S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2022 02029

S PIRRIE EQUITIES PTY LTD (ACN 115 531 087) AND OTHERS	Plaintiffs
v
VENETIAN MEDIA GROUP PTY LTD (ACN 608 613 501) AND OTHERS	Defendants
AND BETWEEN:
VENETIAN MEDIA GROUP PTY LTD (ACN 608 613 501)	Plaintiff by counterclaim
v
S PIRRIE EQUITIES PTY LTD (ACN 115 531 087) AND ANOTHER	Defendants by counterclaim

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JUDGE:	Elliott J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 February 2023
DATE OF RULING:	18 May 2023
CASE MAY BE CITED AS:	S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 253

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PRACTICE AND PROCEDURE – Pleadings – Amendment of pleadings – Application for leave to file an amended statement of claim – Proposed amendments legally and factually deficient – Proposed amendments fail to disclose reasonable cause of action – Proposed amendments embarrassing – Leave to file refused – Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 13.02, 13.09, 23.02, 36.01, 36.04 – Civil Procedure Act 2010 (Vic), ss 1(c), 7(1), 63(1) – Supreme Court Act 1986 (Vic), s 29(2).

PRACTICE AND PROCEDURE – Application to join 2 further parties as defendants – Whether necessary to join parties – Whether just and convenient to join parties – Leave granted to add fourth defendant – Leave refused to add fifth defendant – No real prospects of success – Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 1.13(1), 9.06(b).

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APPEARANCES:	Counsel	Solicitors
For the plaintiffs	Francis Tiernan KC	Stephen Peter Byrne
For the defendants	No appearance
For Wheelhouse Advisory Pty Ltd	Christie Jones	Gilbert + Tobin
For Mills Oakley	Stewart Maiden KC	Mills Oakley

HIS HONOUR:

IntroductionA.

This ruling concerns an application by the plaintiffs for leave to file an amended statement of claim (“the Proposed Statement of Claim”) and for leave to join 2 entities as defendants to the proceeding.
The first plaintiff, S Pirrie Equities Pty Ltd (“S Pirrie”), and the second plaintiff, Fitstop Pty Ltd (“Fitstop”), are companies owned and run by the third plaintiff, Stephen Pirrie (“Pirrie”) (collectively, “the Sellers”). Under Pirrie’s direction, shares held by S Pirrie and Fitstop in the third defendant, Frontier Media Factory Pty Ltd (“Frontier Media”), were sold to the first defendant, Venetian Media Group Pty Ltd (“Venetian Media”), by way of a share purchase agreement in late 2019 (“the Share Purchase Agreement”). The second defendant, Mark Fishwick (“Fishwick”), is and was at all material times the director of Venetian Media (together, “the Purchasers”).
In their statement of claim filed 1 June 2022 (“the Statement of Claim”), the Sellers allege that the Purchasers breached the Share Purchase Agreement by failing to pay the purchase price in the agreed instalments. The Sellers now seek to join Wheelhouse Advisory Pty Ltd (“Wheelhouse”) and Mills Oakley as defendants in this proceeding (“the Proposed Defendants”), on the grounds that they misled the Sellers during the transaction and breached implied retainers, fiduciary duties and general duties owed to the Sellers.
For the reasons set out below, leave will not be granted to file the Proposed Statement of Claim in its current form. It contains obvious errors. Further, many of the allegations it contains have not been properly pleaded.
Nevertheless, leave will be granted for Wheelhouse to be joined as the fourth defendant to the proceeding. Despite the deficiencies in the Proposed Statement of Claim, the Sellers have demonstrated they have at least an arguable claim against Wheelhouse with some prospect of success. Therefore, the Sellers will be permitted to file an amended statement of claim setting out their case against Wheelhouse, subject to Wheelhouse having the right to apply to have it struck out.
Leave will not be granted to join Mills Oakley. Both on the Proposed Statement of Claim and on the evidence before the court, the Sellers’ claim against Mills Oakley can properly be described as hopeless. The deficiencies of the proposed case against Mills Oakley are such that they could not be cured through further amendments.

Background B.

The sale of the Frontier Media businessB.1

Since at least 2000, Pirrie has conducted and operated a group of companies known as the “Frontier Group”, which group included Frontier Media, an accredited advertising agency. From the outset, Andrew Butler (“Butler”), an accountant, provided taxation and financial advice to Pirrie and the entities in the Frontier Group, including Frontier Media. He did so through his firm, Wellington Accountants Pty Ltd (“Wellington Accountants”).
On 30 September 2015, Wheelhouse was incorporated by Butler. From this date, Butler transitioned his client base, including Frontier Media, from Wellington Accountants to Wheelhouse. A written retainer was entered into in January 2016 between Wheelhouse and another entity in the Frontier Group, Frontier Advertising Pty Ltd, pursuant to which Wheelhouse agreed to provide accounting and taxation services. This retainer was later supplemented by way of annexure to include the provision of accounting and taxation services to each of the Sellers and to Frontier Media.
In the Proposed Statement of Claim, the Sellers allege that in or around August 2019 Butler advised Pirrie that he knew of “someone” who wanted to purchase Frontier Media. That “someone” was subsequently revealed to be Fishwick. Butler allegedly recommended that Pirrie sell Frontier Media to Fishwick, advising Pirrie that Fishwick was a “ripper”, that the offer was “a good deal” and that there “won’t be any problems”. Pirrie claims he accepted Butler’s recommendation and, in doing so, entered into an implied retainer with Wheelhouse (“the Alleged Wheelhouse Retainer”), under which Wheelhouse agreed to act on behalf of the Sellers in the sale of Frontier Media.
The Sellers further allege that Wheelhouse engaged Mills Oakley on the Sellers’ behalf to assist in the drafting, settling and completion of the Share Purchase Agreement and to “facilitate the sale by the Sellers of their shares” in Frontier Media. By Wheelhouse doing so, the Sellers allege that an implied retainer arose between the Sellers and Mills Oakley (“the Alleged Mills Oakley Retainer”). The Sellers claim that pursuant to the Alleged Mills Oakley Retainer, Mills Oakley accessed, used and relied upon the Sellers’ business and financial records in the possession of Wheelhouse. In an affidavit sworn in support of this application, Pirrie stated that it was his “understanding and belief” from his discussions with Butler at the time that Mills Oakley had been engaged to act on the Sellers’ behalf in the sale of the Frontier Media business.
Wheelhouse denies the existence of the Alleged Wheelhouse Retainer, and maintains that it did not provide the Sellers with business advice or any advice on the merits of the sale of the Frontier Media business at any time. Instead, it contends that the scope of its engagement by the Sellers was as set out under the written retainer (and the later annexure) that it entered into with entities in the Frontier Group in January 2016 for accounting and taxation services.[1]
[1]See par 8 above.
Between September and December 2019, Butler sent a number of emails to Pirrie in relation to the sale of the Frontier Media business and the preparation of the Share Purchase Agreement. Many of these emails included information and advice on the Share Purchase Agreement and the related transaction. For example, in an email from Butler to Pirrie dated 17 October 2019, Butler provided a draft share purchase agreement for Pirrie’s consideration and updated Pirrie on several matters related to the transaction, including calculation of a “super bonus payment”, potential locations for a new business premises and a disclosure letter to be prepared by Pirrie to “mitigate any warranty claims”.
In another email from Butler to Pirrie dated 9 December 2019, Butler set out a list of 9 matters for Pirrie’s consideration based on a draft share purchase agreement that had been provided by Mills Oakley the previous week. In respect of several of these matters, Butler provided advice or suggestions to Pirrie. Butler also queried who Pirrie was “using from [a] legal perspective” in relation to the transaction as they would need to “be across” the Share Purchase Agreement and attend settlement. By reply email on the same day, Pirrie stated that he had “not even thought about a lawyer” and that he would “sort it out”.
In a further email from Butler to Pirrie on 11 December 2019, Butler advised that “the [S]hare [P]urchase [A]greement is going to be signed by [Fishwick] today” and outlined where negotiations stood in relation to earn-out bonuses and cross-referring credits. This email concluded with Butler telling Pirrie that Wheelhouse had “pushed [Fishwick] pretty hard on a lot of these things” and that in his view, there was a “genuine upside for all parties” to the transaction.
Further, over the latter half of 2019, Wheelhouse rendered several invoices to the Sellers for these services. Relevant line items on these invoices included:
(1)The preparation of various financial statements, records and forecasts under the heading, “Fee for professional services rendered in relation to the sale of Frontier [Media]”.
(2)“Various correspondence and conference calls with … [the Commonwealth Bank of Australia] regarding finance for business acquisition”.
(3)“Various correspondence with Stuart Lewin[2] & Nicole Tumiati from Mills Oakley regarding term sheet and due diligence work”.
(4)“Various correspondence and meetings with [Butler] & [another representative of Wheelhouse] regarding transaction”.
(5)“Various emails and calls to lawyers in relation to due diligence”.
(6)“Review of share sale agreement for transaction from Mills Oakley”.
(7)“Review of final [Share Purchase Agreement] and amendments with Nicole Tumiati from Mills Oakley”.
(8)“[Butler] attendance of signing of final [Share Purchase Agreement]”.
[2]See par 23(5) below.
Of the 11 invoices tendered, 2 contained a note to the effect that half of the “transaction costs” had been charged to the Frontier Group, and half to the “Fishwick Group”. This arrangement was also confirmed in an email from Butler to Pirrie on 1 October 2019, which stated, “[w]ith our costs we are splitting them and trying to keep to a minimum. Some to [Fishwick] and some to you.”

Mills Oakley likewise denies the existence of the Alleged Mills Oakley Retainer, and further denies that it was acting or had ever acted for the Sellers in the sale of the Frontier Media business. Instead, it maintains that it acted for the Purchasers (and the Purchasers only) in the transaction. To establish this, Mills Oakley referred to the fact that it had previously executed a written retainer with the Purchasers to act on behalf of Venetian Media in respect of the acquisition of the Frontier Media business in August 2019. Pursuant to this agreement, Mills Oakley undertook various work on behalf of the Purchasers and rendered several invoices for legal services in relation to the transaction in late 2019 and early 2020.
In or around late 2019, the Sellers and the Purchasers executed the Share Purchase Agreement for the sale of the Frontier Media business. The evidence presently before the court is that, pursuant to the Share Purchase Agreement, the Purchasers undertook to pay the Sellers approximately $4 million for the Frontier Media business, with payment to be made in instalments. In mid 2020, the Share Purchase Agreement was varied pursuant to a deed of variation (“the Variation Deed”), which altered the bases and details for payment of the remaining instalments.
This proceeding arises out of an alleged failure to pay 1 of these instalments. The Sellers allege the Purchasers failed to pay the sum of $750,000 by the due date of 28 February 2022, in breach of the Share Purchase Agreement as varied by the Variation Deed. This sum remains outstanding.
In the Statement of Claim, the Sellers seek a declaration that Venetian Media was (and is) obliged to pay them the sum of $750,000. They also seek an order requiring either Fishwick or Venetian Media to pay the outstanding $750,000, plus damages, interest and costs from the Purchasers.

The claims against the Proposed DefendantsB.2

B.2.1 The claim against Wheelhouse

In respect of Wheelhouse, the Sellers seek leave to allege in the Proposed Statement of Claim that:
(1)By way of the Alleged Wheelhouse Retainer, Wheelhouse was retained to act on behalf of and represent the Sellers in the sale of the Frontier Media business, including in the negotiation, preparation and execution of transaction documents and the undertaking of due diligence.
(2)There were express and implied terms of the Alleged Wheelhouse Retainer that Wheelhouse was required to (amongst other things) protect the Sellers’ interests and exercise reasonable care, skill and diligence in the sale of Frontier Media, and refrain from doing anything that would cause detriment to the Sellers.
(3)Wheelhouse owed fiduciary duties to the Sellers in the sale of the Frontier Media business or the performance of the Alleged Wheelhouse Retainer, or both, in light of the trust and confidence the Sellers placed in Wheelhouse as their accountants and advisors.
(4)Wheelhouse owed the Sellers other general duties in acting as the accountants and advisors to the Sellers in the sale of the Frontier Media business.
(5)Contrary to the above duties, and unbeknownst to the Sellers:
(a)Butler and Wheelhouse knew that Fishwick had a chequered financial history, including that he was the subject of proceedings in the Supreme Court of New South Wales and had been reported to the Australian Securities and Investments Commission for breaches of director’s duties;
(b)Butler, and the firms of which he was a director (including Wellington Accountants and Wheelhouse), had been the accountants and advisors for Fishwick and his related entities since about 2012; and
(c)after the execution of the Share Purchase Agreement, Butler was appointed as a director of Venetian Media alongside Fishwick.
(6)Wheelhouse therefore “caused detriment and/or injury to” the Sellers and breached the Alleged Wheelhouse Retainer and fiduciary duties and other general duties owed to the Sellers by, amongst other things:[3]
(a)failing to inform the Sellers of Fishwick’s prior conduct and the allegations of misconduct made against him;
(b)failing to inform the Sellers of the long-standing relationship between Wheelhouse and Fishwick;
(c)failing to inform the Sellers, prior to engaging Mills Oakley to draw up the Share Purchase Agreement, of Mills Oakley’s prior relationship with Fishwick;[4]
(d)failing to advise the Sellers to conduct due diligence on Fishwick, to obtain an independent valuation of the Frontier Media business or to refer the Sellers and the Purchasers to independent accountants, advisors and lawyers; and
(e)failing to inform the Sellers that, after the sale of Frontier Media was completed, Butler would become a director of Venetian Media.
(7)Wheelhouse engaged in common law negligent misrepresentation or misleading or deceptive conduct within the meaning of section 18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (“the Australian Consumer Law”) by advising the Sellers, amongst other things, that Fishwick was a “ripper”, the offer was “a good deal” and that there wouldn’t be any problems with the transaction.
[3]This is not an exhaustive list of the allegations contained in the Proposed Statement of Claim.
[4]See par 23(5) below.
The Sellers therefore intend to seek against Wheelhouse:
(1)A declaration that the conduct of Wheelhouse was in breach of the Australian Consumer Law.
(2)Damages at common law for breach of the Alleged Wheelhouse Retainer or negligent misrepresentation.
(3)Further or alternatively, damages under the Australian Consumer Law for misleading or deceptive conduct.
(4)Further or alternatively, equitable compensation.
(5)Interest and costs.

B.2.2 The claim against Mills Oakley

In respect of Mills Oakley, the Sellers seek to allege in the Proposed Statement of Claim that:
(1)By way of the Alleged Mills Oakley Retainer, Wheelhouse on behalf of the Sellers retained Mills Oakley to act for the Sellers in the sale of the Frontier Media business, including in the negotiation, preparation and execution of the Share Purchase Agreement.
(2)There were terms implied within the Alleged Mills Oakley Retainer that Mills Oakley would act in the Sellers’ interests, exercise reasonable care, skill and diligence in the sale of Frontier Media, and would refrain from doing anything that would cause detriment to the Sellers.
(3)Mills Oakley stood in a fiduciary relationship with the Sellers and owed fiduciary duties to them.
(4)By reason of the Alleged Mills Oakley Retainer or instructions given to Mills Oakley by Wheelhouse on behalf of the Sellers, or both, Mills Oakley owed the Sellers other general duties.
(5)Contrary to the above duties, and unbeknownst to the Sellers, Mills Oakley, and specifically Stuart Lewin, a partner of Mills Oakley (“Lewin”), had a long-standing professional relationship with Fishwick that commenced in 2011. Mills Oakley had acted for Fishwick in proceedings related to his alleged misconduct and was therefore aware of Fishwick’s troubled financial history. Moreover, Mills Oakley continued to act for the Purchasers during the drafting of the Share Purchase Agreement, despite also acting on behalf of the Sellers.
(6)Mills Oakley therefore breached the Alleged Mills Oakley Retainer and the fiduciary duties and other general duties owed to the Sellers under it by, amongst other things, failing to take all reasonable steps to ensure the Sellers received necessary and proper advice during the sale of the Frontier Media business, failing to protect and further the Sellers’ interests, and failing to exercise reasonable care, skill and diligence.
The Sellers therefore seek to claim damages for breach of the Alleged Mills Oakley Retainer, or alternatively equitable compensation, plus interest and costs from Mills Oakley.

Procedural historyB.3

On 17 March 2022, prior to the commencement of this proceeding, the Sellers’ solicitor wrote to Mills Oakley alleging that Mills Oakley was acting for both the Sellers and the Purchasers in relation to the sale of Frontier Media. The Sellers’ solicitor demanded Mills Oakley withdraw from representing the Purchasers. Mills Oakley denied the allegations, and refused to withdraw. The Sellers subsequently commenced this proceeding on 1 June 2022. On 14 June 2022, an appearance was filed by Mills Oakley on behalf of the defendants.
The proceeding was first listed for directions on 2 September 2022. At the second directions hearing, held 2 weeks later, the Sellers’ solicitor informed the court that his clients intended to join the Proposed Defendants to the proceeding. A summons seeking leave to file the Proposed Statement of Claim and to join the Proposed Defendants was subsequently filed by the Sellers on 4 November 2022.
By letter dated 15 November 2022, the solicitors for Wheelhouse informed the Sellers’ solicitor that they objected to the filing of the Proposed Statement of Claim on the grounds that it contained serious deficiencies and it was “presently impossible for [Wheelhouse] to understand let alone respond to the claims” made in it. The letter invited the Sellers to either address those deficiencies or withdraw or discontinue the claims against Wheelhouse.

The Sellers’ solicitor responded by letter dated 18 November 2022, denying the existence of any such deficiencies and informing the solicitors for Wheelhouse that the Sellers would not be “acceding to the nonsense proposition that they withdraw their claims against any of the [Proposed Defendants]”.
The Sellers’ application was listed for hearing on 6 December 2022. Orders were made for the Sellers to file and serve submissions by 4.00 pm on 29 November 2022. This deadline was not met.
On 1 December 2022, the Sellers’ solicitor emailed the court foreshadowing an adjournment application. The adjournment was sought to allow time for the Sellers to brief recently retained counsel, and to facilitate the production of further documents. The Proposed Defendants did not consent to the adjournment.
At the hearing on 6 December 2022, counsel for the Sellers stated that they had not been engaged long enough to form any proper opinion of the leave application.[5] Counsel stated they were reviewing the merits of the application for leave to file the Proposed Statement of Claim and to join the Proposed Defendants, and indicated that they may elect to discontinue it.
[5]At that point in time, 2 juniors had been briefed; neither of whom appeared on this application.
On this basis, and in light of the fact that it was the first return of the application, it was appropriate to adjourn the Sellers’ summons.

Issues for determination C.

On the Sellers’ application, 3 issues arise for determination:
(1)Should the Sellers be granted leave to file the Proposed Statement of Claim?
(2)Should the Sellers be granted leave to join Wheelhouse as a defendant?
(3)Should the Sellers be granted leave to join Mills Oakley as a defendant?

C.1 Should the Sellers be granted leave to file the Proposed Statement of Claim?

C.1.1 Legal principles

Rule 36.04(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (“the Rules”) concerns the amendment of pleadings. It relevantly provides:
36.04   Amendment of pleading and disallowance of amendment
(1)       A party may amend any pleading served by that party—
(a)    once before the close of pleadings; or
(b)   at any time by leave of the Court or with the consent of all other parties.
…
Under rule 36.01(1), the court may order that any document be amended or grant any party leave to amend any document if it is for the purpose of determining the real question in controversy between the parties, correcting any defect or error in the proceeding or avoiding multiplicity of proceedings.
The power to grant leave to a party to amend a pleading is a discretionary power. The nature and importance of the proposed amendments must be considered.[6] This consideration must be weighed against case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendment is allowed.[7]
[6]AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 214-215 [102] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). In this case, the High Court considered a similar, though not identical, rule to r 36.01(1)(a).
[7]Ibid, 213 [98]-[99], 214-215 [102], 217 [111].
Regard must also be had to the overarching purpose set out in the Civil Procedure Act 2010 (Vic) in relation to civil proceedings, which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[8]
[8]Civil Procedure Act, ss 1(c), 7(1).
Naturally, proposed amendments that are legally or factually flawed will not satisfy these requirements. As stated in ABL Nominees Pty Ltd v MacKenzie (No 2):[9]
It is common ground that an amendment which is futile because it is obviously bad in law will not be allowed: Commonwealth v Verwayen.[10] Similarly, if a proposed pleading would be liable to be struck out if it had been contained in an original pleading, either because the pleading is bad in law or is defective as a pleading, then leave to file the proposed pleading will not be allowed: Horton v Jones (No 2);[11] Gimson v Victorian WorkCover Authority.[12] …
As J Forrest J observed in Matthews v SPI Electricity Pty Ltd (Ruling No 6),[13] having regard to the terms of the [Civil Procedure Act] … the test is best expressed in the words of s 63 of that Act: if the amendment has no real prospect of success at trial then that would be a highly relevant factor in the exercise of the discretion to refuse the application.
[9][2014] VSC 529, [18]-[19] (Derham AsJ).
[10](1990) 170 CLR 394, 456.8 (Dawson J).
[11](1939) 39 SR (NSW) 305, 310.1 (Jordan CJ).
[12][1995] 1 VR 209, 215.9 (McDonald J).
[13][2012] VSC 70, [34].
In Mandie v Memart Nominees Pty Ltd,[14] the Victorian Court of Appeal considered the meaning of the “no real prospect of success” test:[15]
Since the introduction of the [Civil Procedure Act] and the “no real prospect of success” test, various authorities have used different language to explain what the test means.
According to Lysaght:[16] a prospect which is not “real” is “fanciful”; although the “no real prospect of success” test in s 63(1) of the [Civil Procedure Act] is more liberal than the common law test of “hopeless” or “bound to fail”, there may not be much difference between them in practice; and, properly understood, a real question to be tried is one which realistically might result in the respondent to an application for summary judgment succeeding in the proceeding.
[14][2016] VSCA 4.
[15]Ibid, [44]-[45] (Kyrou, Ferguson and McLeish JJA).
[16]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27, 39 [29] (Warren CJ and Nettle JA, with whom Neave JA agreed).
This is a low bar. The proposed amendment(s) need only be arguable to be allowed.[17] It is not appropriate to refuse an amendment on the basis that it raises a claim or defence which appears not to have much chance of success, as the question of whether a claim or defence ought to succeed is a question for the judge at trial.[18]
[17]The Commonwealth v Verwayen (1990) 170 CLR 394, 456.7 (Dawson J); Hall v National & General Insurance Co Ltd [1967] VR 355, 367.8 (Gowans J).
[18]Ibid.
Nevertheless, a proposed amendment must satisfy the requirements which apply to any other pleading, meaning that it must:
(1)State all the material facts on which the amending party relies.[19]
(2)Alert the defending parties to the case that they need to meet and define the precise issues for determination (in order to ensure procedural fairness and a fair trial).[20]
(3)Not be vague, ambiguous, inconsistent or embarrassing.[21]
[19]See r 13.02(1)(a) of the Rules. See also Wheelahan v City of Casey (No 12) [2013] VSC 316, [25(c)] (Dixon J), applied in Uber Australia Pty Ltd v Andrianakis (2020) 61 VR 580, 599 [50] (Niall, Hargrave and Emerton JJA).
[20]Wheelahan v City of Casey (No 12) [2013] VSC 316, [25(b)] (Dixon J).
[21]A pleading will be “embarrassing” within the meaning of r 23.02 of the Rules when it places the opposing party in the position of not knowing what is alleged against them. Thus, a pleading which is unintelligible, vague or ambiguous, or too general is embarrassing: Sarto v Sarto [2021] VSC 295, [42] (Derham AsJ).
Consistent with these principles, specific requirements have been recognised for pleadings of particular causes of action. For instance, it has been held that a pleading of breach of fiduciary duty should define, with some precision, the circumstances said to give rise to the alleged fiduciary relationship, the scope and content of the fiduciary duties said to have arisen and the particular duty or duties which the party claims have been breached.[22]
[22]Paramasivam v Flynn (1998) 90 FCR 489, 501A (Miles, Lehane and Weinberg JJ).
By way of further example, in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd,[23] it was observed that a pleading of misleading or deceptive conduct under the Australian Consumer Law:[24]
… requires consideration of the words of the relevant statute and their judicial exposition since the cause of action first entered Australian law in 1974. It requires a clear identification of the conduct said to be misleading or deceptive. Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive.
(Emphasis added.)
[23](2010) 241 CLR 357.
[24]Ibid, 364 [5] (French CJ and Kiefel J).
In addition to identifying the particular conduct that is alleged to be misleading or deceptive, a pleading must identify the way in which that conduct is said to be misleading or deceptive.[25] It must also contain facts which constitute the circumstances in which the conduct occurred such that it is alleged that the statutory provisions have been contravened.[26]
[25]McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230, 267 [150] (Allsop J).
[26]Taylor v Lederman [2013] VSC 99, [25] (Ferguson J).

C.1.2 Submissions

The Sellers did not address any of the above authorities in their written submissions. Instead, they focused principally on whether the Proposed Defendants should be joined to the proceeding.
In contrast, Wheelhouse devoted significant attention to what it described as a lack of “real details” in the Proposed Statement of Claim. Wheelhouse submitted that the claims made against it by way of the Sellers’ proposed amendments had no real prospect of success or, alternatively, were so deficient that they were liable to be struck out. In particular, it was submitted that:
(1)Despite the “inordinate length” of the Proposed Statement of Claim,[27] it lacked material facts and necessary particulars and omitted critical details (including, for example, any detail as to the causal link between the pleaded conduct of Wheelhouse and the loss and damage said to be sustained by the Sellers), such that Wheelhouse was unable to understand the case against it.
(2)There was a critical lack of evidence of the Alleged Wheelhouse Retainer, especially given its purported all-encompassing nature and onerous terms, such that any claim as to its existence was untenable.
(3)The claims in respect of the fiduciary and other duties allegedly owed by Wheelhouse to the Sellers were “lacking in sufficient material facts and necessary particulars” so as to render them “futile”.
(4)The alternative claims for misleading or deceptive conduct under the Australian Consumer Law or common law negligent misrepresentation failed to address how the representations allegedly made by Butler were false, and the basis on which it was alleged they had caused loss or damage to the Sellers.
[27]The Proposed Statement of Claim comprises 81 pages.
In light of this, Wheelhouse submitted the Proposed Statement of Claim failed to disclose reasonable causes of action against it and thus had “no real prospect of success”. Further, Wheelhouse contended that the claims made against it were so deficient that they would be liable to be struck out on the grounds of lacking sufficient material facts and necessary particulars.
Wheelhouse also pointed to its attempt to raise the alleged defects in the Proposed Statement of Claim with the Sellers by way of the letter dated 15 November 2022.[28] It alleged the Sellers made no attempt to clarify their claims or adduce additional evidence to rectify the issues raised. Further, Wheelhouse highlighted that at the hearing of 6 December 2022, counsel for the Sellers indicated they would either seek to amend the Proposed Statement of Claim or discontinue their application to join the Proposed Defendants,[29] and noted that neither course was ultimately adopted.
[28]See par 27 above.
[29]See par 31 above.
Wheelhouse submitted that, as a result of the Sellers’ conduct, an inference could be drawn that the Sellers were still in the process of formulating their claim against Wheelhouse. In these circumstances, Wheelhouse contended that allowing the filing of the Proposed Statement of Claim would delay and interfere with the proceeding.
Likewise, Mills Oakley submitted that leave to file the Proposed Statement of Claim should be refused. In so submitting, it pointed to what it considered to be a wealth of evidence that directly contradicted the assertions made in the Proposed Statement of Claim that Mills Oakley was acting for the Sellers in the sale of Frontier Media. Further, it submitted that Pirrie’s claim in his supporting affidavit to the effect that he believed Mills Oakley was acting on the Sellers’ behalf[30] was not supported by any objective evidence.
[30]See par 10 above.
The dearth of material facts capable of providing a foundation for a finding that Mills Oakley was retained by the Sellers was said to be reflected in the Proposed Statement of Claim in the following ways:
(1)The absence of any pleading of an agency relationship between Butler and Mills Oakley such that Butler could bind Mills Oakley to the terms of the Alleged Mills Oakley Retainer.
(2)The absence of any pleading that, in acting as the Sellers’ agent, Butler intended or took steps to engage Mills Oakley on behalf of the Sellers.
(3)The absence of any pleading that Mills Oakley agreed to act as solicitor for anyone other than Venetian Media.
(4)The absence of any pleading that the existence of the Alleged Mills Oakley Retainer could be implied from the conduct of Mills Oakley and the Sellers.
Mills Oakley therefore submitted that, as there was no sustainable pleading in relation to the existence of the Alleged Mills Oakley Retainer, the Sellers could not establish that Mills Oakley owed them any duties or caused them any loss or damage. As such, it was submitted that the Proposed Statement of Claim failed to disclose a case against Mills Oakley that had any reasonable prospects of success.
Further, Mills Oakley referred to the failure of the Sellers to make amendments to the Proposed Statement of Claim despite being afforded additional time to consider the merits of their case against the Proposed Defendants.[31]
[31]See par 31 above.

C.1.3 Analysis

The Proposed Statement of Claim contains many obvious flaws and defects.[32] Many of these were raised during the course of the hearing. In short, it would be inappropriate to grant the Sellers leave to file the Proposed Statement of Claim.

C.1.3.1 Wheelhouse

[32]To be fair to senior counsel appearing, the Proposed Statement of Claim was not settled by counsel.

The case sought to be made against Wheelhouse is defective in its current form. Not only does the Proposed Statement of Claim fail to properly identify the causes of action alleged and material facts to substantiate these causes of action, but it is vague and lacking in proper particulars. Without being exhaustive, some key matters demonstrate these deficiencies.
First, the pleading in relation to the Alleged Wheelhouse Retainer[33] is in broad and extremely vague terms. The Sellers allege Wheelhouse undertook to “provide accounting, taxation, financial and business advice and information when appropriate (that is, when the circumstances required)” and “to act on their behalf, and represent them” in “any (contemplated) sale, and in the completion of any sale” of the Frontier Media business. A claim of this breadth and nature must be substantiated by proper particulars. Instead, the particulars in the Proposed Statement of Claim read as follows:
[33]See par 21(1)-(2) above.
Particulars
The [Alleged Wheelhouse Retainer] is, inter alia, implied from the discussions between Butler of [Wheelhouse] and Pirrie in or about and from August/September, 2019, in which Butler advised Pirrie, inter alia, that someone wanted to purchase the Frontier Media business, and from their continuing discussions; further from the fact that the shares in Frontier Media were owned by [S Pirrie] and Fitstop; and further from the facts that [Wheelhouse] was the accountant and advisor to, inter alia, [the Sellers] and it had been the accountant and advisor to each of [the Sellers] since the inception of [Wheelhouse]; further by the need to give business efficacy to the [Alleged Wheelhouse Retainer]; further, by operation of law.
Further particulars of the [Alleged Wheelhouse Retainer] may be provided after discovery.
(Emphasis added.)
As is evident, through its vague references to “discussions” between Butler and Pirrie which span an extensive and undefined time period, the Proposed Statement of Claim lacks the material facts and particulars necessary to enable Wheelhouse to properly respond to the allegations it makes as to the existence, scope and content of the Alleged Wheelhouse Retainer.
Secondly, the allegations in respect of a fiduciary relationship between Wheelhouse and the Sellers[34] are not supported by the necessary material facts or proper particulars. Beyond stating that the Sellers had “always placed full trust and confidence” in Wheelhouse “as their accountant and advisor”, the Proposed Statement of Claim fails to make clear how and on what basis any fiduciary relationship is said to have arisen between the Sellers and Wheelhouse with respect to the relevant transaction. Such specificity is essential in circumstances where the Sellers were told in writing that Wheelhouse was charging the Purchasers half of their fees arising from the transaction.
[34]See par 21(3) above.
Thirdly, the claim that Wheelhouse caused detriment or injury to the Sellers in providing advice and acting on their behalf in breach of the terms of the Alleged Wheelhouse Retainer[35] is too vague. No material facts or proper particulars are set out concerning the type of detriment or injury alleged to be suffered. Instead, the particulars provided in respect of this allegation simply refer back to the particulars in respect of the allegation that Wheelhouse did not exercise all reasonable care, skill and diligence of a reasonably competent accountant in providing advice to and acting on behalf of the Sellers in respect of the sale of the Frontier Media business.
[35]See par 21(6) above.
Fourthly, the allegations of misleading or deceptive conduct made against Wheelhouse[36] are incomplete, and fail to disclose a reasonable cause of action. No particulars have been provided as to where and when the representations the subject of such allegations are said to have been made,[37] nor have sufficient material facts been pleaded in relation to the falsity of such representations. The Proposed Statement of Claim also fails to properly articulate the causal relationship between the representations Wheelhouse is alleged to have made and any loss or damage suffered by the Sellers.
[36]See par 21(7) above.
[37]Compare Watson v Foxman (1995) 49 NSWLR 315, 318.8-319.1 (McLelland CJ in Equity).
Similar issues arise in respect of many other proposed claims made by the Sellers against Wheelhouse. In light of the serious issues already identified, it is unnecessary to elaborate on these in any great detail. In short, the Proposed Statement of Claim fails to make Wheelhouse properly aware of how the Sellers’ case against it is put and of the claims it must meet, and is “embarrassing”.[38] Were the proposed allegations to have been made in the Statement of Claim, they would have been liable to be struck out under rule 23.02 of the Rules. Thus, it is inappropriate to grant the Sellers leave to advance such claims by way of the Proposed Statement of Claim.

C.1.3.2 Mills Oakley

[38]Sarto v Sarto [2021] VSC 295, [42] (Derham AsJ), citing Meckiff v Simpson [1968] VR 69, 70.8 (Winneke CJ, Adam and Gowans JJ). See also Wheelahan v City of Casey (No 12) [2013] VSC 316, [25] (Dixon J).

Both on the Proposed Statement of Claim and on the evidence, the case against Mills Oakley has no real prospects of success.[39] Indeed, it can aptly be described as hopeless. There are a number of reasons for this.
[39]See pars 103-105 below.
Importantly, the proposed claim in contract is bereft of any material allegations which would properly establish how it was that Mills Oakley was retained on behalf of the Sellers. In short, there is no allegation that either the Sellers or Wheelhouse gave any instruction to Mills Oakley to the effect that the firm was to act on behalf of the Sellers. Further, there is no allegation or evidence that Wheelhouse was instructed by the Sellers to retain Mills Oakley to act for the Sellers.
The difficulties do not end there. Paragraph 60 of the Proposed Statement of Claim states:
By an agreement between [Wheelhouse] for the [Sellers] and [Mills Oakley], made on a date from about August /September 2019, particulars of which will be provided after discovery, [Wheelhouse], for the [Sellers], retained [Mills Oakley] in the negotiation, preparation, making and completion of the documents (inter alia, the [Share Purchase Agreement]), and the terms to be included in the documents (inter alia, the [Share Purchase Agreement]), for the [Sellers], to facilitate, and give effect to, the sale by the [Sellers] of the Frontier Media business/[S Pirrie’s and Fitstop’s] shares in Frontier Media (‘the [Alleged] Mills Oakley [R]etainer’).
Particulars
The [Alleged] Mills Oakley [R]etainer was partly implied, including from the fact that Butler of [Wheelhouse], on behalf of Frontier Media and the [Sellers], provided Lewin, and other officers of Mills Oakley, with instructions, and Lewin, and other offices (sic) of [Mills Oakley], took instructions from Butler, and other officers, of [Wheelhouse], on behalf of Frontier Media and the [Sellers] (particulars of which will be provided after discovery), as to the documents, and the terms to be included in the documents, and Mills Oakley took advice from, and gave advice to, [Wheelhouse], on behalf of Frontier Media and the [Sellers], to facilitate the sale by the [Sellers] of the Frontier Media business/[S Pirrie’s and Fitstop’s] shares in the Frontier Media) (sic), particulars of which instructions and advices will be provided after discovery.
The [Alleged] Mills Oakley [R]etainer is further implied from the fact that [Wheelhouse], the [Sellers’] accountants and advisors, provided [Mills Oakley] with the Frontier Media business, and other, statements and records, along with the relevant statements, and records, of the [Sellers], to facilitate the drawing, and settling, by [Mills Oakley], of, inter alia, the (terms of the) [Share Purchase Agreement] … to facilitate the sale by the [Sellers] of the Frontier Media business/[S Pirrie’s and Fitstop’s] shares in Frontier Media (again, particulars of which will be provided after discovery).
The [Alleged] Mills Oakley [R]etainer is further implied from the fact that Mills Oakley did not take instructions from, or consult, or confer, with the [Sellers] with respect to, and concerning, the (terms of the) documents (inter alia, the [Share Purchase Agreement]), and Frontier Media’s, and the [Sellers’], documents, books and records, required to facilitate, and give effect to, the sale by the [Sellers] of the Frontier Media business/[S Pirrie’s and Fitstop’s] shares in Frontier Media.
The [Alleged] Mills Oakley Retainer is further implied from further surrounding facts and circumstances, particulars of which will be provided after discovery; further from the need to give business efficacy to the transaction, to [the Alleged] Mills Oakley [R]etainer and by operation of law.
Further [p]articulars of the [Alleged] Mills Oakley [R]etainer will be provided after discovery.
As may be seen, despite the heading “Particulars”, there are no particulars to substantiate any of the vague facts alleged in this paragraph. Further, the particulars provided, such as they are, only refer to conduct consistent with there being no retainer as between the Sellers and Mills Oakley. Furthermore, no factual allegation arises on the Proposed Statement of Claim to suggest any assumption of responsibility or conduct on the part of Mills Oakley which might indicate the existence of any implied retainer. To the contrary, it is expressly acknowledged in the proposed particulars that Mills Oakley “did not take any instruction from, or consult, or confer, with the [Sellers]”.
Another fundamental difficulty arises. The Proposed Statement of Claim alleges breaches of fiduciary duties and general duties said to be owed by Mills Oakley to the Sellers. However, it is not disputed on the facts that Mills Oakley was retained in writing by Venetian Media.[40] Accordingly, as was properly conceded by senior counsel for the Sellers, several duties said to form part of the Alleged Mills Oakley Retainer (for example, the obligations to avoid a conflict of interest and to disclose all facts germane to the relationship, and the duty to act to “protect and further” the Sellers’ interests and to not cause them detriment) could not properly be thought to arise in circumstances where Mills Oakley was expressly retained by the counterparty, Venetian Media.
[40]See par 17 above.
Further, several of the express terms of the written retainer entered into between Mills Oakley and Venetian Media (and Venetian Media alone) were inconsistent with Mills Oakley acting for the Sellers. For example, it included terms that:
(1)Mills Oakley would keep all information given to it by Venetian Media in confidence.
(2)Any advice given by Mills Oakley was solely for the benefit of Venetian Media, being the entity to whom Mills Oakley “owe[d] [their] duty of care”.
(3)Mills Oakley would not disclose any confidential information obtained during its engagement by Venetian Media.
It should be noted that the written retainer between Mills Oakley and Venetian Media also expressly provided that Venetian Media agreed that Mills Oakley was not prevented from acting for current or future clients with adverse commercial interests, and was “free to accept an instruction to act for more than one client in relation to [a] transaction” provided that applicable professional rules were complied with, confidential information was protected, and Mills Oakley was capable of acting in the best interests of each client. However, this cannot sensibly be understood (without more) to extend the retainer to cover circumstances where the solicitors would have been simultaneously acting for counterparties to a transaction or to give rise to any retainer being implied with respect to a counterparty who was not a party to the written retainer, as is alleged by the Sellers in the Proposed Statement of Claim.
In this regard, while joint engagement of a solicitor by both parties to a transaction might be sufficient to give rise to a duty in favour of both parties,[41] in the absence of an express retainer, a retainer will only be presumed where a solicitor-client relationship is “a necessary and clear inference from the proved facts”.[42] Likewise, a solicitor can receive instructions from a person other than their client without a retainer arising with that person.[43] Relevantly, it has also been acknowledged that the existence of a written retainer between a solicitor and a person other than the party claiming to have retained the solicitor can be relevant to displace any presumption of a retainer.[44] Each of these factors weighs heavily against the claims in respect of the Alleged Mills Oakley Retainer made by the Sellers in the Proposed Statement of Claim. The absence of any particulars of any fact or circumstance by which the Sellers actually retained Mills Oakley or by which Mills Oakley assumed responsibility makes the position hopeless.
[41]Pegrum v Fatharly (1996) 14 WAR 92, 102.2 (Anderson J, with whom Kennedy J agreed).
[42]Ibid, 95.4 (Ipp J).
[43]Cooper v Winter [2013] NSWCA 261, [53] (Ward JA, with whom McColl and Barrett JJA agreed).
[44]Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969, [68] (Gilmour J).
Furthermore, the evidence demonstrated that whatever “understanding and belief” Pirrie may allege to have had in the period leading up to the execution of the Share Purchase Agreement,[45] any such understanding or belief that Mills Oakley was acting for the Sellers was contrary to the contemporaneous written exchanges between the various parties and, from an objective standpoint, was not rational or reasonable. The Sellers’ case was that Pirrie understood Mills Oakley was acting for him during the period in which discussions commenced about the sale of the Frontier Media business (August 2019) and at the time the Share Purchase Agreement was entered into (“in or about December 2019”). This was said to be based on a statement made by Butler that he would have his “good mate Stu[46] at Mills Oakley draw the documents”. However, there was nothing in this statement to indicate that Mills Oakley was to be retained on behalf of the Sellers (as opposed to the Purchasers, who were paying for Mills Oakley’s services and were also paying for half of Wheelhouse’s fees at the time).[47] Further, the basis of Pirrie’s “understanding and belief” was devoid of any probative value. He swore that it was based on “Butler’s advices” that “Mills Oakley was retained for the [Sellers], and acting for the [Sellers], in the transaction” without providing a scintilla of evidence of what was said in even 1 of the asserted discussions.
[45]See par 10 above.
[46]Presumably, a reference to Lewin.
[47]See par 16 above and 72 below.
Consistent with no such retainer having been put in place, as late as 9 December 2019, when asked by Butler about legal representation, Pirrie stated that he had “not even thought about a lawyer” and that he would “sort it out”.[48] This statement is entirely inconsistent with Pirrie’s purported belief that a lawyer had already been retained on the Sellers’ behalf by way of the Alleged Mills Oakley Retainer.[49] In this regard, it has been recognised that:[50]
Generally speaking it would be surprising if one who is not prepared to retain the solicitor and pay for [her or his] services could expect the solicitor to look after [her or his] interests. It is clear that there is and cannot be any such general expectation. … The result would very likely be the creation of conflicting duties. The starting point seems to be that normally a person who has not engaged a solicitor has no right to expect that the solicitor will look after [her or his] interests and has no right to place reliance upon the solicitor taking any particular action in [her or his] interests.
[48]See par 13 above.
[49]See par 10 above.
[50]Hardware Services Pty Ltd v Primac Association Ltd [1988] 1 Qd R 393, 397.8 (Thomas J). See also Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58, [58] (Wheeler J).
Also inconsistent with the allegations made against Mills Oakley is the fact that no invoice was ever issued to the Sellers by Mills Oakley. On the contrary, the Purchasers were invoiced for the entire amount of the legal services provided by Mills Oakley in relation to the transaction.[51] No explanation was provided by Pirrie as to how it could have been thought that Mills Oakley was providing legal services to the Sellers when no payment had been made by the Sellers for the alleged services. There was no suggestion of any discussion or agreement between the parties to the effect that the Purchasers would pay the Sellers’ legal expenses incurred in the transaction, nor did Pirrie claim to have had such an understanding.[52]
[51]See par 17 above.
[52]For completeness, in an email from Butler to Pirrie dated 1 October 2019, Butler stated “[Fishwick] pays all legals unless you want to get a lawyer to review everything”. Rather than providing any basis for an understanding or belief that the Purchasers were paying for both parties’ legal expenses, this email provided evidence that it was understood that Pirrie did not have a lawyer acting for him at the time (which Pirrie acknowledged was still the position on 9 December 2019: see par 13 above).
Moreover, Pirrie’s affidavit did not establish any objective basis upon which it might be concluded that Wheelhouse had retained Mills Oakley on behalf of the Sellers. In addressing the email of 9 December 2019,[53] Pirrie alleged that he advised Butler at the time that he had not considered hiring a lawyer “because, at that time, it was always my understanding from my discussions with Butler that he had engaged Mills Oakley for the [Sellers]”. However, the basis of this understanding was not set out in any substantive manner.[54] In short, there was no reference in Pirrie’s evidence to any discussion during which Butler stated or implied that he had retained Mills Oakley to act on behalf the Sellers. On the contrary, the evidence was that Butler stated that Mills Oakley had been retained to draw the documents for the sale of Frontier Media. Such a statement was entirely consistent with Mills Oakley acting for the Purchasers. Again, Pirrie’s evidence also must be viewed in the context where it was disclosed to the Sellers that the Purchasers would be paying half of Wheelhouse’s fees in relation to the transaction.
[53]See pars 13, 71 above.
[54]See par 70 above.
Finally, it is significant that no part of the Sellers’ case as made in the Proposed Statement of Claim sought to establish that any retainer or duty alleged to be owed was based upon the conduct of Mills Oakley. In Pirrie’s affidavit, it was expressly stated that any understanding that Mills Oakley was acting for the Sellers was “based on [Butler’s] advices”. To repeat, and in any event, there was no attempt in Pirrie’s affidavit or in the Proposed Statement of Claim to set out what was alleged to have been said by Butler in this regard. Rather, it was repeatedly stated throughout the Proposed Statement of Claim that further particulars would be provided.
For the above reasons, a similar conclusion to that reached in respect of the claims advanced against Wheelhouse in the Proposed Statement of Claim must be reached in respect of the claims against Mills Oakley. Many of the allegations contained in the Proposed Statement of Claim are vague and lacking in material facts and proper particulars, with the consequence that Mills Oakley has not been properly alerted to the case sought to be made against it. As such, it would be inappropriate to grant leave to file the Proposed Statement of Claim in its current form.

C.2 Should the Sellers be granted leave to join Wheelhouse or Mills Oakley, or both, as defendants?

Given that similar principles and considerations arise in considering the Sellers’ application for leave to join of each of the Proposed Defendants, it is convenient to deal with these issues together.

C.2.1 Legal principles

Where a proceeding has already been commenced, a party must seek leave of the court to add a party under rule 9.06 of the Rules. Rule 9.06 aims to enhance the efficient and economic resolution of proceedings,[55] including by preventing multiplicity of actions and enabling a court to determine disputes between all parties in a single proceeding, so as to avoid the same or substantially the same questions or issues being tried twice.[56] Accordingly, rule 9.06 should not be given a narrow construction which would exclude from its operation any particular class of cases.[57]
[55]Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd [2013] VSCA 378, [13] (Beach JA, with whom Osborn JA agreed).
[56]Tatterson v Wirtanen [1998] VSC 88, [86] (Gillard J). See also Supreme Court Act1986 (Vic), s 29(2).
[57]Ubertini v Saeco International Group SpA (No 6) [2014] VSC 294, [43].
Rule 9.06(b) sets out 2 alternative tests for when a party may be joined to a proceeding:
9.06 Addition, removal, substitution of party
At any stage of a proceeding the Court may order that—
…
(b) any of the following persons be added as a party—
(i)a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon; or
(ii)a person between whom and any party to the proceeding there may exist a question arising out of, or relating to, or connected with, any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding;
…
Under either limb of rule 9.06(b), ordinarily the merits or prospects of the claim sought to be brought against a party are not relevant to the question of whether they ought to be joined.[58] However, where the claims made against a party that is proposed to be joined under rule 9.06(b) are “obviously bad in law or futile”[59] or have “no real prospects of success”,[60] the application will usually be refused.
[58]Main Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd [2007] VSC 43, [77] (Bell J).
[59]Ibid.
[60]Countrywide Austral Pty Ltd v Emergency Media Pty Ltd [2018] VSC 540, [31] (Riordan J).
The first test, which is contained in rule 9.06(b)(i), is narrow and contains within itself 2 alternative limbs:
(1)“A person who ought to have been joined as a party”. Under this limb, the party seeking to join a party must prove that their presence is required to enable the proceeding to continue. This limb is comparable to the requirements for joinder of necessary parties under rule 9.03 of the Rules if the plaintiff does not join the person as a party, the court will, on objection by the defendant, stay the proceeding until this is done.[61]
(2)“A person … whose presence before the Court is necessary”. This limb authorises the court to add as a party a person who could have been joined originally (in accordance with rule 9.02 of the Rules).[62] The person need not be necessary in the sense that the court will not allow the proceeding to continue unless the person is made a party, rather, they need only be necessary in that their presence will aid in achieving finality and avoiding a multiplicity of proceedings.[63]
[61]D L Bailey and J K Arthur, LexisNexis, Civil Procedure: Victoria (online at 15 May 2023) [I 9.06.3].
[62]Ibid, [I 9.06.3].
[63]Ibid.
In relation to the second limb of rule 9.06(b)(i), the Privy Council has provided further clarity on when it will be “necessary” to join a party to help achieve finality and avoid multiplicity of proceedings in the context of the equivalent English provisions. As articulated by Lord Diplock in Pegang Mining Co Ltd v Choong Sam (No 1):[64]
A better way of expressing the test is: will [the person’s] rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?
[64][1969] 2 Malayan LJ 52, 56.2, cited in Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd [1999] 2 VR 507, 525 [66] (Chernov JA, with whom Batt JA agreed). See also Stuart v Mordialloc Sporting Club Inc [2021] VSC 244, [272] (Randall AsJ).
This test was approved and further clarified by the Full Federal Court in News Ltd v Australian Rugby Football League Ltd as follows:[65]
The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party’s rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. … The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.
[65](1996) 64 FCR 410, 525.2 (Lockhart, von Doussa and Sackville JJ).

Rule 9.06(b)(ii) was introduced to overcome the limitations of rule 9.06(b)(i), and the test it sets out is therefore much broader in scope.[66] As observed in Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd:[67]
It is plain that [rule 9.06(b)(ii)] is to have a wide construction. That can be deduced from its words and from the circumstances in which the rule was introduced.
[66]Tatterson v Wirtanen [1998] VSC 88, [28]-[29] (Gillard J), cited in Stuart v Mordialloc Sporting Club Inc [2021] VSC 244, [268]; Re Moneysaver Free Coupons Pty Ltd (in liq) [2021] VSC 279, [244] (Randall AsJ).
[67][1999] 2 VR 507, 525 [68].
An applicant who seeks to invoke the court’s jurisdiction under rule 9.06(b)(ii) must prove that:[68]
(i)there are two entities namely the person to be added as a party and a party to the proceedings;
(ii)between the two entities there may exist a question arising out of or relating to or connected with any claim in the proceeding;
(iii)it is just and convenient to determine that question between the proposed party and the other party as well as between the parties to the proceeding.
[68]Tatterson v Wirtanen [1998] VSC 88, [30].
However, even if the above elements are established, the court retains a discretion as to whether or not to make an order under rule 9.06(b)(ii).[69]
[69]Stuart v Mordialloc Sporting Club Inc [2021] VSC 244, [315] (Randall AsJ), citing Tatterson v Wirtanen [1998] VSC 88, [30] (Gillard J).
In relation to the requirement that there be a question arising out of, relating to or connected with a claim in the proceeding between a party to the proceeding and the entity to be joined, the Rules define “question” as:[70]
… any question, issue or matter for determination by the Court, whether of fact or law or of fact and law, raised by the pleadings or otherwise at any stage of a proceeding by the Court, by any party or by any person not a party who has a sufficient interest.
[70]Rule 1.13(1) (definition of “question”). See also Boral Resources (Vic) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] VSC 572, [33] (Digby J).
It is not necessary that the “question” amount to a cause of action; rather, there need only be “a justiciable controversy” between a party to the proceeding and the entity that is sought to be joined.[71]
[71]Re Moneysaver Free Coupons Pty Ltd (in liq) [2021] VSC 279, [246] (Randall AsJ), citing CGU Insurance Ltd v Blakeley (2016) 259 CLR 339, 363 [64] (French CJ, Kiefel, Bell and Keane JJ).
Nor is it necessary that the question between the proposed additional party and the party applying for its addition already exist between the original parties to the proceeding. It has been recognised that such a construction would “undesirably fetter the operation” of rule 9.06(b)(ii).[72] As is evident from the language of the rule itself, it is sufficient that the question “aris[es] out of”, “relat[es] to” or is “connected with” any claim in the proceeding.[73]
[72]Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd [1999] 2 VR 507, 512 [21]-[22] (Batt JA).
[73]Ibid.

C.2.2 Submissions

The Sellers’ submissions were identical in respect of both of the Proposed Defendants. They submitted it was appropriate for the Proposed Defendants to be joined under either or both of rule 9.06(b)(i) and (ii), for the following reasons:
(1)The facts giving rise to the claims sought to be brought against the Proposed Defendants were connected with the facts giving rise to the claims against the Purchasers.
(2)The facts material to the question of the Purchasers’ liability were also material to the question of the Proposed Defendants’ liability.
(3)The Proposed Defendants could properly have been joined as parties at the commencement of the proceeding in accordance with rule 9.02 of the Rules.
(4)The Sellers made their application early (before the close of pleadings and before the matter was set down for trial), and therefore joining the Proposed Defendants would not delay or interfere with the timeline of the proceeding.
In contrast, Wheelhouse submitted that it was inappropriate for leave to be granted for it to be joined as a party because of the deficiencies in the Proposed Statement of Claim[74] and the “untenable nature” of the Sellers’ claims as to the existence of the Alleged Wheelhouse Retainer. It contended that, because the Proposed Statement of Claim failed to disclose a reasonable cause of action against Wheelhouse and had no real prospects of success, it was not appropriate nor just and convenient for leave to be granted.
[74]See pars 46-49 above.
Further, Wheelhouse submitted that the test in rule 9.06(b)(ii) could not be satisfied as the Sellers had failed to identify any question in issue between the Sellers and the Purchasers that also arose between the Sellers and Wheelhouse. While accepting that there was a “commonality of facts” between the Sellers’ claims against it and those against the Purchasers, Wheelhouse submitted that the Sellers’ claims against it raised questions “entirely different” to those raised by the existing issues in the proceeding. In Wheelhouse’s submission, the claims made against it raised substantially different questions of fact and law to those the subject of the proceeding.
Furthermore, Wheelhouse submitted that if leave were granted to join it as a party to the proceeding, it would have the effect of transforming a narrow case against the Purchasers for a payment due under the Share Purchase Agreement into “an expansive, confusing and ultimately flawed lost opportunity case” based on the contention that the Sellers would not have entered into the Share Purchase Agreement but for the conduct of the Proposed Defendants. It was contended this would cause delay and interfere with the existing proceeding, especially in circumstances where the Sellers were (by their own admission) still formulating their claim against Wheelhouse. On this basis, Wheelhouse submitted that it would not be just or convenient within the meaning of rule 9.06(b)(ii) for it to be joined as a party to the proceeding.
For its part, Mills Oakley submitted that under either limb of rule 9.06(b), the court was required to consider (as a threshold question) whether the claim against the party proposed to be joined was “futile”, “had no prospects of success” or was “bad in law”. Mills Oakley contended that, for the reasons outlined previously,[75] the Sellers’ proposed case against it was so deficient that this threshold standard had not been met.
[75]See pars 50-53 above.

C.2.3 Analysis

C.2.3.1 Wheelhouse

Despite the flaws in the Proposed Statement of Claim, on the evidence before the court there can be no question that Wheelhouse was acting for the Sellers in some capacity in relation to the sale of Frontier Media. Butler, on behalf of Wheelhouse, frequently corresponded with Pirrie regarding the sale of Frontier Media. Emails showed that Butler offered Pirrie advice about various aspects of the transaction and oversaw the completion of the Share Purchase Agreement.[76] In addition, the invoices rendered by Wheelhouse in the latter half of 2019 included multiple charges labelled as “professional services rendered in relation to the sale of Frontier [Media]”.[77]
[76]See pars 12-14 above.
[77]See pars 15-16 above.
It would be inappropriate at this point to determine whether these services fell within or went beyond the scope of the written retainer (and its annexure) for accounting and taxation advice entered into in January 2016 between Wheelhouse and the Frontier Group.[78] Nevertheless, and without making any positive findings in this regard, there is at the very least an arguable case that some form of retainer of the nature alleged by the Sellers may have arisen between the Sellers and Wheelhouse in respect of the sale of the Frontier Media business, and that Wheelhouse may have owed certain duties to the Sellers in this context. On this basis, it is clear that a justiciable controversy exists as between the Sellers and Wheelhouse.
[78]See par 8 above.
Further, and regardless of whether or not there was any retainer or any relationship that might give rise to a duty of care or a fiduciary duty, the alleged representations and the alleged circumstances in which they were made would, if properly pleaded, be likely to provide the basis for an arguable case.
Furthermore, it is also clear that this justiciable controversy relates to or is connected with the Sellers’ existing claims against the Purchasers within the meaning of rule 9.06(b)(ii). The submission by Wheelhouse that there is no common “question in issue” between the Sellers and the Purchasers that also arises between the Sellers and Wheelhouse is not to the point. Rather than a common question, rule 9.06(b)(ii) requires the existence of “a question arising out of, or relating to, or connected with, any claim in the proceeding”. Affording this provision the wide construction it has been repeatedly recognised to demand, the Sellers’ claims and allegations against Wheelhouse are clearly related to or connected with the claims and allegations made against the Purchasers in the Statement of Claim.
There is likewise little weight in Wheelhouse’s submission that the Sellers’ claims against it raise “substantially different questions of fact and law” to those made against the Purchasers in the Statement of Claim. As is clear on the evidence presently before the court, Wheelhouse was intricately involved in the sale process and the formulation of the Share Purchase Agreement, and it is from this involvement that the Sellers’ claims against it arise. As such, facts that are material to the question of any liability between the Purchasers and the Sellers will also be material to the question of any liability between Wheelhouse and the Sellers. This is evident from the many allegations made by the Sellers as to the conduct of Wheelhouse and Butler in the context of the transaction that already appear in the Statement of Claim as filed, and have comprised part of the Sellers’ case from the outset.
Moreover, Wheelhouse’s submission that it would not be appropriate nor just and convenient to join it as a party given the “significant expansion of the proceeding” that would result also cannot be accepted. Although, naturally, the addition of Wheelhouse as a party and any consequential amendments to the Statement of Claim will result in changes to the scope of the proceeding, it cannot be said that these changes are unjust or inconvenient in the circumstances. To the contrary, given the common factual background to the Sellers’ claims against the Purchasers and against Wheelhouse, it is both just and convenient that these claims be tried together.
A similar conclusion may be reached in respect of Wheelhouse’s claim that joining it would cause delay and interference. Clearly, the inconvenience of any delay that may result from the making of an order that Wheelhouse be joined and that the Sellers be granted leave to file an amended statement of claim is outweighed by the significant inconvenience that would result if the Sellers’ application were refused, and they were required to bring a separate proceeding against Wheelhouse. In this sense, Wheelhouse’s presence will help achieve finality and avoid a multiplicity of proceedings.
In addition, joining Wheelhouse at this stage (with an express reservation of its right to apply to strike out any further deficient pleadings) will not cause any great prejudice to it or any other party to the proceeding. The proceeding is still in its early stages, with much of its substance to date being concerned with the present application. The intention of the Sellers to file a summons seeking leave to amend the pleadings and to join Wheelhouse was disclosed at the second directions hearing on 16 September 2022.[79]
[79]See par 26 above.
Whilst it is arguable that Wheelhouse’s presence before the court is “necessary” in accordance with the second limb of rule 9.06(b)(i), it is unnecessary to make a finding in this regard given that the case against Wheelhouse falls squarely within the wider ambit of rule 9.06(b)(ii). It is therefore both appropriate and just and convenient to order that Wheelhouse be joined as a party to the proceeding pursuant to rule 9.06(b)(ii) of the Rules.

C.2.3.2 Mills Oakley

In contrast, for the reasons outlined above,[80] the case against Mills Oakley in the Proposed Statement of Claim is hopeless. Further, even viewing the evidence presently before the court in its most favourable light, the Sellers’ claims against Mills Oakley have no real prospects of success, and can properly be described as “futile”.
[80]See pars 62-74 above.
In circumstances where the evidence disclosed no proper basis upon which the Alleged Mills Oakley Retainer could be said to have arisen,[81] nor upon which any fiduciary relationship could be said to have existed between the Sellers and Mills Oakley,[82] nor upon which Mills Oakley could be said to have owed other general duties to the Sellers, Mills Oakley cannot properly be characterised as a “necessary” party to the proceeding in the sense contemplated within rule 9.06(b)(i). Nor can it seriously be said that a justiciable controversy exists between the Sellers and Mills Oakley, such that it would be just or convenient to order that Mills Oakley be joined as a defendant under rule 9.06(b)(ii). To the contrary, in light of the dearth of relevant evidence against it, it would be both unjust and inconvenient for Mills Oakley to be joined to the proceeding.
[81]See pars 67-74 above.
[82]See par 66 above.
Quite plainly, it cannot be said that a party should have been joined to a proceeding under rule 9.06(b)(i) or that it would be just or convenient to subsequently join that party under rule 9.06(b)(ii) in circumstances where there is no evidence that an arguable case can be made against it. For this reason, the Sellers’ application for leave to join Mills Oakley will be refused.

Summary and conclusionD.

It is clear that in its current form, the Proposed Statement of Claim is legally and factually defective. It does not properly disclose causes of action against the Proposed Defendants, and fails to specify all the material facts upon which the Sellers rely to establish their case. Instead, it frequently pleads conclusions from facts that are unidentified or otherwise vague, with the consequence that neither Wheelhouse nor Mills Oakley have been properly alerted to the case it seeks to make against them. Indeed, it can be said that the claims as pleaded in the Proposed Statement of Claim would have no real prospect of success at trial. As such, the Sellers’ application for leave to file the Proposed Statement of Claim in its current form must be refused.
As far as the Sellers’ case against Mills Oakley is concerned, the deficiencies extend beyond the Proposed Statement of Claim. On the evidence before the court, the Sellers’ claims against Mills Oakley are without sufficient basis and can be properly described as hopeless. For this reason, the Sellers’ application for leave to join Mills Oakley as a defendant will also be refused.
However, for the reasons set out above,[83] there is sufficient evidence to suggest that, if the allegations were properly pleaded, the Sellers are likely to have at least an arguable case against Wheelhouse. Accordingly, the Sellers will be given leave to join Wheelhouse as a party, and to file and serve an amended statement of claim which properly articulates their case against Wheelhouse, subject to the right of Wheelhouse to apply for the amended pleading (or parts of it) to be struck out. Orders will be made accordingly.
[83]See pars 94-96 above.
In conclusion, it is important to revisit an exchange that took place during the hearing of this application. Senior counsel for the Sellers was taken to various parts of the Proposed Statement of Claim and asked to consider the lack of detail. In response, it was acknowledged the Sellers’ case contained “nothing beyond what is set out [in the Proposed Statement of Claim] and what is stated in the affidavit [of Pirrie]”. Also during the hearing, reference was made to matters that arose because of the potential inconsistency between the claims against the existing defendants and the proposed claims against Wheelhouse. While inconsistent allegations may be properly pleaded,[84] obviously the manner in which it is done should be clear and sensible.
[84]See r 13.09 of the Rules.
For the avoidance of doubt, the leave granted is not an invitation to cosmetically amend the Proposed Statement of Claim to seek to maintain all of the allegations that have been made by that proposed pleading. Careful consideration must be given as to which causes of action may be properly agitated on a basis that complies with the Rules and the Civil Procedure Act.

[2023] VSC 253

18 May 2023