Macks v Tucker - [2005] SASC 179

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MACKS v TUCKER & ORS
Reasons of Judge Lunn a Master of the Supreme Court
20 May 2005
PROCEDURE
Application under R48.18(a) to strike out parts of a statement of claim as disclosing no cause of action and for summary judgment under R25.04 - applications in nature of demurrers - points not so plain and obvious that they should be dealt with under R46.18(a) or R25.04 - requirements of pleading statement of claim under R46A.03 - facts pleaded under R46A.03(b) which are not directed to a cause of action - applications dismissed.

MACKS v TUCKER & ORS
[2005] SASC 179
Reasons on Applications of the First Defendant to Strike Out Parts of the Statement of Claim and of the Second Defendant for Summary Judgment.

JUDGE LUNN The plaintiff is the Trustee in Bankruptcy of the Estate of the late James McGregor who died on 11 December 1990. On 21 June 1991 probate of his estate was granted to his widow and Adrian McEwin. On 17 February 1997 the estate was declared bankrupt and the plaintiff is now the trustee of that bankrupt estate.
The first defendant is a solicitor who acted for the deceased and later for his estate. The second defendant is a company associated with the first defendant and was the trustee of his family trust.
The plaintiff instituted this action and filed his first statement of claim on 24 May 2004. On 29 July 2004 he filed an amended summons and statement of claim. That statement of claim contained 176 paragraphs and occupied 40 pages. It pleads a number of complicated transactions stretching over a long period of time. A defence has been filed by the second defendant but not by the other defendants.
On 29 November 2004 the first and second defendants took out separate notices for specific directions each seeking summary judgment or alternatively striking out various parts of the statement of claim. The hearings of these applications were held over and on 4 March 2005 the plaintiff filed an application for leave to file a further amended statement of claim which was the exhibit “RJF1” to the affidavit of Rebecca Field filed on that day. On 11 March the first defendant filed an amended notice for specific directions deleting its claim for summary judgment, but maintaining its claim to strike out parts of the statement of claim. On 22 April I heard the plaintiff’s application to amend, the first defendant’s amended application to strike out parts of the statement of claim and the second defendant’s application for summary judgment or to strike out parts of the statement of claim. It was agreed that I should treat the defendants’ applications to strike out the statement of claim as referring to the version which the plaintiff was seeking leave to file and not allow any parts of it which would be struck out pursuant to the defendants’ applications. The strike out applications were brought pursuant to R46.18 (a) and (b) which relate to where the statement of claim does not disclose a reasonable cause of action or does not comply with the Rules as to pleadings. However, no point was raised under (b) which could not be properly dealt with under (a). The defendants did not invoke any other subparagraph of R46.18. R46.18 applies to a statement of claim which is governed by R46A.
I deal first with the application of the first defendant. It seeks to strike out paragraphs 37.3, 165, 27.5, 35.3.5, 37.1, 163.1, 33.3, 35.3.1, 38.2, 141, 163.8 to 163.21, 163.23, 164.2, 166.3 to 166.5, 167.1 to 167.3, 167.5, Appendix A 27.4, 35.3.3, 35.3.4, 36 and 44 of the statement of claim. These paragraphs in their totality are too long to set out in these Reasons. However, the attack is centred on a few particular paragraphs and many others were said to fall consequentially if the primary attacks were successful.
It is useful to take a step back and to see what the first defendant’s application is seeking to do in the context of the whole action. While it attacks a substantial portion of the statement of claim it does not seek to set aside the whole of the pleading. Even if he was to succeed there would still be a significant claim which would proceed to trial against him on the remainder of the statement of claim. The first defendant’s attack is directed at the three discrete parts of the claim which are contained in the paragraphs of the statement of claim mentioned above. In essence, the defendant says that if the plaintiff establishes all it has pleaded on these particular matters, it would not be entitled to any relief in law in respect of them because the matters pleaded do not satisfy the legal requirements for a cause of action. In effect, it is seeking to pursue an old fashioned demurrer against these parts of the plaintiff’s claim. (Butterworth’s Australian Legal Dictionary p344 defines “demurrer” as “a pleading which disputes the legal sufficiency of the other side’s pleading by alleging that the facts in the pleadings are true but that the legal consequences of those facts do not require the demurring party to proceed further. The demurring party is alleging that the pleadings do not state a cause upon which relief can be granted”.)
Although the point was not directly raised by the plaintiff’s counsel, it is necessary to consider whether the first defendant should be permitted to pursue such applications in the nature of demurrers. The right to plead a demurrer was abolished by Order 25 Rule 1 of the Supreme Court Rules 1947. The use of demurrers was removed because it led to substantial delay and expense and often for no good purpose as plaintiffs could then amend if the demurrer was successful to patch up any deficiencies in their cases as pleaded. In lieu of a right to employ demurrers, defendants under the 1947 Rules were given two alternative courses to pursue to raise any deficiencies in the statement of claim: Hubbuck & Sons Ltd v Wilkinson Heywood & Clark Ltd [1899] 1 QB 86 at 91. The first alternative was O25 r4 which allowed the Court to strike out a statement of claim that did not disclose a reasonable cause of action. (This is the equivalent of the present R46.18(a)). However, this was to be a summary procedure which was only to be used in plain and obvious cases: Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1994) 61 SASR 424; Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241. The second alternative was under O25 r2 which required the defendant to plead the point of law and to apply for it to be disposed of before the trial of the rest of the action. (This is the equivalent of the present R75.02(c)). This method was appropriate to cases requiring argument and careful consideration: Hubbuck & Sons v Wilkinson Heywood and Clark above.
The repeal of the 1947 Rules by the Supreme Court Rules 1987 did not revive the common law right of a defendant to pursue a demurrer: Sheahan v Verco (1999) 203 LSJS 109 at 113-4. On an application under R48.18(a) the Court need only deal with a quasi demurrer point where it is plain and obvious, although it has a discretion to resolve the point of law if it thinks fit to do so: Pikes Wines Pty ltd v Kelly (2000) 211 LSJS 159; Catto v Hampton Williams J 26 April 2000 Judgment No [2000] SASC 104 unreported; Esanda Finance Corporation Ltd v Peat Marwick Hungerfords above. As King J said in Esanda v Peat Marwick Hungerfords above at 433,
A conclusion does not necessarily cease to be plain because it has taken argument and consideration to arrive at it.
But where the point is not plain or obvious the Court is not obligated under R48.18(a) to pursue it to its ultimate conclusion. Here I do not consider that it is appropriate to pursue the complex questions raised by the first defendant’s submissions. They are not plain and obvious. They will not dispose of the whole action. The pursuit of such quasi demurrers is generally contrary to the objectives in R2.02 for the expeditious conduct of litigation. It is better that the points, if they are to be pursued other than at the trial of the action, should be dealt with under R72.02(c) which would require a determination whether it was in the interests of justice to have a preliminary trial on these issues rather than to pursue the normal course of adducing all of the evidence and submissions on all of the issues raised by the pleadings before the Court seeks to rule on any of them. I need not decide whether the Court would allow them to be pursued under R72.02(c).
While the short answer to the first defendant’s application is that any deficiencies in the causes of action disclosed by the statement of claim are not so plain and obvious that they should result in the relevant paragraphs being summarily struck out, nevertheless I now go on to deal briefly with them as I did hear full submissions on them and my rulings may expedite the progress of the action.
In relation to the first two points raised by the first defendant which related to the McGregor Senior Estate and the Lloyd Syndicate Settlement the defendants’ submissions in part were based on a misapprehension of the requirements of R46A.03 about what is to be pleaded in a statement of claim. That Rule reads:
In an action where damages for personal injuries are not claimed the Statement of Claim must plead, but plead only:
(a)the material facts relied upon to constitute any cause of action, or grounds for an extension of time or other relief sought;
(b)such further material facts as are necessary to give other parties fair notice of the case which they will have to answer;
(c)the general nature of the legal causes of action;
(d)any statutory provisions relied upon; and
(e)the general nature of the relief sought.
Not everything which is pleaded under this Rule need be directly material to a cause of action. There will be matters to be pleaded under subparagraph (b) which will not be “facts relied upon to constitute any cause of action”, but will need to be pleaded to give proper notice to the other party about what the case of the party will be at trial and to avoid evidence on those matters being excluded at the trial under R46A.10(1). Subparagraphs (c) and (e) only require the pleader to state “the general nature” of the legal causes of action and the relief sought. They do not require pleading of the steps in the argument as to why the particular facts pleaded under paragraph (a) constitute in law the cause of action pleaded or entitle the plaintiff to the relief sought. Furthermore it does not require the pleader to state the manner in which the material facts pleaded under paragraph (b) will be properly part of the plaintiff’s case at trial. All that R46A.03 requires is that the other parties be told the facts which the plaintiff intends to prove at trial so that the other parties can be prepared to mount their own cases at trial on those factual issues and “the general nature” of the legal causes of action and the relief sought by the plaintiff so that the other parties can direct their preparation to the applicable law on those topics.
Without going into details, what has happened here on the first defendant’s attack on the first defendant’s pleadings on the McGregor Senior Estate and the Lloyds Syndicate Settlement is that they have sought to elevate the pleadings on these topics into pleadings under paragraph (a) of R46A.03 of causes of action when they are only pleadings under paragraph (b) of “further material facts as are necessary to give other parties fair notice of the case which they will have to answer”. If the plaintiff intends to lead evidence on those topics at the trial, he runs a grave risk under R46A.10(1) if he does not plead them. Whether the evidence on the topics can be led at the trial is ultimately a question for the trial Judge. On its submissions before me the plaintiff has at least made out an arguable case why it should be permitted to lead evidence on those topics. If the plaintiff has unreasonably pleaded facts which are not material the trial Judge may see fit to penalise him in costs. However it is for the trial Judge, with the benefit of hindsight after conducting the trial, who is in the best position to assess this issue.
In relation to the Anak transactions the first defendant’s primary contention is that there is nothing pleaded to show that the bankrupt estate had any interest in Anak which could be adversely affected by the numerous and complicated transactions pleaded on this topic. I consider that the pleading does extend to at least some indirect interest, and in any event much of what is pleaded on the topic can be put forward under paragraph (b) of R46A.03 in respect of the context of the first plaintiff’s alleged conflict of interest and the claim for exemplary damages.
Application by the Second Defendant for Summary Judgment
Summary judgment is only to be granted under R25.04 where it is clear that the action is devoid of merit: Rogers v Legal Services Commission (1995) 64 SASR 572 at 588. On the proposed new version of the statement of claim the defendant cannot satisfy this criterion. (I have not considered what the position was on the previous statement of claim.)
The crux of the submissions by the second defendant was that it did not owe any duty to the plaintiff at the time any alleged breach of duty occurred, or owe any duty to the plaintiff at all. However, as paragraphs 167A and 167B of the proposed new statement of claim make clear at least a substantial part of the claim against the second defendant relates to it being a constructive trustee of assets received from, or through, the first defendant knowing of the first defendant’s alleged breaches of duty. This is sufficient to justify the dismissal of the application for summary judgment.
The second defendant’s alternative application to strike out the statement of claim, or parts of it, fails for the same reasons as summary judgment is refused and for the reasons why similar applications by the first defendant have been dismissed.
Accordingly there will be leave to the plaintiff to file a further statement of claim in the form exhibited to the affidavit of Rebecca Field and as varied by the letter of 26 April 2005 from her.
I will hear the parties on what other orders should now be made.