Pizzino v Caratti (No 3)

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FEDERAL COURT OF AUSTRALIA

Pizzino v Caratti (No 3) [2024] FCA 1278

File number: WAD 230 of 2023
Judgment of: COLVIN J
Date of judgment: 6 November 2024
Catchwords: PRACTICE AND PROCEDURE - application to strike out statement of claim and for summary dismissal - where facts required to establish causes of action not pleaded or insufficiently pleaded, such that not possible to ascertain causes of action with clarity - where earlier version of statement of claim struck out - where applicant was afforded an opportunity to replead - where respondent contends that application is out of time, however does not contend that claim is otherwise inarguable - where deficiencies in statement of claim do not enable the Court to reach conclusion that action is out of time or there is no arguable case - where counsel for the applicant indicated in oral submissions that independent counsel had been briefed - whether application should be struck out - whether applicant should be afforded a further opportunity to replead - held proceeding has not reached the point where it would be inconsistent with just resolution of the dispute for proceeding to be allowed to continue - statement of claim struck out - application for summary dismissal otherwise dismissed - liberty granted to re-plead
Legislation:

Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 4, 18

Corporations Act 2001 (Cth) s 197
Cases cited:

Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88; (2023) 111 NSWLR 304

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175

Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (Trial Judgment) [2024] FCA 766

Daebo Shipping Co Ltd v The Ship Go Star [2012] FCAFC 156; (2012) 207 FCR 220

Dare v Pulham (1982) 148 CLR 658

Hanel v O'Neill [2003] SASC 409

Karis v Digital CC Management Pty Ltd (No 3) [2024] FCA 738

Pizzino v Caratti [2023] FCA 1624

Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2024] HCA 27

Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511; (2007) 160 FCR 298
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 72
Date of hearing: 22 October 2024
Counsel for the Applicant: Mr BW Duckham
Solicitor for the Applicant: Duckham & Co
Counsel for the Respondent: Mr CG Mofflin
Solicitor for the Respondent: Alan Rumsley - Commercial Lawyer

ORDERS

WAD 230 of 2023
BETWEEN:

ALBERTO PIZZINO

Applicant
AND:

ALLEN BRUCE CARATTI

Respondent

ORDER MADE BY:

COLVIN J

DATE OF ORDER:

6 NOVEMBER 2024

THE COURT ORDERS THAT:

1.The further substituted statement of claim dated 2 August 2024 be struck out.

2.The respondent's interlocutory application dated 6 August 2024 be otherwise dismissed.

3.On or before 19 December 2024, a second further substituted statement of claim…

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Details
Case
[2024] FCA 1278
Decision Date

CaseChat Overview and Summary

In the case of Pizzino v Caratti (No 3), the Federal Court was asked to determine whether the statement of claim should be struck out and whether the plaintiff, Mr. Pizzino, should be granted leave to re-plead. The dispute between the parties revolves around allegations of misleading and deceptive conduct, breach of a Settlement Deed, and breaches of duty by Mr. Caratti, who was a director of a company involved in the trust that managed Mr. Pizzino's assets. The court had previously struck out Mr. Pizzino's initial statement of claim and granted him an opportunity to replead, leading to the current version of the pleading, referred to as the New Pleading. Mr. Caratti applied to have this New Pleading struck out and for the proceedings to be summarily dismissed, arguing that Mr. Pizzino had had ample opportunity to properly plead his case but had failed to do so.

The court had to decide whether the New Pleading should be struck out due to its deficiencies and whether Mr. Pizzino should be given another opportunity to replead. The New Pleading was found to be confusing and lacking in fundamental respects, failing to adequately articulate a cause of action. Despite these deficiencies, the court concluded that the proceedings should not be dismissed at this stage because it was not yet clear whether a reasonable cause of action existed or if it would be inconsistent with a just resolution of the dispute to continue the litigation. The court noted that Mr. Pizzino had been given multiple opportunities to plead his case, and while the New Pleading was the fifth attempt, the court was not yet convinced that the case was hopeless. The court granted Mr. Pizzino leave to re-plead by a specified date, with costs of the interlocutory application reserved, and scheduled a case management hearing for January 2025.

The court struck out the New Pleading but dismissed the application for summary dismissal and granted leave to re-plead, ordering Mr. Pizzino to file a second further substituted statement of claim by 19 December 2024. This decision allows Mr. Pizzino another opportunity to properly plead his case, while ensuring that the proceedings do not continue indefinitely without a viable claim. The case management hearing scheduled for January 2025 will provide an opportunity to review the new pleading and determine the next steps in the litigation.

Orders

Orders of the court

1. The further substituted statement of claim dated 2 August 2024 be struck out.

2. The respondent's interlocutory application dated 6 August 2024 be otherwise dismissed.

3. On or before 19 December 2024, a second further substituted statement of claim be filed and served.

4. The costs of the respondent's interlocutory application be reserved.

5. There be a case management hearing listed for 10.15 am AWST on 30 January 2025.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Here, on any view, the amount of $4 million was due many years ago. There was no contingency or uncertainty on which the obligation to pay the $4 million depended. It is very difficult to see any basis upon which it might be said that there was some claim of misleading or deceptive conduct in which the loss is formulated as taking the form of the failure to pay the $4 million that might require something more to become known or apparent. In particular, it is difficult to see what the significance might be of knowing the terms of the deed of trust or the current asset position of the trust of which WSLC had been trustee for Mr Pizzino to be able to understand whether he had suffered any loss. That is especially so in circumstances where WSLC was wound up some time ago and, on the facts before the Court, Mr Pizzino brought proceedings claiming that loss from his former solicitors in the Supreme Court in 2020.Conclusion whether the New Pleading should be struck out For the above reasons, it is no overstatement to say that the New Pleading is both confusing and hopelessly deficient in fundamental respects. It does not serve the purposes of a statement of claim. It must be struck out.Issue 2: Should there be leave to re-plead? Mr Duckham, who is both the solicitor on the record for Mr Pizzino and the author of the New Pleading, appeared as counsel on the application. Part way through his oral submissions, it emerged that counsel at the Independent Bar had been briefed to consider the preparation of a further version of the pleading. There was no real explanation as to why that had not occurred earlier. However, that was a matter advanced as to why the Court should afford a further opportunity to Mr Pizzino to plead his case. It was also said that on the materials, Mr Caratti paid $760,000 at the time of transfer of Lot 76 and paid nothing more despite the nature of the dealing being one in which much more was to be received by the Vendors. It was also said that the value attributed to Lot 76 when it was sold by WSLC was $2.8 million and there had been no accounting for what had happened to the difference between that amount and the figure of $760,000. This was said to indicate that there was a great injustice that had occurred. However, submissions of that kind are no substitute for discharging the burden of identifying the nature of a claim based upon established legal principles that Mr Caratti can be properly called upon to answer. Significantly, the New Pleading is the fourth attempt to plead a case against Mr Caratti over a period of about 12 months. After the first attempted pleading was struck out, successive versions were delivered each of which was replaced after issues were raised by those acting for Mr Caratti. The New Pleading prompted the present interlocutory application. On the day before the hearing of that application, a minute of two additional paragraphs was delivered. The addition of those paragraphs was not opposed by counsel for Mr Caratti. Therefore, the present application has proceeded on the basis that it is the fifth attempt to articulate a case.

Ratio Decidendi

Legal Principle Established

Therefore, successive failures to plead a case may justify dismissal if (a) the Court concludes from what has occurred (as distinct from factual evidence led) that no reasonable cause of action exists; or (b) the point has been reached where it is inconsistent with a just resolution of the proceedings for the respondent to continue to be exposed to litigation in which an applicant, despite ample opportunity, has been unable to plead a case.Issues for consideration As outlined in oral submissions, Mr Caratti contended that the New Pleading was seriously deficient and should be struck out. He contended that Mr Pizzino had been afforded an adequate opportunity to plead his case. He submitted that the failure to articulate a recognisable cause of action by the New Pleading or to point to facts that might found such a cause of action despite a number of attempts meant that it was appropriate to dismiss the proceedings. He did not advance a submission to the effect that, on the facts, the case sought to be advanced was 'hopeless'. That is to say, he did not seek to demonstrate that the Court should dismiss the proceedings on the basis that the affidavit material filed for Mr Caratti demonstrated that the proceedings should be summarily dismissed. Although issues were raised as to whether any claim by Mr Pizzino was within any limitation period, the position of Mr Caratti as to that aspect was that it was not possible to reach any meaningful conclusion in that regard because Mr Pizzino had not been able to plead any claim in respect of which an assessment could be made as to when the cause of action accrued. Mr Pizzino maintained that the pleading should be allowed to stand. He sought an opportunity to re-plead if Mr Caratti's strike out application was successful. Respectfully, the submissions advanced to support Mr Pizzino's pleading were difficult to understand. They took the form of general assertion and sloganeering. In effect, they reduced to little more than the proposition that as Mr Caratti was the only individual involved and the $4 million had never been paid then Mr Caratti must be responsible as a matter of law. The submissions were not supported by anything resembling coherent legal analysis. Consequently, largely unaided by any meaningful submissions advanced for Mr Pizzino, there are two issues for determination on the interlocutory application. First, should the New Pleading be struck out. Second, should there be leave to replead or should the proceedings be dismissed on the basis that there has been sufficient opportunity afforded to Mr Pizzino to plead his case.Issue 1: Should the New Pleading be struck out? Although the submissions advanced to support the New Pleading were opaque, it appeared that there was an attempt to advance the following categories of claim:(1)A claim of misleading or deceptive conduct.(2)A claim there was a breach of the Arrangement to which Mr Caratti was an accessory.(3)A claim that Mr Caratti breached his common law duties as a director of WSLC.(4)A claim that the breach of the Settlement Deed by WSLC was induced by Mr Caratti.(5)A claim that Mr Caratti is liable to Mr Pizzino by application of s 197(1) of the Corporations Act 2001 (Cth).(6)A claim that Mr Caratti has been involved in some form of breach of an equitable duty or there is some other claim in equity that may give rise to a tracing claim or a claim based upon Barnes v Addy liability.(7)A claim of some kind that depends upon knowledge of the terms of the deed of trust for the WSL Trust.(8)A claim that any cause of action did not arise until there was some perception by Mr Pizzino that there were no available assets in the WSL Trust to be able to meet the liability to pay $4 million in accordance with the terms of the Settlement Deed.