Perricoota Boat Club Investments Pty Ltd v Watson

[2010] NSWSC 1097

CITATION:	Perricoota Boat Club Investments Pty Ltd v Watson [2010] NSWSC 1097
HEARING DATE(S):	26 August 2010
JUDGMENT DATE :	26 August 2010
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	26 August 2010
DECISION:	Refer to paras 66 and 67 of judgment.
CATCHWORDS:	PRACTICE AND PROCEDURE – application to strike out amended defence and cross-claim – where orders made for defence to be filed by certain date – where plaintiff contends that amended defence filed out of time and impermissibly raises new matters – where issues raised require joinder of additional parties – where both parties’ pleadings do not adequately raise issues in proceedings – no basis for striking out defence where raises genuine issues between parties – embarrassing pleadings and pleadings seeking to withdraw earlier admission or raise irrelevant issues struck out – defendant to provide further particulars and replead part of defence with further particularity – where plaintiff contends that cross-claim contains embarrassing, defective, vague and uncertain pleadings – no basis for striking out cross-claim
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW)
CATEGORY:	Procedural and other rulings
PARTIES:	Plaintiff: Perricoota Boat Club Investments Pty Ltd Defendant: Anthony Rupert Watson
FILE NUMBER(S):	SC 2009/291115
COUNSEL:	Plaintiff: D Neggo Defendant: M Goldblatt
SOLICITORS:	Plaintiff: BizLaw Defendant: Dandanis & Associates

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Thursday, 26 August 2010

2009/291115 Perricoota Boat Club Investments Pty Ltd v Anthony Rupert Watson

JUDGMENT

1 HIS HONOUR: The plaintiff moves on a notice of motion seeking orders that the defendant’s further amended defence dated 25 June 2010 be struck out, and that the defendant’s cross-claim dated the same day also be struck out. The grounds upon which the first order is sought, as set out in the notice of motion, is that the further amended defence was filed out of time, and was filed without leave, or in excess of leave granted.

2 In respect of the second order sought concerning the defendant's cross-claim, an additional ground set out in the notice of motion is that the cross-claim contains pleadings that are embarrassing, defective, vague, and uncertain.

3 The pleadings in this case are complex and there are difficulties with both the amended statement of claim and the defendant's further amended defence and cross-claim.

4 Insofar as the plaintiff's application is based upon the pleadings having been filed out of time, or having been filed without leave, or in excess of leave granted, I would not uphold the application.

5 The matter came before Bergin CJ in Eq on 9 June 2010 on an application concerning discovery. In the course of submissions on that question it became apparent that the defendant wished to raise matters that required an amendment to the defence, and, after debate, orders were made ultimately by consent in relation to that and other matters.

6 The relevant order was "Defendant to file any Amended Defence by 21 June 2010". The order did not limit the matters to be raised in the amended defence to matters debated before her Honour on 9 June 2010, nor to the matters in the defendant's affidavit of 1 June 2010, which were referred to at that time. However it is no doubt correct, as Mr Neggo for the plaintiff submits, that the parties at the time envisaged that the amended defence would deal only with such matters. He complains that the defence raises additional matters. It was also served a few days late, but the period of delay is not such as to warrant striking-out the pleading. The delay is sufficiently explained.

7 If the matters raised in the amended defence and the cross-claim can be shown to raise genuine issues between the parties, in the absence of any suggestion of over-reaching on the part of the defendant, I would not refuse leave for the defendant to file the pleading on the ground that it raises matters not raised at the hearing on 9 June.

8 It appears to me the pleadings of both parties require further consideration.

9 The plaintiff's principal claims are first, that in late October 2006, it and another company called Hillington Valley Pty Limited, entered into a contract for sale of land with the defendant and Hillington Valley Pty Limited. This has been called the second land contract. It relates to land known as Perricoota Marina Village. Hillington Valley Pty Limited is described as both vendor and purchaser in different proportions.

10 The plaintiff pleaded that it paid a deposit under that contract of $60,000 and that the moneys were paid to, or at the direction of, the defendant. It alleges that the defendant rescinded the second land contract.

11 Although the date of rescission is not included in the pleading, the plaintiff's evidence is that the notice of rescission was given on 30 March 2009. He complains that the defendant has not returned the deposit.

12 Prima facie the deposit payable under that contract was payable by both purchasers and the relief to which the plaintiff is entitled, if it is entitled to relief at all, is a right it holds jointly with Hillington Valley Pty Limited. Unless the court otherwise orders, that company ought to be joined as party to the proceedings.

13 It is clear that at the hearing there will be a factual issue as to whether the plaintiff did make payment of a deposit under the second land contract by making a payment on the defendant’s instructions as alleged.

14 The plaintiff also pleads that it entered into two contracts called contracts for moorings.

15 In paragraph 16 of the amended statement of claim the plaintiff alleges that it entered into a contract for sale of land as purchaser with the defendant, Hillington Valley Pty Limited and Ozzie Erections Pty Limited as vendors for moorings known as lots 26, 27 and 28 on a proposed plan of subdivision (the first mooring contract). That contract stated that the purchase price was $450,000 and that a deposit of $45,000 and an instalment of $180,000 were payable on the signing of the agreement.

16 The plaintiff alleges that it arranged for the deposit and the instalment to be paid to the defendant by three separate payments, being a payment of $25,000 on or about 27 April 2007, and two payments of $75,000 and $125,000 on or about 4 May 2007. It alleges that each of these payments was made to the defendant.

17 The plaintiff alleges that the mooring contract was rescinded in December 2007 and that it was a term of the Deed of Rescission that the vendors repay the deposit. It alleges that neither the deposit, nor the instalment was repaid by the defendant to the plaintiff.

18 In relation to the first matter, in his defence filed on 14 December 2009 and in his amended defence filed on 15 March 2010, the defendant pleaded that:

" Subject to the production of the first Mooring Contract and reference to its full terms and effects, he admits that he entered into an agreement for the sale of Lots 26, 27 and 28 on a proposed plan of subdivision ... ”

He alleges he did so in the capacity as trustee, but that is not presently material.

19 The defendant denied that the three payments totalling $225,000 were made to him, but pleaded in his amended defence, that if moneys were paid by the plaintiff to him, then he was entitled to set off any moneys paid by the plaintiff to him against moneys due by the plaintiff to him.

20 The Deed of Rescission of the first mooring contract is admitted. That document is signed for each of the vendors under the first mooring contract. It recites the execution and exchange of the contract for sale of land referred to as lots 26, 27 and 28 mooring berth in the unregistered plan. It recites that because of delays required for the completion of the subdivision, the parties had agreed to rescind the contract.

21 All three of the vendors agreed to repay the deposit to the purchaser. The necessary inference from that term, unless explained, is that at least the deposit was paid under the contract. If, as the plaintiff alleges, the instalment of $180,000 was also paid, then it would also be refundable by all three vendors, who would be under a joint obligation in that respect.

22 The plaintiff then pleads that in 2007 it entered into what it called a second mooring contract for the purchase of moorings described as lots 5, 6, 7 and 21 on a certain unregistered plan. That contract is said to have been entered into with the defendant alone.

23 That contract is also for a price of $450,000 and included a provision for payment of a deposit of $45,000 and an instalment of $180,000. The plaintiff pleads that the defendant breached the second mooring contract, as a result of which the plaintiff rescinded that contract. The plaintiff alleges that it agreed to release the deposit and instalment on exchange of the contract. It does not plead how the deposit and the instalment under the second mooring contract were paid, or were taken to have been paid.

24 It seems that the plaintiff would seek to allege either that there was an agreement between it and the defendant that the deposit and instalment repayable to it under the first mooring contract should be treated as having been paid under the second mooring contract, or would allege that it gave a direction to the vendors under the first mooring contract to pay the deposit and the instalment to the defendant pursuant to the second contract.

25 There may be other ways in which the plaintiff contends that it paid or is taken to have paid the deposit and the instalment under the second mooring contract. Whatever those ways might be, they have not been pleaded.

26 The plaintiff alleges that the defendant breached the second mooring contract and that it has rescinded it. It demands the return of the deposit and instalment from the defendant.

27 The defendant admits execution of the second mooring contract but contends, for reasons to which I will come, that that contract is void or unenforceable against him. This was a new allegation raised in the further amended defence filed on 25 June 2010.

28 The defendant denies that moneys were paid pursuant to the second mooring contract. He denies any obligation to repay any moneys following the rescission.

29 The defendant also says that any moneys paid by the plaintiff were not paid pursuant to the contracts in question, but were paid in connection with joint ventures entered into by the plaintiff, Hillington Valley Pty Limited and the defendant.

30 The defendant contends that any claim for repayment of moneys allegedly paid must be brought against all of the relevant joint venture parties.

31 Insofar as the plaintiff claims relief to which Hillington Valley Pty Limited is jointly entitled, then that company should be joined as a party either as plaintiff (if it consents to be joined as plaintiff), or otherwise as defendant under r 6.20 of the Uniform Civil Procedure Rules.

32 Insofar as Hillington Valley Pty Limited and Ozzie Erections Pty Limited may be liable jointly with the defendant for the repayment of moneys said to be refundable on rescission of the first mooring contract, then they should be joined as parties, although pursuant to s 95 of the Civil Procedure Act 2005 (NSW) and r 6.23 of the Uniform Civil Procedure Rules the proceedings are not defeated by their non-joinder. Where the parties are jointly, and not jointly and severally, liable, the proceedings may be stayed.

33 Insofar as the plaintiff's claim seeks to enforce rights under the first mooring contract, it appears to me that the obligations of the vendors are joint, and not joint and several.

34 Enough has been said to indicate why the amended statement of claim requires further attention, both in respect of the joinder of additional parties and for the plaintiff to plead the basis upon which it contends that the moneys he says were paid under the first mooring contract are to be taken to have been paid under the second mooring contract and are repayable by the defendant following the rescission of that contract.

35 Returning to the further amended defence, the defendant has amended his pleading in relation to the allegation that he, with Hillington Pty Limited and not Ozzie Erections Pty Limited, entered into the first mooring contract with the plaintiff. Whereas he had previously admitted entry into the agreement (although the admission was said to be subject to the production of the first mooring contract and reference to its full terms and effect, which is not a proper qualification to be included in the pleading), the defendant, in his further amended defence, alleges that the first mooring contract was void and of no effect.

36 In paragraph 14 of the further amended defence the defendant admits execution of the document on his own behalf as one of three of the vendors, but says that the contract was not executed by or on behalf of the other two vendors. The defendant pleads in paragraph 14:

“ Save to say that he executed a document titled ‘Contract for the Sale of Land – 2005 Addition [sic] ’ purportedly for the sale of Lots 26, 27 and 28, on his own behalf as one of the three vendors, which document he will refer to at the trial of these proceedings, he denies the allegations contained in paragraph 16 thereof. He says further that the said contract was never executed by or on behalf of Hillington Valley Pty Ltd or Ozzie Erections Pty Ltd. He says further that the said contract was drafted by his then solicitors BizLaw, who were also then and remain the solicitors acting for and on behalf of the Plaintiff. The contract as drawn was for the sale of Lots 26 and 28, when these lots were already the subject of a prior and enforceable Contract of Sale by each of the vendors to independent third parties. Accordingly, the said contract was void and of no effect. ”

37 The last three quoted sentences could not arguably lead to the conclusion that the contract was void and of no effect, quite apart from the fact that the defendant admits execution by the vendors of the Deed of Rescission, which deed recites entry by all vendors into the contract of sale.

38 This paragraph seeks, impermissibly in my view, to withdraw the admission in the earlier pleading.

39 In my view the last three sentences of paragraph 14 of the further amended defence should be struck out.

40 I am doubtful as to the purport of the pleading that the contract was not executed by or on behalf of Hillington Valley Pty Limited or Ozzie Erections Pty Limited, given the admission of the entry into the Deed of Rescission. In my view the only relevance of such an allegation would be to deny that the contract was entered into because it was not executed by the other two vendors.

41 Having regard to the earlier pleadings and to the admission of the Deed of Rescission I do not think that allegation raises a real issue between the parties which should be permitted to go to trial.

42 Accordingly I consider that the second sentence of paragraph 14 should also be struck out.

43 Paragraph 16 of the further amended defence purportedly pleads a claim of set-off. The defendant alleges that if any moneys were paid by the plaintiff to him, which he denies, he is entitled to set off any moneys paid by the plaintiff to him against moneys due by the plaintiff to him as part of the Deep Creek Marina and Perricoota Marina Village joint ventures. He then alleges:

“ He says further that any monies which were paid by the Plaintiff pursuant to the terms of the alleged first Mooring Contract or otherwise in connection with the Deep Creek Marina or the Perricoota Marina Village joint ventures were payments made in respect to and concerning such joint ventures between the Plaintiff, Hillington Valley Pty Ltd and him, and any claim which the Plaintiff has to the payment of such alleged monies does not constitute a payment to him, but rather to the Deep Creek Marina or Perricoota Marina Village joint ventures, and accordingly all claims by the Plaintiff against him in respect to such monies are misconceived and accordingly the Plaintiff’s pleading in this regard is embarrassing and liable to be struck out. He says further that, in the circumstances, any claim sought to be made by the Plaintiff in respect of any monies allegedly paid to him and liable to be repaid pursuant to the first Mooring Contract or otherwise in respect to the Deep Creek Marina or Perricoota Marina Village joint ventures can only be properly made by the Plaintiff against all joint venture parties. ”

44 This pleading is in response to the plaintiff's allegation that the plaintiff arranged the deposit and the instalments payable under the first mooring contract to be paid to the defendant by three separate payments totalling $225,000 referred to earlier in these reasons.

45 In my view the pleading, as presently framed, is embarrassing. The defendant is not entitled to leave open the question of whether any moneys were paid to him, but to assert that if they were, they were not made under the contract, but were payments in connection with the joint venture.

46 The defendant denies that the plaintiff made the three payments of $225,000 to him. If that denial is correct then the balance of paragraph 16 is embarrassing and throws up a false issue. The contention that the payments in question were not made under the contract but were payments in connection with the joint venture for other purposes only arises if the plaintiff did make the payments he alleges he made.

47 In my view I should strike out paragraph 16, but give leave to the defendant to plead with particularity whether he admits or denies that the plaintiff made the three payments referred to in the particulars to paragraph 18 of the amended statement of claim. If the defendant admits that the plaintiff made all or some of those payments, then the defendant should have leave to plead with particularity to whom he says the payments were made, when he says the payments were made, and for what purpose they were made.

48 Paragraph 18 of the further amended defence responds to paragraphs 20 and 21 of the amended statement of claim in which the plaintiff alleges that following rescission of the first mooring contract, the defendant did not repay the deposit or the instalment to the plaintiff.

49 The defendant pleads in his further amended defence:

“ 18. He does not admit the allegations contained in paragraphs 20 and 21 thereof and states further that it was agreed between the parties that any monies paid by the Plaintiff to the Defendant were monies paid to the Deep Creek Marina or Perricoota Marina Village joint ventures and would be retained by the Defendant until such time as a reconciliation was finalised in respect of the Plaintiff’s, the Defendant’s and Hillington Valley Pty Ltd’s joint venture agreement entitlements and obligations relating to a number of development projects relating to the Deep Creek Marina and Perricoota Marina Village joint ventures. To date no such reconciliation or taking of accounts has been finalised. Further, and in addition, he refers to and repeats the matters pleaded in paragraph 16 above. ”

50 A pleading to substantially the same effect is contained in the earlier defence.

51 Orders were made for the defendant to serve his evidence by 10 May 2010. I was referred to the defendant's affidavit of 1 June 2010, but that was addressed principally to an interlocutory application.

52 There are no particulars given in the defendant’s pleading. I understand no particulars have been given outside the pleading of the agreement alleged in paragraph 18 of the further amended defence. I was not referred to any affidavit or affidavits served by the defendant setting out the evidence upon which he relies for the agreement alleged in paragraph 18. The lack of specificity of the alleged agreement is troubling. Paragraph 18 should not be struck out, but I will order that within seven days the defendant provide full particulars of the agreement alleged in paragraph 18, including particulars of the persons between whom the agreement is alleged to have been made, how the agreement was made, that is, whether wholly or partly in writing, or wholly or partly orally, and when the agreement was made.

53 I also think the defendant should be required to serve his evidence in relation to the allegation in paragraph 18 promptly and I will hear the parties in relation to that in dealing with questions of finalisation of affidavits and the progress of the matter generally.

54 Paragraphs 18A and 18C of the further amended defence contain allegations of matters which were raised before the Chief Judge in Equity on 9 June 2010.

55 The defendant alleges that the plaintiff through its director, Mr Jarman, collected moneys for which he was required to account to the joint venture, but made unauthorised transfers of those moneys to a company said to be owned and controlled by him, namely, Mashoubra Pty Limited. Particulars are given to the extent that the defendant says he is able to give particulars.

56 What is at the moment lacking in relation to the allegations in paragraphs 18A to 18C is an allegation of the reasons it is said that the impugned payments were unauthorised. That is to say, there is no allegation of the extent of Mr Jarman's authority, or what authority it is said Mr Jarman needed in order to deal with the moneys allegedly received, or otherwise why it is said that the payments were unauthorised. Again, those matters can be addressed by the provision of particulars and service of evidence. Further particulars so far as they can be given of those matters should also be provided within seven days, although I will hear counsel if that is too stringent a timetable.

57 In response to the plaintiff's allegation that it and the defendant entered into the second mooring contract, the defendant alleges:

“ 19. Save to say that he executed the Second Mooring Contract, which contract was drafted by BizLaw purporting to act on his behalf and on behalf of the Plaintiff, for whom Biz Law continues to act, he denies that the Second Mooring Contract was a valid contract and furthermore denies that he is bound by its terms. The Second Mooring Contract purported to sell, inter alia , Lots 20 and 21 which were already the subject of sale under the First and Second Land Contracts. The Second Land Contract was not purported to be rescinded until the purported rescission by the Plaintiff on 30 March 2009. Further, and in addition, BizLaw was effectively acting on behalf of the Plaintiff in relation to the Second Mooring Contract and purporting also to act for the Defendant. BizLaw did not ensure that the Defendant obtained separate independent legal advice in relation to the execution of such contract and the Defendant relied upon BizLaw acting for him in relation to that contract in circumstances where BizLaw had a conflict of interest in so doing. Save as aforesaid, he denies the allegations contained in paragraph 22 thereof. ”

58 In paragraph 26 the defendant alleges:

“ 26. By virtue of BizLaw purporting to act for the Defendant in respect to the First and Second Land Contracts and the first and Second Mooring Contracts, in circumstances where BizLaw was also acting for the Plaintiff, and in circumstances where BizLaw did not advise or ensure that the Defendant obtained separate legal advice in respect of such contracts, BizLaw was acting in a position of conflict of interest. The Defendant was, in these circumstances, under a special disability in respect to such contracts and accordingly all of such contracts are void and unenforceable against him. ”

59 In my view these pleadings do not adequately plead a basis for the defendant’s asserting that the second mooring contract is void or unenforceable against him. The allegations that BizLaw acted for both parties to the contract and failed to ensure that the defendant obtained separate independent legal advice in relation to its execution in circumstances where Bizlaw had a conflict of interest would not by themselves justify a claim that the contracts were unenforceable and, of course, they would not sustain an allegation that the contract was void.

60 I doubt that the matters alleged by themselves would amount to circumstances that could give rise to a special disability. Even if that is not the position, the defendant has not alleged facts by reason of which he might contend the plaintiff took unconscientious advantage of a position of special disability.

61 The defendant does not allege any facts by reason of which the plaintiff could be responsible for the consequences of the solicitors allegedly acting in circumstances where there was a conflict of interest.

62 In my view paragraphs 19 and 26 of the further amended defence should be struck out, but with leave to replead.

63 The cross-claim is based upon the allegations of the making of unauthorised payments contained in paragraphs 18A to 18C of the further amended defence. The plaintiff's complaint is not about the cross-claim per se, but about the fact that it joins as additional parties Mr Jarman (the director of the plaintiff) and Mashoubra Pty Limited, which appears to be a company owned or controlled by Mr Jarman's wife. These matters do not justify striking out the cross-claim. It appears to me that given the nature of the allegations in paragraphs 18A to 18C, Mr Jarman and Mashoubra are proper parties to the cross-claim.

64 It may be that the claims between the plaintiff and the defendant should be heard separately from the cross-claim between Mr Jarman and Mashoubra Pty Limited, although there has been nothing put before me to date that would justify that course. To the contrary, given the pleading of set-off, it would seem to me that the claim in paragraphs 18A to 18C against the plaintiff would have to be heard with the other issues in the proceedings and that accordingly the claims against the additional cross-defendants should be also heard at the same time. In any event, I refuse to strike out the cross-claim.

65 It follows that I should make orders for the plaintiff to file and serve a further amended statement of claim by a date to be fixed. I will strike out all but the first sentence of paragraph 14 of the further amended defence. I will strike out paragraphs 16, 19 and 26 with leave to replead, and I will make orders as outlined in these reasons for the provision of particulars of paragraphs 18 and 18A to 18C of the further amended defence. Otherwise the plaintiff's notice of motion will be dismissed. I will hear the parties in relation to a timetable for those steps to be taken and for other steps to be taken including the service of the evidence.

[Counsel addressed.]

66 I make the following orders:

1. That the second, third and fourth sentences of paragraph 14 of the further amended defence be struck out.
2. That paragraphs 16, 19, and 26 of the further amended defence be struck out with leave to the defendant to replead in respect of those matters.
3. That the plaintiff file and serve its further amended statement of claim by 9 September 2010.
4. That by 9 September 2010 the defendant provide particulars of paragraphs 18 and 18A to 18C of the further amended defence in accordance with my reasons.
5. That by 23 September 2010 the defendant file and serve what will be the second further amended defence to the further amended statement of claim.
6. That by 23 September 2010 the plaintiff serve the balance of its affidavits in chief.
7. That by 7 October 2010 the defendant serves the affidavits on which it will rely.
8. That the pleadings and affidavits already served and those to be served be served on any additional defendants.
9. I list the proceedings before the Registrar on 11 October 2010.
10. Liberty to apply on seven days' notice.
11. I order that the plaintiff's notice of motion filed on 12 August 2010 be otherwise dismissed.

67 Costs of the notice of motion of 12 August 2010 will be costs in the cause.

******