Lockyer v Bermingham
[2016] WASC 367
•16 SEPTEMBER 2016
LOCKYER -v- BERMINGHAM [2016] WASC 367
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 367 | |
| Case No: | CIV:1726/2013 | 16 SEPTEMBER 2016 | |
| Coram: | TOTTLE J | 16/09/16 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Application partially successful | ||
| B | |||
| PDF Version |
| Parties: | PHILLIP LOCKYER MARY BERMINGHAM BEPAD PTY TLD |
Catchwords: | Practice and procedure Strike out application Particulars of defence Where plaintiff asserts particulars are inadequate Whether particulars are sufficient to inform the plaintiff of the case being raised by the defendants and what is required to meet that case Turns on own facts |
Legislation: | Nil |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARY BERMINGHAM
First Defendant
BEPAD PTY TLD
Second Defendant
Catchwords:
Practice and procedure - Strike out application - Particulars of defence - Where plaintiff asserts particulars are inadequate - Whether particulars are sufficient to inform the plaintiff of the case being raised by the defendants and what is required to meet that case - Turns on own facts
Legislation:
Nil
Result:
Application partially successful
Category: B
Representation:
Counsel:
Plaintiff : Mr J C Yeldon
First Defendant : Mr C Slater
Second Defendant : Mr C Slater
Solicitors:
Plaintiff : Huggins Legal
First Defendant : Valenti Lawyers
Second Defendant : Valenti Lawyers
Case(s) referred to in judgment(s):
Nil
1 TOTTLE J: These reasons concern an application brought by letter dated 8 June 2016 to strike out particulars given of allegations made in various paragraphs of the defendants' amended defence dated 3 March 2015 and to strike out those paragraphs of the amended defence.
2 I made an order for the provision of particulars of the amended defence on 26 May 2016. The defendants consented to the order. The plaintiff contends that the particulars provided by the defendant in purported compliance with the order are inadequate and should be struck out.
Background
3 In this action, the plaintiff claims damages for losses he alleges he suffered from acting upon financial planning advice contained in two statements of advice provided by the defendants in 2007 and 2008 respectively. The advice consisted of investment recommendations.
4 The essence of the plaintiff's claim is that the recommendations were premised on incorrect advice and/or erroneous assumptions about the plaintiff's tax liabilities arising from the grant of valuable share options to the plaintiff's wife by his employer and the subsequent exercise by her of those options. The plaintiff alleges that he made a number of investments in reliance upon the 2007 and 2008 advice and suffered losses as a result of making those investments.
5 Relevantly in their amended defence, the defendants allege that:
(a) the plaintiff retained specialist tax advisers throughout the period in which the defendants provided financial planning advice: par 5(a)(ii);
(b) the plaintiff did not provide the defendants with a statement of his complete financial circumstances: par 6(a);
(c) the plaintiff did not inform the defendants of changes in his financial circumstances that had the potential to make the defendants' financial planning recommendations inappropriate: par 6(b);
(d) the plaintiff made the investments recommended in the 2007 and 2008 statements of advice 'in reliance on the specialist taxation advisers': pars 14 and 24;
(e) the plaintiff must credit the benefits he received from making the investments against the damages he claims.
6 The defendants allege that the plaintiff's wife and the corporate trustee of his self-managed superannuation fund were also their clients. In these reasons, unless the context indicates otherwise, references to the plaintiff should be taken as including the plaintiff's wife and the corporate trustee.
7 The action is listed for trial commencing on 16 November 2016. Witness statements and expert reports containing opinions on both liability and quantum have been exchanged.
8 This litigation has seen a number of interlocutory disputes in the lead up to the trial. I have deferred dealing with the plaintiff's strike out application pending the filing and service of a further amended defences and a statement of issues, facts and contentions by the defendants in the hope that these documents would obviate the need to deal with the strike out application.
9 Although the defendants filed and served a minute of proposed draft further amended defence on 23 August 2016 and a statement of facts, issues and contentions on 7 September 2016, neither of these documents resolve the plaintiff's application. The proposed amendments to the defence highlighted in the minute of proposed draft further amended defence do not bear on the outcome of this application in any material way.
Order for particulars of par 5(a)(ii) of amended defence
10 For the purposes of establishing a foundation for a plea that the defendants owed him a common law duty of care in pars 3 and 4 of the amended statement of claim, the plaintiff pleads that, between 1999 and 2012, the defendants acted as his financial advisers and received fees for their services. As a result of those matters, the plaintiff pleads in par 5 of the amended statement of claim that the relationship of the plaintiff and the first defendant was such that the first defendant knew or ought to have known that she was being trusted by the plaintiff 'with respect to his financial position and financial planning'.
11 The defendants do not admit par 5 of the amended statement of claim and, in answer to it, say that the plaintiff received advice from Mr Michael Lee of Michael Lee & Associates and Ms Muriel Oliver of Forum Accounting, defined in the amended defence as the 'specialist taxation advisers'.
12 The order for particulars required the plaintiff to specify with precision the advice provided to him by Mr Michael Lee and Ms Muriel Oliver.
13 The defendants have provided particulars that fall into two sections. The first section comprises a statement to the effect that Mr Michael Lee and Ms Muriel Oliver provided advice to the plaintiff in relation to their obligations in respect of their taxation returns for each financial year between 2004 and 2009. The second section of the particulars comprises a table which purports to set out particulars of advice on further matters provided by Mr Lee or Ms Oliver by reference to the date on which the advice was provided, the identity of the advisor and 'the advice provided'.
14 The plaintiff complains that the first section of the defendants' particulars is 'cryptic vague and lacks key details'. In relation to the information contained in the table, the plaintiff complains that the items listed under the heading 'the advice provided' are 'headlines without details'.
15 There is force in the plaintiffs' criticisms of the particulars the defendant has provided of par 5(a)(ii). The statement that comprises the first section of the particulars is of a very general nature. The advice allegedly provided to the plaintiff is not specified with precision.
16 The particulars provided under the heading 'the advice provided' do not set out advice provided by the taxation advisers. They do no more than identify the topics upon which it is alleged that advice was provided. The advice allegedly provided is not specified.
17 The essence of the defendants' case on the issue of the nature of the professional relationship between the plaintiff and the defendants is that the defendants provided financial planning advice to the plaintiff, but at the same time, the plaintiff received advice from the 'specialist taxation advisers'. The evident purpose of this plea is to limit the scope of any common law duty of care to 'financial planning advice' and to exclude taxation advice from the scope of the duty of care.
18 Notwithstanding the deficiencies in the particulars, I consider that they are sufficient for the purpose of ensuring that the plaintiff is informed of the case being raised by the defendants and that he knows what is required to meet that case. The defendants' counsel has confirmed in the course of argument that the defendants' case, on the nature of the relationship, does not depend upon an allegation that the plaintiff relied on a specific advice received from the 'specialist taxation advisers'. If the defendants wish to rely on specific advice in support of their plea in par 5(a)(ii) of the amended defence, they must plead such advice specifically.
Order for particulars of par 6(a) and (b) and par 17(a) and (b) of the amended defence
19 In response to a plea by the plaintiff that he had provided his 'financial position information' to the first defendant to enable her to provide him with advice, in par 6(a) of the amended defence, the defendants alleged that the plaintiff did not provide a statement of 'complete financial circumstances' and, in par 6(b), alleged that the plaintiff did not provide the defendants with information as to changes in their circumstances where those changes had the potential to make the defendants' recommendations inappropriate. These allegations are repeated in pars 17(a) and (b) respectively of the amended defence.
20 The defendants were ordered to provide particulars of the respects in which it was alleged that there had been a failure to deliver a statement of 'complete financial circumstances' and particulars of the alleged failure to inform the defendants of changes in their circumstances.
21 In summary, the particulars provided by the defendant were to the effect that the plaintiff failed to inform the defendants of his prospective entitlement to the issue of options in his capacity as a director of his employer and failed to inform them that he had decided that the options should be issued to his wife. The defendants also say that the plaintiff failed to inform them that the options had, in fact, been issued to his wife.
22 In par 8 of the amended defence, the defendants alleged that they were not consulted and did not provide any advice on the decision to have the options issued to the plaintiff's wife and that they did not become aware that the options had been issued to the plaintiff's wife until on or about 20 September 2005.
23 The plaintiff complains that the particulars of the failure to provide a statement of 'complete financial circumstances' and the failure to inform the defendants of changes in their circumstances are identical. I do not consider that this is a ground for striking out the particulars. The same facts may constitute a failure to provide a statement of 'complete financial circumstances' and a failure to inform the defendants of a change in the plaintiff's financial position.
24 The plaintiff also complains that the particulars provided of pars 6(a) and (b) are inconsistent with the facts pleaded in par 8 of the amended defence. I do not agree.
25 I do not consider that there is any basis for striking out the particulars given of pars 6(a) and (b) or those paragraphs themselves.
Order for particulars of par 6(b) and par 17(b) of the amended defence
26 In relation to these paragraphs, the defendants were ordered to 'specify precisely what decisions were made by the plaintiff in reliance on advice provided to [the plaintiff] by Michael Lee & Associates and Muriel Oliver of Forum Accounting'. I interpolate that the chamber summons contained a typographical error and referred incorrectly to par 6(a) and par 17(a) of the amended defence as the paragraphs of which particulars should be provided. This typographical error was reproduced in the order made by consent but the parties are agreed that the order should have referred to par 6(b) and par 17(b) and the parties have agreed that the application should be resolved on the basis that order should be taken to have referred to par 6(b) and par 17(b).
27 No decisions are referred to in par 6(b) of the amended defence, either expressly or by implication, and thus no obligation to specify decisions arises from the pleading in this paragraph.
28 Paragraph 17(b) of the amended defence reads as follows:
The plaintiff did not, in breach of clause 3 of the Terms of Engagement, provide to the defendants information on the changes to his circumstances as affected by his decisions made in reliance on his specialist taxation advisers where those changes had the potential to make the recommendations of the defendants' inappropriate.
29 The defendants have provided particulars that specify decisions that they allege were made in reliance on advice provided by Michael Lee & Associates and Muriel Oliver of Forum Accounting. The defendants identify the plaintiff's decisions to authorise and implement the 2007 and 2008 advice. I consider that the particulars provided are adequate to inform the plaintiff of the defendants' case on this issue.
Order for particulars of par 32(b)(iv) of amended defence
30 In par 32 of the amended defence, the defendants deny that the plaintiff suffered loss and damage, but say that, if he did, then he must credit against any such damage the benefit received by him from having acted on the defendants' advice including 'the benefits received by the clients as a result of the defendants' advice'.
31 The defendants were ordered to 'precisely specify the alleged benefits received by the [plaintiff] as a result of the defendants' advice'.
32 The defendants have provided lengthy particulars in narrative form of the benefits that they say the plaintiff has received. Those particulars include a table, 'Table A', that is said to show a positive increase in the net value of the assets held by the plaintiff. Table A, in fact, shows a decrease in the net value of the plaintiffs' assets in the period between 2007 and 2012. Otherwise, the particulars lack any specificity. By way of example, one particular is expressed to be the 'reduction of risks associated with holding a large proportion of investments …. in a single investment'.
33 The benefits are identified with such generality that it is impossible to identify whether they are compensable in monetary terms and, if so, how a monetary value is to be attributed to them. No light is shed on the alleged value of these benefits by the defendants' proposed opinion evidence on damages.
34 In my view, the particulars are embarrassing and are likely to prejudice and delay the fair trial of the action. I will make an order striking out the particulars provided of par 32(b)(iv) and strike out that sub-paragraph of the amended defence in its entirety, with liberty to replead.
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