Stafford & anor v Kekatos & anor

[2008] NSWSC 810

CITATION:	Stafford & anor v Kekatos & anor [2008] NSWSC 810
HEARING DATE(S):	25 July 2008
JUDGMENT DATE :	8 August 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
DECISION:	Amended Statement of Claim filed pursuant to orders to file did not require further leave. Two paragraphs of Amended Statement of Claim struck out, motion otherwise dismissed with costs.
CATCHWORDS:	PROCEDURE - application to strike out pleadings and/or summary dismissal of amended statement of claim - where amended statement of claim alleged no new material facts - where application made three months before final hearing and defendant made no objection to the original claim in preceding eighteen months - whether amended statement of claim filed irregularly - whether causes of action and material facts sufficiently pleaded - whether certain pleadings alleging that defendant held certain interests on trust untenable pursuant to Conveyancing Act 1954, s 54A - whether certain pleadings inconsistent and embarrassing - whether any such prejudice to defendant from minor deficiencies justifies dismissal/striking out at this late stage.
LEGISLATION CITED:	(CTH) Trade Practices Act 1974, s 51A (NSW) Conveyancing Act 1919, s 54A (NSW) Fair Trading Act 1987, ss 41, 42 [52K-52R] (NSW) Uniform Civil Procedure Rules 2005, rr 13.4, 14.28
CASES CITED:	Adams v Bank of NSW [1984] 1 NSWLR 285 Allen v Snyder [1977] 2 NSWLR 685 Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 Baumgartner v Baumgartner (1987) 164 CLR 137 Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Muschinski v Dodds (1984) 160 CLR 583 Penthouse Publications Ltd v McWilliam (NSWCA, 14 March 1991, unreported) Peter Kent Development Pty Ltd v ANZ Banking Group Ltd (NSWSC Hunt J, 6 May 1980, unreported) Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179 Republic of Peru v Peruvian Guano Co (1887) 36 Ch D 489 Spellson v George (1992) 26 NSWLR 666 Tampion v Anderson [1973] VR 321, 325 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 Wickstead v Browne (1992) 30 NSWLR 1 Willis v Earl Howe [1893] 2 Ch 545 Worthington & Co Ltd v Belton (1902) 18 TLR 438
TEXTS CITED:	Heydon and Leeming, Jacobs’ Law of Trusts in Australia, 7th Edition, 2006, Butterworths, [1205]
PARTIES:	Susan Stafford (first plaintiff/respondent) Rhonda Dawn Stafford (second plaintiff/respondent) Voula Kekatos (first defendant/applicant) George Kekatos (second defendant)
FILE NUMBER(S):	SC 4871/06
COUNSEL:	Mr E T Finnane (plaintiffs/respondents) Mr M S Jacobs QC w Mr M H Southwick (first defendant/applicant)
SOLICITORS:	Uther Webster & Evans (plaintiffs/respondents) Kells The Lawyers (first defendant/applicant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
GENERAL LIST

BRERETON J

Friday, 8 August 2008

4871/06 Susan Stafford & anor v Voula Kekatos & anor

JUDGMENT

1 HIS HONOUR: The first defendant Voula Kekatos claims orders summarily dismissing (pursuant to (NSW) Uniform Civil Procedure Rules 2005, r 13.4) proceedings brought against her and her husband the second defendant George Kekatos by the plaintiffs Susan Stafford and Rhonda Stafford, and/or striking out (pursuant to UCPR, r 14.28) their Statement of Claim and/or Amended Statement of Claim. As the proceedings are fixed for final hearing to commence on 8 September 2008, only a month away, it is important that the outcome of the motion be known at an early date and accordingly, these reasons, in which I have endeavoured to address the more substantial arguments raised, will be less ample than had more time been available. No discourtesy to the detailed written and oral submissions of Mr Jacobs QC and Mr Southwick for the Staffords, or Mr Finnane for Mrs Kekatos, is intended.

The proceedings

2 The Staffords commenced these proceedings by summons filed on 18 September 2006, first returnable on 22 September 2006, when interlocutory relief was granted, by consent, and continued from time to time and eventually until further order. On 29 September 2006, a direction was made that the Staffords file a statement of claim and any further evidence in chief by 12 October; that time was later extended to 16 October, and they filed a motion for expedition on 9 October, and their original Statement of Claim on 17 October. Despite directions that they do so by 30 October, the second defendant Mr Kekatos did not file his defence until 15 November 2006, and the first defendant Mrs Kekatos did not file her defence (time for which was later extended to 1 December 2006) until 12 February 2007. The matter was removed from the expedition list on 16 February 2007, but the Staffords have nonetheless continued to do what they can to prosecute the proceedings expeditiously.

3 Although directions had been made (on 17 November 2006) for the service of the defendants’ evidence by 1 December, and any evidence in reply by 14 December (with time for the defendants’ evidence, extended on 15 December, to 26 January 2007), further directions in respect of evidence were made by the Registrar on 16 April 2007, for service of the defendants’ affidavits by 7 May, and the Staffords’ in reply by 28 May. On 31 July, time for the Staffords’ evidence in reply was extended to 7 August 2007, and the proceedings were adjourned to the callover on 4 September. On 12 September, in circumstances where the evidence appeared to be complete, and the matter one that would involve a trial of more than five days, it was referred for judicial case management, and the Registrar directed that the parties file and serve a joint case summary. The Staffords filed such a summary on 15 November 2007, largely reflecting the original Statement of Claim and the defences filed; the defendants did not do so, Mrs Kekatos’ counsel apparently asserting that the Staffords’ document was too long and that an alternative would be provided, but it never was.

4 The matter came before me for case management on 13 December 2007, when the matter was fixed for hearing for seven days commencing on 8 September 2008, and the following directions (inter alia) were made:

1. Direct that each party serve on the other and lodge with the Trial Judge’s associate, a list of pleadings and affidavits proposed to be relied on by that party (by 4 June 2008).
2. Direct that each party serve on the other and lodge with the Trial Judge’s associate, a list of witnesses who are required for cross-examination and, in respect of each, the estimated time required for cross-examination (by 11 June 2008).
…
8. Note that: no party proposes to amend its pleadings.
9. Order (pursuant to UCPR r 31.1(3)) that the evidence in chief of all witnesses at the trial be given by affidavit.
10. Direct that no party may read at the hearing, without the leave of the Court, any affidavit which has not already been served.
11. Grant liberty to any party to apply to the Trial Judge concerning directions for the hearing on two days notice, by arrangement with the Trial Judge’s Associate, any such application to specify the directions to be sought.
…
13. Standover to 15 July 2008 at 0930 before Brereton J for pre-trial check.

5 On 27 May 2008, new solicitors for Mrs Kekatos – Kells – wrote to my associate, indicating that it was intended to mediate the dispute, but that if the mediation failed, then there would be an application to strike out the claim, and requesting that the matter be relisted, as “we consider that it is not appropriate for his Honour to have committed 7 days’ hearing time to this matter in circumstances where, in our view, there need to be further interlocutory steps before any final trial dates are fixed”. On 30 May, Kells filed a motion on behalf of Mrs Kekatos, returnable on 16 June, claiming an order that the Statement of Claim be stayed or dismissed generally pursuant to UCPR r 13.4 or 14.28. So far as the evidence before me reveals, this was the first occasion – eighteen months after the original Statement of Claim was filed, and only three months before the final hearing – that any objection was taken to the pleading. On 2 June, Kells explained that upon the matter being relisted they would seek the vacation of the directions made on 13 December 2007, and directions for the hearing of the motion.

6 On 3 June 2008, the Staffords lodged their list of pleadings and affidavits for the trial. The matter was relisted, pursuant to Kells’ request, on 6 June, when, by consent, directions were made, extending by one month the time limited by directions 1 to 4 made on 13 December, appointing 25 July for hearing of the motion for dismissal and providing for written submissions in respect of it, and:

5. that the Staffords file & serve any Amended Statement of Claim by 19th June 2008.
6. the Court notes that the proceedings are listed for meditation on 23 June 2008.

7 On 19 June 2008, the Staffords filed an Amended Statement of Claim. Kells foreshadowed an application, which was granted without opposition at the hearing, to amend the motion to include reference to the “purported Amended Statement of Claim”, and also to seek vacation of the dates for hearing, as well as other relief – in connection with associated proceedings for remuneration by the receiver – which was not pressed at the hearing. The mediation was unsuccessful, and it is now necessary to resolve the application for dismissal.

Summary Dismissal and Striking Out

8 Uniform Civil Procedure Rules, r 13.4 authorises the Court, if it appears that the proceedings generally or in relation to any claim for relief in them are frivolous or vexatious, or disclose no reasonable cause of action, or are an abuse of the process of the court, to order that the proceedings be dismissed generally or in relation to that claim. The power summarily to dismiss proceedings is exercised only where the defect in the plaintiff’s claim is clearly established [General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125]. Summary dismissal is inappropriate if there are serious questions of fact to be determined [Spellson v George (1992) 26 NSWLR 666]. Where factual issues turn upon evidence likely to be in the possession of the defendant, that circumstance itself may be sufficient to refuse an application for summary dismissal; it may be reasonable to suppose that the evidence will become available in the course of the proceedings [Wickstead v Browne (1992) 30 NSWLR 1].

9 An order for summary dismissal will be made on the examination of the pleadings only if it is apparent that the case is absolutely hopeless, or that there is no possibility of the facts pleaded giving rise to a good cause of action [Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 90; Tampion v Anderson [1973] VR 321, 325]. On such an application, a liberal construction should be given to the opposing pleading, and in order to justify dismissal the offending pleading must be beyond saving by legitimate amendment [Penthouse Publications Ltd v McWilliam (NSWCA, 14 March 1991, unreported); Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937, 942]. While, as distinct from an examination of the pleadings alone, evidence may be adduced by an applicant/defendant to demonstrate that the plaintiff’s case is hopeless [UCPR r 13.4(2); Willis v Earl Howe [1893] 2 Ch 545; Peter Kent Development Pty Ltd v ANZ Banking Group Ltd (NSWSC, Hunt J, 6 May 1980, unreported)], such applications are still concerned more with the weakness of the plaintiff’s case, than the strength of the defendant’s: it is usually practically impossible for a defendant to show on such an application, by affirmative evidence, that a contention of the plaintiff must fail at trial.

10 Uniform Civil Procedure Rules, r 14.28 provides that the court may order that the whole or any part of a pleading be struck out if the pleading discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or has a tendency to cause prejudice, embarrassment or delay in the proceedings, or is otherwise an abuse of the process of the court. Although there is an overlap between summary dismissal under r 13.4 and striking out under r 14.28, the former is more concerned with the tenability of the claim as a matter of substance, and the latter with the adequacy of the pleading as a matter of form. Where the pleading is inadequate or defective, but not beyond saving by legitimate amendment, the appropriate course is to strike out the pleading with leave to replead [cf Republic of Peru v Peruvian Guano Co (1887) 36 Ch D 489, 496; Worthington & Co Ltd v Belton (1902) 18 TLR 438, 439; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 536].

11 Although both parties have adduced some evidence on the present application, the evidence adduced on behalf of Mrs Kekatos is not so much for the purpose of showing that she had an unanswerable defence, as to illuminate some of the allegations in the Statement of Claim, in order to endeavour to show that they cannot succeed. The evidence adduced on behalf of the Staffords is for the purpose of illuminating the allegations in the Statement of Claim, in order to endeavour to show that even if standing alone the pleading has some shortcomings, viewed in the light of the evidence it sufficiently discloses a viable cause of action that, at least at this belated stage of the proceedings, it ought not now be struck out.

12 In this respect, it is noteworthy that, while the amendments made by the filing of the Amended Statement of Claim are textually extensive, they do not involve the introduction of new allegations of material facts, but rather new and alternative legal characterisations of the causes of actions which those facts are said to establish. That the original Statement of Claim stood without objection in point of pleading or sufficiency for eighteen months, until three months before the appointed date for trial, and a pre-trial directions hearing in which both parties confirmed that they did not intend to amend, and neither raised any opposition to the matter being allocated dates for hearing, is relevant to the exercise of any discretion to grant or withhold the relief sought.

Is the Amended Statement of Claim irregular?

13 The first argument raised for Mrs Kekatos, is that the Amended Statement of Claim is said to have been filed irregularly, without leave to amend having been granted, which leave was required by UCPR, r 19.1(1).

14 However, I do not accept that, after the order of 6 June 2008, the Staffords required any further leave to amend their Statement of Claim, provided that they filed an Amended Statement of Claim within the time limited by that order, as they did. An order to file an Amended Statement of Claim necessarily involves a grant of leave to amend. This order was made by consent, and not limited to any particular amendment. It had the effect of giving the Staffords, by consent, leave to amend their Statement of Claim generally. If it were intended only to refer to a draft, pending consideration of whether leave to amend would be opposed, then it would have been expressed as requiring service of a draft of any proposed amended statement of claim, and made provision for an application for leave to amend, rather than authorising the filing and service of any amended statement of claim.

15 The order of 6 June involved a grant of leave to amend generally. The Amended Statement of Claim was regularly filed.

The Staffords’ claim

16 The Staffords claim 67.7%, or alternatively 50%, of a sum of $1,412,500 (the Settlement Proceeds) received by Mrs Kekatos on or about 26 September 2005 from the sale of land at Penrose (the Penrose Land), pursuant to the settlement of earlier proceedings to which the Staffords were not parties (Proceedings 3054/04), on the basis that Mrs Kekatos is to that extent an actual or constructive trustee of the Settlement Proceeds. They also claim 67.7%, or alternatively 50%, of royalties received by Mrs Kekatos in respect of quarrying operations on the Penrose Land, on a similar basis.

17 The Amended Statement of Claim may be summarised as follows; references in brackets being to the numbered paragraphs of the pleading.

18 Prior to 8 December 1999, Australian Machinery Equipment Sales Pty Ltd (AMES) was the proprietor of the Penrose Land, upon which there was a quarry [6], subject to a mortgage to the National Australia Bank (NAB) and a charge over its assets and undertaking [7], and a lease to Heggies Bulkhaul Ltd (the Heggies Lease) [8] under which Heggies was obliged to pay royalties to AMES [9]. AMES, Heggies and Collex Waste Management Pty Ltd were also parties to an agreement for the use of the Penrose Land for landfill purposes (the Landfill Agreement) [10]. AMES’ obligations under the Heggies Lease and the Landfill Agreement were secured by a mortgage over the Penrose Land, which was unregistered but the subject of a caveat (in the pleading called “the Joint Venture Mortgage”, but I prefer to call it the Heggies/Collex Mortgage) [11].

19 On 8 December 1999, the Staffords and Mrs Kekatos advanced to Global Minerals Australia Pty Limited (Global) – a company in which each of the Staffords and Mrs Kekatos was a shareholder and director, and Mr Kekatos was an officer – the sum of $1,200,000, which was documented in a Deed of Loan of 8 December 1999 (Loan Deed), an Equitable Charge over Global’s assets of 10 April 2000 registered on 18 May 2000 (Global Charge), and an unregistered mortgage of the same date, which Global paid to AMES in consideration for the acquisition of its interest in the Penrose Land, the transfer of which to Global was registered on 2 May 2000 [12]. The NAB mortgage was discharged with the proceeds of two loans from the Commonwealth Bank (CBA) totalling $1.3 million, secured by a charge over the assets and undertaking of AMES, and mortgages by each of the Staffords and Mrs Kekatos over other security properties [13].

20 After the term of the Heggies Lease expired in November 2000, Heggies remained in occupation and continued to pay royalties [14], and in May 2001 commenced proceedings in respect of the lease (the Heggies Lease Proceedings) [15]. In January 2003, Global granted an unregistered mortgage over the Penrose Land to Ostabridge Pty Ltd, which had previously commenced proceedings against AMES and Global, but had subsequently gone into receivership [16]. In April 2003, the Staffords commenced proceedings for the winding-up of Global [17], and on 5 May 2003 appointed Mr Cvitanovic receiver and manager of Global’s assets and undertaking, pursuant to the Global Charge [18]. Cvitanovic as receiver claimed to be entitled to receive the royalties [19]. On 13 May 2003, Ostabridge appointed Mr Shirlaw as receiver of the Penrose Land, pursuant to the Ostabridge mortgage [20]. On 28 May 2003, Ostabridge and Global settled on terms that Global would pay $4.5 million to Ostabridge in three instalments over more than 18 months [21]. Cvitanovic retired as receiver on 1 September 2003 [23], but was appointed receiver of the Penrose Land by the Staffords, under the Global Charge, a second time on 9 October 2003 [25], after Austin J had given judgment in the Heggies Lease Proceedings on 19 September [24], but before he decreed on 13 October that Global execute a new lease to Heggies [26].

21 As at 30 October 2003, the Charge secured $3,193,449, of which $741,561 had been advanced by the first plaintiff, $1,370,955 by the second plaintiff, and $1,080,932 by Mrs Kekatos [25]. Global went into liquidation on 23 October 2003 [27]. During the second receivership, Cvitanovic claimed to be entitled to the royalties, and he sought purchasers for the Penrose Land [28].

22 On 29 October 2003, the Staffords and Mrs Kekatos agreed to create a trust, of which Mrs Kekatos would be the trustee, and in which the beneficial interest would be held 50% by the Staffords and 50% by the defendants (though the defendants would have voting control), to acquire the Penrose Land from the receiver, for up to $4.83 million, by assuming liability for the Global Charge (worth $3.193 million) with the balance to be raised by mortgage on the Penrose Land (Penrose Trust Agreement) [29]. On 2 December 2003, Mrs Kekatos executed a document styled “trust deed” by which she acknowledged and declared herself to be trustee of the Penrose Trust [29A]. By 5 December 2003, Mrs Kekatos had submitted a tender for the Penrose Land, on behalf of the Penrose Trust or pursuant to the Penrose Trust Agreement [33, 33A].

23 In August 2004, the Staffords and Mrs Kekatos varied or novated the Penrose Trust Agreement, to the effect that Mrs Kekatos, in consideration of the Staffords assigning to her as trustee of the Penrose Trust their interests in the Global Charge, would use her Vaucluse home as additional security to raise funds for the purchase of the Penrose Land, and if the purchase did not proceed would do all things necessary to recover the moneys secured by the Global Charge [40, 40A]. As at 29 August 2004, the Global Charge secured debts owed by Global to the first plaintiff of $975,930.56, to the second plaintiff of $1,907,161.58, and to Mrs Kekatos of $1,375,233.90 [40B]. On 29 August 2004, Mrs Kekatos executed, as assignee, a deed of assignment of the Staffords’ interests in the Global Charge, and an undertaking that she would purchase the Penrose Land as trustee of the Penrose Trust, and apply all moneys held pursuant to the Global Charge to each of the parties according to the amounts stated in the September 2003 accounts; the Staffords pursuant to the Variation or the Novation executed the deed of assignment on 21 September 2004 [41, 42].

24 The Staffords contend that, in the premises, Mrs Kekatos held the Global Charge as trustee of the Penrose Trust pursuant to an express trust [42A]; or is estopped (by a conventional estoppel arising from the parties having conducted their affairs on the assumed basis that the trust was in existence and that Mrs Kekatos was acting as trustee) from asserting that the assignment to her was other than as trustee [42B, 42C]; or is estopped (by representation made, on her behalf by Mr Kekatos, that she would take the assignment as trustee and that it was unnecessary and fiscally disadvantageous for the deed of assignment to make express reference to the trust) from so asserting [43-52]; or that she held the Global Charge for herself and the Staffords pursuant to a resulting trust arising from the assignment in circumstances where she was not intended to take beneficially [52A-52B], or the consideration failed [52C]; or upon a constructive trust arising from the parties’ common intention that she hold it in trust for the Staffords as to 50% [52D-52E]; or upon a constructive trust according to the respective contributions of the parties, arising from the failure of the substratum of their joint venture to acquire the Penrose Land [52F-52J, 65A]. They further contend that the representation, made by Mr Kekatos, that Mrs Kekatos would take the assignment as trustee and that it was unnecessary and fiscally disadvantageous for the deed of assignment to make express reference to the trust, was a representation made with respect to a future matter without reasonable grounds and thus misleading in contravention of (NSW) Fair Trading Act 1987, s 42 [52K-52R].

25 On 15 October 2004, Mrs Kekatos took by assignment the Heggies/Collex Mortgage, then securing $29,300, and thereby became first ranking secured creditor of Global [56], and as such became or claimed to be entitled to the royalties under the Heggies Lease [57]. The Staffords contend that Mrs Kekatos acquired the Heggies/Collex Mortgage as trustee [58a], or alternatively that it was an opportunity which she was bound to acquire, if at all, on behalf of the trust [58b]. Mrs Kekatos subsequently demanded payment of the royalties [60], and the receiver paid her $226,000 [60A] and directed the lessee to pay all future royalties to her as first mortgagee [61]. The Staffords contend that Mrs Kekatos received the royalties as trustee [61A], or alternatively, even if she acquired the Heggies/Collex Mortgage in her own right, she held the excess over $29,300 for subsequent security holders [61B].

26 On 18 February 2005, the receiver and Mrs Kekatos (as trustee) exchanged contracts for the sale of the Penrose Land [61C]. However, on 10 March 2006, Mrs Kekatos reached agreement with the parties to Proceedings 3054/04 (including the receiver) that the Penrose Land be sold to a third party, Adelaide Brighton Limited, and that Mrs Kekatos would receive 38.56% of the net proceeds [62]. The receiver agreed to this on the basis and in the belief that Mrs Kekatos was acting as trustee [63]. On 25 August 2005, the Penrose Land was sold to Adelaide Brighton [64], and on 25 September 2005, the sale was completed and Mrs Kekatos received $1,412,500 [65].

27 The Staffords allege that, the substratum of their joint venture with Mrs Kekatos having failed upon the Penrose Land being sold to a third party, Mrs Kekatos holds her interest in the Global Charge and its proceeds upon constructive trust for the parties according to their proportionate contributions [65A], or alternatively upon trust for the Staffords as to 50% pursuant to the Penrose Trust Agreement, the Penrose Trust, the Variation or the Novation [66]. In the events which happened, the subsequent security holder was Mrs Kekatos herself as chargee [66A], and the excess royalties are also allegedly held upon constructive trust for the parties according to their proportionate contributions, or alternatively upon trust as to 50% for the Staffords, pursuant to the Penrose Trust Agreement, the Penrose Trust, the Variation or the Novation [66B]. Finally, the Staffords allege that in breach of trust and her fiduciary duties, Mrs Kekatos has applied $1,360,000 in reduction of her personal indebtedness [67], and has not accounted to the Staffords for the Settlement Proceeds or the royalties [67A].

The attack on the Staffords’ case

28 The principal attack on the Staffords’ case was directed at paragraph 63 of the Amended Statement of Claim, which alleges that Global’s receiver, Mr Cvitanovic, entered into the settlement of Proceedings 3054/04 on the basis and understanding that Mrs Kekatos was doing so in her capacity as trustee, and would not have done so had he understood that she was not. Mrs Kekatos submits that paragraph 63 is hopeless in law and in fact, and that the main thrust of the Staffords’ case is reliant on it. The gravamen of her argument is that:

· in order to succeed, the Staffords must allege and prove that they are entitled to a percentage of the Settlement Proceeds;

· they attempt to do so by asserting an interest in the Heggies/Collex Mortgage, in paragraphs 58 and 63 of the Amended Statement of Claim – paragraph 58a alleging that Mrs Kekatos took the assignment of the Heggies/Collex Mortgage as trustee; paragraph 58b alternatively alleging that she did so in circumstances where it was an opportunity available to the trust, which she was bound to take, if at all, for the benefit of the trust; and paragraph 63 alleging that the receiver entered into the settlement only on the basis and understanding that Mrs Kekatos was doing so in her capacity as trustee;

· however, the belief of Mr Cvitanovic is irrelevant, nothing more is alleged, and – paragraph 63 being crucial to the Staffords’ cause of action – the “main thrust” of the Staffords’ case as pleaded cannot succeed.

29 I accept that, in order to succeed, the Staffords must allege and prove that they are entitled to a portion of the Settlement Proceeds. However, I do not accept that their case in that respect depends wholly, or even primarily, on any interest they might establish in the Heggies/Collex Mortgage. Their claim to an interest in the Settlement Proceeds derives from the Global Charge as well as from the Heggies/Collex Mortgage. Their case in respect of the Settlement Proceeds amounts to this:

· Mrs Kekatos’ entitlement under the settlement of Proceedings 3054/04 was in respect of a share of the proceeds of sale of the Penrose Land [62];

· Mrs Kekatos had two claims on the Penrose Land: as first encumbrancee (as assignee of the Heggies/Collex Mortgage [56]), and as second encumbrancee (as assignee of the Global Charge [41]);

· However, she held the Heggies/Collex Mortgage upon trust for herself and the Staffords – either as a result of having acquired it as trustee, or because she acquired it in circumstances where she was bound to do so, if at all, on behalf of the trust [58];

· Even if Mrs Kekatos did not hold the Heggies/Collex Mortgage upon trust but on her own account, it secured only $29,300 [56], which had been paid out by the distribution of royalties [60A], and in those circumstances she held any further receipts upon trust for, and must account on demand to, subsequent encumbrances ( Adams v Bank of NSW [1984] 1 NSWLR 285, 295) [61B]. She was the subsequent encumbrancee, as the chargee under the Global Charge [66A], in which the Staffords – on any one of a number of bases – retained a beneficial interest [42A-52J];

· There was a joint venture between the Staffords and Mrs Kekatos for the acquisition of the Penrose Land [29, 29A, 40, 40A], in furtherance of which each had contributed their respective interest in the Charge [41, 42];

· The joint venture failed without attributable blame by reason of the sale of the Penrose Land to a third party, Adelaide Brighton [52J, 62, 64];

· As the parties had not intended that Mrs Kekatos in such event retain for herself the benefit of their contributions, they were each entitled to recoup their respective contributions, in particular their respective interests in the Global Charge ( Muschinski v Dodds (1984) 160 CLR 583, 620; Baumgartner v Baumgartner (1987) 164 CLR 137, 147-8), and Mrs Kekatos held the benefits derived by her from her interest in the Penrose Land upon trust to restore to each of the contributories their respective contributions [52J, 65A];

· Alternatively, she held those benefits upon the trusts of the Penrose Trust [66], in which the Staffords had a 50% beneficial interest.

30 Thus, insofar as Mrs Kekatos suggests that the Staffords’ claim relies entirely on the Staffords having an interest in the Heggies/Collex Mortgage following its assignment to Mrs Kekatos, that is not correct. The case in respect of the Heggies/Collex Mortgage and its assignment is but a small part of the Staffords’ case, which accommodates the alternative that Mrs Kekatos acquired the Heggies/Collex Mortgage beneficially. The Heggies/Collex Mortgage was worth only $29,300 when it was assigned to Mrs Kekatos, and the Staffords allege that it had been paid out in full before Mrs Kekatos received the Settlement Proceeds, with the consequence that what she received could only have been in respect of the Global Charge. The Global Charge and its assignment to Mrs Kekatos – as the Staffords would say, in circumstances in which she was not to take beneficially – founds by far the predominant part of their claim to the Settlement Proceeds.

31 Accordingly, even if the Staffords’ claim to an interest in the assigned Heggis/Collex Mortgage is not sustained, that would not dispose of the Staffords’ case insofar as it is based on the Global Charge.

The case based on the Heggies/Collex Mortgage

32 In respect of the Heggies/Collex Mortgage, the Staffords’ claim is that when it was assigned to Mrs Kekatos, she held it on trust, either having acquired her interest as trustee and for the benefit of the trust, having acquired it in breach of trust and so holding it upon constructive trust, and so to the extent that she received the Settlement Proceeds because of her interest in the Heggies/Collex Mortgage, she held them upon trust.

33 It was submitted that no material facts were pleaded to support the allegations, in paragraph 58, that Mrs Kekatos either took the assignment of the Heggies/Collex Mortgage as trustee, or did so in breach of fiduciary duty in circumstances where she was bound to do so if at all for the benefit of the trust. However, the material facts that underpin those allegations are those to be found in paragraphs 29, 29A, 33, 33A, 40, 40A, 41, 42 and 56.

34 I accept that paragraph 63 of the Amended Statement of Claim is irrelevant, and should be struck out. The state of mind of the receiver, not attributable to any of the parties, is beside the point. But it is not correct that paragraph 63 is crucial to the Staffords’ claim – far from it. It is mere surplusage. Its deletion does not affect at all the gravamen of the Staffords’ case.

The case based on the Charge

35 In respect of the Global Charge, the Staffords’ case is that, by the Deed of Assignment and the Undertaking and Authority dated 29 August 2004, they assigned their interest in the charge and in the debts secured by it to Mrs Kekatos, to be held upon trust for the Staffords and Mrs Kekatos, and so, to the extent that she received the Settlement Proceeds because of her interest in the Global Charge, she held them upon trust. While their primary claim is that the Global Charge was held pursuant to the “Penrose Trust”, various alternative bases (estoppel, resulting trust, and constructive trust) on which they claim to have retained an equitable interest are pleaded [41-52R].

36 Mrs Kekatos submits that any claim based on any such agreement relating to the acquisition of the Penrose Land cannot succeed, because of (NSW) Conveyancing Act 1919, s 54A, which provides that no action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement or some memorandum or note of it is in writing signed by or on behalf of the party charged. However, it is at least seriously arguable that the Staffords’ claim is not one “upon a contract for the sale or other disposition of land”, and that the Penrose Trust Agreement is not such a contract: it was not an agreement between vendor and purchaser, or disponor and disponee, but an agreement between three people who hoped to become purchasers. It is far from manifestly clear that an agreement between three persons that, in the event that one of them purchases land, she will hold it on trust for all three, is a contract for the sale or other disposition of land within s 54A. Moreover, even if it were within s 54A, it is not manifestly clear that a reply alleging part performance would be doomed to fail; nor that the requirement for writing would not be circumvented by the alternative pleadings of estoppel [cf Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387].

37 For Mrs Kekatos, Conveyancing Act, s 54A, is again invoked for the proposition that enforcement of any agreement that she would take the Global Charge subject to some equitable obligation to the Staffords would require a sufficient written note or memorandum. However, it is at least arguable that a suit to enforce an equitable obligation arising from a common intention as to how land is to be held is not an action on a contract for sale or other disposition of an interest in land. The requirement for writing to create interests – including equitable interests –in land (as distinct from the enforcement of contracts for sale etc) is governed by Conveyancing Act, s 23C, but resulting, implied and constructive trusts are expressly exempted from its operation. Again, it is not manifestly clear that any requirement for writing would not be circumvented by the alternative causes of action asserted, and in particular estoppel.

38 Moreover, if s 54A is an answer to the Amended Statement of Claim, it was also an answer to the original Statement of Claim, yet this has not previously been suggested, let alone pleaded; it would be inappropriate in all the circumstances to allow its belated invocation to result in summary dismissal of the proceedings.

39 Mrs Kekatos further submits that there is embarrassing inconsistency between the allegation that the Staffords’ assignment of the Global Charge was in consideration of Mrs Kekatos’ promise made in August 2004 to use her home as additional security to raise funds for the acquisition of the Penrose Land [40], the allegation that the Staffords assigned their interest in the Global Charge pursuant to the Variation or the Novation on 21 September 2004 [42], and the allegation that the assignment was induced by Mr Kekatos’ alleged misrepresentation on 21 September 2004 that it was unnecessary for express reference to be made to the trust on the face of the documentation and that such reference would have adverse fiscal consequences [43, 52R]. However, no inconsistency is involved: paragraph 40 refers to the agreement to make the assignment and its purpose; paragraph 42 refers the actual assignment pursuant to that agreement; and paragraphs 43 and 52R allege that the assignment took a particular form – in that it contained no express reference to the trust – because of the alleged misrepresentation.

40 Mrs Kekatos makes extensive submissions as to why the allegations in relation to the Global Charge could not result in the Staffords having any claim to the Settlement Proceeds, and in particular that, as it secures only the amounts owing by Global to the Staffords and Mrs Kekatos, and as no amount has been paid by Global in reduction of that amount, it could not catch the Settlement Proceeds. However, those submissions proceed on the misconceived basis that the charge caught only moneys paid by Global in reduction of the loans made by the Staffords and Mrs Kekatos, whereas the true characterisation is that the Charge attached to all Global’s assets, including the Penrose Land, though it only secured Global’s obligation to repay the loans. The advances to Global were recorded in the Loan Deed, clause 6 of which charged to the Staffords and Mrs Kekatos “any interest in any freehold and or leasehold property of which it is now or may hereafter at any time be possessed or to which it is now or may hereafter become entitled …”. The Global Charge secured all moneys owing by it to the Staffords and Mrs Kekatos (clause 2) (which included the amounts owed by Global to the Staffords and Mrs Kekatos under the Load Deed), including by way of a fixed charge as regards Global’s real and leasehold property (clause 3). Moreover, also on 10 April 2000, Global mortgaged the Penrose Land to the Staffords and Mrs Kekatos, also securing “all moneys” due by it to them. The Penrose Land was real property of Global, and was accordingly caught by the Global Charge; and it was expressly caught by the mortgage. While Mrs Kekatos submits that all the Global Charge did was to create some priority in certain circumstances and enable the appointment of a receiver, that overlooks that it created a security interest in the charged assets; moreover, the purpose of the appointment of a receiver is the realisation of the charged assets – including the Penrose Land – and the application of the proceeds to the chargee. Upon sale of the land, the proceeds must be applied to discharge the encumbrances in priority order – seemingly, first the assigned Heggies/Collex Mortgage, and secondly the Global Loan Deed, Charge, and Mortgage – and then to the registered proprietor. The notion of “proceeds of the Global Charge” is not limited to moneys paid by Global in reduction of the loans, but extends to moneys realised pursuant to the sale of the security to which the chargee is entitled pursuant to the charge.

41 Mrs Kekatos’ submissions in this respect do not grapple with the fundamental contention that it was substantially in respect of her interest as chargee that Mrs Kekatos had any claim to the proceeds of the Penrose Land. The Staffords’ case is that Mrs Kekatos received the 38% of the proceeds that she agreed to accept, substantially because she held the Global Charge. It is true, as Mrs Kekatos submits, that the Amended Statement of Claim contains no explicit allegation that she received the Settlement Proceeds pursuant to or in respect of the Global Charge. But it is not correct that “there is not one jot as to the First Defendant entering into [the Short Minutes] in any capacity other than in her own personal capacity”, nor that there is no allegation that she received any of the Settlement Proceeds as trustee. While the Staffords put their case primarily on the basis that the sale of the Penrose Land to Adelaide Brighton resulted in a failure of their joint venture, whereupon Mrs Kekatos is said to have become liable to account to the Staffords for their proportionate interest [65A], paragraph 66 pleads (alternatively) that she held 50% of the Settlement Proceeds in trust for the Staffords, reflecting their claim to a beneficial interest in the Global Charge and its proceeds, whether as beneficiary of the Penrose Trust (see Amended Statement of Claim paragraphs 29, 40 and 40A), or on the basis of one or other of the alternative claims in paragraphs 42B to 52J.

42 Moreover, paragraphs 65A and 66 make clear enough that it is contended that she received the Settlement Proceeds in respect of the Global Charge (in that they are described as proceeds of the charge). Elsewhere, the Amended Statement of Claim pleads that her entitlement to the Settlement Proceeds was founded in an entitlement to a share of the proceeds of sale of the Penrose Land [62], and also pleads the factual history of the title to the Penrose Land in a way that demonstrates that the only interests in the land which Mrs Kekatos had were pursuant to the assignments of the Heggies/Collex Mortgage and the Global Charge – both of which interests she is alleged to have held as trustee. Thus the Amended Statement of Claim sufficiently discloses the Staffords’ case that she received the Settlement Proceeds in respect of the Global Charge, and the material facts that comprise it.

43 That conclusion is reinforced, in the context of the present belated application, in the light of the evidence now adduced, which might be accepted at the trial. In Proceedings 3054/04, Heggies and Collex asserted, as against Global, that they were entitled to a lease over the Penrose Land and to the Heggies/Collex Mortgage in priority to the Ostabridge mortgage. A settlement on 15 October 2004 saw Mr Cvitanovic, as receiver of Global, take an assignment of the Heggies/Collex Mortgage; Global agreed that the Heggies/Collex Mortgage secured the sum of $29,300; and Heggies agreed to consent to any application by Global to substitute it or its nominee as plaintiff. Mrs Kekatos was not a party to the settlement but provided a bank cheque for $29,300 to Heggies, whereupon the receiver directed the assignment of the Heggies/Collex Mortgage to her, and on 21 October 2004, Mrs Kekatos was substituted as plaintiff. Accordingly, Mrs Kekatos became the holder of a mortgage securing $29,300, and substituted plaintiff in Proceedings 3054/04, in which there was no longer any dispute with Global, the only substantive dispute remaining being the priority of the assigned Heggies/Collex Mortgage vis-à-vis the Ostabridge mortgage. In her Second Further Amended Statement of Claim in those proceedings, Mrs Kekatos claimed an interest under the assigned Heggies/Collex Mortgage, and also an interest as chargee pursuant to the Global Charge and as mortgagee pursuant to the Global Mortgage, including as assignee of the Staffords’ interests. The relief she claimed all pertained only to her interest in the Heggies/Collex Mortgage and the Global Charge and Mortgage. The final settlement, on 10 March 2005, provided that Mrs Kekatos would receive 38.56% of the balance proceeds of sale of the Penrose Land – in consequence of which she received, in about September 2005, the Settlement Proceeds.

44 From this, the following is at least arguable, as the Staffords submit:

· Mrs Kekatos had no claim in Proceedings 3054/04, other than in respect of her interests under the assigned Heggies/Collex Mortgage and the assigned Global Charge and Mortgage;

· Mrs Kekatos could not assert that the assigned Heggies/Collex Mortgage secured a sum greater than $29,300, because that was the amount, which the mortgagor and mortgagee agreed was owing at the time of assignment. Moreover, when Mrs Kekatos received the Settlement Proceeds, the sum secured by the assigned Heggies/Collex Mortgage had been paid out, by the royalty payments which Mrs Kekatos received.

· Therefore, upon receipt of the $1,412,500, even if Mrs Kekatos was entitled to keep beneficially any amount which remained owing and secured by the Heggies/Collex Mortgage (that was then nil), and she held the balance (hence the full amount of $1,412,500) on trust for subsequent encumbrancees;

· However, she retained the full amount. Any entitlement on her part to do so must be referable to the fact, asserted in her pleadings in Proceedings 3054/04, that, in addition to being the holder of the Heggies/Collex Mortgage, she was also the holder of the Global Charge and Mortgage.

45 In the present context, illuminated by the case outline document and the evidence, the contention that Mrs Kekatos is not able to understand the case against her in this respect, nor the asserted facts that underly it, is untenable.

Resulting trust

46 Mrs Kekatos submits that paragraphs 52A to 52B cannot sustain a resulting trust, invoking the decision of Campbell J (as his Honour then was) in Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060. However, what his Honour said was:

129 A presumption of a resulting trust can operate in, broadly, three different types of factual situation. The first is where property is conveyed at law, but the entire beneficial interest in that property is not disposed of. The second is where property has been conveyed at law, on a basis which, initially, disposes of the entire beneficial interest, but at a later time equitable obligations attaching to the property fail or are set aside. The third situation is that a presumption of resulting trust arises where one person provides the purchase price of property, which is conveyed into the name of another person.

47 As Mr Finnane for the Staffords points out, the Black Uhlans case was concerned with the third of those classes, whereas in the present case the Staffords invoke the first [52B], and alternatively the second [52C], and Mrs Kekatos’ submission that paragraph 52C goes nowhere and supports no claim for relief is answered by the proposition that, consistent with Campbell J’s second class, a resulting trust can arise from the failure of the purpose of an express trust [Heydon and Leeming, Jacobs’ Law of Trusts in Australia, 7th Edition, 2006, Butterworths, [1205]].

Common intention constructive trust

48 Contrary to Mrs Kekatos’ submissions, a trust – it may be debatable whether it is constructive or express – may arise from a common intention that property be held in a particular way beneficially, and even in the absence of express agreement, such common intention may be inferred [Allen v Snyder [1977] 2 NSWLR 685, 690-1]. The defendants’ submissions acknowledge “some sort of attempt to allege that the First Defendant took the assignment of the Charge where the First Defendant was not intended to take such interest beneficially”, but then assert that there is “no allegation that that was Mrs Kekatos’ intention as well”. I do not understand what else the allegation in paragraph 52D – that the Staffords assigned their interests in the Global Charge to Mrs Kekatos pursuant to a common intention that Mrs Kekatos would hold all her interests in the Charge upon trust for the Staffords as to 50% and herself as to 50% – could mean.

The Trade Practices allegations

49 Mrs Kekatos also submits that the cause of action pleaded in paragraphs 52K to 52R, for misleading and deceptive conduct, is defective in that the pleading (1) contains no material facts to support the allegation that the defendants had no reasonable grounds for making the alleged representations, and (2) does not allege that insofar as the representations were made by Mr Kekatos, they were within his actual or ostensible authority, nor set out any material facts to support such allegation.

50 The passage invoked by Mrs Kekatos from the judgment of Katz J in Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458, [19] – which in fact is a quotation from Goldberg J in Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR ¶46-179, 54,431-2 – is concerned with the requirements of a pleading before the enactment of (CTH) Trade Practices Act 1974, s 51A [cf Fair Trading Act, s 41]. It is clear from the following paragraph of Katz J’s judgment that his Honour did not intend to suggest that the same strictures applied to a pleading that invoked s 51A, although for that purpose it was necessary to specify what representations were alleged to be in respect of future matters.

51 Here, rather like in Aussie Home Security, the relevant representation is said to be misleading (1) because what was represented did not come to fruition [52P], and (2) because they related to future matters and there were no reasonable grounds for making them [52Q]. As in Aussie Home Security, so in this case, the matters alleged in paragraph 52P are insufficient to establish a contravention of s 42: the mere fact that a future state of affairs does not come about does not make the representation misleading. Paragraph 52P should be struck out. However, unlike in Aussie Home Loans, in this case paragraph 52Q plainly identifies what representations are said to relate to future matters, and alleges that the defendants did not at the time have reasonable grounds for making them. I do not accept that an allegation that a defendant had no reasonable grounds for a representation necessarily requires further particularisation, but even if it admits of further particulars, the material fact – absence of reasonable grounds – has been asserted.

52 Paragraph 52N alleges that in making the representations, Mr Kekatos was an agent and attorney of Mrs Kekatos. That is plainly an allegation that he made the representations in the scope of his authority as such agent. The agency is pleaded in paragraphs 4c and 5, which are unamended from the original Statement of Claim. The agency alleged may admit of further particularisation (that is, the usual particulars of whether it was oral, written, or implied, etc), but the material fact – that Mr Kekatos was for relevant purposes the agent of Mrs Kekatos – is sufficiently pleaded.

53 Paragraph 52P should be struck out, but the balance of the Trade Practices pleading is sufficient.

The excess royalties claim

54 As to the claim in respect of the excess royalties (that is, the amount of royalties paid in excess of what was required to discharge the Heggies/Collex Mortgage of $29,300), the Staffords’ case is:

· Mrs Kekatos was entitled to and/or did receive royalties as assignee of the Heggies/Collex Mortgage [57, 60, 60A, 61], to the extent that moneys were secured by it;

· As she held the Heggies/Collex Mortgage as actual or constructive trustee [58], she received those royalties upon trust for herself and the Staffords [61A];

· Even if she was entitled to the Heggies/Collex Mortgage beneficially, it secured only $29,300 [56] which was satisfied by the initial distribution, so that all further payments are held for subsequent encumbrances [61B], which in the circumstances was herself as chargee [66A];

· Mrs Kekatos holds the Global Charge upon trust for herself and the Staffords [42A, 42C, 52, 52B, 52C, 52E];

· Accordingly she also holds the royalties upon such trust [66, 66B].

55 It is alleged, in paragraph 60A of the Amended Statement of Claim, that Cvitanovic paid to Mrs Kekatos the sum of $226,000 being mining royalties from the Penrose Land on 1 December 2004. It is further alleged, in paragraph 61, that Cvitanovic directed Boral Resources to pay future royalties directly to Mrs Kekatos as first ranking mortgagee of the Penrose Land. As the Staffords claim a beneficial interest in the Heggies/Collex Mortgage, and the royalties were purportedly paid to Mrs Kekatos as holder of the Heggies/Collex Mortgage, the Staffords claim a 50% interest in them [57, 61A]. If they had no such interest, the royalties paid out Mrs Kekatos’ debt of $29,300 secured by the mortgage, after which she held the balance in trust for subsequent security holders [61B].

56 The Amended Statement of Claim accordingly discloses a cause of action in respect of the royalties.

Failure to allege breach of pleaded terms and other matters

57 Other submissions, to the effect that no breach of the Penrose Trust Agreement, the Variation or the Novation is alleged, are beside the point. Those transactions are pleaded not to found a case of breach of contract, but to found the allegation that Mrs Kekatos’ acquisition of the Staffords’ interests in the Global Charge involved the assumption by her of equitable obligations to the Staffords, whether in the form of a trust (express, resulting, or constructive arising from their common intention, or a conventional estoppel arising from their common assumption). The relevance of the Trust Agreement [29], the Trust [29A], the Variation [40] and the Novation [40A] is, first, that each is an alternative way of characterising the dealings pursuant to which the Staffords claim to have retained an equitable interest in the Global Charge, notwithstanding the assignment; secondly, that they demonstrate the basis upon which it is contended that Mrs Kekatos’ subsequent dealings with the Penrose Land were qua trustee; and, thirdly, that they form the factual substratum for the primary way in which the Staffords put their claim: namely, that the Penrose Trust Agreement, the Penrose Trust, the Variation and/or the Novation amounted to a joint venture for the acquisition of the Penrose Land [52F], that for the purpose of the joint venture the Staffords contributed their interest in the Global Charge [52G], that the joint venture failed without attributable blame by reason that the Penrose Land was not purchased but sold to a third party [52H, 62, 64, 65] yet Mrs Kekatos retains the Staffords’ interests in the proceeds of the Global Charge [52I], which she holds upon trust for the Staffords according to their proportionate contributions [52J, 65A].

58 I have not, in the foregoing, sought to address every one of the criticisms made of the Amended Statement of Claim. It may not be a model of the pleader’s art, and it may include some matters that are more properly characterised as evidence than material facts or particulars; and it may admit of further particularisation. However, I am satisfied that insofar as any of these criticisms can be made of it, the prejudice or difficulties which might be occasioned to Mrs Kekatos are slight, and manifestly insufficient to justify the striking out or summary dismissal of the claim at this belated stage.

Conclusion and Orders

59 The order of 6 June involved a grant of leave to amend generally. The Amended Statement of Claim was regularly filed.

60 In order to succeed, the Staffords must allege and prove that they are entitled to a portion of the Settlement Proceeds. However, their case in that respect does not depend wholly, or even primarily, on any interest they might establish in the Heggies/Collex Mortgage, but derives from the Global Charge as well. Even if the Staffords’ claim to an interest in the assigned Heggies/Collex Mortgage is not sustained, that would not dispose of the Staffords’ case insofar as it is based on the Global Charge.

61 The material facts said to underpin the allegations in paragraph 58, that Mrs Kekatos was a trustee of the Heggies/Collex Mortgage, are to be found in paragraphs 29, 29A, 33, 33A, 40, 40A, 41. They are sufficient for that purpose.

62 There is no inconsistency between paragraph 40 (which refers to the agreement to make the assignment and its purpose); paragraph 42 (which refers the actual assignment pursuant to that agreement); and paragraphs 43 and 52R (which refer to the form which the assignment took).

63 Paragraph 63 of the Amended Statement of Claim is irrelevant, and should be struck out. But it is not crucial to the Staffords’ claim.

64 Though not explicitly, the Amended Statement of Claim sufficiently discloses that it is contended that Mrs Kekatos’ receipt of the Settlement Proceeds was attributable to the Global Charge [65A, 66], that her entitlement to the Settlement Proceeds was founded in an entitlement to a share of the proceeds of sale of the Penrose Land [62], and that her only interests in the Penrose Land were pursuant to the assignments of the Heggies/Collex Mortgage and the Global Charge – both of which she is alleged to have taken as trustee. In the present context, illuminated by the case outline document and the evidence, and given that both defendants have already pleaded to the original Statement of Claim, the contention that Mrs Kekatos is not able to understand the case against her in this respect, nor the material facts said to underly it, is unsustainable.

65 It is at least seriously arguable that the Staffords’ claim is not one “upon a contract for the sale or other disposition of land” within Conveyancing Act, s 54A, and that neither the Penrose Trust Agreement, nor any agreement or common intention that the Staffords retain an equitable interest in the Charge, is such a contract. Conveyancing Act, s 23C, does not apply to resulting, implied or constructive trusts. Moreover, it would be inappropriate in all the circumstances to allow its belated invocation to result in summary dismissal of the proceedings.

66 The Amended Statement of Claim sufficiently discloses viable causes of action that found the claims for a resulting trust, and for a constructive trust based on common intention. That Mr Kekatos was for relevant purposes the agent of Mrs Kekatos is sufficiently pleaded. Paragraph 52P should be struck out, but the balance of the Trade Practices pleading is adequate.

67 The Amended Statement of Claim also sufficiently discloses a cause of action in respect of the excess royalties.

68 Although I will strike out paragraphs 52P and 63, insofar as any other criticisms can be made of the Amended Statement of Claim, the prejudice or difficulties, which might thereby be occasioned to Mrs Kekatos, are slight, and manifestly insufficient to justify its striking out or summary dismissal at this belated stage. Mrs Kekatos’ application has been substantially unsuccessful, and she should bear its costs.

69 My orders are:

1. Order that paragraphs 52P and 63 of the Amended Statement of Claim be struck out.

2. Order that the Motion filed on 30 May 2008 be otherwise dismissed.

3. Order that the first defendant pay the plaintiffs’ costs of the motion.

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