Reid v Hartcher

[2017] NSWSC 1274

Supreme Court

New South Wales

Medium Neutral Citation:	Reid v Hartcher [2017] NSWSC 1274
Hearing dates:	12 September 2017
Decision date:	28 September 2017
Jurisdiction:	Common Law
Before:	N Adams J
Decision:	(1) Pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW), the statement of claim filed 28 April 2017 is struck out. (2) Leave to file the amended statement of claim dated 8 September 2017 is refused. (3) The plaintiff is to serve a proposed amended statement of claim on the defendant by 5pm on 27 October 2017. (4) The defendant is to notify the plaintiff by 5pm on 10 November 2017 whether it consents to the filing of that statement of claim. (5) If no consent is forthcoming, the plaintiff is to file and serve a notice of motion seeking leave to file any proposed further amended statement of claim together with all affidavits upon which he proposes to rely and an outline of written submissions in support of the orders sought by 24 November 2017. (6) The defendant is to file and serve any affidavits upon which he proposes to rely and a written outline of submissions in reply to the motion on or before 8 December 2017. (7) Grant leave for the motion to be returnable before the Registrar at 9am on 12 December 2017. (8) Otherwise dismiss the notice of motion of the defendant filed on 17 August 2017. (9) Order that each party pay his own costs of the motion.
Catchwords:	PRACTICE AND PROCEDURE – tort of deceit – application to strike out pleadings – whether pleading sufficiently particularised – whether elements of tort of deceit specifically pleaded – whether pleading embarrassing   PRACTICE AND PROCEDURE – application for separate trial of limitation question
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 56 Limitation Act 1969 (NSW), ss 50C, 50D Uniform Civil Procedure Rules 2005 (NSW), rr 13.4, 14.28, 15.3, 15.4, 15.7, 15.8, 28.2
Cases Cited:	Arthur Yates and Co Pty Ltd v The Vegetable Seeds Committee (1945) 72 CLR 37 Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Clarke v State of New South Wales (No.4) [2015] NSWSC 1054 Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 3 Gunns Ltd v Marr [2005] VSC 251 Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 Meckiff v Simpson [1968] VR 62 Nichols Constructions Pty Ltd v Elphick [2015] NSWSC 1732 Perpetual Trustee Co Ltd v Moussa (2013) 16 BPR 31,513; [2013] NSWSC 131 PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407 Robbins v The Royal Bank of Scotland plc [2010] NSWSC 39 Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 Southwell v Bennett [2010] NSWSC 1372 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
Category:	Procedural and other rulings
Parties:	Sebastian Reid (Plaintiff) Christopher Hartcher (Defendant)
Representation:	Counsel: Mr N Broadbent (Plaintiff) Mr H K Insall SC (Defendant)   Solicitors: Summit Legal (Plaintiff) Conditsis Lawyers (Defendant)
File Number(s):	2017/127606
Publication restriction:	Nil

Judgment

1. Sebastian Reid, the plaintiff, is an employed solicitor. Christopher Hartcher, the defendant, is his uncle and a former Member of Parliament.

2. By statement of claim (“SoC”) filed on 28 April 2017, the plaintiff brings proceedings against the defendant for the tort of deceit.

3. By notice of motion filed on 17 August 2017, the defendant seeks an order pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that the SoC in this matter be struck out or, alternatively, an order pursuant to r 13.4 of the UCPR that the proceedings be dismissed. In the alternative, the defendant seeks an order pursuant to r 28.2 of the UCPR that the question of whether the plaintiff’s claim to damages for personal injuries is maintainable having regard to ss 50C and 50D of the Limitation Act1969 (NSW) be decided separately and prior to the trial.

4. At the hearing of the motion, Mr Insall of senior counsel appeared for the defendant and Mr Broadbent of counsel appeared for the plaintiff. The defendant relied upon two affidavits of Michal Mantaj affirmed on 17 August 2017 and 4 September 2017 respectively. Although the plaintiff did not rely upon any evidence on the motion, annexed to his written submissions was a copy of an amended statement of claim (“ASoC”) that he sought leave to file. During the hearing of the motion, the defendant directed his complaints about the pleadings at this proposed ASoC, rather than the SoC on file, and did not pursue the defendant’s application for summary dismissal.

Background

5. The following is taken from the proposed pleadings and from documents annexed to the affidavits before me on the application.

6. In 2001, the plaintiff was a solicitor employed by William George Reid, trading as Reid Lawyers and Co. William Reid is the plaintiff’s father. The defendant is a former partner of that law firm, the brother-in-law of William Reid and the uncle of the plaintiff. He was an ongoing client of the firm as at 2011.

7. On 22 November 2011, the defendant telephoned the plaintiff and advised him that he intended to instruct the firm to provide legal services to the Liberal Party Central Coast Branch. He further stated that three cheques would be received into the trust account of the firm. He requested that the plaintiff pay that money out of the law firm trust account to another entity described as “Micky Tech”.

8. The cheques, payable to the Liberal Party of New South Wales, had actually already been deposited into the firm’s trust account. The plaintiff did not know this. He believed that he was getting instructions on a new matter. He opened a new file to act on instructions for the Liberal Party Central Coast Branch and subsequently acted upon the request made by the defendant.

9. In October 2013, the plaintiff received a subpoena to produce materials from the file from the Independent Commission Against Corruption (“ICAC”). As the plaintiff later explained to his psychiatrist in 2016, ICAC was undertaking a corruption inquiry that included an investigation into the dealings of the Liberal Party Central Coast Branch at the time that the plaintiff opened the new file.

10. In December 2013, he was subpoenaed to appear at a private hearing at ICAC. There was subsequently a public hearing in April 2014 at which he also had to give evidence. His evidence was reported in the media. He was subjected to a three-day investigation by the Legal Services Commissioner in May 2014. As a result of the media scrutiny and exposure he developed a mental illness.

11. A report of Dr Christopher Bench, forensic psychiatrist, was before me on the application. In it Dr Bench states that, “The plaintiff reported the onset of mental health difficulties dating back to December 2013, after the private hearing,” and that, “…the plaintiff reported having first consulted with a General Practitioner…in May 2014.” Dr Bench saw the plaintiff on 19 July 2016. He indicated that the plaintiff meets the diagnostic criteria for an adjustment disorder with anxious mood. He notes that, after being called to give evidence to ICAC, the plaintiff developed difficulties with anxiety, sleeplessness, lethargy and increased appetite.

The proposed amended statement of claim

12. Mr Insall submitted that the proposed ASoC was embarrassing because the plaintiff has still not properly pleaded the tort of deceit. He sought to make good his complaint by going through the ASoC in some detail. In order to understand his submissions properly, as well as those of Mr Broadbent, it is necessary to extract a considerable portion of the proposed ASoC herein.

13. At [5] – [6], the circumstances in which the defendant deposited or caused to be deposited the three cheques into the trust account of the law firm are set out. It is pleaded that the defendant did not have the authority to do so, that he knew that he did not have the authority to do so, and that he knew that the cheques were meant to be deposited straight into the bank account of the Liberal Party of New South Wales.

14. Particulars of a telephone conversation between the defendant and the plaintiff on 22 November 2011 are then provided at [7] of the ASoC as follows:

“Particulars of the first conversation between the plaintiff and defendant

(a) A telephone call of two minutes and eight seconds duration took place.

(b) The telephone calls initiated by the defendant to the law firm.

(c) The defendant spoke with the plaintiff.

(d) The defendant advised the plaintiff orally that he intended to instruct the law firm to provide legal services to the Liberal Party Central Coast Branch (“the legal matter”).

(e) The defendant did not advise the plaintiff of the specific nature of the legal services to be provided as part of the legal matter.

(f) The defendant advised orally that moneys would be received into the trust account of the law firm.

(g) The defendant advised orally that the moneys would be trust money.

(h) The defendant did not disclose to the plaintiff that the 3 cheques had already been deposited in the law firm trust account by the defendant or an agent of the defendant.

(i) The defendant did not disclose that the 3 cheques were payable to the Liberal Party of NSW, as opposed to the Liberal Party of NSW Central Coast Branch.

(j) The defendant advised orally that the monies received would be made payable from the law firm trust account to an entity called “Micky Tech”.

(k) The defendant did not disclose what the purpose of the payment to Micky Tech was.

(l) The plaintiff cannot recall whether the value of the monies is to be received was disclosed.

(m) The defendant did not disclose to the plaintiff that he knew that he did not have authority to deposit, or cause to be deposited, the 3 cheques into the trust account of the law firm.

(n) The defendant did not disclose to the plaintiff that he knew that the three cheques were meant to be deposited directly into the bank account of the Liberal Party of New South Wales.

(o) The defendant did not disclose that he did not have authority to deal with the 3 cheques.

(p) The defendant did not disclose that Micky Tech was an entity owned a controlled by Mr Ekarin Sriwattanaporn, the partner of the defendant’s chief of staff Mr Raymond Carter.

(q) The defendant did not disclose that monies to be received by Micky Tech would be banked into an account and thereafter would be withdrawn by Raymond Carter, and would be paid to the defendant in cash,

(d), (f), (g) and (i) collectively the “first conversation representations”; (e), (h), (i), (k), (m), (n), (o), (p) and (q) collectively, the “first conversation omissions”.

7B. The defendant, by the first conversation representations, as well as by his conduct of the first conversation omissions represented to the plaintiff that he was authorised to deposit, cause to be deposited and otherwise lawfully deal with the 3 cheques

The first conversation representations were express representations.”

15. The ASoC goes on to plead that the plaintiff subsequently arranged for a cheque to be payable to Micky Tech as requested by the defendant and that, on 23 November 2011, there was a further conversation between the plaintiff and either the defendant or someone directed by him in relation to additional instructions regarding the legal matter. At [11A], it is pleaded that during a conversation on 23 November 2011 the defendant:

“(a) orally advised the plaintiff that the reason for the payment to “Micky Tech” was the provision of information technology (IT) services to the Central Coast Branch of the Liberal Party (the second conversation representation).

(b) The defendant did not disclose that Micky Tech had not and would not be providing IT services to the Central Post Branch of the Liberal Party.

(c) did not disclose that the first conversation representations and the second conversation representations were false.

(b) and (c), collectively, the second conversation omissions.

(d) again did not disclose the first conversation omissions.”

16. The ASoC goes on in these terms:

“11B. The defendant knew that the plaintiff would rely on the first conversation representations and the second conversation representation as being accurate and would not be aware of the first conversation omissions and the second conversation omissions when the plaintiff was dealing with the proceeds of the 3 cheques that had been banked into the law firm trust account.

The knowledge of the defendant

13. During the first conversation and the second conversation between the plaintiff and the defendant, the defendant, in making the first conversation representations and second conversation representation, and by his conduct in failing to disclose the first conversation omissions and the second conversation omissions:

(d) actually knew that Micky Tech was an entity owned and controlled by Mr Ekarin Sriwattanaporn the partner of the defendant’s chief of staff Mr Raymond Carter.

(e) actually knew that Micky Tech had not provided, and would not provide, any services to the Liberal Party Central Coast Branch and the defendant’s direction to the plaintiff to pay the money to the third party was to obtain money was not otherwise authorised or able to deal with.

(g) actually knew by virtue of his having formerly been a legal practitioner who held an unrestricted practising certificate and being a principal of a law firm authorised to deal with trust money, that the proceeds of the three cheques was not trust money within the meaning of s 243 of the Act, and/or its cognate provisions as from time to time;

(h) actually knew, or was reckless to the fact, that his direction to the plaintiff to deal with the trust money would cause the plaintiff to contravene his obligations as a legal practitioner which would leave and subject to complaints and investigation by the Law Society of New South Wales and possible sanctions of unsatisfactory professional conduct or professional misconduct in accordance with the Act.

(i) had no actual intention of instructing the law firm to provide legal services to the Liberal Party Central Coast Branch or to any other entity at any time.

(j) actually knew that the law firm would not be instructed to provide legal services to the Liberal Party Central Coast Branch, or to any other entity as instructed by him, at any time;

(k) actually knew that the plaintiff was a signatory to the law firm trust account with power to deal with trust monies under Part 3.1 Legal Profession Act 2004.

(l) actually knew, by reason of his experience as a former partner of the law firm, that the use of the law firm trust account in view of the circumstances particularised by the first conversation representations, the second conversation representation, the first conversation omissions and the second conversation omissions was not a lawful use of the trust account and would expose the plaintiff to professional consequences.

(m) actually knew that he did not have authority to deal with the three cheques on behalf of the Liberal Party Central Coast Branch

(n) actually knew that he did not have authority to deposit, or cause to be deposited, the three cheques of the trust account of the law firm;

(o) actually knew that the three cheques were made out to, and were meant to be deposited directly into the bank account of the Liberal Party of New South Wales;

(p) actually knew that the monies received by Micky Tech would be banked into an account and thereafter the monies would be withdrawn by the defendant’s chief of staff, Ray Carter, and would be paid to the defendant in cash;

(q) actually knew that the monies received by Micky Tech were not for the provision of IT services;

(r) actually knew that the plaintiff would rely on the first conversation representations and second conversation representations as being accurate and would not be aware of the first conversation omissions and the second conversation omissions when the plaintiff was dealing with the proceeds of the 3 cheques that had been banked into the law firm trust account

Items (d) to (r) above, collectively “the defendant’s knowledge”.

Falsity of the first conversation representations in the second conversation representation

13A. By reason of the defendant’s knowledge and the first conversation omissions and the second conversation omissions as pleaded above, the first conversation representations and the second conversation representation were each false in material aspects.

Reliance

14. The plaintiff believed that the first conversation representations and the second conversation representation made by the defendant, who was his uncle, a member of Parliament, a cabinet minister and a former principal of a law practice authorised to deal with trust money, were true and correct.

14A. The plaintiff was not aware of the first conversation omissions and the second conversation omissions and was not told by the defendant about their existence.

15. The plaintiff relied on the truth of the first conversation representations and the second conversation representation made by the defendant and acted upon them to his detriment, thereby suffering damage and loss.”

17. The particulars of detriment are then set out. At [16], it is pleaded:

“16. Had the plaintiff known the representations to have been false he would have refused to act for the defendant and would have avoided the said loss and damage.”

18. The plaintiff claims damages, exemplary damages and aggravated damages Particulars of the exemplary and aggravated damages are then provided in some detail as follows:

“Particulars

The plaintiff claims exemplary damages by reason of:

i. the defendant making the first conversation representations and the second conversation representations, which he knew to be false;

ii. his conduct by omitting to advise the defendant of the first conversation omissions and the second conversation omissions;

iii. the defendant’s knowledge regarding the falsity of the representations;

iv. the defendant’s contumelious disregard for the professional responsibilities of the plaintiff as a solicitor with respect to the operation of a trust account as set out in Part 3.1 Legal Profession Act 2004;

v. The defendant’s contumelious disregard the [sic] personal and psychiatric consequences for the plaintiff arising from a breach of his statutory obligations and the investigation thereof by regulatory bodies such as the Law Society; and

vi. Further particulars will be provided prior to trial.

…

(c) aggravated damages;

Particulars:

i. By reason of the defendant’s conduct in making the first conversation representations and the second conversation representation, as well as this conduct in failing to disclose the first conversation omissions and the second conversation omissions, the plaintiff suffered inconvenience, disruption, embarrassment, insult, humiliation and professional ignominy.

ii. The plaintiff was required to give evidence in proceedings before the Independent Commission Against Corruption.

iii. The plaintiff’s professional practice was subjected to media scrutiny arising from the defendant’s conduct as pleaded herein.

iv. The plaintiff was investigated for trust account irregularities arising from the defendant’s conduct as pleaded herein.

v. Further particulars will be provided prior to trial.”

The defendant’s submissions

19. Mr Insall relied upon a number of decisions in support of his position that allegations of fraud must be made clearly and without ambiguity. I have referred to those decisions below at [36] – [39]. He submitted that any claim of this nature needs to be pleaded with great care, precision and particularity. The ASoC does not do that, nor does it deal with the fundamental elements of such a cause of action. In support of that latter submission he relied upon the decision of the High Court in Magill v Magill (2006) 226 CLR 551; [2006] HCA 51. It was submitted that the ASoC does not plead material facts that satisfy any of the requirements for a pleading of deceit.

19. As for the first requirement for a pleading of deceit, Mr Insall accepted that there is an assertion that certain representations were false, but the pleading does not identify the basis for that and nor are there particulars of the falsity. He submitted that those matters are necessary. That is, each false misrepresentation must be explained. He submitted that the defendant is entitled to know whether any representation is an express misrepresentation or an implied misrepresentation. Similarly, the defendant is entitled to know whether it is said that any particular representation is false and why it is false. Mr Insall accepted that it may be possible to “pick out pieces” of [13] of the proposed ASoC and rely upon them in relation to the falsity of each representation, but submitted that fraud is not to be pleaded in such a “rolled up” manner. Nor is one permitted to plead fraud in a way that leaves the defendant to “guess”.

20. The second requirement for a pleading of deceit is an allegation that the defendant knew or was recklessly indifferent as to the falsity. Paragraph [13A] of the proposed ASoC does not plead that element. It does plead that, “by reason of the defendant’s knowledge” and the relevant omissions, the representations were false “in material aspects”, but that is not sufficient. It was submitted that it must be pleaded that the fact that each of the representations was false was within the knowledge of the defendant.

21. Mr Insall further submitted that, although one could read between some of the paragraphs of the pleading to infer why it was that the defendant is said to have known that each representation was false, if the allegation is not properly pleaded then a defendant could discover for the first time at hearing that the plaintiff relies on a matter in a pleading in a way that is different to how the defendant had understood it. It was submitted that the defendant is not obliged to piece together the case by cross-referencing various paragraphs.

22. The third complaint is that there is no pleading that the defendant made the representation with the intention that it be relied upon. Mr Insall accepted that at [13](r) it is pleaded that the defendant “actually knew” that the plaintiff would rely on the representations, but he submitted that knowledge and intention are different. He submitted that the High Court has said in the clearest possible terms that there must be an intention by the defendant that the representation be relied upon. As for the distinction between actual knowledge and intention, Mr Insall submitted that the heart of this cause of action is that there was a dishonest statement that was designed to induce somebody to do something. He submitted that that has a different quality from knowledge that somebody would do something.

23. The fourth criticism was that there is no reference to the element of reliance in the pleading. Although it was accepted that there is a reference at [15] to the plaintiff relying on the truth of what was said, the pleading needs to set out precisely the way in which the plaintiff relied upon each misrepresentation.

24. Finally, it was submitted that there is nothing in the pleading to show the way in which the plaintiff’s reliance upon the representations, which in themselves are not properly articulated, caused the losses that the plaintiff says were incurred. Until that aspect of the pleading is set out clearly, the defendant is not in a position to know whether the cause of action is an inarguably bad one or whether there is some substance to it. It is upon this basis that the pleading is embarrassing.

25. As for the order that the limitation question be dealt with separately, Mr Insall submitted that this was a clear-cut case for the making of such an order. He submitted that if a separate hearing were ordered it would not be necessary to go into all of the details of the substantive disputes, nor to call all witnesses. He relied upon a number of unreported decisions of this Court in support of this submission: Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464, Robbins v The Royal Bank of Scotland plc [2010] NSWSC 39, Perpetual Trustee Co Ltd v Moussa (2013) 16 BPR 31,513; [2013] NSWSC 131 and Nichols Constructions Pty Ltd v Elphick [2015] NSWSC 1732.

The plaintiff’s submissions

27. Mr Broadbent conceded that it is not appropriate for the pleadings to contain rolled-up allegations of fraud. He submitted that the structural awkwardness of the proposed ASoC flows from the fact that, in re-pleading it, there was a desire to avoid simply “crossing it all out”. He conceded that it may have been a better approach to do so, but submitted that the proposed ASoC is nonetheless properly pleaded.

28. He noted that a chronology was pleaded and that, at [7], the representations have been arranged and defined to establish what each representation was. Also, because a claim in deceit can be based on either an act or an omission, the representations are put into the appropriate categories.

29. As for [13], it was conceded that an ideal pleading, “starting from scratch”, would have commenced by pleading the defendant’s knowledge. However, he submitted there was nonetheless sufficient particularity in the proposed ASoC. He submitted that what is at [7] provides “colour or clarity” to the representations and omissions by way of knowledge. The knowledge pleaded involves matters that the plaintiff says that the defendant knew or did not know about the trust account transaction. It was submitted that the paragraphs concerning knowledge are accurately pleaded in respect of the defendant’s knowledge that no legal services would in fact be provided.

30. It was submitted that, although the defendant is entitled to a proper pleading, the just, quick and cheap resolution of the issues in these proceedings would be better served by a request for particulars. It was accepted that such a request could not have been made in relation to the SoC, but it was submitted that such a request could be made in relation to the proposed ASoC. In relation to that document, it would not be difficult to ask questions about intention, express or implied assertions, and other things of that nature.

31. Mr Broadbent’s ultimate submission was that the purpose of pleadings is to put the other party on notice of the nature of the claim that it is required to meet. The defendant can accept or deny those allegations or otherwise not plead to them. It was submitted that the proposed ASoC sets out with specificity what the relevant representations and omissions were.

32. Mr Broadbent further submitted on behalf of the plaintiff that, in the event that the plaintiff were given leave to file a further ASoC, the SoC should not be struck out because of the possible consequences of so doing, including that the proceedings may then be liable to be dismissed. He submitted that if I were to find that the current pleading was deficient and to grant the plaintiff leave to file and serve an ASoC, an interim order should be made that a draft of such a document be served on the defendant to give him sufficient time to consent. If the consent of the defendant were forthcoming, there would be no need for any order under rr 14.28 or 13.4 of the UCPR.

33. Mr Broadbent relied upon the decision in Southwell v Bennett [2010] NSWSC 1372 and the principles derived from that decision concerning determination of a separate question under r 28.2 of the UCPR. He submitted that this case is not one of those clearest of cases in which the limitation question should be heard separately.

Consideration

Is the pleading defective?

34. The fundamental function of pleadings was expressed by Mason CJ and Gaudron J in Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 (at 286) as follows (citation omitted):

“The function of pleadings is to state with sufficient clarity the case that must be met. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness.”

35. The general principles regarding the requirement for proper pleadings are well established and were conveniently summarised by Garling J in Clarke v State of New South Wales (No.4) [2015] NSWSC 1054 at [36] – [42]. I have had regard to them. I do not propose to set them herein save as to note that an allegation that a pleading is “embarrassing”, as was contended in this application, is an allegation that it is “unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him": Meckiff v Simpson [1968] VR 62 (at 70) per Winneke CJ, Adam and Gowans JJ, cited by Bongiorno J in Gunns Ltd v Marr [2005] VSC 251 at [15].

36. In addition to the above general principles, there are additional principles governing pleadings that allege fraud. No issue was taken before me that a deceit claim is a classic pleading of fraud that requires specific pleading. As Latham CJ observed in Arthur Yates and Co Pty Ltd v The Vegetable Seeds Committee (1945) 72 CLR 37 (at 63), “Allegations of fraud must be made clearly and without ambiguity.” The rule was more recently articulated by the High Court (French CJ, Gummow, Hayne and Kiefel JJ) in Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 3 as follows (at [26]):

“It is fundamental, and long established, that if a case of fraud is to be mounted, it should be pleaded specifically and with particularity.”

37. Rule 15.3 of the UCPR provides that a pleading must give particulars of any fraud and r 15.4 provides that a pleading that alleges any condition of mind must give particulars of the facts on which the party pleading relies. Rule 15.4(2) provides that “condition of mind” includes any fraudulent intention. I accept, as I am required to, that any pleading of fraud must provide clear and unambiguous particulars.

38. An explicit allegation of dishonesty, as is pleaded in this matter, is a serious allegation. Accordingly, a defendant is entitled to know the nature and extent of each misrepresentation upon which the plaintiff relies and the circumstances in which it was allegedly made. The facts relied upon in this matter to establish the intentional tort of deceit are somewhat unusual. This means that the need for the defendant to properly understand the case brought against is particularly important.

39. The elements of the tort of deceit were noted in Magill v Magill, where Gummow, Kirby and Crennan JJ observed the following at [114] (footnotes omitted):

“The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance on the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation.”

40. Having regard to the matters that are required to be pleaded in a cause of action such as this, I am satisfied that the SoC should be struck out and leave refused to file the ASoC. Although the ASoC addresses many of the difficulties in the SoC, I am not satisfied that it properly pleads the tort of deceit.

41. The nub of the plaintiff’s allegation of deceit is that the defendant falsely represented to him on 22 November 2011 that he was depositing three cheques for legal work to be undertaken by the plaintiff when in fact he was seeking merely to use the firm’s trust account as a cover to channel political donations. In the second conversation on 23 November 2011, the defendant falsely represented that the cheques were to be paid to a creditor (Micky Tech) when they were in fact going back to the Liberal Party. The plaintiff acted on the false representations by opening a file and arranging for the cheques to be drawn as requested. The context of the misrepresentations alleged is that the plaintiff considered the defendant to be trustworthy because of their familial relationship, the fact that he was a former solicitor, and the fact that he used to work at the same firm.

42. The ASoC should clearly plead chronologically each false representation made by the defendant and how it is that each is said to be false, that each representation was made by the defendant with the knowledge that it was false (or the defendant was recklessly indifferent as to the falsity), and that the defendant made each false representation with the intention that the plaintiff would act on it.

43. The proposed ASoC does not do this. Among other things, it appears to have purported to address the requirement to identify the relevant misrepresentations by instead identifying the contents of the relevant conversations said to have occurred between the plaintiff and the defendant on 22 and 23 November 2011. Representations need not be by words. It is the nature of each representation, rather than the contents of the conversations, that needs to be separately pleaded.

44. Despite being satisfied of the above and that there is a need for a further pleading, I am not, however, satisfied that all of the complaints made by the defendant have been established. For example, complaint was made that the plaintiff had failed to comply with rr 15.7 and 15.8 of the UCPR. Rule 15.7 provides that:

“The particulars to be given by a pleading that claims exemplary damages must state the facts and circumstances on which the party pleading relies to establish that claim.”

45. Rule 15.8 is in similar terms concerning aggravated damages. The particulars are set out in the proposed ASoC extracted above at [18]. They set out in some detail the facts and circumstances upon which the plaintiff relies to establish his claim for aggravated and exemplary damages. It was submitted that rr 15.7 and 15.8 of the UCPR require that such particulars be in a “pleading” rather than provided by way of particulars. I am not satisfied that the reference to the word “pleading” as it appears in those rules should be construed on the narrow basis contended for by the defendant. The plaintiff claims exemplary and aggravated damages. He does so as part of the pleading. After pleading each head of damage, the ASoC provides detailed particulars. I am not satisfied that the defendant has made good this complaint.

46. Overall, the plaintiff’s claim is somewhat novel. The proceedings will no doubt involve some complex legal and evidentiary issues. Despite the submission of Mr Broadbent that I should not strike out the SoC and leave the proceedings without any extant pleading, I am not satisfied that any difficulty arises from this course being taken in the circumstances of these proceedings. On the contrary, it seems to me that, consistent with the overriding purpose of the Civil Procedure Act 2005 (NSW), the preferable course would be that the plaintiff file a fresh pleading that is not dependent on a SoC that was clearly defective in a number of respects. The plaintiff ought be afforded the opportunity to file a new statement of claim unrestrained by a requirement to keep within the terms of the initial pleading. The observations by Campbell J in PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407 at [57] are apposite in this regard:

“As I have said more than once, the problem with the pleading springs from the attempt to ‘put new wine into old wineskins’: Matthew 9:17. The consequences are well known: ‘the wineskins break, the wine is spilled and the wineskins are ruined’. In a pleading sense, that is what seems to have happened here. Better, I think to ‘put new wine in new wineskins, and both are preserved’.”

47. I am satisfied that the practical course is to strike out the SoC and order that the plaintiff serve a further statement of claim that rectifies the deficiencies raised by the defendant insofar as the pleading of deceit is concerned. The defendant can then be given a period of time to indicate whether he consents to the filing of that document. The proceedings are still on foot until they are dismissed. This course makes it less likely that the proceedings will be stalled at this preliminary stage by protracted arguments concerning the pleadings.

Should the statute of limitation question be heard separately?

48. The second part of this application concerns the order sought by the defendant pursuant to r 28.2 of the UCPR that the question of whether the plaintiff’s claim to damages for personal injuries is statute-barred be determined separately to the other issues in the proceedings.

49. Section 50C(1) of the Limitation Act relevantly provides that:

“An action on a cause of action to which this division applies is not maintainable of brought after the expiration of the limitation period of whichever of the following periods is the first to expire:

(a) the “3 year post discoverability limitation period”, which is the period of three years running from and including the date on which the cause of action is discoverable by the plaintiff.”

50. Section 50D of the Limitation Act relevantly provides:

“(1) For the purposes of this Division, a cause of action is discoverable by a person on the first date that the person knows or ought to know of each of the following facts:

(a) the fact that the injury or death concerned has occurred,

(b) the fact that the injury or death was caused by the fault of the defendant in the case of injury,

(c) the fact that the injury was sufficiently serious to justify the bringing of an action on the cause of action.

(2) A person "ought to know" of a fact at a particular time if the fact would have been ascertained by the person had the person taken all reasonable steps before that time to ascertain the fact.”

51. In determining whether to exercise the power under r 28.2 of the UCPR, I am required to give effect to the overriding purpose of the Civil Procedure Act to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

52. The defendant accepted that in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 (at 533), the High Court warned that it was undesirable that “limitation questions of the kind under consideration” in that case be decided in advance of the hearing except in the clearest cases. The defendant contends that this is such a case.

53. The principles regarding the application of r 28.2 of the UCPR are conveniently summarised in the decision of Hallen AsJ (as his Honour then was) in Southwell v Bennett at [15]. I have had regard to all of those principles but, in particular, the following four that are apposite to this case:

“h) While it may appear attractive, superficially, to order the trial of a separate question, experience often shows that it will not be so, for example, because of the complications that can arise in relation to appeals, or to overlapping factual issues, or to questions of credit, if the same witnesses have to give evidence in relation to a question that is separated and those questions that are not: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7(6)] per Einstein J.; Owners Corporation Sp 70672 v Trustees of Roman Catholic Church [2010] NSWSC 946 at [16] per Ball J.

(i) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings, but often has the reverse effect. It sometimes happens that it turns out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which it is intended to avoid: Idoport Pty Ltd v National Australia Bank Ltd; Tepko Pty Limited v The Water Board at [168].

(j) Before a question is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd at 142, per Giles CJ in Comm D; Parramatta Stadium Trust v Civil and Civic Pty Ltd; Century Medical v THLD (NSWSC, 27 August 1996, unreported).

(k) Where findings as to the credit of a witness is, or of witnesses are, or may be, involved in the consideration of the evidence relevant to the question, it is inappropriate to order a separate trial: ABB v Freight Rail [1999] NSWSC 1037.”

54. The observations of Johnson J In Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 are also pertinent. As his Honour noted at [6]:

“It has been observed that, since the Civil Procedure Act 2005, the Court should take a more interventionist role in identifying and separating important issues which can resolve significant parts of litigation expeditiously: Integral Home Loans Pty Limited v Interstar Wholesale Finance Pty Limited [2006] NSWSC 1464 at [6]. Although trial courts will probably be more disposed nowadays to order separate questions than they might have been in the past, it remains the case that separate determination is an exceptional course to be contrasted with the ordinary course of deciding a case in its totality: Street v Luna Park Sydney Pty Limited [2007] NSWSC 697 at [5].”

55. Having regard to these principles, on the material before me on the application, I am not satisfied that it is in the interests of justice to hear the limitation period argument prior to the hearing for the following reasons.

56. First, although the defendant submitted that this is one of those “clearest of cases”, I am not persuaded that that is the case. Mr Insall asserted that the cause of action was discoverable by December 2013. That assertion is based on an observation made by the psychiatrist Dr Bench in his report extracted above at [11]. I am not satisfied that the report of Dr Bench provides a sufficient basis to find that there is a clear limitation issue in these proceedings. That same report notes that it was not until May 2014, a time fewer than three years before the proceedings were commenced, that the plaintiff first attended on a general practitioner.

57. I am unable to be satisfied on the material before me on this application that there is a clear case that by December 2013 the plaintiff believed that he had suffered an injury and that the injury was caused by the fault of the defendant and that the injury was sufficiently serious to justify bringing an action. Although it is to be accepted that Dr Bench’s report shows that symptoms were apparent in the period from December 2013 to April 2014, that is an insufficient basis for me to be satisfied that the limitation issue be decided separately.

58. Second, the question will involve consideration of expert evidence regarding the plaintiff’s mental condition. The issue of identifying when a mental illness commenced is a more nuanced question than identifying when, for example, the plaintiff suffered a physical injury such as a broken leg.

59. Third, the consideration of the relevant limitation period will involve significant questions of credit, not only of the plaintiff but also of other witnesses. This is not a case in which the discrete issue can be resolved by a statement of agreed facts and legal argument.

60. Fourth, although it was submitted on behalf of the defendant that hearing the limitation question separately would reduce costs, I am not persuaded that that is the case. The plaintiff would have to be cross-examined as to his knowledge of all of the relevant matters and, as the plaintiff submitted, other witnesses, including expert witnesses, would need to be called on that issue as well.

61. I accept that there are cases in which it would be appropriate to order the separate determination of a question. Mr Insall relied upon the decisions of Brereton J in Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd, Barrett J in Robbins v The Royal Bank of Scotland plc, and McCallum J in Perpetual Trustee Co Ltd v Moussa and Nichols Constructions Pty Ltd v Elphick, in each of which such an order was made. I have had regard to those decisions.

62. The decision of Brereton J concerned the separate question of the construction of an agreement. The decision of Barrett J concerned the separate question of whether the defendant held shares at a relevant time. In ordering the separate determination of that question his Honour observed at [8]:

“…the matter is not, on the face of things, particularly complex one and that it is unlikely to entail a protracted hearing. The factual questions seem to be confined to whether the defendant did, with the plaintiff’s concurrence, cease to hold the shares in question and, if so, when that happened.”

63. In Perpetual Trustee Co Ltd v Moussa, McCallum J ordered the separate determination of the question of whether amounts paid by the plaintiff fell within a certain definition in a mortgage memorandum, with the consequence that they were secured by the relevant mortgage. Her Honour was satisfied (at [20]) that determination of the question had “real utility” and “the determination of the separate question would “…enable a sensible reassessment of litigation risks, which is likely to encourage settlement.”

64. All of these decisions concerned different factual considerations and legal principles. Although I have found the principles derived from them of assistance, the outcome in those matters does not lend direct support for the proposition that such an order should be made in this case.

65. Overall, I am not satisfied that the defendant has established that the limitation question should be heard prior to the final hearing in this matter

Costs

66. During the hearing of the motion, I raised with counsel the question of the appropriate costs order in the event that I made both orders sought, only one of the orders sought, or neither order. I have granted the defendant’s motion to have the current pleading struck out, but I have not granted his motion to have the limitation period heard prior to the final hearing in this matter. Neither counsel opposed an approach whereas in the event that each party was partially successful on this motion, the appropriate order would be that each pay his own costs. In the circumstances that is the order that I propose to make.

ORDERS

67. I make the following orders:

1. Pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW), the statement of claim filed 28 April 2017 is struck out.

2. Leave to file the amended statement of claim dated 8 September 2017 is refused.

3. The plaintiff is to serve a proposed amended statement of claim on the defendant by 5pm on 27 October 2017.

4. The defendant is to notify the plaintiff by 5pm on 10 November 2017 whether it consents to the filing of that statement of claim.

5. If no consent is forthcoming, the plaintiff is to file and serve a notice of motion seeking leave to file any proposed further amended statement of claim together with all affidavits upon which he proposes to rely and an outline of written submissions in support of the orders sought by 24 November 2017.

6. The defendant is to file and serve any affidavits upon which he proposes to rely and a written outline of submissions in reply to the motion on or before 8 December 2017.

7. Grant leave for the motion to be returnable before the Registrar at 9 am on 12 December 2017.

8. Otherwise dismiss the notice of motion of the defendant filed on 17 August 2017.

9. Order that each party pay his own costs of the motion.

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Decision last updated: 28 September 2017