PROCEDURE UNDER RULES OF COURT – AMENDMENT – where
the defendant
alleged that the plaintiff’s Further Amended Statement of Claim introduced
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER RULES OF COURT – AMENDMENT – wherethe defendantalleged that the plaintiff’s Further Amended Statement of Claim introduceda new cause of action after the expiryof the limitations period –whether, by the Further Amended Statement of Claim, the plaintiffs introduced anew cause of actionto their pleadingPROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER RULES OF COURT - SUMMARY JUDGMENT – wherethe defendantsmade an application under r 293 UCPR for summary judgment – whether theplaintiffs has no real prospect of succeedingon all or part of their claim andthere is no need for a trial of the claimPROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER RULES OF COURT – PLEADING – STATEMENTOF CLAIM– where the first defendant submitted that the plaintiffs had not, in
their pleading, alleged standing which would
entitle them to sue for conversion
– whether the statement of claim should be struck out because the
plaintiffs did not have
standing – where the plaintiffs made an allegation
of fraud in their Statement of Claim – where the plaintiffs did not
plead
the specific facts said to constitute fraud – whether that part of the
Statement of Claim satisfied the requirement in
r 149 UCPR – whether that
part of the Statement of Claim should be struck out – where the first
defendant submitted that
certain paragraphs of the Statement of Claim were
ambiguous – whether the plaintiffs should be granted leave to amend their
statement of claim
TORTS - TROVER AND DETINUE - WHAT CONSTITUTES CONVERSION - GENERALLY
– where the plaintiff alleged that the first defendant
was liable in
conversion in respect of a cheque - whether a plaintiff may claim damages
against a drawee or paying bank, in an action
for conversion
Bills of
Exchange Act 1909 (Cth), s 86
Cheques Act 1986 (Cth), s 92
Supreme Court Act 1995 (Qld), s 47
Uniform Civil Procedure Rules 1999 (Qld), r 7, r 293, r 376,
r 378, r 379
Adamson v Williams [2001] QCA
38,
Borsato v Campbell [2006] QSC
191
Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232
[2005] QCA
227
Dey v Victorian Railways Commissioners (1949) 78 CLR
62
General Steel Industries Inc v Commissioner for Railways (NSW)
[1964] HCA 69
(1964) 112 CLR 125
Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988)
18 NSWLR 420
Neumann Contactors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA
119
Smith v Union Bank of London (1875) LR 10 QB 291
Judgment (113 paragraphs)
[1]
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - AMENDMENT - where the defendant alleged that the plaintiff's Further Amended Statement of Claim introduced a new cause of action after the expiry of the limitations period - whether, by the Further Amended Statement of Claim, the plaintiffs introduced a new cause of action to their pleading
[2]
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - SUMMARY JUDGMENT - where the defendants made an application under r 293 UCPR for summary judgment - whether the plaintiffs has no real prospect of succeeding on all or part of their claim and there is no need for a trial of the claim
[3]
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - PLEADING - STATEMENT OF CLAIM - where the first defendant submitted that the plaintiffs had not, in their pleading, alleged standing which would entitle them to sue for conversion - whether the statement of claim should be struck out because the plaintiffs did not have standing - where the plaintiffs made an allegation of fraud in their Statement of Claim - where the plaintiffs did not plead the specific facts said to constitute fraud - whether that part of the Statement of Claim satisfied the requirement in r 149 UCPR - whether that part of the Statement of Claim should be struck out - where the first defendant submitted that certain paragraphs of the Statement of Claim were ambiguous - whether the plaintiffs should be granted leave to amend their statement of claim
[4]
TORTS - TROVER AND DETINUE - WHAT CONSTITUTES CONVERSION - GENERALLY - where the plaintiff alleged that the first defendant was liable in conversion in respect of a cheque - whether a plaintiff may claim damages against a drawee or paying bank, in an action for conversion
Williams Graham Carman Solicitors for the respondent/plaintiffs
[17]
McCullough Robertson for the first applicant/defendant
[18]
Bendigo and Adelaide Bank Ltd for the second applicant/defendant
[19]
[1] On 22 June 2001 an instrument was drawn on the first defendant, naming the plaintiffs as payees (Westpac cheque). It was subsequently deposited with the third defendant, to the credit of an account in the name of Drury Management Pty Ltd (Drury Management). The third defendant presented the cheque for payment to the first defendant, and the cheque was paid.
[20]
[2] On 19 June 2007, the plaintiffs commenced these proceedings. On 1 April 2010, they filed a Further Amended Statement of Claim (FASC). The first defendant seeks summary judgment against the plaintiffs under r 293 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). Alternatively, it challenges amendments found in the FASC, or seeks to have some paragraphs of it struck out. It also seeks to have struck out certain parts of the plaintiffs' response to a request for further and better particulars.
[21]
[3] It is convenient to commence with a consideration of the plaintiffs' pleadings.
[22]
[4] The relevant allegations made by the plaintiffs in their initial Statement of Claim (SC) are as follows:
[23]
"2. At all times material to this action, the plaintiffs were customers of the first and second defendants.
[24]
On or about 22 June 2001, the first defendant drew a cheque ('Westpac cheque') in favour of the plaintiffs, particulars of which follow:-
[25]
The Westpac cheque was crossed with two parallel traverse lines with the words 'not negotiable' appearing between the lines.
[26]
The Westpac cheque contained a further direction to the collecting bank that the cheque be paid to the account of the payee only.
[27]
The Westpac cheque was not deposited to the account of the plaintiffs. The Westpac cheque was deposited to an account maintained by the third defendant ('NAB account'), particulars of which follow:-
[28]
On or about 22 June 2001, the first defendant wrongly and without authority paid the cheque and debited the plaintiffs' Westpac account for the amount of $250,000.00.
In the premises, the first defendant had no authority to pay the Westpac cheque and is liable to pay the said sum of $250,000.00 to the plaintiffs.
[29]
In the alternative, it was an implied term of the contract between the first defendant, as banker, and the plaintiffs, as customer, that the first defendant would observe reasonable skill and care in and about executing the plaintiffs' orders, including cheques drawn on or to the plaintiffs' account. By reason of the matters pleaded the first defendant, in paying the Westpac cheque without inquiry, was negligent and in breach of contract and is liable to the plaintiffs for damages in the sum of $250,000.00.
[30]
On or about 22 June 2001, the Westpac cheque was presented to the third defendant for collection and the third defendant collected the proceeds of the cheque and placed them to the credit of the NAB account.
[31]
In the premises, the third defendant has converted the proceeds of the Westpac cheque to its own use and has wrongfully deprived the plaintiffs of them so that the plaintiffs have suffered loss and damage.
[32]
Alternatively, the proceeds of the Westpac cheque in the amount of $250,000.00 are payable to the plaintiffs by the third defendant as money had and received by the third defendant to the plaintiffs' use."
[33]
[5] There then followed a claim for relief in respect of another cheque, which is not relevant for this application. The prayer for relief in the SC, so far as it relates to the first defendant, was as follows:
[34]
1. Against the first defendant, the sum of $250,000, together with interest pursuant to section 47 of the Supreme Court Act 1995, and costs."
[35]
[6] The prayer for relief in the SC is expressed consistently with the relief sought in the Claim.
[36]
[7] On 9 December 2009 the Claim and the SC were amended in ways not relevant for the present application. On 31 March 2010 the plaintiffs filed the FASC, relying on r 378 of the UCPR. The FASC included the following:
[37]
"2. At all times material to this action, the plaintiffs were customers of the first and second defendants.
[38]
On or about 22 June 2001, Cairns Penny Bank Limited drew a cheque upon the first defendant as drawee ('Westpac cheque') in favour of the plaintiffs, particulars of which follow:
[39]
The Westpac cheque was crossed with two parallel transverse lines with the words 'not negotiable' appearing between the lines.
[40]
The Westpac cheque contained a further direction to the collecting bank that the cheque be paid to the account of the payee only.
[41]
The Westpac cheque was not deposited to the account of the plaintiffs. The Westpac cheque was deposited to an account maintained by Drury Management Pty Ltd with the third defendant ('NAB account'), particulars of which follow:
[42]
6A. The Westpac cheque was acquired from the Plaintiffs and deposited to the NAB account by Drury Management Pty Ltd fraudulently and in the conduct and for the purposes of an unregistered managed investment scheme then being undertaken by Drury Management Pty Ltd in contravention of s.601ED of the Corporations Act 2001 (Cth).
[43]
On or about 22 June 2001, the first defendant wrongly and without authority paid on the cheque and debited the plaintiffs' Westpac account for the amount of $250,000.00 to the third defendant as collecting bank acting for and on behalf of Drury Management Pty Ltd.
[44]
In the premises, the first defendant had no authority to pay the Westpac cheque and thereby converted the same and is liable to pay the said sum of $250,000.00 to the plaintiffs.
[45]
In the alternative, it was an implied term of the contract between the first defendant, as banker, and the plaintiffs, as customer, that the first defendant would observe reasonable skill and care in and about executing the plaintiffs' orders, including cheques drawn on or to the plaintiffs' account. By reason of the matters pleaded the first defendant, in paying the Westpac cheque without inquiry, was negligent and in breach of contract and is liable to the plaintiffs for damages in the sum of $250,000.00.
[46]
On or about 22 June 2001, the Westpac cheque was presented to the third defendant for collection and the third defendant collected the proceeds of the cheque from the first defendant for and on behalf of the third defendant's account holder, Drury Management Pty Ltd and placed them to the credit of the NAB account.
[47]
In the premises, the third defendant has converted the proceeds of the Westpac cheque to its own use and has wrongfully deprived the plaintiffs of them so that the plaintiffs have suffered loss and damage.
[48]
Alternatively, the proceeds of the Westpac cheque in the amount of $250,000.00 are payable to the plaintiffs by the third defendant as money had and received by the third defendant to the plaintiffs' use."
[49]
[8] The first defendant made a general challenge to the amendments in the FASC in its written submissions under the heading, "Disallowing the Amendment". In essence, the challenge was based on the proposition that the FASC introduced a new cause of action; that in doing so, the plaintiffs had not obtained leave under r 376; and leave would not be granted because neither limb of the test set out in r 376(4) would be satisfied.
[50]
[9] The language of r 376 makes its provisions applicable only in a case where an application is made for leave to make an amendment. None had been sought in the present case. Counsel for the first defendant was not able to identify a provision which, in terms, made leave necessary. Reference was made to r 379, which applies if a party makes an amendment without leave, before the filing of a Request for Trial date. It enables another party, within eight days after service of the amendment, to apply to the court to disallow all or part of the amendment. No application had been made by the first defendant under r 379. However, without objection on behalf of the plaintiffs, leave was given to amend the first defendants' application, to seek an extension of time under r 7 of the UCPR to seek relief under r 379. That application was granted.
[51]
[10] It was then common ground that the first defendants' application should be dealt with on principles analogous to an application for leave under r 376.[1]
[52]
[11] Rule 376 regulates three classes of amendment. That which is of potential relevance in the present case is an amendment to include a new cause of action. The first question, therefore, is whether, by the FASC, the plaintiffs have introduced a new cause of action to their pleading.
[53]
[12] As was pointed out on behalf of the first defendants, the SC did not expressly identify a cause of action. For that matter, neither did the Claim. Counsel for the plaintiffs referred to Adamson v Williams,[2] which dealt with a pleading which did not nominate a particular cause of action. Having noted that there was no requirement that a cause of action be expressly named in a pleading, the Court held that a pleading would permit a judgment under any cause of action that was established by the facts alleged in the pleading.[3] It seems to me that Adamson is authority for the proposition, therefore, that the plaintiffs would be entitled, at a trial conducted on the SC, to rely on any cause of action which would be established by the facts pleaded (if proven).
[54]
[13] However, Adamson might not provide a completely suitable test for determining whether an amendment has the effect of including a new cause of action, under r 376. In Borsato v Campbell,[4] with reference to r 376, PD McMurdo J said:
[55]
"The term 'cause of action' was defined in Cooke v Gill[5] as being 'every fact which is material to be proved to entitle the plaintiff to succeed', a definition which many judgments have employed in the context of this rule or its equivalent ... But it has not been applied literally, for otherwise any new fact to be added to a plaintiff's case would be treated as raising a new cause of action which required leave in the context of a rule such as r 376(4). So in Allonnor Pty Ltd v Doran for example, there is an indication of what the Court of Appeal in Thomas v State of Queensland[6] subsequently endorsed as a 'fairly broad brush comparison between the nature of the original claim and that to which it is sought to be amended'. The dividing line is between the addition of facts which involve a new cause of action and those which are simply further particulars of the cause already claimed, and its location involves a question of degree which can be argued, one way or the other, by the level of abstraction at which the plaintiff's case is described."
[56]
[14] Rule 376(4) identifies a test for the grant of leave to amend a pleading where the amendment will add a cause of action which may be described as "new". One of the purposes of this provision is to distinguish between cases where the amendment introduces a "new" cause of action, and those where this does not occur. It plainly contemplates that leave will be sought to make amendments which would not add a "new" cause of action to the proceeding. It seems to me unlikely that the test found in this provision was intended to apply to all cases where the amendment would change the facts alleged: pleadings are primarily concerned with the allegation of material facts. For the purposes of r 376(4), it seems to me that a cause of action is not "new", if it is reasonably apparent from a party's pleadings, prior to the amendment, that the party sought to raise that cause of action. As the passage from Borsato indicates, a cause of action is not new in this context simply because not all of the material facts which must be established for the plaintiff to succeed have already been pleaded.
[57]
[15] Reference to r 376 makes it necessary to attempt to identify the causes of action apparently relied upon by the plaintiffs in the SC. It can be seen from paragraphs 9 and 12 of the SC that the pleader intended to establish three alternative causes of action. The second relied upon a contract between the plaintiffs and the first defendant. The third is the basis for a claim made only against the third defendant, and may be ignored for present purposes. The identification of the first cause of action is, however, not so straightforward.
[58]
[16] In particular, in view of the allegation contained in the FASC that the first defendant is liable in conversion in respect of the Westpac cheque, and the submission that this is the introduction of a new cause of action, it is necessary to consider whether the allegations in the SC sought to raise that cause of action. However, it is convenient first to say something about that cause of action.
[59]
[17] Mr Jonsson of Counsel, who appeared for the plaintiffs, submitted that in the circumstances pleaded, a plaintiff may claim damages against a drawee or paying bank, in an action for conversion. Neither he, nor Mr Brennan of Counsel, who appeared for the first defendant, was able to identify a case based on such a cause of action. However, Mr Jonsson referred to the judgment of Blackburn J in Smith v Union Bank of London.[7] That was a case where a cheque stolen from the plaintiff was validly negotiated and paid to a subsequent holder. The plaintiff sued the paying bank. In the course of his judgment, his Lordship said[8] with respect to the paying bank:
[60]
"I think (it) would have been liable for conversion of this cheque, if (it) had paid it to anyone but the lawful holder."
[61]
[18] Paget's Law of Banking[9] seems to give some recognition to such a cause of action.
[62]
[19] Further, s 92 of the Cheques Act 1986 (Cth) provides that, where a bank, in good faith and without negligence, pays a crossed cheque drawn upon it to a bank, the bank shall be deemed to have paid the cheque in due course. The protection may be limited, therefore, to the potential liability of the paying bank to the drawer of the cheque. However, its predecessor was s 86 of the Bills of Exchange Act 1909 (Cth). The effect of this section was to place a paying bank in the same position as if payment of the cheque had been made to the true owner. It seems to me that this recognises a potential action by the true owner against the paying bank, but for the protection provided by s 86.[10] It assumes the existence of an unidentified cause of action by the true owner of the cheque against the paying bank.
[63]
[20] In Hunter BNZ Finance Ltd v C G Maloney Pty Ltd[11] a finance company had been induced to draw cheques in favour of an innocent payee by the fraud of a third party. The payee, again innocently, endorsed the cheques in some cases to the third party, and in some cases to a company under his control. The cheques were then deposited with a bank, which collected them. Giles J held that the property in the cheques had passed from the drawer, notwithstanding the fraud.[12] However, he made a number of other findings which are of present relevance. One was that the title created by the deliveries of the cheque was avoided when the transactions were rescinded by the finance company.[13] Another was that the commencement of proceedings rescinded the transactions.[14] Notwithstanding the position at the time when the collecting bank collected the cheques, the rescission operated retrospectively.[15] The collecting bank was liable in conversion to the finance company.[16]
[64]
[21] While in Hunter's case the defendant was the collecting bank, the tort of conversion may provide a remedy against the paying bank also. Thus it has been said:[17]
[65]
"Voluntarily to receive goods in consummation of a transaction which is intended by the parties to give to the recipient some proprietary rights in the goods may be a conversion actionable by the owner. It has been held a conversion ... for a banker to receive a cheque from a person who has no title to it and to credit the proceeds to that person's account." (references omitted)
[66]
[22] It is difficult to see why the principle stated in that passage would not apply to the paying bank, as much as the collecting bank. Payment to the collecting bank is intended to give the paying bank rights in the cheque in respect of which the payment is made.
[67]
[23] Against that background, it is convenient to turn to the allegations in the SC. They include an allegation that the plaintiffs were the payees of the Westpac cheque; that the Westpac cheque was crossed and marked "not negotiable"; that the Westpac cheque was not deposited to the account of the plaintiffs, but was deposited to an account maintained by the third defendant; and that the first defendant wrongly and without authority paid the cheque.
[68]
[24] In that summary, I have not made mention of the banker-customer relationship pleaded in paragraph 2 of the SC. Paragraph 2 seems to have been advanced in support of the claim made in the SC in reliance on a contract between the plaintiffs and the first defendant. It would support the alternative claim for breach of contract against the first defendant, ultimately pleaded in paragraph 9 of the SC. However, there is no apparent connexion between the relationship pleaded in paragraph 2, and the claim for unauthorised payment, liability for which is alleged in paragraph 8 of the SC.
[69]
[25] It seems to me that a cause of action, and the most likely cause of action, which can be identified by reference to the paragraphs preceding paragraph 9, is a cause of action in conversion. The plaintiffs alleged that they were the payees of the cheque; but that the defendant wrongfully paid the cheque for the benefit of someone else's account with the third defendant. The liability alleged in paragraph 8 is based on the payment made by the first defendant in respect of the cheque.
[70]
[26] In my view, the SC sufficiently raised a claim in conversion for it to be said that the cause of action is not "new". The claim in the pleading is based upon the first defendant's wrongful payment of the cheque for the benefit of a third party, when the plaintiffs were the payees. It may well be that it is necessary to plead some additional facts for the plaintiffs to succeed, though that is not inevitably so. For example, it may be debated whether the allegation that they were the payees of the cheque is sufficient to found an action for conversion, which depends on possession or a right to immediate possession. It may also be necessary, either to avoid surprise, or, perhaps by way of reply to a defence alleging that possession had passed to Drury Management and then to the third defendant, to plead the fraud of Drury Management, and the rescission of the resulting transactions by the plaintiffs. These facts, however, seem to me to be additional facts which do not change the nature of the first claim made against the first defendant.
[71]
[27] It is then necessary to consider the amendments introduced by the FASC.
[72]
[28] The first amendment changed the identity of the alleged drawer. Prior to the amendment, the allegation may have been material to the cause of action based on the relationship between the plaintiffs and the first defendant as banker and customer, giving rise to the alternative claim made against the first defendant; but the change does not introduce a material fact related to a new cause of action. In my view, this change simply corrects a particular describing the cheque.
[73]
[29] The correction of the word "transverse" in paragraph 4, and the addition of the name of the entity holding the account with the third defendant in paragraph 6, likewise, do not plead material facts which might conceivably give rise to a new cause of action.
[74]
[30] The allegation inserted in paragraph 3 of the FASC to the effect that the first defendant was the drawee of the cheque, in my view, does not add a new material fact. This allegation is an amplification of the allegation included in paragraph 7 of the SC that the first defendant paid the cheque.
[75]
[31] Something similar can be said of the allegation inserted in paragraph 7 to the effect that the third defendant acted as collecting bank on behalf of Drury. Paragraph 6 of the SC had already alleged that the cheque was deposited to an account with the third defendant, details of which were provided; and paragraph 7 alleged that the first defendant had paid the cheque. It seems to me that these additions to paragraph 7 more clearly articulated facts which had been pleaded in the SC.
[76]
[32] Paragraph 6A of the FASC, although it contains an allegation of fraud, does not allege fraud by the first defendant. It seems to me that its function is to supplement the allegation contained in paragraph 6 of the SC relating to the deposit of the Westpac cheque with the third defendant. It seems to me to be debatable whether the allegation of fraud is appropriately included in the statement of claim. Its true function may be to defeat a defence which might be raised by the first defendant that the first defendant made payment of a cheque to the third defendant as agent for the true owner or holder of it.
[77]
[33] In my view, therefore, paragraph 6A does not have the effect that the FASC introduces a new cause of action.
[78]
[34] The addition of the words in paragraph 8 expressly alleging conversion does not introduce a new cause of action. It simply identifies the cause of action which the plaintiffs allege to be the consequence of the facts previously pleaded.
[79]
[35] The words added to paragraph 10 are of similar effect to allegations found in paragraph 6A and 7 of the FASC, and do not introduce a new cause of action.
[80]
[36] The application made under r 379 for disallowance of the amendments introduced by the FASC in relation to the action against the first defendant should therefore be refused.
[81]
[37] This application is made under r 293. That rule provides that judgment may be given for a defendant if a plaintiff has no real prospect of succeeding on all or a part of the plaintiff's claim, and there is no need for a trial of the claim, or that part of the claim.
[82]
[38] In Deputy Commissioner of Taxation v Salcedo[18] it was held that rr 292 and 293 "brought about significant changes in the law and procedure relating to summary judgment".[19] More recently, the approach to be taken to an application for summary judgment under the UCPR was considered by the Court of Appeal in Neumann Contactors Pty Ltd v Traspunt No 5 Pty Ltd.[20] Although reference was made to Salcedo, the court nevertheless applied[21] principles derived from Dey v Victorian Railways Commissioners[22] and General Steel Industries Inc v Commissioner for Railways (NSW).[23] Those principles are that issues raised in proceedings are to be determined in a summary way in only the clearest of cases; and that summary judgment is to be granted only when a high degree of certainty is achieved about the ultimate outcome of the proceeding, if it were allowed to go to trial in the ordinary way.
[83]
[39] The first defendant's submissions in support of its application for summary judgment deal with both the claim pleaded in the SC, on the basis that the amendments would be disallowed; and separately with the claims as pleaded in the FASC. In view of the conclusion I have reached about whether the amendments should be disallowed, it is now unnecessary to deal with the submissions in support of summary judgment, on the basis of the claim pleaded in the SC.
[84]
[40] The first submission made is that the FASC contains a bare assertion of a conversion, unsupported by material facts. I have earlier in these reasons attempted to identify the cause of action. It should be apparent that I consider that there is more than a bare assertion of conversion in the FASC. I should add that an action for conversion in these circumstances is quite uncommon, and that there may be some uncertainty about what a plaintiff is required to establish in order to succeed. For that reason alone, I would be reluctant to grant summary judgment in the present case.
[85]
[41] Secondly, it is submitted that the evidence shows a voluntary delivery of the Westpac cheque to Drury Management, resulting in an immediate right on its part to deposit the cheque; and (perhaps by implication, a submission that as a result, Drury Management was entitled to demand, through its agent the third defendant, payment from the first defendant, which the first defendant was required to make). This submission may be considered with the third submission made on behalf of the first defendant, that Drury Management's possession may be said to be "tainted by some pleaded misrepresentation" which would make delivery of the cheque to Drury Management voidable. In support of these submissions, the first defendant relies upon the affidavit of Mr Hughes as to the circumstances in which he gave the cheque to a representative of Drury Management; and on a submission that Drury Management's possession remains lawful "until the plaintiffs exercised the right to avoid the underlying contract between the parties", which is said, on the evidence not to have yet occurred.
[86]
[42] In Hunter[24] Giles J referred to authority for the proposition that where a person has obtained from another, by a fraudulently false pretence, a cheque crossed "not negotiable" with the intent to apply the proceeds to his own use, that person could not make any real title for such a cheque; and that a bank subsequently dealing with it could take no better title than the person who obtained the cheque fraudulently. In the present case, it would seem that the plaintiffs intend to assert that Drury Management, and accordingly the third defendant and first defendant, are in that position. In that respect, their position may be better than the finance company which was the plaintiff in Hunter. However, even if title passed, the plaintiffs may succeed in establishing that they can rescind their transaction with Drury Management ab initio; and that they have done so, at least by commencing this action, with the consequence that the first defendant's dealing with the Westpac cheque constitutes conversion. I do not have the high degree of certainty about the first defendant's prospects of success necessary to enable me to grant it summary judgment.
[87]
[43] The first defendant's application for summary judgment will be dismissed.
[88]
[44] The first defendant submits that the plaintiffs have not alleged in their pleading, standing which would entitle them to sue for conversion of the Westpac cheque.
[89]
[45] It should be noted that in none of the versions of the first defendant's application was this relief sought. The matter was raised in the outline of submissions of the first defendant, but the oral submissions summarising the first defendant's approach to the application did not refer to it.[25] The written submissions on behalf of the plaintiffs do not deal with the matter, though orally Mr Jonsson referred to the allegations in paragraph 3 of the FASC where the plaintiffs were identified as the payees (it had also been alleged that the cheque was drawn in their favour). Reference was also made to paragraph 6A, where it is alleged that the Westpac cheque was acquired from the plaintiffs. I also note the allegations in paragraphs 4 and 5, as to the form of the cheque. It is difficult to see the relevance of these allegations, except in the context of delivery of the cheque to the plaintiffs as payees. Further, paragraph 6 refers to the cheque not being deposited to their account, but to another account. The allegation necessarily carries with it the proposition that the cheque was not retained by the drawer, but delivered to someone; and the implicit allegation that the cheque should have been deposited to the account of the plaintiffs again suggests delivery to them had occurred.
[90]
[46] It would seem desirable for the plaintiffs to make the allegation clear. However, the facts pleaded, in my view, carry with them the proposition that the cheque had been delivered to the plaintiffs, and for that reason I would not strike out the statement of claim, particularly if the difficulty is one curable by an amendment.
[91]
[47] The first defendant seeks to strike out paragraph 6A of the FASC on the ground that, although it contains the allegation of fraud, the allegation is a general one, and does not plead the specific facts said to constitute the fraud.[26] In my view, that submission is correct. The plaintiffs' submissions drew attention to facts identified in the particulars which they have provided, which evidence fraudulent conduct on the part of Drury Management. To the extent that they state comprehensively the fraud alleged by the plaintiffs, they alleviate the difficulty which the requirements relating to pleading fraud are intended to address. However, it seems to me that if the plaintiffs wish to rely on fraudulent conduct of Drury Management, then the material facts on which they rely should be included in their pleading.
[92]
[48] Paragraph 6A of the pleading does not satisfy the requirement found in r 149 of the UCPR to state the material facts on which they intended to rely. Relief should be granted with respect to this paragraph.
[93]
[49] I have dealt separately with the attack by the first defendant on the plaintiffs' allegation of fraud. However the first defendant has also dealt with paragraphs 6A, 7 and 8 of the FASC, in part by reference to the attack on the pleading of fraud; in part by an allegation that the plaintiffs have not pleaded their entitlement to sue in conversion; and in part on the basis that the paragraphs are (at best) "ambiguous, vague or too general". It seems to me that the paragraphs, taken together, include some allegations of material facts, and some conclusory assertions. The true criticism is that the factual basis for the conclusory assertions are either not pleaded, or not adequately pleaded. For example, I have already discussed the fact that the FASC pleads that the Westpac cheque was drawn in favour of the plaintiffs. In a somewhat similar category is the allegation in paragraph 7 that the first defendant wrongly and without authority paid the cheque. It is not specifically pleaded that this had consequences relevant to the claim for conversion. Thus, where a cheque is physically presented to a drawee institution for payment, the drawee bank obtains the right to possession.[27] If payment is made without the physical presentation of the cheque, the drawee bank acquires the right to possession of the cheque; the collecting bank retains the cheque on behalf of the drawee bank.[28] While the facts pleaded arguably carry with them the consequences for which the statute provides, and are matters of law, nevertheless it seems to me that these matters are not fully or properly pleaded.
[94]
[50] In the circumstances of the present case, it seems appropriate to allow the plaintiffs leave to amend their statement of claim within a specified time; and to order that unless they do so, paragraphs 6A, 7 and 8 be struck out.
[95]
[51] The defendant attacks the adequacy of particulars provided in response to requests relating to paragraphs 6A and 7 of the FASC
[96]
[52] Some, at least, of the criticisms, appear to be well made. Nevertheless, since it is envisaged that the plaintiffs will replead matters raised by these paragraphs, it seems to me that the better course is not to make any order in respect of these particulars.
[97]
[53] In my view, the first defendant has failed to establish that the amendments found in the FASC raise a new cause of action and for that reason should be disallowed under r 379. It has also failed to establish that it is entitled to summary judgment. There are, however, some respects in which the FASC and the plaintiffs' particulars are unsatisfactory. Subject to further submissions from the parties, I propose to deal with them in the manner suggested in these reasons.
[98]
[1] See the annotations at [r 379.1] in Civil Procedure Queensland.