Re Tomi-Sasha Holdings Pty Ltd (rec and mgr appt) (No 3)
[2021] VSC 17
•27 January 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2020 02306
| TOMI-SASHA HOLDINGS PTY LTD (ACN 076 376 308) (RECEIVER AND MANAGER APPOINTED) & ORS (according to the Schedule) | Plaintiffs |
| v | |
| WAYNE ANDREW LESLIE CREWES & ORS (according to the Schedule) | Defendants |
---
JUDGE: | DELANY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 December 2020 |
DATE OF RULING: | 27 January 2021 |
CASE MAY BE CITED AS: | Re Tomi-Sasha Holdings Pty Ltd (rec and mgr appt) (No 3) |
MEDIUM NEUTRAL CITATION: | [2021] VSC 17 |
---
PRACTICE AND PROCEDURE – Applications to strike out pleadings and for particulars in support of allegations as to the defendants’ state of mind – Applications prior to compliance by the defendants with s 26 of the Civil Procedure Act 2010 (Vic) and orders for discovery – Applications dismissed – Trkulja v Google LLC (2018) 263 CLR 149 applied – Uber Australia Pty Ltd v Andrianakis [2020] VSCA 186 applied – Wheelahan v City of Casey (No 12) [2013] VSC 316 cited – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 23.02 – Civil Procedure Act 2010 (Vic), s 26.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr D Clough | Burch + Co Lawyers |
| For the First, Second and Sixth | Mr A Herskope with Mr S Freire | Kalus Kenny Intelex |
| For the Fourth and Fifth Defendants | Mr D Carlile | Fitzpatrick Legal Pty Ltd |
HIS HONOUR:
The applications
Two pleading summonses were returnable before the Court on 10 December 2020; a summons issued by the fourth and fifth defendants (‘the Crewes daughters’) filed 4 December 2020; and a summons, issued by the first, second and sixth defendants, Mr and Mrs Crewes and 3 Stanhope Street Pty Ltd (ACN 155 225 237) (‘the Crewes parties’) filed 9 December 2020, that the statement of claim be struck out, pursuant to r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’); alternatively, that specific paragraphs of the pleading be struck out.
On 4 September 2020, the Court heard an application for the removal of the receiver of Tomi-Sasha Holdings Pty Ltd (Receiver and Manager Appointed) (‘TSH’) in proceeding S ECI 2020 03224, and on 16 September 2020 the Court published reasons.[1] Those reasons identify the parties and issues in this proceeding, S ECI 2020 02306, and the related proceeding, S ECI 2020 03224 and provide background to the current disputes.
[1]Re Tomi-Sasha Holdings Pty Ltd (rec and mgr apptd) (adm apptd) [2020] VSC 595.
The most recent statement of claim that has been filed is dated 23 September 2020.
The pleading summonses were argued by reference to the proposed Amended Statement of Claim (‘PASOC’) dated 7 October incorporating particulars, being the pleading for which the plaintiffs contend. It incorporates all existing particulars, and notes that further particulars may be provided following discovery.[2]
[2]First, second and sixth defendants, Affidavit of Michael Jonathan Kenny, dated 12 October 2020, exhibit ‘MJK-8’.
On 25 September 2020, the Court made Orders for pleadings and for further and better particulars. Defences have now been filed.[3]
[3]The fourth and fifth defendants filed their defence on 12 November 2020. The first, second and sixth defendants filed their defence on 13 November 2020. The first, second and sixth defendants filed a request for further and better particulars on 27 November 2020.
Pursuant to a consent order made 1 June 2020, discovery was to be made as follows:
6. By 4:00pm on Friday, 17 July, each party must make discovery of:
(a)each document referred to in the party’s pleadings or the particulars of the pleadings;
(b)any document which may be produced by the party during evidence at the trial;
(c)any document which may harm the party’s case; and
(d)any document or class of documents which any other party reasonably requests the party to discover.
On 25 September 2020 the time for making discovery in this proceeding was extended until 30 October 2020. There has been no compliance with that order.[4]
[4]Mr Crewes filed an Affidavit of Documents on 2 November 2020 in the related proceeding, S ECI 2020 03224.
In support of their summons the Crewes daughters rely upon an affidavit of Nicole Spence dated 7 December 2020,[5] an outline of submissions dated 26 October 2020 and a further outline dated 12 November 2020. The Crewes parties rely upon affidavits of Michael Jonathan Kenny dated 12 October 2020 and 26 October 2020, upon an outline of submissions dated 12 October 2020 and a supplementary outline dated 26 October 2020.
[5]The affidavit of Nicole Spence was originally dated 26 October 2020 and was re-sworn on 7 October 2020 to rectify an administrative error.
Both applications are opposed by the plaintiffs, TSH and NTM Super Holdings Pty Ltd (‘Receivers’).[6] They rely upon written submissions dated 8 December 2020 and supplementary submissions dated 9 December 2020.[7]
[6]For convenience, the plaintiffs are referred to as the Receivers in this ruling.
[7]The supplementary submissions correct some erroneous paragraph references in the PASOC. The PASOC should be read as amended accordingly.
The pleading complaints
The PASOC makes allegations concerning the validity of eight share transfers concerning Tomi-Sasha Holdings’ (‘TSH’) shares in Millennium Services Group Ltd (‘MIL’). The first transfer of shares sought to be impugned is dated 25 January 2018, and the last such transfer occurred in June 2020. The fifth and sixth transfers which took place on 19 May 2020, were in favour of the two Crewes daughters, Sasha Elma Mort, the fourth defendant, and Tomi Tregent-Crewes, the fifth defendant, and are alleged to have been transfers at an undervalue.
The Crewes daughters make the following specific complaints about the PASOC:
(a) The allegations that each of the daughters was ‘aware’ of the registration and was ‘aware’ that TSH’s shares in MIL were encumbered and/or attached to security interests.[8]
[8]Fourth and fifth defendants, Outline of Submissions on Behalf of the 4th and 5th Defendants in Support of their Application to Strike out the Amended Statement of Claim, dated 12 November 2020 (‘Crewes Daughters’ Submissions’), [10]-[14].
(b) The absence of a plea of any awareness on the part of either of the Crewes daughters of the General Security Agreement (‘GSA’).[9]
[9]Ibid, [15]-[23].
(c) The failure to sufficiently identify the date when it is alleged that shares were transferred to the Crewes daughters at an asserted under-value.[10]
(d) The allegation of knowing assistance in paragraph 79 of the PASOC and the associated allegation of knowledge regarding the GSA.[11]
(e) The conspiracy plea made against the Crewes daughters and others.[12]
[10]Ibid, [24].
[11]Ibid, [25].
[12]Ibid, [26]-[37].
The Crewes parties assert that the PASOC is deficient in the following respects:
(a) The allegations against the Crewes daughters of alleged knowledge that the MIL shares were encumbered, and the allegations that the Crewes daughters were knowingly concerned and engaged in a conspiracy by unlawful means, are not supported by adequate particulars.[13]
[13]First, second and sixth defendants, Crewes Parties’ Outline of Submissions in Support of their Strike Out Application, dated 12 October 2020 (‘Crewes Parties’ Submissions’), [6]-[17].
(b) The misleading and deceptive conduct plea against 3 Stanhope Street Pty Ltd, the sixth defendant to the proceeding, and the corresponding plea against the Crewes daughters.[14]
[14]Ibid, [18].
(c) The conspiracy plea.[15]
[15]Ibid, [19]-[20].
(d) Lack of particularisation for the alleged knowledge of Mrs Crewes of registration.[16]
(e) The plea of ‘facilitation’ of impugned transfers.[17]
(f) The allegation of ‘registration’ of share transfers.[18]
[16]Ibid, [21]-[23].
[17]Ibid, [24]-[26].
[18]Ibid, [27]-[28].
Although the pleading complaints extend to the manner in which the claims are pleaded concerning all eight share transfers, conveniently, the application was argued using the plea concerning the fifth transfer as a template.
Paragraphs 68 to 80 of the PASOC contain the allegations regarding the fifth transfer:
68.As at 18 May 2020 TSH owned 1,550,213 shares in MIL.
69.On 18 May 2020 at about 12:20pm the Receiver and Manager informed the First Defendant of the former’s appointment to TSH.
PARTICULARS
The communication was by telephone.
70.On or after 19 May 2020, TSH registered the transfer of 662,606 of its shares in MIL to the Fourth Defendant (Fifth Transfer).
71.The Fifth Transfer was in breach of the GSA.
72.The shares that are the subject of the Fifth Transfer remain subject to the non-circulating security interest under the GSA.
73.The First Defendant was aware of and/or caused TSH to make the said registration.
PARTICULARS
The First Defendant’s awareness and involvement in the said registration is to be inferred from his signature on the off-market transfer form backdated 24 March 2020 but signed by him on about 18 May 2020, and his role as a director and controlling mind of the First Plaintiff. Further particulars may be provided after discovery.
74.The Second Defendant was aware of and/or caused TSH to make the said registration.
PARTICULARS
The Second Defendant’s awareness and involvement in the said registration is to be inferred from her signature on the off-market transfer form backdated 24 March 2020 but signed by her on about 18 May 2020, and her role as a director and controlling mind of the First Plaintiff. Further particulars may be provided after discovery.
75.The Fourth Defendant was aware:
(a)of the said registration; and
(b)that TSH’s shares in MIL were encumbered and/or attached to security interests.
PARTICULARS
The Fourth Defendant’s awareness of the said registration is to be inferred from her knowledge that TSH owned the shares in MIL that were transferred to her, her signature on the off-market transfer form backdated 24 March 2020 but signed by her on about 18 May 2020, and her relationship with the First and Second Defendants as their daughter. The Fourth Defendant’s awareness that TSH’s shares in MIL were encumbered and/or attached to security interests is to be inferred from her signature on the backdated off-market transfer form, her knowledge of the First and Second Defendants’ roles as the directors and controlling minds of TSH, her knowledge that TSH owned the shares in MIL that were transferred to her, her knowledge of the consideration of the value of the shares, and her relationship with the First and Second Defendants as their daughter. Further particulars may be provided after discovery.
76.The Fifth Transfer was for stated consideration below the market value of the shares.
PARTICULARS
The consideration for the transfer was $133,521. The market value of the shares was about $240,000.
77.The Fourth Defendant did not pay the consideration for the Fifth Transfer.
78.In facilitating the Fifth Transfer, the First Defendant and/or the Second Defendant:
(a)failed to act in good faith in the best interests of TSH, in breach of his/her director’s duties under s 181 of the Corporations Act 2001 (Cth);
(b)improperly used his/her position to gain an advantage for himself/herself or someone else and caused detriment to TSH, in breach of his/her director’s duties under s 182 of the Corporations Act 2001 (Cth);
(c)failed to exercise his/her powers to discharge his/her duties with the degree of care and diligence that a reasonable person would exercise if they were a director of TSH, in breach of his/her director’s duties under s 180 of the Corporations Act 2001 (Cth); and
(d)further and alternatively, each aided, abetted and was knowingly concerned with and assisted the other in the breaches of his/her director’s duties.
PARTICULARS
As to paragraph (b), the advantage was derived by the Fourth Defendant at first instance and then by the Sixth Defendant and the beneficiaries of the Trust. As to paragraph (d), paragraphs 23 and 24 above are repeated. Further particulars of paragraphs (b) and (d) may be provided after discovery.
79.The Fourth Defendant aided, abetted and was knowingly concerned with and assisted the First Defendant and/or Second Defendant in the breaches of his/her director’s duties in relation to the Fifth Transfer.
PARTICULARS
The Fourth Defendant’s knowledge of the First Defendant’s and/or Second Defendant’s breaches of his/her directors’ duties in relation to the Fifth Transfer is to be inferred from her knowledge of the First and Second Defendants’ roles as the directors and controlling minds of TSH, her knowledge that TSH owned the shares in MIL that were transferred to her, her signature on the off-market transfer form, her knowledge of the consideration of the value of the shares, and her relationship with the First and Second Defendants as their daughter.
80.Further and alternatively, the First, Second and Fourth Defendants agreed and had the common intention, by the unlawful means of the breach of the GSA and/or breach of their directors’ duties and/or misleading or deceptive conduct, to engage in the Fifth Transfer as a result of which:
(a)TSH would suffer economic loss; and/or
(b)NTM would suffer economic harm in so far as the value of its security under the GSA would be reduced.
PARTICULARS
The agreement and common intention of the First, Second and Fourth Defendants was for the First and Second Defendants to cause, and for the Fourth Defendant to facilitate, TSH unlawfully to dispose of certain of its shares in MIL, which reduced the value of TSH’s property secured under the GSA and thereby caused economic damage to NTM. Further as to the agreement and intentions of the First and Second Defendants, the particulars in paragraph 4 above are repeated. Further as to the agreement and intention of the Fourth Defendant, the particulars in paragraphs 5 and 79 above are repeated. Further particulars may be provided after discovery.
The Receivers contend that the PASOC as particularised is sufficient to comply with the Rules. During argument it was conceded that the words ‘or misleading or deceptive conduct’ at paragraph 80 of the PASOC (and where they appear in the PASOC concerning other transfers) should be deleted. Those allegations are no longer pressed.[19]
[19]Transcript of Proceedings, Re Tomi-Sasha Holdings Pty Ltd (ACN 076 376 308) (Receiver and Manager Appointed) (Supreme Court of Victoria, Delany J, 10 December 2020) (‘Transcript’), 34.
The Receivers contend in the alternative that if there is a failure to properly particularise alleged states of mind so as to comply with the Rules, that the applications are premature and that any consideration of that aspect of the pleading should await the completion of discovery. In support of that submission, the Receivers rely upon the decisions of the High Court in Trkulja v Google LLC,[20] and of the Court of Appeal in Uber Australia Pty Ltd v Andrianakis.[21] They contend that where the nature of the proceeding is such that only the defendants know the relevant facts, there should not be summary determination of relevant issues, at least until after discovery and, in the words of the High Court in Trkulja, in such circumstances, ‘possibly at all’.[22]
[20][2018] HCA 25; (2018) 263 CLR 149, [39] (‘Trkulja’).
[21][2020] VSCA 186, [37] (‘Uber’).
[22][2018] HCA 25; (2018) 263 CLR 149, [39].
The Receivers rely upon s 26 of the Civil Procedure Act 2010 (Vic) (‘CPA’). Section 26 imposes an overarching obligation upon the parties, including relevantly the defendants, to disclose at the earliest reasonable time after they become aware of the existence of a document which that person considers is, or ought reasonably consider is critical to the resolution of the dispute, to disclose that document to each other party. The overarching obligation imposed by s 26 is an ongoing one for the duration of the proceeding and is expressed not to limit or affect a party’s obligations in relation to discovery.
The defendants did not submit that, so far as there were gaps in particulars in the PASOC of which they make complaint, that they have already complied with their s 26 obligations.
The rule and the authorities relied upon
Rule 23.02 of the Rules is in the following terms:
Striking out pleading
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
As submitted on behalf of the Crewes parties, the statement of claim must set out clearly, not just the bare claim that is made, but also the material facts on which it is based, including facts that, if not specifically pleaded, might take the other party by surprise.[23] It is not sufficient simply to plead a conclusion drawn from unstated facts.[24] Each defendants is entitled to know with clarity the case they must meet.[25]
[23]Crewes Parties’ Submissions, [3], referring to Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41 – 522, 42 – 67; Australian Wool Innovation Ltd v Newkirk [2005] FCA 290, [20]-[26].
[24]Ibid, referring to for example Vo v Nguyen [2013] VSC 304, [40] and the cases cited there.
[25]Banque Commerciale SA (in liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 286.
Dixon J summarised the principles to be applied on an application under rule 23.02, in Wheelahan v City of Casey (No 12).[26] Those principles were adopted by the Court of Appeal in Uber.[27]
[26][2013] VSC 316, [25] (‘Wheelahan’).
[27][2020] VSCA 186, [50].
In Trkulja,[28] on an application to strike out a statement of claim in a defamation proceeding prior to discovery, Keifel CJ, Bell, Keane, Nettle and Gordon JJ observed:
39.… There can be no certainty as to the nature and extent of Google’s involvement in the compilation and publication of its search engine results until after discovery. There are only the untested assertions of Google deponents. Furthermore, until and unless Google files a defence it cannot be known what defences will be taken (whatever Google might now say is its intention regarding the defences on which it will rely). Nor does it profit to conjecture what defences might be taken and whether, if taken, they would be likely to succeed. For whatever defences are taken, they will involve questions of mixed fact and law and, to the extent that they involve questions of fact, they will be matters for the jury.[29] Given the nature of this proceeding, there should have been no thought of summary determination of issues relating to publication or possible defences, at least until after discovery, and possibly at all.[30][31]
[28][2018] HCA 25; (2018) 263 CLR 149.
[29]See, eg, Jones v Skelton [1963] 1 WLR 1362, 1378; [1963] 3 All ER 952, 964; Bellino v Australian Broadcasting Corporation (1996) 185 CLR 183, 198, 200 per Brennan CJ; at 214 per Dawson, McHugh and Gummow JJ; at 238 per Gaudron J.
[30]See Wickstead v Browne (1992) 30 NSWLR 1, 5-6 per Kirby P; affirmed on appeal Wickstead v Browne (1993) 10 Leg Rep SL 2.
In Uber,[32] the Court of Appeal was concerned with a strikeout application in a class action where the pleading included allegations of conspiracy by unlawful means. The Court made a number of observations relevant to the current applications including the following:
[32][2020] VSCA 186.
31. In Dresna Pty Ltd v Misu Nominees Pty Ltd,[33] Weinberg J noted the difference between the two forms of the tort of conspiracy, namely, a conspiracy by unlawful means and a conspiracy by lawful means. A conspiracy by lawful means requires an agreement or combination between two or more persons to perform acts which, although themselves not unlawful, are done with the sole or predominant purpose of injuring the plaintiff.[34] An unlawful means conspiracy requires an agreement or combination to perform unlawful acts with the intention, which need not be the sole or predominant purpose of the conspirators, to injure the plaintiff.[35] Weinberg J emphasised, however, that an unlawful means conspiracy ‘still requires proof of an intention to injure’,[36] and continued:[37]
[33][2003] FCA 1537 (‘Dresna’).
[34]Ibid, [99] (Weinberg J).
[35]Ibid, [99]–[104] (Weinberg J); McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409, 435 [135]; [1999] FCA 1101 (Weinberg J) (‘McKellar’).
[36]Dresna [2003] FCA 1537, [104] (Weinberg J).
[37]Ibid, [107] (Weinberg J), quoting Lonrho Ltd v Shell Petroleum Co Ltd [1981] Com LR 74, [75] (Lord Denning MR) (‘Lonrho’) (emphasis added).
It is generally thought that the correct test of intention in this context is that stated by Lord Denning MR in the Court of Appeal decision in Lonrho Ltd v Shell Petroleum Co Ltd... His Lordship said…:
I would suggest that a conspiracy to do an unlawful act — when there is no intent to injure the plaintiff and it is not aimed or directed at him — is not actionable ... But if there is an intent to injure him then it is actionable. The intent to injure may not be the predominant motive. It may be mixed with other motives ... It is sufficient if the conspiracy is aimed or directed at the plaintiff, and it can reasonably be foreseen that it may injure him, and does in fact injure him.
…
35.Uber’s contentions on ground 1 fail to grapple with the high hurdle it must cross, and the low bar confronting the plaintiff. When a defendant contends that a statement of claim should be struck out because it does not disclose a cause of action it is necessary for a defendant in the position of Uber to establish that it would be futile to allow the statement of claim to go forward, because it raises a claim that has no real prospect of success in the sense of being ‘fanciful’. It follows that, where there is a contentious or debatable point of law which arises on a pleading, it is usually inappropriate for a trial judge or the Court of Appeal to determine the issue on a strike-out application, particularly where the answer may depend upon the factual context.
36.This approach is consistent with that of this Court in CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd[38] and of the High Court in Trkulja v Google LLC.[39] In CA Ballan, this Court emphasised that, although the test for summary judgment has been slightly lessened by the real prospect of success criterion, the High Court cases concerning the previous test nevertheless demonstrate the need for there to be a very clear case indeed, which could not be altered by evidence at trial, before striking out a statement of claim on the basis that it raises a case which would not survive a summary judgment application.[40] In that regard, this Court in CA Ballan spoke in terms that the Court should be mindful that the evidence at trial ‘can shape the case in ways that have not been anticipated despite the best efforts of the litigants and their legal advisors’,[41] and adopted the observations of Whelan JA in Mutton v Baker[42] that:
[38](2017) 55 VR 62; [2017] VSCA 11 (‘CA Ballan’).
[39](2018) 263 CLR 149; [2018] HCA 25 (‘Trkulja’).
[40]CA Ballan (2017) 55 VR 62, 72–3 [24]–[28]; [2017] VSCA 11 (Redlich, Tate and Ferguson JJA).
[41]Ibid, 73 [27].
[42][2014] VSCA 43.
Even if it is said that an issue is purely a question of law, the court should not strike out a claim on this basis if it is conceivable that some factual matter could emerge at trial which might alter the analysis.[43]
[43]CA Ballan (2017) 55 VR 62, 73 [27]; [2017] VSCA 11 (Redlich, Tate and Ferguson JJA) citing Mutton v Baker [2014] VSCA 43, [55] (Whelan JA).
…
43. Putting aside cases where a defendant’s sole or predominant intention was to cause harm to the plaintiff, for example out of spite, hatred or revenge,[44] the requisite mental element of intent has been described as ‘elusive’ where it forms one of several reasons or motives for engaging in the unlawful conduct. In this regard, it is generally accepted that the requisite intent will be established if the plaintiff proves that the unlawful conduct was, at least in part, ‘aimed or directed at the plaintiff’.[45] While this manner of proving intent has been described as ‘perhaps difficult to apply in some cases’,[46] it is accepted as a necessary control mechanism ‘to keep liability within reasonable grounds’,[47] in the sense that it ‘prevents claims by those who suffer incidental, though foreseeable, loss as a result of the commission of what is sometimes described as an “undirected” crime’[48] or ‘undirected [unlawful] conduct’.[49] Further, it is accepted that the intent to injure is sufficient if it is directed towards all members of an identifiable class of persons, including the plaintiff.[50]
…
53.In a similar vein, his Honour noted that, in considering pleading objections on the ground that the pleading is embarrassing, the Court should stand back and consider the pleading as a whole and in that light ask: does the case alleged give clear notice of the case to be met at trial?[51]
…
57.Moreover, as noted by the primary judge,[52] in considering whether to strike out a statement of claim as embarrassing, the Court should keep steadily in mind that there are other interlocutory processes subsequent to the pleadings (especially discovery) which continue to perform and progress the function of informing the other side of the case to be met at trial. Thus, even if a defendant simply denies an allegation and puts a plaintiff to proof of it, rather than pleading a positive case as to what the true facts are, the defendant’s discovery may well reveal the truth and enable the plaintiff to fill any gaps in the statement of claim which are beyond its knowledge.
…
59.First, Uber contends that the allegations of agreement or combination in paragraphs 76 and 77 of the statement of claim are simply a ‘rolled-up’ conclusion based on the facts and matters alleged elsewhere in the statement of claim. That may be so. But in our opinion, a reading of the identified allegations in the context of the statement of claim as a whole, discloses a clear case that specific Uber entities, or one or more of them, performed acts from which, if proved, the requisite agreement or combination may arguably be inferred at trial. In this regard, senior counsel for Uber said in oral argument that there is an artificiality about alleging a conspiracy between companies in the same corporate group, all of which are subject to the overall control of the parent company — in this case Uber Technologies Incorporated, the first defendant — and that it may transpire that once all of the evidence is in at trial, no question of an agreement or combination between the subsidiary companies arises, because they were all acting under the overall direction of the parent company. If that is a defence which Uber wishes to take, it is a matter which can be simply pleaded.[53]
[44]For example, Deutsch v Rodkin [2012] VSC 450.
[45]Lonrho [1981] Com LR 74, 75 (Denning MR); McKellar (1999) 165 ALR 409, 435; [1999] FCA 1101; Dresna [2003] FCA 1537, [107] (Weinberg J); Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169, [12] (Kiefel and Jacobson JJ); Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678, 682 [14]; [2004] NSWCA 140 (Handley JA, McColl JA agreeing).
[46]McKellar (1999) 165 ALR 409, 435 [137]; [1999] FCA 1101 (Weinberg J).
[47]Ibid.
[48]Ibid (emphasis added).
[49]Dresna [2003] FCA 1537, [108] (Weinberg J).
[50]Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169, [7] (Kiefel and Jacobson JJ).
[51]Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2) [2017] VSC 556, [17].
[52]Andrianakis v Uber Technologies (Ruling No 1) [2019] VSC 850, [41].
[53]Uber [2020] VSCA 186, [31], [35], [36], [43], [53], [57], [59].
In relation to the conspiracy, the Crewes daughters referred to the decision of Bond J in Lee v Abedian[54] as to the elements of the tort:
70.The elements of the tort of conspiracy to injure by unlawful means are:[55]
(a)there was a combination or agreement between two or more persons to engage in conduct amounting to unlawful means;
(b)a purpose of that combination or agreement was to injure the plaintiff;
(c)the combination or agreement was carried into effect by the commission of the agreed unlawful acts; and
(d)those unlawful acts caused damage to the plaintiff.[56]
[54][2016] QSC 92; [2017] 1 Qd R 549 (‘Lee’).
[55]Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34, 102 [421] per R D Nicholson J; Weston v Publishing and Broadcasting Ltd (2011) 83 ACSR 206, 341 [612] per Ward J.
[56]Lee [2016] QSC 92; [2017] 1 Qd R 549, [70].
The applications to strike out the PASOC
The function of a pleading is to alert the other party to the case they need to meet so as to satisfy the basic requirements of procedural fairness.[57] As stated by Dixon J in Wheelahan, as a general rule the power to strike out will be exercised only where there is some substantial objection to the pleading or where some real embarrassment is shown.[58] Embarrassment will be present where the defendant does not know what is alleged.[59]
[57]Wheelahan, [25(b)].
[58]Ibid, [25(o)].
[59]Ibid, [25(d)].
Although both applications sought to strike out the entire pleading against the defendants, the focus of argument was upon specific aspects of the PASOC. It is appropriate to deal with the specific complaints, and to do so in the context of the pleading as a whole.[60]
[60]Uber [2020] VSCA 186, [53], [59].
‘Facilitation’
The Crewes parties contend that the short-hand reference to ‘facilitation’ by the defendants of the transfers, of which paragraph 78 of the PASOC is an example, is a conclusory term that rolls up issues, and is an allegation of material fact which does not appear on the face of the pleading.
The Receivers respond by saying that in the context of the PASOC as a whole facilitation refers to participation in the procedures of transfers, including authorisation to enable transfers to occur. Further, that the reference to ‘facilitating’/’facilitated’ concerns transfers of shares, and that the allegations are that the relevant defendants assisted in enabling the specific transfer to occur.
The dictionary definition of ‘facilitate’ is as follows:
1. Make easy or easier; promote, help forward (an action, result, etc). 2. Lessen the labour of, assist (a person).[61]
Given the definition, and the context in which the allegation of facilitation is made in paragraph 78 and elsewhere, the defendants can be in no doubt as to the case they are to meet.
[61]Plaintiffs, Submissions on Pleadings, dated 8 December 2020, [48], citing the New Shorter Oxford English Dictionary (1993).
The defendants’ real complaint is an asserted failure on the part of the plaintiffs to provide specific details of how each defendant facilitated the transfers. The Crewes parties submit that the contention on behalf of the Receivers that they are in the best position to understand how the transfers occurred, is an ‘impermissible reversal of the onus’ and that the Crewes parties are entitled to know with clarity the case which they must meet.[62]
[62]Crewes Parties’ Submissions, [26], referring to Banque Commerciale SA (in liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 286.
Applying Trkulja,[63] where the defendant is both involved in the relevant acts – Sasha Elma Mort received the benefit of the share transfer, and where only she and the other defendants know the relevant facts, the allegation should not be struck out. Specific details of how each defendant facilitated the transfers are matters within the particular knowledge of the defendants. No order for further particulars should be made in circumstances where the defendants have not complied with their obligations in s 26 of the CPA and have failed to comply with discovery orders.
[63][2018] HCA 25; (2018) 263 CLR 149, [39].
No question as to the reversal of the onus of proof arises. The onus of proof is a matter for trial.
It is not appropriate to strike out the ‘facilitation’ allegation or require further particulars of those allegations.
‘Registration’
The Crewes parties submit that the plea of ‘registration’, of which paragraph 70 provides an example, is unclear, and that it is not sufficient for the Receivers to contend that ‘matters concerning registration of a transfer of shares of a listed public company are well known’.[64]
[64]First, second and sixth defendants, Affidavit of Michael Jonathan Kenny, dated 12 October 2020, exhibit ‘MJK-6’.
The Receivers deny the validity of the criticism and contend that the disputed paragraphs do not require clarification. I agree with the Receivers.
Referring to s 144 of the Evidence Act 2008 (Vic), the Receivers submit that judicial notice can be taken of matters of common knowledge and that it is a matter of common knowledge that companies have registers. They submit that reading the PASOC as a whole, ‘it is plain’ that the relevant register is that which is relevant to the transfer of the MIL shares.
I accept the Receivers’ submission that matters concerning the registration of share transfers are matters of common knowledge. The pleading of which the defendants complain does not require them to speculate about what is meant by ‘registered’ or as to the identity of the share register in question. The material facts in each instance are that ‘TSH caused the relevant transfer to be recorded on the share register’, and that as the transfers concerned shares in MIL, ‘Necessarily, and as a matter of common knowledge’ the relevant share register must be that of MIL.[65] There is no substance to the defendants’ complaint concerning ‘registration’.
[65]Plaintiffs, Submissions on Pleadings, dated 8 December 2020, [58].
The alleged knowledge of Mrs Crewes of the registration
The Crewes parties submit the allegation of awareness of registration by Mrs Crewes, of which paragraph 74 concerning the fifth transfer is an example, is wholly speculative, and is ‘inadequate to support the material allegations in support of which they are put forward’. Citing Montclare v Metlife Insurance Ltd,[66] they submit that even if the matters set out in the particulars were established, that would not be sufficient to make out the material facts alleged.
[66][2009] VSC 402; (2009) 29 VR 20, [7], [9] and [20] (‘Montclare’).
In Montclare, in a passage to which the Crewes parties referred, Harper J said as follows:
7.In coming to this conclusion, I do not wish to suggest that inadequate particulars can never result in a pleading that is embarrassing or which may prejudice or delay the fair trial of a proceeding. If the absence of particulars, or their manifest inadequacy to support the material allegation in support of which they are put forward, is not corrected after proper opportunity for correction has been provided, then it may be entirely appropriate for the opposite party to bring that circumstance to the notice of the court; and the court may be of the opinion that such particulars as have been pleaded cannot sustain the material allegation they are intended to support, and for which particulars are necessary. In that state of affairs, it might be entirely appropriate for the court to intervene pursuant to r 23.02 so that further time and expense is avoided, and a hopeless pleading put to its final rest. That point has not been reached in this case…[67]
[67]Ibid, [7].
If there were validity to the pleading complaint concerning Mrs Crewes ’awareness’ the strike-out application is nonetheless premature, based on the very authority on which the Crewes parties rely. If the particulars of ‘awareness’ are inadequate, and I do not consider them to be so, the ’proper opportunity’ to which Harper J referred,[68] can only arise, at the earliest, after compliance by the defendants with their outstanding s 26 and discovery obligations.
[68]Ibid.
However, the awareness and knowledge pleas concerning Mrs Crewes’ state of mind are not deficient. The particulars to paragraph 74 state that Mrs Crewes is a director and controlling mind of TSH. Her awareness and involvement in the registration is said to be inferred from those facts, and from her signature on the off-market transfer form. So far as other transfers are concerned, the pleading alleges that each of the transfers was made to Mrs Crewes, or to Mr Crewes, personally or to both of them in their capacities as trustees of the W and E Crewes Superannuation Fund and that there is a strong inference to be drawn that Mrs Crewes was aware of and involved in each of the transfers.
I accept the Receivers’ submission, that there is a strong inference to be drawn from Mrs Crewes position as director, that she was aware of and involved in each of the transfers. The observations of Ormiston J in Morley v Statewide Tobacco Services Ltd[69] as to the duties imposed on directors both by application of the rules of equity and of the statutory duties in the Corporations Act 2001 (Cth) come to mind.
[69][1993] 1 VR 423, 430; applied in Elliott v ASIC [2004] VSCA 54; (2004) 10 VR 369, [103].
Whether read separately or in the context of the pleading as a whole, the plea in paragraph 74 as particularised is sufficient to ensure that Mrs Crewes can be under no reasonable misapprehension of the facts on which, at trial, the Receivers will rely so as to urge the Court to draw inferences as to her state of knowledge. The same is the case concerning the pleas at paragraphs 23 and 24 concerning Mrs Crewes.[70]
[70]Although the argument during the hearing was directed towards the complaint about Mrs Crewes, in their submissions dated 26 October 2020, complaint was made by the Crewes parties about the allegations that Mr and Mrs Crewes had knowledge of the GSA and Loan & Charge Agreement as alleged in paragraphs 23 and 24 of the PASOC. Just as the allegations against Mrs Crewes are sufficiently particularised, so too are the allegations against Mr Crewes.
The ‘awareness’ plea concerning Mrs Crewes in paragraph 74 and its corresponding pleas will not be struck out and no further particulars of the allegations will be required. The same is the case concerning the allegations at paragraphs 23 and 24 of the PASOC of which complaint was made.
The awareness of the Crewes daughters of registration and encumbrance
The Crewes parties submit the particulars to paragraph 75, which alleges that Sasha Elma Mort, one of the Crewes daughters, was ’aware’ of the registration of transfer, and that TSH’s shares in MIL were encumbered and/or attached to security interests, are inadequate to support the material allegations.
The Crewes daughters refer to the lack of a plea as to Sasha Elma Mort’s awareness of the GSA, and say that without such a plea, the Receivers cannot plead that she was aware that the shares in MIL were encumbered or attached to security interests. They submit that her lack of knowledge as to these matters is fatal to the Receivers’ case.
Looking more broadly at the PASOC, the ’awareness’ in paragraph 75 is part of the claim that Sasha Elma Mort, aided, abetted and was knowingly concerned with and assisted her parents in breach of their directors’ duties in relation to the fifth transfer (at paragraph 79 of the PASOC). Further and in the alternative, that she was a party to a conspiracy by unlawful means concerning that same share transfer.
What is required is to look individually at each of the causes of action relied upon to see whether or not a claim pleaded at a level of generality that does not include a specific allegation of awareness of the GSA on the part of Sasha Elma Mort is consistent with the required elements of each such cause of action. The adequacy or otherwise of the ’awareness’ plea in paragraph 75 without a plea that alleges knowledge of the GSA is discussed below as part of the discussion of the defendants’ complaints concerning those causes of action.
As to ’awareness’, the defendants submit that paragraph 75 does not say when or why Sasha Elma Mort was aware of the registration or of the security interest over the shares and that a causal link is missing. They refer to the particulars to paragraph 75 and ask rhetorically, how can it be that the mere execution of a share transfer ‘transfuses’ the writer with the knowledge that the shares are encumbered, or that a familial link can give rise to the knowledge of the existence of the loan document to which she is not a party? They submit there are no material facts pleaded to give rise to the knowledge alleged. They submit that, as pleaded and particularised, the allegation of awareness against the Crewes daughters, of which paragraph 75 is an example, is wholly speculative with no proper basis, and that such a plea cannot be permitted to proceed.
In response, the Receivers submit that it is sufficient for them to prove that the Crewes daughters were aware of the fifth to eighth transfers and should have recognised that TSH’s shares in MIL were encumbered and/or attached to security interests. They contend that is so because the transfers were otherwise inexplicable in circumstances where:
a.each of the Daughters signed a back-dated off-market transfer form, many weeks prior to any transfer of shares;
b.the directors of TSH, who were also their parents, transferred TSH’s major asset to them without any other apparent justification; and
c.the transfers were for stated consideration that was significantly below market price.[71]
[71]Plaintiffs, Submissions on Pleadings, dated 8 December 2020, [29]-[30].
The reference in the particulars to paragraph 75 to execution of the backdated share transfer by Sasha Elma Mort in the circumstances of her relationship with her parents and their roles as directors and controlling minds of TSH provides facts from which knowledge of the registration and encumbrance or security interest over the MIL shares might be inferred. The particulars to paragraph 75, while thin, are sufficient to support the allegation of ’awareness’. Whether such an inference will be drawn at trial will depend upon the evidence.
While the particulars of ’awareness’ in paragraph 75 are thin, I will not order a strike out of those allegations. Bearing in mind that none of the defendants, including Sasha Elma Mort, has complied with their obligations under s 26 of the CPA or with existing discovery orders it is not appropriate to do so.
Even if I considered the existing particulars of ‘awareness’ to be insufficient, to refuse to order further particulars before discovery is consistent with the observations of the High Court in Trkulja,[72] and the Court of Appeal in Uber.[73] The ’awareness’ of Sasha Elma Mort is a matter peculiarly within her knowledge.
[72][2018] HCA 25; (2018) 263 CLR 149, [39].
[73][2020] VSCA 186, [57].
The failure to specify the date of the under-value transactions
Paragraph 76 provides an example of the plea of which complaint is made due to the lack of any reference to the date on which it is said that the consideration was ‘below the market value of the shares’.
The defendants contend that the parties to the fifth transfer and, for that matter, to each other transfer said to have been under value, are entitled to know the date as at which the value of the shares is said to have been at an under value. I agree.
Although it may be possible to glean from the pleading as a whole that the allegation is intended to refer to the date of registration of the transfer of the shares and not to the date the share transfer bears, the share transfer being alleged to have been back-dated (see, for example, the particulars to paragraphs 73 and 74), paragraph 76 and its equivalents are deficient. These paragraphs should be specific in identifying the date or dates upon which the Receivers contend the market value of the shares was higher than the amount recorded on the face of the transfer.
The plaintiffs should replead paragraph 76 and its equivalents to make clear the alleged ‘undervalue date’. Without such clarification, the defendants are not fairly on notice of the case they have to meet.
The plea of aiding and abetting, knowing concern in, and assisting in breach of directors duties
Allegations of aiding and abetting, knowing concern in, and assisting in breach of directors duty are made in paragraph 79 of the PASOC and elsewhere.
The Crewes parties contend that in order to be knowingly concerned in the alleged breaches, Sasha Elma Mort must have had actual knowledge of the essential facts constituting the contravention at that time. The Crewes parties refer to the difference in the pleading concerning the Crewes daughters, and the pleadings concerning Mr and Mrs Crewes, which are supported by particulars of knowledge.
The Receivers accept that to prove that Sasha Elma Mort is liable as an accessory to Mr and Mrs Crewes’ breach of directors’ duties, they must prove that the she had knowledge of their dishonest and fraudulent design.[74]
[74]Farah Constructions v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, [160], [163] (‘Farah Constructions’).
Referring to Farah Constructions,[75] the Receivers submit it is unnecessary for them to prove the actual knowledge of each of the matters asserted in the Crewes parties’ submissions as the requirement of knowledge is satisfied by:
174.… (i) actual knowledge; (ii) wilfully shutting one’s eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man”; but falling short of purely constructive knowledge (that is, “(v) knowledge of circumstances which would put an honest and reasonable man on inquiry”)…[76]
…
177.… In this way, there is accommodated, through acceptance of the fourth category, the proposition that the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons.[77]
[75][2007] HCA 22; (2007) 230 CLR 89.
[76]Ibid, [174], referring to Baden v Société Générale pour Favoriser le Dévelopment du Commerce et de l’Industrie en France SA Note [1993] 1 WLR 509, 575-576, 582; [1992] 4 All ER 161, 235, 242-243. The case was decided in 1983.
[77]Ibid, [177].
The Receivers submit, that the pleading of each transfer sets out the details of the transfer, and that the precise acts by which each relevant defendant assisted with the transfer of the shares ‘are matters of evidence for trial’. They submit that they are not material facts of the causes of action of breaches of directors’ duties or accessorial liability; contending that as to the latter, they need only establish ‘knowing assistance.’[78]
[78]Plaintiffs, Submissions on Pleadings, dated 8 December 2020, [51], referring to Farah Constructions [2007] HCA 22; (2007) 230 CLR 89, [112].
How it is that Sasha Elma Mort aided, abetted and was knowingly concerned with and assisted her parents in breach of their directors duties in relation to the fifth transfer is not satisfactorily particularised in paragraph 79 of the PASOC. However, those matters are matters peculiarly within the knowledge of the defendants. Compliance by them with their obligations pursuant to s 26 of the CPA and existing discovery orders requires that the defendants and each of them disclose all records of communications, notes and memoranda, whether by email, by text message, by WhatsApp or otherwise, concerning the transfer of shares of which complaint is made in the PASOC, including in relation to the fifth share transfer. The lack of any particulars in the pleading is not in these circumstances a reason to strike out these aspects of the claim. It cannot be said that to allow these claims to go forward would be futile because they have no real prospects of success in the sense of being ‘fanciful’. To once again refer to the observations of the High Court in Trkulja, ‘there should… (be) no thought of summary determination of issues… at least until after discovery, and possibly at all’.[79]
[79][2018] HCA 25; (2018) 263 CLR 149, [39].
The conspiracy plea
The Crewes parties submit that the conspiracy plea in paragraph 80 and elsewhere is defective. They submit that in order for that allegation to be maintained, it must be alleged, with respect to the fifth share transfer, that Sasha Elma Mort had actual knowledge:
(a)as to the existence of the GSA and its terms and effect;
(b)that the GSA created a security interest over the MIL shares;
(c)that TSH’s shares in MIL were encumbered;
(d)that TSH entered into the GSA in its own right and its capacity as trustee of the National Property Trust;
(e)that if TSH transferred its shares in MIL, then it would be in breach of the GSA.[80]
[80]Crewes Parties’ Submissions, [8].
The Receivers have deliberately chosen to plead the causes of action mentioned in paragraph 80 and elsewhere of the PASOC against the Crewes daughters, including the conspiracy plea, not by reference to an alleged awareness on their part of the GSA, but rather, on the basis that the Crewes daughters were aware that TSH’s shares in MIL ‘were encumbered and/or attached to security interests’ and that the GSA is such an encumbrance or security interest. They submit that the elements of a conspiracy plea do not require them to plead the GSA specifically and that the precise terms of the particular security agreement are not to the point. They contend that such an approach is both permissible and consistent with the decision of the Court of Appeal in Uber.[81]
[81][2020] VSCA 186.
The Crewes daughters’ complaints about the plea of conspiracy to injure by unlawful means are not restricted to the failure on the part of the receivers to plead the GSA. The Crewes daughters’ submissions allege the following deficiencies:
31.The first is that it again fails to plead that the fourth defendant had knowledge as to the existence of, the terms of, and the alleged common intention of those who executed the document that the shares in MIL were secured by the GSA…
32.The second problem is that there must be an intention to injure the plaintiff. Again, what is required is that the fourth defendant has knowledge of the GSA and that this transfer will affect its security and thereby injure it. Without a pleading of knowledge, there cannot be the consequential pleading of intent.
33.The third problem is that there must be a loss suffered. However, it is not in dispute that the trust still retains those shares. The fact that there is a new trustee is irrelevant. Hence, in order to prove that it suffered loss the plaintiff needs to prove that those shares are no longer owned by the trust, which it does not plead and cannot plead. If there is no loss there is no cause of action.[82]
[82]Crewes Daughters’ Submissions, [31]-[34].
The Crewes parties submit:
17.…the allegations depend on the fourth/fifth defendant having had actual knowledge of the essential facts which constitute each of the alleged unlawful means. No such knowledge is alleged. In other words, the unlawful means aspect must existence [sic] at the time that the alleged agreement was made.
…
19.…the tort of conspiracy by unlawful means is committed when two or more persons combine to commit an unlawful act with the intention of harming the plaintiff’s economic interests.[83] There is no allegation that the relevant defendants acted with the intention of harming the plaintiff’s economic interests. Instead, what is alleged is that the relevant defendants’ actions had the consequence that the plaintiffs would suffer economic loss...
20…it is an element of the tort of conspiracy by unlawful means that the conspiracy was carried into effect by commission of the agreed unlawful acts and that those agreed unlawful acts caused damage to the plaintiff.[84] Both paragraphs 80 and 82 of the SOC plead the alleged unlawful conspiracy claim (as against the fourth and fifth defendants respectively, acting in combination with the first and second defendants). The elements of the tort cannot be made out as the ‘agreed unlawful acts’ necessarily requires the requisite knowledge by both the fourth and fifth defendants and… the allegations as to knowledge are hopelessly deficient.[85]
[83]Balkin and Davis, Law of Torts (5th ed., 2013), [21.43] 631 and [21.55] 637.
[84]Dresner Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169, [7].
[85]Crewes Parties’ Submissions, [17], [19], [20].
Referring to Uber,[86] the Receivers submit that it is difficult to accept that by not spelling out the details of each allegation, the defendants are put to a genuine disadvantage of not knowing what it is that is alleged against them. Further, that before proper discovery and identification of critical documents, the specific details of each of the defendants’ act and actual purposes in connection with the transfers cannot be known to the Receivers. They refer to the following statement by the Court of Appeal in Uber:
it is in the nature of conspiracy allegations that the precise facts are not within the knowledge of the plaintiff. All that the plaintiff can do is plead the overt facts which were performed and rely on inferences from the evidence as a whole at trial to establish the necessary elements of the tort.[87]
[86][2020] VSCA 186, [60].
[87]Ibid.
As to the required elements of the tort, in Uber, the Court of Appeal accepted that the intent to injure is sufficient if it is directed towards all members of an identifiable class of persons, including the plaintiff.[88] In this pleading the class of persons is relevantly identifiable as persons with an encumbrance/security interest in MIL shares (see paragraph 75(b)). The intention to injure is pleaded as one by unlawful means. The unlawful means alleged is a transfer without giving recognition to the security interest, by persons with knowledge (awareness) of that category of security interest. The allegation is one of breach of the GSA (at paragraph 80), a subset of the class of encumbrances/security interests in the MIL shares, with ‘awareness’ of the existence of that broader class of encumbrance/interest (at paragraph 75(b)). The pleading approach adopted in the PASOC is consistent with the approach in Uber[89] and is permissible without the need for a plea of awareness of the GSA on the part of Sasha Elma Mort or her sister.
[88]Ibid, 43.
[89]Ibid.
Counsel for the Crewes daughters sought to distinguish the conspiracy plea in Uber,[90] submitting that in Uber the pleading identified not only the class of plaintiffs, but also the basis upon which there was a link to identify how it is the target of the injury was that class of plaintiffs. It was submitted that the PASOC does not plead causal knowledge, that there is a party or group of parties who could be damaged; no link that the Crewes daughters knew that there was a lender.[91]
[90]Ibid, [28].
[91]Transcript, 25-7.
That submission must be rejected because paragraph 75(b) contains an express allegation that Sasha Elma Mort was aware of the relevant class of persons who could be injured. It is not necessary, in order to prove conspiracy, that the Crewes daughters had specific knowledge of the person holding the security over the shares or that the actions taken were with a view to injuring that specific person. It is sufficient that there be an intention to injure a class of persons of which the plaintiff was a member.[92] The cases also establish that it is sufficient if ‘a purpose’ of the combination or agreement was to injure the plaintiff. It is not necessary that such purpose be the sole or dominant purpose.[93]
[92]Uber [2020] VSCA 186, [31], [43].
[93]Ibid, [31].
The plea in paragraph 80 makes it clear that TSH was targeted by the unlawful transfer of the shares, as TSH was the sole owner of those shares, and that NTM is a member of the class of persons who claim security over TSH’s shares is sufficient for the cause of action. I accept that there is a sufficient plea of the required connection between the unlawful means and the agreement to cause injury to TSH and NTM in sub-paragraphs (a) and (b) of paragraph 80. TSH is said to suffer economic loss because it loses the shares per se and NTM suffers economic harm because the value of its security is reduced.[94]
[94]Transcript, 46-7.
As to the need to show an intent to target those parties, counsel for the Receivers drew an analogy to the facts of Uber, submitting the critical fact was that the taxi drivers had an entitlement to exclusivity in the relevant point-to-point transport market, and that the unlawful conduct of unlawful competition interfered with that exclusivity.[95] The Receivers contended that in the same way, NTM has an entitlement to exclusivity with respect to security over the shares, and the nature of transferring those shares out of TSH interfered with that exclusivity.[96] Referring to Uber[97] and Maritime Union of Australia v Geraldton Port Authority,[98] the Receivers submit that one can infer intention from the nature of the conduct:
It follows that the nature of the offence which conspirators agree to commit and the facts of a particular case may inevitably lead to the conclusion that it was intended to cause damage to a particular person…[99]
[95][2020] VSCA 186, [40].
[96]Transcript, 47.
[97][2020] VSCA 186, [45].
[98][1999] FCA 899; (1999) 93 FCR 34.
[99]Ibid, [443].
What is alleged in paragraph 80 is a common intention by the unlawful means of the breach of the GSA, as a result of which, TSH would suffer economic loss and/or NTM would suffer economic harm as the value of its security under the GSA would be reduced. The Receivers submit that it can be inferred inevitably that by the facilitation and disposal of TSH’s encumbered shares, it was intended to cause damage to the party who had the benefit of that security.[100] I accept that such an inference as to intent to injure persons of the class of which TSH and NTM are persons is open on the pleading.
[100]Transcript, 48-9.
As to the alleged failure to properly plead loss, the particulars to paragraph 80 allege that each of TSH and NTM suffered loss. The loss and damage is pleaded at paragraph 81 and elsewhere which refer in turn to paragraph 34 of the PASOC. There is no deficiency in that aspect of the pleading.
I do not accept the validity of the criticisms of the pleading of conspiracy to injure by unlawful means. For the reasons discussed, the required elements of the cause of action are pleaded and the defendants are on notice of the case they have to meet. The allegation of conspiracy to injure by unlawful means will not be struck out.
Disposition
The Receivers will be given leave to file and serve the PASOC dated 7 October 2020. The pleading summonses will both be dismissed. To the extent there is legitimate complaint as to an absence of particulars, this is a case where the knowledge of what is alleged is within the defendants’ camp. It is not appropriate to order particulars at least until after compliance by the defendants with their obligations pursuant to s 26 of the CPA and until after compliance with existing discovery orders.
I will grant leave to the Receivers to file and serve the PASOC in a form that incorporates the following:
(a)corrections to typographical errors as identified in the supplementary submissions dated 9 December 2020; and
(b)in the case of paragraph 76 and equivalent paragraphs, in a form that specifies the date or dates upon which it is alleged the market value of the shares transferred was higher than the stated consideration.
The receivers shall file and serve the PASOC by no later than 4.00 pm on 28 January 2021.
Subject to submissions the parties may wish to make in writing by no later than 4 February 2021, I propose to order that the defendants pay the Receivers’ costs of and incidental to the summonses filed 4 and 9 December 2020.
The proceeding is currently listed for directions on 29 January 2021. The hearing and determination of these applications has drawn attention to the failure on the part of the defendants and, perhaps also, on behalf of the plaintiffs, to comply with their obligations pursuant to s 26 of the CPA. The parties should provide proposed orders to my chambers in advance of the directions hearing that fixes a date pursuant to s 26(2)(b) of the CPA for the prompt compliance by all parties with those obligations. The proposed orders should also specify a date for compliance with the outstanding orders for discovery, first made by consent in June 2020 and which as a result of the orders made on 25 September 2020, should have been complied with by 30 October 2020.
SCHEDULE OF PARTIES
TOMI-SASHA HOLDINGS PTY LTD (ACN 076 376 308)
(RECEIVER AND MANAGER APPOINTED)
First Plaintiff
and
NTM SUPER HOLDINGS PTY LTD (ACN 609 675 774)
Second Plaintiff
and
WAYNE ANDREW LESLIE CREWES
First Defendant
EILEEN FRANCES CREWES
Second Defendant
SASHA ELMA MORT
Fourth Defendant
TOMI TREGENT-CREWES
Fifth Defendant
3 STANHOPE STREET PTY LTD (ACN 155 225 237)
Sixth Defendant
[31][2018] HCA 25; (2018) 263 CLR 149, [39].
0