RICHKING NOMINEES PTY LTD -v- WEDGEPOINT NOMINEES PTY LTD
[2013] WASC 36
•14 FEBRUARY 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RICHKING NOMINEES PTY LTD -v- WEDGEPOINT NOMINEES PTY LTD [2013] WASC 36
CORAM: MASTER SANDERSON
HEARD: 29 NOVEMBER 2012
DELIVERED : 14 FEBRUARY 2013
FILE NO/S: CIV 1953 of 2010
BETWEEN: RICHKING NOMINEES PTY LTD (ACN 085 284 653)
Plaintiff
AND
WEDGEPOINT NOMINEES PTY LTD (ACN 105 461 309)
Defendant
Catchwords:
Practice and procedure - Application to add parties and amend statement of claim - Turns on own facts
Legislation:
Nil
Result:
Application refused
Category: B
Representation:
Counsel:
Plaintiff: Mr P G McGowan
Defendant: Mr D H Solomon
Solicitors:
Plaintiff: Chris Stokes & Associates
Defendant: Solomon Brothers
Case(s) referred to in judgment(s):
Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323
MASTER SANDERSON:
Summons filed 2 April 2012
The plaintiff sought leave to add four additional defendants to this action and for leave to amend the statement of claim. The matter was adjourned on a number of occasions and finally on 8 October 2012 the plaintiff lodged a minute of further amended writ of summons. This had endorsed upon it a minute of the amended statement of claim. The first defendant objected to the amendment of the writ and to the form of the statement of claim. It is convenient to begin by detailing what is proposed to be pleaded in the minute of amended statement of claim.
The plaintiff has as its sole director one Jamie Pollock. The first defendant has as its sole director and shareholder Allen Bruce Caratti. When proceedings were issued these were the only two parties to the action. It is now proposed to add Gucce Holdings Pty Ltd as the second defendant. It is said the sole director and shareholder of Gucce Holdings Pty Ltd is Ms Tina Bazzo. It is proposed to add Ms Bazzo as the fourth defendant to the proceedings. The plaintiff wants to add Mr Caratti in his own right as the third defendant. As the fifth defendant it wants to add Mammoth Nominees Pty Ltd. The sole director and shareholder of Mammoth Nominees Pty Ltd is Mr Caratti.
By par 2 of the minute the plaintiff pleads a joint venture agreement entered into between 'Kevin Pollock for the Pollock Family Companies' and Mr Caratti. Pursuant to that agreement the parties were to acquire certain land in Jandakot. They would mortgage the land to undertake a subdivision. The land was to be held by a company. The parties would share the costs and divide equally the net receipts of the joint venture. The joint venture agreement was oral and was entered into between Kevin Pollock and Allen Caratti.
By par 3 it is alleged pursuant to the joint venture agreement the parties acquired all the shares in Riviera Assets Pty Ltd. Mr Caratti was appointed the sole director of Riviera Assets Pty Ltd. Riviera then offered to purchase the Johnson Road lots from M M Developments Pty Ltd for $3.2 million. Capital contributions were made by both parties to allow the purchase to go ahead and consultants were engaged to assist with the subdivision.
By par 4 it is alleged in November 2002 Riviera lodged an application for subdivision in the name of the then registered proprietor M M Developments Pty Ltd with the West Australian Planning Commission.
By par 5 it is alleged on 27 March 2003 the National Australia Bank appointed receivers to the 'Pollock Group of Companies' including M M Developments Pty Ltd.
By par 6 it is alleged the feasibility report on the proposed subdivision was completed and by par 7 it is alleged in July 2003 application was made for subdivisional approval of the Jandakot property into semi‑rural lots.
By par 8 it is alleged in July 2003 the joint venturers agreed to substitute the first defendant for Riviera and submit an offer to purchase the Jandakot property from M M Developments Pty Ltd. All of the shares in the first defendant were in the name of Mr Caratti.
By par 9 it is alleged an offer was made by the first defendant to acquire the Jandakot land from the receivers of M M Developments Pty Ltd. The purchase price was $2.6 million. The parties also agreed to acquire a property being Lot 287 at Acourt Road which adjoined the Jandakot property which was essential to the sub‑development. The acquisition of the Acourt Road lot was successfully completed. Paragraph 9.6 of the minute is in the following terms:
For the purpose of the issue of certificates of title in due course, cause Richking to assign the benefit of the high bid to Wedgepoint and for Wedgepoint to execute a deed of trust whereby it declared that it held at (sic) the Acourt Road lot on trust for Richking.
It is then pleaded money was borrowed to allow for the acquisition of all the land and for its development. The development then proceeded.
Paragraph 10 of the minute is said to be further or alternatively to par 9. Paragraph 10.1 is in the following terms:
On or about 24 January 2005 the first defendant, represented by Caratti, executed a declaration of trust pursuant to which the first defendant agreed to acquire the Johnston Road lots (the Jandakot property) and the Acourt Road lot and to hold them in trust as trustee for the plaintiff and the first defendant in equal shares.
The subsequent two subparagaphs of par 10 then plead the acquisition. Paragraph 11 pleads subdivisional approval and par 12 pleads the first defendant held the development approval in trust for the joint venture.
Paragraph 13 pleads as follows:
Further and alternatively each of Wedgepoint, Caratti, Richking Nominees and Pollock were in a fiduciary relationship one with the other. The fiduciary relationship arose from the matters pleaded in paragraphs 1 to 10 above.
It is convenient at this point to pause and observe contrary to what is pleaded in par 13, nothing pleaded in pars 1 through to 10 can give rise to a fiduciary relationship. As Beech J observed in Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323 a claim for breach of fiduciary duty requires more than mere incantation of equitable principle. It is necessary to plead the relevant material facts. In this case, there are no material facts pleaded which could give rise to any fiduciary relationship. The fact that the parties are in a joint venture is not in and of itself sufficient to say a fiduciary duty arises. It might be different if the parties were in a partnership. But the mere fact there was a commercial arrangement of a rather murky nature and an oral agreement to do certain things does not give rise to fiduciary obligations.
The first defendant further complains that the pleas are confusing. First it is said the preamble to par 2 describes Mr Kevin Pollock as having made an agreement 'for the Pollock Family Companies'. The principal or principals allegedly represented by Mr Pollock as agent are not identified. Subsequent references through par 2 and the rest of the minute to 'the parties' and 'the joint venturers' and 'the joint venture' do not identify any specific person or persons. That is confusing. Paragraph 2.3 of the minute contemplates that all parties would acquire a company to purchase the Jandakot property and pars 3.1 and 3.2 plead the acquisition of such a company - Riviera Assets Pty Ltd. A Pollock Family Company - Redglen Pty Ltd was to hold the shares for the Pollock interests. However, it is pleaded Mr Caratti acquired all the shares in the first defendant. That is inconsistent with the involvement of Redglen Pty Ltd.
Although it is possible to see where these paragraphs of the pleading are headed, they are in their present form unacceptable. What is pleaded is too confusing. Of particular concern is the failure to identify material facts said to give rise to the fiduciary relationship. That is the major point which must be addressed. Otherwise the failings are of form and can doubtless be put right with further consideration. In any event, I would not be prepared to allow amendment in terms of these paragraphs.
Having reached that conclusion pars 14 and 15 cannot stand. They assume the existence of certain fiduciary duties.
Paragraph 16 deals with an agreement between the joint venturers pursuant to which Mr Caratti (apparently in his own right) was to extract sand from the Jandakot property and the Acourt lot. It is alleged Mr Caratti would pay 'a commercial royalty' to the joint venture for the extraction of the sand. By par 17 it is alleged the same was extracted and by par 18 the royalty has not been paid.
Paragraph 19 returns again to the fiduciary duties in par 14. Once again, the paragraph cannot stand. Paragraph 20 appears to allege certain breaches of the joint venture agreement. It is not entirely clear where it leads or what cause of action it relates to. None of these paragraphs can stand.
Paragraph 21 pleads as an alternative to pars 9 and 10 the 'Canning Vale Property and the properties' were held on constructive trust for the plaintiff and the first defendant in equal shares. That plea is difficult to follow. Assuming the reference should be to the Jandakot property and the Acourt Road lot, there are no facts which give rise to the assertion there was a constructive trust. The pleading in the earlier paragraphs does not support such a conclusion. In any event, the first defendant can hardly hold a property it owns on a constructive trust for itself. The paragraph is illogical and cannot stand.
By par 22 it is alleged the first defendant mortgaged both the Jandakot property and the Acourt Road lot to secure a loan in favour of the proposed second defendant, Gucce Holdings Pty Ltd. Paragraph 23 pleads Ms Bazzo is the sole shareholder and director of Gucce Holdings Pty Ltd. This is the only mention of Ms Bazzo in the minute and it is difficult to see what cause of action could arise against her even if Gucce Holdings Pty Ltd receive funds from a loan taken out in breach of trust.
Paragraph 24 pleads certain fiduciary duties based upon the first defendant's position as a constructive trustee. Paragraph 25 pleads the taking out of the mortgages was a breach of the fiduciary duties. Paragraph 26 alleges the first and the other proposed defendants have not accounted to the plaintiff for the loan. As a consequence it is alleged in par 27 the plaintiff has suffered loss and damage.
There are a number of difficulties with these pleas. First and most obviously, even accepting what the plaintiff says, it is difficult to see how either Mr Caratti or Ms Bazzo would be liable to account to the plaintiff.
Paragraphs 29 onwards deal with the case against the proposed four defendant, Mammoth Nominees Pty Ltd. By par 29 it is alleged pursuant to the joint venture agreement Mammoth Nominees Pty Ltd was engaged to undertake site works in relation to the Jandakot property and the Acourt lot. Mr Caratti was the sole director of Mammoth Nominees Pty Ltd. Paragraph 31 pleads at all material times Caratti, Wedgepoint and Mammoth Nominees Pty Ltd owed the plaintiff fiduciary duties. It is difficult to see how any of the three individuals owed the plaintiff fiduciary duties. None of these paragraphs can stand.
Paragraph 32 appears to plead a case against Mammoth Nominees Pty Ltd for breach of its contract with the first defendant. There is nowhere alleged the plaintiff was a party to that contract and it cannot sue for any breach. That claim falls away and the pleading cannot stand.
In all, there is no basis upon which leave could be given to amend in terms of the minute of further amended writ of summons. I would not be prepared to add the parties as proposed because to my mind there is no case pleaded against them.
In further opposition to this application, the first defendant pointed out the statement of claim made allegations of fraud against the proposed parties. That being so, it was said to seek to amend in terms of the minute would fall foul of O 6 r 3. On that basis leave ought not be granted. Given I would not allow the amendment in any event, it is not strictly necessary to deal with this issue. However, it may be of assistance to the plaintiff if I say it seems to me the complaint is well made. I would not have allowed the amendment of the writ in its present form because the statement of claim alleging fraud is endorsed on the writ. If the plaintiff wishes to add further parties it should seek to amend the writ to include just an endorsement of claim. Any statement of claim should be separate.
In light of these reasons the plaintiff ought have a further opportunity to bring in a minute of substituted statement of claim. It may or may not wish to persist with addition of parties. If it does, an application to amend the writ and for leave to amend in terms of a substituted statement of claim can be dealt with on the present summons. The plaintiff ought pay the defendant's costs of this application including the reserved costs.
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