mixed. The Court struck out paragraph 18K of the Fourth Amended Statement of Claim (and consequential Prayer A(d) insofar as it depends on that pleading) for failing to plead a real chance of future loss; the...
Key principles
An allegation of mere 'potential' future liability, contingent on another party's insolvency, does not, without more, plead a 'likelihood' of loss or damage within the meaning of...
On a strike-out application the court must determine whether there is any arguable question of fact or law; if there is an arguable evidentiary basis for an allegation the...
A pleading which advances a bald conclusion of law (for example, that offers or invitations were made to the public) without pleading the material facts giving rise to that...
Issues before the court
Whether paragraph 18K of the Fourth Amended Statement of Claim adequately pleads a right to a declaration or relief under s 87 of the Trade...
Whether paragraphs 24-32 of the Fourth Amended Statement of Claim, alleging that Lloyd's offered or invited the public (including the defendant) to...
Whether paragraphs 33-41, which allege offers or invitations to the public during a period when the defendant was already a member, are adequately...
Plain English Summary
Mandie J heard Lloyd's application to strike parts of the defendant's Fourth Amended Statement of Claim. The judge struck out a paragraph seeking relief for future loss because it only alleged a mere 'potential' contingent on another party's failure to pay, which does not meet the statutory threshold of a "real chance" of loss. The court refused to strike out a block of allegations that Lloyd's had made offers to the public because there was other evidence creating an arguable factual issue. Another block of allegations, which was a bare assertion of public offers without factual particulars, was struck out but the defendant was given leave to replead. The court also gave directions to bring the third party proceeding to trial alongside the main action and fixed a trial date in March 2004.
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Deep Dive
1,889 words · generated 09/07/2026
What happened
How the court should manage interlocutory case management and scheduling given delays, overlapping third party proceedings, and the parties'...
Cited legislation
10 cited instruments linked from this judgment.
This is an interlocutory judgment of Mandie J in proceedings commenced by the Commonwealth Bank against Peter Everett White, with the Society of Lloyd's joined as a third party. The defendant (White) filed a Fourth Amended Statement of Claim which alleged misleading and deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) and s 11 of the Fair Trading Act 1985 (Vic), and also made allegations that Lloyd's had offered or invited the public in Victoria to subscribe for underwriting membership of Lloyd's syndicates, with asserted contraventions of historic companies legislation (paras 8, 21-24).
Lloyd's applied, by summons dated 25 March 2003, for interlocutory relief including a stay (addressed in an earlier judgment, No. 7) and, in the present hearing, to strike out parts of the Fourth Amended Statement of Claim (paras 2, 5). The strike-out application sought deletion of paragraph 18K (a claim seeking relief for prospective loss) and paragraphs 24-41 (alleging offers or invitations to the public and breaches of companies legislation) (paras 5, 8).
Mandie J considered affidavit material filed by Lloyd's (notably the affidavit of Caroline Mayne sworn 9 September 2003) which deposed that Lloyd's itself did not make offers or invitations and that members' agents arranged Names' membership (para 21). The defendant produced other material, summarised in his outline and Annexure B, drawn from an earlier affidavit of his solicitor, which the judge found raised arguable factual issues about whether Lloyd's itself made offers or invitations to the public (paras 24-25).
The court struck out paragraph 18K (and effectively the related prayer for indemnity for future underwriting losses) because the pleading alleged only a 'potential' future liability contingent on Equitas being unable to meet liabilities, which fell short of alleging a "real chance" or real possibility of loss required to make out likely future loss under s 87 TPA (paras 11, 15-18). The court refused to strike out paragraphs 24-32, but struck out paragraphs 33-41 on the ground that they were bald conclusions alleging public offers without material particulars, and granted leave to replead within a short time (paras 24-29). Finally the judge ordered directions to bring the third party proceeding to readiness for trial alongside the principal trial and fixed a trial date in the first week of March 2004, refusing Lloyd's request to defer delivery of a defence (paras 30-36).
Why the court decided this way
Three core legal principles guided the decision.
Statutory threshold for prospective relief under s 87 (and equivalent state provision). Mandie J applied the established statement that to say a person is "likely to suffer loss or damage" it is sufficient to show a real chance or real possibility of loss. The pleaded language in paragraph 18K, expressing only a 'potential' liability contingent on Equitas being unable to meet future liabilities, did not amount to an allegation of a real chance (paras 11, 18). Because the statutory relief under s 87 requires that likelihood threshold, an allegation of mere contingent potential was inadequate, and paragraph 18K was therefore struck out.
Test for strike-out on summary interlocutory application. The court emphasised that a strike-out application succeeds only if there is no arguable question of fact or law. Mandie J accepted that if Ms Mayne's affidavit stood alone it might have supported strike-out, but the defendant had put before the court additional material (Annexure B and parts of his solicitor's affidavit) that raised arguable evidentiary questions whether Lloyd's itself made offers or invitations to the public. Where there is an arguable evidentiary basis, summary determination is inappropriate and the pleading must be left for trial (paras 24-25).
Pleading requirements. For paragraphs 33-41 the pleading was found to be a bald assertion that offers or invitations were made to the public during a period when the defendant was already a member; the particulars referred to did not, on present material, relate to public offers. The court applied the principle that pleadings must include material facts and not merely conclusions; inadequately particularised allegations can be struck out but repleading may be permitted to correct defects (para 27).
The balance of competing prejudices and pragmatic considerations dictated case management directions. The plaintiff (the Bank) had pressing reasons for an early trial, including elderly witnesses. Lloyd's complained that it faced a new and substantial case mirroring important English litigation and that it required time to prepare; there was also an outstanding application for leave to appeal. Weighing these factors, Mandie J decided not to relieve Lloyd's from delivering a defence and instead fixed a trial date and directed that the third party proceeding be prepared to proceed with the principal trial (paras 30-36).
Before and after state of the law
Before this judgment the legal principles applied in striking out pleadings and interpreting 'likely to suffer loss' under s 87 were well established. This judgment applies and restates those principles rather than creating new law.
The 'real chance' or 'real possibility' formulation for likelihood of future loss under s 87 TPA is restated and applied to pleadings seeking prospective statutory relief (paras 11, 18).
The standard for summary striking out, that the defendant must show there are no arguable questions of fact or law, is enforced; the court will not resolve factual disputes on interlocutory application where supporting evidence raises arguable issues (para 24).
The requirement that pleadings must adduce material facts supporting a cause of action, and that bare conclusions are insufficient, is applied to historical allegations of offers to the public (paras 27-29).
After this judgment the practical effect is that pleadings seeking relief for future loss under s 87 must plead more than contingent possibilities; they must allege facts that demonstrate a real chance of future loss. Also, litigants seeking strike-out must be prepared to address other evidentiary material that could create arguable questions of fact; conversely, claimants must particularise allegations of public offers with supporting facts or documents to survive a strike-out challenge on pleading grounds.
Key passages with plain-English translation
Para 11 (quoted pleading): "Although Equitas has reinsured all 1992 and prior years of account, there remains the potential that Names may still be liable if, for example, Equitas is unable to meet future liabilities." Translation: The pleading says there might be a future problem if another party fails to pay. The court treats that as a mere 'maybe', which is not enough to say the claimant is likely to suffer future loss for the purposes of statutory relief (paras 11, 18).
Para 24: "What Lloyd's has to show on a summary application is that there are no arguable questions of fact in relation to this allegation." Translation: If the defendant wants the court to throw out a claim at an early stage, it must show the claimant has no real argument left to make on the facts; if any reasonable factual dispute remains, the court cannot decide it now.
Para 27: "I do not think that paragraph 34 properly pleads the necessary material facts to support what is in reality a conclusion that offers or invitations were made to the public." Translation: You cannot simply assert 'we offered this to the public' without saying what was offered, when and how; a court will strike that out because it is a bare legal conclusion without supporting facts.
Paras 30-33: The judge balances competing practical pressures: the bank's need to avoid delay and the third party's burden in meeting a new, complex pleading. Translation: The court must manage the timetable so the trial can proceed fairly; it will not allow a party to delay indefinitely simply because a new and complex pleading requires extra work.
What fact patterns trigger this precedent
A plaintiff seeks prospective relief under s 87 TPA (or equivalent state provision) based only on a remote contingency (for example, 'we might be liable if third party X becomes insolvent'); this judgment indicates such pleading is likely to be struck out unless there is factual material showing a real chance of that contingency occurring (paras 11, 18).
A third party applies to strike out allegations that another entity made offers or invitations to the public, when the applicant relies on an affidavit denying involvement; where the claimant has disclosed factual material that could support the allegation (documents, agent conduct), the court will not resolve the dispute summarily (paras 21-25).
A claimant pleads that offers were made 'to the public' but supplies no particulars or documents identifying the offers; the court will treat this as a bald conclusion and strike out the pleading unless repleaded with material facts (para 27).
How later courts have treated it
This judgment is an application of well-established interlocutory and pleading principles rather than a landmark statement of new doctrine. It demonstrates the court's careful application of the 'real chance' test for prospective statutory relief and the strictness in requiring factual particulars for public-offer allegations. Later courts would treat these passages as confirming existing standards for pleading and strike-out applications: (1) do not plead mere potentialities as a basis for relief under s 87; (2) do not expect strike-out where there are arguable factual issues; and (3) particularise allegations of offers to the public. The judgment also illustrates pragmatic case management considerations that courts will weigh when interlocutory disputes cause delay (paras 30-36).
Still-open questions
What precise level of factual pleading suffices to transform a 'potential' future contingency into a 'real chance' of loss under s 87? Mandie J determined that the pleading before the court failed, but did not elaborate a granular checklist of facts that would suffice. The boundary between sufficient and insufficient factual anticipation of future loss remains a contextual question for trial judges to resolve in future cases (paras 11, 18).
The factual test for whether an offer is made 'to the public' remains intensely fact-specific. Mandie J referred to the High Court decision in Corporate Affairs Commission v Australian Central Credit Union as a guide, but emphasised it is not a rule of law; future cases will continue to develop the line between offers to members or sections and offers to the public generally (para 27).
The interaction between English proceedings (the 'Laws' proceeding) and local Australian litigation raises procedural and evidentiary issues about reliance on foreign parallel litigation in pleadings and disclosure. Mandie J noted the practical difficulty for Lloyd's but did not resolve how overlap with foreign proceedings should weigh in interlocutory relief or time to prepare (para 30).
Case management outcomes balancing the prejudice to plaintiffs with elderly witnesses against the burden to third parties defending new pleaded cases will continue to require judicial discretion. The judgment shows how the court may order parallel readiness for trial, but the factors and thresholds for severance or trial timetable adjustments in similar multi-party, cross-jurisdictional matters will remain fact-specific (paras 30-36).
Conclusion: Mandie J applied established pleading and strike-out principles, striking out allegations that were conclusory or insufficiently particularised and preserving those with an arguable evidentiary foundation, while exercising case management powers to fix a trial date and require concurrent readiness. The judgment is a useful exposition of how courts treat allegations of prospective loss, summary strike-out tests, and pleading sufficiency in complex multiparty litigation (paras 11, 24-29, 30-36).
PRACTICE AND PROCEDURE - Application to strike out part of Statement of Claim in third party proceeding
[3]
In Commonwealth Bank of Australia v White (No.7)[2003] VSC 344, I dealt with that part of the third party ("Lloyd's") application by summons dated 25 March 2003 which sought a stay of the Third Party Proceeding. The background to this proceeding is set out in that judgment. The Court has now heard the other part of Lloyd's summons, which in paragraph 2(a) and (b) seeks that certain parts of the defendant's Fourth Amended Statement of Claim against the third party be struck out, alternatively that judgment be entered for the third party in respect thereof.
[4]
In relation to paragraph 2(a) of the summons, the third party pursued only a limited application to strike out paragraph 18K of the Fourth Amended Statement of Claim. Paragraph 2(b) sought to strike out paragraphs 24 - 41 of the Fourth Amended Statement of Claim.
[5]
The argument in relation to paragraph 18K of the Fourth Amended Statement of Claim can be dealt with briefly. The pleading alleges in paragraphs 1 - 18 causes of action in misleading and deceptive conduct contrary to s.52 of the Trade Practices Act 1974 (Cth) and s.11 of the Fair Trading Act 1985 (Vic). The damage which is alleged to flow from such misleading and deceptive conduct is set out in paragraphs 18A - 19 but, as Counsel for the defendant explained, paragraph 18K is concerned not with a claim for damages but with a claim for a declaration in relation to future loss.
[6]
Paragraph 18K alleges that, in relation to a matter (in respect of which it is unnecessary to set out the factual background):
[7]
"Although Equitas has reinsured all 1992 and prior years of account, there remains the potential that Names may still be liable if, for example, Equitas is unable to meet future liabilities."
[8]
The defendant then goes on to allege that he may suffer further loss and damage as a result and in paragraph A(d) of the Prayer for Relief, seeks an order pursuant to s.87 of the Trade Practices Act or s.41 of the Fair Trading Act that "Lloyd's indemnify the defendant for any underwriting losses he may hereafter be liable to pay in respect of his underwriting at Lloyds during the period 1981 - 1992".
[9]
Lloyd's submission was simply that an allegation that there was a "potential that Names may still be liable if...Equitas is unable to meet future liabilities" was not an allegation sufficient to raise an issue under s.87 of the Trade Practices Act (or s.41 of the Fair Trading Act) that the defendant was "likely to suffer loss or damage" within the meaning of those statutory provisions. It was common ground, on the authorities, that to establish that a person was likely to suffer loss and damage, it was sufficient to prove a real chance or a real possibility that the person might suffer loss and damage. I accept Lloyd's submission that the allegation that there is a "potential...if...Equitas is unable to meet future liabilities" is not an allegation of a real chance or real possibility of the defendant suffering loss and damage. Accordingly, paragraph 18K (and, I think, paragraph A(d) of the Prayer for Relief) should be struck out.
[10]
Turning to the other part of Lloyd's application seeking to strike out paragraphs 24 - 41 of the Fourth Amended Statement of Claim, Lloyd's relied on an affidavit of Caroline Margaret Mayne sworn 9 September 2003. Ms Mayne is an English barrister employed by Lloyd's as the head of the litigation team of its Legal Services Department and is familiar with the practices and procedures of Lloyd's. Her affidavit in essence deposes that it has not at any relevant time been Lloyd's, but rather members' agents who organise the membership of Names in insurance syndicates of their choice and that "Lloyd's itself did not make any recommendations as to which syndicates should be joined and had no role in placing Names on any syndicates". This evidence was directed to the allegations in the Fourth Amended Statement of Claim that Lloyd's offered to the public in Victoria (including the defendant) or invited the public in Victoria (including the defendant) to subscribe for or purchase membership in Lloyd's underwriting syndicates. This allegation is contained in paragraph 25 of the Fourth Amended Statement of Claim where it is alleged in relation to the initial offer or invitation to the defendant in or about 1980 and wherein it is further alleged that the offer or invitation was in breach of the "interest" provisions of the Companies Act 1961 (Vic). The allegation is further contained in paragraph 34 of the Fourth Amended Statement of Claim wherein it is alleged in relation to a period from 1982 to 1990 that Lloyd's offered to the public (including the defendant) or invited the public (including the defendant) to subscribe for or purchase underwriting membership of Lloyd's syndicates and wherein it is further alleged that the offer or invitation was in breach of the "prescribed interest" provisions of the Companies (Victoria) Code.
[11]
Looking first at paragraph 25, it is a question of fact whether Lloyd's made offers or invitations to the public as therein alleged. What Lloyd's has to show on a summary application is that there are no arguable questions of fact in relation to this allegation. If Ms Mayne's affidavit stood alone, that would perhaps be the case. But I am persuaded that there is other evidence before the Court which does not enable the Court to determine this matter on a summary application. The evidence is summarised in paragraphs 17 - 19 of the defendant's outline of submissions, together with Annexure B to that outline. Annexure B provides a convenient set of extracts from material contained in or exhibited to an affidavit of the defendant's solicitor, Alan James Foster, sworn 5 March 1999. I am not satisfied that there is no arguable evidentiary basis for the allegation either that Lloyd's was making relevant offers or invitations, or that those offers or invitations were made to the public. Accordingly, no parts of paragraphs 24 - 32 of the Fourth Amended Statement of Claim should be struck out on the basis of this argument.
[12]
However, Lloyd's submissions in relation to paragraphs 33 - 41 of the Fourth Amended Statement of Claim yield a different result, in my view. Paragraph 34 of the Fourth Amended Statement of Claim refers to alleged offers or invitations to the public made at a time when the defendant was already a member of Lloyd's. The pleading does not identify what those offers or invitations were, save that there is a reference under the heading "Particulars" to the "several particulars sub-joined to paragraph 15 hereof". When one turns to the particulars to paragraph 15, there are references to a number of documents, none of which appear to relate to invitations or offers to the public in so far as it is possible to understand exactly what these particulars are referring to. Senior Counsel for Lloyd's referred to Corporate Affairs Commission v Australian Central Credit Union[1985] HCA 64; (1985) 157 CLR 201, in which it was held that there was no offer to the public or a section of the public where an offer was made to the members of a group and a number of other criteria were satisfied. Clearly enough, this is not a rule of law, but a question of fact and dependent upon all the circumstances of the case. However, as the defendant's pleading is presently constituted, there is a bald assertion of an offer or invitation to the public which does not appear to be supported by the kind of documents which are referred to in the particulars to paragraph 15. I tend to the view that the allegation about an invitation or offer to the public in paragraph 34 is, on the present material, unsustainable, but, in any event, I do not think that paragraph 34 properly pleads the necessary material facts to support what is in reality a conclusion that offers or invitations were made to the public. Alternatively, the particulars either vitiate the paragraph or are inadequate. I think that the appropriate solution is to strike out paragraphs 33 - 41 of the Fourth Amended Statement of Claim and give the defendant leave to replead if he so wishes. That should be done within a short period of time, given the number of previous versions of this pleading and the lengthy delays in this proceeding.
[13]
The proceeding is also before the Court for the purpose of directions. I am faced with a dilemma. The plaintiff wants a trial date fixed for early next year. The plaintiff is entitled to complain of the long delays in this proceeding which have been caused by the interlocutory warfare between defendant and third party. The plaintiff has been ready to proceed to trial for a long time, and its case is not unduly complicated or lengthy. An affidavit of Cullen Ross Thomson sworn 19 September 2003 deposes that there are number of witnesses for the plaintiff bank who are now quite elderly and some in poor health. Notwithstanding the rejection by Byrne J of the plaintiff's application to sever the third party proceeding, the time may yet arrive when this cannot be avoided in order to protect the plaintiff from being denied a fair trial simply due to the passage of time. On the other hand, there is strength in Lloyd's emphatic complaint that it faces a new case in the Fourth Amended Statement of Claim which requires substantial time and effort to prepare and which mirrors an important proceeding in England (the Laws proceeding - which was referred to in my previous judgment). In addition, there is the application for leave to appeal from the order of Warren J which, it is hoped, may be heard by the Court of Appeal later this year. Then, there is the plea of the defendant that it be protected from the risk of going to trial against the plaintiff without the possibility of immediate recovery over against the third party, should the plaintiff be successful.
[14]
Taking into account the foregoing circumstances, I am, on balance, unable to accede to Lloyd's request that it not be required to deliver a defence at this stage. I think that directions should be given with the aim of having the third party proceeding ready for trial at the same time as the principal proceeding between the plaintiff and defendant. I think that a trial date should be fixed in the first week of March 2004 and directions given to bring the third party proceeding to a state of readiness for that date.
[15]
I will hear Counsel on the question of the precise directions required to meet the above plan of procedure.
Parties
Applicant/Plaintiff:
Commonwealth Bank of Australia
Respondent/Defendant:
White
Legislation Cited (10)
Practices Act 1974
Trading Act 1985
Practices Act 1974
Trading Act 1985
Practices Act 1974
Trading Act 1985
Practices Act 1974
Trading Act 1985
Practices Act 1974
Trading Act 1985
Cases Cited (1)
(1985) 157 CLR 201
AI Analysis
Outcomemixed
Disposition:
The Court struck out paragraph 18K of the Fourth Amended Statement of Claim (and consequential Prayer A(d) insofar as it depends on that pleading) for failing to plead a real chance of future loss; the Court refused to strike out paragraphs 24-32, finding there was an arguable evidentiary basis for those allegations; the Court struck out paragraphs 33-41 for inadequate pleading but granted leave to replead within a short period; the Court directed that the third party proceeding be brought to readiness for trial to coincide with the principal trial and fixed a trial date in the first week of March 2004, with further directions to be settled (paras 11, 18, 24-29, 33-36).