Menegazzo v Pricewaterhousecoopers (A Firm) - [2016] QSC 94

SUPREME COURT OF QUEENSLAND

CITATION:

Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94

PARTIES:

MARK JOHN MENEGAZZO

(plaintiff)

v
PRICEWATERHOUSECOOPERS (A FIRM)
ABN 52 780 433 757

(first defendant)
and
BRENDAN PETER MENEGAZZO
(second defendant)
and
DEBRA LOUISE MENEGAZZO
(third defendant)
and
DAVID ANGELO MENEGAZZO
(fourth defendant)
and
JUTLAND PTY LTD
ACN 010 813 322
(fifth defendant)
and
THYNNE & MACARTNEY (A FIRM)
ABN 79 763 953 991
~~(sixth defendant)~~
and
MCCULLOUGH ROBERTSON LAWYERS (A FIRM)
ABN 42 721 345 951
(seventh defendant)

FILE NO:

SC No 10502 of 2013

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

29 April 2016

DELIVERED AT:

Brisbane

HEARING DATE:

15 March 2016

JUDGE:

Applegarth J

ORDERS:

1.    Adjourn the applications to a date to be fixed for the purpose of allowing the parties to confer and bring in forms of order reflecting the reasons for judgment and directions for the future conduct of the proceeding.

2.    Direct the parties to confer for the purpose of agreeing steps for the just and expeditious resolution of the real issues in the proceeding at a minimum of expense.

3.    Liberty to apply.

CATCHWORDS:

PROCEDURE – CIVIL PROCEDURE IN STATE AND TERRITORY COURTS – PLEADINGS – FORM OF PLEADING – RAISING NEW MATTER – where the plaintiff sues various defendants arising out of his relinquishing interests in companies and trusts that owned pastoral properties and carried on businesses in the cattle industry – where the plaintiff had agreed to relinquish certain interests in favour of his three siblings (the second, third and fourth defendants) in exchange for acquiring certain properties and not having to repay a loan of $18,500,000 – where the plaintiff seeks leave to amend a claim and further amend a statement of claim which has gone through a number of editions – where the pleadings allege breaches of the ‘fair dealing rule’ by his siblings, and breaches of duties of care by the first, fifth and seventh defendants in relation to various advices and valuations – where the plaintiff submits that new causes of action in the proposed pleading arise out of substantially the same facts as that for which relief had already been claimed – where defendants oppose the grant of leave on the basis that the amendments raise new causes of action which are time-barred and do not fall within r 376(4) of the Uniform Civil Procedure Rules 1999 (Qld) – where action not started until six years after relevant events – where inadequate explanation for delay in raising new causes of action – whether proposed pleading raises causes of action which arise out of substantially the same facts as those for which relief has already been claimed – whether any new causes of action raised are time-barred – whether it is otherwise appropriate for leave to amend to be granted

EQUITY – EQUITABLE PRINCIPLES – RESCISSION – MISTAKE – where the plaintiff alleges that he and his siblings were all under a misapprehension as to the value of the companies and trusts when entering into the agreement whereby he relinquished his interests in them in return for substantial property and a loan release – where the proposed new claim is said to be supported by the principle of “equitable common mistake” – where the defendant siblings submit that this claim is misconceived, bad in law and is liable to be struck out – whether leave should be granted to amend the proposed pleading to incorporate the new cause of action – whether the principle of “equitable common mistake” extends to a common mistake of the kind alleged in the proposed pleading about the value of property

LIMITATION OF ACTIONS – LIMITATION OF PARTICULAR ACTIONS – TRUSTS AND DECEASED ESTATES – ACTIONS IN RESPECT OF TRUST PROPERTY AND BREACH OF TRUST – where the defendant siblings submit that the new claims for breach of trust are time-barred because the six year limitation period in s 27(2) of the Limitation of Actions Act 1974 (Qld) applies – where the plaintiff submits that the new claims are not in relation to a “breach of trust” for the purposes of s 27(2) – whether the new claim is an action to recover “trust property” so as to bring it within the exception in s 27(1)(b) – whether the new claim is in relation to a “future interest” of a beneficiary so as to bring it within an exception to s 27(2) contained in s 27(2A)

Limitation of Actions Act 1974 (Qld), s 10(2), s 10(6), s 27(1), s 27(2), s 27(2A), s 38(1)(b), s 38(1)(c)
Limitation Act 1935 (WA)
Trade Practices Act 1974 (Cth), s 52
Uniform Civil Procedure Rules 1999 (Qld), r 5, r 171, r 222,
r 371, r 375, r 376, r 376(4)(a), r 376(4)(b), r 377(1)(c)

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 cited
Armitage v Nurse [1998] Ch 241 at 261 cited
Australia Estates Pty Ltd v Cairns City Council [2005] QCA 328 followed
Baldwin v Icon Energy Ltd (No 2) [2015] QSC 286 cited
Bartlett v Barclay’s Bank Trust Co Ltd [1980] Ch 515 at 537 cited
Borsato v Campbell [2006] QSC 191 cited
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551-553 cited
Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713 cited
Clay v Clay (2001) 202 CLR 410 cited
Doneley v Doneley [1998] 1 Qd R 602 at 608 cited
Draney v Barry [2002] 1 Qd R 145 at 164 applied
Errichetti Nominees Pty Ltd v Paterson Group Architects Pty Ltd [2007] WASC 77 followed
Feigan v Ainsworth [2011] VSC 454 at [32] – [34] cited
Great Peace Shipping Ltd v Tsaviliris Salvage (International) Ltd [2003] QB 679 followed
Grist v Bayley [1967] Ch 532 cited
Gwembe Valley Development Co Ltd v Koshy [2003] EWCA 1048 at [103] – [109] followed
Hartnett v Hynes [2009] QSC 225 cited
HWG Holdings Pty Ltd v Fairlie Court Pty Ltd [2015] VSC 519 cited
James v The State of Queensland [2015] QSC 65 cited
Jane v Bob Jane Corporation Pty Ltd [2013] VSC 406 cited
Jetcrete Oz Pty Ltd v Conway [2015] QCA 272 cited
J J Harrison (Properties) Ltd v Harrison [2001] EWCA Civ 1467 cited
Johns v Johns [2004] 3 NZLR 202 at [43] – [63] cited
McCullough Robertson Lawyers (A Firm) v Menegazzo [2015] QSC 109 cited
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 cited
Mineral Resources Engineering Services Pty Ltd as Trustee for the Meakin Investment Trust v Commonwealth Bank of Australia [2015] QSC 62 cited
Mokrzecki v Popham [2013] QSC 123 followed
Monto Coal 2 Pty Ltd v Sanrus Pty Ltd as Trustee of the QC Trust [2014] QCA 267 cited
Murdoch v Lake [2014] QCA 216 cited
Newgate Stud Co v Penfolds [2004] EWHC 2993 Ch cited
Page v The Central Queensland University [2006] QCA 478 at [24] cited
Paulus v Jones Unreported, Queen’s Bench Division 16 April 1984 cited
Pianta v BHP Australia Coal Ltd [1996] 1 Qd R 65 cited
Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd [2011] QCA 102 cited
Robert Bax v Cavenham [2011] QCA 53 cited
Solle v Butcher [1950] 1 KB 671 discussed
Stacey v Perkins [2015] QDC 100 cited
Svanosio v McNamara (1956) 96 CLR 186 cited
Taylor v Johnson (1982) 151 CLR 422 cited
Thomas v State of Queensland [2001] QCA 336 cited
Tito v Waddell (No 2) [1977] 1 Ch 106 considered
Westpac Banking Corporation v Hughes [2012] 1 Qd R 581 at 584 cited
Westpac Banking Corporation v Knight Property Investments No 3 Pty Ltd [2014] QSC 270 cited
Wheatley v Bower [2001] WASCA 293 at [123] cited
Wolfe v State of Queensland [2009] 1 Qd R 97 applied

COUNSEL:

G A Thompson QC and E Morzone for the plaintiff
L F Kelly QC and M F Johnston for the second and third defendants
S R Eggins for the fourth defendant
T Pincus for the fifth defendant
R P S Jackson QC for the seventh defendant

SOLICITORS:

Emanate Legal for the plaintiff
Allens Linklaters for the second and third defendants
Minter Ellison for the fourth defendant
Hopgood Ganim for the fifth defendant
Bartley Cohen for the seventh defendant

This litigation started late, in November 2013, six years after the events to which it relates. Since then it has made slow progress. The plaintiff seeks leave to amend his claim and to further amend his pleading, which has gone through a number of editions. Various defendants oppose leave being granted on the ground that the amendments raise new causes of action which are time-barred and do not fall within r 376(4) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). The second, third and fourth defendants also oppose leave to amend on other grounds, and apply to strike out all or part of the plaintiff’s proposed amended claim and proposed further amended statement of claim in the event leave is granted to amend. They argue that some of the plaintiff’s proposed causes of action are bad in law or are defective in point of pleading.
In general terms, the plaintiff’s proposed pleading relates to the circumstances under which he came to relinquish his interests in companies and trusts that owned pastoral properties and carried on businesses in the cattle industry, together with his interest in the estate of his late father, Peter Menegazzo. In exchange for agreeing to relinquish those interests in favour of his three siblings (the second, third and fourth defendants), the plaintiff acquired certain properties and was released from the obligation to repay a loan of $18,500,000.
The plaintiff agreed in principle to that deal on 7 November 2007, and alleges that in doing so he relied on:
(a)short form appraisals of nine rural properties and a meatworks, in which the fifth defendant gave an “Opinion of Value” for each pastoral property, which totalled $329,595,000, and an “Opinion of Value” for the meatworks of $10,000,000 to $12,000,000;
(b)a memorandum and attached spreadsheets prepared by the first defendant (“PwC”) which estimated the potential net asset value of the relevant pastoral properties, taking account of tax liabilities that may arise on the realisation of assets.
The plaintiff alleges that:
(a)the fifth defendant breached a duty of care which was owed to him in preparing the Opinions of Value dated 5 November 2007; and
(b)PwC breached a duty of care which was owed to him in preparing its memorandum and net assets calculation dated 7 November 2007.
As a result of his alleged reliance on those documents, the plaintiff says that he agreed to receive less than the true value of his interests.
In his proposed amended claim and proposed pleading against his siblings, the plaintiff alleges that:
(a)they breached the “fair dealing rule’ which governs the purchase by a trustee of a beneficiary’s interest under a trust;
(b)alternatively, that the plaintiff and his siblings were under a common fundamental misapprehension about the value of the Menegazzo Group and therefore about their respective rights: this claim is based on the contentious doctrine of “equitable common mistake” articulated in Solle v Butcher[1] which has since been disapproved by the English Court of Appeal and the Queensland Court of Appeal.
[1] [1950] 1 KB 671.
The plaintiff also sues the seventh defendant, a firm of solicitors he engaged on

7 November 2007 about the advice it gave him.
In seeking leave to amend, the plaintiff’s basic position is that, with the exception of the claim for equitable common mistake made against the second, third and fourth defendants and the claim for breach of contract against the seventh defendant, all claims are the same as previously raised. In any event, he submits that all the causes of action contained in his proposed pleading arise out of the same facts or substantially the same facts as a cause of action for which relief had already been claimed in the original claim and statement of claim filed on 6 November 2013.
As for his claims against the second, third and fourth defendants, the plaintiff submits that the essential difference is that the original statement of claim related to a trust under the will of his late father (“the Will”), whereas the proposed pleading includes properties which were held by the Stanbroke Investment Trust and the Peter Menegazzo Family Trust, as well as the trust created by the Will. The plaintiff submits that there are no statutory limitation periods applicable to his causes of action against the second, third and fourth defendants or, if there are, the amendments do not give rise to new causes of action, save for the claim for equitable common mistake.
In general terms, the second, third and fourth defendants submit that the proposed statement of claim pleads a much broader, and therefore new, cause of action for breach of trust which extends to trusts which were never part of the plaintiff’s original claim and that the new causes of action are time-barred. His breach of trust claim, which has been extended to his alleged interest in 15 companies, is submitted to not arise out of substantially the same facts as the cause of action for which relief has already been claimed. In addition, the new cause of action for “equitable common mistake”, for which leave is required, is said to be misconceived. According to the second, third and fourth defendants, it is not appropriate to allow the amendments because they are an exercise in futility and a waste of resources. They are time-barred and defective in point of pleading.
The fifth defendant submits that leave to make the proposed amendments should be refused because they would add new causes of action which do not arise out of the same or substantially the same facts as any cause of action previously pleaded against it and because it would be inappropriate to allow the amendments. The fifth defendant also applies to strike out the existing statement of claim against it.
The seventh defendant similarly points to new causes of action against it in the proposed pleading which are submitted to not arise out of the same or substantially the same facts, and points to various grounds upon which it is not appropriate to permit the amendments.
The defendants rely on the initial delay in commencing the proceeding, the manner in which the litigation has been conducted by the plaintiff to date and the absence of any adequate explanation from the plaintiff as to why it has taken until now to bring forward his proposed amendments.

Background

The plaintiff and the second, third and fourth defendants are siblings. Their parents died in a plane crash on 2 December 2005. The four siblings were appointed executors of their father’s Will. The Will also appointed them trustees of a trust created by the Will which provided for each to receive a one quarter share of the residue of the deceased’s estate.
Leaving aside property that belonged to the estate of the late Peter Menegazzo, trusts and companies associated with the Menegazzo family held other property. They owned numerous large cattle properties, a feedlot and a meatworks. They carried on businesses of raising cattle, slaughtering cattle and processing, marketing and selling beef products. The siblings became trustees for those trusts and directors of trustee companies in the group. The trusts included the Stanbroke Investment Trust and the Peter Menegazzo Family Trust. The Stanbroke Investment Trust holds all of the shares issued in Vanwarren Pty Ltd, which is the ultimate holding company of Stanbroke Pastoral Company Pty Ltd and Valley Beef Pty Ltd. Stanbroke Pastoral Company Pty Ltd is and was the owner of several cattle stations and a feedlot. Valley Beef Pty Ltd is and was the owner of a meatworks.
Following the death of Peter Menegazzo, the siblings became trustees of the Stanbroke Investment Trust. They also became directors of Mowburn Nominees Pty Ltd, which is trustee of the Peter Menegazzo Family Trust. Mowburn Nominees Pty Ltd, as trustee of the Peter Menegazzo Family Trust, was the owner of cattle stations named Warrenvale, Glenore and Vanrook.
Other companies in the Menegazzo/Stanbroke Group, to which the siblings were appointed as directors, were trustees of trusts which operated feedlot, abattoir and beef marketing and sale businesses. Ringtank Pty Ltd, as trustee of the Ringtank Trust, owned properties described as the Ballina properties. The Menegazzo/Stanbroke Group consisted of 15 companies and eight trusts.
After the death of their parents, the siblings, to different degrees, were involved in the day-to-day management of the family’s businesses and properties. Mr James Bell QC was asked by the siblings to attend family meetings and to act as a facilitator for communications between them. Differences arose between the siblings over decisions to be made in operating the family’s businesses. PwC had acted as an adviser to the family. At some stage, the plaintiff and the fourth defendant indicated that they wanted to consider options to “exit” from the family business arrangements. The siblings agreed that consultants would need to be instructed to provide figures for arrangements to be put in place. On 31 October 2007 Mr Bell, acting on behalf of the Menegazzo Group, sent an email to Mr Rod Douglas (of the fifth defendant), who had undertaken work for

Mr Peter Menegazzo and the family in previous years in connection with real estate.

Mr Bell, as instructed by the siblings, sought an opinion about the value of the rural property interests of the Menegazzo Group for the purpose of considering the value of the group assets.
On 5 November 2007 Mr Douglas, as director of the fifth defendant, responded to the email and enclosed his “Opinion of Value” for each property. His covering letter said that the “Opinion of Value” was based on comparable sales, his knowledge of the subject properties and the cattle herd and his experience in rural property. The “Opinion of Value” was expressly stated by Mr Douglas to be “my opinion only” and should not be taken as a “sworn valuation”. It consisted of opinions of value of nine rural properties on a “walk in walk out” basis, which totalled $329,595,000, together with an opinion of value as to the meatworks which as at 1 November 2007 was said to have a value of between $10,000,000 and $12,000,000.
As appears from the plaintiff’s original statement of claim, it was clear on the face of the documents which Mr Douglas prepared that they were not formal valuations, but rather “short appraisals”.
PwC is alleged to have provided a calculation of the potential net asset value of the properties of the Stanbroke Group in the form of a Pastoral net assets calculation dated

7 November 2007.
The plaintiff alleged in his original statement of claim that at the meeting on 7 November 2007 an agreement was reached with his siblings to the effect that he would accept “in lieu of his entitlement under the Will” certain properties, and that an $18.5 million debt would be forgiven. The properties he agreed to accept include Vanrook Station (which the fifth defendant thought was worth, together with its cattle, $55,750,000) and a quarter share in other properties.
Immediately after the 7 November 2007 meeting, Mr Bell told the plaintiff that he would require independent legal advice before reaching any binding agreement with his siblings. Mr Bell arranged for the plaintiff to be introduced to a partner of McCullough Robertson, the seventh defendant. Thereafter formal documents were entered into and a deed was executed on 31 December 2007.

The claims in the original statement of claim

The essence of the plaintiff’s claim against PwC in his original statement of claim is that PwC owed him a duty of care in tort in respect of its preparation of the so-called “Asset Valuations” and breached that duty.
The essence of the plaintiff’s claim against the second, third and fourth defendants, as originally pleaded, related to the agreement which is alleged to have been reached at the 7 November 2007 meeting about what he would accept “in lieu of his entitlement under the Will”. The plaintiff alleged that by receiving the assets which he did pursuant to that agreement, he received less than his one quarter entitlement. In particular, it is alleged that in acquiring his interest in the trust created by the Will, his siblings did not give full value because the value of the assets he received was less than one quarter of the value of the property of that trust.

The original statement of claim also made claims against the second, third and fourth defendants about an alleged “side agreement”, but that allegation is not pressed. Critically for present purposes, the pleaded causes of action for breach of trust and breach of fiduciary duty related to the second, third and fourth defendants’ obligations as executors and trustees under the Will, not their obligations as trustees of other trusts or as directors of companies which acted as trustees.
As for the fifth defendant, the essence of the original statement of claim was that the fifth defendant owed a duty of care to the plaintiff in its preparation of “the Property Valuations” (elsewhere described in the pleading as “short appraisals”), and that these documents failed to meet the appropriate standard of valuation expected from a reasonably competent valuer because each “failed to properly identify the components of the assets being valued, the basis or methodology on which the valuation was conducted, and any underlying assumptions on which the valuations were based”. The fifth defendant was alleged, in the alternative, to have negligently misrepresented the value of the properties.
The claim against the sixth defendant, a firm of solicitors which had acted for the deceased and his family, was discontinued following an application to strike it out.
As for the original claim against the seventh defendant, it alleged that the firm breached its duty of care to the plaintiff in five pleaded respects. It is unnecessary to detail them because a number of them are not pursued in the proposed pleading. It seeks to include new alleged breaches of duty, to which I will return.
I should add that PwC objected to a grant of leave to the plaintiff to file a proposed pleading which was exhibited to the plaintiff’s solicitor’s affidavit dated 27 November 2015. PwC brought an application in respect of proposed paragraphs 36, 38 and 39. However, the matter was resolved as between the plaintiff and PwC and consent orders were made by me in respect of PwC’s application. This led to the formulation of a new proposed pleading which was tendered at the hearing before me on 15 March 2016. I will refer to it as “the proposed pleading”.

History of the proceeding

This proceeding was not started until 6 November 2013, one day prior to the sixth anniversary of the “Exit Meeting” which was held on 7 November 2007. Delay prior to the commencement of a proceeding is an obvious matter which bears on the exercise of the Court’s discretion to grant leave.[2]
[2] Hartnett v Hynes [2009] QSC 225 at [18]; [2010] QCA 65 at [40].
The plaintiff’s present solicitor has outlined, based upon her review of documents obtained from the plaintiff’s previous solicitors, certain events which occurred between 2007 and the commencement of proceedings. The plaintiff first instructed legal representatives in about October 2008, when he conferred with solicitors in Sydney and a Queen’s Counsel. In 2009 he retained another firm, based in Melbourne. His then solicitor sought access to documents and records in relation to relevant entities. The plaintiff was in regular communications with his QC and his solicitors in Melbourne. Another firm in Melbourne provided active assistance to him. In 2011 he communicated regularly with and directly with his barristers. He received a number of joint advices from them during 2011 and 2012. In fact, between October 2008 and June 2012 he received seven joint advices from counsel.
Steps were taken to engage an expert forensic accountant. In May 2012, a new firm of chartered accountants was engaged to provide accounting advice. About the same time, the plaintiff retained two Sydney firms, Equius Legal and Sagacious Legal, while still having a firm in Victoria involved. During 2012 and after further conferences, counsel revised a draft statement of claim, based on the plaintiff’s instructions. In 2013, a new barrister was briefed and there were meetings with the accountants. In September 2013 a new firm of accountants was engaged to provide advice. Because of the plaintiff’s concern about the limitation period’s pending expiry, a claim and statement of claim was filed on 6 November 2013, by which time his solicitors had become Agility Legal.
On 14 March 2014 the plaintiff’s present solicitors, Emanate Legal, began to act for him, and after obtaining access to the large volume of files which the plaintiff’s previous legal advisers held, reorganised them. A new senior counsel and a new junior counsel (not the counsel who presently appear for him) were retained. On 20 March 2015 a proposed amended claim and a proposed amended statement of claim were delivered to the other parties and these documents were filed on 30 March 2015. They effectively abandoned the entirety of the original statement of claim and sought, without leave, to introduce new claims for breach of contract, negligent misrepresentation and breach of s 52 of the

Trade Practices Act
1974 (Cth) (“TPA”). The filing of those documents without leave was objected to, with various defendants foreshadowing applications to disallow them.
On 7 April 2015, the seventh defendant filed an application seeking to have the amended statement of claim against it struck out. The plaintiff proposed a timetable to the second, third and fourth defendants about obtaining leave and confirmed that he would not require those defendants to file and serve a defence.
On 21 April 2015, McMurdo J heard the seventh defendant’s application to strike out the amended statement of claim against it. For reasons delivered on 8 May 2015, the pleading was struck out.[3]
[3] McCullough Robertson Lawyers (A Firm) v Menegazzo [2015] QSC 109.
The second, third and fourth defendants inquired of the plaintiff’s solicitors as to whether they should be directing their foreshadowed strike-out application to the existing pleading or should await a further pleading. Some months later the plaintiff’s solicitors advised that counsel were settling amendments together with an application seeking leave. Delays continued and it was not until 3 September 2015 that the plaintiff filed an application seeking leave to amend in terms of an amended claim and a further amended statement of claim. The revised pleading persisted with a number of apparently time-barred causes of action including causes of action for negligent misrepresentation and breach of s 52 of the TPA. The defendants opposed leave being granted and also brought an application to strike out that pleading in its entirety. Those applications proceeded to a hearing before Flanagan J on 29 and 30 October 2015. On the second day of the hearing the applications were adjourned, following which the plaintiff’s application for leave to amend was dismissed. Orders were also made on 4 December 2015 that the amended statement of claim filed on 30 March 2015 was ineffectual as against the second, third and fourth defendants. The plaintiff was ordered to pay the costs of the second, third and fourth defendants in respect of the plaintiff’s application filed on 3 September 2015 and in respect of those defendants’ separate applications. He also was ordered to pay the costs of the first, fifth and seventh defendants.
On 27 November 2015, the plaintiff filed an application seeking orders:
(a)pursuant to r 377(1)(c) of the UCPR for leave to amend the claim filed on

6 November 2013 in terms of an amended claim exhibited to his solicitor’s affidavit filed that day; and
(b)pursuant to r 375, and if necessary r 376 of the UCPR, for leave to amend his statement of claim generally in terms of the further amended statement of claim exhibited to that affidavit.
In summary, the proceeding was commenced about six years after the events to which it related. In the period of more than two years since the proceeding was commenced it has not progressed to the stage where any defendant has been required to file a defence, due to the plaintiff’s various proposed changes to his claim and pleadings, and deficiencies in those documents. The statement of claim has now gone through five editions. The original statement of claim was filed on 6 November 2013. The version filed on

30 March 2015 was declared ineffectual as against the second, third and fourth defendants. The version filed on 3 September 2015 was abandoned. The version proposed in the application filed 27 November 2015 has been the subject of minor revisions to accommodate the concerns raised by PwC. In substance, there have been four main attempts at articulating the plaintiff’s case. Because the second and third editions of the plaintiff’s pleading have effectively been abandoned, the plaintiff accepts that the required comparison is between his original statement of claim and the proposed pleading.

Rule 376(4)

The plaintiff’s application for leave to amend requires consideration of his separate claims against his siblings (the second, third and fourth defendants), the fifth defendant and the seventh defendant. However, common issues arise concerning the application of r 376(4) to the proposed statement of claim in respect of all the defendants who contested the application for leave to amend.
Rule 376(4) applies to an application for leave to make an amendment if a relevant period of limitation, current at the date the proceeding was started, has ended.[4] Rule 376(4) provides:
“(4)The court may give leave to make an amendment to include a new cause of action only if –
(a)the court considers it appropriate; and
(b)the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment.”
[4] Rule 376(1).
Commonly there will be three separate questions to consider in an application for leave to amend:
(a)     Is there a new cause of action?
(b)     Does it arise out of substantially the same facts?
(c)     Is it appropriate to give leave to make the amendment?
In some applications or in respect of some amendments, an applicant may acknowledge that an amendment raises “a new cause of action”.

A new cause of action

The frequently-cited judgment of McMurdo J in Borsato v Campbell[5] considered the term “cause of action” in the context of r 376. The term has been defined to mean “every fact which is material to be proved to entitle the plaintiff to succeed”.[6] However, not every newly-pleaded fact raises a new cause of action. McMurdo J stated:
“The dividing line is between the addition of facts which involve a new cause of action and those which are simply further particulars of the cause already claimed, and its location involves a question of degree which can be argued, one way or the other, by the level of abstraction at which a plaintiff’s case is described.”[7]
[5] [2006] QSC 191.
[6] At [8].
[7] [2006] QSC 191 at [8].
In Murdoch v Lake,[8] Peter Lyons J (with whom Morrison JA agreed), cited authority that a “cause of action is the combination of facts which gives rise to a right to sue”. His Honour noted that in Bruce v Odhams Press Ltd,[9] Scott LJ had observed that it is often difficult to distinguish between a material fact, and a particular piece of information which it is reasonable to give to the defendant, in order for the defendant to know the case to be met. Pleadings sometimes include facts which are not material facts. Lyons J went on to observe:
“… if an amendment introduces a new material fact, then a new cause of action is introduced, even if the cause of action is of the same type or category as one pleaded before the amendment. However, if the material facts remain the same, then no new cause of action is introduced.”[10]
[8] [2014] QCA 216 at [17].
[9] [1936] 1 KB 697 at 712-713.
[10] [2014] QCA 216 at [17].

A relevant limitation period has ended

In some cases an applicant for leave to amend may not acknowledge that leave is required pursuant to r 376(4) and contend that any new cause of action is still within the relevant period of limitation. There may be scope for argument about that, for example, where it is not clear when the plaintiff first suffered loss and damage in cases in which the cause of action is not complete until loss and damage is suffered. In such cases the approach is often taken to proceed to the issues that arise under r 376(4), namely whether any new cause of action arises out of the same or substantially the same facts as the cause of action for which relief has already been claimed, and whether it is appropriate to make the amendment. This is because if the requirements in r 376(4) are satisfied, the plaintiff should be granted leave to make amendments, notwithstanding the expiry of the limitation period.[11] If an applicant satisfies the requirements of r 376(4) then it should have the benefit of that rule, which permits the inclusion, by amendment, of a cause of action which otherwise would be out of time. If the court hearing the application is not in a position to fairly determine whether a relevant period of limitation, current at the date the proceeding was started, has ended, but the applicant satisfies the requirements of r 376(4), then there is no relevant detriment to the defendant in being deprived of a limitation defence.[12] If, however, the requirements of r 376(4) are not satisfied, and it is not clear whether the new cause of action is out of time “the amendment may be permitted but on terms that it take effect from the order giving leave or from some other time, so as not to prejudice a possible limitation defence”.[13]
[11] Mokrzecki v Popham [2013] QSC 123 at [21].
[12] Ibid.
[13] Ibid at [22]; Mineral Resources Engineering Services Pty Ltd as Trustee for the Meakin Investment Trust v Commonwealth Bank of Australia [2015] QSC 62 at [18] – [19] (“Mineral Resources”); Baldwin v Icon Energy Ltd (No 2) [2015] QSC 286.
In some cases it will be inappropriate to decide a contested issue of whether a relevant period of limitation has ended, and therefore whether r 376 applies, because that issue cannot be fairly determined. However, this does not mean that issues under r 376(4) cannot be determined. They should be so as to allow the effective date of the amendments to be determined.[14] If the circumstances demonstrate that the requirements of r 376(4) are satisfied, then leave may be granted. If, on the other hand, they are not, then an order may be made that the amendments take effect, not from the date of the document which is being amended, but from some other date, such as the date when the amendments were foreshadowed or the date when the application to amend was made or the date that leave is granted to make them.[15]
[14] Mineral Resources at [19].
[15] Mokrzecki v Popham at [22]; Westpac Banking Corporation v Knight Property Investments No 3 Pty Ltd [2014] QSC 270 at [11]; Stacey v Perkins [2015] QDC 100 at [10] – [13].
Such a course is appropriate where the issue of whether the limitation period for a new cause of action has expired cannot fairly be determined and therefore the Court cannot determine if r 376 applies. In some cases, however, it may be possible to fairly decide whether a limitation period has expired. The facts and the law may be clear. If it is possible to determine (or it is conceded) that the relevant period of limitation for the new cause of action has ended, and if the requirements of r 376(4) are not satisfied, then the power to give leave to amend to include the new cause of action under r 376(4) is not engaged. The power to give leave to amend pursuant to r 375 is subject to r 376. There is no power under r 375 to allow an amendment to add a new cause of action after the expiry of the limitation period.[16]
[16] Westpac Banking Corporation v Hughes [2012] 1 Qd R 581 at 584 [7] and 589 [18]; Mokrzecki v Popham at [15], [23]. Even if it were assumed that a power to amend existed, there would be no utility in granting leave to amend under r 375 or under some other power because the new cause of action would be met by a clear limitation defence. The amendment would be futile.
An application for leave to amend pursuant to r 375 and/or r 376 may also be refused on grounds which would justify the striking out of the proposed pleading. These would include a plea which is bad in law or defective due to its non-compliance with rules of pleading.

Substantially the same facts

The words “substantially the same facts” should not be read as tantamount to the same facts.[17] The rule presupposes the addition of facts in an amended pleading in support of a new cause of action. As Thomas JA observed in Draney v Barry:
“If the necessary additional facts to support the new cause of action arise out of substantially the same story as that which would have to be told to support the original cause of action, the fact that there is a changed focus with elicitation of additional details should not of itself prevent a finding that the new cause of action arises out of substantially the same facts. In short, this particular requirement should not be seen as a straitjacket.”[18]
The story metaphor in this passage has proven a useful and enduring one. However, as the Court of Appeal constituted by McMurdo P, Thomas JA and Holmes J (as her Honour then was) observed in Thomas v State of Queensland,[19] the “story” is a shorthand reference to the matters that the plaintiff has to prove. Some authorities may be thought to encourage “a fairly broad bush comparison between the nature of the original claim and that to which it is sought to be amended”.[20] However, as Thomas v State of Queensland exemplifies, on occasions a judge can use “rather too broad a brush”.[21]
[17] Draney v Barry [2002] 1 Qd R 145 at 164 [57].
[18] Ibid (footnote omitted).
[19] [2001] QCA 336 at [19].
[20] Ibid.
[21] At [20].
Depending upon the circumstances of the particular case, an amendment which sets out a different breach of duty may not be within the scope of r 376(4)(b).[22] One possible inquiry in assessing whether the new cause of action arises out of substantially the same facts is to consider what would have happened if, at trial, the plaintiff sought to lead evidence of the facts without having made the amendment. If the evidence would clearly be objectionable on the ground of surprise or on the ground that it was simply irrelevant to the case raised by the plaintiff’s pleading, then this may assist in determining whether the requirement of r 376(4)(b) is satisfied.[23] In a case alleging breaches of duty, the inclusion of additional facts which raise quite different breaches of duty may lead to the conclusion that the new cause of action based on the new breach of duty does not arise out of substantially the same facts as a cause of action for which relief has already been claimed.
[22] Wolfe v State of Queensland [2009] 1 Qd R 97 at 101 [15].
[23] Wolfe v State of Queensland [2009] 1 Qd R 97 at 100 [12].
The helpful test of asking whether the additional facts arise out of “substantially the same story”, like the inquiry into what would have happened if the plaintiff had sought to lead evidence of the new facts without having made the amendment, are practical tests applied in reaching a conclusion about whether the requirement of r 376(4)(b) is satisfied. One returns to the words of the rule: “substantially the same facts”. A question of degree is involved.

Appropriateness

The requirement in r 376(4)(a) is a potentially broad one, and is not confined simply to questions of prejudice. A proposed amendment will be inappropriate when it is bad in law. Caution is required not to reject a claim as bad in law where the law may be in a state of uncertainty or development.[24] A proposed pleading also will be inappropriate where it does not comply with the rules of pleading and is liable to be struck out. A pleading which is “difficult to follow or objectively ambiguous or creates difficulty for the opposite party insofar as the pleading contains inconsistencies, is liable to strike out because it can be said to have a tendency to prejudice or delay the fair trial of the proceeding”.[25]
[24] Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd [2011] QCA 102 at [27] – [29].
[25] Robert Bax v Cavenham [2011] QCA 53 at [16].

In determining whether the proposed amendment is appropriate, regard should also be had to the principles discussed in Aon Risk Services Australia Ltd v Australian National University[26] and r 5 of the UCPR. The purpose of the rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. Principles have developed governing amendments for which leave is required.[27] They include the principle that an application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. An application to amend will not be acceded to without adequate explanation or justification, including an explanation for any delay in applying for the amendment. The interests of justice require consideration of the prejudice caused to other parties if the amendment is allowed. This includes considering the strain litigation has on litigants and the distress caused by delay and proposed changes to a case. These may be greater where there is no adequate explanation for why the changes were not made sooner.
[26] (2009) 239 CLR 175.
[27] Monto Coal 2 Pty Ltd v Sanrus Pty Ltd as Trustee of the QC Trust [2014] QCA 267 at [74].
If it is appropriate to make an amendment to include a new cause of action pursuant to

r 376(4), there may be other proposed amendments which do not warrant the grant of leave or there may be existing parts of the pleading which are defective and liable to be struck out.

Proposed amendments affecting the second, third and fourth defendants

Although there is an overlap in respect of some issues raised by the plaintiff’s application for leave to amend and the second, third and fourth defendants’ application to strike out all or parts of the proposed pleading, it is convenient to address first the issues under

r 376(4). These include:
(a) whether the proposed pleading includes a new cause of action;
(b)if so, whether it arises out of the same or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding; and
(c) whether it is appropriate to allow the amendments.
The second, third and fourth defendants contend that leave is required pursuant to

r 376(4) in respect of:
(a)     a new cause of action for breach of trust;
(b)     a new cause of action for an equitable account; and
(c)     a new cause of action for “equitable common mistake”.
The claim for “equitable common mistake” is said to be misconceived, and, for that reason alone, the defendants submit that it should not be allowed or that it should be struck out of any amended pleading for which leave is given. In any event, according to the second, third and fourth defendants, none of the new causes of action satisfy the requirements of r 376(4).

Breach of trust claim

The original claim filed 6 November 2013 sought against the second, third and fourth defendants:
“A declaration that the purchase of Mark’s beneficial interest in the assets of the estate of the late Peter Menegazzo by each of Brendan, David and Debra was in breach of trust.”
It also sought equitable compensation or equitable damages and an order that the “Exit Deed be set aside to the extent it contains releases by Mark”.
The original claim for breach of trust, like the proposed amended claim, is based on the “fair dealing rule”. The High Court in Clay v Clay[28] stated:
“The ‘fair dealing rule’ provides that a transaction whereby the beneficial interest of a beneficiary is purchased by the trustee is not voidable ex debito justitiae, but may be set aside, unless the trustee can show that no advantage has been taken of the position of trustee, that full disclosure has been made to the beneficiary, and that the transaction is fair and honest.”
The rule places the onus upon the trustee to show, among other things, that full value was given for the beneficial interest that was purchased by the trustee and that the trustee disclosed all information which could affect the judgment of the beneficiary.[29]
[28] (2001) 202 CLR 410 at 434 [50].
[29] D Heydon and M J Leeming Jacobs’ Law of Trusts in Australia, 7^th ed (2006) [1747]; Tito v Waddell (No 2) [1977] 1 Ch 106 at 225, 241.
The significant difference between the claim, as originally brought and pleaded, and the claim in the proposed pleading is that the latter is no longer confined to the plaintiff’s beneficial interest in the trust created by his father’s Will. He has broadened his claim so that it extends to other trusts that were not part of his original claim, and the claimed relief extends to his alleged interest in 15 companies identified in Schedule 1 to the proposed pleadings, of which the second, third and fourth defendants, or some of them, were directors. The new claim extends to the defendants’ roles as trustees of the Stanbroke Investment Trust, and their roles as directors of seven trustee companies. The relief claimed is expanded to include the reconveyance of shares alleged to have been held by the plaintiff in 15 companies. The second, third and fourth defendants separately submit in their strike out application that there is no basis for this claim, and certainly no articulation of facts to support such a claim.

A new cause of action?

The plaintiff’s original submissions asserted that the material facts constituting the breaches of trust in each case remained the same and that the amendments were “simply further and better particulars of the causes of action already pleaded”. However, this submission was not pressed in later written or oral submissions. There appears no real scope to seriously dispute that the proposed amendments seek to raise new causes of action in respect of different trusts. It is not to the point that the claim remains one for breach of trust with a declaration being re-cast to cover the plaintiff’s beneficial interest in other assets and a declaration that the purchase of his interests in those assets and in the estate was each “an unfair dealing in breach of fiduciary duty”. It is not sufficient that the new cause of action is of the same type or category as the one pleaded before the amendment.[30] If an amendment introduces a new material fact, then a new cause of action is introduced. The proposed amendments clearly introduce new material facts in relation to alleged breaches of the “fair dealing rule” in respect of additional trusts. Although the trusts were identified in Schedule 3 to the original statement of claim, the breach of trust and breaches of fiduciary duty pleading in paragraphs 35 – 42 related to the trust created by the Will. The matters pleaded against the second, third and fourth defendants in respect of the additional trusts and breaches of fiduciary duty in respect of those trusts are new causes of action.
[30] Murdoch v Lake [2014] QCA 216 at [17].

Substantially the same facts?

The plaintiff submits that his “essential complaint” based upon the fair dealing rule is the same. The difference is the addition of assets held in the Stanbroke Investment Trust and the Peter Menegazzo Family Trust, and the expansion of the case to plead breaches of the fair dealing rule in respect of those trusts.
The plaintiff notes that one sub-paragraph of the original statement of claim referred to his “entitlement to the assets and undertakings of the Stanbroke Group under the Will” and that the pleading defined the Stanbroke Group to mean the 15 companies and eight trusts in Schedule 3 to the original statement of claim. The same 15 companies and eight trusts appear in Schedules 2 and 3 of the proposed pleading. The original pleading erred in adding the words “under the Will”.
If the original pleading had not erroneously included the words “under the Will”, and referred simply to the plaintiff’s interest or entitlement in the Stanbroke Group, the present issue would not arise. It was, after all, his interest in the Stanbroke Group (also referred to as the Menegazzo Group) which was the subject of the deal that was reached on 7 November 2007, based on valuations of the group’s assets, not just the assets of the estate.
According to the plaintiff, the subject matter of the claim is the same, namely the agreement he reached with his siblings to relinquish his interests in the properties held by “the Stanbroke Group”/“the Menegazzo Group”. The obligations upon the second, third and fourth defendants, in the context of the fair dealing rule, are the same. The plaintiff contends that the only real difference between the two pleadings is that the original statement of claim proceeded on the erroneous basis that the assets held in the Stanbroke Investment Trust and the Peter Menegazzo Family Trust were held by the Estate of Peter Menegazzo upon the trust created by the Will. The essential complaint is the same, and arises out of substantially the same facts as appear in the original statement of claim. In summary they are:
(a)The Stanbroke Group (referred to in the proposed pleading as the Menegazzo Group) comprised 15 companies and eight trusts, the names of which appear in Schedule 3 to the original statement of claim;
(b)The Stanbroke Group had a “synergistic value” as a unified collection of income producing assets;
(c)The fifth defendant provided an opinion as to the value of the pastoral and other properties of the Stanbroke Group;
(d)PwC provided a calculation of the potential net asset value of the properties of the Stanbroke Group;
(e) The “Exit Meeting” on 7 November 2007 considered those documents;
(f)The plaintiff also relied on those documents in reaching the agreement in principle at the “Exit Meeting”;
(g) The plaintiff did not in fact get “full value” for his one quarter interest;
(h)This was because the PwC Asset Valuations were deficient in certain respects, including the fact that they did not take into account the synergistic value of the Stanbroke Group as a unified collection of income producing assets;
(i)The Deed of Release dated 31 December 2007 between the siblings (referred to as “the Exit Deed”) and the other “Transaction Documents” gave effect to the agreement reached on 7 November 2007.
The Transaction Documents referred to in the original statement of claim and the proposed pleading are the same. In general terms, in return for certain benefits, the plaintiff agreed to transfer his legal and beneficial interests in shares in certain companies, resign as a director and office bearer of the companies and resign as a trustee, and agreed to not make any claim whatsoever and to not receive any further payments. He was released from loans which had been made to him by certain entities and released from personal guarantees. Mowburn Nominees Pty Ltd was replaced as trustee of the Vanrook Trust by Vanrook Station Pty Ltd and the plaintiff was appointed sole principal of the Vanrook Trust. The second, third and fourth defendants became the sole principals of the Peter Menegazzo Family Trust. In short, the plaintiff relinquished his interests in the trusts, and gained substantial benefits, including Vanrook Station and the cattle upon it, a share of the Ballina properties, and forgiveness of a debt which then stood at $18,500,000.
The agreement in principle reached at the meeting on 7 November 2007 and the Transaction Documents were about the ownership and control of pastoral and other assets held by the group of companies and trusts listed in Schedule 3 to the original statement of claim. They were about the plaintiff’s “exit” from the Menegazzo/Stanbroke Group, not simply about his interest under the Will. They were about what the plaintiff received to relinquish his interests and entitlements in the group as a whole.
In effect, the plaintiff submits that the new and broadened claim tells much the same story about how the value of properties was arrived at with the assistance of PwC and the fifth defendant, and how he did not get “full value” for his interests. The same transaction documents are pleaded. He submits that the factual matters pleaded in the proposed pleading have arisen “out of substantially the same story as that which would have to be told to support the original causes of action”.
He also submits that it would have been relevant to prove, as a matter of evidence, the facts alleged in the proposed pleading in order to establish the causes of action pleaded in the original statement of claim. The only new facts are pleas that correctly state the ownership of properties within the group, being the “Stanbroke Group” referred to in the original statement of claim. The eight trusts and 15 companies described in the originating statement of claim as the Stanbroke Group also feature in the proposed pleading, being referred to, for convenience, as the Menegazzo Group.
The second, third and fourth defendants submit that the revised and broadened breach of trust/fair dealing claim does not arise out of substantially the same facts. They point to many new facts in the pleading, for example, the proposed pleading sets out in the body of the pleading the corporate and trust structure of the Stanbroke Group, whereas the body of the original statement of claim referred in general terms to these companies and trusts, and identified them by name in a schedule. Those changes as not significant, being the kind of matters which would have been provided, if particulars had been sought of the properties of the Stanbroke Group and the entities which owned them. The useful addition in the body of the statement of claim of details of the companies and trusts amounts to the “elicitation of additional details”.[31] The same applies to the additional details in paragraph 6 of the proposed pleading that part of the property of the Menegazzo Group comprised assets of the estate of Peter Menegazzo that were held on trust by his executors under the trust created by his Will.
[31] Draney v Barry [2002] 1 Qd R 145 at 164 [57].
The second, third and fourth defendants correctly point to the fact that the original statement of claim related to breaches of duty by the trustees of the trust created by the Will, which resulted in the plaintiff receiving less than the full value of his interests and entitlements under the trust created by the Will. The proposed pleading, although based on the same agreement in principle and Transaction Documents, includes alleged breaches of trust in respect of the Stanbroke Investment Trust and by Mowburn Nominees Pty Ltd as trustee of the Peter Menegazzo Family Trust, a company of which the siblings were directors. Instead of erroneously stating that the plaintiff gave up his interest and entitlements in the trust created by the Will in exchange for certain benefits, the proposed statement of claim correctly identifies the trusts in which he had an interest and which were the subject of the Exit Meeting and the Transaction Documents. The proposed pleading also includes greater detail about the benefits which the plaintiff agreed to accept in order to relinquish his interests, including the fact that he agreed to accept the cattle on Vanrook Station as well as the station itself. Whereas the original statement of claim said that he agreed to accept a one quarter share of the Ballina properties, the proposed pleading states that he agreed to receive one of the properties known as the Ballina properties. These details are not substantial and are part of the same story. The same may be said for the proposed pleading’s additional detail about the terms of the Exit Deed. The proposed pleading sets out the material terms of this deed whereas the original statement of claim did not.
Account should be taken of the fact that, despite the original statement of claim’s erroneous reference to the agreement being about what the plaintiff would accept in lieu of his entitlement “under the Will”, rather than referring to his interests and entitlements in the trusts and companies that constituted the Stanbroke Group, the original statement of claim was concerned with the alleged erroneous valuation of the net assets of the Stanbroke Group (and not simply the assets held on trust under the Will). The valuations, and the role they played at the Exit Meeting and in the plaintiff’s decision to relinquish his interests, were an essential part of the story.
Part of the original fair dealing claim was about the plaintiff’s interests in the pastoral and other properties of the Stanbroke Group, and his reliance upon the relevant valuations of those assets in executing the Transaction Documents. Many of the “new facts” pointed to by the second, third and fourth defendants can be seen as part of the same essential story. The “new fact” of most importance is that the pastoral holdings and other properties that were the subject of the 7 November 2007 deal and the subsequent Transaction Documents which formalised it were owned by some of the trusts and companies which appear in Schedule 3 of the original statement of claim. They were held in trusts in addition to the trust established by the Will.
The revised claim for breach of trust, breach of fiduciary duties and other remedies as a result of the plaintiff’s relinquishing his one quarter interest in the group adds, by way of correction, additional facts about the trust and company structure and the individual properties that were held by various trusts. Those trusts and companies were named in the original statement of claim which identified them as parties to some of the Transaction Documents.
To use the metaphor coined by Thomas JA in Draney v Barry[32] and adopted in many cases, the additional facts pleaded in support of the new cause of action “arise out of substantially the same story as that which would have to be told to support the original cause of action”. The fact that there is an “elicitation of additional details” does not, of itself, prevent a finding that the new cause of action arises out of substantially the same facts.
[32] [2002] 1 Qd R 145 at 164 [57].
The story that would have been told to support the original cause of action is substantially the same story that would be told to support the revised claim for breach of trust/breach of the fair dealing rule. The cast of characters that is involved is the same with the same dramatis personae of the entities that constituted the Stanbroke Group/Menegazzo Group. In simple terms the story is:
“Once upon a time there were pastoral and other properties owned by the Stanbroke Group in which four children, whose parents had died, each had an interest. The children did a deal and one of the children received valuable properties and the forgiveness of an $18.5 million debt for his interests. He now says he did not get enough.”
The original statement of claim includes many details about the Stanbroke Group, the deal, how it came about and why the Stanbroke Group (and therefore the plaintiff’s interest in it) was undervalued. Any lack of detail about some of these things has been improved by the proposed pleading. The key difference between the old story and the new one is that the new story corrects the old story about the trusts which held the plaintiff’s interest in the Stanbroke Group. The properties that were owned by the Stanbroke Group, and which were valued for the purposes of the deal, are the same in both pleadings
On one view, the change is significant because the original statement of claim was wrong in adding the words “under the Will”. However, the present issue is not whether the amendments make a difference. Clearly they do and that may be a reason why it is not appropriate to allow them. The present issue is whether the new cause of action arises out of substantially the same facts as a cause of action for which relief has already been claimed. The term “substantially” involves questions of degree about which views may differ. However, a comparison of the facts in the original statement of claim (including facts that were not particularised to the same degree as appear in the proposed pleading) and the facts in the proposed pleading leads me to conclude that the new causes of action for breach of trust/breach of the fair dealing rule and the facts which support them arise out of substantially the same story as that which would have to be told to support the original cause of action. An error about the trust which held the plaintiff’s interest is corrected, but the story is substantially the same. The new cause of action arises out of substantially the same facts as a cause of action for which relief has already been claimed. The requirement of r 376(4)(b) is satisfied with respect to amendments which correctly identify the relevant trusts for the purpose of the breach of trust/fair dealing claim.

Is it appropriate to give leave to make the amendments?

As noted in the general discussion about the requirement in r 376(4)(a), a number of matters may arise in considering whether amendments to include a new cause of action are appropriate. One is the question of prejudice. Another is whether there is an adequate explanation for any delay in applying for the amendment. Another is whether the amendments are futile because they plead a claim which is bad in law. In addition, it may be inappropriate to allow an amendment if its effect does not “facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense”.[33] It may not be appropriate to allow amendments if they do not comply with the rules of pleading or otherwise have a tendency to prejudice or delay the fair trial of a proceeding.
[33] UCPR r 5.
If, however, amendments which include a new cause of action and which satisfy the requirement in r 376(4)(b) are appropriate in the light of these matters, they do not cease to be appropriate because they overcome what otherwise would be a relevant period of limitation. This is because the benefit which r 376(4) confers upon a plaintiff is to overcome what otherwise would be a limitation defence.
The second, third and fourth defendants do not call evidence that they are specifically prejudiced by the amendments which broaden the breach of trust claim to include the additional trusts. For example, they do not say that they are prejudiced by the correction of the error in the original statement of claim about which trusts held the properties that were the subject of the deal on 7 November 2007 and the Transaction Documents. The second, third and fourth defendants do not say that they ever thought that the deal that was struck and then documented was that the plaintiff should receive Vanrook Station and its cattle with their estimated value of $55.75 million, other properties and forgiveness of an $18.5 million debt in return for his equal interest in the trust created by the Will over the residue of the estate. They presumably appreciated that the deal was about the plaintiff’s interests in the Stanbroke Group/Menegazzo Group, not just the deceased estate.
The pleader of the original statement of claim seemingly was under the misapprehension that the assets being valued by PwC, and for which the plaintiff was prepared to relinquish his interest in exchange for Vanrook Station, other properties and forgiveness of the debt, were held on trust under the Will. The reason the pleader was under that misapprehension has not been explained to any extent. For example, it is not sworn that the pleader misapprehended when beneficial interests vested. The affidavit material relied upon by the plaintiff hints that the original statement of claim was settled in haste in October-November 2013 because of concerns about the pending expiry of the limitation period. The error seemingly was one made by the plaintiff’s previous advisers, but who exactly made the mistake is not disclosed if those persons’ identities are known to the plaintiff and his present advisers. The plaintiff’s material, instead, suggests that any misconception may have been contributed to by the fact that after January 2006 the deceased’s shares in Vanwarren Pty Ltd were recorded as being held by the plaintiff and his siblings “as executors of the estate” of Peter Menegazzo and the ASIC Register remained in that state when the pleading was filed.
In deciding whether it is appropriate to allow amendments which correct the position in relation to the trust or trusts which owned the relevant property, it is important to recall that the purpose of the rules is the just and expeditious resolution of the real issues in civil proceedings. The real issues in the current proceeding (at the risk of simplification) are how the net value of the Stanbroke Group was estimated in November 2007, the agreement by which the plaintiff reached to relinquish (or on one view “sell”) his interests in that group and whether he has a claim under the “fair dealing rule” insofar as his beneficial interest in trust property was purchased by a trustee. The just and expeditious resolution of those issues, as well as issues relating to the conduct of the first, fifth and seventh defendants, is advanced by the correction of an obvious mistake. The just and expeditious resolution of real issues in the proceeding will not be advanced by requiring the plaintiff and at least some of the defendants to adopt a fiction, namely that the deal was only about the plaintiff’s interests under the Will. It would be highly artificial to conduct the litigation on that fictional basis, particularly when the case against the first defendant is about its valuation of the net assets of the group, rather than the value of the estate, and the case against the fifth defendant is about his valuation of pastoral and other properties owned by the relevant trusts and companies and not simply property that was subject to the Will.
Presently, I am concerned with whether it is appropriate to allow amendments which correctly state the trusts in which the plaintiff had an interest, which were the subject of the agreement to relinquish at the Exit Meeting and which were documented in the Transaction Documents. The relevant defendants do not appear to be specifically prejudiced by amendments which remove what I have described as a fiction and state the correct position (being the position known to them). The explanation for the amendments is an apparent error by the plaintiff’s previous legal advisers. In the circumstances, it seems appropriate to allow amendments which correct the error about which trusts held the relevant property, including the trusts of which the second, third and fourth defendants were trustees and the trustee companies of which the second, third and fourth defendants were directors and which held the property.
The extent to which other amendments contained in the proposed pleading are allowed is a different matter. This includes amendments which plead, for the first time, the alleged use which has been made of the plaintiff’s interest in the Menegazzo Group since

31 December 2007, and the raft of alternative remedies which the plaintiff seeks in new prayers for relief. A number of amendments contained in the proposed pleading and in the proposed amended claim upon which it is based have generated substantial arguments by the second, third and fourth defendants about the relief which is claimed, the need to join additional parties if orders setting aside transactions are to be pursued and the alleged confusing way in which the plaintiff has pleaded that the second, third and fourth defendants owed fiduciary duties to the plaintiff in respect of trustee companies of which they were directors. These matters require separate consideration because, if accepted, they make the proposed pleading an inappropriate one. They require consideration of the new basis upon which the plaintiff claims an account and whether it is appropriate to allow the plaintiff in the circumstances to claim relief which would, more than ten years after the events in question, seek to unravel a complex series of transactions. The plaintiff’s pleading does not disclose whether it is even possible to do equity by setting aside the transactions and whether the plaintiff is prepared to do equity by, if possible, reversing the transactions by which he obtained Vanrook Station, other properties and the forgiveness of a debt. I will defer addressing these matters and the various grounds upon which the second, third and fourth defendants submit that it is inappropriate to grant leave to allow the proposed pleading and the amended claim to proceed.
Presently, I simply have concluded that it is appropriate to allow amendments to correct the error about which trusts owned the relevant property, being the trusts in which the plaintiff had interests which he agreed to relinquish or sell and which were in fact relinquished or sold by virtue of the Transaction Documents. Expressed differently, I consider that it is inappropriate for the proceeding against the second, third and fourth defendants to proceed based on a fiction about the interests which were the subject of the relevant deal. That fiction seemingly arose through a misunderstanding of the plaintiff’s previous legal advisers who appear to have settled the pleading in some haste in late 2013. In the absence of prejudice to the second, third and fourth defendants in having the fiction removed and the reality which those defendants presumably understood stated, the interests of justice are best served by the fiction being removed so that the real issues are the subject of a just and expeditious resolution.

Limitation issues – breach of trust

Because I am satisfied that amendments which recast the plaintiff’s fair dealing/breach of trust claim so that it is not confined to his beneficial interest in the trust created by his father’s Will satisfy the requirements in r 376(4), it is not necessary to decide whether such a claim for breach of trust is subject to a relevant limitation period. However, since the limitation points were argued, they should be addressed in the interests of completeness.
I turn to the question of whether the claim, originally styled as one for breach of trust, and subsequently restyled in the proposed amended claim as one concerned with “an unfair dealing in breach of fiduciary duty” was subject to a relevant period of limitation, current as at 6 November 2013 but which has since ended. The second, third and fourth defendants submit that leave was required under r 376 because the new breach of trust causes of action were brought outside of the relevant limitation period. They submit, in reliance on the English Court of Appeal decision in Gwembe Valley Development Co Ltd v Koshy,[34] that the new claims for breach of trust are subject to s 27 of the Limitation of Actions Act 1974 (Qld). Section 27 relevantly provides:
[34] [2003] EWCA Civ 1048 at [103] – [109].
“27 Actions in respect of trust property –
(1)A period of limitation prescribed by this Act shall not apply to an action by a beneficiary under a trust, being an action –
(a)in respect of a fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b)to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to the trustee’s use.
(2)Subject to subsection (1), an action by a beneficiary to recover trust property or in respect of a breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of 6 years from the date on which the right of action accrued.
(2A)Notwithstanding subsection (2), the right of action shall be deemed not to have accrued to a beneficiary entitled to a future interest in the trust property until the interest fell into possession. …”
According to the second, third and fourth defendants the six year period stated in s 27(2) applies because neither of the exceptions in s 27(1) applies. No fraud is being alleged against the defendants, and the claim is not to recover “trust property” or its proceeds. Instead, the plaintiff claims the return of his beneficial interest in the trusts. A beneficiary’s interest in a trust is not trust property. Expressed differently, a beneficial interest is not held by the trustee upon the terms of the trust. Trust property is held. A beneficial interest simply represents the nature of the beneficiary’s interest in the trust property. A proceeding by a beneficiary for the return of his beneficial interest is therefore not an action to recover “trust property”.
The plaintiff responds to these limitation arguments by contending that his fair dealing claims against the second, third and fourth defendants as trustees:
(a)are not an “action by a beneficiary … in respect of a breach of trust” within the meaning of s 27(2);
(b) alternatively, fall within the exception in s 27(1)(b);
(c) fall within s 27(2A);
(d) are actions to which s 38(1)(c) of the Act applies; and
(e) are actions to which s 38(1)(b) of the Act applies.
As to (a), the plaintiff submits that Gwembe should not be followed. The cause of action for breach of the fair dealing rule is said to not be based on a breach of trust. Reliance is placed upon Tito v Waddell (No 2)[35] for the proposition that breach of the “self-dealing rule” and the “fair dealing rule” should not be classified as being “in respect of any breach of trust”. Instead, equity subjects trustees to “particular disabilities” in cases falling within these rules.[36] However, the analysis in Tito v Waddell of the relevant statutory provision was rejected in Gwembe as resting on an unsound distinction between being afflicted with a disability from making a profit and a breach of a core fiduciary duty. The distinction between the two for limitation purposes could not be justified.[37] The appellant in that case was correct, in the view of the Court of Appeal, in not seeking to uphold the distinction in the light of subsequent authorities. Those subsequent authorities included J J Harrison (Properties) Ltd v Harrison.[38] In Gwembe Lord Justice Mummery (with whom Hale and Carnworth LJJ agreed) pointed out that the Tito v Waddell distinction would lead to an anomaly and that the distinction created a “needless complication”.[39] The limitation issue and the correctness of the classification expounded in Tito v Waddell was the subject of carefully developed reasons in Gwembe. The fact that the appellant in that case did not seek to uphold the classification adopted in Tito v Waddell does not alter the force of the Court of Appeal’s reasoning. Its analysis of relevant English provisions is persuasive, and concerns provisions which are materially the same as s 27 of the Queensland Act.
[35] [1977] 1 Ch 106 at 246-250.
[36]    At 248.
[37]    At [107] – [109].
[38] [2001] EWCA Civ 1467.
[39]    At [108] – [109].
There is some support for the proposition that a breach of the “self-dealing rule” as described in Tito v Waddell is a breach of trust.[40] A similar approach would apply to a breach of the fair-dealing rule. Whilst not every breach of duty by a trustee or other fiduciary may be “in respect of a breach of trust” for the purpose of limitations legislation, Gwembe strongly supports the view that, as a matter of characterisation, a breach of the self-dealing rule or a breach of the fair-dealing rule is a breach of trust for the purpose of a limitation provision such as s 27 of the Queensland Act. Such an approach avoids the anomalies identified in Gwembe. I do not accept that Gwembe is incorrect in its analysis or that it is distinguishable. The reasoning in Gwembe should be followed.
[40] Doneley v Doneley [1998] 1 Qd R 602 at 608.
The plaintiff next argues that a fair-dealing claim is one within s 27(1)(b) “to recover from the trustee trust property”, so that the limitation in s 27(2) does not apply. However, the submissions of the second, third and fourth defendants that an action by a beneficiary for the return of his or her beneficial interest is not an action to recover “trust property” should be accepted. Such an action is one for the restoration of the plaintiff’s beneficial interest in trust property, not an action to recover the trust property. The plaintiff seeks to rely upon certain paragraphs from Lewin on Trusts.[41]However, those passages are not particularly supportive of the plaintiff’s position. Lewin on Trusts states that a breach of the self-dealing rule will attract the operation of s 21(1)(b), but a breach of the fair-dealing rule probably will not.[42] Lewin also expresses doubt as to whether s 21(1)(b) of the English Act has any application to the fair-dealing rule “since the beneficial interest was not itself held on trust and hence a claim to set aside the transaction is not a claim to recover ‘trust property’.”[43] At its highest, Lewin identifies an argument that s 21(1)(b) ought to apply on the ground that where the transaction is impeachable the objection to it is substantially the same as to a case of self-dealing. Therefore, I do not consider that Lewin on Trusts supports the plaintiff’s argument that the limitation period in s 27(2) does not apply to his claim for a breach of the fair-dealing rule because the claim is one within s 27(1)(b). The defendants’ position also derives support from the observation of Megarry VC in Tito v Waddell that:
“… an action ‘to recover trust property,’ is open to the difficulty that an action to recover a beneficial interest in trust property cannot readily be described as an action to recover ‘trust property’: what a man owns beneficially is essentially different from what a man holds not beneficially but in trust.”[44]
In summary, the plaintiff’s claim for a breach of the fair-dealing rule is not an action to recover “trust property”. Instead, it is an action which seeks to set aside a transaction so as to allow a beneficial interest in trust property to be recovered.
[41]    19^th ed Thomson Reuters, 2015, [44-012], [44-021], [44-077].
[42]    At [44-012].
[43]    At [44]077].
[44] [1977] 1 Ch 106 at 247. As to the nature of a beneficiary’s interests under a trust, see Dal Pont Equity and Trusts in Australia, Thompson Reuters, 2011 at [20.95] – [20.135].
The plaintiff next argues that his fair dealing claim falls within s 27(2A). His argument is that he is a residuary beneficiary under the Stanbroke Investment Trust and under the Peter Menegazzo Family Trust, and that both interests are “future interests” within

s 27(2A) which have not fallen into possession. His entitlement to a share in the residue of the trust fund is contingent on survival to the vesting date. Reliance is placed upon Johns v Johns.[45] That case confirms the well-established proposition that the rationale behind a provision such as s 27(2A) in respect of future interests is that a beneficiary with a future interest “should not be compelled to litigate (at considerable personal expense) in respect of an injury to an interest which he may never live to enjoy.”[46]
[45] [2004] 3 NZLR 202 at [43] – [63].
[46] Armitage v Nurse [1998] Ch 241 at 261; Lewin on Trusts 19^th ed, Thomson Reuters, 2015 [44-036]; Johns v Johns at 219 [61].
The second, third and fourth defendants argue that s 27(2A) does not apply for at least two reasons. The first is that the plaintiff does not have a “future interest” or any interest for that matter, in the trust property since, on his case, he sold whatever interests he held, whether present or future. He is not presently a residuary beneficiary. His proposed pleading does not allege that he is and that the value of his future interest has decreased by reason of an alleged breach of trust. There is considerable force in that argument, and it is not deflected by the fact that the plaintiff is named in the relevant trust deed as someone who would participate in the distribution of capital on the “vest end date”.
The defendants’ second argument, which follows from their first, is that the section does not apply because the plaintiff’s interest in the trust property “fell into possession” when valuable trust property was distributed to him pursuant to the Exit Deed and the Transaction Documents in or around February 2008. This was when certain trust property was distributed to him in exchange for his interests under various trusts. The proposed pleading alleges as much. As a result, he became entitled to an interest in possession. In that respect, this case is unlike Johns v Johns in which the plaintiff had not received any distribution of trust property and, as a residuary beneficiary, had an interest which had not fallen into possession. As the New Zealand Court of Appeal observed, the expression “future interests” in the legislation is one in respect of which possession and enjoyment is delayed or deferred. Once an interest falls into possession, time begins to run.[47] This is consistent with the rationale of the provision, discussed above. In this case, trust properties were distributed to the plaintiff. As a result of the relevant transactions he took possession of certain trust property and renounced any interest in the rest. He ceased to have a “future interest”. To adopt the language of Millett LJ in Armitage v Nurse,[48] he lived to enjoy his interests under the trusts. What was a future interest in trust property fell into possession and time began to run in or around February 2008.
[47] Johns v Johns at 216 [47] – 217 [49].
[48] [1998] Ch 241 at 261.

In determining whether it is appropriate to grant leave to make amendments of the kind proposed, the interests of justice are paramount. A plaintiff who has not been well served by legal advisers in the past should not be deprived of the opportunity to have the real issues brought forward to a trial and fairly resolved. However, the material relied upon by the plaintiff for the purpose of this application does not particularly identify how or when he was poorly served by previous legal advisers. In the case of the fifth defendant, there is no adequate explanation as to why the issues which the proposed pleading seeks to agitate were not raised sooner. It is not suggested that they depended upon the discovery of evidence which was not available to the plaintiff until recently. The plaintiff has had no shortage of legal advisers over the years and the reasons for his regular changes of legal and other advisers have not been adequately explained.
The delays over the last two years in the plaintiff’s progressing the proceeding come against the background of his taking almost six years after the events in question to commence proceedings. The fifth defendant has had to confront, or be vexed by, four versions of the pleadings. The fact that the most recent edition may be an improvement over earlier editions does not necessarily make it appropriate to allow the amendments. This is because no adequate explanation has been given as to why the amendments were not advanced sooner. The changes are substantial and, if allowed, would require the fifth defendant to respond to allegations about his knowledge and conduct. The changes have the potential to cause distress and prejudice to an individual in Mr Douglas’ position. In the absence of an adequate explanation for why the changes were not brought forward sooner, I am not satisfied that it is appropriate to give leave to make the amendments.
Therefore, in addition to the plaintiff failing to satisfy the requirement of r 376(4)(b), he has not satisfied the requirement of r 376(4)(a).
Leave to make the amendments pleaded against the fifth defendant should not be allowed. As noted, the amendment statement of claim filed 30 March 2015 will be struck out to the extent that it pleads allegations against the fifth defendant. The result will be that the plaintiff’s original pleading against the fifth defendant will stand, subject to directions being made about the preparation of a new pleading which suitably particularises the plaintiff’s claim against the fifth defendant as well as his claims against the other defendants.

Proposed amendments affecting the seventh defendant

The original statement of claim alleged that in the course of acting for the plaintiff after the Exit Meeting and in relation to the Transaction Documents, the seventh defendant breached its duty of care to him in that it failed to:
“(a)    advise that there might be methodologies that might be adopted to value the assets of the estate other than that used in the net pastoral assets calculation referred to in paragraph 15; [this is a reference to the calculation of the potential net asset value of the properties of the Stanbroke Group provided by PwC dated 7 November 2007]
(b)     advise whether there were mechanisms to effect transfers of, or changes to beneficial interests in the assets of the estate in such a way as to avoid taxation liabilities accruing;
(c)     advise Mark to obtain independent accounting, valuation, and taxation advice, having regard to PwC acting for multiple clients with conflicting interests;
(d)     advise Mark to not enter into, or execute any agreement except after obtaining independent accounting, valuation, and taxation advice; and
(e)     advise Mark whether the agreement reached at the Exit Meeting was enforceable against him.”
In my view, subparagraphs (c) and (d) should be understood to refer to the accounting, valuation and taxation advice provided by PwC and its alleged lack of independence. The subparagraphs, taken together, allege a failure to advise the plaintiff to obtain independent accounting, valuation and taxation advice, rather than act upon PwC’s advice, and to not enter into a binding agreement until he had done so.
The proposed pleading is substantially different in its claims against the seventh defendant. It pleads new matters about what allegedly was within the field of knowledge and experience of solicitors experienced in undertaking legal work and advising in relation to large pastoral property transactions, including four factors which are said to determine value, and what such solicitors would know about the value of a group of companies “involving an integrated business”. Paragraph 72 of the proposed pleading alleges that such an experienced solicitor would have:
“(a)    advised the Plaintiff to the effect that the value of his interest in the Menegazzo Group was dependent upon the accuracy of the valuation of the pastoral properties;
(b)     obtained a copy of the valuation opinion prepared by the Fifth Defendant and familiarised him or herself with its terms and the circumstances in which that valuation opinion had been provided and, in particular that:
(i)the Fifth Defendant had been requested to provide the valuations on 31 October 2007, and based upon the number and nature of the properties which it purported to value, it was unclear what level of investigation the Fifth Defendant had undertaken;
(ii)the valuation opinion stated that it was not a ‘sworn valuation’;
(iii)on its face, the valuation opinion prepared by the Fifth Respondent did not identify that Rod Douglas was a registered valuer, did not identify what (if any) comparable sales had been relied upon and did not identify what valuation methodology (if any) had been applied by the Fifth Defendant in valuing the Meatworks and the feedlot;
(iv)the valuation opinion did not appear to address or attribute any value to any synergies or economic advantages arising from the Menegazzo’s aggregation of large pastoral holdings and its integrated business operations;
(c)     advised the Plaintiff that there was no binding agreement to sell his interest in the Menegazzo Group to the Second Defendant, the Third Defendant, the Fourth Defendant until he executed the Deed and the Transaction Documents;
(d)     advised the Plaintiff that he should obtain a further valuation of the Menegazzo Group before he executed the Deed and the Transaction Documents.”
By contrast, the original statement of claim simply pleaded that by reason of the seventh defendant’s engagement it owed the plaintiff “a duty of care”.
Paragraph 73 pleads new, and different allegations of breach of duty. These are that the seventh defendant:
“(a)    failed to advise the Plaintiff to the effect that the value of his interest in the Menegazzo Group was dependent upon the accuracy of the valuation of the pastoral properties;
(b)     failed to inquire of the Plaintiff the basis upon which his share in the Menegazzo Group which was to be sold to the Second Defendant, the Third Defendant and the Fourth Defendant had been determined;
(c)     failed to obtain a copy of the valuation opinion prepared by the Fifth Defendant;
(d)     failed to advise the Plaintiff that it had not obtained a copy of the valuation opinion prepared by the Fifth Defendant;
(e)     alternatively, if the Seventh Defendant did obtain a copy of the valuation opinion prepared by the Fifth Defendant, the solicitors on behalf of the Seventh Defendant with the conduct of the matter of behalf of the Plaintiff:
(i)failed to familiarised himself as to its terms and the circumstances in which that valuation opinion had been provided namely, as to the matters pleaded in subparagraph 72(b)(i) to (iv);
(ii)failed to advise the Plaintiff of the matters pleaded in subparagraph 72(b)(i) to (iv);
(f)     failed to advise the Plaintiff that there was no binding agreement to sell his interest in the Menegazzo Group and under the Will of Peter Menegazzo to the Second Defendant, the Third Defendant, the Fourth Defendant and that he should not execute the Deed and the Transaction Documents before obtaining a further valuation of the Menegazzo Group;
(g)     failed to advise the Plaintiff that he should obtain a further valuation of the Menegazzo Group on the basis that, as the pastoral properties were part of an integrated cattle breeding, backgrounding, fattening, feed lotting and slaughter business, that may give the Menegazzo Group a greater value than the sum of the individual properties valued in isolation.”

A new cause of action?

A comparison between paragraph 50 of the original statement of claim and paragraph 73 of the proposed pleading reveals a number of differences, apart from the fact that the allegation in subparagraph 50(b) of the original statement of claim about taxation liabilities is not pursued. In general, the focus of the original statement of claim was on the PwC “Asset Valuations” pleaded in paragraph 15 of that pleading. Paragraph 50 did not refer to the fifth defendant or the opinions of value given by the fifth defendant in respect of pastoral and other properties of the Stanbroke Group. The focus of the original claim against the seventh defendant was on PwC’s lack of independence. There was no reference to any lack of independence on the part of the fifth defendant. Indeed, there was no reference in paragraph 50 or other parts of the pleading against the seventh defendant to the fifth defendant at all. There was no reference to alleged deficiencies in the fifth defendant’s valuations.
By contrast, the proposed pleading makes no express reference to PwC and PwC’s possible lack of independence. The concern is with an alleged failure to obtain a copy of the fifth defendant’s valuation opinion. There is an alternative allegation that if the seventh defendant obtained a copy of the fifth defendant’s valuation opinion the relevant solicitors failed to familiarise themselves with its terms and failed to advise the plaintiff of the matters pleaded in proposed subparagraph 72(b)(i) to (iv) about the valuation’s alleged shortcomings.
The proposed case against the seventh defendant is quite different to the original case. As the seventh defendant submits, the proposed pleading sets up “multiple new breaches of duty and those breaches of duty are quite different from the breach previously pleaded”. Originally, there was no direct and specific complaint about a failure to detect errors in the work of another consultant. Now, the plaintiff wishes to contend that the seventh defendant failed to do so. I accept the seventh defendant’s submission that the effect of the proposed amendments is to add causes of action. The amendments cannot be said to simply be further particulars of a cause of action for breach of duty that has already been claimed. By the time the application to amend was made, the limitation period for these new causes of action, whether in contract or in negligence, had ended.

Substantially the same facts?

I do not accept the plaintiff’s submission that any new causes of action against the seventh defendant arise out of the same or substantially the same facts for which relief has already been claimed. As with his similar submissions in respect of the fifth defendant, the argument that the “essential breach” is the same in each pleading cannot be accepted. The plaintiff’s submissions characterise the essential breach as “failing to properly advise the plaintiff in relation to the proposed transaction”. However, this identifies the various breaches of duty, each of which constitutes a cause of action, collectively and at far too high a level of abstraction. Subparagraph 50(a) of the original statement of claim alleged a breach in failing to advise about possible alternative methodologies than that used by PwC. It did not refer to the fifth defendant’s valuation or its methodologies. The original statement of claim did not suggest that there was a duty to obtain and critique the fifth defendant’s opinions of value, and a correlative breach of duty for having failed to do so.
As I have noted, subparagraphs 50(c) and (d) of the original statement of claim should be read together. If, however, subparagraph 50(d) might be thought to be sufficiently broad or vague to extend to a valuation of pastoral properties by the fifth defendant then, as Pincus JA observed in Draney v Barry, one cannot evade the plain intention of the rule by inserting in a pleading an allegation which is vacuous or so vague as to be devoid of any ascertainable meaning.[82] Subsequent decisions have affirmed that a plaintiff cannot rely upon a broad and vague allegation so as to submit that any new cause of action arises out of the same facts, or substantially the same facts, as those which fell within such a content-free zone. If subparagraphs 50(c) and (d) were not to be properly interpreted as referring to the PwC advice and its alleged lack of independence, then the inclusion within those subparagraphs of the fifth defendant’s valuation and its supposed inadequacies would depend upon the breadth and vagueness of the pleading, and its failure to plead within those subparagraphs material facts which would permit the comparison required by r 376(4)(b). In any case, the proposed subparagraph 72(d) is concerned with obtaining a further “valuation of the Menegazzo Group”. The fifth defendant was not asked to provide a valuation of the Menegazzo Group, and did not do so. Therefore, to the extent that subparagraph 50(d) of the original pleading might be argued to extend to obtaining an independent valuation to replace that obtained from the fifth defendant (an interpretation which the subparagraph does not bear), subparagraph 73(d) of the proposed pleading is referring to advice to obtain a valuation of something quite different to a valuation of pastoral and other properties.
[82] [2001] QCA 336.
Subparagraph 73(e) of the proposed pleading relates to the fifth defendant’s methodology. Notably, the original statement of claim did not allege against the fifth defendant an error of methodology in failing to value the Menegazzo Group as a whole, and in doing failing to capture the value that it had as an “integrated business”. Instead, this allegation of breach was levelled against PwC in subparagraph 60(d) of the original statement of claim. The original statement of claim’s allegations against the seventh defendant concerning lack of independence on the part of PwC and the need to obtain independent advice before executing any agreement did not make any allegation about the methodology adopted by PwC, let alone any error in the methodology adopted by the fifth defendant, or that these errors of methodology should have been known to a solicitor in the seventh defendant’s position.
The plaintiff argues that if he had been requested to give further and better particulars of the allegation contained in subparagraph 50(d) of the original statement of claim then he would have answered that request by pleading the matters which now appear in subparagraph 73 of the new pleading. However, any such particulars would not have been about the need to obtain independent advice. Instead, they would have been about why the fifth defendant’s advice was allegedly inadequate. The critical point is that the original statement of claim did not refer to such matters in framing the duty of care which the seventh defendant allegedly owed and the respects in which that duty of care was breached. If the plaintiff intended to rely on methodological deficiencies in the fifth defendant’s valuation it was required to plead them as material facts. If the matter had gone to trial then an attempt to introduce evidence in this regard in the plaintiff’s case against the seventh defendant would have been met by an objection on the grounds of surprise.
The new pleading against the seventh defendant contains new material facts about the content of its duty. It contains new material facts about the seventh defendant’s alleged breaches of duty. These are new causes of action which rely upon the new material facts. They are not further particulars of an existing cause of action. The following passage of the judgment of the Court of Appeal in Pianta v BHP Australia Coal Ltd is apposite:
“The facts out of which each of the causes of action arose were those giving rise to the duty of care, those which constituted a breach of that duty and the fact of injury. The submission that the duties of care owed by the respondent to the applicant in each case were the same because the parties were the same and they were, in each case, in the relationship of employer and employee is correct only in a general sense. Relevantly the precise duties owed are correlative to the breaches of those duties and, as the applicant conceded, the facts constituting the breaches of duty in each case were quite different; neither the same nor substantially the same. And it follows that if the second accident gave rise to a new cause of action the damage was new and consequently different even though it may have been of the same kind.
As none of the facts constituting the essential elements of the two causes of action was the same and those constituting the elements of duty and breach of duty were not substantially the same the learned District Court Judge was plainly right in concluding that the cause of action arising out of the accident which occurred on 22 January did not arise out of substantially the same facts as the cause of action pleaded.”[83]
[83] [1996] 1 Qd R 65 at 68 (emphasis added)
In summary, the material facts which are pleaded for the first time in the plaintiff’s case against the seventh defendant are quite different to those previously pleaded. As noted, they extend to methodological and other errors in the valuation opinions proffered by the fifth defendant and the seventh defendant’s alleged failure to detect them. They extend to an alleged breach of duty in failing to give advice about the need to obtain a fresh valuation of the Menegazzo Group. The new breach of duty pleaded in paragraph 73(a) of the proposed pleading is a new allegation that the seventh defendant failed to state what was perhaps obvious, namely that the value of the plaintiff’s interest in the Menegazzo Group was dependent on the accuracy of the valuation of the pastoral properties. New subparagraph 73(b) is about a failure to inquire about the basis on which the plaintiff’s share in the Menegazzo Group had been determined. Each new cause of action relies on additional facts and substantially different facts to those previously pleaded. This is not a case of a “change of focus”. Each new cause of action does not arise out of the same or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the plaintiff. This is not a case in which there has been a change of focus with “elicitation of additional details”.[84] The new causes of action do not satisfy the requirement of r 376(4)(b).
[84] Draney v Barry [2012] 1 Qd R 145 at 164.

Is it appropriate to give leave to make the amendments?

This makes it strictly unnecessary to consider whether it is appropriate to grant leave to make the amendments which introduce new causes of action for which the relevant limitation period has expired. It is unnecessary to repeat in this context, the history of the proceedings. Relevantly, so far as the seventh defendant is concerned, the proceeding was not served upon it until 20 August 2014. It complained about the original statement of claim and eventually an amended statement of claim was filed on 30 March 2015. That statement of claim was struck out as against the seventh defendant on 8 May 2015. Another version of the statement of claim was formulated and then abandoned in October 2015.

The plaintiff’s solicitors have explained the somewhat tortuous history of the matter prior to its commencement, and the comings and goings of barristers and solicitors who have advised the plaintiff over a period of about eight years. General material about the history of the matter does not descend to any detail in explaining the significant change in direction of the plaintiff’s case against the seventh defendant. I should add that the plaintiff in correspondence with the solicitors representing the fourth defendant responded to requests under r 222 for the production of documents on the basis that the rule was not engaged or that legal professional privilege applied to the documents. There has been no argument before me about waiver of legal professional privilege and the plaintiff is not to be criticised for maintaining it. However, the plaintiff has not disclosed in any informative way why the new allegations were not made much earlier. In the circumstances, one is left to speculate whether a case of the kind sought to be advanced in the proposed pleading against the seventh defendant (and, for that matter, against the fifth defendant) was ever considered by the plaintiff’s previous legal advisers. One cannot say whether or not they did and whether or not they thought that it was unmeritorious. There appears, however, to have been no impediment in the period between late 2007 and November 2015 to the plaintiff and his legal advisers considering whether the content of the duty of care which the seventh defendant owed him extended to the matters which are now pleaded and whether the seventh defendant’s duty of care was breached in the respects now alleged. This is not a case in which it is suggested that some evidence or documents have recently emerged, following which new investigations have been called for.
In short, it was open to the plaintiff to formulate the kind of cases he now seeks to formulate against the fifth defendant and the seventh defendant in relation to alleged methodological errors in the fifth defendant’s valuation and the failure of the seventh defendant to detect them. No adequate explanation has been given as to why these matters were not raised earlier. I am not prepared to infer that it was because no previous legal adviser (and there have been many) did not turn his or her mind to the methodology adopted by the fifth defendant, and whether or not the seventh defendant should have considered the adequacy of the fifth defendant’s valuation. I am not prepared to infer that because the original pleader in paragraph 15 was critical of alleged methodological shortcomings in PwC’s valuation exercise in failing to consider the value of an integrated business. No similar allegation was made against the fifth defendant and no allegation was made against the seventh defendant of having failed to detect some methodological shortcoming in the PwC valuation.
There appears to have been no impediment over the years to the plaintiff seeking professional advice and expert opinion about these matters and about whether a reasonably competent solicitor would have advised about such matters. The plaintiff’s material does not indicate when he sought and obtained expert opinion in relation to matters affecting his claim against the fifth defendant and, more importantly for present purposes, the seventh defendant. If he did not do so, there is no explanation as to why this was not done. If he did, there is no indication of why matters which are now pursued were not pursued then.
In short, no adequate explanation has been given as to why the case which the plaintiff now seeks to prosecute against the seventh defendant was not brought forward sooner than it was.
In circumstances in which:
(a)the proposed amendments advance a very different case against the seventh defendant;
(b)the proceeding was not commenced and served upon the seventh defendant until more than six years after the events in question;
(c)the conduct of the proceeding against the seventh defendant since then has not reflected the plaintiff’s undertaking to proceed with expedition and in accordance with the principles contained in r 5; and
(d)there has been no adequate explanation as to why the new matters were not raised sooner;
I am not satisfied that it is appropriate to allow the amendments which introduce new causes of action against the seventh defendant.

Summary – seventh defendant

In summary, the proposed pleading against the seventh defendant raises new causes of action which were current when the proceeding commenced but which had expired by the time the application was made. The new causes of action do not arise out of the same facts or substantially the same facts as a cause of action for which relief had already been claimed. I do not consider that it is appropriate to give leave to make an amendment to include the new causes of action. I will allow, however, an application to the amended claim to introduce, for what it is worth, a cause of action for breach of contract on the basis that the breach of contract claim reflects the concurrent duty of care alleged in the original statement of claim and that the allegations of breach of contract are the same as the allegations of breach of duty in tort.

Orders and directions

On 15 March 2016, I made consent orders in relation to the application so far as it concerned the first defendant and the first defendant’s strike-out application.
For the reasons which I have given, I decline to make an order pursuant to r 377(1)(c) granting leave to amend the claim filed on 6 November 2013 in terms of the amended claim that was an exhibit to the affidavit of Ms Gleeson sworn 27 November 2015. I will grant leave to amend the claim to introduce a claim for breach of contract against the seventh defendant. I will grant leave to the plaintiff to amend his claim against the second, third and fourth defendants so that the declaratory relief which he claims and any claim for equitable compensation, equitable damages or breach of fiduciary duty as against the second, third and fourth defendants apply to the plaintiff’s beneficial interest in the assets of the Menegazzo Group (as defined in a new pleading). For the reasons which I have given, I decline to grant leave to the plaintiff to amend his statement of claim to allege that the Exit Deed and the Transaction Documents were affected by equitable common mistake. The plaintiff’s claim in respect of the alleged purchase of his “beneficial interest in the assets of the Menegazzo Group and the estate of the late Peter Menegazzo” should be confined to a claim for equitable compensation or equitable damages or equitable damages for breach of fiduciary duty (the proposed amended claim uses each of these terms).
I decline the plaintiff’s application for leave to amend his pleading pursuant to r 375 and if necessary r 376 insofar as it relates to the fifth defendant and the seventh defendant either in the form of the further amended statement of claim exhibited to the affidavit of Ms Gleeson sworn 27 November 2015 or in the form of exhibit 1 to the extent that the pleading introduces new causes of action.
I will, however, grant leave pursuant to r 375 to the plaintiff to amend his statement of claim in some respects. For the reasons which I have given, there is utility in terms of the just and expeditious resolution of the real issues in the proceeding for a number of the improvements which have been made by the proposed pleading to be introduced. These include the better identification in the body of the statement of claim of the corporate and trust structure of the Menegazzo Group. It would be retrograde to require the plaintiff and the other parties to proceed to trial on the basis of the original statement of claim. The improvements which have been made in very late 2015 and early 2016 should not be lost. However, any new pleading needs to be confined to causes of action for which relief has already been claimed in the proceeding, save for the expansion of the plaintiff’s claim for breach of trust or breach of fiduciary duty in respect of the fair dealing rule in respect of the Menegazzo Group (properly defined). Whilst the plaintiff should be confined to the causes of action for breach of duty which have previously been claimed, this should not preclude the adoption of the improvements which I have already mentioned and the provision of such further and better particulars as are necessary to enable the defendants to file and serve defences and for the matter to be brought to an early resolution.
As will be apparent from my reasons, the new pleading is not to include fresh allegations about the use which the second, third and fourth defendants are alleged to have made of the plaintiff’s beneficial interest in the assets of the Menegazzo Group. Instead, the claim is confined to one for compensation and damages with such compensation or damages to be assessed as at a convenient date on or about the date of the relevant transactions.
I will allow the plaintiff a reasonable time to formulate a proposed amended claim and proposed new pleading to reflect these reasons. Because of the need for care in the formulation of a new pleading and a proposed amended claim to reflect these reasons, I propose that the plaintiff prepare a draft amended statement of claim and circulate it to the defendants. Any constructive comments may be taken on board, and I trust that the form of the amended claim and the form of the amended statement of claim can be agreed. If not, I will review the matter before making orders granting leave in the respects which I have indicated.
I also expect the parties to confer with a view to agreeing directions for the progress and early resolution of the proceeding. Given the number of parties, it may be cost-effective for such a conference to be in person or by telephone so as to avoid a whirlwind of legal correspondence. However, one party may wish to take the initiative and propose directions. I expect that the directions will address the following:
1. The close of pleadings.
2.A Document Plan which will lead to the identification and exchange of a limited number of critical documents that are likely to be tendered at any trial and are likely to have a decisive effect on the resolution of the matter either at trial or at a mediation.
3. That the parties defer disclosure until a Document Plan is agreed.
I intend to direct the parties to adopt a proportionate and efficient approach to the management of both paper and electronic documents in the proceeding and that any document plan facilitate any trial being conducted in accordance with the Supreme Court’s e-trial program.
The parties should confer at an appropriate time about whether an expert or experts are to be appointed in relation to valuation or other issues. The parties are directed to avoid generating unnecessary costs in relation to the briefing of separate experts until the parties have conferred and the Court made appropriate directions in relation to expert evidence.
Once the real issues in dispute are narrowed following the close of pleadings, the matter is one which might benefit from alternative dispute resolution. Therefore, the parties are directed to formulate directions for the mediation of the matters in dispute in the proceeding.
The only direction which I propose to make at this stage is that by a date to be fixed the parties confer for the purpose of agreeing steps for the just and expeditious resolution of the real issues in the proceeding at a minimum of expense. That conference may be in person, by video conference or by telephone conference. Part or all of the conference may be held “without prejudice” by express agreement of the parties, and the parties may agree to the appointment of an independent person to facilitate the conference.
Within seven days of that conference the parties should provide a brief joint report to my Associate as to how it is intended to progress the proceeding to resolution and propose directions. The matter will be listed for review, if required. Otherwise, I will make directions and orders in the form agreed by the parties.
I will hear the parties, if necessary, on the question of costs. However, I expect the parties to resolve appropriate costs orders in the light of my reasons. I grant liberty to apply.

CITATION:	Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94
PARTIES:	MARK JOHN MENEGAZZO (plaintiff) v PRICEWATERHOUSECOOPERS (A FIRM) ABN 52 780 433 757 (first defendant) and BRENDAN PETER MENEGAZZO (second defendant) and DEBRA LOUISE MENEGAZZO (third defendant) and DAVID ANGELO MENEGAZZO (fourth defendant) and JUTLAND PTY LTD ACN 010 813 322 (fifth defendant) and THYNNE & MACARTNEY (A FIRM) ABN 79 763 953 991 ~~(sixth defendant)~~ and MCCULLOUGH ROBERTSON LAWYERS (A FIRM) ABN 42 721 345 951 (seventh defendant)
FILE NO:	SC No 10502 of 2013
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	29 April 2016
DELIVERED AT:	Brisbane
HEARING DATE:	15 March 2016
JUDGE:	Applegarth J
ORDERS:	1. Adjourn the applications to a date to be fixed for the purpose of allowing the parties to confer and bring in forms of order reflecting the reasons for judgment and directions for the future conduct of the proceeding. 2. Direct the parties to confer for the purpose of agreeing steps for the just and expeditious resolution of the real issues in the proceeding at a minimum of expense. 3. Liberty to apply.
CATCHWORDS:	PROCEDURE – CIVIL PROCEDURE IN STATE AND TERRITORY COURTS – PLEADINGS – FORM OF PLEADING – RAISING NEW MATTER – where the plaintiff sues various defendants arising out of his relinquishing interests in companies and trusts that owned pastoral properties and carried on businesses in the cattle industry – where the plaintiff had agreed to relinquish certain interests in favour of his three siblings (the second, third and fourth defendants) in exchange for acquiring certain properties and not having to repay a loan of $18,500,000 – where the plaintiff seeks leave to amend a claim and further amend a statement of claim which has gone through a number of editions – where the pleadings allege breaches of the ‘fair dealing rule’ by his siblings, and breaches of duties of care by the first, fifth and seventh defendants in relation to various advices and valuations – where the plaintiff submits that new causes of action in the proposed pleading arise out of substantially the same facts as that for which relief had already been claimed – where defendants oppose the grant of leave on the basis that the amendments raise new causes of action which are time-barred and do not fall within r 376(4) of the Uniform Civil Procedure Rules 1999 (Qld) – where action not started until six years after relevant events – where inadequate explanation for delay in raising new causes of action – whether proposed pleading raises causes of action which arise out of substantially the same facts as those for which relief has already been claimed – whether any new causes of action raised are time-barred – whether it is otherwise appropriate for leave to amend to be granted EQUITY – EQUITABLE PRINCIPLES – RESCISSION – MISTAKE – where the plaintiff alleges that he and his siblings were all under a misapprehension as to the value of the companies and trusts when entering into the agreement whereby he relinquished his interests in them in return for substantial property and a loan release – where the proposed new claim is said to be supported by the principle of “equitable common mistake” – where the defendant siblings submit that this claim is misconceived, bad in law and is liable to be struck out – whether leave should be granted to amend the proposed pleading to incorporate the new cause of action – whether the principle of “equitable common mistake” extends to a common mistake of the kind alleged in the proposed pleading about the value of property LIMITATION OF ACTIONS – LIMITATION OF PARTICULAR ACTIONS – TRUSTS AND DECEASED ESTATES – ACTIONS IN RESPECT OF TRUST PROPERTY AND BREACH OF TRUST – where the defendant siblings submit that the new claims for breach of trust are time-barred because the six year limitation period in s 27(2) of the Limitation of Actions Act 1974 (Qld) applies – where the plaintiff submits that the new claims are not in relation to a “breach of trust” for the purposes of s 27(2) – whether the new claim is an action to recover “trust property” so as to bring it within the exception in s 27(1)(b) – whether the new claim is in relation to a “future interest” of a beneficiary so as to bring it within an exception to s 27(2) contained in s 27(2A) Limitation of Actions Act 1974 (Qld), s 10(2), s 10(6), s 27(1), s 27(2), s 27(2A), s 38(1)(b), s 38(1)(c) Limitation Act 1935 (WA) Trade Practices Act 1974 (Cth), s 52 Uniform Civil Procedure Rules 1999 (Qld), r 5, r 171, r 222, r 371, r 375, r 376, r 376(4)(a), r 376(4)(b), r 377(1)(c) Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 cited Armitage v Nurse [1998] Ch 241 at 261 cited Australia Estates Pty Ltd v Cairns City Council [2005] QCA 328 followed Baldwin v Icon Energy Ltd (No 2) [2015] QSC 286 cited Bartlett v Barclay’s Bank Trust Co Ltd [1980] Ch 515 at 537 cited Borsato v Campbell [2006] QSC 191 cited Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551-553 cited Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713 cited Clay v Clay (2001) 202 CLR 410 cited Doneley v Doneley [1998] 1 Qd R 602 at 608 cited Draney v Barry [2002] 1 Qd R 145 at 164 applied Errichetti Nominees Pty Ltd v Paterson Group Architects Pty Ltd [2007] WASC 77 followed Feigan v Ainsworth [2011] VSC 454 at [32] – [34] cited Great Peace Shipping Ltd v Tsaviliris Salvage (International) Ltd [2003] QB 679 followed Grist v Bayley [1967] Ch 532 cited Gwembe Valley Development Co Ltd v Koshy [2003] EWCA 1048 at [103] – [109] followed Hartnett v Hynes [2009] QSC 225 cited HWG Holdings Pty Ltd v Fairlie Court Pty Ltd [2015] VSC 519 cited James v The State of Queensland [2015] QSC 65 cited Jane v Bob Jane Corporation Pty Ltd [2013] VSC 406 cited Jetcrete Oz Pty Ltd v Conway [2015] QCA 272 cited J J Harrison (Properties) Ltd v Harrison [2001] EWCA Civ 1467 cited Johns v Johns [2004] 3 NZLR 202 at [43] – [63] cited McCullough Robertson Lawyers (A Firm) v Menegazzo [2015] QSC 109 cited McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 cited Mineral Resources Engineering Services Pty Ltd as Trustee for the Meakin Investment Trust v Commonwealth Bank of Australia [2015] QSC 62 cited Mokrzecki v Popham [2013] QSC 123 followed Monto Coal 2 Pty Ltd v Sanrus Pty Ltd as Trustee of the QC Trust [2014] QCA 267 cited Murdoch v Lake [2014] QCA 216 cited Newgate Stud Co v Penfolds [2004] EWHC 2993 Ch cited Page v The Central Queensland University [2006] QCA 478 at [24] cited Paulus v Jones Unreported, Queen’s Bench Division 16 April 1984 cited Pianta v BHP Australia Coal Ltd [1996] 1 Qd R 65 cited Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd [2011] QCA 102 cited Robert Bax v Cavenham [2011] QCA 53 cited Solle v Butcher [1950] 1 KB 671 discussed Stacey v Perkins [2015] QDC 100 cited Svanosio v McNamara (1956) 96 CLR 186 cited Taylor v Johnson (1982) 151 CLR 422 cited Thomas v State of Queensland [2001] QCA 336 cited Tito v Waddell (No 2) [1977] 1 Ch 106 considered Westpac Banking Corporation v Hughes [2012] 1 Qd R 581 at 584 cited Westpac Banking Corporation v Knight Property Investments No 3 Pty Ltd [2014] QSC 270 cited Wheatley v Bower [2001] WASCA 293 at [123] cited Wolfe v State of Queensland [2009] 1 Qd R 97 applied
COUNSEL:	G A Thompson QC and E Morzone for the plaintiff L F Kelly QC and M F Johnston for the second and third defendants S R Eggins for the fourth defendant T Pincus for the fifth defendant R P S Jackson QC for the seventh defendant
SOLICITORS:	Emanate Legal for the plaintiff Allens Linklaters for the second and third defendants Minter Ellison for the fourth defendant Hopgood Ganim for the fifth defendant Bartley Cohen for the seventh defendant