National Australia Bank Ltd v Rowe - [2018] WASC 330

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   NATIONAL AUSTRALIA BANK LIMITED -v- ROWE [2018] WASC 330
CORAM:   VAUGHAN J
HEARD:   18 OCTOBER 2018
DELIVERED          :   1 NOVEMBER 2018
FILE NO/S:   CIV 1353 of 2017
BETWEEN:   NATIONAL AUSTRALIA BANK LIMITED
Plaintiff
AND
MICHAEL ANDREW ROWE
First Defendant
JEANINE PATRICA ROWE
Second Defendant

Catchwords:

Practice and procedure - Pleadings - Whether counterclaim should be struck out as not disclosing a reasonable cause of action - Turns on own facts

Equity - Claim for a general account - Circumstances in which an account can be ordered in the context of a mortgagor-mortgagee relationship - Whether there is a possible fraud exception to the usual requirements for an order for an account - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 8, O 20 r 19

Result:

Counterclaim struck out

Category: B

Representation:

Counsel:

Plaintiff	:	C P K Russell
First Defendant	:	D H Solomon
Second Defendant	:	D H Solomon

Solicitors:

Plaintiff	:	Lavan
First Defendant	:	Solomon Brothers
Second Defendant	:	Solomon Brothers

Case(s) referred to in decision(s):

Adams v Bank of New South Wales (1984) 1 NSWLR 285
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Agricultural Land Management Ltd v Jackson [No 2] [2014] WASC 102 (S)
Ahn v Toppro Pty Ltd [2014] NSWSC 1699
Aldi Stores Ltd v WSP Group Plc [2007] EWCA Civ 1260; [2008] 1 WLR 748
Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd [2006] FCA 1415; (2006) 236 ALR 699
Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] [2008] WASC 239; (2008) 39 WAR 1
Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
C2C Developments Pty Ltd v Commonwealth Bank of Australia [2012] NSWSC 1162
Chungco Pte Ltd v Barrington Partners (Unreported, WASC, Library No 920282, 13 May 1992)
Clone Pty Ltd v Players Pty Ltd (in liq) [2018] HCA 12; (2018) 353 ALR 24
Commercial & General Law (SA) Pty Ltd v Permanent Custodians Ltd (No 2) [2012] SASC 216; (2012) 273 FLR 247
Davy v Garrett (1877) 7 Ch D 473
Doss v Doss (1843) 3 Moo Ind App 175; [1843] 18 ER 464
Emanuel Management Pty Ltd (in liq) v Foster's Brewing Group Ltd [2003] QSC 205; (2003) 178 FLR 1
Fardon v Attorney-General (Qld) [2004] HCA 46; (2004) 223 CLR 575
Farley (Aust) Pty Ltd v JR Alexander & Sons (Q) Pty Ltd [1946] HCA 29; (1946) 75 CLR 487
Frietas v Dos Santos (1827) 1 Y & J 574; [1827] 148 ER 800
General Credits Ltd v Wenham (1989) 18 NSWLR 570
Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431
Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207
Harrington v Churchward (1860) 29 LJ Ch 521
Hartl v Cowen [1993] 2 Qd R 633
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
Juul v Northey [2010] NSWCA 211
Kennedy v General Credits Ltd (1982) 2 BPR 9456
Kimberley Downs Pty Ltd v The State of Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162
Lang v Simon (1952) 53 SR (NSW) 508
Lazarus Estates Ltd v Beasley [1956] 1 All ER 341; [1956] 1 QB 702
Liberty Financial Pty Ltd v Scott (No 3) [2005] VSC 363
MBF Investments Pty Ltd v Nolan [2011] VSCA 114; (2011) 37 VR 116
McEwen v Combined Coast Cranes Pty Ltd [2002] NSWSC 1227; (2002) 44 ACSR 244
McLauchlan v Prince [2001] WASC 43
Melland v Gray (1843) 2 Y & CCC 199; [1843] 63 ER 87
Mercanti v Mercanti [2016] WASCA 206; (2016) 50 WAR 495
Metropolitan Petar v Mitreski [2012] NSWSC 16
Mulherin v Quinn Villages Pty Ltd [2007] QSC 231
Noble Earth Technologies Pty Ltd v Hampic Pty Ltd (in liq) [2017] NSWSC 502
North-Eastern Railway Co v Martin [1848] 41 ER 1136; (1848) 2 Ph 758
O'Connor v Spaight (1804) 1 Sch & Lef 305
QNI Resources Pty Ltd v Park [2016] QSC 222; (2016) 146 ACSR 321
Rams Mortgage Corporation Ltd v Skipworth [2007] WASC 24
Re Prismex Technologies Pty Ltd [2013] NSWSC 292
Re Stevens [1898] 1 Ch 162
Riva NSW Pty Ltd v Key Nominees Pty Ltd [2014] NSWSC 301
Singh v Singh [2017] NSWCA 234
Southampton Dock Co v Southampton Harbour and Pier Board (1871) LR 11 Eq 254
State Bank of NSW Ltd v Ralston (Unreported, NSWSC, 1 August 1995)
Stuart v Goldberg Linde [2008] EWCA Civ 2; [2008] 1 WLR 823
Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317
SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189
Taff Vale Railway Co v Nixon (1847) 1 HLC 111; [1847] 9 ER 695
Tannock v North Queensland Securities Ltd [1932] St R Qd 285
Tsatsoulis v Trigamist Holdings Pty Ltd [2000] NSWSC 900
Vigliaroni v CPS Investment Holdings Pty Ltd [2009] VSC 428; (2009) 74 ACSR 282
Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544
Wenham v General Credits Ltd (Unreported, NSWSC, 16 December 1988)
Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [2002] NSWCA 287
Woodward v Woodward [2015] NSWSC 1793

VAUGHAN J:

The obligation to plead material facts

The terms of O 20 r 8(1) of the Rules of the Supreme Court 1971 (WA) are clear and should be obeyed. Subject to exceptions that are presently irrelevant:
…every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits. (emphasis added)
It is said that this rule is applied in a more flexible way than was the case in earlier times in view of the principles of positive case flow management.[1]
[1] Gething M, Joseph R and Curwood M, Civil Procedure: Western Australia [20.8.1].
Equally, referring to case management authorities as to the modern function of pleadings,[2] it is often sought to justify an overly lengthy pleading by reference simply to whether it identifies the issues, discloses an arguable claim and informs the parties of the case that has to be met. The strictures of O 20 r 8(1) are ignored. Evidence is pleaded, either under the guise of being a material fact or by way of particulars, and the particulars themselves go beyond that which is necessary.[3]
[2] See eg Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [4] - [7], [16]; Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [29].
[3] Cf Rules of the Supreme Court 1971 (WA) O 20 r 13(1). See also Barclay Mowlem Construction Ltd v Dampier Port Authority [15] - [16].
It is simply wrong to read decisions such as Barclay Mowlem Construction Ltd v Dampier Port Authority as in any way condoning this approach. To the contrary, the goal in O 1 r 4A of the Rules of the Supreme Court 1971 (WA) and the objects of O 1 r 4B are best achieved through conscientious adherence to O 20 r 8(1). Prolixity obscures identification of the true issues in contention and adversely impacts on the proper and efficient preparation of a case and its presentation at trial. Where this style of pleading must be responded to a vast number of false issues will be raised. It places a significant burden on the parties, in terms of costs, and also the resources of the court.
The requirements of O 20 r 8(1) should be observed in preparing a pleading. Practitioners may do so confident in the knowledge that a summary statement of the material facts - and only such a summary statement - is what is required by the rules. The true significance of the case management authorities in this area is that it is unnecessary to encumber a pleading with unnecessary particulars, and all the more so evidence, as it is inevitable that there will be subsequent pre-trial disclosure of the evidence to be adduced at trial.[4]
[4] Barclay Mowlem Construction Ltd v Dampier Port Authority [5] - [6], [8], [16].
A pleading must identify the issues, disclose an arguable claim or defence, and inform the parties of the case to be met. In doing so it should be clear and complete but concise. That standard is not met by over-complicating the pleading with unnecessary particulars and evidence.
A prolix pleading, offending the requirements of O 20 r 8(1) by its incorporation of unnecessary or irrelevant material, may be struck out on the ground that it will prejudice, embarrass or delay the fair trial of the action.[5] Doing so, approaching the pleading as a whole rather than requiring the other party and the court to undertake the oppressive task of surgical excision to remove all but the material facts, will often be the means most conductive to meeting the goal in O 1 r 4A and the objects of O 1 r 4B.
[5] Chungco Pte Ltd v Barrington Partners (Unreported, WASC, Library No 920282, 13 May 1992) 8.
My exhortation to observe the requirements of O 20 r 8(1) is brought about by the defendants' re-amended defence and counterclaim dated 12 September 2018 the subject of the present strike-out application. As will be seen, the claim to which it responds is a simple mortgage recovery action. The defence and counterclaim is 143 pages with some 330 paragraphs and sub‑paragraphs too numerous to count. Much of that pleads evidence or unnecessary particulars. Much of it is irrelevant and foreign to fulfilment of the function that a pleading is intended to serve.
It is, for example, puzzling why it is said to be a material fact that in 2012 approximately five million pre‑loaded ASIC charges were migrated to the Personal Property Securities Register (PPSR) - going on, over two pages, to give details of some 22 State and Territory transitional registers from which charges were migrated to the PPSR.[6] Other examples could be given but it is unnecessary for the proper disposition of this application to do so. Ordinarily, however, only the effect of a document should be pleaded; and then only so far as material.[7] Terms of agreements need only be pleaded so far as material.[8] That is all the more so for instruments providing for financial accommodation. And it is well-established that, with limited exceptions, admissions are no more to be pleaded than any other evidence.[9]
[6] Re-Amended Defence and Counterclaim dated 12 September 2018 (DC) par 150.
[7] Rules of the Supreme Court 1971 (WA) O 20 r 8(2). Cf DC par 252 (3 pages as to what is contained in certain frequently asked questions as published on the plaintiff's website).
[8] Liberty Financial Pty Ltd v Scott (No 3) [2005] VSC 363 [64] ‑ [66]; Ahn v Toppro Pty Ltd [2014] NSWSC 1699 [5]. Cf DC par 149 (5 pages as to the terms of a Master Asset Finance Agreement).
[9] Davy v Garrett (1877) 7 Ch D 473, 485. Cf DC pars 224, 275.
The plaintiff did not bring its strike-out application by reference to O 20 r 8(1). As the deficiency in terms of O 20 r 8(1) is not the case the defendants had to answer it is unnecessary for me to consider the issue any further. That is all the more so when, for reasons developed below, the counterclaim will largely be struck out (albeit with liberty to apply to seek leave to amend). However, my observations as to O 20 r 8(1) should be borne in mind in propounding any minute of proposed further re-amended defence and counterclaim.

The pleadings and the strike-out application

The statement of claim

As counsel for the plaintiff sought to emphasise, the plaintiff's claim in these proceedings is a simple one. The plaintiff, a bank, seeks repayment of money lent under two home loan facilities (the 'Gawthorne Loan Agreement' and the 'Yallingup Loan Agreement'). The plaintiff also seeks delivery up of the so‑called 'Yallingup Property'. The Yallingup Property is said to be subject to a mortgage (the 'Yallingup Mortgage') granted by the defendants to the plaintiff to secure the money due under the two Loan Agreements.
It is not necessary to dwell on the details of the statement of claim. It should, however, be noted that the money the subject of the Gawthorne Loan Agreement is said to have been advanced on 28 August 2012.[10] The money the subject of the Yallingup Loan Agreement is said to have been advanced on 6 May 2015.[11] The Yallingup Mortgage is said to have been granted on 7 May 2015[12] and registered the same day.[13] The amount said to be due under the two Loan Agreements is some $1.16 million.[14]

The defence and counterclaim

[10] Statement of Claim dated 28 May 2018 (SC) par 5.

[11] SC par 17.

[12] SC par 10.

[13] SC par 12.

[14] SC pars 43.1, 43.3.

The plaintiff did not seek to strike out the defence. Accordingly, little needs to be said as to the defence. Among other things, the defendants deny that they signed the Gawthorne Loan Agreement,[15] the Yallingup Loan Agreement[16] and the Yallingup Mortgage.[17] It is alleged that an officer of the plaintiff falsely stated that he witnessed their purported signatures.[18] Accordingly, it is alleged that the Yallingup Mortgage is defeasible by reason of fraud and should be set aside.[19]
[15] DC pars 3.2, 38.1.
[16] DC pars 6.2, 38.1.
[17] DC par 10.2.
[18] DC pars 3.2, 6.2, 10.2, 38.1, 38.2.
[19] DC pars 10.3, 38.1 - 38.4.
The defendants allege that there are irregularities as to the accounts associated with both the Gawthorne Loan Agreement[20] and the Yallingup Loan Agreement.[21] The defendants also seek to set‑off their alleged entitlement as to 'damages and other compensation and remedies' as pleaded in the counterclaim in extinction or diminution of any liability that they have to the plaintiff.[22]
[20] DC par 3.6.
[21] DC par 6.5.
[22] DC par 38.5.
Given the length of the counterclaim, a summary of it will not fully address all aspects of the pleading. What follows is intended only to put in context the legal issues that arose on the plaintiff's strike-out application. It is convenient to first note some parts of the prayer for relief.
First, the prayer for relief raised matters that are plainly reflective of the defence in as much as they challenge the validity of, and seek cancellation of, the Gawthorne Loan Agreement, the Yallingup Loan Agreement and the Yallingup Mortgage (pars D, E and F). The defendants also seek to set aside another agreement associated with the Yallingup Property (par C).
Second, as an adjunct to the claim for a general account[23] that I will come to shortly, the defendants sought to challenge the validity of mortgages associated with the Gawthorne Loan Agreement and a property referred to as 'Cherratta Road' (pars D, F and G). Accordingly, that part of the counterclaim stands and falls with the claim for a general account.
[23] In oral submissions, counsel for the defendants explained that the challenge to these now discharged mortgages was so that, on the account if so ordered, various matters would be disallowed to the plaintiff as the accounting party: ts 53 ‑ 54.
Third, a damages claim was made (par H). This was based on claims for misleading conduct or unconscionable conduct.
Fourth, the defendants sought an order for the taking of a 'general account' (par A). The order was sought not only as to the accounts (ie bank accounts) between the plaintiff and the defendants. An account was also sought as to the accounts between the plaintiff and two companies associated with the defendants, described as KTEQ[24] and Gas City Transport (GCT).[25] It is common ground that those companies are now in liquidation.[26] Consequential on the general account, the defendants sought an order for payment of any money found due by the plaintiff to the defendants on the account (par B).
[24] KTEQ Rentals Pty Ltd.
[25] Gas City Transport Pty Ltd.
[26] ts 3. See also DC pars 6.6.2, 47.4 and the heading above par 307.
The defendants' claim for a general account was the focus of the plaintiff's strike‑out application. It is necessary to explain the architecture of the pleading so far as it relates to the claim for an account.
The defendants repeated the contents of the defence (par 40). Reference was then made to GCT (pars 43 - 46) and KTEQ (par 47). A series of property purchases were then described. These consisted of properties described as the 'Calluna Way Property' (pars 50 - 55), the 'Zamia Road Property' (pars 56 - 62), the 'Cherratta Road Property' (pars 63 - 95), the 'Anderson Road Property' (pars 96 - 109), the 'Fairbairn Property' (pars 110 - 116), the 'Unit 6 McCann Street Property' (pars 117 - 120), the 'Victoria Road Property' (pars 121 - 129), the 'South Trees Property' (pars 130 - 135) and the 'Gap Ridge Property' (pars 136 - 143).
After the hearing, counsel for the defendants helpfully provided a table that summarised by property the relevant owner, the date of acquisition and sale, whether the property was mortgaged to the plaintiff, the accounts associated with the property and whether, if the defendants were not the owner, they had guaranteed the accounts. The table identifies the paragraphs of the counterclaim in which the relevant information appears. That table is attached to these reasons with certain personal information having been redacted.
Importantly:
(1)The defendants were only owners of three of the properties (the Calluna Way Property, the Zamia Road Property and the Cherratta Road Property) and part owners of two of the other properties (the Anderson Road Property and the Gap Ridge Property).
(2)None of the properties remain owned by the defendants, KTEQ or GCT.
(3)To the extent that the plaintiff had mortgages over the properties those mortgages have been discharged.
The timing of the dealings shows the extent to which the defendants seek a general account. The earliest of the properties is the Calluna Way Property. Here the counterclaim refers to a November 2002 loan by the plaintiff to the defendants (pars 53 - 54) and a discharge of mortgage, on the sale of the property, in July 2004 (par 55).
The defendants assert that their purported signatures on mortgages or loan agreements associated with certain properties were not their signatures and that an officer of the plaintiff falsely stated that he witnessed the signatures. Those allegations - self‑evidently of fraud on the part of the plaintiff - are made as to the Cherratta Road Property (pars 78 ‑ 79, 81, 93) and the Anderson Road Property (par 105).
The defendants then plead a 2010 Master Asset Finance Agreement (MAFA), and accompanying facility, between the plaintiff and KTEQ (pars 144 - 149, 155 - 183).
The first defendant is pleaded to be a purported guarantor in respect of the MAFA from its inception (par 144). However, the defendants deny that his signature on various guarantees in relation to the MAFA is in fact his signature and allege that it was falsely witnessed by an officer of the plaintiff (pars 145, 156 - 157, 160 - 161, 163 - 164, 167 - 168, 173 - 174, 180 - 181). The second defendant is pleaded to have purportedly become a guarantor in late April 2015 (par 170). She too denies that her purported signature is her signature and says that the documents are falsely witnessed by an officer of the plaintiff (pars 173 - 174, 180 - 181).
Similarly, reference is made to the 2011 MAFA between the plaintiff and GCT which was purportedly guaranteed by the defendants (pars 184 - 212). The defendants again deny that their purported signatures were in fact their signatures (pars 187, 198 - 199, 202 - 203, 206 - 207, 210 - 211).
Mention is made of various plant and equipment loans made by the plaintiff to either KTEQ or GCT and certain alleged irregularities in respect of those dealings (pars 213 - 231). The defendants also plead details of a September 2014 overdraft facility between the plaintiff and KTEQ which was guaranteed by the defendants (pars 232 - 240).
The defendants plead, at length, evidentiary details as to internet banking facilities and an associated 'Money Tracker' program made available by the plaintiff (pars 241 ‑ 244, 251 ‑ 269). In part, there is a suggestion that one of the KTEQ and GCT employees was given authorisation without the defendants' consent, knowledge or authorisation and this caused loss (pars 241, 243). In oral submissions, counsel for the defendants said that the alleged loss was the $3.9 million said to have been falsely recorded as advanced to the defendants and KTEQ according to Money Tracker as pleaded in par 269.[27] Other pleas, as to losses due to inappropriate credit card use and merchant machines by the KTEQ and GCT employee (pars 245 ‑ 250), were not referred to in oral submissions.
[27] ts 43.

The defendants pleaded - by way of evidence - what the second defendant had observed by using the Money Tracker program in April and May 2015 (pars 253 ‑ 269, 272 ‑ 274). Counsel for the defendants placed emphasis on these pleas and, in the course of oral submissions without objection, took me to screen snapshots to demonstrate what was seen.[28]
[28] Affidavit of Aleksandar Vuksic sworn 5 October 2016 pages 178 -184, 266 - 267.
Among other things, the Money Tracker shows a reduction in the aggregated net position of the various accounts in mid‑April 2015; with a number of advances being recorded as having been made on 20 April 2015 (there being, based on the pleadings, no relevant advances on that day). Later - again pleading evidence - the defendants plead what are suggested to be a series of different explanations given on behalf of the plaintiff for the drop in net asset position displayed in Money Tracker (pars 274 - 280).
Insofar as two of the accounts were said to have certain balances the defendants then plead that the balances were not as stated (pars 270 ‑ 271). Both of those accounts were KTEQ accounts. The defendants then allege a number of irregularities whereby bank statements and other materials issued by the plaintiff on various accounts are not accurate or reliable (pars 281 - 287), going on to plead - by way of evidence - what appears in various letters and emails or was said in telephone conversations (pars 288 - 294).
One of the accounts, Account 4042, is associated with the Yallingup Loan Agreement (par 281). Two more of the accounts with the alleged irregularities are associated with the defendants. Account 4991 is in relation to the Anderson Road property (pars 284 - 285). But here the irregularity is no more than the facility expiry dates. Account 2101 is said to have incorrect branch contact details (par 288). Prima facie neither of those matters bespeak a self‑evident basis to believe that there are financial errors in the state of the accounts.
Before making the claim that the defendants are, by reason of the conduct as pleaded, entitled to the taking of accounts before determination of liability (par 299), the defendants then plead by way of summary (and in part repetitively) that:
(1)an officer of the plaintiff falsely signed that he had witnessed signatures of the defendants (par 295);
(2)the plaintiff had overcharged KTEQ and thus the amount, if any, owing by the defendants to the plaintiff could not be ascertained without a full account (par 296);
(3)the plaintiff's records of transactions and collateral were unreliable (par 297); and
(4)the plaintiff had overcharged KTEQ which had resulted in money being claimed from the defendants by the plaintiff (par 298). It is noteworthy that, despite the over-particularisation elsewhere, this plea is a bald assertion without particulars.
The counterclaim also raised additional claims as to misleading conduct, unconscionable conduct and a breach of contract claim based on the Banking Code of Practice. Those matters were dealt with summarily at the hearing on 18 October 2018, having not been the subject of any prior written submissions. I will refer to the relevant pleadings when dealing with the disposition of this part of the strike‑out application.

The strike-out application

The plaintiff applied by chamber summons dated 21 September 2018 to strike out the whole of the counterclaim. The grounds of the application were that the pleading disclosed no reasonable cause of action (O 20 r 19(1)(a)) or, alternatively, would prejudice, embarrass or delay the fair trial of the action (O 20 r 19(1)(c)). The focus of the plaintiff's submissions was that the pleading disclosed no reasonable cause of action.
An extension was required in terms of O 20 r 19(3)(a) because the bulk of the amendments were made in an earlier amended defence and counterclaim. The application was only marginally out of time, with the failure to observe the time limit under O 20 r 19(3) being explained by a need to complete conferral as to the application. The extension was not opposed. In those circumstances, as the application sought to agitate matters of substance which were arguable, the short extension required will be granted. That is all the more so where the extension could cause no prejudice to the defendants and the counterclaim has obvious implications for the likely length of the trial.
There was no dispute between the parties as to the applicable principles on such a strike‑out application. As to whether a pleading should be struck out as disclosing no reasonable cause of action, counsel for the defendants referred me to the standard authorities.[29] For present purposes it is enough if I remind myself that, at this interlocutory stage, the plaintiff must show that the case is 'really not arguable' - or that the plea 'is so clearly untenable that it cannot possibly succeed'. For summary dismissal there must be a high degree of certainty about the ultimate outcome of the action at trial.[30]
[29] Kimberley Downs Pty Ltd v The State of Western Australia (Unreported, WASC, Library No 6414, 25 August 1986) 6 ‑ 7; Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [44].
[30] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57].

The claim for a general account: the parties' submissions

Counsel for the plaintiff pointed out that the claim for a general account sought an account going back to 2002. On that basis counsel submitted, and I accept, that the strike-out application did not raise a mere technical point. The claim for an account will significantly increase the scope of the plaintiff's discovery obligations and prolong the trial. If the claim to an account fails to disclose a reasonable cause of action, striking out the claim will better achieve the goal in O 1 r 4A and the objects in O 1 r 4B of the Rules of the Supreme Court 1971 (WA).
Counsel for the plaintiff submitted that the general account as sought had no utility. Counsel contended that, on examination, the counterclaim did not plead:
•Any allegation to the effect that, on an account, the defendants would be entitled to some money from the plaintiff.
•Any facts which justified the defendants as having standing to seek an account for the companies KTEQ and GCT.
•Any basis as to why, should on an account it be found that a payment was due by the plaintiff to one or both of KTEQ and GCT, that would result in a diminution of the defendants' putative liability to the plaintiff.
Counsel for the defendants did not dispute the last point. Counsel accepted that the defendants did not seek to apply any payment due to KTEQ or GCT by way of set‑off against the defendants' liability. Counsel noted, as is the case, that the prayer for relief in par B only requires payment of any money found due by the plaintiff to the defendants on the taking of accounts.[31]
[31] ts 27.
Otherwise, counsel for the plaintiff advanced two legal propositions which were said to be determinative of the claim for a general account:
(1)In reliance on C2C Developments Pty Ltd v Commonwealth Bank of Australia counsel submitted that, on finalisation of a mortgage, the mortgagor only has an entitlement to an account if the mortgagor pleaded and proved that there was a surplus owing to the mortgagor.[32]
(2)In reliance on Adams v Bank of New South Wales counsel submitted that, before finalisation of a mortgage, the only circumstances in which a mortgagor has an entitlement to an account was where the mortgagor was prepared to make an offer to redeem.[33] It was said that no offer to redeem had been pleaded.
[32] C2C Developments Pty Ltd v Commonwealth Bank of Australia [2012] NSWSC 1162 [27] - [28].
[33] Adams v Bank of New South Wales (1984) 1 NSWLR 285, 296 (referring to Kennedy v General Credits Ltd (1982) 2 BPR 9456, 9462).
Counsel for the defendants accepted that there was no plea by way of an offer to redeem in relation to the Yallingup Mortgage.[34] That is perhaps self-evident to the extent that the defendants challenge the validity of the Yallingup Mortgage, claiming it to be defeasible on the basis of fraud. (In principle, however, it may be that a person in the position of the defendants could challenge the validity of the mortgage but, in the alternative, offer to redeem on the taking of accounts.)[35] More significantly, counsel challenged the completeness of the legal propositions relied on by the plaintiff and sought to restrict them to the particular circumstances then before the court.
[34] ts 26 - 27.
[35] E Tyler, P Young and C Croft, Fisher and Lightwood's Law of Mortgage (3^rd Australian ed, 2013) [33.9].
Counsel for the defendants submitted that, as to the plaintiff's first proposition, it applied only where an account was sought as to the proceeds of sale after a power of sale had been exercised by the mortgagee. Otherwise it was said that, in the circumstances pleaded in the re-amended defence and counterclaim, the defendants were entitled to an account even after the relationship of mortgagor and mortgagee had ended.
Counsel for the defendants referred me to the well-known passage of Lord Cottenham LC as to the wide variety of cases in which the court may order the taking of an account in its equitable jurisdiction:
The jurisdiction in matters of account is not exercised, as it is in many other cases, to prevent injustice which would arise from the exercise of a purely legal right, or to enforce justice in cases in which Courts of law cannot afford it; but the jurisdiction is concurrent with that of the Courts of law, and is adopted because, in certain cases, it has better means of ascertaining the rights of parties. It is, therefore, impossible with precision to lay down rules or establish definitions as to the cases in which it may be proper for this Court to exercise this jurisdiction. The infinitely varied transactions of mankind would be found continually to baffle such rules, and to escape from such definitions. It is, therefore, necessary for this Court to reserve to itself a large discretion, in the exercise of which due regard must be had, not only to the nature of the case, but to the conduct of the parties.[36]
[36] North-Eastern Railway Co v Martin [1848] 41 ER 1136; (1848) 2 Ph 758, 762.
It was said, by reference to a number of cases that I will examine below, that orders for an account may be made where transactions are complex and difficult to ascertain or cannot be justly and fairly ascertained.[37] Counsel for the defendants also placed heavy reliance on the decision of Hartl v Cowen and its apparent acceptance that there were situations in which it would be appropriate to order an account notwithstanding that the relationship of mortgagor and mortgagee had come to an end.[38]
[37] Counsel primarily relied on O'Connor v Spaight (1804) 1 Sch & Lef 305, 309; Lang v Simon (1952) 53 SR (NSW) 508, 513; Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd [2006] FCA 1415; (2006) 236 ALR 699 [50]. Counsel also referred to Melland v Gray (1843) 2 Y & CCC 199; [1843] 63 ER 87 and Harrington v Churchward (1860) 29 LJ Ch 521. As for Melland v Gray, however, I do not read the case as being concerned with the circumstances in which a court in equity would order an account due to complexity. Rather, there being in the case no evidence against a mortgagor as to actual advances made by the mortgagee, the mortgagor was charged only to the extent of his admissions.
[38] Hartl v Cowen [1993] 2 Qd R 633, 638.
Counsel for the defendants contended that, by reason of the alleged fraudulent conduct on the part of the plaintiff and the irregularities in the accounts as pleaded, it was impossible without the taking of accounts to accurately ascertain the true position as to the lending between the plaintiff and the defendants and their associated companies (of which the defendants were guarantors). This was said to justify a complete account of what was said to be a complex and interconnected banking relationship. Counsel made reference to the advantageous procedural mechanisms available on the taking of an account; for example, discovery, interrogatories and cross-examination (including cross-examination of former employees).[39]
[39] See also Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd [51].
In oral submissions counsel for the defendants accepted, in substance, that the defendants could not positively say that on an account being taken money would be owing to the defendants.[40] Thus the plaintiff's submission that there was no plea to that effect was uncontroversial. In any case, as the defendants' written submissions record:
Whilst the Defendants do not dispute that all of the properties mortgaged by the Defendants and their related companies to the Plaintiff, other than the Yallingup Property, have been sold by the Plaintiff exercising its power of sale, it is presently impossible, without an account being taken, for the Defendants to ascertain whether in fact money is owing by the Plaintiff to the Defendants …[41]
[40] ts 23.
[41] Defendants' Submissions dated 5 October 2018 par 9.
The defendants' submissions went on to suggest that it may be that, after the taking of an account, the plaintiff is indebted to the defendants. That is no more than unpleaded speculation. For the purposes of the strike-out application before me the matter of importance is the omission of any plea to the effect that, on an account, the defendants would be entitled to some money from the plaintiff.
In the course of the hearing I requested that counsel for the defendants identify whether there was any plea in the re‑amended defence and counterclaim to the effect that, as guarantors, the defendants had made payment to the plaintiff on behalf of KTEQ or GCT.[42] After this initially went unanswered, and I returned to it, counsel referred me to par 296.[43] Paragraph 296 only pleads that because the plaintiff is said to have overcharged KTEQ the amount owing by the defendants to the plaintiff cannot be ascertained. That is the context in which par 298 must be read. Essentially the allegation is as advanced in the defendants' written submissions:
[H]ad the conduct complained of by the Defendants in the Counterclaim not occurred (and particularly conduct referred to in paragraphs 14 and 15 below), it may well be that the Defendants would not have ever been in a position requiring them to borrow the funds which the Plaintiff alleges in the SOC are secured by the Gawthorne Mortgage and the Yallingup Mortgage.[44]
[42] ts 14.
[43] ts 15.
[44] Defendants' Submissions dated 5 October 2018 par 11.
Accordingly, understood in context, par 298 of the re‑amended defence and counterclaim is not a plea alleging that the defendants have made payment to the plaintiff on behalf of KTEQ or GCT. It only goes to whether additional funds are now claimed from the defendants by the plaintiff than might otherwise be the case. The absence of any pleaded allegation that the defendants have made payment as guarantors also seems implicit in various pleas within pars 307 to 326 where demands are asserted but it is said that no payments were made and the defendants had no obligation to do so.
In written submissions, counsel for the defendants also referred to the plea in par 38.5 advanced by way of equitable set-off.[45]
[45] Defendants' Submissions dated 5 October 2018 pars 11, 16 - 17.
The plaintiff did not seek to strike out par 38.5. Nor, read properly, does par 38.5 seek to incorporate the individual factual matters pleaded in the counterclaim by way of defence: the pleas are not incorporated into the defence in the same way, for example, that par 40 incorporates the pleading in pars 1 to 39 of the defence into the counterclaim. The plea is to set‑off the entitlement to damages and other compensation and remedies as established by reason of the counterclaim. Accordingly, I see no reason to consider the pleas in the counterclaim as if they were also advanced by way of defence. They are put by way of counterclaim rather than defence. I intend to assess them as such. On that basis I need not further address the submissions as to equitable set-off.
Paragraph 38.5 of the defence will remain in its present form. The extent, if any, that par 38.5 has substance will depend on the outcome of the plaintiff's challenge to the counterclaim.

The claim for a general account: the authorities

General: the entitlement to an order for account

The nature and historical development of an account in equity, and the difference between an account in equity and an account at law, are discussed elsewhere.[46] While, originally, the procedure was limited to cases involving fiduciaries, an account in equity expanded to cover the field because of deficiencies in the common law procedure. Its availability in this court is not open to doubt.[47] Procedurally, O 45 of the Rules of the Supreme Court 1971 (WA) provides for the taking of accounts and inquiries in exercise of the jurisdiction.
[46] See generally P Young, C Croft and M Smith, On Equity (2009) [16.1300] - [16.1360]; E Tyler, P Young and C Croft, Fisher & Lightwoods's Law of Mortgage (3^rd Australian ed, 2014) [39.5]; J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26.005] ‑ [26.020].
[47] Supreme Court Act 1935 (WA) s 16, s 24.
As I apprehend the counterclaim, what is sought by the defendants is, at least substantially, an account of debt. So far as what is sought is a common account, it is to ascertain the monetary dealings between the parties and determine with precision the balance between them.[48] To the extent that the account is sought on a wilful default basis additional issues will arise. Where there is an accounting on a wilful default basis the accounting party is required to account for what it might have received had it not been for the default. In this respect the suggested defaults do not appear clearly from the pleading and were not identified by counsel for the defendants in his written or oral submissions.
[48] McLauchlan v Prince [2001] WASC 43 [12].
There are accepted categories of cases in which equity may order an account in aid of a common law right. In Meagher, Gummow & Lehane's Equity Doctrines & Remedies the authors suggest some 10 categories before suggesting that the categories are not closed.[49] The categories as mentioned include accounts otherwise too complicated to settle at common law.[50] The authors deal separately with an action between a mortgagor and a mortgagee, which is described as one of the most common actions for an account.[51]
[49] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26.025] - [28-080].
[50] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26-070].
[51] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26-140] - [26-145].
It must be appreciated, however, that an order for an account is not simply a direction to investigate and report. It is an order that affirms the applicant's rights and calls for an assessment of what is owed by the accounting party.[52]
[52] P Young, C Croft and M Smith, On Equity (2009) [16.1300] referring to Doss v Doss (1843) 3 Moo Ind App 175, 196 - 197; [1843] 18 ER 464, 472.
This explains why the entitlement to an account ordinarily requires an applicant to demonstrate two matters. First, that the parties are in an accounting relationship with each other, ie that the person against whom the account is sought is an 'accounting party'.[53] Second, that in performance of the accounting party's obligations the applicant is entitled to some - albeit uncertain - amount from the accounting party.
[53] See eg J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26-020], [26-085].

These two requirements are recognised in the leading texts.
In On Equity the authors state:
Both at law and in equity, a plaintiff must first satisfy the court that he or she is entitled to some money from the defendant and that the defendant is bound to render an account.[54] (citations omitted)
[54] P Young, C Croft and M Smith, On Equity (2009) [16.1320].
In Meagher, Gummow & Lehane's Equity Doctrines & Remedies the authors state:
Where a plaintiff seeks the remedy of an account, the plaintiff must generally prove, inter alia, that the defendant has undertaken to be an accounting party, and that in performance of the defendant's accounting obligations the plaintiff is entitled to some sum from the defendant, although the plaintiff is uncertain what is the quantum of that sum. The plaintiff must do more than demonstrate that the plaintiff might be owed some money, or that the plaintiff wants, as it were, to have a kind of general discovery.[55] (emphasis added)
[55] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26.085]. The passage goes on to refer to Doss v Doss. A similar passage from an earlier edition is quoted with apparent approval in Juul v Northey [2010] NSWCA 211 [185].
Recent authorities also confirm that the party seeking an account must prove that it is entitled to some (if uncertain) amount from the accounting party.[56]
[56] Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 [338]; Woodward v Woodward [2015] NSWSC 1793 [9]; Noble Earth Technologies Pty Ltd v Hampic Pty Ltd (in liq) [2017] NSWSC 502 [201] - [203].
The requirement was expressly noted by Bond J in QNI Resources Pty Ltd v Park:
…before the Court will make an order for the taking of an account it is necessary for the applicant for such an order to demonstrate:
(a)the existence of an accounting relationship between the applicant and the alleged accounting party; and
(b)the applicant is entitled to some sum from the accounting party, although the applicant is uncertain what is the quantum of that sum.[57]
[57] QNI Resources Pty Ltd v Park [2016] QSC 222; (2016) 146 ACSR 321 [70].
If that entitlement must be proved it must also be pleaded.
While the principle was acknowledged in Mulherin v Quinn Villages Pty Ltd, and said to be no doubt accurate in the context in which it was expressed, Muir J suggested that it was not a universal truth.[58] His Honour mentioned the taking of accounts on the dissolution of a partnership, a mortgagor seeking an account in a redemption action and a fiduciary seeking an account where there are mutual accounts between the fiduciary and the defendant.[59]
[58] Mulherin v Quinn Villages Pty Ltd [2007] QSC 231 [20] (see also at [17] - [18]).
[59] Mulherin v Quinn Villages Pty Ltd [20] - [21].
The position in a redemption action is anomalous and I will deal with it shortly. On the dissolution of a partnership, however, the settling of accounts will generally result in adjustment between the partners.[60]The present case is self‑evidently not one where there are mutual accounts between a fiduciary and the putative accounting party. To that extent the reservations as to the general position, as mentioned by Muir J, may be put to one side.
[60] Partnership Act 1895 (WA) s 57.
An order for an account is discretionary.[61]It will not be ordered if the account will serve no useful purpose.[62]Equity does not require an idle gesture; it does not act in vain.This is the reason why the applicant for an account must prove that it is entitled to some amount from the accounting party. As is stated in Noble Earth Technologies Pty Ltd v Hampic Pty Ltd (in liq):
The court will not order an accounting, which is likely to be an expensive exercise, if the accounting is likely to be futile because the claimant has not established that it is entitled to be paid some unquantifiable amount that is sufficient to justify the exercise.[63]
[61] Metropolitan Petar v Mitreski [2012] NSWSC 16 [188(7)]; Singh v Singh [2017] NSWCA 234 [51]; Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544, 559.
[62] Mulherin v Quinn Villages Pty Ltd [22]; Sze Tu v Lowe [2014] NSWCA 462; (2014) 89 NSWLR 317 [390].
[63] Noble Earth Technologies Pty Ltd v Hampic Pty Ltd (in liq) [203].
Accordingly, based on precedent and consistent with principle, I conclude that, ordinarily, to be entitled to an account an applicant must prove that in performance of the accounting party's obligations the applicant is entitled to some amount from the accounting party. That amount may be uncertain or unquantifiable. But it is not enough to show that applicant might be owed some money.
A requirement that a person seeking an account first plead and prove an entitlement to some amount from the accounting party is consistent with recent authority dealing with the analogous equitable remedy of an account of profit.
In that context there are two recent authorities in this court that recognise the requirement that a plaintiff must plead that a profit has been made.[64] Moreover, an account of profit will not be ordered where a plaintiff pleads, but fails to prove, that any profit was made.[65] Proof of some profit is thus an integer that must be established before the court will order an account of profit.
[64] See Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [36]; Agricultural Land Management Ltd v Jackson [No 2] [2014] WASC 102 (S) [14].
[65] Agricultural Land Management Ltd v Jackson [No 2] [14].
I am unable to identify any relevant distinction between an account for profit and an account for debt which might mean that while, for the former, there is an accepted need to plead and prove some profit, with the latter there is no need to plead and prove some debt. To the contrary, having regard to the common equitable origins of the two forms of account and the desirability of coherence within the law, I consider a similar requirement exists. This provides further support for my conclusion that the applicant for an account must prove that it is entitled to some amount from the accounting party.

Order for an account in the context of a mortgagor-mortgagee relationship

A mortgagor is entitled in certain circumstances to obtain, through court order, an account from the mortgagee. The extent of that right was in issue in the application before me.
There are a number of uncontroversial propositions that may be stated at the outset:
(1)The order for the taking of an account is discretionary.[66]
(2)The existence of the relationship of mortgagor and mortgagee does not of itself give the mortgagor an entitlement to an order for an account.[67]
(3)Although the mortgage has been discharged, bringing an end to the relationship of mortgagor and mortgagee, an account may still be taken.[68] (It is, however, necessary to further examine the circumstances in which such an order will be made.)
(4)After exercise of a power of sale a mortgagor may obtain an order for an account where it is seeking to recover a surplus,[69] the mortgagee holding the surplus as a fiduciary.[70] If, however, there is no surplus, there is no obligation to account.[71] Thus, such a claim for an account following a sale of the mortgaged property must plead and prove that there is a surplus.[72]
(5)The mortgagor cannot obtain an interlocutory account or a partial account.[73]
[66] Tsatsoulis v Trigamist Holdings Pty Ltd [2000] NSWSC 900 [47]; Mulherin v Quinn Villages Pty Ltd [22]; Metropolitan Petar v Mitreski [188(7)]; Singh v Singh [51]; Warman International Ltd v Dwyer (559); QNI Resources Pty Ltd v Park [73].
[67] Tsatsoulis v Trigamist Holdings Pty Ltd [44].
[68] Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [2002] NSWCA 287 [57].
[69] Adams v Bank of New South Wales (295); Tsatsoulis v Trigamist Holdings Pty Ltd [44]; C2C Developments Pty Ltd v Commonwealth Bank of Australia [22] - [23].
[70] Many of the authorities refer to the mortgagee holding the surplus on trust. However, in Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269 [50] the plurality left undecided the question whether the relationship was a true trust relationship rather than a fiduciary relationship.
[71] Tsatsoulis v Trigamist Holdings Pty Ltd [46], [58]; C2C Developments Pty Ltd v Commonwealth Bank of Australia [27] (see also at [22] - [23]); QNI Resources Pty Ltd v Park [72(a)].
[72] C2C Developments Pty Ltd v Commonwealth Bank of Australia [28].
[73] Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [33]; Adams v Bank of New South Wales (296); Emanuel Management Pty Ltd (in liq) v Foster's Brewing Group Ltd [2003] QSC 205; (2003) 178 FLR 1 [1076]; Riva NSW Pty Ltd v Key Nominees Pty Ltd [2014] NSWSC 301 [20].
The fourth proposition in the preceding list is consistent with, and strongly supportive of, my earlier conclusion that, ordinarily, an applicant for an account must prove that it is entitled to some amount from the accounting party. The same rationale underpins the denial of an account unless and until the mortgagee demonstrates a reasonable likelihood that the mortgagee holds a surplus. It would be futile and vexatious to require the mortgagee to give an account in the absence of a surplus.[74]
[74] Tsatsoulis v Trigamist Holdings Pty Ltd [60].
A matter on which the parties were divided was whether, before discharge of a mortgage, the mortgagor must make an offer to redeem if seeking an account. The plaintiff submitted this was the position. The defendants contended that the authorities relied on by the plaintiff did not establish such a principle.
I accept that where an account is sought by a mortgagor before the mortgagee exercises its power of sale the mortgagor must make an offer to redeem.[75] The account is only ancillary to the right to redeem.[76] This is a rule of substantive law, not merely a matter of practice or procedure.[77]
[75] Kennedy v General Credits Ltd (9462); Adams v Bank of New South Wales (296); Tsatsoulis v Trigamist Holdings Pty Ltd [49]. The necessity for an offer to redeem in an action for an account on the basis of wilful default was also confirmed in General Credits Ltd v Wenham (1989) 18 NSWLR 570, 572 in approving the ruling in Wenham v General Credits Ltd (Unreported, NSWSC, 16 December 1988).
[76] Hartl v Cowen (637).
[77] Kennedy v General Credits Ltd (9462); Adams v Bank of New South Wales (296); Tsatsoulis v Trigamist Holdings Pty Ltd [49].
The principle is expressed in these terms by Hope JA in Kennedy v General Credits Ltd:
In cases where it is alleged that upon the taking of accounts it will or may be found that the mortgage has been paid off, the mortgagor should nonetheless offer to redeem if, upon the taking of accounts, money is still found to be due. Furthermore, in many although not all cases, a mortgagor is required to pay into court the money prima facie payable to the mortgagee as a condition of his getting relief … it is not necessary to pursue these matters save to emphasise that the law in these respects is not merely procedural but substantive, and that the appellants’ proceedings should have failed in limine because of their failure to comply with its requirements.[78]
[78] Kennedy v General Credits Ltd (9462).
The rule has been acknowledged in this court. In Rams Mortgage Corporation Ltd v Skipworth EM Heenan J stated:
[W]here there is a dispute as to part of the moneys owing under the security of the mortgage, including the propriety of particular items of expenditure being debited to the mortgagors, the appropriate remedy for the mortgagors is to seek an account of the balance claimed and, unless this is agreed between the parties, for the court to conduct such an account to settle the balance owing which may, depending upon the outcome, require a refund of overpayments by the mortgagee to the mortgagors. However, pending the taking of any such account and settling the balance due, the mortgagee is entitled to require payment into court of the whole of the balance sworn to be due, subject to the completion of the account and any associated enquiries which may need to be conducted. This right to account endures even for a mortgagor in default … but, generally, a mortgagor in default will be required to offer to discharge the mortgage as a condition of obtaining an order for the taking of accounts [in support of this proposition reference was made to Kennedy v General Credits Ltd and Adams v Bank of New South Wales].
It is established that a mortgagor is only entitled to an order for an account as an ancillary to an action for redemption and the offer to redeem is usually an essential prerequisite to any such claim of relief.[79] (emphasis added and citations omitted)
[79] Rams Mortgage Corporation Ltd v Skipworth [2007] WASC 24 [32] - [33].
In the passage quoted, EM Heenan J did not offer any suggestions as to when the words of qualification (ie 'generally' and 'usually') might operate. Later, however, his Honour noted the absence in that case of any allegation of fraud and the consequential indefeasibility of the mortgage.
The rule is accepted in Fisher & Lightwoods's Law of Mortgage. The authors refer to a general principle that a mortgagee cannot be made a party to an action relating to the mortgage unless the mortgagor has made an offer to redeem.[80] The authors of Meagher, Gummow & Lehane's Equity Doctrines & Remedies are even more absolute. They state that an account 'must be refused unless redemption or foreclosure is also sought'.[81]
[80] E Tyler, P Young and C Croft, Fisher & Lightwoods's Law of Mortgage (3^rd Australian ed, 2014) [39.1].
[81] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26.140] (citing Tannock v North Queensland Securities Ltd [1932] St R Qd 285, 295 - 297, 300).
In challenging the principle contended for by the plaintiff, counsel for the defendants referred to two things.
First, it was suggested that the passage in Adams v Bank of New South Wales relied on by the plaintiff as expressing the principle related to the circumstance that the court would not countenance a partial account. I accept that both are rooted in acceptance that any litigation between a mortgagor and mortgagee must have utility. But to identify that there is such a relationship does not gainsay the principle that where an account is sought the mortgagor must offer to redeem. To the contrary, it reinforces the basis for the principle.
Second, counsel for the defendants referred me to Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd. The specific passage referred to reads:
I should add that there is no right to an interlocutory account, and a mortgagor is not entitled to a partial account. A mortgagor cannot pick out one or more aspects of the accounts between the parties and litigate that alone. The Court of Appeal has decided this on numerous occasions [reference then being made to, among other authorities, the cases relied on by the plaintiff - Kennedy v General Credits Ltd and Adams v Bank of New South Wales].[82] (other citations omitted)
[82] Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd [33].
The implicit suggestion by counsel for the defendants is apparently that the cases relied on by the plaintiff establish the principle referred to in Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd rather than any other principle. I reject that contention. Kennedy v General Credits Ltd and Adams v Bank of New South Wales are authority for the proposition advanced by the plaintiff. They have been recognised as such time and time again. They may also be authority for the additional proposition referred to by counsel for the defendants. But to so state in no way qualifies acceptance of the principle that when an account is sought by a mortgagor before the mortgagee exercises its power of sale the mortgagor must make an offer to redeem.
Finally, in considering the authorities as to the ordering of an account in the context of the relationship between a mortgagor and mortgagee, reference needs to be made to Hartl v Cowen.
In Hartl v Cowen a former mortgagor sought an account after the mortgage had been discharged. It was argued that, the mortgage having been redeemed following tender of the amount claimed by the mortgagee, there was no longer any basis on which the plaintiff could ask for an account as between mortgagor and mortgagee. Williams AJ accepted that there had been redemption and there was thus no basis for the court to exercise its general equitable jurisdiction over the mortgagee.[83] The court therefore had no jurisdiction to entertain a redemption suit.[84] It was said, however, that the end of the mortgagor and mortgagee relationship did not necessarily deprive the court of the jurisdiction to order an account.[85]
[83] Hartl v Cowen (637).
[84] Hartl v Cowen (638).
[85] Hartl v Cowen (638).
As I have noted above (see par 76(3)), the power to order an account post-discharge of a mortgage is uncontroversial. The issue for present purposes is in what circumstances that may occur. Williams AJ referred to an order for account being made in circumstances of foreclosure (when the mortgagee became the absolute owner of the property).[86] His Honour went on to state:
I have not been able to find any case (nor was I referred to any by counsel) where either under the general law or under the Torrens System, a mortgagor was held entitled after redemption to an account in order to determine what amount, if any, was recoverable from the mortgagee as constituting an overpayment. However, there would undoubtedly be situations where it was appropriate to order an account (for example, if fraud was alleged), and I have no doubt that the 'mortgagor' after redemption would not be without remedy. But the cases suggest that where the extent of the alleged overpayment is known the appropriate remedy is an action for money had and received.[87] (emphasis added)
[86] Hartl v Cowen (638).
[87] Hartl v Cowen (638).
In that case the claim for an account was struck out as being vexatious, oppressive and embarrassing. The former mortgagor was able to particularise the amounts said not to have been payable under the mortgage. In those circumstances it was inappropriate to order the taking of an account. The appropriate claim was one for money had and received.
The passage from Hartl v Cowen must be read in context. The observations are strictly obiter. More importantly, they are made in circumstances where the relationship of mortgagor and mortgagee has ended (note the express reference to 'after redemption'). The passage does not, in my opinion, address the entitlement to an order for an account while the relationship of mortgagor and mortgagee subsists. The suggestion that an order for account may be justified where there is an allegation of fraud leading to an overpayment does not impact the rule that where an account is sought before the mortgagee exercises its power of sale the mortgagor must make an offer to redeem.
In other words, Hartl v Cowen is not, in my opinion, authority for some 'fraud exception' to the accepted position that during the subsistence of the mortgage an account is only ancillary to the right to redeem. To the contrary, Williams AJ expressly recognises that rule.[88] Besides, where fraud is found to invalidate a mortgage an account is not required to bring about finality in the relationship of mortgagor and mortgagee: the mortgage will be set aside, with all necessary consequential orders, without any taking of accounts.
[88] Hartl v Cowen (637).
The mention of an account being a possible remedy, post-discharge, in respect of alleged overpayment must also be considered. No reasons are given for the statement that there are such situations where it would be appropriate to order an account. And the statement is made without reference to the authorities establishing either: (1) the general rule that the applicant must show that it is entitled to some amount from the accounting party; or (2) the specific rule, post‑exercise of a power of sale, that where seeking to recover a surplus the mortgagor must plead and prove that there is a surplus.

However, the suggested exception that an allegation of fraud leading to an overpayment might, post‑discharge of mortgage, justify an order for the taking of accounts is consonant with equity's traditional abhorrence of fraud. Equity's origins, as a court of conscience, mean that the notion of 'fraud' - a broader notion in equity than in law - is deeply embedded in equity.[89] Fraud is suggested to be one of the three pillars which support the entire structure of the equitable jurisdiction.[90] Fraud is abhorrent to the good conscience on which the principles of equity are based.[91]
[89] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [12-005].
[90] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [12-035]; Re Prismex Technologies Pty Ltd [2013] NSWSC 292 [50].
[91] Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] [2008] WASC 239; (2008) 39 WAR 1 [4845].
In Lazarus Estates Ltd v Beasley Denning LJ said:
No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever …[92] (citations omitted)
[92] Lazarus Estates Ltd v Beasley [1956] 1 All ER 341; [1956] 1 QB 702, 712 ‑ 713.
In Farley (Aust) Pty Ltd v JR Alexander & Sons (Q) Pty Ltd Williams J described fraud as 'conduct which vitiates every transaction known to law … It is an insidious disease, and if clearly proved spreads to and infects the whole transaction'.[93]
[93] Farley (Aust) Pty Ltd v JR Alexander & Sons (Q) Pty Ltd [1946] HCA 29; (1946) 75 CLR 487, 493.
Some degree of flexibility is apparent where fraud is shown. Equity is flexible and robust in moulding relief to meet the requirements of conscience.[94] There is much to be said for the view that equity is flexible enough to deal with fraud in any appropriate way.[95] The doctrine of equitable fraud in particular is fluid and flexible.[96] Fraud is infinite in variety and so no invariable rules can be established; otherwise the court's jurisdiction to grant relief would be 'perpetually eluded by new schemes'.[97]
[94] State Bank of NSW Ltd v Ralston (Unreported, NSWSC, 1 August 1995).
[95] See eg the analogous comments of Young CJ in relation to unconscionable conduct: McEwen v Combined Coast Cranes Pty Ltd [2002] NSWSC 1227; (2002) 44 ACSR 244 [60]. That decision was disapproved in Vigliaroni v CPS Investment Holdings Pty Ltd [2009] VSC 428; (2009) 74 ACSR 282 but in relation to a separate point of law.
[96] Mercanti v Mercanti [2016] WASCA 206; (2016) 50 WAR 495 [278].
[97] Fardon v Attorney-General (Qld) [2004] HCA 46; (2004) 223 CLR 575 [105]; SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189 [8].
I have expressed the rule that a person seeking an account must first plead and prove an entitlement to some amount in terms of that 'ordinarily' being the case or that being a 'general' rule. The expression of the rule in those qualified terms is consistent with the authorities. Accordingly, the rule necessarily admits of exceptions.
In principle there might be an exception where, by reason of fraud, a former mortgagor is unable to plead and prove that there has been an overpayment. Otherwise the effective fraudster may be able to immunise itself from the taking of accounts. Plainly, in the posited circumstances, there could be no claim for money had and received: the former mortgagor is equally unable to plead and prove that it has paid amounts that were not lawfully payable. Absent a taking of accounts, the former mortgagor may be left unable to pursue a remedy. Such an inequitable and unjust result would surely not be permitted in equity. Equity will not suffer a wrong to be without a remedy and will not allow a person to take advantage of their own wrong.
In other contexts it is accepted that fraud may excuse non-compliance with stipulated conditions. Where, for example, by the fraud of another party, a person is prevented from complying with a condition or doing a necessary act the condition is considered as fulfilled and the act treated as done.[98]
[98] Young P, Croft C and Smith M, On Equity (2009) [5.130].
I am assessing the defendants' claim for a general account in the context of a strike‑out application. For present purposes it is enough if the claim is arguable. I should, in any case, be careful not to risk stifling the development of the law by summarily rejecting the possibility of a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie.[99]
[99] Kimberley Downs Pty Ltd v The State of Western Australia (6 - 7).
Viewed in this context, I am satisfied that an allegation of fraud leading to an overpayment by the mortgagor might arguably, post‑discharge, justify an order for the taking of accounts even if the former mortgagor is unable to prove that the applicant is entitled to some amount from the accounting party. There is a possible fraud exception to the general rule that a person seeking an account must first plead and prove an entitlement to some amount. But the allegation could not be one of fraud at large - or even in the obtaining of the mortgage. It must be that, by reason of the fraud, the applicant is unable to plead and prove that there has been an overpayment meaning that the applicant is entitled to some amount from the accounting party.
In addressing the circumstances in which the court will order an account in the context of the relationship of mortgagor and mortgagee I have deliberately omitted any consideration of the authorities concerning claims as to the improper exercise of the mortgagee's power of sale.
No such claim is advanced in the defendants' counterclaim. I observe, for completeness, that the authorities and commentaries in this area also refer to such a proceeding as a claim in equity for an account.[100] That, however, is different in nature to the form of 'general account' - as an account of debt - sought by the defendants in their counterclaim. Accordingly, it is not necessary to address those authorities.

Order for an account due to complicated transactions

[100] MBF Investments Pty Ltd v Nolan [2011] VSCA 114; (2011) 37 VR 116 [245] (see also the cases cited therein at fn 226).

Counsel for the defendants also relied on the equitable jurisdiction to order an account where transactions were complex and difficult to ascertain or could not be justly and fairly ascertained.
There is no doubt that equity would order an account where it was too complicated to settle at law. I have already referred to that as being an accepted category of case. As counsel for the defendants submitted, the category was also recognised as such by Finkelstein J in Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd.[101] But, as noted by the authors of Meagher, Gummow & Lehane's Equity Doctrines & Remedies, this was a 'vaguely defined' category where the dealings 'were too entangled to be left to a jury'.[102] Earlier the authors had observed that '[a]gain and again it was said that the jurisdiction would not be exercised where the case could be disposed of as fully and conveniently by a court of common law'.[103]
[101] Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd [50].
[102] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26.070].
[103] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5^th ed, 2015) [26-020].
The rationale that certain matters were too complicated for determination at law (by a jury), thereby justifying equity's intervention, is evident in the cases relied on by counsel for the defendants. In the relevant passage of O'Connor v Spaight relied on by the defendants is said that the account had become so complicated that a court of law would be incompetent to examine it on a trial at nisi prius.[104] Harrington v Churchward specifically refers to a jury being manifestly incompetent to deal with the complicated accounts in that case.[105] So too, in the more modern case of Lang v Simon, McLelland J came to the conclusion that an account in equity was appropriate as a jury would not be competent to examine the accounts with all necessary accuracy or justly and fairly.[106]
[104] O'Connor v Spaight (309).
[105] Harrington v Churchward (525).
[106] Lang v Simon (513).
In assessing whether to order an account it was necessary to envisage the probable course of the proceedings in a court of law.[107] Consideration had to be given to the nature of the dealings and whether they were too complex to be determined in law. Equity would not intervene in every case. In Frietas v Dos Santos Alexander LCB stated:
It is not every account which will entitle a Court of Equity to interfere: it must be such an account as cannot possibly be taken justly and fairly in a Court of law.[108]
[107] Lang v Simon (512 - 513).
[108] Frietas v Dos Santos (1827) 1 Y & J 574, 576; [1827] 148 ER 800, 801.
Accordingly, I accept that - all other requirements being satisfied - the court may order the taking of accounts where the alternate envisaged proceedings would be deficient or incompetent due to complexity. But, as a matter of practical reality, this aspect of equity's jurisdiction to order the taking accounts is of far lesser importance in this court in 2018. This court administers law and equity concurrently.[109] A civil trial of a dispute such as that the subject of these proceedings will be conducted by a judge alone. There will not be a jury. It cannot be contended that a trial before a judge would not be able to competently ascertain, with precision, what amount is due by the defendants to the plaintiff or the other way around. Indeed, given that the defendants deny the plaintiff's pleas as to the amounts owing under the Loan Agreements, it will be necessary for the trial judge to determine what amount, if any, is due by the defendants to the plaintiff.
[109] Supreme Court Act 1935 (WA) s 24.
Counsel for the defendants put emphasis on the range of procedural mechanisms that could be employed in an account exercising the equitable jurisdiction. I do not accept that these are such that it could be concluded, even arguably, that this is not a case that could be disposed of as fully and conveniently by the court acting in law. The powers under the Rules of the Supreme Court 1971 (WA) to make interlocutory orders to ensure the just and fair disposition of disputes within this court are almost plenary.[110]
[110] See eg Rules of the Supreme Court 1971 (WA) O 4A r 5. See more generally O 26, O 27, O 36 and O 36B.
It should also be clarified that complexity alone will not justify, or arguably justify, an order for the taking of an account. The general requirements that must be met to establish an entitlement to an account continue to apply. Complexity alone is not described in the cases as providing any exception to the general requirements. Thus the applicant must also establish that it is in a relationship with the other party whereby the other party is an accounting party. Such an accounting relationship existed in all the cases on which counsel for the defendants relied.[111] And, for reasons previously given, the applicant must ordinarily demonstrate that it is entitled to some unquantified amount from the accounting party.
[111] See O'Connor v Spaight (landlord and tenant); Harrington v Churchward (employer and employee/contractor - where salary based on percentage of profit); Lang v Simon (employer and employee - where part of salary based on percentage of profit); Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (manager and partnerships). As to the other cases mentioned in Meagher, Gummow & Lehane's Equity Doctrines & Remedies at [26-070] in this category the same position prevails: see Frietas v Dos Santos (agent and principal); Taff Vale Railway Co v Nixon (1847) 1 HLC 111; [1847] 9 ER 695 (employer and contractor); Southampton Dock Co v Southampton Harbour and Pier Board (1871) LR 11 Eq 254 (statutory company and statutory board of commissioners - parties considered to be in a fiduciary relationship); Re Stevens [1898] 1 Ch 162 (executors and beneficiary).

Disposition

Before applying the relevant authorities to the defendants' pleaded case it is convenient to briefly re-state the principal conclusions I have reached as to the applicable principles.
I have concluded that:
(1)Ordinarily an applicant for an order for an account must demonstrate two matters: (a) that the parties are in an accounting relationship; and (b) that, in performance of the accounting party's obligations, the applicant is entitled to some amount from the accounting party.
(2)Where an account is sought by a mortgagor before the mortgagee exercises its power of sale the mortgagor must make an offer to redeem.
(3)Post-discharge of a mortgage the court may still order an account. There are then two usual forms of claim: (a) where a former mortgagor seeks to recover a surplus following exercise of a power of sale; and (b) where a former mortgagor seeks to recover an overpayment.
(4)Where a former mortgagor seeks an order to account to recover a surplus on exercise of the mortgagee's power of sale the former mortgagor must plead and prove that there is a surplus.
(5)Where the claim is one of overpayment the court will not order an account if the mortgagor is able to particularise the amounts said not to have been lawfully payable. Whether there might otherwise be an account will ordinarily depend on proof that the former mortgagor is entitled to some unquantified amount. But here, arguably, there is at least one exception to the general rule expressed at par (1)(b) above. Where, by reason of fraud, a former mortgagor is unable to plead and prove that it is entitled to some amount from the mortgagee, it might be that the court will order the taking of accounts even if the exercise may prove futile.
(6)The court may order an account where the proceedings would otherwise be deficient or incompetent due to complexity. But complexity alone is insufficient. And, in any case, complexity does not warrant equitable intervention unless such an account could not otherwise possibly be taken justly and fairly.
Broadly speaking, the defendants' counterclaim seeks a general account in three ways. First, as to the amount, if any, due in respect of the Yallingup Mortgage - this encompasses the amounts due under the Gawthorne Loan Agreement and the Yallingup Loan Agreement as well as any offsetting claims. Second, as to any overpayments in respect of now finalised mortgages and accounts as to which the defendants were the relevant mortgagors; for example, those associated with the Calluna Way Property, the Zamia Road Property and the Cherratta Road Property. Third, as to the dealings between the plaintiff, on the one hand, and KTEQ and GCT, on the other.
The claim for an account in relation to the Yallingup Mortgage does not disclose a reasonable cause of action. As previously mentioned, the defendants make no offer to redeem. To the contrary, the defendants deny the validity of the Yallingup Mortgage, claiming it to be defeasible for fraud.
Insofar as, post-discharge of their personal finalised mortgages and accounts, the defendants seek an account as to their dealings with the plaintiff (as opposed to those of KTEQ and GCT), the defendants do not plead that, on an account, the defendants will be entitled to some money from the plaintiff. To the contrary, as previously mentioned, the defendants submitted that without an account being taken it was impossible for the defendants to ascertain whether in fact money is owed by the plaintiff to the defendants.
Accordingly, subject to the possible 'fraud' exception I have identified, this aspect of the claim for an account also fails to disclose a reasonable cause of action: the defendants do not plead an entitlement to some amount from the plaintiff as the putative accounting party.
The defendants do raise alleged fraud. But the pleas as to fraud are limited. There is, for example, fraud specifically pleaded as to the obtaining of the Yallingup Mortgage, the Loan Agreements and the mortgages concerning the Cherratta Road Property and the Anderson Road Property. But there is no allegation of fraud in relation to other aspects of the defendants' dealings with the plaintiff in respect of which an account is sought; for example, the mortgage and accounts concerning the Calluna Way Property and the Zamia Way Property. And, as I read them, the numerous allegations of 'irregularities' are not themselves allegations of fraud. Fraud must be pleaded specifically and particulars of the fraud must be given exactly.[112] It is a most serious allegation that must be clearly pleaded and proved.[113] The pleaded allegations that there are irregularities in relation to the accounts, bank statements and other aspects of the dealings are not allegations of fraud.
[112] Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 285.
[113] Clone Pty Ltd v Players Pty Ltd (in liq) [2018] HCA 12; (2018) 353 ALR 24 [62].
More fundamentally, to the extent that fraud is pleaded, it is not alleged that by reason of the alleged fraudulent conduct the defendants are unable to determine whether they are entitled to some amount from the plaintiff. For that reason the pleading is insufficient to bring the case within the arguable exception to the general rule that to obtain a taking of accounts the defendants must first satisfy the court that they are entitled to some money from the plaintiff. This second component of the defendants' claim for a general account also fails to disclose a reasonable cause of action.
The third aspect of the claim for a general account suffers a number of defects.
Here, as with an account to claim any overpayments as to the defendants' own dealings with the plaintiff, there is no plea that KTEQ and GCT will be entitled to some money from the plaintiff. I acknowledge that, in respect of one specific account, par 116 of the re-amended defence and counterclaim refers to an apparent balance purportedly due by the plaintiff. I infer that this was a KTEQ account. But there is no plea that deals with KTEQ's position in aggregate. Accordingly, the defendants have not satisfied the obligation to plead that KTEQ is entitled to some money from the plaintiff.
Nor, so far as there may be a fraud exception to that general rule, does the pleading invoke facts that support the possible application of that arguable exception. The relevant pleas are no different in nature to those made in respect of the defendants' own mortgages and dealings with the plaintiff. It is not contended that, by reason of fraud, the defendants are unable to plead and prove that KTEQ and GCT are entitled to some amount from the plaintiff as their former mortgagee.
Additionally, I accept the plaintiff's submission that the defendants do not plead any facts which demonstrate the defendants as having standing to seek an account for KTEQ and GCT. Subject to certain exceptions - the basis for which would need to be pleaded in any event - it is for those companies rather than the defendants to seek to vindicate any claim for an account the companies may have against the plaintiff.
Counsel for the defendants' riposte that, by par B of the prayer for relief, the defendants clarified that they sought only to obtain payment of the amounts found due by the plaintiff to them, does not answer the plaintiff's point as to standing. Rather, it establishes the lack of utility of the account sought on behalf of KTEC and GCT. The account cannot result in any diminution of the defendants' alleged liability to the plaintiff.

The issue is not answered by pars 296 or 298 of the counterclaim. As explained at pars 51 to 52 above the suggestion appears to be that the defendants might not have borrowed funds if KTEQ had not made alleged over-payments to the plaintiff. But that is not what has been pleaded. It does not follow from KTEQ being allegedly overcharged that the plaintiff claims more money from the defendants. Even if that is the case, the person with the legal entitlement to make a claim as to the alleged overcharging is KTEQ rather than the defendants.
At the hearing I asked counsel for the defendants to identify a case in which the guarantor of a former or existing mortgagor had been held to be entitled to a common account of the type sought here in respect of the dealings between the mortgagor and the mortgagee. No such case was identified.[114] My own research has not identified such a case. I also asked counsel for the defendants to identify the basis for the guarantor's standing to seek such an account. The suggestion was that there might be standing where the guarantor had made a payment to the mortgagee on behalf of the mortgagor.[115] But that is not this case.
[114] ts 22.
[115] ts 14.
There is no plea to the effect that the defendants, as guarantors, have made payment to the plaintiff on behalf of KTEQ or GCT.[116] Nor is this a case where the plaintiff's claim concerns the defendants' guarantee of money due by KTEQ or GCT. Whether there might be standing to seek an account in that sort of case is not a question that presently arises.[117] Insofar as the plaintiff's claim concerns the defendants' own borrowing, and there is no basis to suggest that money found due by the plaintiff to KTEQ or GCT will result in a reduction in the defendants' alleged debt to the plaintiff, the pleaded facts in support of the claim for an account on behalf of KTEQ and GCT do not disclose a reasonable cause of action.
[116] See pars 51 to 52 above.
[117] In the context of a guarantor seeking an account as to the alleged improper exercise of the mortgagee's power of sale so as to reduce liability under a guarantee see Commercial & General Law (SA) Pty Ltd v Permanent Custodians Ltd (No 2) [2012] SASC 216; (2012) 273 FLR 247 [56] (see also the cases cited therein at fn 58).
In short, in the pleaded circumstances the plaintiff is not an accounting party in relation to the defendants as concerns the dealings between the plaintiff and one or both of KTEQ and GCT.
I have reached the conclusion that the defendants' pleaded claim for a general account as to the dealings between the plaintiff and the defendants and their associated companies does not disclose a reasonable cause of action. In reaching that conclusion I have not overlooked the defendants' submission based on the suggested complexity of the dealings between the parties and the associated companies. In oral submissions that contention was further developed to suggest that, by analogy with the historical circumstance that equity would enjoin an action to law so as to ascertain the debt precisely by means of an account, a sequencing issue arose in the present case. It was said that there ought to be an account before the final determination of the plaintiff's claim.[118]
[118] ts 28.
The defendants' reliance on complexity does not suffice to transform what is otherwise deficient into a reasonable cause of action. That is particularly the case with the account sought as to the dealings between the plaintiff and KTEQ and GCT. Any complexity in this regard raises a false issue. For the reasons already given the defendants lack standing to seek an account for KTEQ and GCT. Much of the suggested complexity is eliminated when the pleading is considered stricken of the dealings as to the plaintiff and KTEQ and GCT.
Otherwise, as to all three aspects of the claim for a general account, two things need to be said. First, complexity alone does not suffice for an order for an account. The defendants' pleaded case must demonstrate a reasonable cause of action by satisfying the various other requirements I have identified. For the reasons I have already given the pleaded case fails to do so. Second, I am not satisfied, even arguably, that this is a case that could not be disposed of as fully and conveniently by the court acting in law. For the reasons I have given at pars 109 to 110 above, I conclude that a trial judge could justly and fairly ascertain with precision the state of the accounts as between the plaintiff and the defendants. The contrary proposition is not reasonably arguable.
No part of the defendants' claim for a general account survives the strike-out application. Accordingly, I will strike out all of the paragraphs of the counterclaim that plead this aspect. This consists of pars 43 to 299 and 307 to 332, as well as pars A and B of the prayer for relief.
I have given consideration to the extent to which the defendants ought to be given leave to re‑plead.
The plaintiff contended that, if given an opportunity to re‑plead, it was difficult to see how, from a conceptual or principled basis, the underlying facts could be pleaded in a way that disclosed a reasonable claim for an account. Implicitly, I took the plaintiff to be suggesting that this part of the counterclaim should be struck out without leave to re-plead.
I am not willing to so order. It may be that that the defendants could re‑plead so as to raise an arguable claim for an account. For example, subject to advice from their legal representatives, the defendants may decide to offer to redeem the Yallingup Mortgage. The defendants may also be able to plead a case that relies on the possible exception I refer to at pars 99, 102 and 113(6) above. It does not appear that this has yet been the subject of any consideration. Whether, on the facts, such a case is tenable is something that the defendants ought to have the opportunity to determine in consultation with their legal advisers.
For those reasons, there will be an opportunity to re‑plead.
It is, however, the position that it would be incompatible with these reasons for the defendants to plead any claim for an account as to the dealings between the plaintiff, on the one hand, and KTEQ and GCT, on the other. That might be re-visited if the defendants were to be sued by the plaintiff in their capacity as a guarantor of a debt alleged to be owed by KTEQ or GCT. However, no such proceedings have been commenced. If such proceedings are contemplated it is incumbent on the plaintiff to identify that now and inform the defendants and the court accordingly. A failure to do so would be inconsistent with the obligation of all litigants to ensure the efficient and economical use of the court's resources.[119]
[119] Aldi Stores Ltd v WSP Group Plc [2007] EWCA Civ 1260; [2008] 1 WLR 748 [24], [29] - [31], [42]; Stuart v Goldberg Linde [2008] EWCA Civ 2; [2008] 1 WLR 823 [77], [91] - [97], [101].

The remaining aspects of the counterclaim

Other parts of the counterclaim received no attention in the parties' written submissions. However, they were addressed at the hearing.
The plaintiff sought to strike out the whole of the counterclaim. But par 40 of the counterclaim did no more than repeat the defence (pars 1 to 39). There was no suggestion in the plaintiff's written submissions that it sought to strike out the defence. At the hearing counsel for the plaintiff accepted that the defences must be litigated.[120] Accordingly, par 40 of the counterclaim should remain. So too pars C, D, E and F of the prayer for relief ought not be struck out so far as they are simply reflective of the defence made to the plaintiff's claim under the Yallingup Mortgage.
[120] ts 9.
Counsel for the plaintiff accepted that this was the case. Those parts of the counterclaim will not be struck out.
Oral submissions were made as to the misleading conduct claim (pars 300.1, 301 ‑ 302) and the unconscionable conduct claim (pars 300.2, 302). Paragraphs 41 and 42 provided formal pleas to meet other elements of those claims.
There are two difficulties with those claims. First, the claims refer to the alleged contraventions by reference to 'by its conduct pleaded above'. The plea is too general and, in any case, the parts of the counterclaim relating to the claim for an account will be struck out. The platform for the plea then falls away. Second, as to damage it is said only that 'the defendants have suffered loss or damage by reason of the conduct'. That is unsatisfactory. There is no exposition of the defendants' case on causation nor the alleged nature of the loss or damage.
I will strike out those paragraphs. However, these are claims which the defendants are to be at liberty to re‑plead. In formulating a case based on alleged misleading conduct or unconscionable conduct the defendants should only plead a case based on damage alleged to have been suffered by them personally rather than damage suffered by one or both of the companies in liquidation.
Finally there is the claim based on the Banking Code of Practice (pars 303 ‑ 306). As I understand this claim, it is based on the proposition that the 2004 Code and the 2014 Code were either incorporated in and formed part of the express terms of guarantees executed by the defendants (par 306.1), or alternatively, the defendants accepted an offer to be bound by the terms of the 2004 Code or the 2014 Code (par 306.2).
The claim is apparently a contractual one. The defendants plead that any breach of the 2004 Code or the 2014 Code was a breach of contract by the plaintiff (par 306.3).
The difficulty with the pleading is that the counterclaim does not allege that there was any breach of the 2004 Code or the 2014 Code. Nor is it pleaded that, if there was a breach, the breach caused loss to the defendants. Accordingly, the alleged cause of action is incomplete. No reasonable cause of action is disclosed by the pleading.
I will strike out pars 303 to 306. However, this too is to be a claim which the defendants are at liberty to re-plead.

Conclusion and orders

Counsel for the plaintiff submitted that, should large parts of the counterclaim be struck out with leave to amend, there should not be leave at large. It was submitted that the defendants should first bring in a minute of the proposed further re‑amended counterclaim and seek leave to amend in those terms. That submission is consistent with O 20 r 19(5) of the Rules of the Supreme Court 1971 (WA). I will so order.
Subject to hearing from counsel as to the precise terms of the orders, I will make orders to the effect that:
(1)The time for the plaintiff to bring an application to strike out the defendants' re‑amended defence and counterclaim dated 12 September 2018 is extended to 21 September 2018.
(2)The following portions of the re‑amended defence and counterclaim dated 12 September 2018 are struck out:
(a)pars 41 to 332;
(b)pars A, B, G, H and I of the prayer for relief; and
(c)as to par D of the prayer for relief - the words 'the Gawthorne Mortgage,' and 'and the Cherratta Road Mortgages'.
(3)By 4.00 pm on 15 November 2018 (the precise date may be the subject of further submissions) the defendants file and serve any minute of further re‑amended defence and counterclaim setting out the terms in which they seek leave to amend. The minute is to be in conformity with the reasons of the court delivered 1 November 2018.
I will hear from the parties as to costs.

ANNEXURE 'A'

Table 1

Material Property	Abbreviated Name	Owner of Property	Acquisition and Sale	Mortgage Information	Associated Account/s	Whether Defendants Guarantors if Not Owners
[REDACTED] – [3.2] of the Amended Writ of Summons and Statement of Claim (SoC)	Gawthorne Property – SoC [3.2]	Defendants – [3] of the Re-Amended Defence and Counterclaim (RADC)	August 2012 to-20 June 2016 – RADC [11]; [19]; [20]	Mortgage [REDACTED] registered in favour of the Plaintiff 28 August 2012 – RADC [11]	[REDACTED] (Account 2871) – RADC [3.1]	-
[REDACTED] – SoC [2]	Yallingup Property – SoC [2]	Defendants – RADC [2]	June 2011 to 21 June 2016, Plaintiff granted the Defendants a short-term licence to occupy the Yallingup Property – SoC [2]; RADC [6.6.1]; [22]	Mortgage [REDACTED] in favour of CBA registered 29 June 2011 – RADC [6.6.1] Mortgage [REDACTED] in favour of the Plaintiff registered 7 May 2015 – RADC [10]	[REDACTED] (Account 4042) – RADC [6.1]	-
[REDACTED] – RADC [50]	Calluna Way Property – RADC [50]	Defendants – [50]	18 April 2000 to July 2004 – RADC [50]; [55]	Mortgage [REDACTED] in favour of Keystart Loans Limited – RADC [51]; Mortgage [REDACTED] discharged 27 November 2002 – RADC [52] Mortgage [REDACTED] in favour of Plaintiff discharged 29 July 2004 – [55]	-
[REDACTED] – RADC [56]	Zamia Road Property – RADC [56]	Defendants – [56]	23 July 2004 to April 2018 – RADC [56]; [62]	Mortgage [REDACTED] in favour of CBA registered 16 May 2008 – RADC [62]; CBA entered into possession April 2018 – RADC [62]	[REDACTED] (Account 6271) – RADC [57] [REDACTED] (Account 0117) – RADC [58] [REDACTED] (Account 6437) – RADC [60] [REDACTED] (Account 8166) – RADC [61]	-
[REDACTED] – RADC [63]	Cherratta Road Property – RADC [63]	Defendants – RADC [70]	Acquired 8 December 2006 – RADC [70] Sold 17 January 2017	Mortgage [REDACTED] in favour of ME Bank registered around December 2006 and discharged on 18 April 2012 – RADC [67]-[70]; [87] Mortgage [REDACTED] registered in favour of Plaintiff registered on 19 April 2012 – RADC [89] Registered mortgage in favour of the Plaintiff as security for the South Trees Property – RADC [132.6]	[REDACTED] (Account 2101) – RADC [91]	-
[REDACTED]– RADC [96]	Anderson Road Property – RADC [96]	The Defendants as joint tenants for one undivided half share and Aycelle Pty Ltd of [REDACTED] as to one undivided half share – RADC [104]	10 May 2010 to 27 June 2016. The Defendants purportedly transferred their undivided half share to ACL Bennett Pty Ltd – RADC [108]	Mortgage [REDACTED] discharged by Plaintiff on or about 27 June 2016 – RADC [107] Registered mortgage in favour of the Plaintiff as security for the Gap Ridge Property – RADC [141.4]	[REDACTED] (Account 4991) – RADC [100]
[REDACTED] – RADC [110]	Fairbairn Property – RADC [110]	KTEQ – RADC [110]; [114]	4 August 2011 to 12 August 2016 – RADC [110]; [114]	Registered mortgage over the Fairbairn Property – RADC [112.2] Registered mortgage in favour of the Plaintiff as security for the Unit 6 McCann Street Property – RADC [119] Registered mortgage in favour of the Plaintiff as security for the South Trees Property – RADC [132.2]	[REDACTED] (Account 0609) – RADC [111] [REDACTED] (Account 2909) – RADC [115]; [267]	First named Defendant and M Rowe guarantors by document titled Guarantee and Indemnity dated 27 July 2011 – RADC [113]
[REDACTED] – RADC [117]	Unit 6 McCann Street Property – RADC [117]	KTEQ – RADC [117]	March 2012 – 22 November 2016 – RADC [117]; [118]	Mortgage in favour of the Plaintiff – RADC [119] Registered mortgage in favour of the Plaintiff as security for the South Trees Property – RADC [132.3]	[REDACTED] (Account 5780) – RADC [118]
[REDACTED] – RADC [121]	Victoria Road Property – RADC [121]	KTEQ – RADC [121]	22 October 2012 to 19 July 2016 – RADC [127]; [129]	Subject to mortgage [REDACTED] granted by KTEQ – RADC [128]; Mortgage [REDACTED] was discharged by the plaintiff on or about 19 July 2016 – RADC [129]	[REDACTED] (Account 4505) – RADC [124]	First named Defendant and M Rowe guarantors by document titled Guarantee and Indemnity dated 4 October 2012 – RADC [126]
[REDACTED] – RADC [130]	South Trees Property – RADC [130]	KTEQ – RADC [134]	20 December 2012 to 19 December 2016 – RADC [130]; [134]	Mortgage in favour of the Plaintiff – RADC [132.5]	[REDACTED] (Account 4202) – RADC [131] [REDACTED] (Account 9405) – RADC [134]	Defendants and M Rowe guarantors by document titled Guarantee and Indemnity dated 11 October 2012 – RADC [133]
[REDACTED] – RADC [136]	Gap Ridge Property – RADC [136]	Defendants as joint tenants in a 1/3 share, M Rowe in a 1/3 share and Aycelle Pty Ltd in a 1/3 share – RADC [136]; [142.A]	[142.A]	Mortgage [REDACTED] – RADC [136]	[REDACTED] (Account 5404) – RADC [140]	-

Table 2

Material Account	Abbreviated Name	Borrower/Customer Counterparty	Associated Property	Whether Defendants Guarantors if Not Borrower/Customer Counterparty
[REDACTED] – RADC [3.1]	Account 2871– RADC [3.1]	Defendants – RADC [3.1]	Gawthorne Property– RADC [3.1]	-
[REDACTED] – RADC [6.1]	Account 4042 – RADC [6.1]	Defendants – RADC [6.1]	Yallingup Property – RADC [6.1]
[REDACTED] – RADC [57]	Account 6271 – RADC [57]	Defendants – RADC [57]	Zamia Road Property – RADC [57]
[REDACTED] – RADC [58]	Account 0117 – RADC [58]	Defendants – RADC [58]	Zamia Road Property – RADC [58]
[REDACTED] – RADC [60]	Account 6437 – RADC [60]	Defendants – RADC [60]	Zamia Road Property – RADC [60]
[REDACTED] – RADC [61]	Account 8166 – RADC [61]	Defendants – RADC [61]	Zamia Road Property – RADC [61]
ME Bank Account [REDACTED] – RADC [68]	Account 3457 – RADC [68]	Defendants – RADC [68]	Cherratta Road Property – RADC [68]
ME Bank Account [REDACTED] – RADC [69]	Account 3597 – RADC [69]	Defendants – RADC [69]	Cherratta Road Property – RADC [69]
[REDACTED] – RADC [76]	Account 2101 – RADC [76]	Defendants – RADC [76]	Cherratta Road Property – RADC [76]
[REDACTED] – RADC [100]	Account 4991 – RADC [100]	Defendants – RADC [100]	Anderson Road Property – RADC [100]
[REDACTED] – RADC [111]	Account 0609 – RADC [111]	KTEQ – RADC [111]	Fairbairn Property – RADC [111]	First named Defendant and M Rowe guarantors by document titled Guarantee and Indemnity dated 27 July 2011 – RADC [113]
[REDACTED] – RADC [115]	Account 2909 – RADC [115]	KTEQ – RADC [115]	Fairbairn Property – RADC [115]	First named Defendant and M Rowe guarantors by document titled Guarantee and Indemnity dated 27 July 2011 – RADC [113]
[REDACTED] – RADC [118]	Account 5780 – RADC [118]	KTEQ – RADC [118]	Unit 6 McCann Street Property – RADC [118]
[REDACTED] – RADC [124]	Account 4505 – RADC [124]	KTEQ – RADC [124]	Victoria Road Property – RADC [124]	First named Defendant and M Rowe guarantors by document titled Guarantee and Indemnity dated 4 October 2012 – RADC [126]
[REDACTED] – RADC [131]	Account 4202 – RADC [131]	KTEQ – RADC [131]	South Trees Property – RADC [131]	Defendants and M Rowe guarantors by document titled Guarantee and Indemnity dated 11 October 2012 – RADC [133]
[REDACTED] – RADC [134]	Account 9405 – RADC [134]	KTEQ – RADC [134]	South Trees Property – RADC [134]	Defendants and M Rowe guarantors by document titled Guarantee and Indemnity dated 11 October 2012 – RADC [133]
[REDACTED] – RADC [140]	Account 5404 – RADC [140]	Defendants – RADC [140]	Gap Ridge Property – RADC [140]
[REDACTED] – RADC [6.5B]	Account 5085 – RADC [6.5B]	First Defendant – RADC [6.5B]
[REDACTED] – RADC [7.1]	CBA Account 9604 – RADC [7.1]	Defendants – RADC [7.1]	Yallingup Property – RADC [7.1]
[REDACTED] – RADC [16.6]	Account 0684 – RADC [16.6]	Defendants – RADC [273]	N/A – Defendants’ Chequing Account – RADC [273]
[REDACTED] – RADC [286]	Account 3821 – RADC [286]	Gas City Transport – RADC [286]	N/A – Chequing Account – RADC [286]
Full account description [REDACTED] first appears in particular RADC [241.E] re Theresa Baruffi NAB Connect access	Account 7532. Not defined, first appears at RADC [134]	KTEQ – [235]; [273]	N/A – Chequing Account – RADC [273]
Full account description [REDACTED] – RADC [241.C] at page 89	Account 4025 – RADC [142.D]; [142.E]
[REDACTED] – RADC [241.D] at page 89	Not defined
[REDACTED] – RADC [241.D] at page 89	Not defined	N/A – Credit Card – RADC [258]
[REDACTED] – RADC [245.B]	Credit Card 5850 – RADC [241.C]	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [245.C]	Credit Card 4279 – RADC [245.C]	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [241.C]	Credit Card 0340 – RADC [241.C]	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [241.C]	Credit Card 0332 – RADC [241.C]	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [241.C]	Credit Card 1822 – RADC [241.C]	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [245.G]	Account 2862 – RADC [264.1]	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [245]	Account 6608 – RADC [246]	KTEQ – RADC [246]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [245.G]	Not defined	KTEQ and/or Gas City Transport – RADC [245]	N/A – Credit Card – RADC [245]
[REDACTED] – RADC [258]	Account 5085 – RADC [258]	First Named Defendant – RADC [258]; [273]	N/A – Personal Account – RADC [258]
[REDACTED] – RADC [258]	Account 2837 – RADC [258]	First Named Defendant – RADC [258]; [273]	N/A – Personal Account – RADC [258]
[REDACTED] – RADC [258]	Account 9937 – RADC [258]	Defendants – RADC [258]; [273]	N/A – Personal Account – RADC [258]
[REDACTED] – RADC [258]	Account 7723 – RADC [258]	Defendants – RADC [258]; [272]	Gap Ridge Property – RADC [273]

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CC
RESEARCH ASSOCIATE TO THE HONOURABLE JUSTICE VAUGHAN
1 NOVEMBER 2018