Polish Ex-Servicemen’s Association Sub-Branch No 5 Canberra and District Inc (A00195) v Polish Ex-Servicemen’s Association Branch Australia Inc (No A00025) and Paul Ellis Green & Ors T/As Meyer Vandenberg
[2013] ACTSC 35
•12 March 2013
POLISH EX-SERVICEMEN’S ASSOCIATION SUB-BRANCH NO 5 CANBERRA AND DISTRICT INC (A00195) v POLISH EX-SERVICEMEN’S ASSOCIATION BRANCH AUSTRALIA INC (NO A00025) AND PAUL ELLIS GREEN AND ORS T/AS MEYER VANDENBERG
[2013] ACTSC 35 (12 March 2013)
JURISDICTION, PRACTICE AND PROCEDURE – Interlocutory Applications – strike out applications – whether impugned pleadings disclose no reasonable cause of action – where dispute over ownership of monies – where constitution of association provides for joint ownership – Corin v Patton (1989-1990) 169 CLR 540 not address central issue in question as property in question not in the nature of real property – constitution clearly states arrangement for joint ownership – individual entitlement to draw upon joint funds not inconsistent – plaintiff’s pleadings alleging sole ownership of monies inconsistent with constitution – even if constitution acted as a declaration of a gift, no suggestion of rescission – impugned pleadings disclose no reasonable cause of action – applications for strike out granted
JURISDICTION, PRACTICE AND PROCEDURE – Interlocutory Applications application to amend statement of claim – inappropriate to allow application to amend where amendments directed towards pleadings or assertions struck out – application refused
ACTEW Corporation Ltd v Mihaljevic [2004] ACTSC 59
Brunker v Perpetual Trustee Co (Ltd) (1937) 57 CLR 555
Corin v Patton (1989-1990) 169 CLR 540
Partriche v Powlet [1740] Eng R 185; 26 ER 430
Scoones v Galvin and the Public Trustee (1934) NZLR 1004
Williams v Hensman [1861] 1 John & Hem 546; 70 ER 862
Civil Law (Property) Act2006 (ACT)
Court Procedures Rules 2006 (ACT), rr 414, 425
Land Titles Act1925 (ACT)
Real Property Act1900 (NSW)
No. SC 466 of 2010
Judge: Burns J
Supreme Court of the ACT
Date: 12 March 2013
IN THE SUPREME COURT OF THE )
) No. SC 466 of 2010
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:POLISH EX-SERVICEMEN’S ASSOCIATION SUB-BRANCH NO 5 CANBERRA AND DISTRICT INC (A00195)
Plaintiff
AND:POLISH EX-SERVICEMEN’S ASSOCIATION BRANCH AUSTRALIA INC (NO A00025)
First Defendant
PAUL ELLIS GREEN AND ORS T/AS MEYER VANDENBERG
Second Defendant
ORDER
Judge: Burns J
Date: 12 March 2013
Place: Canberra
THE COURT ORDERS THAT:
Paragraphs 27, 33, 37, 41, 51, 70, 71, 72 and 73 of the Amended Statement of Claim be struck out.
Paragraphs A, B, C, D, E, F, G, H, I, J, K, L, M and N of the plaintiff’s prayers for relief be struck out
The plaintiff’s Application to amend its Statement of Claim is refused.
The first defendant, which for convenience I will refer to as the National Body, is an incorporated association dedicated to providing support to Polish ex-servicemen. The plaintiff is an association incorporated in the ACT with similar aims to the National Body. The second defendant is a firm of lawyers practicing in the ACT who were retained by the plaintiff to act for it in certain transactions involving the surrender of a sublease in 2009.
The sublease surrendered by the plaintiff in 2009 was one that it held to occupy premises in Civic for a term of 89 years 11 months and 5 days from 16 December 1994. In or around 2009 the Crown lessee wanted the plaintiff to vacate the premises, and entered into negotiations with it to agree upon a sum of compensation to be paid to the plaintiff in exchange for it surrendering the sublease. Eventually a sum of $1,350,000 (the surrender proceeds) was agreed on, and the plaintiff surrendered the sublease.
The plaintiff alleges that on or about 28 August 2009 the second defendants received the surrender proceeds and deposited those funds into their trust account. Almost immediately, they paid out from the surrender proceeds a sum of $1,340,000 to the National Body and a sum of $10,000 to meet their own costs. The plaintiff alleges that the net surrender proceeds and the lawyers costs were disbursed without instructions to that effect from it, and claims, under various heads of claim, entitlement to return to those monies, or damages.
Additionally, the plaintiff also alleges that on or about 7 September 2009 it held a credit of approximately $180,000 in its bank account, which sum was transferred to the account of the National Body on or about that date. The plaintiff claims entitlement to return of that sum.
THE PRESENT APPLICATIONS
By an Application dated 31 July 2012 the National Body seeks the following orders:
a)that paragraphs 27, 33, 37, 41 and 51 of the Amended Statement of Claim dated 11 October 2011 be struck out; and
b)that paragraphs A, B, C, D, E, F, G, H, I, J, K and L of the orders sought against the National Body by the plaintiff in the Amended Statement of Claim be struck out.
The grounds as set out in the Application upon which the National Body seeks these orders are:
1.The allegations contained in paragraphs 27, 33, 37, 41 and 51 of the Amended Statement of Claim and the claims contained in Paragraphs A, B, C, D, E, F, G, H, I, J, K and L of the Plaintiff’s claim against the First Defendant in the Amended Statement of Claim are allegations and claims which are inconsistent with the allegations in Paragraph 7 A of the Amended Statement of Claim, contrary to the provisions of Rule 414 of the Court Procedures Rules2006.
2.By reason of the matters if Paragraph 1 of the grounds of application, the allegations in Paragraphs 27, 33, 37, 41 and 51 of the Amended Statement of Claim and the claims in Paragraphs A, B, C, D, E, F, G, H, I, J, K and L of the Plaintiff’s claims against the First Defendant in the Amended Statement of Claim:-
a) disclose no reasonable cause of action; and / or
b) may tend to prejudice, embarrass or delay the fair trial of this proceeding.
By an Application also dated 31 July 2012 the second defendants seek orders:
a)that paragraphs 70 to 73 of the Amended Statement of Claim be struck out;
b)that sub-paragraphs M and N of the prayer for relief as against the solicitors in the Amended Statement of Claim be struck out; and
c)that judgment be entered for the solicitors against the plaintiff.
The grounds upon which the second defendants seek these orders are:
1)Paragraphs 70 to 73 do not disclose any reasonable cause of action against the second defendant.
2)The prayer for relief contained in clauses M and N of the plaintiff’s Amended Statement of Claim as against the second defendant is inconsistent with the allegations contained in paragraphs 7A and 10A of the plaintiff’s Amended Statement of Claim and unable to be sustained.
3)Each of paragraphs 70 to 73 and clause M and N of the plaintiff’s Amended Statement of Claim is thus liable to be struck out under rule 425 of the Court Procedures Rules 2006 upon the grounds that the same:
(a)discloses no reasonable cause of action or defence appropriate to the nature of the pleading; or
(b)may tend to prejudice, embarrass or delay the fair trial of the proceeding.
There is also an Application by the plaintiff for leave to amend its Statement of Claim. The proposed amendments do not change of affect the issue raised by the National Body and the second defendants in their Applications. It would be inappropriate to grant the plaintiff leave if the National Body and the second defendants succeed on their Applications.
At one time, it was a matter of contention between the parties which constitution was binding on the plaintiff at the relevant times. The parties are now agreed that the constitution which the plaintiff adopted in 1993, with some minor subsequent amendments, is the relevant constitution. Paragraph 7A of the Amended Statement of Claim pleads the terms of clause 54 of the 1993 Constitution in these terms:
All assets of the National Executive of the Polish Ex-Servicemen’s Association Branch Australia Incorporated and of all Sub-Branches of the Association in Australia are owed [sic] jointly by the Polish Ex-Servicemen’s Association Branch Australia Incorporated and the relevant Sub-Branch. Therefore it is necessary to obtain the approval of the National Executive before the proposal involving the sale or disposal of more substantial assets, especially the real property, is put before the Annual General Meeting or a Special General Meeting. Such proposal shall be approved jointly by the National Executive and by a majority of votes of no less that [sic] two-thirds (2/3) of all of the ordinary members of the Association.
The essential foundation for the Applications by the National Body and the second defendants is that the plaintiff’s claim for entitlement to return of the monies in question, or damages in lieu, is inconsistent with the terms of clause 54.
The impugned provisions of the Amended Statement of Claim
Paragraph 10A alleges that the amended 1993 Constitution was the only valid and binding constitution of the plaintiff at the relevant date. As I have said, all parties are now agreed that this is correct.
Paragraph 27 alleges that the sum of $1,340,000 received by the National Body is the property of the plaintiff, and are monies had and received by the National Body.
Paragraph 33 alleges a claim in detinue against the National Body, alleging that the sum of $1,350,000 has been detained by the National Body.
Paragraph 37 alleges that the National Body has converted the said sum of $1,350,000 to its own use.
Paragraph 41 alleges that the National Body holds the sum of $1,350,000 as constructive trustee on behalf of the plaintiff.
Paragraph 51 alleges that the sum of $180,000 transferred from the plaintiff’s bank account to the account of the National Body is:
a) monies had and received by the National Body;
b) property detained by the National Body; or
c) property converted by the National Body; or
d) held by the National Body or constructive trustee on behalf of the plaintiff.
Paragraphs 70 to 73 plead, relevantly for present purposes, that by virtue of the actions of the second defendants the plaintiff has suffered loss and damage constituted by:
a) $1,340,000 paid to the National Body;
b) $180,000 paid to the National Body;
c) interest on these two sums; and
d) legal costs incurred by the plaintiff in seeking to recover these sums.
Paragraphs A to L are the plaintiff’s prayers for relief against the National Body.
Paragraphs M and N are some of the plaintiff’s prayers for relief against the second defendants, specifically seeking declarations that the sums of $1,340,000 and $180,000 are the property of the plaintiff.
THE LAW RELEVANT TO THE STRIKE OUT APPLICATIONS
Rule 425 of the Court Procedures Rules 2006 (ACT) provides:
Pleadings – striking out
(1)The court may, at any stage of a proceeding, order that a pleading or part of a pleading be struck out if the pleading –
(a)discloses no reasonable cause of action or defence appropriate to the nature of the pleading; or
(b)may tend to prejudice, embarrass or delay the fair trial of the proceeding; or
(c) is frivolous, scandalous, unnecessary or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2)The court may receive evidence on the hearing of an application for an order under this rule.
(3)If the court makes an order under this rule, it may also make any other order it considers appropriate, including, for example–
(a)if the court makes an order under subrule (1) (a) – an order staying or dismissing the proceeding or entering judgment; and
(b)an order about the future conduct of the proceeding.
In ACTEW Corporation Limited v Mihaljevic [2004] ACTSC 59 Master Harper set out the test for striking out a pleading as disclosing no reasonable cause of action at [26]–[27]:
The test for striking out a pleading as disclosing no reasonable cause of action is a high one. Dickson J (sic) said in Dey v Victorian Railways Commissioners (1949) 78 CLR 62:
A case must be very clear indeed to justify the summary intervention of the Court to prevent plaintiff submitting his case for determination in the appointed manner by the Court... Once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the Court to dismiss the action...
This stringent test was met by the defendants in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 in which Barwick CJ struck out the plaintiff’s statement of claim and dismissed the action. His Honour noted that the jurisdiction to terminate an action summarily was to be sparingly employed, quoting from earlier decision words which have been used to describe the test to be applied: “So obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “the manifest that to allow [the pleadings] to stand would involve useless expense”. Great care, his Honour said, must be exercised to ensure that under the guise of achieving expeditions finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal.
CONTENTIONS
The National Body and the solicitors contend that the impugned pleadings cannot stand in the light of the plaintiff’s acceptance, as pleaded in the Amended Statement of Claim, that clause 54 of the 1993 Constitution bound it at all relevant times, which provided that all assets of the plaintiff are owned jointly with the National Body. They submit that the plaintiff cannot maintain a claim based on an entitlement to sole possession of the monies while at the same time pleading that the monies are jointly owned by it and the National Body. In that regard they refer me to Rule 414 of the Court Procedure Rules 2006:
Pleadings – inconsistent allegations etc
(1)A party may make inconsistent allegations or claims in a pleading only if they are pleaded as alternatives.
(2)However, a party must not make an allegation or new claim that is inconsistent with an allegation or claim made in another pleading of the party without amending the pleading.
The plaintiff contends that there is no inconsistency in its pleadings, as the effect of clause 54 of the 1993 Constitution is not to vest property jointly in it and the National Body, but is in the nature of a declaration of an unperfected gift from it to the National Body. Alternatively, the plaintiff submits that the current pleadings are adequate to allow the parties to understand what is in dispute, and the proper interpretation of clause 54 should be left to be determined at the trial.
In support of its primary contention, that clause 54 does not vest property in the monies jointly in it and the National Body, the plaintiff relies upon the wording of clause 54, the framework of the 1993 Constitution, insofar as it deals with property interests, and the decision of the High Court in Corin v Patton (1989-1990) 169 CLR 540.
The plaintiff points to the fact that the 1993 Constitution allows for it to expend funds and dispose of assets without the approval of the National Body as inconsistent with clause 54 having the effect of vesting ownership of all assets in it and the National Body jointly. Clause 21 gives the Executive Committee of the plaintiff power to raise loans or expend funds up to a limit of $25,000. Expenditure over that sum must be decided and approved by a Special General Meeting. Clause 54 refers to the necessity for the plaintiff to obtain the approval of “the National Executive” before a sale or disposal of “more substantial assets, especially the real property” is put before the Annual General Meeting or a Special General Meeting of the plaintiff, but even where such approval is forthcoming, disposal of such assets requires a resolution of no less than two thirds of the ordinary members of the plaintiff.
In their outline of Argument dated 19 November 2012, the plaintiff contends that the effect of those provisions is that:
[M]embers of the Association in General Meeting would have the final say in relation to any disposal of assets and that it was not legally open to the [National Body] at any time to call for a conveyance to it of the so-called “joint interest” in the absence of a Special Resolution of the members.
Corin v Patton considered
The plaintiff submits that the position it advocates on the construction of the 1993 Constitution is consistent with the common law concerning unperfected gifts, citing Corin v Patton. In that case Mr and Mrs Patton were registered proprietors of land under the Real Property Act1900 (NSW). Mrs Patton wished to sever the joint tenancy and transfer her interest in the property to her brother, Mr Corin. Mr Corin was then to execute a deed of trust in which he expressed himself as holding that interest in trust for her. To that end Mrs Patton and Mr Corin executed a memorandum of transfer and a declaration of trust. Mrs Patton died shortly afterwards. No steps were taken to enable the transfer to be registered prior to her death. At first instance, in the New South Wales Supreme Court, it was held that the joint tenancy had not been severed and Mr Patton was therefore entitled to the whole of the property. This decision was upheld in the Court of Appeal, albeit for different reasons. In the High Court Mr Corin argued, amongst other things, that Mrs Patton had done all that was in her power to effect a gift of her interest in the property, so that there was a transfer of the interest in equity.
In a joint judgment Mason CJ and McHugh J referred to the judgment of Page Wood V.-C. in Williams v Hensman [1861] Eng R 701; 70 ER 862 at [557] on the means by which a joint tenancy could be severed:
A joint tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund-losing, of course, at the same time, his own right of survivorship. Secondly, a joint tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.
By reference to Partriche v Powlet [1740] Eng R 185; 26 ER 430, their Honours affirmed, at 547, that “a unilateral declaration of intention or other act inconsistent with the continuation of a joint tenancy” would not suffice for the purposes of the first mode of severance set out above. What is required is an actual alienation. The question for the High Court therefore was: had Mrs Patton effectively alienated the property in equity, not having done so at law?
In this context Mason CJ and McHugh J considered whether the actions of Mrs Patton constituted a gift or other alienation of the property that could be enforced by equity. After referring to the general equitable principles that equity will not perfect a gift, nor assist a volunteer, their Honours concluded the question was whether Mrs Patton had done all that was necessary for her to do in order to effect a transfer of the property. By reference to the decisions in Brunker v Perpetual Trustee Co (Ltd) (1937) 57 CLR 555 and Scoones v Galvin and the Public Trustee (1934) NZLR 1004 their Honours, at 560, affirmed that a gift of Torrens system land could not be regarded as complete in equity while the donor retained possession or control of the certificate of title. As Mrs Patton had given no authority for the mortgagee bank to hand the certificate of title to Mr Corin for the purposes of registration, the transactions entered into by Mrs Patton and Mr Corin failed to pass the equitable property in the land to Mr Corin.
Corin v Patton does not address the central issue in the present case, being the effect of clause 54 of the 1993 Constitution of the local body. The principles governing the severance of a joint fund, and those governing the requirement for an enforceable gift, do not assist in determining whether identified property is jointly owned. The unspoken assumption behind the plaintiff’s submission is that the monies were its property before clause 54 came to apply to them. Whatever may have been the National Body’s entitlement to claim in interest in the real property formerly leased by the plaintiff, the monies the subject of the present dispute are not, of course, in the nature of real property.
Joint Ownership
The affidavits filed on behalf of the National Body establish that there has been, and was intended to be, a close relationship between the national and local sub-branches. Where the aims of both organisations are similar, if not identical, this is hardly surprising. The plaintiff was created as a sub-branch of the National Body, albeit using the vehicle of a separate incorporated association. In passing the 1993 Constitution, the members agreed that its terms would govern the activities of the plaintiff, including its ownership of property. Clause 54 clearly states that the arrangement is that all assets are jointly owned with the National Body. It is a statement that whatever assets the plaintiff may acquire, property in those assets vests jointly in it and the National Body.
In my view, the fact that the plaintiff has some individual entitlement to draw upon the joint funds held by it, without consulting the National Body, is not inconsistent with the assets of the plaintiff being owned jointly with the National Body. The restrictions placed on the plaintiff to obtain the approval by resolution of no less than two thirds of its ordinary members, as well as the approval of the National Executive, before it disposes of “substantial assets’ is not inconsistent with the assets being held jointly. The plaintiff has an interest in the jointly owned property, and clause 54 places restrictions upon the ability of it to alienate its interest. Whether the assets be owned jointly with the National Body, or separately by the plaintiff, it has an interest in the property. The fact that the 1993 Constitution places restrictions on the ability of the plaintiff to alienate that interest tells us nothing about whether the interest is joint or sole.
As the funds in dispute, whilst the product of a sale of an interest in land, are not themselves an interest in land, the plaintiff’s appeals to s 201 of the Civil Law (Property) Act2006 (ACT) and to the principle of indefeasibility of title granted by the Land Titles Act1925 (ACT) are misconceived.
In any event, if the plaintiff was correct that clause 54 acted as a declaration of a gift by it to the National Body, this could not assist it. There is no suggestion that it rescinded the gift before the National Body took possession of the monies from the second defendants. By taking possession the National Body perfected the gift.
CONCLUSION
Clause 54 does not operate as a declaration of gift from the plaintiff to the National Body. It is a statement of the terms on which the plaintiff owns property. It provides that all property is owned jointly with the National Body. To the extent that the plaintiff’s current pleadings allege that is the sole owner of the monies in question, or entitled to sole possession of them, they are inconsistent with the terms of clause 54, and embarrassing. Each of the impugned provisions in the Amended Statement of Claim will be struck out.
As the amendments proposed by the plaintiff to its Statement of Claim were, in large measure, amendments to provisions now struck out, or amendments directed towards a continued assertion of a sole right to the possession of the monies in question, the Application to amend should be refused.
I will hear the parties on what further orders may be appropriate.
I certify that the preceding thirty nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Burns.
Associate:
Date: 12 March 2013
Counsel for the Plaintiff: Mr G Walker
Solicitor for the Plaintiff: Chamberlains Law Firm
Counsel for the First Defendant: Mr W Sharwood
Solicitor for the First Defendant: James Byrne & Rudz
Counsel for the Second Defendant: Mr R Clynes
Solicitor for the Second Defendant: Sparke Helmore
Date of Hearing: 19 November 2012
Date of Judgment: 12 March 2013
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