plaintiff. 1. Grant the plaintiffs leave to file the amended statement of claim in the form served on 12 August 2019, noting the further particulars provided in submissions in relation to paragraphs 19-20 of...
Key principles
Leave to amend a statement of claim should be granted unless the proposed amendment discloses no reasonable cause of action or is hopeless or manifestly groundless; here the...
It was not a necessary pre-condition to plead an action for moneys had and received that the defendant must have been the immediate, direct recipient of the plaintiff's funds; a...
The court will not impose a condition preventing a plaintiff from adducing further evidence in chief simply because the amended pleading changes the case, absent clear prejudice...
Costs consequences for the amendment: plaintiff granted leave to re-plead but ordered to pay the defendants' costs thrown away by the amendment; otherwise costs of the pleadings...
Issues before the court
Whether leave should be granted to amend to plead claims in moneys had and received against a defendant who was not alleged to have been the...
Plain English Summary
Ward CJ granted the plaintiffs leave to file an amended statement of claim which included alternative moneys had and received allegations against defendants who were not alleged to have been the immediate recipients of the transfers. The Court held that it would be premature to refuse leave because the plaintiff's restitutionary and tracing arguments were arguable and the pleading, with the provided particulars, adequately put the defendants on notice. The Court refused the defendants' request to prevent the plaintiffs from adducing further evidence in chief, and ordered the plaintiffs to pay the defendants' costs wasted by the amendment, while leaving the remaining costs in the cause.
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Deep Dive
1,837 words · generated 29/06/2026
What happened
This is an interlocutory ruling about leave to amend pleadings in equity proceedings. The plaintiffs (two individuals, with others as corporate plaintiffs in the substantive proceedings) served a proposed amended statement of claim on 12 August 2019 that pleaded, in the alternative, causes of action in moneys had and received against several defendants, including the second defendant, Mr Evans, who (the defendants said) had not been the immediate recipient of the transfers alleged by the plaintiffs. The defendants opposed parts of the proposed amendment (principally paragraphs 19–25 of the amendment) on the basis that a claim in moneys had and received is only maintainable against the person who actually received the money, and that the plaintiffs' own admission (via a notice to admit facts) established that the second defendant had not received funds.
Whether a condition should be imposed on leave to amend preventing the plaintiffs from adducing further evidence in chief to support the amended...
What costs orders are appropriate following the grant of leave to amend and interlocutory dispute over pleadings.
Cited legislation
3 cited instruments linked from this judgment.
At an interlocutory hearing (the hearing occurred 19 August 2019; reasons delivered 3 September 2019), Ward CJ reviewed the earlier procedural history (including a prior decision made on 11 July 2019 in which earlier pleading material was struck out and a regime set for proposed amendments), the proposed amended pleading, the defendants' objections and proposed conditions (notably a proposed condition that the plaintiffs not be permitted to rely upon any further evidence in chief), and the plaintiffs' submissions, which relied on restitutionary principles and tracing to support a moneys had and received claim against a non-immediate recipient.
The judge granted leave to file the amended statement of claim (subject to noting the further particulars provided), refused to impose the defendants' proposed restriction on further evidence, and ordered that the plaintiffs pay the defendants' costs thrown away by the amendment; otherwise costs of the pleadings argument were to be costs in the cause. The judge emphasised the court's case-management obligations and reluctance to stifle arguable claims at an interlocutory pleading stage.
Why the court decided this way
The Court's decision hinges on three related themes:
The applicable standard for refusing leave to amend: the Court applied established authorities that leave to amend should be refused where an amendment would be liable to be struck out as embarrassing, frivolous, vexatious, hopeless or manifestly groundless, and that the plaintiff's pleaded case must be taken at its highest at the pleading stage (see the Court's discussion invoking Horton v Jones (No 2), McGuirk, General Steel Industries and Dey for the high threshold of summary dismissal). The Court observed the “high test” in the summary dismissal context and was reluctant to find the proposed pleading so untenable as to warrant refusal at this stage (Determination paras where these principles are cited).
The legal character of an action in moneys had and received: Ward CJ declined to treat as decisive the proposition that a moneys had and received claim is strictly limited to cases of immediate receipt by the defendant. The judge accepted that restitutionary principles and the remedy of tracing can in some circumstances support recovery against a defendant who was not the immediate recipient if, for example, funds were paid at the defendant's direction, placed at his disposal, or received by a company he controlled. The Court therefore found it arguable that the pleaded alternative claims could be supported once the factual matrix (discoverable evidence, tracing possibilities) was developed.
Case management and prejudice: while acknowledging delay and inconvenience caused by repeated pleading skirmishes, the Court balanced prejudice. The defendants argued prejudice from allowing the plaintiffs to adduce further evidence after evidence was served and after forensic decisions had been made; Ward CJ found that the defendants had not shown sufficient prejudice to justify imposing a condition preventing further evidence in chief. The Court emphasised the overriding obligations under ss 56–58 of the Civil Procedure Act to achieve just, quick and cheap resolution, and applied Aon to the balance-of-prejudice analysis, concluding the interests of justice favoured permitting the amendment and the adducing of evidence.
The result was that leave to amend was granted, the defendants' requested evidentiary restriction was refused, and a costs order reflecting some wasted costs was made against the plaintiffs.
Before and after state of the law
Before: The case law prior to this decision establishes that leave to amend is a discretionary exercise and that an amendment should be refused where it would be struck out as embarrassing, futile or hopeless; that a plaintiff's case should be taken at its highest; and that the court must manage proceedings to avoid undue delay and cost. Authorities cited in the judgment include Horton v Jones (No 2), General Steel, Dey, McGuirk and the High Court plurality decision in Aon with respect to balancing case-management concerns.
After: Ward CJ's ruling does not change legal doctrine but clarifies its application in the pleading context. The decision stands for three practical propositions:
At pleading stage, a moneys had and received claim against a defendant who is not the immediate recipient will not necessarily be struck out. Restitutionary principles (unjust enrichment) and tracing can render such claims arguable. The Court must not treat earlier obiter remarks as binding dicta that foreclose such claims at the pleading stage.
Pleading sufficiency is evaluated against the backdrop that further particulars and discovery can reveal essential facts; if the pleaded particulars (and any supplementary particulars) sufficiently inform the defendants of the substance of the claim, leave will normally be granted unless the claim is hopeless.
Courts will be cautious about imposing conditions that bar further evidentiary material where the interests of justice and case resolution favour allowing the party to adduce necessary evidence to support the newly pleaded case.
Practically, the judgment endorses a permissive approach to amendments that raise arguable restitutionary or tracing-based claims, provided the pleading is not fundamentally defective.
Key passages with plain-English translation
"I can only express (again) my concern at the proliferation ... of interlocutory applications ..." (Opening para 3).
Plain English: The judge was critical of both sides for repeatedly litigating technical pleading points, causing delay and cost, and emphasised the court's expectation that parties focus on resolving the real issues efficiently.
"I am not prepared to dismiss out of hand ... a claim that the second defendant has 'received' funds ... by reason of those funds having being placed at his disposal (or transferred to a company which he controls) or as having been paid at his instruction or direction ..." (Determination).
Plain English: The Court will allow a claim to proceed at least as arguable where the plaintiff pleads that the defendant effectively had control or benefited from funds even if the funds passed first into another entity's bank account; such scenarios may engage restitution/tracing and cannot be dismissed on pleading alone.
"I do not consider it appropriate for there to be a condition ... that no further evidence in chief be permitted ..." (Determination on the defendants' proposed condition).
Plain English: The Court will not prevent the plaintiffs from bringing fresh primary evidence just because their pleading has changed. The defendants did not show such significant prejudice that the plaintiffs should be barred from presenting necessary evidence.
Costs order: plaintiffs to pay costs thrown away by the amendment; other costs are in the cause.
Plain English: The plaintiffs win the right to amend, but because the amendment caused wasted work by defendants, the plaintiffs must pay those wasted costs; otherwise costs will wait until the end.
What fact patterns trigger this precedent
This decision is particularly relevant where:
A plaintiff alleges funds were paid into bank accounts not in the personal name of a defendant, but claims the defendant controlled the account, instructed the payment, or otherwise enjoyed the benefit (for example, funds paid into a corporate account controlled by an individual defendant).
Plaintiffs propose restitutionary claims (moneys had and received) or propose tracing against defendants not alleged to have been the immediate recipient.
There has been a prior interlocutory history directing precise pleadings, and defendants seek to resist repleading on technical grounds, or to limit evidence after amendment.
Defendants seek to impose curtailing conditions (e.g., banning further evidence) following late repleading.
In those scenarios, the decision provides authority for a court to allow amendments that advance arguable restitution or tracing theories, while reserving direct challenges on merits for later stages when evidence can be tested.
How later courts have treated it
As this is a 2019 NSW Supreme Court interlocutory ruling, it operates as persuasive authority on amendment and restitution pleading points in NSW. It applies established principles (Aon, summary dismissal authorities) rather than breaking new doctrinal ground. Later courts facing similar factual permutations would likely refer to Ward CJ’s articulation that direct receipt is not invariably fatal to moneys had and received claims at the pleading stage and that the court should weigh prejudice before imposing evidentiary limits. Practitioners should expect other trial judges to follow the balancing approach emphasised here: protect case-management imperatives but not to shut out arguable causes of action at the pleading stage.
(When this decision is invoked, courts will still apply the settled tests: plead the best case, pleading must give defendants fair notice, and amendments that are hopeless may still be refused.)
Still-open questions
The precise boundary between an arguable restitution-based moneys had and received claim against a non-immediate recipient and a claim that is too speculative remains unresolved. Ward CJ accepted the possibility of such claims being arguable, but did not delineate the concrete factual matrix that must be pleaded to sustain such a cause of action at trial.
The judgment leaves open the required particularity for pleading the 'how' and 'why' of benefit: Ward CJ noted that particulars could be sought and that discovery might reveal necessary facts. It is therefore uncertain how detailed the pleaded factual narrative must be at the outset to survive a more focused strike-out application, particularly where the defendant can point to admissions (such as a notice to admit facts) that appear inconsistent with the amended claim.
The interaction between tracing remedies and the action for moneys had and received in cases where funds pass through intermediary accounts controlled by different corporate vehicles remains fact-dependent. Ward CJ accepted tracing as a potential basis for the claim but did not decide tracing issues. That remains for a trial or a dedicated summary ruling on tracing.
Finally, while the Court rejected the defendants' request to bar further evidence in chief, there is a live question as to when, and on what grounds, a court should impose such constraints to protect defendants from unfair surprise and prejudice due to late changes in pleaded claims, Ward CJ set a high bar for that condition, but future contours depend on case-specific prejudice assessments.
In short, the judgment is a useful, pragmatic template for pleading and amendment disputes involving restitution/tracing allegations: it encourages a permissive approach to arguable amendments, insists on reasonable particulars, and reinforces measured case-management balancing under ss 56–58 of the Civil Procedure Act.
Catchwords
[2009] HCA 27[2017] VSCA 11
Caason Investments Pty Ltd v Cao (2015) 236 FCR 322[2009] FCA 320
Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552
Judgment (14 paragraphs)
[1]
Defendant)
International Pacific Group 1992 Pty Ltd (Fifth Defendant)
Representation: Counsel:
J Afshar (Plaintiffs)
J Lee (First to Fourth Defendants)
[2]
Solicitors:
MistryFallahi Lawyers and Business Advisors (Plaintiffs)
Re Zhou Lawyers (First to Fourth Defendants)
File Number(s): 2018/00246696
Publication restriction: Nil
[3]
Judgment
HER HONOUR: On 19 June 2019, I heard an application, by notice of motion filed on 17 May 2019 by the first to fourth defendants in these proceedings (collectively, the applicants), seeking to strike out certain paragraphs of the plaintiffs' statement of claim filed on 26 April 2019. That application was brought pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). It was the second such application that had been brought by the applicants. For the reasons that I published on 11 July 2019 (Di Palma v Chimmalee [2019] NSWSC 864), I made orders striking out the impugned paragraphs and put in place a regime whereby the plaintiffs were to serve any proposed amended statement of claim on the defendants within 21 days; the defendants were to notify the plaintiffs in writing within 14 days thereafter if there was any reasoned objection to the grant of leave to file the proposed amended statement of claim, stating with particularity the basis of that objection; and, if there was an objection to the filing of the proposed amended statement of claim, for the parties to prepared brief written submissions on the objection(s) raised by the defendants, with a view to there being a determination on the papers as to whether such leave should be granted.
The plaintiffs served their proposed amended statement of claim on the defendants on 12 August 2019. Perhaps not surprisingly, given the history to date of pleading complaints on the part of the defendants and unwillingness or inability on the part of the plaintiffs to deal with those complaints in a manner satisfactory to the defendants, there was opposition by the defendants (albeit only in part) to the filing of the proposed amended statement of claim. Further, the defendants made submissions as to the imposition of a condition on any grant of leave to re-plead (to the effect that the plaintiffs not be permitted to rely upon any further evidence in chief).
I summarise below the position of the parties on the two questions now raised in relation to the filing of the proposed amended statement of claim. At the outset, however, I can only express (again) my concern at the proliferation (coupled with the inevitable incurring of delay and costs) of interlocutory applications on what are now (though I accept not at first) quite technical pleading issues in this matter, in circumstances where the proper focus of the parties should be on the just, quick and cheap resolution of the real issues in dispute. Both sides, in my opinion, bear a portion of the blame for this.
I have set out the background to the underlying dispute between the parties in my earlier reasons and do not here repeat it. Relevantly, the defendants' complaint as to the previous iteration of the plaintiffs' pleading focussed on the failure of the plaintiffs to differentiate between the respective defendants and deficiency in the articulation of the basis on which the plaintiffs' claims were brought against each of the defendants.
[4]
Proposed Amended Statement of Claim
The defendants' objection to the latest iteration of the proposed amended statement of claim now centres on [19]-[25] insofar as the plaintiffs are there seeking to bring claims for moneys had and received against defendants (in particular, the second defendant) not pleaded actually to have received the relevant moneys. The defendants submit that leave should be refused in relation to those paragraphs on the basis that the pleaded claims are untenable at law.
The impugned paragraphs of the proposed amended pleading are as follows:
Monies had and received: paid by the first and second plaintiffs and received by the second defendants
19. Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant's benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.
Monies had and received by the third plaintiff and received by the first and second defendants
20. Alternatively to paragraphs [14] to [18] above, the third plaintiff paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 2 which monies were had and received by the first and second defendants for their benefit, alternatively for first defendant's benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the third plaintiff.
Monies had and received: paid by the first and second plaintiffs and received by the third defendant
21. Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant's benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.
Monies had and received: paid by the first and second plaintiffs and received by the fourth defendant
22. Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant's benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.
Monies had and received: paid by the third plaintiff and received by the fourth defendant
23. Alternatively to paragraphs [14] to [18] above, the third plaintiff paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 2 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant's benefit, and the first and second defendants, alternatively the first defendant, are liable to refund such monies to the third plaintiff.
Monies had and received: paid by the first and second plaintiffs and received by the fifth defendant
24. Alternatively to paragraphs [9] to [13] above, the first and second plaintiffs paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 1 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant's benefit, and for the first and second defendants, alternatively the first defendant, are liable to refund such monies to the plaintiffs.
Monies had and received: paid by the third plaintiffs and received by the fifth defendant
25. Alternatively to paragraphs [14] to [18] above, the third plaintiff paid sums of money in Australian dollars into bank accounts nominated by the first and second defendants, alternatively the first defendant, on the dates and in the amounts reflected in Schedule 2 which monies were had and received by the first and second defendants for their benefit, alternatively for the first defendant's benefit, and for the first and second defendants, alternatively the first defendant, are liable to refund such monies to the third plaintiff.
[5]
Defendants' submissions as to pleading
The defendants say that their objections to [19]-[25] should be upheld for the following reasons.
First, that in the earlier judgment it has already been determined that a pleading of moneys had and received which claims moneys against a defendant who did not actually receive those moneys is liable to be struck out (referring to what I said at [114] - see below).
Second, that, as a matter of principle, an action for moneys had and received is only maintainable against the defendant who is pleaded to have actually received the monies (referring to Juul v Northey [2010] NSWCA 211 at [216] where it was said that the cause of action for money had and received is applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff). It is said that a plaintiff is not entitled to judgment against a defendant for moneys had and received unless it can be demonstrated that the relevant defendant received the plaintiff's legal property (citing Russell Gould Pty Ltd v Ramangkura (2014) 87 NSWLR 552; [2014] NSWCA 310 (Russell Gould) at [28]). Complaint is further made that there are no pleaded allegations, or material facts, in the proposed amended statement of claim which would enliven the application of the principles in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 572 (referring also to Russell Gould at [29]). Accordingly, it is submitted that the only claims for moneys had and received which can be maintained are those brought against the defendants who actually received moneys transferred by the plaintiffs (and, in particular, not the second defendant).
Third, that, even if, contrary to the defendants' submission, an action for moneys had and received can be maintained against a person or entity who did not (actually) receive the funds, there is an absence of material facts in the pleading as to why and how all of the payments made to all defendants were made for the benefit of the first and second defendants and/or were received by those parties (and it is submitted that, in the absence of those material facts in relation to each transaction, no leave should be granted to rely upon those paragraphs).
[6]
Plaintiffs' submissions as to pleading
The plaintiffs cavil with the proposition that any determination was made in the earlier judgment of the kind now suggested by the defendants. Rather, it is submitted that the observation (at [114]) was in the nature of obiter dicta, i.e., that, if such a claim were to be brought, it would be "incumbent on the plaintiffs to identify with precision what funds are said to have been received to the use of each defendant or converted by each defendant". The plaintiffs submit that the proposed amended statement of claim does precisely that.
As to the second argument relied upon by the defendants (namely, that, "as a matter of principle", an action for moneys had and received is only maintainable against the defendant who is pleaded to have actually received the money), the plaintiffs argue that a claim for moneys had and received (which the plaintiffs say is one "within which the principles of unjust enrichment operate", referring there to Equuscorp v Haxton (2012) 246 CLR 498 (Equuscorp v Haxton) at 516 per French CJ, Crennan and Kiefel JJ), is available in circumstances where a defendant has not directly received the relevant moneys but has benefited from compliance by the plaintiff with the defendant's request or instruction to pay moneys to third parties. It is submitted (by reference to the discussion in Mason & Carter's Restitution Law in Australia, 3rd edn (2016) at [154]; [155]) that in those circumstances the law will impose an "obligation of protection" on the defendant to compensate or indemnify the plaintiff for the consequences of taking the requested action.
It is submitted that in circumstances where (as here) it is claimed that moneys were paid into accounts nominated by the first and second defendants and at their direction or on their request (see [9]-[11] of the proposed amended statement of claim), the relevant "benefit" is the plaintiffs' compliance with the direction (which has been pleaded at [11] and [19]-[25]) and it is submitted that no more needs to be pleaded.
Reliance is placed on Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221, where Byrne J stated at 258:
[W]here a person requests another to do something, it is not unreasonable for the law to conclude that the former sees some benefit in its performance, however wrong this view may be on an objective basis and for the law to act upon the perception of the recipient
a statement adopted by Murray J (with whom Templemann J and Einfeld AJ agreed) in ABB Power Generation Ltd v Chapple [2001] WASCA 412 (at [9]-[24]).
[7]
Determination
At the outset, I should make clear that I made no determination at [114] of my earlier reasons as to the particular issue now raised in relation to the adequacy of the proposed pleading (i.e., as to whether, in order to plead a claim for moneys had and received, it is necessary that there be an actual receipt of funds into the hands or to the account of a particular defendant). What I said, at [114], in the context of consideration of the complaints that had been made as to [30]-[31] of the existing pleading, was that:
The admission as to [12] of the Points of Claim goes to the allegation that "at least initially" the Exchange Proposal was implemented by the taking of the steps there alleged. The difficulty I see with the reliance placed on this is that the allegation is a broad brush reference to "the defendants" and it is by no means clear what is being admitted by [5] of the Points of Defence. In any event, if there is to be an allegation of moneys had and received or of conversion, it is incumbent on the plaintiffs to identify with precision what funds are said to have been received to the use of each defendant or converted by each defendant.
The statement that it was incumbent on the plaintiffs "to identify with precision what funds are said to have been received to the use of each defendant or converted by each defendant" if there were to be a claim for moneys had and received or for conversion, was addressing the complaint that had been made by the plaintiffs as to the broad brush reference in the then pleading to the "defendants" without distinguishing between the respective defendants. The complaint now made about the proposed amended pleading goes to a quite different issue, namely, whether it is a requirement for a claim for moneys had and received that there be an actual receipt of funds in the hands (or, more relevantly, in the bank account) of the particular defendant as opposed, say, to what might be termed a "constructive receipt" of funds if funds have been paid to another person or entity at the particular defendant's instruction or direction.
Therefore, the first basis on which the defendants resist the grant of leave to plead the allegations at [19]-[25] is not well-founded.
As to the second basis put forward (namely, as to what, as a matter of principle, is required by a plea of moneys had and received), as noted above, the plaintiffs have put forward an argument (in defence of the proposed pleading) to the effect that actual receipt of funds is not required - rather, that there may be a "receipt" of funds by reason of those funds being disbursed at the direction or instruction of the particular defendant. Restitutionary principles are invoked, as is the remedy of tracing (albeit that there is no pleaded claim of any entitlement to trace into funds held in another's hands).
[8]
Request for conditions to be placed on the grant of leave
As adverted to above, the defendants also seek, as a term of any leave granted to the plaintiffs to rely upon [9]-[18] of the amended statement of claim (and, presumably, for the plaintiffs to rely upon the whole of the proposed amendments if, as they are now, to be allowed), that no further evidence in chief be permitted to be relied upon by the plaintiffs.
In this regard, the defendants point to the fact that the plaintiffs' evidence in chief and the defendants' evidence in response had been served as long ago as December 2018. They say that, at the hearing before me on 19 June 2019, Counsel for the plaintiffs made submissions regarding the formation of the relevant contract which, at least in relation to the second defendant, were in express contradiction to the pleading which now appears at [9]-[18] of the amended statement of claim (but which were consistent with the pleaded contractual allegations contained in the points of claim filed in August 2018 and the statement of claim filed in May 2019).
The defendants say that a forensic decision was made (on the basis of the evidence that had been served by the plaintiffs) not to call evidence from the second defendant (Mr Evans), a decision communicated to the solicitor for the plaintiffs by email on 15 November 2018. It is submitted that, given the "complete, and entirely unexplained, change in position" by the plaintiffs (from the commencement of the proceedings to the position now taken in the proposed pleading served on 12 August 2019) in relation to the contractual claim, the imposition of that term is appropriate.
It is submitted that, in circumstances where the proceedings have been on foot for more than one year, and the defendants' evidence in response was served in December 2018, it would not be consistent with ss 56-58 of the Civil Procedure Act for the plaintiffs to be permitted to adduce evidence of alleged oral contracts with the second defendant which do not appear in their evidence in chief. The defendants argue that, were the plaintiffs to be permitted to do so, this would result in the defendants having to go into further evidence (and, likely, result in additional witnesses being called in the defendants' case, being at least the second defendant).
It is submitted that the plaintiffs have breached multiple timetables to serve evidence in reply; and have now been excused from serving that evidence until the pleadings issue is resolved (pursuant to the orders made on 5 April 2019) and that, if the plaintiffs had not done so, the matter would now be ready to take a trial date.
[9]
Plaintiff's submissions on the proposed condition on grant of leave
The plaintiffs submit that no such condition should be imposed on the grant of leave for the following reasons.
First, complaint is made as to the reference to "some unidentified submission made on 19 June 2019". It is said that the correctness of this cannot be ascertained given the absence of any reference to the specific submission allegedly made; and that, even if the premise of the contention is established, that "there is no reason why the plaintiffs should not be allowed to prosecute the present case in light of a previous submission (particularly when the alleged prejudice relied upon by the defendants is a forensic decision allegedly made in November 2018 before the submission now relied upon was made)".
Second, it is submitted that the alleged prejudice is illusory. The plaintiffs argue that the fact that the second defendant decided in November 2018 not to go into evidence is of no relevant significance; and that if the plaintiffs serve further evidence (depending on the facts the defendants put in issue), the second defendant will have an opportunity to reconsider his position as to whether he wishes to give evidence. The position is contrasted with a case where a witness has been released and cannot be recalled.
Third, it is said that the Court is required to decide the matter on all the relevant evidence and to determine the real issues in dispute; and that it is not in the interests of justice for the Court to be shut out of relevant evidence that may bear upon the very question that the Court must decide.
Fourth, it is said that it is "not at all unusual" where a statement of claim is amended that a consequence of the amendment is that further evidence in chief must be led to support the amended statement of claim.
Fifth, the plaintiffs note that the matter has not been allocated a hearing date as yet and they say that, accordingly, the filing of supplementary evidence in chief will not prejudice any existing hearing date.
[10]
Determination
I do not consider it appropriate for there to be a condition of the kind sought by the defendants to be imposed on the grant of leave to amend the pleading, particularly where it is likely that further evidence will be required to address the allegations now pleaded in the detail that has (quite rightly) been insisted upon by the defendants and to which there is no opposition. I do not consider that it is in the interests of justice to shut the plaintiffs out of putting on evidence in support of their case. No prejudice has been shown to follow from the forensic decision made by the defendants not to adduce evidence to date from the second defendant (other than the inconvenience to which it may be assumed he will now personally be put if such evidence is to be adduced; and the additional cost of adducing any such evidence - which can be dealt with in the final wash-up of costs at the conclusion of the final hearing). No doubt it is in the second defendant's interest to have the case against him (whatever its merits may be) summarily dismissed. However, that is not the test. I do not consider that the principles articulated in Aon mandate foreclosing evidence on issues now raised in the amended statement of claim.
[11]
Costs
Finally, the defendants submit that the plaintiffs should pay their costs of the present argument on an indemnity basis forthwith (on the basis of their contention - which is incorrect - that I had already determined that a pleading in the form maintained was liable to be struck out).
The plaintiffs, to the contrary, maintain that there is no conduct which would provide grounds for an order for costs to be paid on the indemnity basis or forthwith. They submit that the appropriate costs order is for the costs pertaining to the defendants' latest objection to be costs in the cause.
[12]
Determination
In my opinion, there is no basis for the indemnity costs order sought; nor is there a basis for an order that costs be payable forthwith. Given the history of the interlocutory pleading stoushes to date, the appropriate orders are for the plaintiffs to pay the costs thrown away by the amendment of the statement of claim but otherwise for the costs of the present costs application to be costs in the cause.
[13]
Orders
For the reasons set out above, I make the following orders:
1. Grant the plaintiffs leave to file the amended statement of claim in the form served on 12 August 2019, noting the further particulars that have been provided by the plaintiffs in their submissions as to the allegations made at [19]-[20] of the said amended statement of claim.
2. Order the plaintiffs to pay the defendants' costs thrown away by the amendment of the statement of claim.
3. Otherwise order that the costs of the pleadings argument here determined be costs in the cause.
When these reasons are published I will make further directions for the ongoing conduct of the proceedings.
[14]
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: 03 September 2019
1. Grant the plaintiffs leave to file the amended statement of claim in the form served on 12 August 2019, noting the further particulars provided in submissions in relation to paragraphs 19-20 of that amended statement of claim. 2. Order the plaintiffs to pay the defendants' costs thrown away by the amendment of the statement of claim. 3. Otherwise order that the costs of the pleadings argument determined be costs in the cause. Further directions to follow on publication of reasons.
Schedules 1 and 2 to the proposed amended pleading (referred to in the above paragraphs of the pleading) itemise a list of deposits (specifying, inter alia, the deposit date, deposit amount and the accounts from and to which the respective amounts have been deposited).
The defendants maintain that the Schedules, insofar as they purport to record the receipt of moneys by the second defendant, are inconsistent with the fact (taken to have been admitted as a result of a notice to admit facts served on the plaintiffs on 15 November 2018, to which I referred in my earlier reasons at [111]-[112]) that the second defendant had not received any funds transferred by any plaintiff. The defendants maintain that the reference to the second defendant receiving any moneys at all is "simply wrong" and say that the party which received those moneys was the third defendant (a corporate entity).
The plaintiffs say that none of the authorities referred to by the defendants (in their submissions at [11]-[15]) supports the submission that the action for moneys had and received is strictly limited to circumstances of a direct transfer to a defendant of moneys by a plaintiff. They argue that the grounds for seeking relief in moneys had and received are not "static" and strict (again referring to Equuscorp v Haxton at 516). Moreover, they submit that this matter of law is "sufficiently arguable" to meet the test for an amendment.
The plaintiffs also argue that there is a further basis upon which the plaintiffs can succeed on a claim for moneys had and received against the second defendant notwithstanding that the moneys paid by the plaintiffs were first paid into accounts held by the other defendants, namely that of common law tracing, referring to the statement of Millett J in Agip (Africa) Ltd v Jackson [1990] Ch 265 at 285. It is submitted that, applying the principles of tracing, the action for moneys had and received can be pursued against a defendant where the immediate receiving party has in turn made payment to the defendant. (It is also noted in this regard that the notice to admit facts only confirms that the payments were "first" made into those accounts; i.e., not, any admission as to the ultimate recipient of the funds.)
As to the complaint that there is no pleading that explains how all of the payments made could be for the benefit of the first and second defendants, the plaintiffs point to the following matters in the proposed pleading: that the plaintiffs had paid sums of money into accounts nominated by the first and second defendants (that is, at the first and second defendants' request/direction); that the payments were made as set out in Schedules 1 and 2; and that the moneys were had and received for the benefit of the first and second defendants (referring to [19]-[25] of the further amended statement of claim).
The plaintiffs note that they have also disclosed in their particulars (to [33] of the amended statement of claim), in relation to the second defendant, that:
(i) The first and second defendants operated a business or a scheme which involved soliciting funds from investors.
(ii) The solicitation of those funds required the making of representations by the first defendant to potential investors in the same terms, mutatis mutandis, as the Representations made by the first defendant to the plaintiffs.
(iii) The business or scheme attracted investors because the conversion rates offered to investors, through the making of the representations, were more favourable than the conversion rates offered by banks and other retail foreign exchange providers.
(iv) The second defendant was actively involved in the operation of the business or scheme in that, inter alia, he was:
1. the sole director of the third defendant, which was used to receive monies solicited in the course of the business or scheme;
2. the sole signatory on the bank account of the third defendant;
3. responsible, together with the first defendant, for transferring monies received from investors, including the plaintiffs, to other banking accounts;
4. together with the first defendant controlled the bank accounts of the fourth and fifth defendants which were used to receive investors' money…
The plaintiffs say that, to the extent that the complaint by the defendants (see their submissions at [15]) is that the second defendant does not understand how it is put that he received a benefit by reason of payments to the accounts referred to in Schedules 1 and 2, the above particulars provide that answer. However, in their submissions on the present application, the plaintiffs have gone further and provide the following further particulars to [19] and [20] of the proposed amended statement of claim (which they say largely repeat facts and matters already in the amended statement of claim):
1. The relevant benefit received by the first and second defendants was, in respect of the first defendant, to the extent that the payments were made into her account directly, the monies referred to in Schedules 1 and 2, and otherwise and in respect of the second defendant, the plaintiffs' compliance with their requests, alternatively, the monies paid into the accounts reflected in Schedules 1 and 2 which were accounts:
1.1 controlled by the first and second defendants;
1.2 used in the conducting of a business by the first and second defendants;
1.3 from which monies were transferred to other accounts for the benefit of the first and second defendants.
2. The further particulars of the benefit procured by the first and second defendants in nominating those accounts into which the plaintiffs were requested to deposit monies are matters which, at this stage, prior to discovery, are peculiarly within the knowledge of the first and second defendants.
The claim for moneys had and received has been explained by the late Professor Birks in restitutionary terms in Unjust Enrichment (Clarendon Law Series, 2nd edn, 2005)as follows:
[T]he action for money had and received, is the principal source of the modern law of unjust enrichment, though confined to money. Its operative allegation was that the defendant was indebted to the plaintiff because he had received a sum of money for the benefit of the plaintiff - to the use of the plaintiff. If he was so indebted and had not paid, the rest of the allegations were deemed to have been substantiated.
Exploration of the scope of a claim of unjust enrichment in those circumstances (and how such a claim fits within the taxonomy of restitutionary claims more generally) is fertile ground for academic debate but unnecessary to delve into for present purposes.
Leave will not be granted to allow an amendment if the amendment would be liable to be struck out had it appeared in the original pleading (see Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 309-310; McGuirk v University of New South Wales [2009] NSWSC 1424 at [18]). Leave to amend will therefore not be granted in respect of a pleading, or amendment, likely to be struck out as embarrassing (referring to Tamaya Resources Limited (in Liq) v Deloitte Touche Tohmatsu (A Firm) [2015] FCA 1098 at [142]-[143] (Gleeson J); Caason Investments Pty Ltd v Cao (2015) 236 FCR 322; [2015] FCAFC 94 at [21] (Gilmour and Foster JJ); ACN 074 971 109 v The National Mutual Life Association of Australasia Ltd [2010] VSC 186 at [29] (Croft J); Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66; [2009] FCA 320 at [21], [23] (Kenny J)). (See also Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 58 FCR 26 (Lindgren J, Lockhart and Tamberlin JJ agreeing).) In HFPS Pty Limited (Trustee) v Tamaya Resources Limited (in Liq) (No 2) [2016] FCA 446, Foster J said (at [56]) that it would be a wrong exercise of the Court's discretion to allow an amendment for which there was no arguable basis in fact.
That said, it is well recognised, in the summary dismissal context, that a plaintiff should not be denied the right to prosecute a claim unless it is clearly demonstrated that there is no arguable cause of action (see General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; [1964] HCA 69 (Barwick CJ) and Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1 (Dixon J)).
The plaintiff's case should be taken at its highest on a pleading application such as an application for leave to amend (see S1 v The Trustees of Marist Brothers [2016] NSWSC 970 (S1) at [11]).
Ordinarily, leave to re-plead (in the absence of discretionary factors pointing against the grant of leave) unless the view is taken that the proceeding is frivolous or vexatious or no reasonable cause of action is disclosed (see Steiner v Strang [2016] NSWSC 9 at [26]-[27], [49]; S1 at [51]-[52]) or that the case sought to be put is "hopeless" or "manifestly groundless" (see Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 at 536; and Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676 at [254]-[256]). In CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd (2017) 5 VR 62; [2017] VSCA 11 at [24], the Court of Appeal in Victoria said that leave to re-plead will only be refused if the amendments raise a claim that has no prospects of success, in the sense of being fanciful, in accordance with the criteria for summary dismissal set out in the Civil Procedure Act 2010 (Vic); the Court there recognising (at [27]) that evidence adduced at trial may shape the case in ways that have not been anticipated despite the best efforts of litigants and their lawyers.
In the present case, I am not prepared to dismiss out of hand (as being so untenable as to warrant a refusal to grant leave to amend) a claim that the second defendant has "received" funds (for the purposes of a moneys had and received claim) by reason of those funds having being placed at his disposal (or transferred to a company which he controls) or as having been paid at his instruction or direction; nor am I prepared to discount the possibility that the claim as pleaded could be supported by arguments based on resitutionary principles.
Having regard to the high test to be met for a summary dismissal application, I am not persuaded that if such a claim were to have been pleaded at the outset it would have been liable to be struck out.
Third, as to the complaint about the absence of pleading of material facts, the defendants argue that they are entitled to a pleading of facts as to as to "why and how all of the payments made to all defendants were made for the benefit of the first and second defendants and/or were received by those parties". If, by seeking facts as to "why" the payments were made, the plaintiffs are seeking a pleading going to the motivation or intent behind the making of the payments, I do not see how this is justified. I accept that, if intent or motivation were to be an element of the claim based on that alternative pleading (see from [19]) then (as would be the case if knowledge were to be pleaded), then the material facts on which such an allegation is based would need to be specifically pleaded. However, it is not apparent that the plaintiffs' alternative moneys had and received claim is based on proof as to the subjective intention or motivation as to "why" certain payments were made. The proposed pleading clearly identifies the alleged agreement pursuant to which it is said that payments were made (see from [14]ff) (i.e., the Best Baht Agreement); albeit that there is an alternative pleading that is not based on the alleged Best Baht Agreement.
As to the pleading of material facts as to "how" all the payments were made, presumably this complaint does not go to the question of "how" moneys were electronically or physically transferred to bank accounts as such, but rather as to "how" such payments are alleged to have been made "for the benefit" of the first and second defendants. If that truly requires clarification, that can be the subject of a request for particulars. It would seem to me to be obvious from the pleading that what is contended is that the second defendant, for example, through his control of one or other of the corporate defendants has obtained a benefit from the transfer of moneys to that defendant.
In my earlier judgment in this proceeding I made clear what was required of a proper pleading (see, for example, at [5]ff) and I do not here repeat what was there said. I consider that there has now been an adequate pleading of the material case made against the defendants. If further particulars are required they can be sought but in essence the pleading is sufficient to permit the respective defendants to know the case that is being put against each of them. It is high time that the defendants proceeded to the real issues in dispute rather than spending time and costs arguing pleading points of the kind now raised. The proposed amended statement of claim may still not be a shining example of a model pleading - sadly, many pleadings are not. It does, however, now adequately articulate the case against the defendants.
In terms of discretionary factors, I accept that the amendment to the pleading will occasion yet further delay; and I have already made clear that there must be a limit to the amount of times a party (here, the plaintiffs) will be given the opportunity to replead. The exercise of the discretion to grant or refuse liberty to replead must be in accordance with the "dictates of justice" (see ss 56, 57 and 58 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act)); and that this will generally require consideration of the nature and degree of any prejudice that may be suffered by the grant or refusal of the application (as recognised in the context of an application for leave to amend pleadings in Itex Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104).
In the present case, I do not consider that the prejudice likely to be suffered at this stage of the proceedings, if leave is given to the plaintiffs to replead the claims sought to be made against the second defendant, outweighs the prejudice to the plaintiffs of being denied such an opportunity. I am conscious in this regard of the overriding mandate for the just, quick and cheap resolution of the real issues in dispute and the principles articulated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27; (2009) 258 ALR 14 (Aon). In Aon, the plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) said (at [111]-[113]) (citations omitted):
An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to the payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. …
A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to the parties having sufficient opportunity to identify the issues they seek to agitate.
In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition from principle and policy. It recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.
However, balancing all the relevant factors in the present case (including that the proceedings cannot yet be said to be at an advanced stage - not least because of the pleading issues raised by the defendants; and that it is difficult to see any prejudice to the second defendant other than the obvious fact that he will continue to be a party to the proceedings), I consider that leave should be granted for the amended statement of claim to be filed.