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[5] It is alleged that Tucker & Cowen acted as the solicitors for Equititrust in numerous retainers, with Mr Tucker being the partner with primary responsibility for such retainers; that TCS Solicitors Pty Ltd (the sixth defendant) (TCSS), an incorporated legal practice, succeeded to the business of Tucker & Cowen in about early 2016; and that Mr Tucker is employed as a consultant by TCSS, and has continued to have primary responsibility for the retainers by Equititrust of TCSS.

[6] Mr Cowen is named as part of the fifth defendant, the firm Tucker & Cowen. He is also said to be one of the directors of TCSS.

[7] The fourth defendant, MS Asia Debt Acquisition Ltd is said to be a company registered in Hong Kong, in respect of which there were three shares issued, which were transferred to three companies registered in the British Virgin Islands. It is alleged Mr Tucker, or another person Mr Howard, was the sole beneficial shareholder of two of those companies; and that Mr Kennedy was the sole beneficial shareholder of the third.

[8] As articulated in the plaintiff's submissions at [8]: "In summary, Equititrust's case is that:

• (a) as a consequence of his roles as a director of Equititrust and as Equititrust's solicitor, Mr Tucker was aware of information concerning the recoverable value of various debts owed to Equititrust as trustee of the EPF;

(b) in about April 2012, Equititrust was indebted to BOS International (Australia) Pty Ltd (BOSI) [from which it had borrowed funds pursuant to a loan facility, for the purpose of on lending to others] for an amount of approximately $6.8 million. This debt was secured by (inter alia) mortgage securities over the assets in the EPF loan book [a reference to the loans due to Equititrust from its borrowers, and guarantors, and the associated securities held by Equititrust]. As a consequence of his roles as a director of Equititrust and as Equititrust's solicitor, Mr Tucker was also aware of the terms of Equititrust's finance facility with BOSI and the amount of the BOSI Debt;

(c) at about that time, Mr Kennedy became aware that an entity associated with Morgan Stanley proposed to purchase BOSI's entire Australian loan book, including the debt owed by Equititrust as trustee of the EPF and the associated securities;

(d) Mr Tucker and Mr Kennedy subsequently negotiated for the fourth defendant (MS Asia), a company incorporated in Hong Kong, to purchase the debt owed by Equititrust to BOSI and associated securities from Morgan Stanley for the sum of $2 million. This purchase price was paid by Tuckerloan (as to

$666,667) and Mr Kennedy (as to $1,333,334 with half of that sum being paid on behalf of a third person, Mr Howard);

(e) Tucker & Cowen Solicitors (including by Mr Tucker) acted as the solicitors for MS Asia in its purchase of the BOSI debt, and BOSI Securities;

(f) Mr Tucker and Mr Kennedy (and a third person Mr Howard) are the ultimate beneficial owners of companies incorporated in the British Virgin Islands

which were themselves the shareholders of MS Asia (which has only ever had three shares on issue);

(g) Mr Tucker and Mr Kennedy are each beneficially entitled to a one-third interest of the assets of MS Asia;

(h) MS Asia's acquisition of the BOSI debt and associated securities completed on about 17 July 2012;

(i) on or about 7 August 2012, one of the borrowers from the EPF repaid the sum of $2,325,000 in discharge of a debt it owed to Equititrust. This repayment was effected by payment of that sum to the trust account of Tucker & Cowen. From that payment, the sums of $666,667 were repaid to Tuckerloan, Mr Kennedy and Mr Howard as repayment of the sums advanced to MS Asia to pay the $2 million required to acquire the BOSI debt;

(j) since MS Asia's acquisition of the BOSI debt, in excess of $17.5 million has been recovered through debt recovery proceedings brought on behalf of Equititrust against borrowers from the EPF and guarantors of those debts;

(k) those amounts were received into the trust account of Tucker & Cowen Solicitors and later TCS Solicitors to be held on trust for Equititrust as trustee of the EPF;

(l) of that recovered sum, an amount not less than $11.94 million was paid to MS Asia in Hong Kong and thereafter paid to (or at the direction of) Mr Tucker, Mr Kennedy and Mr Howard;

(m) in causing MS Asia to acquire the BOSI debt and receive and pay away the amounts recovered therefrom, Mr Tucker and Mr Kennedy breached duties which they owed to Equititrust;

(n) Mr Tucker and Mr Kennedy deliberately concealed their beneficial ownership of MS Asia through the British Virgin Island companies;

(o) in receiving and paying away the amounts recovered from borrowers from the EPF, Tucker & Cowen and later TCSS acted contrary to the requirements of the Legal Profession Act 2007 (Qld) concerning the treatment of trust monies and in breach of trust."

[9] The proceedings are at an early stage. Not all parties have been served yet, and no defences have been filed.

[10] By applications filed on 7 and 29 January 2019, Mr Tucker and Tuckerloan have applied for orders:

• (a) striking out the claim and statement of claim in their entirety, or alternatively striking out particular paragraphs of the statement of claim, or alternatively, for the plaintiff to provide further particulars of those paragraphs; and

(b) that the plaintiff provide security for costs in the sum of $373,885, by payment into court.

For ease of reference I will refer to these as the Tucker application(s), and the moving parties as the Tucker applicants.

[11] Likewise, by applications filed on 29 January 2019, Mr Cowen and TCSS have applied for orders:

(a) striking out the whole of the claim and statement of claim, or alternatively various paragraphs of the statement of claim, and of the prayer for relief in the claim; and

(b) that the plaintiff provide security for costs in the amount of $161,705.61 by payment into court.

For ease of reference I will refer to these as the Cowen application(s) and the moving parties as the Cowen applicants.

[12] Neither Mr Kennedy (the third defendant) nor MS Asia (the fourth defendant) appeared at the hearing (as to the latter, it was expressly said it has not yet been served). In some respects the discussion below about aspects of the pleading concerning Mr Tucker applies also to the pleading concerning Mr Kennedy. It is anticipated that, in any repleading undertaken consequent upon this decision, the plaintiff would address the issues as against Mr Kennedy in the same way as against Mr Tucker (where appropriate).

[16] McPherson J went on to say, by reference to the practice in cases of criminal conspiracy, that whilst proof of conspiracy "almost invariably rests upon inference deduced from acts of the parties", and the prosecution may not be able to give particulars or evidence of the actual making of the agreement, "what certainly can be done is to give particulars of the 'acts' relied upon to justify the inference".

[17] So too, in this case, the plaintiff is properly required to plead the facts relied upon to justify the inferences that it contends ought to be drawn.1 So much is confirmed by r 150(2) of the UCPR.

[18] Nevertheless, it may be accepted that the court's discretion to strike out a pleading, or part of it, "should not be exercised except in clear cases", "especially so where the case is pleaded as a circumstantial one and the inference to be drawn from evidence critical to determining liability is not common ground and the evidence is untested": Royalene Pty Ltd v Registrar of Titles [2007] QSC 59 at [6] per Mackenzie J.

[19] At the commencement of the hearing of the applications, the plaintiff tendered as an exhibit a draft proposed amended statement of claim (exhibit 2), and argument on the applications proceeded by reference to exhibit 2. There was considerable cross-over between the arguments in relation to the Tucker application and the Cowen application, although the claims against Mr Cowen (as part of the firm) and TCSS are essentially

1 See also Smith v Smith [2015] NSWSC 484 at [62].

consequential upon the claims against Mr Tucker. It is convenient to deal with the arguments by reference to the pleaded causes of action, as the parties did in their submissions.

[25] It is then alleged that, three days later, on 10 August 2012, Tucker & Cowen repaid, from the SLOT payment, the sums of $666,667 to each of Tuckerloan, Mr Kennedy and Mr Howard, in repayment of their advances towards the $2 million for the acquisition by MS Asia (statement of claim at [85]). The payments referred to in this and the preceding paragraph can be seen in the "trust account statement" incorporated as schedule 6 to the statement of claim.

2 Underlining added.

[26] It is alleged that on 27 August 2012 MS Asia appointed Mr Peldan and Mr Cook as the receivers and managers of all the assets and undertaking of Equititrust, pursuant to the BOSI securities (the Receivers) (statement of claim at [86] and [87]). Referring to certain provisions of the deed of appointment of the Receivers, it is proposed to allege (exhibit 2 at [87A]) that:

"... after execution of the Deed of Appointment, Equititrust was the only person entitled (by its agents, the Receivers) to take possession of the EPF Loan Book and to receive the proceeds thereof". [emphasis added]

[27] Paragraphs [88]-[94] of the statement of claim contain allegations of MS Asia, by the Receivers, appointing Equititrust, under the BOSI securities, as its agent to take possession of the assets of debtors of Equititrust (Handley Heights Pty Ltd and MQ Ink Pty Ltd), and Equititrust, by the Receivers, appointing receivers to another company, Kunda Trading Pty Ltd [not specifically alleged to be a debtor of Equititrust], and of the receipt by the Receivers of various amounts of money from the controllership of those companies, as agent for Equititrust. It does not appear to be alleged that these sums of money were deposited into the trust account of Tucker & Cowen (cf [96(c)] of the statement of claim). The relevance of these allegations, in this part of the pleading, leading to the pleading of breach of s 249 of the Legal Profession Act, is not clear.

[28] It is alleged that from the date of the MS Asia acquisition on 17 July 2012 Tucker & Cowen have continued to act as the solicitors for Equititrust in the various proceedings listed in schedule 4 and schedule 5 to the statement of claim (statement of claim at [95]).

[29] At [96] of the statement of claim it is alleged that (underlining represents the proposed amendment):

"Since the MS Asia Acquisition:

(a) Tucker & Cowen have received sums totalling not less than

$17,565,264.98, particulars whereof are set out in Schedule 6 hereto;

(b) Each such sum proceeded from the EPF Loan Book, on account of debts owing to Equititrust as trustee of the EPF;

(c) Each such sum was (in the premises of paragraphs 54, 87 and 87A hereof) the property of Equititrust as trustee of the EPF, being:

(i) the proceeds of loans made to its borrowers; or

(ii) payments received from the exercise of securities held by it; or

(iii) the enforcement of guarantees held by it;

(d) Each such sum was banked to the general trust account of Tucker & Cowen with Commonwealth Bank of Australia;

(e) The Deed of Appointment has remained on foot.

(The sums banked to the trust account of Tucker &Cowen are referred to as 'the Tucker & Cowen Receipts')."

[30] It is proposed to allege, by [96A] of exhibit 2, that:

"In the premises of paragraphs 6, 6A, 54, 83, 83A, 86, 87, 87A to 93, 95 and 96 hereof, in respect of all sums comprising the Tucker & Cowen Receipts:

(a) the Schedule 4 Proceedings and the Schedule 5 Proceedings included retainers of Tucker & Cowen pursuant to which they received the Tucker & Cowen Receipts;

(b) the only persons competent and authorised to give instructions to Tucker & Cowen in the conduct of the retainers were:

(i) the BOSI Receivers for the SLOT payment; and

(ii) the Receivers for all other receipts;

(c) the only persons from whom Tucker & Cowen, in acting as solicitors, took instructions were:

(i) the BOSI Receivers for the SLOT payment; and

(ii) the Receivers for all other receipts;

(d) the client of Tucker & Cowen was Equititrust." [emphasis added]

[31] Paragraph [97] (with proposed change underlined) pleads: "In the premises of paragraphs 96 and 96A hereof:

• (a) Tucker & Cowen were, by force of subs 249(1) of the LPA obliged:

(i) to hold each sum making up the Tucker & Cowen Receipts exclusively for Equititrust as trustee of the EPF; and

(ii) to disburse the Tucker & Cowen Receipts only under a direction given by Equititrust, as trustee for the EPF; and

(b) Tucker & Cowen received the Tucker & Cowen Receipts upon trust for Equititrust, as trustee for the EPF."

[32] Mr Tucker and Mr Cowen, as principals of Tucker & Cowen, are said to be severally obliged, by s 244(1) of the Legal Profession Act to discharge the obligations of Tucker & Cowen under, relevantly, s 249 (statement of claim at [98]).

[33] It is further alleged that on and after 31 May 2016 TCSS received sums of not less than

$54,658.53 (particularised in schedule 7), comprising amounts which "proceeded from the EPF Loan Book, on account of debts owing to Equititrust as trustee of the EPF"; that these sums were the property of Equititrust; and that these sums were banked to the general trust account of TCSS (the TCSS receipts) (statement of claim at [99]). It is alleged TCSS was obliged by s 249 of the LPA to hold those sums exclusively for Equititrust and to disburse the TCSS receipts only under a direction given by Equititrust, and that TCSS received the TCSS receipts on trust for Equititrust as trustee for EFP (statement of claim at [100]).

[34] Mr Cowen, as a principal of TCSS, is said to be obliged, by s 244 of the Legal Profession Act, to discharge the obligations of TCSS under, relevantly, s 249 (statement of claim at [101]).

[35] It is also alleged that since the completion of the MS Asia Acquisition, TCSS and/or MS Asia have received other sums from realisation of the BOSI securities, particulars of which are yet to be provided (statement of claim at [102]).

[36] The conduct said to amount to contravention of s 249, by Tucker & Cowen and TCSS, is pleaded in paragraphs [105]-[109], both by reference to s 249 and also to the pleading of an express trust. That conduct is:

(a) failing, in breach of s 249, to deposit the Tucker & Cowen Receipts and the TCSS Receipts into a general trust account for Equititrust (as trustee of the EPF);

(b) instead depositing those sums into a general trust account for MS Asia and, in some respects for Worrells; and

(c) failing to pay any of those receipts to Equititrust, but rather paying them away to persons other than Equititrust.

[37] There is an alternative pleading of a constructive trust (see [103], [104], [110] and [111] of the statement of claim).

[38] The first attack on the pleading of this cause of action is that it is untenable because the Tucker & Cowen Receipts and the TCSS Receipts (as those terms are used in the statement of claim) deposited into the trust account were not received on behalf of Equititrust; but rather were received on behalf MS Asia, consequent upon MS Asia exercising its rights, as a secured creditor, under the BOSI securities (which it acquired in July 2012). The Tucker applicants and the Cowen applicants contend that MS Asia was the "client" on whose behalf the money was received, not Equititrust.

[39] In written submissions for the Tucker applicants and the Cowen applicants it is said there is no plea that the funds were in fact received "on behalf of" Equititrust as trustee for the EPF; and no plea that Tucker & Cowen and TCSS received the monies acting as the solicitors for Equititrust as trustee for the EPF. Rather, the pleading merely alleges in a

conclusory way that because the sums recovered by MS Asia "proceeded from" the EPF loan book, on account of debts owing to Equititrust, the money recovered was therefore the property of Equititrust.

[40] The plaintiff submits that the criticism of its claim for breach of s 249 mischaracterises the effect of the statement of claim and is factually incorrect. It submits the defendants' criticism overlooks the fact that, to the extent the statement of claim pleads that MS Asia took steps to collect the BOSI debts, by enforcing the BOSI securities, this enforcement and collection is pleaded as having been effected by the appointment of receivers and managers (referring to paragraphs [86] to [93] of the statement of claim). The plaintiff submits the receivership involved the collection of debts owed to Equititrust; that in proceedings undertaken to recover debts owed to Equititrust, Tucker & Cowen's client was Equititrust; and the monies received in the course of those recovery proceedings were collected by Equititrust and received by Tucker & Cowen on behalf of Equititrust, not on behalf of any other party (as proposed to be pleaded in the new [96A]).

[41] This point is made by reference to the terms of the deed of appointment of the Receivers, and the BOSI securities (referred to in [17] of Mr Tucker's submissions), under which the plaintiff submits the receivers acted as the agent of Equititrust (as proposed to be pleaded in the new [87A]).

[42] The Tucker applicants and the Cowen applicants accept that, under the BOSI securities3

and the deed of appointment of the Receivers,4 there is a provision stating the Receiver is the agent of (in effect) Equititrust. But they take issue with the proposed pleading, in [87A] of exhibit 2, that "after execution of the Deed of Appointment, Equititrust was the only person entitled (by its agents, the Receivers) to take possession of the EPF Loan Book and to receive the proceeds thereof." They submit that is not the case, as the BOSI securities contemplate the secured creditor (relevantly, MS Asia, following the assignment from BOSI) being able to exercise the powers of a receiver.5 In addition, they submit that under the deed of appointment of the Receivers, MS Asia retained the ability to direct the Receivers to pay money recovered directly to itself.6

[43] The Tucker applicants emphasise the special and limited character of the agency relationship between the Receiver and the debtor (here, Equititrust); with the Receiver's primary duty being to the secured creditor, to realise the security and pay over to it the secured amount.7

[44] Those submissions lead to the conclusion, on the applicants' argument, that the plaintiff's claim in this regard is based on a factually and legally flawed premise, which is expressed

"Further and in the alternative to the allegations in paragraphs 96 to 98 hereof, in the premises, Tucker & Cowen received and held the Tucker & Cowen Receipts upon constructive trust for Equititrust, as trustee for the EPF."

[48] Paragraph [104] is in similar terms, in relation to the receipt by TCSS of the TCSS Receipts.

[49] The basis on which it is pleaded that a constructive trust arose further to the allegations in [96] to [98] of the statement of claim is not clear (including from the plaintiff's submissions). It seems (as the heading before [103] and [104] indicates) that the pleading of a constructive trust is really an alternative to the claim based on s 249 and/or an express trust.

[50] The first point made by the applicants is that there are no "premises" identified, so it is not possible to ascertain, from the pleading, the basis on which a constructive trust is said to arise. Having regard to [23] of the plaintiff's submissions, it appears the pleading of a constructive trust is on the basis that even if the moneys were not received on behalf of

Equititrust, a constructive trust is said to arise against Tucker & Cowen and/or TCSS as a result of the alleged breach of fiduciary duty by Mr Tucker (later pleaded in the statement of claim). But that is not what is pleaded.

[51] In any event, the applicants contend it is not a viable claim because, as articulated in [23] of the plaintiff's submissions, it is a constructive trust said to arise from the receipt by Tucker & Cowen and/or TCSS of the money; but there are no allegations in the pleading of knowledge of the relevant kind, nor of the beneficial receipt of the money (on any view, the money received into the trust account was being held for the benefit of someone else).8

[52] Thirdly, the applicants submit there is no scope for the imposition of a constructive trust, as an alternative, in the face of s 249 of the Legal Profession Act. That is supported by Legal Services Board v Gillespie-Jones [2013] HCA 35; (2013) 249 CLR 493 at [119], where Bell, Gageler and Keane JJ affirmed the principle that "[a] trust relationship is not to be recognised or enforced, and is therefore not to be inferred, if and to the extent the trust relationship would give rise to rights or obligations inconsistent with those conferred or imposed by statute".

[53] In their present form, I accept the submission for the Cowen applicants and the Tucker applicants that [103] and [104] ought to be struck out; together with [110] and [111] (where the breach of the constructive trusts is pleaded).

[54] In so far as the remedy of a constructive trust is sought to be relied upon as against either Tucker & Cowen, the firm, or TCSS, for the alleged breach of duty(ies) by Mr Tucker, as foreshadowed in the plaintiff's submissions, that is not a matter that is presently pleaded, but is something that may be separately addressed by the plaintiff in a further version of the statement of claim, taking into account the challenges raised against it.

[55] The Tucker applicants and the Cowen applicants also attack the pleading of the claim for breach of s 249 on the basis that there are deficiencies in the pleading. In some respects, exhibit 2 represents an attempt by the plaintiff to address those deficiencies. Nevertheless, I accept that there are aspects of this part of the pleading that warrant further attention, including:

(c) a fiduciary duty as a solicitor not to permit a conflict to arise between his duties to Equititrust, including as trustee of the EPF, and his private interests, including the interest of his firm Tucker & Cowen;

(d) a fiduciary duty as a solicitor to advise his client Equititrust of any facts or matters within his knowledge which may have had a real capacity to affect the interests of Equititrust, including as trustee of the EPF, relevant to any of his retainers as its solicitor; [omitted in exhibit 2]

(e) a solicitor's fiduciary duty of loyalty owed to Equititrust, including as trustee of the EPF.

[61] In [51], Mr Kennedy is alleged also to have been subject to a duty under s 183(1) of the

Corporations Act and a fiduciary duty of confidence as an employee.

[62] Paragraph [53] pleads that, in the premises of [52] (which pleads that the knowledge and information referred to in [28]-[43] were of such a nature and were imparted to Mr Tucker and Mr Kennedy in such circumstances as to be inherently confidential) both Mr Tucker and Mr Kennedy were under an equitable duty of confidence not to disclose the information or make improper use of it.

[63] An overarching complaint made by both applicants is that the rolled up conclusory allegation in [114], as it is said in the Cowen applicants' submissions, "makes it impossible to know precisely how it is contended each alleged duty was breached and the material facts relied upon. It also makes it impossible to know how the apparent

relief that is claimed is related to each alleged breach". In my view, this is a valid complaint about the form of the statement of claim. The plaintiff should be required to plead (by cross-reference if that is apt) the material facts relied upon to allege that each of the duties said to be owed by Mr Tucker (and Mr Kennedy) were breached.

[64] The deficiency of the pleading in this respect is demonstrated by reference to one of the duties alleged to have been breached, namely the duty under s 183(1) of the Corporations Act, which provides as follows:

"A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation."

[65] The applicants complain that the plaintiff has not pleaded, with specificity:

[68] Returning to [114], where the breach, of this and the other duties, is pleaded, all the dots which seem to need to be joined are not referred to or identified (for example, there is no reference in [114] to [45] and [48] of the statement of claim, which the plaintiff's submissions (at [26]) refer to as the source of the detail of the "information", with further internal cross-references. It should not be for the reader of the pleading to try to conduct a "treasure hunt"12 to try to find the pleading of the elements of these causes of action; even if they are said to be on the basis of inferences drawn from other facts.

[69] I accept the submission by Mr Clothier QC for the Cowen applicants that what is required for the purposes of the s 183 claim is a precise pleading of the information that is said to have been obtained by the person as director, a pleading of the material fact of its misuse (not merely its use, but its misuse), and a pleading of the material fact of a relevant purpose in connection with its misuse. The pleading alleges a narrative of facts, but does not draw it all together.13

[70] To be clear, I accept the plaintiff's submission that it is not able, and is not required, to give further particulars of specific pieces of information by which it is alleged Mr Tucker acquired the knowledge he is alleged to have had; which if required would be a request for evidence (paragraph [32] of the plaintiff's submissions); nor to give particulars of specific retainers under which it is alleged Mr Tucker received specific pieces of information (paragraph [36] of the plaintiff's submissions). Accepting that the plaintiff relies upon inferences to be drawn from facts which it alleges, in my view what is required is a clearer pleading of the matters referred to in paragraph [70] above.

[71] The same points apply equally in relation to the alleged breaches, by Mr Tucker, of his fiduciary duty of confidence as a solicitor, including a fiduciary duty not to take private advantage for himself or others of information acquired in the course of his retainers as Equititrust's solicitor: in terms of the need to identify the information said to be acquired in the course of Mr Tucker's retainers. How this is addressed may be a matter for further consideration by the plaintiff. The facts alleged show Mr Tucker acted as a solicitor prior to becoming a director and continued to do so after he ceased to be a director. But in oral submissions Mr Stewart QC for the plaintiff said the pleading does not make an allegation that information was obtained after Mr Tucker ceased to be a director of the company.14 That is, all of the information alleged to have been acquired (and misused, etc) is alleged to have been acquired by Mr Tucker in his dual capacities, as director and solicitor. This should be clarified.

[72] The applicants also complain about the breadth of the retainers identified in schedules 1, 2, 3 and 4, not all of which could be said to have anything to do with the knowledge alleged to have been held by Mr Tucker (as it is described in [26] of the plaintiff's submissions). For the plaintiff, it is submitted the purpose of referring to the retainers by Equititrust, going back to 2006, is to show that the firm, and Mr Tucker, was the

12 To use Jackson J's phrase, from Mio Art Pty Ltd v Macequest Pty Ltd & Ors [2013] QSC 211 at [62].

13 Cf T 1-54.

14 T 1-52.

longstanding solicitor of that company, a relevant factor to determining the scope and content of the duty of loyalty. That is, the retainers are not identified only for the purpose of the inference as to acquisition of knowledge as a solicitor. I accept that submission.

[73] In that regard, the applicants also apply to strike out the reference in [49(e)] of the statement of claim to Mr Tucker owing a solicitor's fiduciary duty of loyalty to Equititrust, as adding nothing in light of the other duties alleged. In the context of this case, in my view it cannot at this stage be concluded that such an allegation of such a duty, and breach of it, adds nothing. I am not persuaded it ought to be struck out.

[74] The issues in relation to the allegation of misuse of information acquired as a director, and as a solicitor, flow through to the separate allegation of improper use of information imparted to Mr Tucker (and Mr Kennedy) in such circumstances as to be inherently confidential (paragraphs [52] and [53] of the statement of claim). There is an additional complaint made, that the circumstances relied upon as being "inherently confidential" are not clearly pleaded. That is a valid criticism, which ought to be addressed, by amendment to, or particularisation of, [52] of the statement of claim.

[75] In relation to the allegation of breach by Mr Tucker of the fiduciary duty as a solicitor not to permit a conflict to arise between his duties to his client, Equititrust, and his private interests (paragraph [49(c)] of the statement of claim), the applicants submit, among other things, that the material facts alleged to have given rise to a conflict are not pleaded. This is a matter that I would expect could readily be addressed, upon reviewing the pleading of breach of the various duties alleged, by reference to other parts of the statement of claim.

[76] The applicants' challenge to the pleading of a fiduciary duty of the kind set out in [49(d)] appears to have been accepted by the plaintiff, as this is struck out in exhibit 2. In its stead, there is a proposed new pleading of a contractual duty (see [102A] and [102B] of exhibit 2). The applicants have flagged opposing any grant of leave to add this claim, inter alia, on the basis it is statute barred. It is not necessary for me to address this issue, as at present it is no more than a proposal in exhibit 2.

[77] There is a broader objection taken by the applicants to the pleading of fiduciary duties owed by Mr Tucker, and breached by him, on the basis that the scope of the fiduciary duty(ies) owed by him will depend upon analysis of the contractual retainers, in terms of what the solicitor has undertaken, or is deemed to have undertaken, to do. It is said the material facts in support of, inter alia, the existence of the alleged duties have not been pleaded. The (remaining) fiduciary duties pleaded in [49] are a duty of confidence, relevantly, not to take private advantage for the solicitor or others of information acquired in the course of the solicitor's retainer by the client; a duty to avoid a conflict between the solicitor's personal interests and those of his client; and (or perhaps reflecting the other two) a duty of loyalty. Each of these are fundamental aspects of the fiduciary duty

owed by a solicitor in any retainer of them by a client.15 The subject matter over which these fiduciary obligations extend will depend upon the particular retainer(s); as will the determination of whether there has been a failure to discharge those obligations;16 but the very nature of the solicitor-client relationship is what gives rise to the obligations the subject of the pleaded duties. Whilst it is accepted that the allegations of breach of the pleaded duties requires further attention, I do not accept that more is required in terms of the pleading of the existence of the duty itself.

[78] I will hear from parties as to the appropriate form of relief in relation to this part of the pleading also. It may be appropriate to strike out [114], but give leave to replead. Beyond [114], it is difficult to identify particular paragraphs to be struck out and repleaded, as opposed to amended or particularised (because of the significant interconnection and cross-reference between them).

15 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 67 per Gibbs CJ; see also

Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 at 463, referring to Clark Boyce v Mouat [1994] 1 AC 428 at 437.

16 Hospital Products at 73 per Gibbs CJ and at 102 per Mason J; Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 at 464.

17 Referring to Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 (see at 667-668) and Addenbrooke Pty Ltd v Duncan (No 2)

[2013] FCA 820 at [2]- [4].

(having been received on behalf of MS Asia, not Equititrust). That is not a basis on which to strike out this part of the pleading. If the Tucker applicant's argument is ultimately not successful, and the moneys are found to have been paid out of the trust account in breach of the obligation under s 249 of the Legal Profession Act, or in breach of trust; and if Tuckerloan is found to have accessorial liability; the remedy of a constructive trust may be available, in respect of the part of the SLOT payment that was paid to Tuckerloan. Again, it comes down to knowledge.

[85] In so far as Tuckerloan is concerned (cf the discussion below in relation to Tucker & Cowen, relevantly Mr Cowen), the knowledge of Tuckerloan is premised upon Mr Tucker having controlled Tuckerloan since its incorporation, and having always been and remaining its only directing mind. In that regard, the knowledge of Mr Tucker is said to be the knowledge of Tuckerloan. I am not persuaded that there is any basis on which to strike out these paragraphs.

[89] I am not persuaded this is a basis upon which to strike out those paragraphs. It is a question of fact whether, in the particular circumstances, those things are found to be within the ordinary course of the business of this firm.

18 Referring to Crouch and Lyndon v IPG Finance Australia [2014] 1 Qd R 512 at [53].

19 Cf exhibit 2, the reference to paragraph 119 is missing - so that there is only reference to "subparagraphs (a) to (g) hereof", which does not make sense.

Mr Kennedy of the duty under s 183. Mr Tucker's complaint about the pleading is a valid one, but is a matter for which leave to replead should be given, to articulate clearly the basis on which it is alleged Mr Tucker had the requisite knowledge of the contravention by Mr Kennedy of his duty under s 183 of the Corporations Act, to make him liable as an accessory for that contravention (if it be established). The same applies to [125(b)], which is pleaded on the same basis as [123] and therefore suffers the same deficiency.

[95] In so far as these paragraphs allege accessorial liability on the part of Mr Cowen, as a member of the firm Tucker & Cowen, for the conduct of Mr Tucker and Mr Kennedy, he contends the pleading fails to allege and plead any involvement by him, let alone any knowledgeable involvement, in any of the conduct of Mr Tucker (or Mr Kennedy). There are a number of paragraphs cross-referenced in the opening of [123], but none of those contain any allegations of involvement, or knowledge on the part of Mr Cowen. In paragraph (b) of the particulars, it is said "that Mr Cowen... had the requisite knowledge of the facts constituting the contraventions by Mr Tucker and Mr Kennedy of their duties under s 183(1) of the Act is to be inferred from" those premises (ie the cross-referenced paragraphs) and the further matters set out in subparagraphs (b)(i) to (xxv), most of which deal with details about deposits to and withdrawals from the trust account.

[96] In so far as [123] is concerned, I accept the submission for Mr Cowen that there is no pleading of Mr Cowen's knowledge of the elements of the contravention of s 183(1) alleged to have been committed by Mr Tucker and/or Mr Kennedy, and no pleading of any involvement by Mr Cowen in that contravention. The only reference to knowledge of either Mr Tucker or Mr Kennedy even being a director of Equititrust (let alone misusing information acquired in that capacity for a particular purpose) is in subparagraph (xix) of paragraph (b) to the particulars to [123] which, as it is proposed to be amended, states that "[i]n any event [Mr Cowen] was aware that Mr Tucker acted as a director of a client while the firm also acted as its solicitors (which awareness is to be inferred from the matters alleged and referred to in this paragraph 123)".

[97] The pleading of knowing involvement by Mr Cowen in the breaches by Mr Tucker and Mr Kennedy of the other duties alleged suffers the same deficiency. As is made clear in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [160], [163], [171]-[179], what must be shown, to establish accessory liability for breach of trust or fiduciary duty, is (relevantly) participating with knowledge in a dishonest and fraudulent design. The facts relied upon to prove participation, with knowledge, by Mr Cowen in a dishonest and fraudulent design (of Mr Tucker and/or Mr Kennedy) are not pleaded - simply a conclusion in [125], on the premises of [123].

[98] In my view, in so far as it concerns Mr Cowen, [123]-[125] ought to be struck out. Counsel for Mr Cowen submits there is no evidence before the court that the plaintiff could replead such a case. However, quite properly this application has focussed on the pleading itself, not evidence, and unless there are limitation issues, I cannot see a reason to foreclose the plaintiff from pleading a claim on this basis, if it can.

21 Qintex Australia Ltd (in liquidation) v ANZCap Nominees Ltd [2000] QSC 394 at [25] per Williams J; Lanai Unit Holdings Pty Ltd (as trustee of Lanai Unit Trust) v Mallesons Stephen Jacques (a firm) [2016] QSC 002 at [43] and [52] per Jackson J; see also Allen Dodd (as trustee for the Dodd Superannuation Fund) v Shine Corporate Ltd [2018] QSC 040 at [15]- [17] per Martin J.

given the nature of the allegations which are made against Mr Tucker; but noting that as the case against Mr Cowen is framed, there is a need for him to address the allegations as against Mr Tucker as well. Although not a mechanical exercise, if I factor into account Mr Robinson's critique of some of the items of work which comprise Mr Tucker's estimate, adopting a broad and general approach, a reduction in the amount sought by Mr Tucker to $250,000 is reasonable, taking into account, for example:

(a) the terms of the draft (or specimen) were non-variable; and

(b) the provision of any deed of indemnity would be subject to the claimant (plaintiff) and defendants agreeing on the terms of the draft, and the amount of security; and to the "subsequent express written confirmation from AmTrust that AmTrust would be willing to provide a DOI / a DOI in that amount".22

[119] By reference to this, the applicants submit the proposal is illusory, because it is conditional upon AmTrust agreeing to provide it. They submit this is reinforced when turning to the terms of the "specimen" deed itself,23 at the top of which there is note that

22 Affidavit of Mr Russell (CFI 42), at p 2 and p 36 of the exhibits.

23 Affidavit of Mr Russell (CFI 42), commencing at p 4 of the exhibits.

this is a "specimen only - any terms would be subject to AmTrust internal sign off and offer and to agreement".

[120] While this may be so, an order for security, to be provided by way of a deed of indemnity, would carry with it a consequential order for the stay of the proceedings if that is not forthcoming. Accordingly, in a practical sense, this does not support the argument that the proposed form is inadequate.

[121] Next, the applicants contend the indemnity itself is not unconditional. The indemnity is contained in clause 2, in terms that:

"Subject to this provision and to 3, 4, 5, 6, 12, 13 and 15 below, AmTrust hereby unconditionally and irrevocably undertakes to pay to the Respondent any sum or sums which the Claimant is legally liable to pay to the Respondent in respect of the Respondent's costs in the Claim which relate to the cost incurred up to and including the costs of the first instance determination only of the Claim."

[122] Whilst some of the clauses to which clause 2 is subject are mechanical provisions, the applicants make the following submissions about clauses 3 and 15:

[124] What can be ascertained from the redacted funding agreement is:

[128] The construction of a contract which is heavily redacted is impractical and artificial. On such parts of the funding agreement as are in evidence, I am not persuaded that what the plaintiff contends is the objective intention, effect or operation of the funding agreement.

[129] Accordingly, I am not persuaded on this basis that there is any particular disadvantage to the plaintiff if the security for costs is required to be provided by cash (or bank guarantee), as opposed to by way of a deed of indemnity.

[130] For completeness, I note that in [13(c)] of Mr Russell's affidavit filed 7 February 2019 (CFI 42) he deposes to being informed by the managing director of Vannin (the litigation funder) that the reasons it prefers to provide security for costs by means of a deed of indemnity include that the deposit of cash or the provision of a bank guarantee is "much more expensive" for Vannin (and also for the plaintiff) than the costs of providing security by means of a deed of indemnity. This is reiterated in a subsequent affidavit, filed 13 February 2019 (CFI 43) (at [6]) where Mr Russell deposes to being informed by the managing director that the terms of Vannin's litigation funding arrangements with

the plaintiff, and insurance arrangements with AmTrust are strictly confidential; that "pricing mechanisms and associated matters in the litigation funding arrangements" are not to be disclosed to the defendants; and that the cost to the plaintiff (if Vannin were to provide security by way of payment into court or a bank guarantee) would exceed the costs to the plaintiff of the insurance and deed of indemnity already arranged with AmTrust "because of the arrangements in that regard".

[131] The plaintiff sought to make this point good by reference to the redacted funding agreement; an argument which I have not accepted.

[132] In any event, the fact that the plaintiff contends the form of security it proposes is the least disadvantageous to it is not the answer to the central question, which is whether the plaintiff has discharged the practical onus of demonstrating that the proposed security, in the form of a deed of indemnity from AmTrust to the applicants, is adequate (in the sense of providing a fund or asset against which the applicants, if successful, can readily enforce an order for costs against the plaintiff) and does not impose an unacceptable disadvantage on the applicants.

[133] There are examples of cases in which a court has been satisfied that a deed of indemnity (provided by AmTrust) does provide adequate security.25 But as acknowledged by Crow J in one of those cases, the question whether the provision of security in the form of a deed of indemnity is adequate in any particular case is to be determined by reference to the deed provided and the evidence in the application, not by reference to any seemingly acceptable practice in AmTrust offering a deed of indemnity in other cases.26

[134] It has been held that in exercising the discretion as to the form of security to be provided, the issue is not to be approached by embarking upon a comparison exercise of assessing the relative attributes of the proffered security on the one hand, and the "conventional" or "familiar" forms of security (by cash deposit or bank guarantee) on the other, with a view to determining which form of security would be superior and which would be inferior.27

[135] In contrast, in Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293 at [59] the Victorian Court of Appeal (Tate and Kyrou JJA) said this, by way of obiter:

"The authorities do not preclude an order that security for costs be in the form of a personal undertaking by a third party other than a financial institution. However, where the court has a choice between security in that form and security in a liquid form that enables funds to be accessed with minimum risk that litigation may be required to enforce the security, ordinarily the court

25 DIF III Global Co-Investment Fund LP v BBLP LLC [2016] VSC 401; Re Tiaro Coal Limited (in liq) [2018] NSWSC 746; and Murphy v Gladstone Ports Corporation Ltd [2019] QSC 12.

26 Murphy v Gladstone Ports Corporation Ltd [2019] QSC 12 at [15].

27 DIF III Global Co-Investment Fund LP v BBLP LLC [2016] VSC 401 at [65]; see also Re Tiaro Coal Limited (in liq) [2018] NSWSC 746 at [12] and [22].

should prefer the liquid form. The need to prefer the liquid form where a choice is available has become more acute since the commencement of the CPA28 because:

(a) section 8(1) requires a court to seek to give effect to the overarching purpose in the exercise of any of its powers;

(b) section 7(1) provides that the overarching purpose is 'to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute';

(c) section 9(1) provides that in making an order in a civil proceeding, a court must further the overarching purpose by having regard to a number of objects, including: the efficient conduct of the business of the court (s 9(1)(c)); the efficient use of judicial resources (s 9(1)(d)); and the timely determination of the civil proceeding (s 9(1)(f));29 and

(d) a form of security for costs which does not provide a fund which can be accessed without the cooperation of the opposing party or a person who is connected to that party - and may require the commencement of proceedings to enforce it - has the potential to undermine the overarching purpose. This is because that form of security can give rise to satellite proceedings and additional delay and costs. Such satellite proceedings are contrary to the principle of finality in litigation."

[136] I note in this regard that the evidence before the court includes correspondence from Mr Russell, the solicitor for the plaintiff, to Mr Tucker, of 2 December 2018 in which it is said:

"Rather than engage in any argument, and consistent with UCPR 5, the plaintiff agrees to provide reasonable security for the costs of Tuckerloan and you, by way of deposit to our firm's trust account, such sum to be invested pending further order."30

[137] The plaintiff's position subsequently changed, on the basis of the evidence, given by its solicitor, Mr Russell, as to the preference of the litigation funder. But as both the Cowen applicants and the Tucker applicants submit, there is no evidence that the plaintiff, or its funder, are unable to provide security in the form of payment into court, or into a trust account, or by way of a bank guarantee.

[138] I accept, on the evidence before the court, that AmTrust is an entity of substance;31 and that the process of enforcing a costs judgment of this court in the United Kingdom is a

28 Civil Procedure Act 2010 (Vic).

29 See by analogy r 5 of the UCPR.

30 Affidavit of Mr Tucker filed 3 December 2018 (CFI 3) at p 17 of the exhibits.

31 See the affidavit of Mr Russell, filed 7 February 2019 (CFI 42) at pp 106-109.

relatively straightforward one, the cost of which would be expected to be covered by the additional $30,000 cash security covered.32 But as against that, AmTrust is a foreign third party to the proceeding, the terms of the proposed deed of indemnity in some respects require the applicants to depend upon AmTrust's cooperation (in respect of which it has "absolute discretion"), and if the deed is not voluntarily responded to upon a request for payment, would involve the applicants in further proceedings to enforce a costs judgment against AmTrust overseas. Those matters raise the considerations referred to in the Trailer Trash case referred to above.

[139] As against that, there is no basis in the evidence to conclude that there would be any impediment to the plaintiff, or its litigation funder, providing the security by payment into court, or a bank guarantee.

[140] On balance, I am not satisfied the plaintiff has discharged its practical onus of establishing that the proposed security, in the form of a deed of indemnity, is adequate and does not impose an unacceptable disadvantage on the applicants (defendants). Accordingly, the order of the court will be that the plaintiff provide the security for costs by payment into court, or into a solicitors' trust account, or in the form of a bank guarantee.

[141] Once again, the parties requested the opportunity to be heard, before the orders are made, in particular as to the time for provision of the security.

[142] I will also hear the parties as to costs of the applications.

32 See the affidavit of Mr Russell, filed by leave on 14 February 2019, at exhibit SCR-4.