Sunlea Enterprises Pty Ltd as trustee for Drummond Cove Unit Trust v Pollock [No 3]
[2015] WASC 330
•4 SEPTEMBER 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SUNLEA ENTERPRISES PTY LTD AS TRUSTEE FOR DRUMMOND COVE UNIT TRUST -v- POLLOCK [No 3] [2015] WASC 330
CORAM: ALLANSON J
HEARD: 20 AUGUST 2015
DELIVERED : 20 AUGUST 2015
PUBLISHED : 4 SEPTEMBER 2015
FILE NO/S: CIV 2705 of 2012
BETWEEN: SUNLEA ENTERPRISES PTY LTD AS TRUSTEE FOR DRUMMOND COVE UNIT TRUST
Plaintiff
AND
JAMIE KEVIN POLLOCK
First DefendantLASERBASE PTY LTD
Second DefendantCARINA LEE-ANNE HEALEY
Third DefendantAIK CORPORATION PTY LTD
Fourth DefendantKEVIN BARRY TERRANCE HEALEY
Fifth DefendantTREVOR STANLEY JOHN BETTS
Sixth DefendantMICHAEL IAN LURIE
Seventh DefendantJAMES MALCOLM FREMANTLE
Eighth DefendantDREAMVIEW INVESTMENTS PTY LTD IN ITS OWN RIGHT TRUSTEE FOR THE DREAMVIEW TRUST
Ninth DefendantPROMENADE INVESTMENTS PTY LTD AS TRUSTEE FOR THE DREAMVIEW UNIT TRUST
Tenth DefendantWALTHAMSTOW PTY LTD
Twelfth DefendantSTEVEN ALICK MASEL
Thirteenth DefendantTROIKA CAPITAL PTY LTD
Fourteenth DefendantHOWARD FRANSZ
Fifteenth Defendant
Catchwords:
Practice and procedure - Pleadings - Strike out application - Pleading discloses reasonable cause of action
Legislation:
Rules of the Supreme Court 1971 (WA), O 20 r 8
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr J C Thomson SC
First Defendant : Mr J R Birman
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Solicitors:
Plaintiff: Tottle Partners
First Defendant : Birman & Ride
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Case(s) referred to in judgment(s):
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566
Leitch v Abbott (1886) 31 Ch D 374
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628
Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [2014] WASC 91
Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [No 2] [2015] WASC 102
Whyte v Ahrens (1884) 26 Ch D 717
ALLANSON J: This is the second application by the first defendant, Jamie Kevin Pollock, to strike out the plea against him. In late 2014, Mr Pollock was partially successful on an application to strike out an earlier version of the statement of claim. At the hearing of the second application, I dismissed it and said I would publish my reasons.
Background
I have previously set out the background of this matter, which involves a complicated plea against multiple defendants: see Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [2014] WASC 91; Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [No 2] [2015] WASC 102. For the purposes of the present application, it is not necessary to go into that degree of detail.
In broad summary, the plaintiff, Sunlea Enterprises Pty Ltd, pleads the following.
Sunlea is the trustee of the Drummond Cove Unit Trust and claims relief for losses suffered in a land development project near Geraldton. Sunlea was not the original trustee, and many of the relevant events occurred when Diamo Nominees Pty Ltd was the trustee.
Diamo Nominees entered into Heads of Agreement for a joint venture with Dreamview Investments Pty Ltd to carry out the land development project. Dreamview Investments and Diamo Nominees were equal owners of Sandpiper Asset Pty Ltd.
Sandpiper held the land that was to be developed in trust for the purposes of the project (the Land Trust). There was no declaration of trust regarding the land, but 'at all material times ... [the] parties acted on the basis that Sandpiper had received the transfer of the Land as if Sandpiper had executed a declaration of trust': par 43. The Heads of Agreement (as varied) provide the contractual context in which the duties of Sandpiper as trustee are to be determined.
Sandpiper entered into financing agreements with two financiers (Troika Capital Pty Ltd and Walthamstow Pty Ltd) secured by mortgages on the project land. Upon the proper interpretation of the Heads of Agreement, as varied, Sandpiper was in breach of the Land Trust when it used the project land as security and made unauthorised payments to various persons from the money it borrowed.
In this application, the court is concerned with Sunlea's plea regarding one of the challenged borrowings and payments. The money was borrowed under what Sunlea refers to as the Troika Facilities. Sunlea pleads that:
(1)On or about 24 October 2006, Sandpiper borrowed $3 million from Troika, for the purpose of providing that amount to Laserbase Pty Ltd (par 148).
(2)The borrowing was secured over the project land by a mortgage (par 148).
(3)Sandpiper thereafter paid the amount of $3 million to Laserbase (par 149).
(4)The payment was not required for developing or subdividing the land, and was not authorised by the Heads of Agreement (par 150).
(5)By borrowing for a purpose not authorised by the Heads of Agreement, upon the security of the land, Sandpiper breached the Land Trust (par 153).
The plaintiff seeks to implicate Mr Pollock in that breach of trust by alleging that he participated in it, with actual knowledge.
The further re-amended statement of claim
After the earlier, successful, strike out application, Sunlea re-pleaded its case that Mr Pollock knowingly participated in a breach of trust. Mr Pollock applied again to strike out. Sunlea then filed a minute of further re-amended statement of claim, on 17 August 2015, after the solicitors for Mr Pollock had filed the application and submissions in support of it.
The plea against Mr Pollock is that he 'assisted in arranging this borrowing' (par 148(b)). In particulars to that plea, Sunlea pleads that the assistance provided by Mr Pollock may be inferred from the following facts (particulars to par 148(b)):
(i)Mr Pollock was designated as the contact person on behalf of Sandpiper in relation to the borrowing;
(ii)he collected the cheque from Troika;
(iii)he was 'kept informed of the negotiations concerning the documentation of the First Troika Facility Agreement'. (That agreement is pleaded in par 91. Under the First Troika Facility Agreement, Troika agreed to lend Sandpiper $3 million on terms including 'that Sandpiper would diligently proceed to develop and subdivide the Land and to subsequently sell the subdivided blocks at fair market value', and that 'the loan would be secured by a charge over the land);
(iv)he was responsible for arranging the checks necessary to finalise the First Troika Facility Agreement.
Sunlea pleads that Mr Pollock was aware that the only business carried on by Sandpiper was developing or subdividing the land, and that in carrying on this business it was acting pursuant to the Heads of Agreement on behalf of the trustees of the Drummond Cove Unit Trust and the Dreamview Unit Trust; and of the terms, or the substance of the terms, of the Heads of Agreement relating to the Land Trust (par 151A). In particulars to par 151A, Sunlea pleads that Mr Pollock's awareness of 'the contractual basis for that business' may be inferred from:
A.Mr Pollock's position as contact person acting on behalf of Sandpiper in arranging the borrowing, and that he must have provided disclosure concerning the business of Sandpiper and the purpose of the borrowing to Troika;
B.his position as guarantor of an earlier loan agreement with Walthamstow, which specifies that the purpose for which the amount loaned may be used is only for the subdivision and development of the land;
C.his instructions to make payments on behalf of Sandpiper for work performed or in relation to land tax;
D.his practice of collecting cheques arranged by Sandpiper in favour of third parties who had performed work for the subdivision and development of the land;
E.his instructions in relation to documenting two later Troika Facility Agreements (although both were after the relevant borrowing); and
F.correspondence that was sent in relation to the facility to the same address as correspondence addressed to Mr Pollock.
Sunlea also pleads that Mr Pollock was aware that the amount of $3 million was to be used to pay Laserbase other than for developing or subdividing the land. Mr Pollock does not challenge that plea.
As a matter of form, I believe that the plea fails to comply with the requirement in O 20 r 8 of the Rules of the Supreme Court 1971 (WA) that a pleading is to contain only a statement in summary form of the material facts on which the party relies for his claim or defence, and not the evidence by which those facts are to be proved. Counsel for Mr Pollock objected to the plea on that basis.
In his submissions, however, he accepted that the statement of claim gives notice of the material facts from which, on Sunlea's case, Mr Pollock's knowledge may be inferred. I am not prepared to strike out the plea on a matter of form if it is sufficient in giving proper notice of the cause of action, and pleads material facts sufficient to establish that plea: see Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [8].
Mr Pollock's primary objection of substance was that the material facts pleaded did not provide a proper basis for attributing to Mr Pollock 'an intimate knowledge of the source and limitations on Sandpiper's authority' as pleaded in par 151A.
I am, however, satisfied that there is an arguable case of knowledge pleaded. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable: Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers ‑ Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54]. The question is whether it would be open to Sunlea, on these pleaded facts and particulars, to prove facts at the trial which would constitute a cause of action against Mr Pollock: see Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628, 631.
The effect of the pleaded particulars is to identify, by reference to Mr Pollock's role in the business of Sandpiper, a basis for the pleaded fact that he was aware of the nature of Sandpiper's business, including that he was aware that Sandpiper carried on the business as trustee on behalf of the two unit trusts and pursuant to the terms of the original and varied Heads of Agreement. Sunlea pleads Mr Pollock's 'position', not as an officer in Sandpiper, but as having an active role in arranging borrowing, making payments, and providing disclosure to the lender. He pleads his position as guarantor of an earlier lending. He pleads that Mr Pollock had a role in the conduct of Sandpiper's business which carries an inference that he knew of the basis of Sandpiper's business in the agreements. Whether the evidence led on this plea will establish the knowledge which Sunlea alleges can be inferred is a question for trial.
I also take into account that Mr Pollock has not yet given discovery. Sunlea's plea crystallised significantly after documents were provided in discovery by other parties. Permitting a party to obtain discovery and inspection prior to finalising its pleading, including pleading out an allegation of fraud, is well recognised: see Whyte v Ahrens (1884) 26 Ch D 717, 722; Leitch v Abbott (1886) 31 Ch D 374, 379. This is particularly so where one party knows the facts and the other does not: see Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566, 570.
For these reasons I am satisfied that the plea gives Mr Pollock sufficient notice of the case he is to meet, and discloses a reasonable cause of action. The application, accordingly, was dismissed.
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