Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm)

Sadie Ville Pty Ltd sought to amend its amended statement of claim against Deloitte Touche Tohmatsu (A Firm) to incorporate new allegations related to the audit of Hastie Securities Limited. Deloitte opposed the amendment and sought to have certain paragraphs of the amended statement of claim struck out. The Federal Court of Australia was tasked with determining whether the proposed pleading was likely to cause embarrassment in the proceeding and if it failed to plead material facts, thereby failing to disclose a reasonable cause of action.

The central issue before the Court was whether the proposed second amended statement of claim should be allowed, particularly in light of the allegations regarding the FY2010 audit. Deloitte argued that the proposed pleadings were conclusory and failed to properly plead the material facts necessary to establish a cause of action under section 1041E of the Corporations Act. The Court had to decide if the allegations sufficiently disclosed the requisite material facts and whether they were likely to cause prejudice or embarrassment in the proceeding.

In reaching its decision, the Court considered the principles governing the striking out of pleadings and the need for particularity in legal pleadings. The Court noted that the proposed pleadings were conclusory and did not sufficiently detail the material facts that would establish the alleged contraventions under section 1041E. The Court found that certain paragraphs failed to adequately link the statements or information to the proscribed effects, and that the proposed pleadings were likely to cause embarrassment in the proceeding. Consequently, the Court struck out the specified paragraphs and dismissed Deloitte's interlocutory application in all other respects.

The Court made orders dismissing Sadie Ville’s application to amend its amended statement of claim to the form of the proposed second amended statement of claim. Paragraphs [94]-[97] and [114] of the amended statement of claim were struck out. The interlocutory application by Deloitte was dismissed except for the striking out of the specified paragraphs. Sadie Ville was required to file and serve a proposed second amended statement of claim within 28 days. The matter was to be listed for a case management hearing. The costs of the interlocutory application were reserved.