capacity and as trustee of the John Lamers Family Trust | Second Defendant |
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JUDGE: | Lansdowne AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 February 2019 |
DATE OF JUDGMENT: | 14 February 2019 |
CASE MAY BE CITED AS: | Lamers v Lamers and anor (No 3) |
MEDIUM NEUTRAL CITATION: | [2019] VSC 63 |
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PRACTICE AND PROCEDURE – amendment to statement of claim – whether proposed amendments relating to construction of a trust deed should be refused because they have no real prospect of success – held: amendments allowed, question of construction is better considered at trial – consideration of Jenkins v Ellett [2007] QSC 154 and Mercanti v Mercanti [2016] WASCA 2016 – whether introduction of a new claim arising from already pleaded facts should be refused on ground of delay or being statute barred – held: delay sufficiently explained and limitation issue better considered at trial – consideration of Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 – whether joinder of new defendant and new claim in negligent misstatement against that defendant should be refused for delay, being statute barred or for inadequate pleading of duty and loss – held: refused for inadequate pleading of loss – observations on the difference between detriment in proprietary estoppel and loss in negligent misstatement.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P H Caillard | Oakleys Legal |
| For the Defendants | Mr D B Clough | Macpherson Kelley |
TABLE OF CONTENTS
Introduction and summary............................................................................................................... 1
Proposed Trust allegations............................................................................................................... 3
Submissions................................................................................................................................... 5
Clause 18............................................................................................................................... 5
Clause 19............................................................................................................................... 7
Discussion and conclusion.......................................................................................................... 8
Proposed incorrect payment claim.................................................................................................. 9
Proposed joinder of Birch Ross Barlow (BRB)........................................................................... 12
Delay............................................................................................................................................. 12
Pleading of duty and loss.......................................................................................................... 14
Statute barred............................................................................................................................... 17
Conclusion and orders.................................................................................................................... 17
HER HONOUR:
Introduction and summary
This is an application to amend the statement of claim filed with the writ on 30 September 2015. The defendants filed their defence shortly thereafter, on 2 November 2015. The plaintiff (Andrew) seeks relief against the first defendant (John), his uncle, and the second defendant (OPPL), a company in which they are each shareholders and of which they are the two directors, relating to a dairy farming enterprise near Leongatha. Andrew alleges that as a result of representations made to him in relation to a family trust, the John Lamers Family Trust (Trust) and John’s will, and by reason of a joint endeavour conducting the dairy farming enterprise, he has acted to his detriment. In the statement of claim, Andrew seeks declarations that OPPL holds its interest in certain land on trust for the Trust or for him, and that John holds his interest in OPPL on trust for Andrew. In the alternative, he seeks equitable compensation or equitable damages.
The proceeding has not progressed to trial because of disputes about discovery, culminating in a judgment of Almond J, on appeal from me, first given on 13 December 2017, and revised on 21 February 2018 (I am informed not substantially).
Following that judgment, further documents were discovered by the defendants to 28 May 2018. Thereafter the parties engaged in a voluntary mediation, in an attempt to resolve their disputes, which was held on 25 July 2018. The mediation was followed by an exchange of without prejudice offers in August 2018, which again did not resolve the proceeding. The plaintiff then contacted the Court seeking directions in relation to amendment of his statement of claim, culminating in the present summons dated 20 December 2018. The plaintiff had flagged potential amendment of the statement of claim from at least his success on the discovery application before me.[1]
[1]Noted in Other Matters of orders made by me on 24 May 2017.
The summons seeks leave to join the former solicitors for the defendants and to amend the statement of claim in the form of a proposed amended statement of claim dated 10 December 2018 (PASOC). The PASOC is the third iteration of a proposed amended statement of claim provided by the solicitors for the plaintiff to the solicitors for the defendant from late October 2018 to December 2018.
The defendants now take objection to three aspects of the PASOC. The first derives from the parties’ competing constructions of clauses 18 and 19 of the deed that established the Trust, a Deed of Settlement dated 11 June 1993 (Trust Deed). The construction of those clauses is critical to the parties’ respective cases, and to what occurs in relation to the assets of the Trust. Andrew asserts that by reason of a Deed of Variation dated 13 October 2000 (2000 Deed), executed by both him and John, he will become the sole appointor of the Trust on John’s death, provided he complies with certain conditions. He seeks to amend the statement of claim to assert that, by reason of his construction of the Trust Deed, all subsequent deeds of variation and appointment executed by John only in 2014 and 2015 are invalid.
It emerged in argument that, by reason of their construction of clause 18 of the Trust Deed, the defendants assert that the 2000 Deed is invalid. The defendants agree that certain of the deeds of variation and appointment executed by John in 2014 are invalid. However, on the basis of their construction of clause 19 of the Trust Deed, they assert that the deeds of appointment executed by John on 18 December 2014 and 16 October 2015 are both valid, the Deed of Appointment dated 16 October 2015 (2015 Deed) having overtaken the deed executed on 18 December 2014. The effect of the 2015 Deed, if valid, is that on John’s death, and on compliance with certain conditions, a different family member to Andrew would become the appointor of the Trust. The 2015 Deed provides that if that family member fails to meet those conditions, the assets of the Trust are to be sold and distributed to various family members, excluding Andrew.
The second objection taken by the defendants relates to the proposed addition of a claim for repayment of moneys said to have been ‘incorrectly paid’ by Andrew to John.
The third objection is to the proposed joinder of Birch Ross Barlow, solicitors, the former solicitors for the defendants (BRB). The nature of the proposed claim against those solicitors was not entirely clear from the PASOC, but it emerged in argument that it is a claim in negligent misstatement. Andrew seeks to allege that the solicitors made certain representations to him to the effect that a contested property was owned by OPPL as trustee for the Trust, not in its own right, and that on signing the 2000 Deed he would become the sole appointor of the Trust, on his compliance with certain conditions, and so would ‘effectively inherit’ that property on John’s death. In the statement of claim, Andrew asserts that these representations were made by BRB on behalf of John (paragraph 7 of the statement of claim). In their defence, the defendants allege that the representations were made without authority. Andrew’s proposed claim against BRB is expressed in paragraph 34 of the PASOC as being ‘Further and in the alternative’. Counsel for the plaintiff clarified in argument that it is an alternative claim to the claim made in paragraph 7 of the statement of claim, should it be established, as the defendants contend, that the representations, if made, were made without authority.
For the reasons that I now give, I would allow the amendments asserting the plaintiff’s construction of the Trust Deed and those relating to the incorrect payment claim. I would have allowed the joinder of BRB, on correction of some infelicitous pleading, had the allegation of loss and damage as against them been sufficiently pleaded. Regrettably, however, it is not, and I do not consider that the deficiency can be cured by particulars as proposed by the plaintiff. For that reason, I would not allow the proposed joinder. I will hear the parties on what orders should flow from these reasons.
Proposed Trust allegations
The contest relates to the proper construction of two clauses in the Trust Deed, clauses 18 and 19. They provide as follows:
18.THE Trustees for the time being may at any time and from time to time by deeds revoke add to or vary all or any of the trusts hereinbefore limited or the trusts limited by any variation or alteration or addition made thereto from time to time and may by the same or any other deed or deeds declare any new or other trusts or powers concerning the Trust Fund or any part or parts thereof the trusts whereof shall have been so revoked added to or varied but so that any law against perpetuities is not thereby infringed and so that such new or other trust powers discretions alterations or variations –
(a)may relate to the management or control of the Trust Fund or the investment thereof or to the Trustees’ powers or discretions in these presents contained;
(b) shall not be in favour of or for the benefit or result in any benefit to the Settlor Appointor or Trustees or any of them except a person named or described in the Schedule as a Beneficiary but shall otherwise be for the benefit of all or any one or more of the Beneficiaries or the next-of-kin of any of them or the next-of-kin of the Beneficiaries or any of them;
(c)shall not affect the beneficial entitlement to any amount set aside for any Beneficiary prior to the date of the variation, alteration or addition.
19.(a) THE person or persons named and described in the Schedule as
“The Appointor” or any person or persons nominated as Appointor by the Appointor or Appointors by instrument in writing or by a sole Appointor or by the last surviving Appointor by Will or if no‑one is so appointed by the last surviving Appointor then his or her legal personal representatives and in the case of a Company named as Appointor then any person or Company appointed by it so to act shall have power to appoint in writing a new or additional Trustee or Trustees hereof (but not including the Settlor or any beneficiary named and described in the Schedule) and to remove any Trustee hereof provided that if there is no Appointer named or described in the Schedule or if at the time in question there is no Appointor the power to appoint a new or additional Trustee or Trustees and to remove any Trustee shall be exercisable by the Trustees named in the Schedule or the survivor of them and from and after the death of the survivor of the Trustees named in the Schedule is or her legal personal representatives and in the case of a company the liquidator shall have the said powers.
(b)The office of a Trustee shall be ipso facto determined and vacated if such Trustee being an individual shall be found to be a lunatic or of unsound mind or if he shall be come subject to the bankruptcy laws or if he shall without the consent of the other Trustees remain out of the place in which this Trust Fund is for the time being administered for more than twelve months or if such Trustee being a company shall enter into liquidation whether compulsory or voluntary (not being merely a voluntary liquidation for the purpose of amalgamation or reconstruction).
(c)A copy of all notices of changes in the trusteeship shall be endorsed on or attached to these presents and every such notice shall be sufficient evidence to any person having dealings with the Trustees of this Deed as to the facts to which it relates.
(d)Any person dealing with the Trustees of the Trust Fund may rely upon a copy of these presents and of the notices endorsed thereon or attached thereto certified by the Trustee or the Trustee’s lawyer before a Notary Public to the same extend as he might rely on the original.
(e)Any person becoming a Trustee of the Trust Fund may accept the account rendered and the property delivered to him by the continuing Trustee or his predecessors in office without being bound to enquire further as to the assets of the Trust Fund and any person ceasing to be a Trustee hereof may be given a full and complete discharge by the Appointor.
Submissions
Clause 18
Andrew contends that clause 18 of the Trust Deed confers power on the trustee of the Trust to change or add to the appointors. The 2000 Deed purports to rely on this clause to change the appointors as set out in the Schedule to the Trust Deed, who were John during his lifetime and Andrew, together with his brothers Paul and Mark Lamers on his death, to John during his lifetime and Andrew solely on his death, provided he met certain conditions. He seeks to amend the statement of claim to include explicit pleas to this effect.
The defendants oppose those amendments in proposed paragraphs 3(d), 5, 6, 29 (I infer the objection on this ground is to [29(b)]) and 37(d) of the PASOC on the basis that Andrew’s construction of clause 18 of the Trust Deed has no real prospect of success, and so the amendments would be futile. The defendants rely on Jenkins v Ellet (Jenkins)[2] in support of this submission. In that case, Douglas J in the Supreme Court of Queensland held that a clause in a trust deed with significant similarity to clause 18 did not permit a trustee to change the appointor (there called the ‘Principal’) of the trust. The defendants rely on similar wording conferring power on the trustee to amend in that case to the wording in clause 18, and to the observations by Douglas J that it would subvert the ‘substratum of the deed’ to allow a trustee to change the Principal, given that the Principal had power to remove and replace a trustee in the deed. The parties agree that clause 19 of the Trust Deed allows the appointor to remove and replace the trustee to the Trust in this case (and the 2000 Deed in fact did that, to appoint OPPL as trustee). The defendants submit that the same argument as applied in Jenkins applies here: that it would defeat the power conferred by clause 19 on the appointor to change trustee, if the trustee had the power under clause 18 to change appointor.
[2][2007] QSC 154.
Jenkins was considered by the West Australian Court of Appeal in Mercanti v Mercanti (Mercanti),[3] amongst many other authorities. One question on the appeal was whether the trust deed there in question that empowered the trustee to change the appointor. The appellants argued that the trial judge had been incorrect in holding that it did, for essentially two reasons. The first was based on the construction of the trust deed. The appellants relied on Jenkins in support of their second argument, that the primary purpose of the appointor was to oversee, and if necessary remove, the trustee, and it would derogate from this purpose if the trustee could change the appointor. The Court of Appeal distinguished Jenkins on the basis of the different wording of the clause there in question and the clause in Mercanti, and upheld the trial judge on this issue.[4] The clause in question in Mercanti included a power to vary the ‘terms and conditions’ of the trust, as well as ‘the trusts’. The words ‘terms and conditions’ did not appear in the amendment clause in Jenkins. The defendants rely on the fact that nor are they included in clause 18 of the Trust Deed.
[3][2016] WASCA 206.
[4][146]-[154] (Buss P); [356]-[358] (Newnes and Murphy JJA).
In response, Andrew submits that clause 18 of the Trust Deed is relevantly different to the clause under consideration in Jenkins because it contains a specific power, in clause 18(a), that a ‘variation’ may ‘relate to the management or control of the Trust Fund…’. Andrew contends that the identity of the appointor relates to ‘the management or control of the Trust Fund’. Andrew also submits that the proper construction of clause 18 requires detailed consideration of the whole of the Trust Deed, and is a matter for trial. Further, Andrew distinguishes the nature of the change to appointor sought to be effected by the 2000 Deed in this case from the disputed changes in Mercanti, and, I observe, in Jenkins. In both Mercanti and Jenkins, the trustee or trustees purported to entirely remove the original Appointor or Principal and appoint a new Appointor/Principal. Here, the 2000 Deed did not remove the original appointor John during his life, but changed the appointors on his death.
Clause 19
The issue in respect of this clause is whether the words ‘or any person or persons nominated as Appointor by the Appointor or Appointors by instrument in writing’ in paragraph (a) confer on the appointor in the Schedule (relevantly John) the power to change appointors by nomination in writing. The defendants contend that they do, and point to other words in clause 19(a) supporting this construction. Andrew contends that they do not, because the intent of clause 19, viewed as a whole, is to confer power on the appointor to change trustee, not to confer power on the appointor to change appointors. On his construction, the words identified above are merely descriptive of the appointor, not empowering.
The competing constructions are significant because by the deeds John executed on 18 December 2014 and 15 October 2015 as appointor he purported to change the appointors on his death. The defendants oppose the proposed inclusion of paragraph 3(f) of the PASOC which pleads that the Trust Deed ‘does not give the appointor the power to additional appointors or to otherwise change the appointor of (the Trust)’. The defendants also object on this basis to the inclusion of proposed paragraphs 28 and 29(a). They submit that Andrew’s construction of clause 19 which underpins these paragraphs has no real prospect of success, and so the amendments should not be allowed.
Paragraphs 28 and 29 appear in a section of the PASOC headed ‘Invalid attempts to vary Trust Deed after 10 October 2000’. The defendants do not object to proposed paragraphs 25-27, which plead that a deed executed by John on 13 June 2014 as appointor, purporting to vary the Trust Deed to confer a specific power on the appointor to change appointors by the inclusion of a new clause 19(f), was invalid. In fact, they agree that that deed is invalid. Proposed paragraphs 28 and 29(a)[5] plead that deeds entitled deeds of appointment subsequently executed by John on 28 August 2014, 11 December 2014, 18 December 2014 and 16 October 2015, are also invalid because they relied on the invalid deed of variation of 13 June 2014. The defendants agree that the purported deeds of appointment dated 28 August 2014 and 11 December 2014, which expressly rely on the introduced clause 19(f), are invalid, because of the invalidity of that inclusion. These are pleaded in sub-paragraphs (a) and (b) of proposed paragraph 28, and so strictly the defendants’ objection would appear to be to sub-paragraphs (c) and (d) which plead the deeds of appointment executed on 18 December 2014 and 15 October 2015. These deeds expressly refer to clause 19(a) as the provision empowering the appointor to change appointors, not clause 19(f).
[5]Counsel for the plaintiff clarified in argument that the internal reference in paragraph 29 was intended to be to paragraph 28, not paragraph 27.
Discussion and conclusion
In Mandie v Menmart Nominees Pty Ltd the Court of Appeal endorsed refusal of leave to amend to include allegations where those allegations have ’no real prospect of success’ at trial,[6] within the meaning of s 63 of the Civil Procedure Act 2010 (Vic) (CPA). The Court noted that ‘to grant leave in that circumstance would be futile as the claim or defence would be susceptible to a summary judgment application’.[7] In Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd,[8] the Court of Appeal held by majority that ‘real’ in the test ‘no real prospect of success’ in s 63 of the CPA is to be contrasted with a claim or defence that is merely ‘fanciful’. The Court also stressed that caution should be exercised in the giving of summary judgment on the ground of no real prospect of success, and that it should not be given unless it is clear that there is no real question to be tried.[9] It follows that similar caution should be exercised before refusing leave to amend on the ground that the amendments have no real prospect of success.
[6](2014) 42 VR 325; [2016] VSCA 4.
[7]Ibid [43].
[8](2013) 42 VR 27; [2013] VSCA 158.
[9]Ibid [35] (Warren CJ and Nettle JA).
I am not persuaded on the basis of the limited argument before me that the constructions of clauses 18 and 19 that Andrew seeks to advance by the disputed amendments have only fanciful prospects of success. Clause 18 differs in its wording, and arguably materially so, from the relevant clauses in both Jenkins and Mercanti. The plaintiff’s submission that the principal thrust of clause 19 is directed to the appointment or removal of a trustee, not an appointor, is not fanciful having regard to the terms of that clause.
Further, it is plain from both Jenkins and Mercanti, and the other authorities discussed in Mercanti, that a conclusion on the construction of one clause in a trust deed should only be reached after careful consideration of the whole of the deed. The parties have not engaged in such a detailed consideration in this application, and in my view appropriately so. The proper construction of those clauses is properly a question for trial. I would allow the proposed paragraphs, with the corrections identified by counsel for Andrew in argument.
Proposed incorrect payment claim
The defendants oppose the introduction by proposed paragraphs 30-33 of a claim for repayment of $66,000 pleaded to have been ‘incorrectly’ paid by Andrew to John, as opposed to OPPL. They oppose those amendments on three principal bases.[10] First, that the proposed claim would be statute barred. Second, that the claims are ‘entirely new’ and based on ‘material facts that have not been pleaded previously and other otherwise irrelevant to the existing claims’.[11] The defendants also oppose these amendments on the basis of unexplained delay in bringing the claim.
[10]The defendants withdrew a further objection identified in [17] and a portion of [14(c)] of the Defendants’ Submissions dated 31 January 2019.
[11]Defendant, ‘Supplementary Submissions’, 4 February 2019, [3].
Dealing with that objection first, it is correct to say that Andrew did not in any affidavit in support of the summons seek to explain the prima facie delay in advancing the proposed amendments generally, including this claim. The High Court in Aon Risk Services Australia Ltd v Australian National University (Aon)[12] that significant delay in seeking amendment should be explained. However, I accept the submission of counsel for Andrew that the timing of this proposed amendment is not as egregious as in Aon, where amendment was sought after the trial had commenced. Further, at the Court’s request during the hearing, the solicitor for Andrew prepared a chronology of events dating from the judgment of Almond J on discovery. The defendants accept the accuracy of the chronology. On consideration of that chronology, significant events of which I have recited in the introduction to these reasons, I do not consider the delay to be such as to justify refusal of these proposed amendments. I note that the defendants do not take any point that the introduction of this claim would cause them prejudice.
[12](2009) 239 CLR 175.
I turn now to the second objection, that the claim of incorrect payment is new and irrelevant to the existing claims. I do not consider that to be accurate. Although not immediately apparent on the face of the PASOC, it emerged in argument that the proposed new claim relates to events pleaded by the defendants at [11(d)] of their defence. The defendants there plead that there was a ‘common intention’ that Andrew would pay the sum of $66,000 (inclusive of GST) for rent due to OPPL to John. Andrew expressly denied this in his reply at [1]. It is correct, as identified by the defendants, that Andrew did not there make or foreshadow a claim against John for one specific payment made on 17 June 2011. The proposed amendments make a new claim, but it is a claim that arises from facts already ventilated in the pleadings, relating to payments of this type, specifically to whom they were to be paid.
The remaining objection is that the new claim would be statute barred. In the course of argument, counsel for the defendants conceded that this objection assumes that the proposed claim is in debt. He was unable to assist the Court as to what the position would be if the claim is properly understood as in unjust enrichment or moneys had and received. My notes record that he then withdrew this objection, but in the absence of transcript and for the avoidance of doubt I consider it preferable that I determine it.
In Wardley Australia Ltd v Western Australia (Wardley)[13] the High Court held that it is undesirable to decide limitation questions in interlocutory proceedings ‘except in the clearest of cases’.[14] At that time, summary judgment was only given where a claim was ‘hopeless’ or ‘bound to fail’, a different and more stringent test than ‘no real prospect of success’. How Wardley might apply in the context of the CPA with its less stringent test for summary dismissal was considered by the Court of Appeal in D’Aquino v Trovatello (D’Aquino).[15]In that case, McLeish JA, with whom Warren CJ and Ashley JA agreed, observed that, notwithstanding the changed test for summary judgment from that applicable at the time of Wardley:
…in my opinion it remains the case that, in interlocutory proceedings, insufficient is often known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify coming to the conclusion that the claims of the plaintiff have no real prospect of success by reason of limitation of actions defences.[16]
[13](1992) 175 CLR 514; [1992] HCA 55.
[14]Ibid 533 (Mason CJ, Dawson, Gaudron and McHugh JJ), cited by the Court of Appeal in Bodycorp Repairers Pty Ltd v Holding Redlich [2018] VSCA 17, 128.
[15](2015) 47 VR 31; [2015] VSCA 78.
[16]Ibid 42 [49].
Wardley was recently considered and applied by the Court of Appeal in Bodycorp Repairers Pty Ltd v Holding Redlich (Bodycorp).[17] In that case, as in Wardley, the cause of action was in negligence, and so the limitation issue arose in relation to the accrual of loss. The Court upheld a summary judgment on the basis of a limitation defence in circumstances where the relevant dates were clear from the pleadings, there was no relevant issue of fact that required determination at trial, and so evidence at trial had no potential to affect the analysis.
[17][2018] VSCA 17.
This proposed new claim is not in negligence, and so the detailed analysis as to when that cause of action accrues provided by Wardley and applied in Bodycorp is not applicable. Counsel for Andrew submits that the cause of action only arose when John appropriated the payment for himself. When this occurred does not emerge from the PASOC. If the analysis is correct, and as noted there was no submission to the contrary as to when a cause of action in unjust enrichment arises, then it can be pleaded in the amended defence together with any consequential limitation defence. I consider that that is the appropriate way to proceed.
A final objection to the introduction of this new claim as it initially appeared in the PASOC is that proposed paragraph 33 introduced the possibility that the money was owing by John to OPPL, not to Andrew. This was sufficiently met by Andrew withdrawing the reference to repayment to OPPL in the course of argument.
For these reasons, I would allow proposed paragraphs 30-33 and proposed relief D, subject to deletion of any claim for repayment to OPPL.
Proposed joinder of Birch Ross Barlow (BRB)
Objection is taken to the joinder of BRB on three grounds. The first is that it would be an abuse of process to allow the joinder and additional claim because it would result in significantly greater delay to trial, may embarrass the trial, cause prejudice to the defendants, or be otherwise inconvenient.
The second objection is that the proposed claim is not properly pleaded in relation to duty of care and categories and calculation of loss and damage.
The third objection is that the claim is statute barred.
Delay
Plainly the addition of a new defendant, who it may be assumed must act through an insurer, when discovery was otherwise complete and a mediation already undertaken, will add to the period of time before the proceeding is ready for trial. As against that, however, BRB has been intimately involved in this dispute throughout, including in the discovery disputes. It is not a stranger to the dispute, only now to be introduced into it.
BRB drafted all of the deeds of variation and appointment that are the subject of dispute, as well as the original Trust Deed. A solicitor employed by BRB was appointed substitute appointor on John’s death in the disputed deeds executed 28 August 2014, 11 December 2014, 18 December 2014 and 16 October 2015. That same solicitor gave evidence on oath for the defendants in support of their privilege claim in late 2016. As set out earlier, it was the privilege claim that delayed discovery, and so the progress of the proceeding until the decision of Almond J. I have earlier noted that I consider the further delay thereafter to be sufficiently explained, and not a barrier to amendment.
Further, BRB acted for the defendants until 20 April 2016, and, in particular, was on record when their defence was filed and so presumably took the instructions for that defence. I infer that BRB is likely to be well apprised of the issues in dispute, and so in a position to respond in a timely way if joined.
The proposed claim against BRB arises from what Andrew alleges Mr John Barlow said to him about the 2000 Deed (and possibly also the 1999 Deed) and is of particular significance if, as the defendants assert in their defence, Mr Barlow made those representations without authority from the defendants. It may also be critical to any success for the plaintiff if his argument on clause 18 fails and the 2000 Deed is found to be invalid. In parallel vein, while the defendants oppose the joinder of BRB they inform the Court that if it is joined, they will seek contribution from it. Counsel for the defendants did not outline the grounds on which they would rely in such a claim for contribution, but the defendants do allege that a number of the deeds prepared by BRB are invalid, and so that may be one basis of such a claim.
For these reasons, I consider the intimate connection of Andrew’s proposed claim against BRB to the allegations as between the current parties, and the possibility of other interconnected claims by the defendants, outweigh in significance the delay that will be occasioned by the joinder of that firm. If other objections to the pleading of Andrew’s claim are sufficiently met, I would allow that joinder.
Pleading of duty and loss
To consider this objection, and the objection that the claim is statute barred, it is first necessary to identify the proposed cause of action. I agree with the defendants that the pleading of duty in paragraph 39 of the PASOC is objectionable, in my view because it is confusing. The paragraph pleads in sub-paragraph (b) that BRB owed a duty to Andrew ‘to act in accordance with the instructions given by the firm’s clients’. The pleading does not identify who these ‘clients’ were, or why, if they did not include Andrew, the firm owed any duty to him arising from its duties to its clients to act on their instructions. In the course of argument, counsel for Andrew clarified that the proposed cause of action against BRB is negligent misstatement and deleted sub-paragraph (b). With that deletion, paragraph 39, coupled with the matters pleaded in proposed paragraphs 37 and 38, for current purposes sufficiently plead the source of the duty. This observation should not, of course, be taken to exclude or determine any objection subsequently made by BRB if ultimately joined.
Unfortunately, however, I take a different view in relation to the pleading of loss, a critical element of a cause of action in negligence. I do not consider that the heads of loss and damage on which Andrew relies for this proposed claim are sufficiently pleaded, and I do not consider that it is a deficiency that can be met by particulars or by expert evidence as to the quantum of loss.
The plea of loss and damage is contained in proposed paragraph 41 of the PASOC which is solely in these terms:
As a result of the matters referred to above, Andrew has suffered loss and damage.
Particulars
Particulars of loss will be provided closer to the hearing of this matter and is expected to be the subject of expert evidence.
This paragraph entirely fails to plead the heads of damage asserted by Andrew. The reference to expert evidence is not sufficient. Expert evidence may well be required to calculate the quantum of loss under those heads of damage, but the heads of damage must first be identified. This is to enable the proposed defendant, BRB, to plead in response and to delimit for the area for any expert evidence as to quantum. It may be that Andrew requires expert accounting or other assistance in the first instance to identify the heads of damage, in particular to disentangle them from loss he may have suffered arising from the acts of the defendants, as opposed to BRB. If that assistance is required it should be obtained before any attempted re-pleading.
The only other hint as to the loss that Andrew might be asserting he suffered arising from the representations by BRB is in proposed paragraph 34 (b)(iii). In that sub-paragraph, Andrew seeks to plead that in reliance on the pleaded representations he ‘acted to his detriment as described in paragraph 15 above’. I consider this insufficient in relation to plea of loss as against BRB for two reasons. First, I accept the submission of the defendants that this is a plea of detriment, not loss, and while they may have some factual overlap, they have different content depending on the cause of action.
Secondly, paragraph 15 pleads detriment arising from three aspects of John’s conduct – the Trust Representations, the Joint Endeavour, and the Will Representations. Only one of these, the Trust Representations, corresponds in any way to the claim sought to be brought against BRB. I elaborate these concerns as follows.
The principal relief sought by Andrew as against the defendants is equitable, not in tort (relief sought A, B, C and D). This relief is apparently based on proprietary estoppel. Detriment in proprietary estoppel need not have a quantifiable economic value.[18] Loss occasioned by negligent misstatement, by contrast, would at least ordinarily have quantifiable value.[19] It appears that Andrew has sought to quantify some aspects of his ‘detriment’ in Annexure A to the PASOC, which is incorporated by reference into paragraph 15(f). Incorporation into that sub-paragraph suggests, however, that these cash contributions are not the whole of any economic loss he has suffered by reason of the matters recited in paragraph 15. The broader point, is that equating ‘detriment’ occasioned in proprietary estoppel (the claims against the existing defendants) with loss occasioned in tort (proposed claim against BRB) is at least confusing, and likely to be productive of error.
[18]Samantha Hepburn, Principles of Equity and Trusts (Federation Press, 5th ed, 2016) [15.7.6].
[19]Richards and de Zwart, Tort Law Principles (Thomson Reuters, 2017) [8.140].
The other difficulty is that the detriment claimed in paragraph 15 relates to three aspects of John’s conduct, not just the representations which Andrew contends were made by John Barlow either with John’s authority (paragraph 7) or without (proposed paragraphs 34 and 36). These three aspects of conduct are pleaded to have occurred at different times. The Joint Endeavour is said to have commenced in 1998 (paragraph 11) and been varied in 2010 (paragraph 13). John is said to have made the Will Representations to Andrew in July 2012 (paragraph 14). There is also confusion about the date of the Trust Representations, pleaded in paragraph 7 (and the first particulars to proposed paragraph 34(a)) to be October 2000 in relation to the 2000 Deed, but in proposed paragraph 34(b) to relate to both the 1999 Deed and the 2000 Deed. On the pleading of paragraph 15, it is not clear which, if any, of the detriment there pleaded arose solely from the representations made by BRB in 1999 or 2000, whether with, or without, authority. The confusion is not cured by Annexure A, which sets out various forms of expenditure by Andrew, at different times, in the period 1 November 1999 to dates in 2015, but does not relate these to particular conduct of John.
The deficiencies in the pleading of loss in the proposed claim against BRB cannot be cured by particulars. They are deficiencies of the material facts, that would identify the heads of damage on which Andrew relies in tort against BRB.
A further potential difficulty which was raised by me in argument is whether the proposed claim against BRB would adequately satisfy the requirements introduced into any claim in negligence by the amendments to the Wrongs Act 1958 (Vic) in 2003. I take this no further in these reasons, as it was not the subject of objection by the defendants and so was not fully argued.
I will refuse amendments to join BRB and the proposed claim against it on the basis of the deficiencies in the pleading of loss and damage. I will hear the parties further if Andrew seeks a further opportunity to plead this claim and join BRB.
Statute barred
Given the inadequate pleading of loss, it is too early to consider whether the introduction of a claim against BRB should be refused because the claim would be statute barred. As discussed earlier, it may be that consideration of limitation issues is better left to trial, in any event, at which time full argument can be had on the basis of all the evidence as to when the loss was suffered. Andrew asserts that loss was only suffered when John resiled from his earlier promises, which was in 2014, and so within the limitation period.
Conclusion and orders
Given that I would allow some of the contested amendments, but not the joinder of BRB and the proposed new claim against it, I will give the parties the opportunity to consider their preferred course of action and what orders should be made to reflect these reasons. I will hear them further if they do not agree on those orders.
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