Sobh v Ali
[2023] VSC 225
•1 May 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2022 03478
BETWEEN:
| SHARIF HASSAN SOBH & ANOR (according to the attached Schedule) | Plaintiffs/Defendants by Counterclaim |
| v | |
| MARLINE ALI | Defendant/Plaintiff by Counterclaim |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 April 2023 |
DATE OF JUDGMENT: | 1 May 2023 |
CASE MAY BE CITED AS: | Sobh & Anor v Ali |
MEDIUM NEUTRAL CITATION: | [2023] VSC 225 |
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PRACTICE AND PROCEDURE — Pleadings summons — Applicable principles — Statement of claim not coherently and succinctly pleading material facts to establish essential elements of cause of action – Pleading unnecessary and irrelevant allegations, facts which do not lead to any cause of action — Pleading conclusions without material facts – Pleadings vague, unclear and embarrassing – Statement of claim struck out – Wheelahan v City of Casey (No 12) [2013] VSC 316; Uber Australia Pty Ltd v Andrianakis (2020) 61 VR 580, referred to.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs/Defendants by Counterclaim | Mr M Fox, Solicitor | Sea Change Conveyancing & Legal (NSW) |
| For the Defendant/Plaintiff by Counterclaim | Mr C Charnley of Counsel | Linda Ashley Law |
HIS HONOUR:
Introduction
By Summons filed on 11 December 2022, the defendant applies to strike out the plaintiffs’ Statement of Claim (‘SOC’) indorsed on the Writ, in whole or in part, under r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’). The orders sought also include that the plaintiffs file any amended SOC within three weeks, and costs.
Background
The SOC tells an incomplete story that is unfortunately not uncommon. It is common ground, although it is only pleaded in passing in the SOC, that the plaintiffs are the defendant’s parents. In very broad summary, the essential facts appear to be that the plaintiffs acquired their home at 14 Runecrest Terrace, Epping, Victoria (‘Runecrest’) with the assistance of the defendant — who was registered with them as a joint proprietor — and were later induced to part with their interests in Runecrest by what is said to be a breach of contract by the defendant, although the claim has all the hallmarks of an equitable claim that the defendant engaged in unconscionable conduct, or a claim in deceit. They seek to be placed back on the title to Runecrest (holding their interests jointly as between them, and as between them and the defendant as tenants in common) at no cost to themselves.
For the reasons set out below, it is necessary that the SOC be struck out as a whole with liberty to replead. Given the unusual form of the SOC, and the criticisms made of it by the defendant’s Counsel, it is desirable that I set out at some length why the SOC must be repleaded.
Pursuant to orders originally made Keith JR in February 2023, but later varied by me, the parties filed written submissions. I will refer to them in the course of explaining why the SOC must be struck out in its entirety.[1]
[1]Defendant’s Submissions filed 10 March 2023 (‘Defendant’s submissions’). Plaintiffs’ Submissions filed 31 March 2023 (‘Plaintiffs’ submissions’).
Principles applicable
Rule 23.02 of the Rules provides:
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court--
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
Under this Rule, the objection is to the manner of expression of the claim or defence in the indorsement of claim or pleading. That is, the indorsement or pleading does not disclose the cause of action or defence or its contents are such that it is scandalous, frivolous or vexatious, or may prejudice, embarrass or delay the fair trial of the proceeding, or is otherwise an abuse of process. However, the defendant does not ask that the proceeding be brought to an end. They seek an order that the offending indorsement be struck out or amended, and that the plaintiffs present the claim in the proper way.[2]
[2]Brinson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937.
The meanings of some of the terms are not immediately obvious to the modern eye. They are:
(a) Scandalous: Allegations made in a pleading for the purpose only of abusing or injuring the opposite party and allegations which are indecent or offensive are scandalous within the meaning of the Rule, and liable to be struck out;[3]
(b) Frivolous or vexatious: These words in combination have traditionally been used to describe a wide variety of circumstances in which a claim is found to be groundless, or lacking a legal basis or merit.
(c) Prejudice, embarrass or delay: In general, a pleading or indorsement is embarrassing when it places the opposite party in the position that he or she does not know what is alleged against him or her;[4] Thus, a pleading which is unintelligible,[5] or is vague or ambiguous,[6] or is too general[7] is embarrassing.[8]
[3]Christie v Christie (1873) LR 8 Ch App 499; Coyle v Cuming (1879) 40 LT 455; Cashin v Craddock (1876) 3 Ch D 376. See Neil J Williams, LexisNexis Butterworths, Civil Procedure: Victoria [23.02.30].
[4]Girando v Padbury (1919) 22 WALR 7; Meckiff v Simpson [1968] VR 62, 70; Gunns Ltd v Marr [2005] VSC 251, [15] (‘Gunns’).
[5]Hoffnung v Fletcher (1887) 4 WN (NSW) 68.
[6]Byrd v Nunn (1877) 7 Ch D 284.
[7]British & Colonial Land Assn Ltd v Foster (1888) 4 TLR 574.
[8]See Neil J Williams, LexisNexis Butterworths, Civil Procedure: Victoria [23.02.35].
In Wheelahan v City of Casey (No 12),[9]Dixon J exhaustively summarised the principles to be applied in an application to strike out a pleading pursuant to r 23.02,[10] and in Uber Australia Pty Ltd v Andrianakis (‘Uber’),[11] the Court of Appeal adopted them. In summary, they are as follows:
[9][2013] VSC 316, [25].
[10]Derived from three earlier decisions of this court: SMEC Australia Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd (No 2) [2011] VSC 492 (‘SMEC’); Environinvest Ltd v Pescott; Environinvest Ltd v Blackburne Pty Ltd [2011] VSC 325 (‘Environinvest’); and Clarke v Great Southern Finance Pty Ltd [2010] VSC 473 (‘Clarke’).
[11](2020) 61 VR 580, [50] (‘Uber’).
(a) The function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the Court may conduct a fair trial.[12]
[12]The function of defining issues for trial is required from an early stage. Otherwise, discovery and other interlocutory process are likely to be misdirected: Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522, 42-679 (Burchett J).
(b) The cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence).[13] The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action.[14]
[13]A reasonable cause of action or defence is one with a real chance of success, assuming the correctness of the allegations of fact in the challenged pleading.
[14] Australian Automotive Repairers’ Association (Political Action Committee) Inc v NRMA Insurance Ltd [2002] FCA 1568, [13], citing Bruce v Oldhams Press Ltd [1936] 1 KB 697, 712–713.
(c) As a corollary, the pleading must be presented in an intelligible form — it must not be vague or ambiguous or inconsistent.[15] Thus, a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged.
[15]In Environinvest, the pleading was struck out because it was confusing, often circular, sometimes inconsistent and contained no coherent narrative.
(d) The fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant.[16]
[16]SMEC [2011] VSC 492, [8].
(e) Pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic).[17]
[17] Ibid [9].
(f) Pleading which contains unnecessary or irrelevant allegations may be embarrassing — for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined.[18]
[18]Ibid [28]–[31]. In SMEC, Vickery J remarked (at [5]) that good pleading calls for ‘judgment and courage to shed what is unnecessary’.
(g) It is not sufficient to simply plead a conclusion from unstated facts.[19] In this instance, the pleading is embarrassing.
[19]Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109, 114.
(h) Every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a)).
(i) The effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03).[20]
[20]In Gunns, Bongiorno J remarked (at [52]) that the paragraphs in the pleading ‘contain quotations from newspapers, websites and correspondence which are inappropriate in form’.
(j) Rule 13.10 requires a pleading to contain the necessary particulars of any fact or matter pleaded. Particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement — namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met.[21] An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried.[22]
[21]Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 286 (Mason CJ and Gaudron J).
[22]Clarke [2010] VSC 473, [9].
(k) A pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it.[23]
[23]Knorr v CSIRO (No 2) [2012] VSC 268.
(l) Extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible.[24]
[24]In Gunns, Bongiorno J noted (at [20]) that the particulars to the amended statement of claim under attack incorporated allegations of approximately 40 other paragraphs, requiring the defendants to navigate through a labyrinth of allegations. His Honour refused leave to file the amended statement of claim in the proposed form.
(m) In an application under r 23.02, the Court will only look at the pleading itself and the documents referred to in the pleading.[25]
(n) The power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown.[26]
(o) If the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.[27]
[25]Rule 23.04 and Day v William Hill (Park Lane) Ltd [1949] 1 KB 632.
[26]Clarke [2010] VSC 473, [11].
[27]Davy v Garrett (1878) 7 Ch D 473.
A number of the authorities referred to above support the proposition that a statement of claim must contain material facts, being the facts necessary for the purpose of formulating a complete cause of action, and that it is not sufficient simply to plead a conclusion drawn from unstated facts.[28]
[28]See for example Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109, 114–115 (Fisher J); Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413, 417; Pioneer Electronics Australia Pty Ltd v Edge Technology Pty Ltd [1999] FCA 142, [7] (Kenny J).
The material facts are those necessary for the purposes of formulating a complete cause of action.[29] In practice, it is often difficult to distinguish between a ‘material fact’ and a ‘particular’. Antecedent to that distinction however, is the definition of the level of generality at which the material facts should be pleaded. It is an ancient and established rule of pleading that the question of generality of pleading must depend upon the general subject matter.[30]
[29]Bruce v Odhams Press Ltd [1936] 1 KB 697, 712 (Scott LJ).
[30]Ratcliffe v Evans [1892] 2 QB 524, 532 cited in Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413, 417.
A statement of a conclusion drawn from facts which are not in the statement of claim may not, depending on the subject matter and nature of the claim, be an allegation of a material fact. There are cases where a conclusion is a material fact, and it will conform to the requirements of the Rules if there are sufficient facts that lead up to it, or which are given as particulars to it.[31]
[31]Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413, 418.
Whether it is appropriate that the conclusion is supported merely by particulars, rather than be preceded by separate allegations of the facts leading to the conclusion, depends on the case at hand. Thus, it is common, and usually unobjectionable, to plead as a conclusion that on a certain date a contract was entered into or an agreement was reached between certain identified parties and having a certain subject matter. That allegation is then supported by particulars, which may allege the contract or agreement to be, for example, partly written, partly oral and partly to be implied, setting out the facts from which each of those elements is supported, but not the evidence. This is sufficient to enable the opposite party to know what is alleged against it, to plead to the allegation, to avoid surprise and define the questions for trial.[32]
[32]See the requirements of r 13.10(2) of the Rules.
As Harper J (as he then was) pointed out in Downer Connect Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd,[33] pleadings have another important audience: the Judge or Magistrate. In most cases, the opposite party will have the assistance of some knowledge of the factual background — some knowledge, in other words, of the facts against which the pleadings can be assessed. The tribunal of fact will never be in that position. The pleadings must therefore be drawn so as to allow the impartial and uninformed reader to know what the case is about. This end cannot be achieved unless the pleadings form a coherent narrative of material facts, with the necessary detail included as particulars. They must be drawn with a careful eye to the evidence that will necessarily be called if the case is to be made out. If the party pleading does not have that evidence, then the case ought not go to trial. Indeed, it is generally true to say that it ought not to proceed beyond the point at which the party pleading appreciates, perhaps because the very act of pleading reveals it, that there is and will remain a gap in the evidence upon which the cause of action or defence is based and without which that cause of action or defence will fail.
[33][2008] VSC 77, [1]–[4].
Last, but not least, as Hargrave J observed in Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2),[34] and the Court of Appeal approved in Uber:[35]
To this summary, I would add that the Court should consider the pleading under a challenge as a whole and adopt a practical case management approach to pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole and there is no embarrassment to filing a responsive pleading. Such an approach accords with the discretionary nature of the power to strike out and with the overarching purpose under the Civil Procedure Act. However, in cases alleging dishonesty or fraud, precise pleadings with full particulars are required.[36]
[34][2017] VSC 556.
[35]Uber (2020) 61 VR 580, [52].
[36]Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2) [2017] VSC 556, [15].
Hargrave J also noted that, in considering pleading objections on the ground that the pleading is embarrassing, the Court should stand back and consider the pleading as a whole and in that light ask: does the case alleged give clear notice of the case to be met at trial?[37] In Uber,[38] the Court of Appeal said this modern approach to applications to strike out pleadings on the ground that they are embarrassing is reflected in this Court’s decision in CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd,[39] where the Court stated that, while important, pleadings are primarily used ‘to help the parties define the real issues in dispute’, while bearing in mind that pleadings are ‘procedural tools only’.[40]
[37]Ibid [17].
[38]Uber (2020) 61 VR 580, [54].
[39](2017) 55 VR 62.
[40]Ibid 71 [21].
The Statement of Claim
I will deal with the SOC as the submissions do, paragraph by paragraph. The SOC begins with a chronology of events (paragraphs 1–7), many of which are the subject of complaint by the defendant. Nevertheless, the defendant has managed to admit some of those she criticises.
Paragraph 1
Paragraph 1 refers to the sale of a property located at 115 Grand Parade, Epping, Victoria in April 2010 (‘Grand Parade’).
Defendant’s complaint
The defendant complains that it does not state any material fact or particulars relevant to any cause of action. It does not comply with r 13.02 nor assists the defendant in identifying the case she must meet at trial.
Plaintiffs’ response
It is asserted that the sale of Grand Parade is a material fact because it is the backdrop to the subsequent purchase of Runecrest, and surprisingly the submission adds some facts: the plaintiffs were forced to sell Grand Parade due to the failure of ‘a relative’s’ business that the plaintiffs had funded. It was a forced sale that led to the agreement later pleaded pursuant to which Runecrest was purchased.
Analysis
How this is material to the claim does not emerge from the pleading and is only explained in the defendant’s submissions. As it stands at present, the allegation is unnecessary or irrelevant and in consequence is embarrassing. It is a background fact which does not lead to the making out of any defined cause of action. The event may be a material fact if it is sufficiently connected to the agreement pursuant to which Runecrest was purchased, settlement of which purchase preceded settlement of the sale of Grand Parade. Was Grand Parade the plaintiffs’ home? Was it lost in circumstances that in some way brought about the purchase of Runecrest with the assistance of the defendant? One cannot tell from the SOC.
Paragraph 2
Paragraph 2 pleads the registration of the plaintiffs and the defendant as tenants in common in equal shares as proprietors of Runecrest, and the mortgaging of the land to the Bank of Queensland (‘BOQ’), both on 8 February 2010.
Defendant’s complaint
The first complaint in the defendant’s submissions, but not pressed in oral submissions, is that this paragraph makes two assertions of fact needlessly conflated into a single paragraph, which, if relevant to a claim, ought to be separated into individual numbered paragraphs.
It is then objected that the claim simply asserts conclusions without stating any particulars at all. They neither comply with r 13.01(2) nor r 13.10, nor assist the defendant in identifying the case she must meet at trial. Further, the allegation that the plaintiffs and defendant were registered as tenants in common is factually wrong as the title shows registration as joint tenants.
Plaintiffs’ response
This paragraph, like paragraphs 3 and 4, outline the facts required to support the plaintiffs’ case. The plaintiffs concede that the parties were joint proprietors and not tenants in common but contend the erroneous statement can be rectified by a notice to admit.
Analysis
The complaint of ‘conflation’ is, as Counsel for the defendant conceded in argument, a trifling objection in the circumstances of this claim. Otherwise, there is some merit in the defendant’s complaint. It is not sufficient to simply plead a conclusion from unstated facts.[41] Such a pleading is embarrassing. The conclusion of registration of the plaintiffs and defendant as proprietors of the land is a consequence of the agreement later pleaded and deserves to be placed in sequence, and preceded by the material facts that lead to it, including (I would expect) the entry into the contract of sale, the payment of the various monies later alluded to (see [50] below), and the obtaining of the loan and mortgage from the BOQ, and be supported by particulars, albeit that they may be brief and refer to documents likely to be a part of the discovery and of the evidence. If, as may be the case, some of the relevant documents are not in the possession of the plaintiffs, then that can be stated and that particulars will be given after discovery of documents.
[41]Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109, 114.
The title is not in evidence, as it could be as it is a document referred to in the SOC, and may be taken into account in an application under r 23.02.[42] The concession that the parties were joint proprietors and not tenants in common is not, as a matter of pleading, capable of correction by a notice to admit. This is a very odd way of correcting error in a pleading. Given my conclusion that, standing back and viewing the pleading as a whole, the SOC needs to be re-done, neither a notice to admit nor a defence pleading the correct position is an effective solution.
[42]Rule 23.04 and Day v William Hill (Park Lane) Ltd [1949] 1 KB 632.
Paragraph 3
Paragraph 3 alleges the ‘entry into’ a transfer of Runecrest by the plaintiffs to the defendant on about 27 April 2017, and registration of it on 5 May 2017.
Defendant’s complaint
The complaint made in the defendant’s submission, but abandoned in oral submissions, is that the paragraph rolls up two matters that should be pleaded separately as material facts and also lacks particulars.
Plaintiffs’ response
This paragraph, like paragraphs 2 and 4, outline the facts required to support the plaintiffs’ case.
Analysis
I disagree with the first complaint. There is no material impact on pleading to this paragraph by combining the ‘entry into’ the transfer (which I take to mean signing) and its registration. The particulars should have, however, been given. That is a matter usually dealt with by a request for particulars and of itself is no reason to strike out the paragraph.
However, the approach of setting out a chronology at the outset of the SOC has the result that this allegation is a conclusion from unstated facts. The material facts that should be set out together and in sequence are spread out and separated. As will appear, the significance of the transfer and its registration is that the defendant and her husband requested that the plaintiffs sign documents relating to a refinance of the BOQ loan. In fact, they unknowingly signed the transfer of Runecrest to the defendant. Although this is placed under the heading of ‘Breach of Agreement’, it includes particulars of ‘deception’, a matter dealt with below. Paragraph 3 needs to be a part of the sequence of events that give rise to the claimed ‘breach of agreement’ or deceit (or even unconscionable conduct) engaged in by the defendant. As it presently stands, one wanders about the pleading trying to connect the material facts into a coherent story.
Paragraph 4
Paragraph 4 alleges that on 5 May 2017 (the same date as registration of the transfer to the defendant), a mortgage of Runecrest was registered in favour of AFSH Nominees Pty Ltd (‘AFSH’) and the BOQ mortgage was discharged.
Defendant’s complaint
The same complaint is made about this allegation as is made about paragraphs 2 and 3.
Plaintiffs’ response
In the plaintiffs’ submissions, it is explained that the facts in paragraph 4 are material because they show the defendant was refinancing the BOQ loan at the same time as the plaintiffs transferred their interests in Runecrest to the defendant and that ‘the fact of the refinance is fundamental to the Plaintiffs’ assertions of fact contained within paragraph 15’ of the SOC.[43]
[43]Plaintiffs’ submissions, [5].
Analysis
My comments to paragraphs 2 and 3 apply to this paragraph. The separate allegation of refinancing being fundamental to the plaintiffs’ allegations in paragraph 15, because it forms a misrepresentation to, or misleading of, the plaintiffs, demonstrates the point made earlier that the allegation needs to be placed in sequence and not put up front in a chronology.
Paragraphs 8 and 9
Paragraph 8 alleges an ‘agreement’ between the parties that Runecrest was to be purchased ‘on behalf’ of the plaintiffs (‘Runecrest Agreement’). Paragraph 9 claims the agreement was wholly oral.
Defendant’s complaint
The defendant complains that paragraph 8 fails to say when the alleged agreement was formed and paragraph 9 fails to provide even in a general sense, any material facts or particulars to support that contention, nor is there any detail provided regarding when the alleged agreement was formed in a way that the defendant may know the case she must meet at trial.
Plaintiffs’ response
The plaintiffs concede that paragraph 8 should have stated that the agreement was ‘formed’ on or before 8 February 2010, the date in paragraph 2 when the plaintiffs and defendant were registered as proprietors of Runecrest. The plaintiffs’ submission responds that in truth the agreement was partly written and partly oral, and that the written part was the Transfer of Land by which Runecrest was transferred to the plaintiffs and defendant as joint tenants. This, it is submitted again, can be rectified by a notice to admit.
Analysis
It would be a good beginning to make the date of the alleged agreement clear. But the vice of separating material facts into a chronology at the beginning of the SOC and then making the material allegations that are vital to establishing a cause of action, without connecting them to the facts in the chronology, is the root cause of the deficiencies in this SOC. The result is that the pleading is not in an intelligible form and contains many conclusions from unstated facts.
In relation to the absence of proper particulars, it is curious that the author has pleaded particulars as a material fact (paragraph 9), and then admittedly does not give all the particulars that could have been given. A notice to admit is not a mode of correcting deficiencies in this pleading. It is the pleadings that define the issues, not notices to admit. The defendant is entitled to an intelligible SOC and has had to face a document that is rather like a jigsaw puzzle with missing pieces.
Although sometimes the distinction is difficult to make, particulars are distinct from material facts. The particulars of the oral part of the alleged agreement need to set out when, where and between whom the conversations took place and what was the material substance of them.
Paragraph 10
Paragraph 10 sets out the terms of the Runecrest Agreement pleaded in paragraph 8.
Defendant’s complaint
In the defendant’s submissions, but not in argument before me, the defendant complains that paragraph 10 seems to allege the terms of the agreement pleaded at paragraph 8, but the terms are pleaded without the necessary specificity so that the defendant can plead to them. Specifically, the defendant was concerned by paragraph 10(e) which claims that the defendant ‘would be responsible for the mortgage’. The SOC pleads the existence of two mortgages prior to paragraph 10; one registered by the BOQ at paragraph 2, and another registered AFSH at paragraph 4. Neither mortgage is defined in the SOC.
In the defendant’s submissions, but not in argument, the defendant further complained that the second ambiguity is the use of the word ‘share’ in paragraphs 10(f) and 10(g). It is alleged in paragraph 10(f) that a term of the Runecrest Agreement was that the defendant would be entitled to her share of any equity in Runecrest once the first plaintiff and second plaintiff had both passed away. Paragraph 10(g) alleges that the first plaintiff and second plaintiff would retain ownership of two of three shares for the remainder of their lives. The defendant says she is required to respond to a pleading incorporating another undefined term; ‘share/s’ are not defined in any part of the SOC.
Plaintiffs’ response
In response, the plaintiffs say it is obviously the BOQ mortgage as it is the mortgage registered at the time of acquisition of Runecrest and, clearly, the AFSH mortgage was given by the defendant alone so that only she could be responsible for it. That is probably fair, but the ambiguity or lack of clarity is not limited to this point.
The plaintiffs respond that it is clear when paragraphs 10(f) and 10(g) are read together that paragraph 10(g) refers to the plaintiffs retaining ownership of two of three shares and that provides meaning to ‘share’ when used in paragraph 10(f). The plaintiffs’ submission goes on to say that paragraph 10(f) could have referred to ‘one of three shares’, and goes on to say the defendant had no difficulty pleading to the alleged terms and the defence does not turn on the meaning of ‘share’.
Analysis
In my view, there is a lack of clarity in paragraph 10(f). It must be recalled that the defendant became one of three joint proprietors — with the plaintiffs — of Runecrest on its acquisition. It seems to be common ground that she was intended to be so under the Runecrest Agreement, although that is not clearly pleaded. She is therefore the holder of a share in the land in the sense that she is one of three jointly registered proprietors. Section 30(2) of the Transfer of Land Act 1958 (Vic) has the effect of applying the common law principles applicable to joint tenants to joint proprietors under the Act. The interest of each joint tenant in land are the same in respect of possession, interest, title and time. No distinction can be drawn between the interest of any one tenant and that of any other tenant. If one joint tenant dies, her interest is extinguished. She falls out, and the interest of the surviving joint tenants is correspondingly enlarged.[44]
[44]Wright v Gibbons (1949) 78 CLR 313, 323 (Latham CJ).
It is common to speak of joint tenants having shares, often undivided shares.[45] Given that the defendant has a share as joint tenant with the plaintiffs pursuant to the Runecrest Agreement and in consequence of registration, what is meant by paragraph 10(f) when it states ‘that the Defendant would be entitled to her share of any equity in the Property once the First Plaintiff and Second Plaintiff had both passed away’? She already has an equal undivided one-third part or share in Runecrest. Is it a part of the Agreement that, notwithstanding she is a joint proprietor with her parents, in equity she has nothing? Or that she holds her one-third share in trust for the plaintiffs? Or simply that the defendant becomes sole proprietor by survivorship on the death of both the plaintiffs? What does it mean?
[45]See, for example, Wright v Gibbons (1949) 78 CLR 313.
In short, the alleged term of the Runecrest Agreement is unclear and should be struck out.
Paragraph 11
Paragraph 11 alleges that in consideration of the Runecrest Agreement, the plaintiffs contributed about $198,000.00 by way of payment of the deposit to purchase Runecrest and the costs associated with its acquisition. The balance of the purchase price being wholly funded by way of a loan from the BOQ.
Defendant’s complaint
In the defendant’s submissions she complains that paragraph 11 repeats the pattern of rolling up two statements of fact in a single paragraph as previously identified in paragraphs 2–4. Further, the claim does not state any particulars necessary to sustain either allegation. The claim simply asserts the conclusions without stating any particulars at all. More importantly, the paragraph must surely be a part of the Runecrest Agreement and is out of place.
Plaintiffs’ response
The plaintiffs respond that the rolling together of the two sentences is not objectionable as they contain facts that are closely related. If they were set out as separate paragraphs there could be no objection to them. In so far as the complaint is that there are no particulars of the BOQ loan, the response is that the plaintiffs are not in possession of any.
Analysis
The rolling together of the two parts of the paragraph is not a serious deficiency in the pleading. The lack of particulars could be cured by a request. But the most serious difficulty is lack of coherence of the pleading as a whole and making allegations out of sequence — the jigsaw problem to which reference is made above (see [40]).
Paragraph 12
Paragraph 12 alleges that the defendant was required to be a co-purchaser of Runecrest in order to secure a loan to purchase it, given that the plaintiffs were pensioners at the time of its acquisition.
Defendant’s complaint
The defendant complains that paragraph 12 simply does not state any material fact or particulars relevant to any claim made by the plaintiffs or provide particulars relevant to any material fact alleged. It does not comply in any way with r 13.02 or r 13.10, and should be struck out.
Plaintiffs’ response
The plaintiffs maintain that it is a material fact as it is material to explain, in effect, that the reason why the defendant obtained an ownership interest was to enable the plaintiffs to purchase Runecrest.
Analysis
If this allegation were placed in a relevant context, for example that the plaintiffs sought to obtain loan finance to purchase Runecrest but were unable to do so without the defendant or some other person joining with them to purchase the land, then it might make sense as a material fact. Otherwise, it appears to be a particular of the circumstances leading to the purchase in the joint names of the three of them. It comes ‘out of the blue’ in the sequence of events. I agree that at present it makes no sense as a material allegation of fact. I would add that it is conclusory, in that it implies facts that are unstated: that is, some difficulty in obtaining finance to purchase Runecrest without the assistance of the defendant.
Paragraph 13
Paragraph 13 alleges that the plaintiffs have adhered to all of the terms of the Runecrest Agreement since its inception up to and including the date upon which these proceedings have been issued.
Defendant’s complaint
In the defendant’s submissions she complains that this paragraph asserts a conclusion but identifies no basis whatsoever for it. That is, there is no discernible identification of material facts or particulars by which it is claimed that the plaintiffs have ‘adhered to all the terms’ of the alleged agreement, or otherwise. In the absence of any such link, the paragraph does not identify the case the defendant must meet at trial. In argument the more material complaint was raised, that it is not relevant to the alleged breach of agreement later (purportedly) pleaded. It should be struck out with a right to replead.
Plaintiffs’ response
The plaintiffs disagree. They say it is a fact and not a conclusion and that they cannot prove a negative. The only positive terms of the Runecrest Agreement are in paragraphs 10(c) and 10(d) (pay all outgoings and maintain Runecrest) and it is for the defendant to prove that they have not complied with those terms.
Analysis
In my view, this allegation is both irrelevant to the cause of action and conclusory in nature. If it were relevant to allege that the plaintiffs have performed the terms applicable to them, then that should be put squarely. But as it presently stands, it is not essential to their cause of action for breach of the Runecrest Agreement.
Further, one of the terms is that in paragraph 10(a), namely that the plaintiffs ‘would reside in the Property for the remainder of their respective lives’, meaning, I think that the plaintiffs would be entitled to do so. Presumably, the plaintiffs have resided at Runecrest in reliance on the Runecrest Agreement and that it is, and was, intended by the Agreement to be their home? There may be much more to the bare conclusion that could be set out in order to make good the Agreement and performance of it by the plaintiffs.
Paragraph 14
Paragraph 14 alleges that the terms of the Runecrest Agreement as described in paragraph 11 are consistent with the plaintiffs’ ownership of the Property.
Defendant’s complaint
The defendant complains that this repeats the pattern of stating conclusions without stating the necessary material facts or particulars necessary to support those conclusions. Further, it refers to the terms of alleged agreement as being set out in paragraph 11 of the SOC. However, this is plainly incorrect as the paragraph of the SOC which alleges the terms of the agreement is paragraph 10. Accordingly, paragraph 14 should be struck out.
Plaintiffs’ response
The plaintiffs agree that it should be struck out, but contend that its presence creates no difficulty to the defendant in pleading.
The greater difficulty is that it is quite unclear what is meant by the allegation. It should clearly be struck out.
Paragraphs 15 and 16
Paragraph 15 alleges in the first sentence, in substance, that on or about the 27 April 2017, the defendant and the defendant’s husband requested that the plaintiffs sign documents relating to a refinance of the loan associated with the acquisition of Runecrest. The second sentence alleges that at all relevant times, the plaintiffs were led to believe and understood that the documents that they were asked to sign solely related to a new loan and did not in any way alter the plaintiffs’ ownership of Runecrest.
Paragraph 16 alleges in substance that the defendant concealed the fact that the plaintiffs were executing a transfer of land which would result in their respective interests in Runecrest being transferred to the defendant. This transfer was affected without the knowledge or consent of the plaintiffs. The particulars of the defendant’s deception are:
(a) the defendant was aware that the plaintiffs speak very little English, leading to a very limited comprehension of the English language;
(b) documents of the type provided to the first plaintiff and second plaintiff would, consequently, be incomprehensible to them;
(c) the defendant would have been well aware that the plaintiffs would innately trust the defendant given the familial relationship, the defendant being the daughter of the plaintiffs; and
(d) at no time did the defendant recommend to either of the plaintiffs that they obtain independent legal advice prior to signing the documents that they were being asked to sign, especially given the age of the plaintiffs who were both sixty eight years of age at the time.
Defendant’s complaint
The defendant complains that the allegations are imprecise in their identification of a cause of action and are conclusionary in nature and, as such, are not adequately supported by any prior allegation of material fact or particulars identifying the cause of action on which the plaintiffs rely. The defendant is therefore unable to identify with clarity exactly which cause of action (or indeed causes of action) the plaintiffs seek to invoke. This inability to discern a clear cause of action from the pleadings severely limits the defendant’s ability to identify a debatable point of law on which a trial could proceed.
Further, the defendant complains that paragraph 15 makes allegations regarding the signing of documents relating to Runecrest. It asserts that the plaintiffs were ‘led to believe’ that the documents related to a ‘refinancing of the loan’ only, however fail to articulate specifically that any representation was made by the defendant. If the plaintiffs seek to invoke a doctrine which encompasses an element of fraud or deception on the part of the defendant, it is crucial that the defendant be in a position to identify with precision the case that she must meet at trial.[46]
[46]Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486, [25]–[26]; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573; Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 285, 295.
In a similar vein, the defendant submitted, paragraph 16 goes on to allege that the transfer of interest in the Property was performed without the ‘knowledge and consent’ of the plaintiffs. The alleged conduct is later described in the same paragraph as being a ‘deception’ on the part of the defendant. Reading paragraphs 15 and 16 together may suggest the plaintiffs seek to allege a cause of action by way of the common law tort of deceit. However, such reasoning is disturbed by reference to the particulars pleaded by the plaintiffs to detail the ‘Defendant’s deception’ alleged at paragraph 16. The particulars pleaded by the plaintiffs suggest instead an allegation of a special disadvantage on the part of the plaintiffs. Accordingly, the particulars pleaded at paragraph 16 invoke confusion and uncertainty as to what cause of action the plaintiffs seek to rely on and what case the defendant must meet at trial.
The paragraphs do not identify the case the defendant must meet at trial, especially given the ambiguous nature of paragraph 16. They should be struck out with a right to replead.
Plaintiffs’ response
The plaintiffs respond that they are at a loss to understand the defendant’s submission. The first sentence of paragraph 15 is a material fact as it demonstrates how the defendant breached the contract between the parties, the terms of which are pleaded earlier in paragraph 10. To conceal the execution of the transfer of land is a breach of the term that the plaintiffs would retain ownership for the remainder of their lives. The second sentence is also a material fact as it pleads the state of the plaintiffs’ knowledge at the time. The plaintiffs disagree that there is a failure to articulate any representation made. Whilst the words used could be improved, paragraph 15 is stating a representation by the defendant, being that the documents provided to the plaintiffs for their signature related solely to a refinance of the loan secured by a mortgage over Runecrest.
In relation to paragraph 16, the plaintiffs submit that they are not alleging fraud nor an action in deceit. The only cause of action is breach of contract. This paragraph describes how the defendant breached the contract. The use of the word ‘concealed’ is what factually occurred. The reference in paragraph 16 to the particulars of the defendant’s deception does not suggest that the plaintiffs are mounting some other cause of action. The particulars are the facts that enabled the defendant ‘to achieve what she intended to do’.
Analysis
Paragraph 15 is preceded by a heading ‘Breach of the Agreement’. That is, together with the prayer for relief in paragraph 19, the clue to the allegations in paragraphs 15 and 16 being allegations of a breach of the Runecrest Agreement. It is quite unclear that the only cause of action is for breach of the Runecrest Agreement. Paragraph 16 includes particulars of deception that are the indicia of a claim of undue influence or unconscionable conduct by the daughter on her specially disadvantaged parents. The presence of the allegation that the plaintiffs were ‘led to believe’ the documents solely related to a new loan strongly suggest misrepresentation. Similarly, the particulars to paragraph 16 hark back to claims of relief from unconscionable conduct of the kind exemplified in Commercial Bank of Australia Ltd v Amadio.[47]
[47](1983) 151 CLR 447; [1983] HCA 14.
These two paragraphs should be struck out with a right to replead. The allegations require close attention in the context of a new pleading.
Paragraph 17
Paragraph 17 alleges that in or around August 2020, the defendant visited the plaintiffs and told them, firstly, that the loan taken out to fund the purchase of Runecrest was in arrears and, secondly, that the defendant would struggle to meet the future loan payments. The plaintiffs agreed to commence paying $1000.00 per month to the defendant to assist, and their daughter, Victoria Sobh, contributed $5,500.00 to cover the loan arrears.
Defendant’s complaint
Paragraph 17 seeks to allege two assertions of fact conflated into a single paragraph, which, if relevant to a cause of action, ought to be separated into individually numbered paragraphs. Regardless, there appears no link between the allegations made and any identified cause of action or relief claimed by the plaintiffs. Further, the claim does not state any particulars necessary to sustain either allegation. The claim simply asserts the conclusions without stating any particulars at all. It neither complies with r 13.01(2), nor r 13.10, nor assist the defendant in identifying the case she must meet at trial. The paragraph should be struck out.
Plaintiffs’ response
The plaintiffs respond first by saying that the two sentences of the paragraph are clearly facts to which the defendant can plead. Their separation into discrete paragraphs would achieve nothing. No attempt is made to explain the relevance of the allegations to the plaintiffs’ claims.
Analysis
The fact that the paragraph rolls together two allegations of fact and gives no particulars is not such a serious problem in this case. Much worse is the apparent irrelevance of the allegation to the cause of action. It should be struck out.
Paragraph 18
Paragraph 18 alleges that the plaintiffs’ daughter, Victoria Sobh, was concerned about the defendant’s behaviour and conducted a search of the Runecrest Title and discovered that the Runecrest Title was in the defendant’s sole name.
Defendant’s complaint
Paragraph 18 simply does not state any material fact or particulars relevant to any possible cause of action. This paragraph may, taken at its highest, identify evidence that is to be relied upon at a trial of the matter, as the allegations made have nothing to do with any relief claimed by the plaintiffs, or any articulated cause of action, or other allegation in the SOC. It should be struck out.
Plaintiffs’ response
The plaintiffs agree that the allegation should be struck out. It was included to show the inaction of the plaintiffs since April 2017, that is that they did not know of the transfer to the defendant until that search was made, although it is not said when that occurred.
On the face of it, the allegation is irrelevant to the cause of action pleaded and should be struck out. It might later find a place in a properly formulated claim or as a particular.
Conclusion
It is clear that the SOC offends most of the rules of pleading in one way or another and cause embarrassment to the defendant. The central observation to be made by the Court is that although the claims emerge from the facts scattered about in the SOC, it remained necessary for the plaintiffs to explain that it is only alleged to be a breach of contract claim. That is unclear and must be made clear. This is a case where the objectionable parts of the pleading are intertwined with the rest of the pleading and make separation difficult.
As I have said, it is a little like a jigsaw puzzle that the reader has to put together from the pieces scattered about the pleading. The appropriate course is to strike out the whole of the pleading. I strongly suggest that Counsel experienced in pleading claims of this kind be engaged to reformulate the pleading in its entirety. When that is done and learned advice is obtained, it may well turn out to be to the plaintiffs’ distinct advantage to plead other causes of action in addition to a breach of contract.
The SOC will be struck out with a right to replead within a reasonable time.
SCHEDULE OF PARTIES
| S ECI 2022 03478 | |
| BETWEEN: | |
| SHARIF HASSAN SOBH | First Plaintiff |
| WAJIHA SHARIF SOBH | Second Plaintiff |
| - v - | |
| MARLINE ALI | Defendant |
| - and - | |
| MARLINE ALI | Plaintiff by Counterclaim |
| - v - | |
| SHARIF HASSAN SOBH | First Defendant by Counterclaim |
| WAJIHA SHARIF SOBH | Second Defendant by Counterclaim |
| THE REGISTRAR OF TITLES | Third Defendant by Counterclaim |
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