Sigley and De Santis & Ors (No 4)
[2020] FamCA 903
•21 October 2020
FAMILY COURT OF AUSTRALIA
| SIGLEY & DE SANTIS AND ORS (NO. 4) | [2020] FamCA 903 |
| FAMILY LAW – PRACTICE AND PROCEDURE – pleading amendments sought by applicant – trial well underway yet parties log jammed on pleading amendments – latest version imprecise and unclear, advancing allegations akin to fraud – held, leave to replead in terms of the proposed amendment refused – leave to replead given. |
| Corporations Act 2001 (Cth) s 601AD(2) Family Law Act 1975 (Cth) ss 80, 114 Property Law Act 1958 (Vic) s 53(1)(b) |
| Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Ascot Investments Pty Ltd v Harper and Harper (1981) 148 CLR 377 Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 Bass v Permanent Trustee Group Co Ltd (1999) 198 CLR 334 Gissing v Gissing [1971] AC 886 Goodridge & Beadle (2017) 57 Fam LR 425 Jacobson v Ross [1995] 1 VR 337 Miller v Cameron (1936) 54 CLR 572 Re JS & GP (2006) 35 Fam LR 88 Secretary, Department of Social Security v James (1990) 95 ALR 615 Sigley & De Santis [2019] FamCA 271 Sigley & De Santis (No 2) [2019] FamCA 596 Tarkington Pty Ltd v Kingdrake Pty Ltd [2000] VSCA 98 Tepko Pty Ltd v Water Board (2001) 206 CLR 1 White v Overland [2001] FCA 1333 |
| APPLICANT: | Ms Sigley |
| FIRST RESPONDENT: | Mr De Santis |
| SECOND RESPONDENT: | Q Pty Ltd as trustee for Q Discretionary Trust |
| THIRD RESPONDENT: | R Pty Ltd as trustee for De Santis Family Trust |
| FOURTH RESPONDENT: | Mr S De Santis |
| FIFTH AND SIXTH RESPONDENTS: | Mr T and Mr U as liquidators of E Pty Ltd (in liquidation) |
| SEVENTH RESPONDENT: | De Santis Family Investments Pty Ltd as trustee for E Superannuation Fund |
| EIGHTH RESPONDENT: | V Partners Pty Ltd (formerly P Partners Pty Ltd) |
| |
| TENTH RESPONDENT: | X Pty Ltd as trustee for Trust for the Children of Mr & Ms De Santis |
| ELEVENTH RESPONDENT: | E6 Pty Ltd |
| TWELFTH RESPONDENT: | Ms De Santis (also known as Ms BB De Santis) |
| THIRTEENTH RESPONDENT: | E Pty Ltd |
| FOURTEENTH RESPONDENT: | Mr AA De Santis |
| FIFTEENTH RESPONDENT: | Ms EE De Santis |
| SIXTEENTH RESPONDENT: | Ms DD De Santis |
| SEVENTEENTH RESPONDENT: | Ms AA De Santis |
| FILE NUMBER: | MLC | 9296 | of | 2015 |
| DATE DELIVERED: | 21 October 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 15, 16, 19, 20, 21 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr J. St John QC with Mr P. Agardy and Mr T. Hutchings |
| SOLICITOR FOR THE APPLICANT: | Peter Szabo Family Law |
| COUNSEL FOR THE FIRST RESPONDENT: | No appearance |
| SOLICITOR FOR THE FIRST RESPONDENT: | No appearance |
| COUNSEL FOR THE SECOND RESPONDENT: | No appearance |
| SOLICITOR FOR THE SECOND RESPONDENT: | No appearance |
| COUNSEL FOR THE THIRD RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE THIRD RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE FOURTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE FOURTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE FIFTH AND SIXTH RESPONDENTS: | Dr A. Trichardt |
| SOLICITOR FOR THE FIFTH AND SIXTH RESPONDENTS: | Charles Fice Solicitors |
| COUNSEL FOR THE SEVENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE SEVENTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE EIGHTH RESPONDENT: | No appearance |
| SOLICITOR FOR THE EIGHTH RESPONDENT: | V Partners Pty Ltd |
| |
| |
| COUNSEL FOR THE TENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE TENTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE ELEVENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE ELEVENTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE TWELFTH RESPONDENT: | Mr M. Wilson |
| SOLICITOR FOR THE TWELFTH RESPONDENT: | KCL Law |
| COUNSEL FOR THE THIRTEENTH RESPONDENT: | No appearance |
| SOLICITOR FOR THE THIRTEENTH RESPONDENT: | Charles Fice Solicitors |
| COUNSEL FOR THE FOURTEENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE FOURTEENTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE FIFTEENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE FIFTEENTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE SIXTEENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE SIXTEENTH RESPONDENT: | Berry Family Law |
| COUNSEL FOR THE SEVENTEENTH RESPONDENT: | Mr D. Bongiorno |
| SOLICITOR FOR THE SEVENTEENTH RESPONDENT: | Berry Family Law |
Orders
I refuse leave to the applicant to make the amendments sought in the applicant’s amended CAMSOC proposed on 19 October 2020.
The applicant has leave to further amend the CAMSOC and must file and serve any further proposed amended CAMSOC by noon on 22 October 2020.
Any argument about whether to grant leave arising from the further amended CAMSOC is adjourned to 2:15pm on 22 October 2020.
Costs thrown away by reason of this application are reserved.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sigley & De Santis has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9296 of 2015
| Ms Sigley |
Applicant
And
| Mr De Santis |
First Respondent
And
| Q Pty Ltd as trustee for Q Discretionary Trust |
Second Respondent
And
| R Pty Ltd as trustee for De Santis Family Trust |
Third Respondent
And
| Mr S De Santis |
Fourth Respondent
And
| Mr T and Mr U as liquidators of E Pty Ltd (in liquidation) |
Fifth and Sixth Respondents
And
| De Santis Family Investments Pty Ltd as trustee for E Superannuation Fund |
Seventh Respondent
And
| V Partners Pty Ltd (formerly P Partners Pty Ltd) |
Eighth Respondent
And
| |
Ninth Respondent
And
| X Pty Ltd as trustee for Trust for the Children of Mr & Ms De Santis |
Tenth Respondent
And
| E6 Pty Ltd |
Eleventh Respondent
And
| Ms De Santis (also known as Ms BB De Santis) |
Twelfth Respondent
And
| E Pty Ltd |
Thirteenth Respondent
And
| Mr AA De Santis |
Fourteenth Respondent
And
| Ms EE De Santis |
Fifteenth Respondent
And
| Ms DD De Santis |
Sixteenth Respondent
And
| Ms AA De Santis |
Seventeenth Respondent
EX TEMPORE REASONS FOR JUDGMENT
INTRODUCTION
When the applicant commenced the trial of this proceeding on 15 October 2020, she relied on her then latest version of her amended statement of claim that her counsel, Mr St John QC, Mr P. Agardy, and Mr T. Hutchings called her consolidated amended statement of claim, elsewhere described by the acronym her “CAMSOC”.
Before any counsel had been heard to open the case on behalf of his, her or its client, objection was taken to the claims made in the CAMSOC against the fifth and sixth respondents, being the liquidators of the thirteenth respondent, E Pty Lid (in liq). After a far reaching debate between Dr Trichardt who appeared for the liquidators, Mr St John QC, Mr Bongiorno and Mr Wilson for whom in earlier reasons I recorded their appearances, I indicated to Mr St John that I was not willing to permit the applicant to advance the proposed amendments to the allegations in the CAMSOC against the liquidators insofar as it required the liquidators to take a positive step, especially those recorded in paragraph 23A of the amendments proposed on the second day of the trial.
The proposed paragraph 23A
The debate focused on the consequences of the liquidators having been led to believe that their role in the trial of this proceeding was largely peripheral having regard to the fact that they had been excused from participating in the proceeding and having regard to the fact that the winding up of E Pty Ltd (in liq) was nearly complete. Further, Dr Trichardt submitted that the liquidators had proceeded since my reasons dated 3 May 2019[1] on the basis that the liquidators were likely to be involved in an argument concerning their costs but that otherwise no relief of an ongoing nature was sought against them in the trial of this proceeding.
[1]Sigley & De Santis [2019] FamCA 271.
The proposed new paragraph 23A which Mr St John QC wished to advance in his proposed amendment emailed to my associates on 16 October 2020 was in the following terms –
23AThat liberty be reserved to the Applicant to make application for consequential Orders arising from the findings of the Court.
Dr Trichardt submitted that his clients were “lulled into a false sense of security” (his words) by not participating in this litigation essentially since May 2019 only to find that the applicant, by the proposed new paragraph 23A, wished to preserve an entitlement to re-open the litigation once findings were made by me following the trial of this proceeding. Dr Trichardt described that situation as “preposterous” (his word). He said that for very many months he had proceeded on the basis that his clients would await the conclusion of the trial until applying for costs but they were otherwise not involved in this litigation.
Mr St John QC then announced that his client may be forced to apply for an injunction to prevent the liquidators appropriating to their own use and benefit whatever funds they held and which they indicated might be applied towards costs. A debate then emerged about whether it was competent for the applicant, not being a member or creditor of E Pty Ltd (in liq) to apply for orders for the preparation of amended accounts of that company. Dr Trichardt submitted that E Pty Ltd (in liq) had been nearly fully wound up so any such order was inappropriate.
On behalf of the several clients he represented, Mr Bongiorno opposed the application to amend the CAMSOC to incorporate paragraph 23A. He relied on three main bases, those being –
a)the form of the proposed amendment;
b)the practical consequences of the amendment if leave were given to amend; and
c)the circumstances in which the amendment was sought.
As to the form of the proposed amendment, Mr Bongiorno submitted that paragraph 23A failed to comply with conventional requirements in pleadings by setting out material facts on which the relief prayed in aid was sought. He contended that paragraph 23A raised unconventional issues especially in the nature of case management issues by reason of a trial being held on all issues then subsequent litigation being conducted “arising out of findings of the court”, highlighting how two pieces of litigation were envisaged from the same set of facts.
So far as the practical consequences of the proposed amendments in paragraph 23A were concerned, Mr Bongiorno raised jurisdictional issues. He drew an analogy with an application for the trial of a preliminary issue and how the learning in such cases as Tepko Pty Ltd v Water Board,[2] Bass v Permanent Trustee Group Co Ltd,[3] and Jacobson v Ross[4] were generally unfavourably disposed towards such a course.
[2] (2001) 206 CLR 1.
[3] (1999) 198 CLR 334.
[4] [1995] 1 VR 337.
So far as the circumstances in which the proposed amendment were raised was concerned, Mr Bongiorno argued that the factual basis on which the proposed paragraph 23A was put forward had been well known by the applicant’s representatives prior to 16 October 2020 and yet paragraph 23A was raised for the first time on the second day of the trial. Upon its being raised, Mr Bongiorno said the proposed amendment was vague, it was akin to “fishing”, no pleaded allegations to which it related were set out and that such a lack of clarity militated against the grant of leave permitting it to go forward. He said the proposed new paragraph 23A lacked forensic focus so it was impossible to tell the direction the case would go if the amendment were granted.
By the close of debate of 16 October 2020 Mr St John had sought an undertaking from Dr Trichardt to the effect that the liquidators would not appropriate the sum held by them in trust, in the order of $104,000, to their costs without notice to the applicant. Dr Trichardt stated in open court that he had not been able to contact the liquidators to obtain their instructions to give such an undertaking. Mr St John said that in the absence of such an undertaking being proffered, he may be forced to apply for an injunction restraining the liquidators from disbursing those funds.
Without formally ruling on the application to amend to include the proposed paragraph 23A, I invited Mr St John to consider the matters that had been put against him and for him to state whether he elected, of his own motion, to withdraw the proposed amendment to paragraph 23A with leave to replead or whether he wished me to rule on his application for leave to amend to incorporate paragraph 23A. Mr St John said he sought to replead and that he abandoned his application to amend to incorporate paragraph 23A. I granted him leave to replead.
The Applicant’s 19 October 2020 CAMSOC
On the morning of the third day of the trial of this proceeding Mr St John QC applied for leave to file and serve the applicant’s latest version of the CAMSOC. The debate about whether or not to allow such amendments to be made took the whole of the third day allocated to the trial of this proceeding. By the end of the day on the third day of the trial no openings had been made and no evidence had been led. This case has been on foot since 2015 and up to the commencement of the trial it had been before a variety of judges on the hearing of interlocutory applications on not less than 46 separate occasions. It was not emblematic of the way litigation should be conducted, even recognising the complex claims and cross-claims made in this litigation.
The main focus was on the section of the pleading headed “The liquidation of the thirteenth respondent” being paragraphs 79 to 82 and paragraph 13A of the prayer for relief.
Other amendments were made by the latest version of the CAMSOC. They included –
a)correctly describing the companies in liquidation by the use of the suffix (in liq);
b)the addition of information in paragraph 12A in relation to the loan facility for the luxury motor vehicle;
c)the deletion of paragraph 21;
d)the deletion of the reference to De Santis Family Investments Pty Ltd in paragraph 23;
e)other cosmetic amendments;
f)an entirely new collection of allegations about the ownership of X Street Suburb FF by Q Pty Ltd reposed in paragraphs 59A to 60, matters of concern to Mr Wilson’s client;
g)paragraph 80 by its deletion of any reference to X Pty Ltd and the insertion in lieu thereof of E Pty Ltd (in liquidation);
h)the wholesale deletion of paragraphs 121, 122 and 123; and
i)the hotly contested paragraph 13A of the prayer for relief.
The debate about whether to allow the new version of the CAMSOC to proceed occupied the entire third day of the trial in this proceeding and part of the fourth day.
By the fourth day of the trial of this proceeding two things were patently obvious about this case. The first was that despite this litigation having been on foot for over five years, the applicant was continuing to encounter very real obstacles in the proper and efficient articulation of the claims she made against each respondent. The second obvious matter was that each respondent, as he, she or it was entitled so to do, was confining the applicant very strictly to the case that the applicant brought against each respondent. That provoked a submission on behalf of the applicant that in family law litigation in this court an applicant should not be held strictly to pleadings as if the case were fought in a commercial court. While I have certain sympathy for such a submission reminiscent of contentions urged in a long line of cases culminating in Gissing v Gissing[5] where the House of Lords was invited to hold that constructive trust arguments as between married persons were wholly different to commercial cases, in this case since my decision in Sigley & De Santis (No 2)[6] in which pleadings were ordered, this case has stood outside of the majority of cases in this court which do not proceed by way of pleadings. The claims advanced by the applicant against each respondent are complex as both to fact and law. On many occasions in debate since the trial proceeding commenced Mr St John QC has attempted to persuade me that the applicant's case against each respondent is well known to each respondent as the claim she advances against each respondent is in affidavit form, in documents produced by subpoena or it is in the expert reports produced thus far.
[5] [1971] AC 886.
[6] [2019] FamCA 596.
I do not share Mr St John’s simplification of the claims his client advances. At its core Mr St John relies on what he calls in the CAMSOC “a scheme”, which he argued is to be understood as a ruse for an improper arrangement in which many of the respondents have participated to render hollow the applicant's claim to enforce the financial agreement between her and the first respondent. Those allegations ought not to be lightly made. The applicant is required to prove those allegations in precise terms once the precise content of the allegations are put against each respondent. Vague, inexact, woolly, loose, imprecise assertions will not suffice. To say that details of the claims put against each respondent are to be found somewhere in the mountain of affidavit material in this case is inadequate. It is equally insufficient for Mr St John to deflect the pleading complaints by his response that the expert Mr C whose two compendious affidavits survived challenge is the repository of information on which the applicant relies. In my view, the applicant’s approach towards pleading her case against each respondent has been less than optimal. To my mind, the respondents have been entitled to complain about deficiencies in the applicant’s pleadings, even on the third and fourth day of the trial of this proceeding. It is no answer for the applicant, having brought a proceeding alleging a sham transaction, to contend that the details of her claims somehow lie in a bundle of affidavits and reports filed in the lead up to trial. Such an approach circumvents the purpose and function of pleadings.
In broad terms, the allegations concerning the liquidation of E Pty Ltd (in liq) involved the applicant’s contention that Mr De Santis, his son Mr S De Santis and the grandfather, Mr AA De Santis as directors of E Pty Ltd (when it was not in liquidation) approved its accounts and those accounts did not represent the true financial position of the company. Mr Bongiorno contended that such a pleading is akin to an allegation of fraud. In the passages below I address that situation. But the relevance of paragraph 80 lies in its connection to paragraph 13A of the prayer for relief. That paragraph is entirely new. It is necessary to set out its terms –
13AThe First, Third Respondent (if applicable) & the Fourth Respondents do all acts and things and sign all documents necessary to ensure the proper realization of all assets of E Pty Ltd (in liquidation), including but not limited to –
(a)causing new accounts to be prepared to properly reflect the assets and liabilities of E Pty Ltd (in liquidation);
(b)to the extent lawfully possible, causing the liquidator(s) to act on corrected and accurate accounts;
(c)appointing a new liquidator (whether replacing the current liquidator or subsequent to the conclusion of the current liquidation);
(d)pursuing any action at law to recover unpaid amounts payable to E Pty Ltd (in liquidation) and available to a shareholder.
Paragraph 13B of the prayer for relief was an adjunct subparagraph to 13A. In paragraph 13B the applicant claimed the following –
13BThe First, Third (if applicable) & Fourth Respondents sign all documents as may be required to authorize and / or enable the Applicant in the name of the First Respondent to do all acts and things required to give effect to paragraphs 13 and 13A of these Orders.
Mr Bongiorno focused first on paragraph 80. He made several points by way of criticism of that paragraph. In no particular order of priority they were as follows –
a)the contention that the persons there mentioned approved accounts which did not accurately represent the thirteenth respondent’s financial position was connected by the words “including giving accounting effect to purported transactions”;
b)the use of the word “including” and the words that followed were embarrassing;
c)an allegation that the accounts as approved did not accurately reflect the company’s true financial position required particulars in order to see how the inaccuracy was alleged; and
d)an allegation that the accounts do not accurately reflect the company’s true financial position is akin to an allegation of fraud or at least a misrepresentation.
Mr Bongiorno focused on paragraph 82 of the CAMSOC. It was in the following terms –
The accounting of the Thirteenth Respondent as described in paragraph 80 hereof is the subject of ongoing investigation.
Mr Bongiorno said paragraph 82 added nothing.
Mr Bongiorno then addressed paragraph 13A of the prayer for relief. He submitted it was defective in several ways including –
a)its reference in the third line to “including but not limited to” was inadequate as it failed to set out all acts and things that had to be done to ensure proper realisation of all assets of the company in liquidation;
b)the prayer in the first three lines of paragraph 13A failed to set out the power of this court to grant the relief sought generally in that paragraph;
c)the words in paragraph 13A(b) “causing new accounts to be prepared to properly reflect” injected uncertainty because nowhere was it said how those accounts would answer the description of “properly”;
d)further, by the use of the word “properly” in paragraph 13A(a), the pleading failed to disclose what was currently not “proper” in the accounts;
e)no legislative basis for the orders sought in paragraph 13A were set out, especially under the Corporations Act; and
f)in any event the winding up of E Pty Ltd has come to an end.
A similar assault was made on paragraph 13A(b) of the prayer for relief. Mr Bongiorno submitted as follows in relation to that subparagraph –
a)the words “to the effect lawfully possible” are meaningless;
b)the words “causing the liquidators to act on” were likewise meaningless; and
c)in any event, the liquidators (so Mr Bongiorno asserted) are required to consider putting the company into liquidation and insolvency.
So far as paragraph 13A(c) of the prayer for relief was concerned, Mr Bongiorno asserted that nowhere did the applicant plead the power allegedly reposed in this court to appoint a new liquidator and doubt exists that any such power exists at all.
As to the allegations in paragraph 13A(c), Mr Bongiorno submitted that this court has no power to command that any particular cause of action be pursued by a liquidator so the prayer for relief in subparagraph 13A(c) had no legal foundation.
Mr Bongiorno focused on the prejudice that paragraph 80 and paragraph 13A of the prayer for relief occasioned to his clients. He said the applicant was maintaining an inconsistent position by abandoning her contentions about a sale at an undervalue in paragraphs 119 and 120 of the CAMSOC yet she concurrently pressed the pleading in paragraph 80 that certain respondents approved the accounts of the thirteenth respondent that did not accurately represent the thirteenth respondent’s financial position. Mr Bongiorno referred to the report of Mr KK of LL Accountants dated 31 July 2019, especially paragraphs 46 to 59 and he submitted that it was unclear precisely what Mr KK was pressing. At all events, Mr Bongiorno argued that if leave to amend were granted to incorporate the proposed paragraph 80 and paragraphs 13A and B of the prayer for relief then Mr Bongiorno’s clients would need to obtain their own expert evidence to contradict the contentions advanced by Mr KK. Conversely, Mr Bongiorno said that if leave to amend paragraph 13A is refused, no such new evidence will be required.
By way of summary, Mr Bongiorno argued that leave to amend in relation to paragraphs 80 and 82 as well as paragraphs 13A and 13B of the prayer for relief should be refused. That was because –
a)paragraphs 80 and 82 did not support the relief sought in paragraphs 13A and 13B of the prayer for relief;
b)paragraphs 13A and B of the prayer for relief is misconceived because the relevant jurisdiction being exercised is not set out and the court should not presume that it has such jurisdiction;
c)to the extent that members of the company in liquidation have controlled the liquidation of E Pty Ltd (in liq) then the applicant who is not a member or creditor of that company has no power to apply for the relief sought and the court has no power to order the relief sought;
d)a forensic unfairness exists in the way the applicant proposes to proceed under paragraphs 13A and 13B without a corresponding right to Mr Bongiorno’s clients to obtain independent expert advice; and
e)no explanation for the delay in bringing the amendments was offered on behalf of the applicant.
The Position of MS De Santis
The position of the twelfth respondent, Ms De Santis, focused on X Street, Suburb FF.
In the version of the CAMSOC that was on foot immediately prior to the commencement of the trial on 15 October 2020, the applicant alleged in paragraph 59 that since 20 September 2015 the second respondent had been the registered proprietor of X Street, Suburb FF. In paragraph 60, the applicant alleged that the primary asset of the Trust, being defined to mean in paragraph 57 of the CAMSOC the Trust for the children of Mr & Ms De Santis.
In the version of the CAMSOC produced at 10am on 19 October 2020, various amendments were proposed to paragraph 59 and following. They were –
a)the deletion of the reference to the second respondent being the registered proprietor of X Street Suburb FF since 20 September 2005;
b)the additional paragraph 59A to include reference to the deregistration of the second respondent on 20 February 2017;
c)the inclusion in paragraph 59A to the legal and beneficial ownership in X Street being held by the second respondent;
d)the reference in the particulars subjoined paragraph 59A to there being no written declaration of trust required by s 53(1)(b) of the Property Law Act;
e)the new contention in paragraph 59B that if X Street is not held on trust by the second respondent then X Street has vested in ASIC pursuant to s 601AD(2) of the Corporations Act;
f)the new contention in paragraph 59C that pursuant to s 601AH(5) of the Corporations Act upon reinstatement of the registration of the second respondent, ownership of and beneficial interest in X Street will be restored as though deregistration had never occurred; and
g)the new contention in the amended paragraph 60 that if X Street is held on trust, the primary asset of the Trust is X Street.
Mr Wilson, who appeared for Ms De Santis, submitted that the newly cast paragraphs 59, 59A, 59B, 59C and the new 60 were different to the applicant’s proposed paragraph 60A as put forward on day two of the trial. Omitting particulars paragraph 60A was in the following terms –
Alternatively, the second respondent is the legal and beneficial owner of X Street.
Mr Wilson submitted that in the lead up to the trial of this proceeding and up until the revision to paragraphs 59, 59A, 59B, 59C and 60 was produced for the amended application on 19 October 2020, the versions of paragraphs 59 and 60 were as they appeared as annexure A to the affidavit of Mr Szabo to his affidavit made 6 October 2020. Mr Wilson submitted that leave should not be granted to amend in the terms proposed because –
a)the case will be prolonged with debate about the ownership of the asset, that is to say, whether absolutely by the second respondent or in a representative capacity as trustee of the Trust for the children of Mr and Ms De Santis;
b)the applicant asserts that the land at X Street is held on trust yet she states in paragraph 59A that no written declaration of trust exists;
c)according to the Secretary, Department of Social Security v James[7] as well as Re JS & GP,[8] the requirements for writing may be satisfied by a combination of documents capable of being read together and any informal writing may stand as evidence of the existence of the trust, yet here, the applicant squarely pleads that no written declaration of trust exists;
d)this case has been on foot since 2015 involving 46 interlocutory appearances and since August 2019 paragraph 60 appeared in the manner immediately preceding the proposed amendment for which leave was sought on the morning of the third day of the trial;
e)according to Aon Risk Services Australia Ltd v Australian National University,[9] a party does not have an automatic entitlement to amend;
f)in considering whether to allow a proposed amendment the court must weigh delays, wasted costs, case management issues, the nature and importance of the proposed amendments, the stage which the litigation has reached when the amendment was sought and any other explanations for the delay; and
g)irremedial prejudice will be caused to parties seeking to uphold the Trust for the children of Mr De Santis and Mr AA De Santis if the amendment were allowed.
[7] (1990) 95 ALR 615, 622.
[8] (2006) 35 Fam LR 88.
[9] (2009) 239 CLR 175.
THE APPLICANT’S REPLY
Mr St John QC raised matters under the guise of points in reply which were, more correctly, propositions in support of his application for leave to amend. Yet a more fundamental issue arose from Mr St John’s submissions, namely, his unwillingness to recognise that this case was ordered to proceed with pleadings and his contentions that his client’s case is to be understood, not by reference to the pleadings, but by reference to the affidavit material filed so far. I brought to Mr St John’s attention a passage from the last two sentences in paragraph 8 of my reasons for the 27 August 2019 decision.[10]
[10]Sigley & De Santis (No 2) [2019] FamCA 596.
There I pointed out –
a)that in Miller v Cameron[11] the High Court held that pleadings define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at trial; and
b)relief is generally confined to that available on the pleadings as was held in Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd.[12]
[11] (1936) 54 CLR 572.
[12] (1990) 169 CLR 279.
Mr St John submitted that Mr C’s evidence in his 16 April 2020 affidavit was sufficient for the respondents to know how and on what forensic evidence the applicant proceeded. It need only be pointed out that Mr C’s affidavit of 16 April 2020 is, with exhibits, 78 pages in length. His 4 September 2020 affidavit is a further 74 pages in length. It is not the task of a respondent to attempt to guess at the details of a pleading by reference to the contents of a dense and highly technical affidavit. I found Mr St John’s contentions in that regard to be of no utility and they entirely overlooked the purpose and functions of pleadings.
Mr St John submitted that paragraph 80 had not been the subject of a request for further and better particulars. He also submitted that the gravamen of the factual matters underpinning paragraph 80 was covered by Mr C’s affidavits. For reasons already canvassed in the two paragraphs immediately preceding this one, I reject that submission.
Mr St John submitted that it was wrong for Mr Bongiorno to argue that paragraphs 80 and 83 represented a “re-jigging” of the applicant’s contentions. Mr St John submitted that there could be no misunderstanding of his client’s case and in any event, no previous complaint had been made about paragraph 80 nor do any defences take issue with its sufficiency. I enquired how Mr St John could make that submission in view of the fact that many respondents simply deny paragraph 80.
Mr St John submitted in reply that no prejudice was occasioned to the respondents by the amendments proposed. He says no re-jigging was involved. He said that if anything, the new amendments expanded on matters previously pleaded and the affidavit material showed how, in the case of paragraph 80, the applicant cast her case.
So far as the power of the court to make the orders sought in paragraph 13A and following of the prayer for relief were concerned, Mr St John submitted that Gibbs J dealt with the court’s power in Ascot Investments Pty Ltd v Harper and Harper.[13]
[13] (1981) 148 CLR 377.
Insofar as prejudice to Mr Wilson’s client was concerned, Mr St John posed the rhetorical question of how Ms De Santis was prejudiced. He said the question of the legal ownership of X Street was a question of law.
Mr St John contended that if any deficiencies exist in the statement of claim, those deficiencies should not be visited upon the applicant who has waited five years for her case to be tried. Mr St John sought an opportunity of conferring with his junior, Mr Agardy, before closing his address especially to ensure that matters bearing upon company law had been exhaustively put. I allowed Mr Agardy to address on 20 October 2020.
Before adjourning on 19 October 2020 Mr Bongiorno brought to my attention the observations of Allsop J (as the Chief Justice then was) in White v Overland.[14] There, his Honour spoke in discouraging terms of a practice in litigation of leaving footprints in correspondence to be uncovered at some later time in an attempt to reveal that a particular matter was always in issue. His Honour said the following –
However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly. Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game. It is a costly and stressful, though necessary, evil.
[14] [2001] FCA 1333.
Tuesday 20 October 2020
Mr Agardy did not address me on 20 October 2020. Apparently he was elsewhere, despite being retained as junior counsel in this case, a practice I do not condone. Mr St John QC conducted a two hour further address. In the course of that, several matters arose, namely –
a)he applied to amend paragraph 13A of the prayer for relief so that the opening words were replaced by “the first, fourth and fourteenth respondents do all acts…”;
b)he said that after the words E Pty Ltd (in liq) on the third line of paragraph 13A the paragraph should end thereby deleting subparagraphs 13A(a), (b), (c) and (d);
c)he said paragraph 13B should be amended in its opening few words to now read “the first, fourth and fourteenth respondents sign all documents”;
d)he said the new allegations in paragraphs 13A and 13B do not involve allegations that invoke the Corporations Act;
e)he argued that the head of power for the purposes of paragraphs 13A and 13B of the prayer for relief is s 80 and s 114 of the Family Law Act;
f)he submitted that the three directors against whom paragraphs 13A and 13B are pleaded “acted collusively” (his words);
g)he said they engaged in a joint enterprise to defeat the orders of this court;
h)he argued that no prejudice will be suffered by any respondent by the grant of leave to amend;
i)he said that in an application to amend pleadings, in the ordinary course the pleading amendment should be allowed unless it irretrievably prejudices a party;
j)the applicant has carefully eschewed any assertion in paragraph 80 of the existence of fraud;
k)the applicant says the three respondents (that is to say the first, fourth and fourteenth respondents) approved the accounts of E Pty Ltd prior to putting it into voluntary liquidation and that the accounts were not accurate; and
l)the applicant was and remains unaware of the state of mind of the three respondents in approving the accounts.
Those matters were no mere points in reply. The fact that further amendments were dictated to me verbally by Mr St John during his submissions raised suspicions in my mind that the applicant’s camp was in a state of chaos in its approach to the pleading amendments.
Mr Bongiorno made a collection of submissions, as it seemed he was entitled to do, given that the most recent amendments were urged “on the fly”. Mr Bongiorno said –
a)the deletions of subparagraphs to paragraph 13A rendered that paragraph even more vague;
b)it is unclear how any aspect of paragraph 80 bears upon new allegations in paragraphs 13A or 13B;
c)the court’s jurisdiction to make orders against directors in respect of a company in liquidation when the directors’ powers had been assumed by the liquidator were not identified;
d)the “scheme” alleged against the first, fourth and fourteenth respondents connotes misfeasance of some sort as paragraph 22 of the pleading defines the scheme to include the phrase “deliberately intended to defeat existing orders”;
e)it is fanciful for the applicant to assert that approval of the E Pty Ltd accounts was not part of the scheme alleged; and
f)it is equally fanciful for the applicant to suggest that the approval of the accounts of E Pty Ltd did not involve some wrongdoing.
Mr Wilson also replied. He submitted that the allegations concerning the Trust for the children of Mr and Ms De Santis have been placed before the court but those allegations were marshalled on pleadings in which no issue was raised concerning the trust being held in the manner in which it is now alleged to be held.
Against those contentions, I have considered the application to amend.
CONSIDERATION
Mr St John QC submitted that an application to amend pleadings should be allowed unless irretrievable prejudice is caused.
That is not the test.
The test is as stated in Aon Risk Services Australia Ltd v Australian National University.[15] Relevantly paraphrased, in considering whether to allow a proposed amendment the court must weigh delays, wasted costs, case management issues, the nature and importance of the proposed amendment, the stage the relevant litigation has reached when the amendment is sought and any explanation for the delay.
[15] (2009) 239 CLR 175.
Here, this amendment application was urged on the fourth day of the trial in the context of a case that has been on foot for over five years and in which 46 discrete applications have been heard before members of this court. No real explanation has been offered for the delay in bringing the amendment application before this day. I find it remarkable that the points that are now the subject of amendment had not been apparent to the applicant’s legal advisors before now. The elements of the so-called scheme must have been obvious to the applicant’s legal advisors prior to the fourth day of the trial. After all, the scheme features most prominently in the applicant’s case. I find it beyond comprehension that paragraph 80, featuring as it does as a pivotal component of the scheme, has been amended on the fourth day of the trial.
Further, I do not consider it an acceptable position for the applicant to maintain that the identity of the three key participants in the step identified in paragraph 80 emerged for the first time on the fourth day of the trial.
Further, I do not accept that it is proper or correct for the applicant to point to the lengthy 16 April 2020 affidavit of Mr C so as to assert that the elements embedded in the pleading in paragraph 80 are to be found somewhere in that affidavit. To adopt such a course wholly misconceives the purpose and function of pleadings. The applicant is required to properly plead the case on which she relies. The respondents are not required to guess at the case alleged in the volumes of affidavits and to attempt to backfill what they think the case against them might be.
The applicant has adopted a cavalier approach to the discharge of her obligations in pleading her case. Naturally, she is not legally trained and cannot be supposed to know the subtleties of advancing a complex case of which this is an exemplar. She has relied on her legal advisors to guide her. Sadly, they have adopted a curious approach to the task of pleading this case. The respondents have taken the applicant to task on point, as was their entitlement. My task is to ensure a fair trial is conducted. I take the view that an unfair trial will be set in train if I were to allow the amendments sought. I say that for the following reasons –
a)embedded deeply in paragraph 80 is an assertion that the named persons who approved the accounts approved those accounts which did not represent the true financial picture of E Pty Ltd;
b)the approval of the accounts was a necessary precursor to E Pty Ltd being placed in liquidation;
c)once the accounts were approved, E Pty Ltd was then placed in liquidation;
d)the placing of E Pty Ltd in liquidation was part of the scheme alleged in paragraph 22;
e)axiomatically, the pleading proceeds on the premise that if the placing of the company in liquidation was part of the scheme and was therefore part of some misfeasance, the approval of the accounts as the precursor to the placing of the company in liquidation was likewise part of the scheme, therefore involving misfeasance;
f)whether described using the word fraud or not, it is artificial for the applicant to contend that the applicant is not seeking to impugn the legitimacy of the conduct of the first, fourth and fourteenth respondents;
g)in Goodridge & Beadle[16] I canvassed the allegations of fraud or allegations akin to fraud that require exquisite attention in pleadings;
h)I take the view that Mr Bongiorno is correct in his characterisation of paragraph 80;
i)in the absence of a precise and exhaustive articulation of the acts, facts, matters, circumstances and things that go to make up the allegations in paragraph 80, that paragraph should not be allowed to go forward;
j)the significance of the matters set out in paragraph 80 as being a component of the scheme alleged in paragraph 22 cannot be overlooked;
k)it is not sufficient for the applicant to say that the particulars to support paragraph 80 are to be found somewhere among the 78 pages of Mr C’s 16 April 2020 affidavit;
l)it is not for the respondents to guess at the way an applicant casts his, her or its case against the respondents;
m)pleadings form a critical role in litigation, especially defining the issues that fall for determination, as the High Court held in Miller v Cameron[17] and in Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd;[18]
n)where collusive conduct is alleged, as Mr St John said it was, that involves an allegation of a state of mind and according to orthodox theory, the pleader must plead a state of mind;
o)paragraph 80 does not descend to that level; and
p)if paragraph 80 is no more than a recital of the details in the 16 April 2020 affidavit of Mr C, then the relevant portions of his affidavit should have been extracted, yet they were not.
[16] (2017) 57 Fam LR 425 (at [112] et seq and following).
[17] (1936) 54 CLR 572.
[18] (1990) 169 CLR 279.
Next it is necessary to go to paragraphs 13A and 13B of the prayer for relief. Several things must be said of the allegations about those paragraphs. In no special order –
a)it was remarkable that Mr St John QC on day four of the trial, when his junior had been announced to be submitting issues about company law, instead informed the court that paragraph 13A(a) – (d) were abandoned;
b)no legislative basis whether under the Corporations Act or the Family Law Act was pleaded as providing a source of power to make the orders sought, even in their truncated form;
c)I entertain very real doubt that s 80 or s 114 of the Family Law Act conferred power for me to order persons who at one time were directors of E Pty Ltd prior to its being placed in voluntary liquidation to “do all acts and things and to sign all documents necessary to ensure the proper realisation of all assets of E Pty Ltd (in liquidation)”;
d)since the liquidators of E Pty Ltd have been appointed, the power and authority of the directors of that company have been suspended and their power assumed by the liquidators;
e)the notion of ordering the former directors to do all things to “ensure the proper realisation of all assets” of the company was devoid of content and courts do not ordinarily make orders that are incapable of meaningful enforcement;
f)paragraph 13B is meaningless;
g)the legislative basis for the making of that order was not given for the purposes of the Corporations Act; and
h)I do not agree that the observations of the High Court in Ascot Investments Pty Ltd v Harper and Harper[19] provide some enabling power to make the orders in paragraphs 13A and 13B.
[19] (1981) 148 CLR 377.
Then there was the proposed amendment in relation to X Pty Ltd. To better understand the factual setting of the claim about X Street, it is necessary to recognise that –
a)Q Pty Ltd was the registered proprietor of X Street, being the land more particularly described in certificate of title volume … folio …;
b)Q Pty Ltd was deregistered on 20 February 2017; and
c)pursuant to section 601AD(2) of the Corporations Act, assets owned by Q Pty Ltd now vest in ASIC consequent upon its deregistration.
As things presently stand, by reason of the deregistration of Q Pty Ltd, it ceased to exist on the date of its deregistration.[20] In paragraph 59B of the amended CAMSOC proposed on 19 October 2020, the applicant asserted that if X Street is not held on trust, then X Street has vested in ASIC. I do not accept the conditional nature of that assertion. X Street is an asset owned by Q Pty Ltd and that company is deregistered so it has ceased to exist. All property (real and personal) owned by it vests in ASIC. Paragraph 59B contains a legal non-sequitur. Such a pleading should not be allowed to go forward.
[20] See Tarkington Pty Ltd v Kingdrake Pty Ltd [2000] VSCA 98 (at [15]).
Amendments should be allowed if the criteria prescribed by Aon Risk Services Australia Ltd v Australian National University[21] are met, plus a purpose is served by the amendment. Conversely, if the pleading that is to be amended does not advance a claim that is maintainable in law, then no useful purpose is to be gained by the grant of leave to make the amendment. In my view, no useful purpose is gained by the proposed amendments in the document produced for my consideration on 19 October 2020.
[21] (2009) 239 CLR 175.
I refuse leave to allow the amendments sought in that document.
Recognising that the applicant should not be shut out altogether from seeking leave to make such amendments as she may be advised to make, I will grant the applicant leave to amend in such manner as she may be advised, so long as the applicant files and serves any further proposed amended CAMSOC by noon on 22 October 2020. If so, I will hear argument about whether to grant leave at 2:15pm on 22 October 2020.
Costs thrown away by reason of this application are reserved.
I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 21 October 2020.
Associate:
Date: 27 October 2020
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