Rasch Nominees Pty Ltd v Bartholomaeus - [2009] SASC 87

SUPREME COURT OF SOUTH AUSTRALIA
(Applications Under Various Acts or Rules: Civil)
RASCH NOMINEES PTY LTD & ANOR v BARTHOLOMAEUS & ORS
[2009] SASC 87
Judgment of The Honourable Justice Bleby
3 April 2009
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PLEADINGS
TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION - PROCEDURE - PLEADINGS
REAL PROPERTY - TORRENS TITLE - INDEFEASIBILITY OF TITLE - EXCEPTIONS TO INDEFEASIBILITY - IN PERSONAM EXCEPTION
Application by first and second defendants to dismiss proceedings brought by second plaintiff or, alternatively, to strike out portions of statement of claim – first plaintiff entered into contract with first and second defendants to purchase land but land was not transferred to first plaintiff – land transferred to another party - second plaintiff claims to be the intended lessee of the land after its transfer to first plaintiff – plaintiffs plead various causes of action – first plaintiff seeks various remedies – second plaintiff seeks damages only.
Whether second plaintiff can sustain claim for fraud within the meaning of Real Property Act 1886 (SA) s 69(a) – s 69(a) does not create a cause of action for which damages are a remedy – second plaintiff’s claim under s 69(a) cannot succeed.
Whether second plaintiff’s claim based on Trade Practices Act 1974 (Cth) s 52 should be struck out – not pleaded that alleged misleading representation was communicated to, or relied upon by, second plaintiff – not necessary for person claiming remedies for breach of s 52 to be the person to whom the representation was made – plea not struck out.
Second plaintiff pleads unconscionable conduct by first and second defendants – not pleaded that second plaintiff was in any relationship of special disadvantage with defendants – not pleaded that defendants knew of existence of second plaintiff – pleas of unconscionable conduct at common law and under Trade Practices Act 1974 (Cth) s 51AA struck out.
Second plaintiff sought to argue that first and second defendants were vicariously liable to second plaintiff by virtue of alleged breach of duty by first and second defendants’ solicitors – no plea that first and second defendants owed second plaintiff a duty of care – statement of claim pleads breach of primary duty owed by solicitors to plaintiffs – plea does not amount to a plea that first and second defendants are vicariously liable to second plaintiff.
Whether pleading of fraud within the meaning of Real Property Act s 69(a) gives rise to any cause of action by first plaintiff – s 69(a) provides a foundation for an order for rectification of the register – alleged involvement of first and second defendants in transfer of property capable of amounting to fraud within the meaning of s 69(a) – plea not struck out – plea of fraud sufficient to found a reasonable cause of action.
Whether pleas based on s 51AA and s 52 Trade Practices Act can be made against first and second defendants, being natural persons and not corporations – plaintiffs plead that first and second defendants participated in transfer of property to another party utilising telephonic and postal services within the extended operation provisions of s 6 Trade Practices Act – plea not struck out.
Whether plea that first and second defendants were knowingly concerned in or party to contraventions of Trade Practices Act by parties to whom land was transferred should be struck out – plaintiffs plead misrepresentation and misleading conduct by transferee towards first and second defendants – plaintiffs also plead that first and second defendants represented that they were able to transfer land to first plaintiff and later became involved in transfer to other party – sufficient for the purposes of Trade Practices Act s 75B to plead that first and second defendants had knowledge of the essential matters which make up the contravention – plea not struck out.
First and second defendants complain of lack of clarity in statement of claim in which certain matters are pleaded in a rolled-up manner relating to both plaintiffs and all defendants – specific conduct not related to particular defendants – statement of claim not struck out – plaintiffs to recast statement of claim in terms which does not plead causes of action by a particular plaintiff against particular defendants which cannot be justified.
Supreme Court Civil Rules 2006 (SA) rr 98, 104, 193; Real Property Act 1886 (SA) s 69(a); Trade Practices Act 1974 (Cth) ss 6, 51AA, 52, 75B, 80, 84, 87, 163A, referred to.
Janssen-Gilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301; Bahr v Nicolay (No 2) (1988) 164 CLR 604, applied.
Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248; Kabwand Pty Ltd v National Australia Bank Ltd (1989) 11 ATPR 40-950; Tara Shire Council v Garner (2003) 1 Qd R 556, discussed.
Australian Guarantee Corporation Ltd v DeJager [1984] VR 483; Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (in liq) (2003) 214 CLR 514; Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301, considered.

RASCH NOMINEES PTY LTD & ANOR v BARTHOLOMAEUS & ORS
[2009] SASC 87
Civil
BLEBY J.
Introduction

This is an application by the first and second defendants pursuant to r 193 of the Supreme Court Civil Rules 2006 (SA) to dismiss the proceedings brought by the second plaintiff against them or alternatively to strike out, pursuant to r 104, certain portions of the plaintiffs’ amended statement of claim insofar as it relates to a claim by the second plaintiff against them.
Pursuant to r 104 of the Supreme Court Civil Rules they also apply to strike out portions of the amended statement of claim in any event.
The plaintiffs’ statement of claim
The subject of the application is the amended statement of claim filed by the plaintiffs on 21 July 2008. In the proceedings it is admitted that, on 31 October 2005 the first plaintiff, Rasch Nominees Pty Ltd (“Rasch”) entered into a contract with the first and second defendants, Brian Norman Bartholomaeus and Jean Edna Bartholomaeus, (“the Bartholomaeuses”) to purchase the land comprised in Certificates of Title Register Book Volume 5626 Folios 625, 626 and 627, known as 1, 3 and 5 Oborn Road, Mount Barker (“the land”). The purchase price stipulated in the contract was $1.25m. The plaintiffs claim that the Bartholomaeuses are in breach of their contract in failing to transfer the land to Rasch in accordance with the requirements of the contract.
The plaintiffs also plead that the third defendant, Mount Barker Properties Pty Ltd (“MBP”) and the fourth defendant, Jondam Pty Ltd (“Jondam”), by stealth, through what is described in the pleadings as “the Transfer Deal”, obtained title to portion of the land and thereby defeated Rasch’s contractual rights. They allege that this was done with the assistance of the Bartholomaeuses and of the fifth defendant, Mr Hone, a director of MBP and a director and shareholder of Jondam, and the sixth defendant, the Bartholomaeuses’ solicitors, also acting as their agents. An outline of the various causes of action pleaded against those defendants, to the extent necessary for the resolution of this application, appears below. In addition, it is alleged against the seventh defendant, the solicitors for Rasch, that they ought to have advised Rasch to lodge caveats or to take such other steps as would have prevented loss and damage to, and to protect, Rasch’s interests prior to the giving effect of the Transfer Deal.
Except to the extent indicated below, I am not concerned in these proceedings with the pleadings against any of the defendants other than the Bartholomaeuses, as the application is only brought by them.
The second plaintiff is the South Australian Potato Company Pty Ltd (“SAPC”). SAPC was not a party to the contract for sale and purchase of the land. In paragraph 2.3 of the statement of claim it is alleged that SAPC was the intended lessee of the land after transfer of it to Rasch. No particulars are given as to how such intention may be inferred. By paragraph 2.4 it is alleged that SAPC has suffered and continues to suffer loss and damage by reason of conduct engaged in by the Bartholomaeuses, MBP and Jondam as particularised in the statement of claim.
The plaintiffs plead the conduct of the various defendants in entering into the Transfer Deal, the detail of which it is not necessary to describe for present purposes.
Paragraph 20 of the statement of claim alleges that at all material times Rasch and SAPC were in a position of vulnerability to any conduct by the defendants that would be contrary to Rasch’s rights and interest in the land. Particulars are given.
Paragraph 21 pleads unconscionable conduct on the part of MBP and Hone, and that the entry into the Transfer Deal constituted misleading and deceptive conduct, misrepresentation as to their rights and of the facts, false representations in respect of the land and unconscionable conduct. The plaintiffs allege that it was unconscionable for the Bartholomaeuses, as trustees of Rasch’s equitable estate in the land, to act contrary to the representations made by their conduct in executing the contract with Rasch. They did so by entering into the Transfer Deal and giving effect to it. The defendants are also alleged to be guilty of fraud within the meaning of s 69(a) of the Real Property Act 1886 (SA).
Paragraph 22 of the statement of claim pleads a breach of the contract between the Bartholomaeuses and Rasch. Paragraph 23 of the statement of claim pleads misleading and deceptive conduct on the part of the defendants, fraudulent conduct under s 69(a) of the Real Property Act and unconscionability.
Paragraph 24 pleads that but for the conduct of the defendants Rasch would have become the registered proprietor of the land and would have had the opportunity (among other things) to grant a lease to SAPC and to develop the land. SAPC would then have had opportunity to increase its profit through its use of the land, and Rasch and SAPC would not have suffered loss and damage resulting from the Transfer Deal.
Paragraph 25 of the statement of claim pleads the remedies to which Rasch is said to be entitled. These include declarations that Rasch is entitled to a correction of the Register Book and to specific performance of the contract compensation under s 74 of the Trade Practices Act 1974 (Cth), and damages.
Paragraph 26 pleads that in the event that Rasch is not granted relief by which it is able to obtain title to the land, it and SAPC have suffered loss and damage by reason of the conduct comprised in and relating to the Transfer Deal.
Paragraph 27 is a plea against the solicitors for the Bartholomaeuses in that they knew that if the Transfer Deal was given effect, it would cause Rasch and SAPC loss, damage and economic harm, and that they owed Rasch and SAPC a common law duty of care. Paragraph 28 pleads a breach of that duty. There is no specific plea of vicarious liability on the part of the Bartholomaeuses for the acts of their agents other than by way of implication from paragraph 6.1.3 where it is alleged that the solicitors were at all material times “agents through whom the Bartholomaeuses transacted the Transfer Deal, including within the meaning of s 84 of the Trade Practices Act”. I will return to the question of vicarious liability later in these reasons.
Paragraph 29 pleads inducement of breach of contract by MBP, Jondam and Mr Hone, while paragraph 30 is a specific plea against Rasch’s solicitors.
Paragraph 31 pleads that by reason of the matters pleaded in the previous paragraphs Rasch and SAPC have suffered loss and damage.
The claims by SAPC against the Bartholomaeuses
In paragraphs 21-24 inclusive of the statement of claim there are causes of action pleaded which, on their face, are causes of action on which SAPC, as one of the plaintiffs, relies. In brief, those causes of action are:
·Fraudulent conduct under s 69(a) of the Real Property Act;
·Misleading and deceptive conduct under s 52 of the Trade Practices Act;
·Unconscionable conduct under s 51AA of the Trade Practices Act and at common law; and
·Breach of contract.
Paragraph 25 of the statement of claim alleges that in the premises of the matters pleaded in paragraphs 21-24, Rasch is entitled to certain declaratory relief set out in paragraph 25.1. In paragraph 25.2 it is alleged that Rasch is entitled to orders pursuant to ss 80 and 87 of the Trade Practices Act to give effect to Rasch’s rights as declared pursuant to s 163A of the Trade Practices Act, and in paragraph 25.3 Rasch claims an entitlement to compensation pursuant to s 87 of the Trade Practices Act. Although the internal numbering of paragraph 25 is slightly confusing, it claims “further and in the alternative” that Rasch and SAPC be awarded damages “under the Trade Practices Act, in equity or otherwise at common law”.
As mentioned above paragraphs 27 and 28 plead a duty of care by the Bartholomaeuses’ solicitors to the plaintiffs and a breach of that duty. Paragraphs 29 and 30 are not relevant for present purposes, and paragraph 31 alleges that by reason of the matters pleaded in paragraph 22-24 and 27-30 Rasch and SAPC have suffered loss and damage, full particulars of which will be provided by way of an expert’s report.
The remedies sought in Part 2 of the statement of claim repeat the remedies claimed in paragraph 25 together with some consequential orders.
The claim by SAPC is therefore for damages only and, on its face, in respect of the four causes of action pleaded in paragraphs 21-24, and for breach of the duty of care by the Bartholomaeuses’ solicitors pleaded in paragraphs 27 and 28. It is convenient to deal with each of those causes of action in turn.
Fraud under section 69(a) of the Real Property Act
Section 69 of the Real Property Act relevantly provides:
Title of registered proprietor indefeasible, except in cases of—
69.The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible, subject only to the following qualifications:
Fraud
(a) in the case of fraud, in which case any person defrauded shall have all rights and remedies that he would have had if the land were not under the provisions of this Act: Provided that nothing included in this subsection shall affect the title of a registered proprietor who has taken bona fide for valuable consideration, or any person bona fide claiming through or under him;
I agree with the submission of the Bartholomaeuses that s 69(a) does not create a cause of action for which damages are a remedy. The High Court said of that section in Bank of South Australia Ltd v Ferguson:[1]
[The section] operates to qualify the general principle of indefeasibility only if the case answers the statutory description of “fraud”. Not all species of fraud which attract equitable remedies will amount to fraud in the statutory sense. The distinction may be illustrated as follows. In some circumstances, equity subjects the interest of a purchaser of unregistered land to an antecedent interest of which the purchaser has notice. However, in respect of land to which the Act applies, registration of a transfer is not fraudulent in the statutory sense required to qualify the operation of the doctrine of indefeasibility, merely because the transferee knows that registration will defeat an antecedent unregistered interest of which the transferee has notice.[2]
The points of significance for the present litigation are that (i) statutory fraud embraces less, not more, than the species of fraud which, at general law, founds the rescission of a conveyance; and (ii) statutory fraud is not itself directly generative of legal rights and obligations, its role being to qualify the operation of the doctrine of indefeasibility upon what would have been the rights and remedies of the complainant if the land in question were held under unregistered title.
[1] [1998] HCA 12, [10]-[11], (1998) 192 CLR 248, 255-256.
[2] Bahr v Nicolay (No 2) (1988) 164 CLR 604, 652-653.
While it may give rise to a right to Rasch to have registered on the title its allegedly prior interest in the land as a result of its contract with the Bartholomaeuses, the section does not give rise to a claim for damages to Rasch or to SAPC. The plaintiffs have not pleaded common law fraud against the defendants, for which damages might be a possible remedy. As damages is the only remedy claimed by SAPC, to the extent that SAPC is included in this cause of action it cannot succeed as against the Bartholomaeuses.
Misleading and deceptive conduct
The relevant plea against the Bartholomaeuses is contained in paragraph 23.1 of the statement of claim. It alleges that by entering into the Transfer Deal they engaged in conduct that was misleading and deceptive or likely to mislead and deceive in contravention of s 52 of the Trade Practices Act in that:
23.1.1at the time of entry into the Contract, the Bartholomaeuses warranted and represented by their conduct that they had good title to the fee simple in the Land that they were able to were able to transfer to Rasch and that they would so transfer such title in accordance with the terms of the Contract;
There is no express plea that the alleged representation was false. There is no plea that it was communicated to SAPC or that SAPC in some way relied on it.
Section 52 of the Trade Practices Act relevantly provides:
(1)A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
By s 6 of the Trade Practices Act the operation of that section is extended to a person not being a corporation where the conduct involves the use of postal, telegraphic or telephonic services. I assume, for present purposes, that the conduct pleaded against the Bartholomaeuses does involve such use, although that is an issue which needs to be addressed in respect of another aspect of the Bartholomaeuses’ application.
The Bartholomaeuses rely on a dictum of Lockhart J in Kabwand Pty Ltd v National Australia Bank Ltd[3] where the plaintiffs had alleged misleading and deceptive conduct on the part of a bank in relation to the purchase by them of a business. In delivering the judgment of the Full Court of the Federal Court Lockhart J said:[4]
A finding that conduct is misleading or deceptive will not necessarily result in an applicant being entitled to recover damages, for sec. 52 of the Act does not itself provide a remedy in damages; that remedy is to be found in sec. 82 and 87 of the Act. The right to damages arises where the applicant to the Court has suffered loss or damages “by” the conduct that was in contravention of sec. 52. The relationship between the damages and the impugned conduct is expressed in the word “by” which signifies no more than that the loss or damage has to have been brought about by virtue of the conduct which is in contravention of sec. 52.
… For present purposes it is sufficient to say that a person claiming damages must show either that he has been induced to do something or to refrain from doing something which gives rise to damage or has been influenced to do or refrain from doing something giving rise to damage by the conduct contravening sec. 52.
That dictum was appropriate to the circumstances of that case.
[3] (1989) 11 ATPR 40-950.
[4] Ibid 50, 378.

However, s 52, aided by s 82 of the Trade Practices Act has a wider operation. In Janssen-Gilag Pty Ltd v Pfizer Pty Ltd[5] it was held that where a corporation engages in conduct which misleads consumers and the natural and direct result is to cause the public to buy more of that trader’s product and less of a rival trader’s product, the loss to the rival is recoverable under s 82 even though the rival was not misled by the conduct. On that occasion Lockhart J said:[6]
Whilst the applicant's loss or damage must be caused by the respondent's misleading or deceptive conduct, I see nothing in the language of the Act or its purpose to warrant the suggestion that the right of an applicant for damages under s 82 is confined to the case where he has relied upon or personally been influenced by the conduct of the respondent which contravenes the relevant provision of Pt IV or Pt V of the Act. Examples abound to prove the point, but it is sufficient if I take one simple case. A manufacturer of, say, leather goods may have established over many years a large and valuable reputation amongst the public or a significant section of the public. The respondent may commence to carry on the business of manufacturing leather products under a name deceptively similar to that of the applicant and by which the applicant's goods are known. Members of the public may be misled into believing that the respondent's business is the business of the applicant or associated with the business of the applicant and they may take their business to the respondent. The applicant has not relied on any representation of the respondent or been misled or deceived by it, but his loss is the loss of business occasioned directly by the respondent's conduct (or the consequent loss of profit). I can conceive of no reason why the Act, which is designed to foster and promote competition and, by Pt V, to prevent misleading or deceptive conduct, should be given a restrictive interpretation in s 82 such that only persons who relied upon the representation are entitled to recover loss or damage from the respondent. The evident purpose of the Act leads in my opinion plainly to a different conclusion.
[5] (1992) 37 FCR 526.
[6] Ibid 530-531.
There may well be questions of causation and remoteness which arise, but it is not necessary that the person to whom the representation is made is the one that suffers loss. I am therefore not prepared to strike out the claim of SAPC insofar as it is based on an alleged breach by the Bartholomaeuses of s 52 of the Trade Practices Act.
The pleas of unconscionable conduct
Paragraph 23.5 of the statement of claim, with the exception of one sub-paragraph only, pleads conduct by the Bartholomaeuses in relation to Rasch alone. Even the exception in paragraph 23.5.4 does not plead any unconscionable conduct in relation to SAPC.
In Australian Competition and Consumer Commission v Samton Holdings Pty Ltd[7] the Full Court of the Federal Court noted the type of cases which attract the language of unconscionability. They said:[8]
[7] [2002] FCA 62, (2002) 117 FCR 301.
[8] Ibid [47], 318.
Four classes of case attracting the application of the language of unconscionability are described in Laws of Australia, Vol 35, Unfair Dealing, 35.5 Notion of Unconscionability [1]-[38]:
(i)    Exploitation of vulnerability or weakness;
(ii)     Abuse of position of trust or confidence;
(iii)     Insistence upon rights in circumstances which make that harsh or oppressive;
(iv)    Inequitable denial of legal obligations.
These are said to be supported by three broad standards:
(i)    That those in positions of strength or influence should not take advantage of another's relative weakness.
(ii)     That people should not, by appeal to strict legal rights, cause hardship to others by violating their reasonable expectations.
(iii)     That those in fiduciary positions should act only in the interests of those to whom those fiduciary duties are owed.
Each of those classes requires a party, who is not necessarily in a contractual relationship with the defendant, but who is at least within the sphere of knowledge of the defendant and in some form of relationship with the defendant. The Court continued:[9]
[9] Ibid [48], 318.
Under the rubric of unconscionable conduct, equity will:
(i)    Set aside a contract or disposition resulting from the knowing exploitation by one party of the special disadvantage of another. The special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education – Commercial Bank of Australia Ltd v Amadio [(1983) 151 CLR 447]. Or it may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on the other – Louth v Diprose [(1992) 175 CLR 621]; Bridgewater v Leahy (1998) 194 CLR 457.
(ii)     Set aside as against third parties a transaction entered into as the result of the defective comprehension by a party to the transaction, the influence of another and the want of any independent explanation to the complaining party – Garcia v National Australia Bank Ltd (1988) 194 CLR 395.
(iii)     Prevent a party from exercising a legal right in a way that involves unconscionable departure from a representation relied upon by another to his or her detriment – Waltons Stores (Interstate) Ltd v Maher [(1988) 164 CLR 387]; Commonwealth v Verwayen [(1990) 170 CLR 394].
(iv)    Relieve against forfeiture and penalty – Legione v Hateley [(1983) 152 CLR 406]; Stern v McArthur [(1988) 165 CLR 489].
(v)     Rescind contracts entered into under the influence of unilateral mistake – Taylor v Johnson [(1983) 151 CLR 422].
[Emphasis added].
It will be noted that in each of those situations there is a party to a transaction with the defendant or a knowing exploitation by one party of the special disadvantage of another.
It is not pleaded in the statement of claim that SAPC is in any such relationship with the Bartholomaeuses or with any other defendant. It is not even pleaded that the Bartholomaeuses knew of the existence of SAPC. In those circumstances the pleading by SAPC against the Bartholomaeuses, insofar as it includes a claim for unconscionability at common law must be struck out.
The same applies to the pleading of unconscionability under s 51AA of the Trade Practices Act. Section 51AA prohibits conduct that is “unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories”. Of that section the Court said in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd:[10]
Ultimately the language of s 51AA requires identification of conduct able to be characterised as unconscionable in a sense known to the unwritten law. In the context of that law as it presently stands, unconscionable conduct is that which supports the grant of relief on the principles set out in specific equitable doctrines. Five categories of case are set out above. As was said of s 51AA in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 509:
"[It] prohibits conduct in respect of which a judge in equity would have been prepared to grant relief. The imposition of the prohibition precedes any actual or notional judicial decision. The judge deciding a case under s 51AA will be asking himself or herself whether he or she would have been prepared to grant relief at equity on the basis of an assessment of the conduct in question as unconscionable."
Although the application of the principles in that case to a particular circumstance of special disadvantage on the part of a shopping centre tenant was overturned by a Full Court the principles were not impugned – see CG Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission [(2003) 214 CLR 51].
On that basis, the claim based on s 51AA must be struck out for the same reasons as the claim based on unconscionability at common law.
[10] Ibid [49], 318-319.
Breach of contract
The plaintiffs conceded that there was no alleged privity of contract between SAPC and the Bartholomaeuses and that, accordingly, there could be no award of damages in favour of SAPC against the Bartholomaeuses for breach of the contract between the Bartholomaeuses and Rasch. It follows that, insofar as the pleadings include a claim for damages by SAPC on that ground, the pleading must be struck out.
Breach of a duty of care
The plaintiffs sought to justify the retention of SAPC as a party who had a cause of action against the Bartholomaeuses by suggesting that the pleas contained in paragraphs 27 and 28 of the statement of claim, namely the existence and breach of a duty of care to SAPC by the Bartholomaeuses’ solicitors was, in effect, a plea of vicarious liability to SAPC by the Bartholomaeuses. I reject that contention.
Paragraphs 6.1.3 and 6.1.4 of the statement of claim allege that the solicitors were agents through whom the Bartholomaeuses transacted the Transfer Deal and were themselves parties to contravention to the Trade Practices Act by participating in the Transfer Deal. The conduct pleaded in relation to the Transfer Deal is deliberate conduct on the part of the Bartholomaeuses and their solicitors acting as their agent. There is no plea that the Bartholomaeuses owed SAPC a duty of care or that there was any breach by them or by agents on their behalf of any such duty.
The duty of care pleaded in paragraph 27 of the statement of claim is a primary duty owed by the solicitors to Rash and SAPC. The breach pleaded in paragraph 28 is a breach of that primary duty of care. As pleaded, the agency of the solicitors relates only to the conduct of the Bartholomaeuses as pleaded, and that does not allege a duty of care or breach of such duty on their part. Paragraphs 27 and 28 are therefore pleas of a discrete cause of action by Rasch and SAPC against the solicitors and not in their capacity as agents for the Bartholomaeuses such as to render the Bartholomaeuses vicariously liable for that breach.
Other alleged defects in the statement of claim
The s 69(a) fraud pleading
The Bartholomaeuses argue that s 69(a) of the Real Property Act does not give rise to any cause of action, even by Rasch, against the Bartholomaeuses. The essence of the plea of fraud by Rasch is that the participation of the various defendants, including the Bartholomaeuses, in the Transfer Deal constituted fraud for the purposes of s 69(a) of the Real Property Act. The participation of the Bartholomaeuses is pleaded in paragraphs 21.6-21.9, 23.4 and 25.1.2 of the statement of claim.
In Bank of South Australia Ltd v Ferguson[11] the High Court said of s 69(a):[12]
The legislation thus recognises the principle, propounded in an established line of cases dealing with Torrens system legislation, that an equity arising from the conduct of a registered proprietor before or after registration may be enforced against that registered proprietor notwithstanding the indefeasibility of registered titles.[13]
[11] [1998] HCA 12, (1998) 192 CLR 248.
[12] Ibid [9], 255.
[13] Bahr v Nicolay (No 2) (1998) 164 CLR 604, 612-614, 637-638, 653-654.
In Bahr v Nicolay (No 2)[14] Mason CJ and Dawson J said that the equivalent sections of the Transfer of Land Act 1893 (WA) “give expression to, and at the same time qualify, the principle of indefeasibility of title”.[15] They went onto say:[16]
Neither the two sections nor the principle of indefeasibility precludes a claim to an estate or interest in land against a registered proprietor arising out of the acts of the registered proprietor himself: Breskvar v. Wall. Thus, an equity against a registered proprietor arising out of a transaction taking place after he became registered as proprietor may be enforced against him: Barry v. Heider . So also with an equity arising from conduct of the registered proprietor before registration (Logue v. Shoalhaven Shire Council), so long as the recognition and enforcement of that equity involves no conflict with ss. 68 and 134. Provided that this qualification is observed, the recognition and enforcement of such an equity is consistent with the principle of indefeasibility and the protection which it gives to those who deal with the registered proprietor on the faith of the register.
There is no fraud on the part of a registered proprietor in merely acquiring title with notice of an existing unregistered interest or in taking a transfer with knowledge that its registration will defeat such an interest: Mills v Stokman; Waimiha Sawmilling Co. v. Waione Timber Co. The decision in Waimiha Sawmilling merely gives effect to s. 134 by excluding from the statutory concept of fraud an acquisition of title with notice of any trust or unregistered interest. However, Lord Buckmaster in expressing the reasons for the decision went rather further when he reproduced the following passage of the remarks of Lord Lindley in the earlier decision (Assets Co. Ltd. v. Mere Roihi): "Fraud ... means actual fraud, dishonesty of some sort, not what is called constructive or equitable fraud ... " Lord Buckmaster went on to instance, as examples of fraud, the transfer whose object is to cheat a man of a known existing right and a deliberate and dishonest trick causing an interest not to be registered.
These comments do not mean all species of equitable fraud stand outside the statutory concept of fraud. Far from it. In Latec Investments Ltd. v Hotel Terrigal Pty. Ltd. (In liq.), Kitto J. held that a collusive and colourable sale by a mortgage company to its subsidiary was a plain case of fraud. According to his Honour, "[t]here was pretence and collusion in the conscious misuse of a power", this being a "dishonest course". Likewise, in Loke Yew v. Port Swettenham Rubber Co. Ltd., Lord Moulton instanced the case of an agent who has purchased land on behalf of his principal but has taken the conveyance in his own name, and in virtue thereof claims to be the owner of the land, though he is in law a trustee for his principal. It seems that his Lordship did not intend to make this illustration as an example of the statutory concept of fraud. His Lordship had earlier dealt with the issue of fraud and indefeasibility and was, when instancing the acquisition of title by an agent, propounding another answer based on the power and duty of the Court to rectify the register: see the analysis of Loke Yew by Starke J. in Stuart v. Kingston. Despite this, the example given by Lord Moulton is in our view an instance of fraud within the meaning of s 68.
According to the decisions of this Court actual fraud, personal dishonesty or moral turpitude lie at the heart of the two sections and their counterparts: see Butler v. Fairclough; Stuart v. Kingston. [Footnotes omitted].
Section 69(a) will therefore provide a foundation for an order for rectification of the register where fraud is established.
[14] (1998) 164 CLR 604.
[15] Ibid 613.
[16] Ibid 613-614.
Although the Queensland legislation is in slightly different form in prescribing that a registered proprietor does not enjoy indefeasibility in respect of “an equity arising from the act of the registered proprietor”, the case of Tara Shire Council v Garner,[17] is instructive. The Court held that the recipient was liable if he or she had knowledge at the time of receipt that the property was trust property that was being misapplied, and that a person knowingly receiving and retaining misapplied trust property could give rise to an equity in favour of the beneficiary, enforceable against the registered proprietor despite his registered title. In the course of his judgment, Atkinson J said:[18]
[If] … there is an equity arising from the act of the registered proprietor, Arcape, that equity would be sufficient to overcome the indefeasible title that Arcape would otherwise enjoy, in the sense that Arcape’s title would be subject to the interest held by the Council. It is not sufficient that the Council is able to show an equity arising from the act of the previous registered proprietors, the Garners. It must arise from the act of the present registered proprietor, Arcape.
This principle recognises the in personam exception to indefeasibility. As Wilson and Toohey JJ. recognised in Bahr v. Nicolay [No 2] (1988) 164 CLR 604, 638, indefeasibility does not protect a registered proprietor from the consequences of his or her own actions where those actions give rise to a personal equity in another.
[17] [2002] QCA 232, (2003) 1 Qd R 556.
[18] Ibid [52]-[53], 572.
In this case Rasch seeks a remedy against the present registered proprietors of the land, not the Bartholomaeuses. However, to the extent that it is alleged that they were parties to the Transfer Deal which is said to have deprived Rasch of what would otherwise be its registered interest in the land, the Bartholomaeuses are appropriately parties to that action as having participated in or facilitated or assisted the perpetrator of the alleged fraud, as that in itself will constitute fraud.[19] The Bartholomaeuses must therefore fail on this aspect of their application.
[19] Australian Guarantee Corporation Ltd v DeJager [1984] VR 483.
Adequacy of the pleading of fraud
The Bartholomaeuses complain that the pleading of fraud against them is inadequate. They complain that the pleading merely pleads a representation that they had accepted the election of MBP not to exercise any rights under the right of refusal which that company had, and represented to Rasch that no such rights existed, and the unconscionable entering into by them of the Transfer Deal.
There is no doubt that fraud must be pleaded clearly, specifically and with detailed particulars.[20] If the particulars are sufficient to found a reasonable cause of action, they will suffice, and it is only necessary to plead material facts, rather than the evidence required to establish them.[21] The allegation of the plaintiff is that the Bartholomaeuses gave effect to the scheme of the Transfer Deal by giving title to portions of the land to MBP, notwithstanding its knowledge of Rasch’s equitable interest in the land and the fact that the Bartholomaeuses held the land on trust for Rasch. It does not really matter whether the Bartholomaeuses knew that the representation they allegedly made was false at the time it was made or that they later discovered it to be false but refrained from correcting it. In my opinion the pleading is adequate.
[20] Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (in liq) [2003] HCA 25, [38], (2003) 214 CLR 514, 534.
[21] Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301, 303-304.
The pleas based on ss 52 and 51AA of the Trade Practices Act
The Bartholomaeuses are individual persons. They are not corporations for the purposes of ss 52 and 51AA of the Trade Practices Act. Section 6(3) of the Act extends the operation of those sections to persons not being a corporation to the extent that the conduct in question involves the use of postal, telegraphic or telephonic services. The Bartholomaeuses complain that there is no such plea against them and that the pleading should therefore be struck out.
Paragraph 3.5 of the statement of claim pleads that, as further pleaded and particularised later in the statement of claim, the Bartholomaeuses were participants in the Transfer Deal “utilising telephonic and postal services within the extended operation provisions of s 6” of the Trade Practices Act. Paragraph 18.23 of the statement of claim further particularises the use of postal and telephonic services by the solicitors for the Bartholomaeuses and on their behalf.
Whether the use of those services was material to the conduct pleaded against the Bartholomaeuses will depend on the evidence at the trial. Whether further particulars should be sought or given is not a matter for present consideration. However, the pleading is adequate and should not be struck out.
The plea based on s 75B of the Trade Practices Act

Paragraph 3.4 of the statement of claim pleads that insofar as either MBP or Jondam or either of them contravened the provisions of Part IVA or Part V of the Trade Practices Act by participating in the Transfer Deal, the Bartholomaeuses were directly or indirectly, knowingly concerned in or party to any such contravention within the meaning of s 75B(1) of the Trade Practices Act. However, the Bartholomaeuses complain that the only breaches of Part V of the Act are those pleaded in paragraphs 23.1.2, 23.2 and 23.3. Those paragraphs plead misrepresentations, false representations or misleading conduct by MBP against the Bartholomaeuses. If they were only the pleaded victims of conduct contravening Part V they cannot be said to have knowingly participated in the conduct.
However, that ignores the plea in paragraph 23.1.1 of the statement of claim, namely that the Bartholomaeuses warranted and represented by their conduct that they had good title to the fee simple in the land and that they were able to transfer it to Rasch and that they would so transfer it in accordance with the terms of the sale and purchase contract. It was their later giving effect to the Transfer Deal which constituted the relevant breaches, which were not only breaches in themselves but by which they became knowingly concerned in or party to the contraventions by MPB and Jondam. For the purposes of s 75B(a), knowledge of the essential matters which make up the contravention is sufficient. It is not necessary to prove knowledge that those matters amounted to a contravention.[22]
[22] Yorke v Lucas (1985) 158 CLR 661, 667, 669, 676.
I consider that this part of the application fails.
A rolled-up pleading
The Bartholomaeuses complain, with some justification, of some lack of clarity in paragraph 23 and other paragraphs of the statement of claim which are pleaded in a rolled-up manner relating to both plaintiffs and to all defendants. It does not relate the earlier conduct pleaded to particular defendants. I do not accept the Bartholomaeuses’ submission that it contravenes r 98(2)(c) or (d) of the Supreme Court Rules 2006, namely that it is scandalous, evasive or ambiguous or frivolous or vexatious or an abuse of process, or that it fails to plead such facts as give fair notice of a party’s case at trial. Other paragraphs do plead the relevant particulars.
However, where, as in this case, certain parts of that rolled-up plea purport wrongly to apply to one plaintiff’s claim against two of a number of defendants, the statement of claim may well require significant surgery. I have indicated which causes of action are improperly pleaded by SAPC against the Bartholomaeuses. Paragraph 25 will also need attention to ensure that the remedies claimed by each of the plaintiffs relate to the respective causes of action properly pleaded by them against the Bartholomaeuses and the other defendants.
I am not prepared, at this stage, to strike out the statement of claim. The plaintiffs should be given an opportunity to recast their statement of claim in a manner which does not plead causes of action by a particular plaintiff against particular defendants which cannot be justified. I will therefore hear the parties further as to the precise orders which should be made and as to the costs of the application.