Pope & Ors v Harris Orchard - [2010] SASC 354

SUPREME COURT OF SOUTH AUSTRALIA
(Miscellaneous Appeal: Civil)
POPE & ORS v HARRIS ORCHARD
[2010] SASC 354
Judgment of The Honourable Justice White
23 December 2010
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PLEADINGS - GENERALLY
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - AMENDMENT
The defendants to an action alleging breaches of trust obligations brought a third party cross-action against a firm of accountants, alleging that they had breached a series of duties owed to them - the defendants sought permission to file an amended statement of claim against the third parties - a master refused permission to amend on the basis of deficiencies in the pleading and because the proposed amended statement of claim was vague, embarrasing and vexatious.
Held: appeal dismissed - the proposed amended statement of claim did not comply with the pleading requirements of the Supreme Court Civil Rules 2006 (SA).
Supreme Court Civil Rules 2006 (SA) r 98, r 99, r 101, referred to.
Holcon Australia Pty Ltd v Corporation of the Town of Walkerville [2007] SASC 437; Williams v Australian Telecommunications Commission (1988) 52 SASR 215; Marini v MLH Insurance Brokers Pty Ltd [2004] SASC 400; Duke Group Ltd (in liq) v Arthur Young (1991) 4 ACSR 355, considered.

POPE & ORS v HARRIS ORCHARD
[2010] SASC 354
Appeal from a Master

WHITE J: The defendants appeal against a master’s refusal to grant them permission to amend the statement of claim by which they seek relief from third parties.
The plaintiff’s action was commenced on 5 September 2006, and these proceedings are accordingly governed by the Supreme Court Civil Rules 2006. The plaintiff’s summons was accompanied by a statement of claim which has not since been amended. Each of the defendants filed defences to the plaintiff’s statement of claim on 2 March 2007, and amended defences on 5 June 2007.
The defendants issued a third party notice with an accompanying statement of claim on 13 July 2007. The third parties filed a defence on 20 September 2007. The period of three years which has elapsed since then appears to have been occupied principally with attempts by the defendants to get their third party pleading into proper form. A master rejected one application to amend the third party statement of claim on 29 May 2008, and rejected a further application on 28 June 2010. The defendants’ present appeal is against the latter decision.
The Plaintiff’s Claim
It is appropriate to commence by noting the matters alleged by the plaintiff against the defendants.
The plaintiff is the son of the first defendant (Des Pope) and the brother of the third, fourth and fifth defendants (Danielle, Dale and Deanna). Members of the Pope Family have interests in, or control, a number of companies and trusts referred to collectively as “the Pope Group”. Des Pope is said to be the controlling mind of the Pope Group.
The plaintiff alleges that he is the sole beneficiary of a trust established by his late grandfather entitled “the DO Pope Settlement”. The trustees of the DO Pope Settlement have, since its inception, been Des Pope and Valerie Pope (the plaintiff’s mother). Des Pope and Valerie Pope divorced in 1994.
The assets of the DO Pope Settlement were originally nine fully paid class “D” shares in DRP Holdings Pty Ltd, shares in WB Finnie Pty Ltd, and an interest bearing loan to DRP Holdings. Both these companies are members of the Pope Group.
The plaintiff alleges a number of breaches by his father in particular of the DO Pope Settlement. He pleads a number of transactions by which the alleged breaches were effected.
First, the plaintiff alleges that on or about 13 July 1984, Des Pope caused, in breach of trust, the transfer of the nine shares in DRP Holdings Pty Ltd which he and Valerie held as trustees of the DO Pope Settlement to the first defendant, DRP Nominees Pty Ltd (the First Transfer). He claims that DRP Nominees was a participant in the breach of trust so that it held the nine shares subject to a constructive trust in his favour. In addition, the plaintiff claims that Des Pope and DRP Nominees are liable to account to him for the dividends paid on the shares since 1984, and also to pay equitable compensation.
The plaintiff’s second claim arises from further dealings by DRP Nominees in the nine DRP Holdings shares. He alleges that DRP Nominees held the nine shares on trust for a different trust, the Des Pope Family Settlement Trust until 23 August 1993. On that date it transferred two shares to each of Danielle, Dale and Deanna and, at that time, or shortly afterwards, three shares to the sixth defendant Brookway Pty Ltd (collectively, the Second Transfers). The plaintiff claims that the Second Transfers were breaches of the constructive trust by which DRP Nominees held the shares, and also a breach by it of the Des Pope Family Settlement Trust. He alleges that Des Pope was a participant in those breaches and that each of Danielle, Dale, Deanna and Brookway knowingly assisted in the breaches, so that they too are liable to restore the nine shares in DRP Holdings to him. Finally, he alleges that Des Pope, his siblings and Brookway are liable to account as constructive trustees for the dividends they have received, and are liable to pay him equitable compensation.
Thirdly, the plaintiff alleges that sometime after 30 June 1983, Des Pope, in his capacity as trustee of the DO Pope Settlement, caused the shares held by the Trust in WB Finnie Pty Ltd to be transferred to a third party for no consideration at all, or alternatively, for inadequate consideration (the Third Transfer). Arising out of this transaction, he claims that Des Pope is liable to account for the value of the shares in WB Finnie, and liable to pay equitable compensation for the value of those shares and for the lost dividends.
Finally, the plaintiff claims that Des Pope has failed in his capacity as trustee of the DO Pope Settlement to account for the loan of money, and the interest payable in respect of it, by the Trust to DRP Holdings in or about 1977. Again, he asserts that Des Pope is liable as a constructive trustee to account to him for the amount of the loan and the interest payable on it, and to pay equitable compensation for the lost dividends.
By his amended defence filed on 5 June 2007, Des Pope does not admit any of the alleged breaches; denies, in effect, that the plaintiff is entitled to the relief which he seeks; seeks to invoke s 56 of the Trustee Act 1936; and pleads laches. As one of the particulars of the plea of laches, Des Pope pleads that his accountants, the third parties, have destroyed many of their practice records relating to the impugned transactions.
It is not necessary to refer to the amended defences of the remaining defendants. They seem to be in substantially similar form to that of Des Pope.
The Third Party Proceedings
The defendants seek to recover from the third parties any amounts which they are found liable to pay to the plaintiff. I will refer to their proposed amended statement of claim for which the Master refused permission as “the ASC”.
By the ASC, the defendants allege that at all times material to the plaintiff’s action, the third parties carried on business in partnership as a firm of certified practising accountants or chartered accountants, providing accountancy, auditing, financial, commercial, taxation and a business advice and services [17.1]. They allege that the third parties provided professional accounting and business services of a wide-ranging kind to Des Pope, the Pope Family and the Pope Group, following the initial retainer of the partnership by Des Pope on behalf of the Pope Family and the Pope Group in 1974 [18]-[20]. The defendants assert that, by reason of an implied term in the contract of retainer [46] and the common law duty of care [42], the third parties owed to Des Pope, the Pope Family and the Pope Group a duty to provide their professional accounting and business services with reasonable care, skill and diligence.
The defendants allege in [24] that in 1984 the third parties recommended to Des Pope a restructure of the Pope Group (the First Restructure) and that Des Pope accepted and acted upon that recommendation. The First Restructure is said to have involved the First and Third Transfers described earlier [28.2].
Next, the defendants allege that in about 1993, the third parties recommended to Des Pope a further restructure (the Second Restructure) and that Des Pope agreed to and acted on that recommendation [35] and [37]. The Second Restructure led to the Second Transfers.
Next, the defendants allege that commencing in about 1977, the financial accounts of the DO Pope Settlement and of DRP Holdings recorded a loan from the former to the latter and that in the financial years ending on 30 June 1977 to 30 June 1981, the financial accounts of the Trust recorded the receipt of interest in respect of that loan [30]-[31].
Finally, the defendants allege that if they are liable to the plaintiff, as he claims, then they are entitled to recover the amount of their liability from the third parties, by reason of the third parties’ breach of the implied contractual and common law duties of care [62]-[65].
Principles Relating to Pleading
Rule 99(1) of the Supreme Court Civil Rules 2006 stipulates the requirements for the content of a statement of claim. It provides:
(1)     A statement of claim—
(a)     must state each cause of action; and
(b)     must state the basis of each cause of action (including reference to any statutory provision on which the plaintiff relies); and
(c)     must contain a short statement of the material facts on which each cause of action is based; and
(d)     must state any remedy for which the plaintiff asks; and
(e)     if the plaintiff seeks an ancillary remedy (such as an extension of a period of limitation or a temporary injunction)—must state the nature of the remedy and the basis on which it is sought.
In addition, r 98(2)(b) requires that a pleading must “state only material facts relied on and not the evidence or arguments by which the facts are to be proved”. In addition r 98(2)(d) provides that a pleading must “plead such facts as give fair notice of the party’s case at trial”.
In Holcon Australia Pty Ltd v Corporation of the Town of Walkerville[1] I spoke of the operation of r 98(2)(d) in relation to statements of claims in the following passage:
Ordinarily, one would expect that a statement of claim which complied with the requirements of sub-rr 98(2)(a)-(c) inclusive and r 99 would, without more, plead sufficient facts to give fair notice of the plaintiffs’ case at trial. It is likely to be a rare case in which a plaintiff will need to plead additional facts in a statement of claim in order to comply with sub-r 98(2)(d). When it is necessary to plead an additional matter for the purpose of giving fair notice, it is a material fact, and not evidence, which is to be pleaded.[2]
[1] [2007] SASC 437.
[2] Ibid at [18].
The 2006 Rules endeavour to minimise interlocutory disputation about pleadings. Apart from specifying the minimum requirements for an adequate pleading, the Rules confine the circumstances in which a party may obtain further particulars (r 101(3)); confine the circumstances in which the Court will strike out a pleading (r 104); and emphasise the consequences at trial for a party who relies on an inadequate pleading (r 103). Nevertheless, the function and purpose of pleadings stated by King CJ in Williams v Australian Telecommunications Commission[3] in relation to the pleading regime in the 1987 Rules remain true:
The new Rules do not change, however, the fundamental nature, function or purpose of pleadings. The fundamental purpose of pleadings is to provide a structure or framework for the litigation designed to promote a just outcome. Pleadings achieve this purpose by performing two basic functions. The first is to define the issues between the parties thereby providing the basis for the determination of questions as to discovery before trial and admissibility of evidence at trial and of questions as to what the litigation has decided for the purpose of the Rules as to res judicata and issue estoppel. The second function is to give the parties fair notice of the case to be made against them at trial thereby minimising the risk of injustice resulting from surprise.[4]
[3] (1988) 52 SASR 215.
[4] Ibid at 216. See also Marini v MLH Insurance Brokers Pty Ltd [2004] SASC 400 at [13]; Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279.
The application giving rise to the present appeal was not for further and better particulars or for the striking out of a pleading. It was instead an application for permission to amend and accordingly required an exercise of the Court’s discretion. An amendment to pleadings should not be permitted unless it complies with the pleading rules and, in particular, if it would be vulnerable to being struck out on the grounds of non-compliance[5] or would inevitably give rise to an application for further and better particularisation.
[5] Duke Group Ltd (in liq) v Arthur Young (1991) 4 ACSR 355 at 382.
The defendants submitted that the third parties, although opposing the amendment, had not asserted that they would be prejudiced if it was allowed, or that they did not know the case which they had to meet. Whether or not this was so in the argument before the Master, I cannot say, but the third parties on the appeal did assert uncertainty as to the precise basis of the defendants’ claims. Further, the absence of prejudice is only one factor to be considered. The defendants have the primary responsibility of establishing that their proposed pleading is compliant with the Rules. If it is not, some non-compliance may be excused if the third parties would not suffer any detriment, but one does not start from the proposition that an amendment should be allowed unless the opposing party can identify some prejudice or detriment.
Consideration of Appeal
“At all Times Material”
The Master considered that in the context of the defendants’ claim against the third parties, the use of the expression “at all times material to this action” as the preface to some 12 of the pleaded allegations introduced vagueness, embarrassment and vexation. He considered that the expression was capable of referring to some or all of the period commencing in 1974 and continuing until the present time. Given that the impugned conduct of the third parties was limited, and was said to have occurred at particular times, the Master considered that the defendants should be more specific.
It is reasonable to suppose that the expression “at all times material to this action” is used with the same meaning each time it appears in the ASC.
I note that in Action No SCCIV-01-1922, the plaintiff (OE & DR Pope Pty Ltd) is a member of the Pope Group and that the third parties to these proceedings are the defendants. The precise allegations made in Action No SCCIV-01-1922 are not presently material although they do have some similarities with the claims which the defendants make against the third parties in these proceedings. The solicitors for the defendants and third parties in these proceedings are the same as the respective solicitors for the plaintiff and defendants in Action No SCCIV-01-1922.
In a decision published on 9 April 2009 in Action No SCCIV-01-1922, Judge Lunn refused to grant leave to OE & DR Pope Pty Ltd to amend their pleading while it used the expression “the times material to this action”. Judge Lunn said:
The phrase “the times material to this action” as defined in paragraph 24 is embarrassing and vexatious in that it is ambiguous and too vague. It apparently could mean a time span from the earliest of the dates and events referred to in paragraphs 26-29 to the last of those dates and events. On the dates stated that is range between 1976-1996 and on the “times” or events referred to in those paragraphs the span could stretch from the inception of the trust as referred to in the preamble to paragraph 28 (which was 1974) to the commencement of this action as being the times when the defendant was aware of the dealings pleading in paragraph 29. Alternatively the phrase could mean only these times referred to and not those in between.
The same observation may be made in respect of the ASC.
In the present action, numerous of the defendant’s pleas in their former statement of claim were prefaced with the words “at all material times”. In the ASC, the defendants use instead the expression “at all times material to this action”. This change is one in form only and does not seek to address the vice identified by Judge Lunn in his judgment on 22 April 2009. It is puzzling that the defendants have not sought to address in a more substantive way the problem identified by Judge Lunn.
The use of the expression “at all times material to this action” creates an underlying uncertainty as to the period alleged by the defendants. For example, the defendants have pleaded the birth dates of the six children of Des Pope, the first of whom was born on 10 November 1958. In addition, the defendants have pleaded the establishment of the DO Pope Settlement by an indenture dated 26 November 1970 and the incorporation of WB Finney & Co Pty Ltd on 2 April 1973. It is simply not clear whether the expression “at all times material to this action” is to extend as far back as, say, 1958, 1970 or 1973.
The same point can be made by reference to the plaintiff’s pleading. The times at which the conduct pleaded by him occurred also appear to be material times for the purpose of the action. As that conduct extends back to the early 1970s, there is some uncertainty whether the defendants intend their plea to embrace those times as well.
The effect of the ASC is to leave the reader uncertain as to the actual time or period to which the defendants refer.
I accept that in some instances the use of the expression “at all times material to this action” in relation to a discrete plea may be unobjectionable. However, on some occasions it is the conjunction of one plea with another prefaced with the same expression which gives rise to difficulty. For example, paragraph 8 refers to “the Pope Group” as comprising at all times material to the action a group of companies and trusts. Those companies and trusts are later particularised in [14] to include, amongst others, Brookway Pty Ltd which did not come into existence until 18 December 1986 and which became trustee of a trust known as the Des Pope Family Settlement only on 12 October 1993. Similarly, the Pope Group is said to include DRP Nominees which ceased to be trustee of the Des Pope Family Settlement on 12 October 1993. These changes may not have been important if it were not for the later plea in [17] that “at all times material to this action” the third parties provided professional accountancy and business services to, amongst others, “the Pope Group”. Similarly, [18] pleads the professional accounting and business services provided by the third parties to, amongst others, “the Pope Group”. It is said that these accounting and business services were provided “at all times material to this action”. The change in composition of the Pope Group during at least some of the period to which the defendants’ pleading relates gives rise to uncertainty.
The third parties are sued in the firm name of Harris & Orchard, but the third party notice also indicates that is directed to four named individuals. The ASC asserts that “the third parties carried on business in partnership “at all times material to this action” and that they are able to be sued in their firm name of Harris & Orchard [17].

The defence filed by the third parties to the original statement of claim indicates that each of the four named individuals has been a partner in the firm of Harris & Orchard for differing periods. Some of those periods include the times at which particular events pleaded by the plaintiff and the defendants are said to have occurred, and some do not. This too indicates the inappropriateness of a generalised plea of “at all times material to this action”. Such a method of pleading tends to obscure the omission of the defendants to plead the material facts by which they contend that a member of the firm may be liable for conduct occurring before he became a partner, or occurring after he ceased to be a partner.
There may be a question about whether it is appropriate to have regard to a document such as an existing defence when considering an application of the present kind. However, even if it is not permissible, the possibility of changes in the composition of the third party over the long period alleged in the ASC indicates in a more general way the inappropriateness of the defendants’ form of pleading. In short, the defendants should give attention to the question of whether it is possible for the four named individual third parties to be grouped together for all the purposes of the pleading and, in this context, whether it is appropriate to preface the pleading with the words “at all times material”.
For these reasons, I consider that the Master was correct in refusing the defendants permission to plead paragraphs 1, 3, 5, 8, 9, 11, 13, 15 to 18 and 23 in their present form. The defendants should plead with greater specificity the times or periods to which they refer in those pleadings.
Pleading by Reference to an Event
By [6] and [7] of the ASC, the defendants plead that Des Pope was the directing mind of the financial affairs of the Pope Family before and after his divorce. The difference between the two pleas is that [7] acknowledges that Des Pope was not the directing mind of the financial affairs of his wife after their divorce.
The Master concluded that the absence of any plea in these two paragraphs as to the time of the divorce made them unacceptably vague and embarrassing.
If this was the only deficiency in the ASC, I doubt that it would have been sufficient to warrant the amendment being disallowed. The date of the divorce is unlikely to be controversial and was in any event pleaded in [23] of the plaintiff’s statement of claim. That statement of claim accompanied the third party notice issued by the defendants on 13 July 2007 which was served on the third parties.
However, given the other deficiencies in the ASC, I do not consider that the Master was incorrect in regarding the omission in [6] and [7] of the date of the divorce as a defect in the pleading.
The Allegation of Breach of Contract and of a Duty of Care in Relation to the First and Third Transfers
The defendants particularised their plea of a breach of contract and negligence by the third parties in a number of ways. It is not necessary to detail in these reasons the whole of the allegations. It is sufficient to note that the defendants allege that, in a variety of ways, the third parties were in breach of duty because they failed to give Des Pope advice of a kind which is generally regarded as being of a legal nature. For example, the defendants allege a failure by the third parties to advise Des Pope that the elements of the First and Third Transfers involved a breach of trust [54.3], [54.5]; to advise Des Pope of the potential liability which he and DRP Nominees may incur [54.9]; and to advise of the potential conflicts of interest which may arise [54.10.4].
Given the earlier plea [17] that the third parties carried on business as accountants, it is not self-evident that their engagement by Des Pope on behalf of the Pope Group included a retainer to give legal advice. Accordingly, the defendants’ should plead with some specificity the facts and circumstances by which the defendants were retained to give legal advice or, if not specifically retained for that purpose, the facts and circumstances upon which they rely in asserting that the third parties were subject to such a duty. Such a plea would not be a pleading of evidence, but instead a plea of the underlying material facts.
The defendants’ pleading does not do this. Paragraph 17.4 alleges that the defendants provided “professional accounting and business services for reward to Des Pope, the Pope Family and the Pope Group”. Paragraph 18 then contains some particularisation of the services alleged to have been provided. This particularisation is in very general terms and is broadly a plea of the provision of a number of services of a conventional accounting kind.
However, there are some pleas in [18] of the provision of advice, for example, an allegation that the defendants provided “advice regarding the general management of the financial affairs of the Pope Family and the Pope Group [18.5]; that they provided “general accountancy, financial, commercial and business advice to Des Pope and the Pope Group” [18.8]; and that they provided “advice, direction and recommendations in relation to achieving the strategic planning objectives of the Pope Family and the Pope Group as notified to them by Des Pope from time to time” [18.9]. These pleadings do not descend into any specificity at all of the advice of these kinds said to have been provided. Notably for present purposes, the [18] does not include any allegation that the third parties were retained to, or did as a matter of fact, provide advice of a legal kind, let alone provide any particularisation of such an allegation by reference to occasions, events or transactions. In addition, the preface to [18] of “at all times material to this action” makes it unclear whether any of the occasions upon which the third parties did provide advice of a legal nature (if that did occur) was before any of the First, Second or Third Transfers so as to give rise to an assumption of reliance to the knowledge of the defendants as pleaded later in the ASC. This makes the time or times at which the advice previously given by the third parties upon which the defendants rely a material fact which should be pleaded. The effect is that the ASC does not include a pleading of the material facts upon which the defendants’ assertions of a duty in the third parties to give proper legal advice is based.
Paragraph 18.10 of the proposed ASC is different from the pleas in [18.1] to [18.9] inclusive. Whereas the first nine sub-paragraphs allege the provision by the third parties of services of particular kinds, [18.10] alleges that the “professional accounting and business services” provided by the third parties comprised:
18.10 An assumption of responsibility by the third parties to ensure that:
18.10.1any advice, direction or recommendation made by the third parties to Des Pope in respect of one of his positions in the Pope Group was not inappropriate or contra-indicated to Des Pope in respect of one or other of his other positions in the Pope Group;
18.10.2Des Pope was referred to solicitors for legal advice where any matter was beyond the expertise of the third parties in respect of the positions held by Des Pope in the Pope Group.
It can be seen that [18.10] pleads that the services provided by the third parties included an assumption of responsibility by the third party. A plea of this kind self-evidently involves some awkwardness. Further, a plea of an assumption of responsibility is a plea of a conclusion, the validity of which depends upon proof of a number of underlying facts. Paragraph 18.10 does not contain any plea of those underlying material facts.
These deficiencies in the pleading are not made good elsewhere in the ASC. In fact, [23.3] repeats the deficiency. Paragraph 23 pleads:
As a consequence of the Retainer and the frequent communications between Des Pope, the Pope Family and the Pope Group on the one hand, and the third parties on the other as pleaded in paragraphs 21 and 22 above:
…
23.3At all times material to this action the third parties knew that Des Pope in his own right, the Pope Family and the Pope Group relied on the third parties to provide professional accounting and business services which did not expose them to any liability in one or other of the positions which they from time to time held in the Pope Group.
The effect of this plea is to assert that by reason of the Retainer and certain communications, the third parties knew that they were being relied upon to provide professional accounting and business services “which did not expose [Des Pope, his family or the Pope Group] to any liability in one or other of the positions which they from time to time held in the Pope Group”. There are a number of difficulties with this plea. In the first place the ASC does not contain any plea at all of “frequent communications” between the Pope Family and the Pope Group on the one hand and the third parties on the other. The only “frequent communications” pleaded in [21.2] are between the third parties and Des Pope.
Secondly, there is some awkwardness in that part of [23] which alleges that the third parties knew that the Pope Group relied upon them not to expose the Pope Group to any liability in a position which they held from time to time in the Pope Group itself. Paragraph [23] may make more sense if it was confined to an allegation concerning the positions held by members of the Pope Family in the Pope Group.
Thirdly, the ASC fails to specify the material facts said to give rise to the particular knowledge in the third parties which is alleged, namely, an awareness that they were being relied upon to provide professional accounting and business services (apparently whether requested or not) which did not expose Des Pope, the Pope Family or the Pope Group to any liability in one or other of the positions which they held from time to time in the Pope Group.
Accordingly, I agree with the Master that the ASC does not include a proper pleading of the material facts relied upon for the retainer and the particular duties of care alleged by the defendants.
I also agree with the Master that a proper particularisation of the defendants’ claim against the third parties is especially important in the present case. As the Master pointed out, the third parties are being asked to respond to pleas of acts on their part commencing in one case in 1977 and in other instances occurring in or about 1984. The lengthy lapse of time between the matters said to give rise to the causes of action against the third parties and the commencement of the third party proceedings makes it incumbent upon the defendants to plead the material facts in relation to each cause of action with proper particularity so as to ensure that the third parties do have fair notice of what is alleged against them.
Finally, it is pertinent to note that the defendants are not required to formulate a pleading without access at this stage to the third parties’ documents. The third parties have already made disclosure.
For the reasons outlined above, the ASC fails to give the necessary particularity.
The Allegations of Breach of Contract and of a Duty of Care in Relation to the Second Transfer
The defendants’ claims against the third parties in respect of the Second Transfer are, although not identical, similar to those made against them in respect of the First and Third. In particular, the allegations of breach of contract and negligence raise in substance an omission by the third parties to give appropriate legal advice. These pleadings are deficient for the same reasons given above in relation to the First Transfer.
Other Deficiencies
Paragraph 29 of the proposed ASC pleads that the First Transfer took place on the advice of the third parties; that the third parties prepared all the “transactional documents”; that the third parties failed to give advice to Des Pope as to the “propriety” of the Transfer; and that it took place without the third parties recommending to Des Pope that he consult solicitors in relation to the matter.
The Master considered this plea to be deficient because the defendants do not plead with adequate particularity the advice which they allege should have been given nor the person to whom they allege the advice should have been given; do not particularise the “transactional documents”; do not particularise the “propriety” in respect of which advice was required; and do not particularise the purpose for which it would have been appropriate that Des Pope obtain legal advice.
It could be said that some of these matters can be inferred. I also think it likely that if this was the only deficiency in the pleading, there would have been a real question as to whether it warranted refusal of permission to amend. However, in the context of the other identified deficiencies in the pleading, I consider that the Master was correct in regarding these particular deficiencies as also warranting a refusal of leave to amend.
The very general nature of the ASC and, correspondingly, the lack of proper particularisation, is illustrated by the proposed [48]. In [48], the defendants’ plead that:
By reason of the matters pleaded in paragraph 46 above the defendants, to the knowledge of the third parties, relied on the third parties to:
48.1Ensure that any transaction or other matter involving the Pope Family or the Pope Group with which the third parties were concerned pursuant to the Retainer:
48.1.1Did not contravene any applicable laws;
48.1.2Did not expose them to any liability;
48.1.3Did not require independent advice”.
By [48.2], the defendants plead that, to the knowledge of the third parties, they also relied upon the third parties to give them advice to the same effect.
Amongst other things, the assertion of a duty in the third parties to ensure that any transaction did not require independent advice is, at the least, unusual. That unusualness by itself underlines the requirement for proper particularisation.
For the present purposes, it is the link between [48] and [46] which is to be noted. The reliance of Des Pope, the Pope Family and the Pope Group is said to arise by reason of matters pleaded in [46]. However, [46] in turn commences with the words “by reason of”. It thereby incorporates by reference “the nature of the professional accounting and business services provided by the third parties to Des Pope, the Pope Family and the Pope Group pursuant to the Retainer” (presumably the services pleaded in [18]) and the matters pleaded in [21]-[23] inclusive.
Thus, by a series of inter-connected pleas the defendants assert that because of the provision of services of a seemingly conventional accounting kind together with advice of a general accountancy, financial, commercial and business kind, the third parties knew that the defendants relied on them to ensure that any transaction or other matter involving the Pope Family or the Pope Group with which the third parties were concerned pursuant to the retainer did not contravene any applicable laws, did not expose them to any liability and did not require independent advice. This is a wide-ranging duty. When it is stated in this way, it can be seen that the ASC does not contain a sufficient pleading of the material facts from which the reliance pleaded in [48] could reasonably arise.
I agree that this may be a matter which could be left to trial so that, subject to the trial Judge taking a contrary view, the defendants would be precluded from adducing evidence of any other matter to support the evidence of such a wide-ranging, and in some respects unusual, duty. However, the Master considered that [46] was inadequately pleaded. I agree with that conclusion and consider also that [48] suffers from the same defect.
Conclusion
For the reasons given above, I dismiss the appeal.
I will remit the matter to the Master for him to determine whether the defendants should be given a further opportunity to put their statement of claim against the third parties into proper form. If the defendants are given that opportunity, it would be appropriate, in my respectful opinion, for them to commence their pleading against the third parties afresh. That should occur after the defendants have identified the particular loss or detriment in respect of which they seek relief from the third parties; the manner in which they assert that loss or detriment results from some action or omission of the third parties; the elements of each cause of action upon which they rely; and the material facts which must be proved in order to establish those causes of action.
I will hear the parties as to costs.