Angius v Salier & Ors

Judgment

1. The plaintiff is the widower of the late Laura Angius (the deceased). The first defendant is the executor of the deceased's estate. On 1 March 2019, I gave judgment on the plaintiff's claims for contribution against the first defendant and on the first defendant's cross-claim against the plaintiff, which were determined separately from the other questions in the proceedings: Angius v Salier & Ors [2019] NSWSC 184 (principal judgment).
2. In the principal judgment, I also dismissed the plaintiff's application (made at the hearing) for leave to amend his statement of claim to include a claim against the first defendant for contribution to amounts the plaintiff says he paid in respect of a GST liability. I provided the plaintiff with another opportunity to plead that claim in a proper form and made directions for him to serve a draft of a further amended statement of claim and for the first and seventh defendants to inform the plaintiff whether they consented or objected to leave being granted.
3. When the matter came back before me on 29 March 2019 the plaintiff sought leave to file a further amended statement of claim. The first and seventh defendants objected. I directed the parties to provide written submissions and it was agreed that I would determine the plaintiff's application for leave to amend on the papers.
4. The issue to be determined is whether the plaintiff should be granted leave to file the further amended statement of claim (being the version provided to my chambers on 5 April 2019 marked up to show the amendments to the amended statement of claim) (FASOC) to include a claim for contribution and restitution in respect of GST and penalty amounts (GST liability) which the plaintiff alleges was incurred jointly with the deceased, and was paid by him to the Australian Taxation Office (ATO).

Background and the proposed GST pleading

1. The background to these proceedings is set out in the principal judgment and I will not repeat it.
2. The principal judgment also sets out a history of the plaintiff's attempts to plead a claim for contribution against the first defendant in respect of an amount said to relate to GST. That history shows that the amendments in the FASOC - for which leave is now sought - is the fifth iteration of a claim for contribution in respect of a GST liability that the plaintiff has attempted to plead. All four previous iterations have either been struck out or leave to amend has been refused.
3. In the principal judgment, I refused the plaintiff leave to amend to include the previous iteration of a GST contribution claim because it was inadequately pleaded as it had not identified how the purported liability arose and did not identify when and from which accounts the plaintiff had made the payments said to give rise to the claim for contribution: principal judgment at [160].
4. I also found that the GST contribution claim in the form then proposed did not appear to arise from the same or substantially the same facts giving rise to an existing cause of action in these proceedings and was unconnected to the previous iterations of GST claims: principal judgment [151]. These findings were relevant to the Limitation Act 1969 (NSW) s 14 issue raised by the first and seventh defendants at the hearing and in submissions on this application, to which I refer below.
5. Turning to the FASOC for which leave is now sought, the amendments comprise 15 new paragraphs (paragraphs 38 to 52) and a new claim for relief seeking, as against the first defendant, the amount of $263,965 plus interest from 27 July 2012 as reimbursement or restitution for assessed and penalty amounts paid to the ATO on behalf of the deceased's estate.
6. Paragraphs 38 to 43 plead the existence of a joint venture agreement (JVA) between the plaintiff and the deceased, as owners of property at Allen Street Waterloo (Waterloo property), a developer and another third party to develop the Waterloo property into strata lots. This development was said to be carried out and the strata lots divided between the joint venture parties in accordance with the terms of the JVA, as varied.
7. Paragraphs 44 to 46 plead facts relating to the partnership between the plaintiff and the deceased being registered for GST and the sale by the partnership of nine strata lots during the period 7 September 2010 to 18 February 2012. These paragraphs also plead that the sale of the strata lots constituted a "supply" for the purposes of, and subject to, GST and identifies that $476,881 was payable for GST.
8. Paragraph 47 alleges that the partnership understated its liability for GST when preparing the partnership's quarterly BAS returns. This understatement was detected after the ATO carried out a routine audit for the period 1 January 2008 to 31 December 2011. The pleading refers to the findings of the ATO audit being summarised in an interim report dated 12 April 2012, which was replaced by a revised report dated 26 April 2012, which levied additional GST of $426,230.
9. The particulars to paragraph 47 refer to the ATO interim report dated 12 April 2012 (behind tab 17 in Exhibit Folder JA1), the BAS statements for the partnership for the quarters December 2010 to December 2011 (also behind tab 17 in Exhibit Folder JA1) and the ATO interim report dated 26 April 2012 (ATO 26 April report) in respect of which leave is sought to rely by the plaintiff as additional evidence.
10. Paragraph 48 pleads an "Additional Liability" to the ATO totalling $527,930, which is said to be calculated based on amounts included in a table at paragraph 48 summarised from the ATO 26 April report. The table refers to "shortfall/undeclared GST" in the amount of $423,905 and "penalty levied by ATO" of $104,025, making up $527,930.
11. Paragraph 49 asserts that the plaintiff paid the ATO $527,930 in satisfaction of the GST liability. The pleading does not specify when that amount was paid by the plaintiff.
12. The particulars to paragraph 49 refer to the ATO Integrated Client Account for the plaintiff and the deceased (behind tab 17 in Exhibit Folder JA1) but do not identify which parts of the document are relied upon. The particulars also refer to "Part 1 of the Vella Report" which is a reference to a report from an accountant, Trevor Vella, which was prepared for these proceedings and which was in evidence before me at the hearing (Exhibit B). Once again, the particulars do not identify upon which parts of that report the plaintiff relies.
13. Paragraph 50 pleads that the deceased's estate was "unduly enriched" in the sum of 50% of the amount paid by the plaintiff.
14. Paragraph 51 pleads that the plaintiff and deceased were jointly liable for the amount of $527,930. The particulars to that paragraph assert that the plaintiff and the deceased were co-owners in the properties [1] which were levied with unpaid GST or alternatively, that the estate is jointly liable to pay the GST debt pursuant to section 9 of the Partnership Act 1892 (NSW).
15. Paragraph 52 then asserts that "in the premises and, to the extent that the monies were paid by the Plaintiff from his own funds", the estate should contribute 50% towards the assessment and penalty amounts in the sum of $263,965 plus interest from 27 July 2012. There are no particulars provided regarding the extent to which the plaintiff paid the monies from his own funds.

Legal principles

1. The plaintiff did not identify the basis of his application to amend and file the FASOC in submissions. I have approached it as having been made under s 64 of the Civil Procedure Act 2005 (NSW), which provides that the Court may grant leave to amend, and s 65(2) of the Civil Procedure Act, which refers to applications to amend being made after the expiration of a relevant limitation period.
2. The general discretion to grant leave to amend under s 64 of the Civil Procedure Act is subject to s 58 of the Civil Procedure Act, which requires the Court to follow the dictates of justice in deciding whether to make any order for the amendment of a document. It also requires the Court to have regard to the overriding purpose of the Civil Procedure Act being to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1) of the Civil Procedure Act.
3. Before granting leave, the Court must be satisfied that the proposed amendment is not so obviously futile that it would be liable to be struck out had it appeared in the original pleading and that there is an arguable basis for the amendments sought to be made: McGuirk v The University of New South Wales [2009] NSWSC 1424 at [18]; Galati v Deans (No 2) [2018] NSWSC 1813 at [61].
4. The Court must also be satisfied that the proposed amendments comply with relevant rules of Court in form and in substance and plead all material facts in support of an arguable cause of action: Clough v Frog (1974) 4 ALR 615; 48 ALJR 481; McGuirk v The University of New South Wales [2009] NSWSC 1424 at [18].
5. This means that, in addition to being satisfied that the FASOC discloses a reasonable cause of action, the Court must be satisfied the FASOC pleads specifically any matters that, if not pleaded specifically, may take the defendants by surprise: r 14.14 UCPR; and provides particulars of the plaintiff's contribution claim as are necessary to enable the defendants to identify the case they have to meet: r 15.1 UCPR.
6. The purpose of rr 14.14 and 15.1 of the UCPR is to ensure that the issues to be tried are properly defined and to avoid taking up time with matters that are not in dispute. Proper particulars avoid the injustice of a party being taken by surprise and keep the conduct of a case within bounds: Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214; McCormick v Colonial Mutual General Insurance Co Ltd (1995) 8 ANZ Ins Cas 61-262 at 75,940.
7. As Rees J observed in Re Kupang Resources Ltd [2018] NSWSC 1872, the Court may refuse leave to amend where the proposed amendments are defective or raise an unparticularised case: see also Tamaya Resources Ltd (in liq) v Campbell Wilson (2016) 332 ALR 199; [2016] FCAFC 2 at [194] - [204].

Are the GST liability contribution and restitution claims adequately pleaded and particularised?

1. The plaintiff submits that leave should be granted as the issues to be determined by the Court are reasonably defined by paragraphs 38 - 52 of the FASOC without the need for further pleadings and are adequately defined in order to establish a cause of action against the defendant. He submits that the relevant issues are whether: 1. the GST liability owed to the ATO is a debt for which the deceased was jointly liable to pay with the plaintiff; 2. the plaintiff paid the GST liability and did so with his own funds; and 3. it is just and equitable that the plaintiff be reimbursed 50% of the amount which he paid to the ATO to discharge the joint GST liability.
2. The plaintiff also submits that the issues of when, how and with which funds the plaintiff used to pay the GST liability are matters for evidence. He appears to rely on the particulars provided at paragraph 49 and the plaintiff's affidavit sworn 30 April 2018 as being adequate notice of what evidentiary matters will be relied on.
3. I do not accept the plaintiff's submission that the FASOC properly pleads and particularises the claim for contribution in respect of the GST liability and that the issues of when and with which funds the plaintiff used to pay the GST liability are just matters for evidence in this case.
4. The right to contribution is a personal right dependent on payment by the person making the claim. As stated by McHugh J in Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17at [38]: "Both common law and equity give a person the right to obtain contribution to a payment made by that person in discharging "a common obligation" that is owed by that person and others" (emphasis added)
5. As the plaintiff accepts, a critical element of the plaintiff's cause of action for contribution is that the plaintiff paid the GST liability and that he did so with his own funds. The materiality of those facts, and the need for them to be pleaded and properly particularised, can be tested by considering the position if payment of the GST liability had been made to the ATO not by the plaintiff but by another person or entity using their own funds. In those circumstances, the plaintiff may not have a right of contribution against the deceased as he did not pay more than his share of the asserted common monetary obligation.
6. While paragraph 49 pleads that the plaintiff paid the GST liability, paragraphs 49 to 52 fail to plead that he did so with his own funds or identify what amounts were paid from his own funds to the ATO. Nor do they plead or adequately particularise when such amounts were paid and from which bank accounts.
7. The ATO Integrated Client Account referred to in the particulars to paragraph 49 indicates dates on which certain payments were made to the ATO but does not identify the source of the payments as being the plaintiff's own funds.
8. The particulars to paragraph 49 also refer to "Part 1 of the Vella report", which is even more obscure, given Schedule 1 of the report (there is no Part 1) comprises 259 pages of spreadsheets in landscape format containing over 6200 line items relating to a bank account held by Angius Investments Pty Ltd and the particulars fail to identify which parts of Schedule 1 are relied on.
9. In my view, it was incumbent on the plaintiff to identify with precision which parts of Schedule 1 of the Vella report are relied on as particulars in support of the assertion that the plaintiff paid the GST liability and that he did so from his own funds. I do not accept, as the plaintiff submitted, that the defendants "should have examined it for their own understanding". It is not the defendants' role to piece together the relevant facts from various unidentified, disparate line items. Rather, it is a matter for the plaintiff to set out the facts which he must assert to make good his claim with sufficient particularity to inform the defendants of the case they must meet: Gunns Limited v Marr [2005] VSC 251 at [57].
10. Further, a document detailing transactions relating to Angius Investments Pty Ltd alone do not constitute proper particulars to a pleading that the plaintiff himself paid the GST liability, given the FASOC does not plead that another entity paid the funds to the ATO for, or on behalf of, the plaintiff.
11. The need for clarity and precision regarding payment by the plaintiff from his own funds is highlighted by an ambiguity within the FASOC as to what amounts are asserted as having been paid by the plaintiff. Paragraph 49 pleads that "the Plaintiff paid to the ATO amounts totalling $527,930 in satisfaction of the GST liability", whereas paragraph 52 pleads "In the premises, and, to the extent that the monies were paid by the plaintiff from his own funds, the plaintiff seeks a 50% contribution". The ambiguity arises from the use of the words "to the extent", which raises difficulties or doubts about what is, in fact, asserted as the amount that was paid by the plaintiff from his own funds. The pleadings in paragraphs 49 and 52 are, therefore, embarrassing even if the pleadings in prior paragraphs could be said to contain allegations of material facts sufficient to constitute a cause of action for contribution: Northam v Favelle Favco Holdings Pty Ltd (Supreme Court (NSW), 1 and 7 March 1995, unrep).
12. The plaintiff's written submissions on the amendment application do not assist in clarifying this ambiguity about what amount was paid by the plaintiff to the ATO in respect of the GST liability from his own funds. To the contrary, they raise further ambiguities given they refer to: 1. the plaintiff's position being that "the majority of the funds used to pay the GST debt were substantially paid with funds belonging to the plaintiff and derived from numerous sources"; 2. there being "no one else that could have caused this payment [of the GST liability to the ATO] other than" the plaintiff; and 3. the question of the monies the plaintiff used to discharge the GST liability being "complex" and requiring a "detailed analysis of practice used by the plaintiff to pay all debts" of the plaintiff's family and a "thorough understanding" of the Vella report.
13. The GST liability was either paid for by the plaintiff from his own funds in full, in part or not at all. The defendants are entitled to know what the position is. It is no answer to say that the question as to which monies used is "complex" or that the plaintiff "caused" it to be paid. If the plaintiff is going to assert there was some "practice" used to pay debts or some other "monies" from other entities were used, that practice, those monies and the other entities are material facts that should be pleaded and particularised in support of the claim. They are not.
14. In contrast to many applications for leave to amend which are made before evidence is served or evidence is adduced at a hearing, this application is being made at a late stage of the proceedings after evidence on relevant matters has already been adduced at the separate questions hearing. In that context, a consideration of whether the FASOC adequately pleads and particularises the claim for contribution should not ignore the factual dispute at the separate questions hearing as to whether the plaintiff has used his own funds to make payments the subject of the plaintiff's other claims for contribution and his evidence that he used funds from the accounts of Angius Investments Pty Ltd about "90% of the time": principal judgment [47]. That factual dispute and the evidence supports the need for clarity and precision in pleading and particularising all facts regarding payment by the plaintiff using his own funds to avoid surprise and any ambiguity as to what case is being put. There is no clarity on those matters in the FASOC.
15. The extent to which the plaintiff personally paid the GST debt from his own funds on behalf of the partnership, when and from what accounts he paid are, in this case, material facts which needed to be pleaded and properly particularised with clarity and precision. Given the ambiguities and other matters referred to above, in my view, paragraphs 49 to 52 of FASOC do not do so.
16. Using the observations and findings in the principal judgment as a guide, the plaintiff could have achieved some clarity on these matters by a properly pleaded and particularised FASOC. He has not done so. After receiving the FASOC the first defendant asked the plaintiff to provide further particulars of those matters. He chose not to do so. The Court also granted the plaintiff another opportunity to provide them after the directions hearing on 29 March 2019. Again, the plaintiff chose not to do so. There is some force to the first defendant's submission that this approach suggests the plaintiff is unable to provide them or to sustain the contribution claim made in the FASOC.
17. I also note that there are other pleading defects and ambiguities in the FASOC in respect of the plaintiff's claim based on a GST liability. For example: 1. the claim for relief at prayer 1(h) includes a new claim for restitution and paragraph 50 appears to plead unjust enrichment. This aspect of the pleading is inadequate, as it fails to address basic elements required for a claim for restitution by way of unjust enrichment including pleading facts going to the injustice suffered by the plaintiff, and whether the defendant (or deceased) was enriched at the plaintiff's expense (which again raises queries about the source of the funds used to pay the liability). In addition, the plaintiff was not given leave to include a claim for restitution in the draft FASOC; 2. the pleading does not adequately identify what GST amounts are claimed to have been properly payable; 3. paragraph 47 does not plead that the understated GST in the partnership's quarterly returns or the additional GST in the amount of $426,230 was referrable to GST payable on the sale of the strata lots pleaded in paragraph 46; and 4. other than a reference in the heading of column 2 of the table to "Undeclared Sales" there is nothing pleaded in paragraph 48 which links the Additional Liability as relating to GST on the sales of the strata lots referred to in paragraph 46.

Limitation issue

1. As noted above, I have also approached the plaintiff's application to amend as being made under s 65(2) of the Civil Procedure Act. This is because the plaintiff accepts the amendments for which leave is sought plead a new cause of action out of time.
2. The plaintiff submits that he ought to be allowed to plead the amended contribution claim in respect of the GST liability as if it were claimed in the original statement of claim filed in 2016 (which was within the limitation period), because the first defendant has been on notice of a GST related claim for some time. This submission is presumably made based on s 65(3) of the Civil Procedure Act which provides that, unless the court otherwise orders, an amendment made under s 65 is taken to have effect from the date the proceedings commenced.
3. Under s 65(2) of the Civil Procedure Act a new cause of action may be added with the leave of the Court under s 64(1)(b) if it arises from the same or substantially the same facts that, in the court's opinion, give rise to an existing cause of action and claim for relief set out in the original pleadings.
4. It was not in dispute that the contribution claim in respect of the GST liability in the FASOC is a new cause of action. While the plaintiff has sought to plead such a claim previously, those pleadings have been struck out or he has been refused leave to amend.
5. The amended statement of claim includes some facts relating to the development of the Waterloo property and the sale of certain lots. They are of a very general nature and appear to have been included as background to different contribution claims made by the plaintiff in respect of strata lots that were not sold, which claims were abandoned at the separate questions hearing. The facts now pleaded in support of the contribution claim for GST liability are different. They describe the joint venture arrangements, the partnership between the plaintiff and the deceased, the sale of specific strata lots, the calculation of the GST liability and alleged payments.
6. Consistent with my finding in the principal judgment, the GST contribution claim in the FASOC does not arise from the same or substantially the same facts giving rise to an existing cause of action against the first defendant in these proceedings. The plaintiff did not contend otherwise.
7. In those circumstances, section 65(2)(c) has no application to the amendments now being sought and leave should not be granted under that section to enable the amendments to have effect from the date the proceedings were commenced.

Prejudice and other considerations

1. The plaintiff submits he should be granted leave to amend to include the new claim pursuant to the Court's inherent jurisdiction to grant such leave as it would be unjust to the plaintiff not to do so given the claim is for a substantial amount and the defendants will not suffer any prejudice from the delay.
2. I do not accept the plaintiff's submission that the first defendant would not suffer any prejudice from the delay in making this claim. While the value of the estate could possibly be finalised with a provision for this claim, it is important for the issues between the plaintiff and the estate of the deceased to be finally resolved, including because related family provision proceedings need to be progressed. Further delay caused by this application and any grant of leave to pursue the GST liability claim (which would require the sixth iteration of a pleading to be prepared in light of the inadequacies previously referred to) could impede those proceedings, will delay finalisation of the estate and will lead to further legal costs resulting in the further diminution of the deceased's estate.
3. I accept that the size of the claim is not insubstantial. That is not, in my view, sufficient grounds for me to exercise my discretion to grant leave to the plaintiff to file the FASOC.
4. The fact that the plaintiff has sought to raise a GST contribution claim since before the limitation period expired does not, to my mind, assist the plaintiff. To the contrary, it highlights that the plaintiff has been given many opportunities to properly plead a claim and now seeks to so again in a way that is not consistent with the rules of this Court.
5. It is also apparent that the claim for contribution relies on the plaintiff being granted leave to adduce further evidence, being the ATO 26 April report. The Court made guillotine orders in respect of the plaintiff's evidence on 5 April 2018, which were partially lifted to allow the plaintiff to serve evidence relating to the GST claim by 16 November 2018. The plaintiff did not serve the ATO 26 April report by 16 November 2018. Additionally, the plaintiff's solicitor advised the Court at the hearing on 18 February 2019 that the plaintiff's evidence was complete and that the plaintiff would not be relying on any further evidence in support of the GST claim: T5:50.
6. The plaintiff must have known of the existence of the ATO 26 April report since before these proceedings were commenced. Other than a reference in written submissions to the "unfair guillotine orders" and the "most vital ATO report", the plaintiff has not provided any explanation or evidence in support of the application for leave to adduce the ATO 26 April report at this late stage. In those circumstances, I am not satisfied that I should exercise my discretion to grant leave to allow the plaintiff to adduce further evidence in this case insofar as it relates to a contribution claim against the first defendant.
7. The seventh defendant also raises the terms of the Separation Agreements between the plaintiff and the deceased as a matter that the Court should take into account in considering whether to grant leave to amend. He submits that the effect of the Separation Agreement is that the plaintiff assumed all obligations, including GST, in respect of the strata lots he received pursuant to that agreement, which means there is a real question about how or on what basis the plaintiff would be entitled to a 50% contribution from the estate for the GST liability claimed.
8. Given the plaintiff pleads the Separation Agreement and that certain interests in respect of the Strata lots were to be transferred between he and the deceased (at paragraphs 15 and 16), there is some force to that submission. In my view, that is really a matter that goes to the merits of the claim, rather than whether or not the claim is properly pleaded and particularised as required by the rules.

Conclusion

1. I have concluded that I should not exercise my discretion to grant leave to the plaintiff to amend and file the FASOC in this case. This is primarily because I consider that the FASOC does not adequately plead and particularise the claim for contribution and restitution in respect of the GST liability.
2. The plaintiff accepts that the claim is now statute barred and has not persuaded me that leave should be given for any amendment to take effect from the date the proceedings were commenced nor that leave should be given for him to adduce further evidence against the first defendant in the form of the ATO 26 April report in this case. Granting leave to file the FASOC in those circumstances would, therefore, constitute granting leave to pursue a claim that is likely to be futile.
3. The plaintiff has had five opportunities to plead a claim for contribution in respect of GST in the proper form. He has been on notice for some time of the matters that needed to be addressed in the pleading, has failed to address them in the FASOC and chose not to respond to the first defendant's request for further information.
4. In these circumstances, providing the plaintiff with leave to file the FASOC would, in my view, be inconsistent with the principles relating to case management, cost and delay as set out in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [111]-[112], or the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings: s 56 Civil Procedure Act.
5. As the plaintiff has not succeeded with his application for leave to file the FASOC, the appropriate costs order is for the plaintiff to pay the first defendant's costs.
6. The seventh defendant's appearance and submissions were made on a limited basis. I have, therefore, made no order as to his costs.

Orders

1. For the reasons given the Court makes the following orders: 1. Dismiss the plaintiff's application and refuse him leave to amend and file the proposed further amended statement of claim to include at paragraphs 38 to 52 a claim for contribution in respect of a GST liability. 2. The plaintiff to pay the first defendant's costs in relation to the plaintiff's application for leave to amend and file the further amended statement of claim. 3. Order that any costs of the first defendant relating to the plaintiff's application that are not paid by the plaintiff under order 2 be otherwise paid from the estate of the late Laura Angius on an indemnity basis.

Endnote

1. There is no reference to the deceased in the first line of the particulars but I have read them as if they do as the lack of reference appears to be a typographical error DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 June 2019