procedural. The plaintiffs were ordered to re-plead paragraph 53 of the statement of claim to specify with particularity the material facts, matters and circumstances supporting the allegation. They were...
Key principles
A claim should not be summarily struck out for disclosing no reasonable cause of action unless, taking the pleaded facts at their highest, it is manifestly groundless or so...
A pleaded agreement to augment partnership shares to an unspecified amount at a later date was not necessarily incapable of supporting an arguable contractual claim where the...
The proprietary estoppel claim was not shown to be unarguable merely because the plaintiffs’ alleged conduct could also be characterised as performance of a contractual promise....
The contingent restitution claim based on alleged work undertaken under a unilateral mistake was not manifestly hopeless. Whether the alleged mistake could support restitution,...
Issues before the court
Whether the pleaded Augmentation Agreement disclosed an arguable contractual claim despite leaving the future increase in partnership shares...
Plain English Summary
The Court did not decide who was right about the partnership shares or whether the plaintiffs owed money to the partnership. It decided only Benscrape’s interlocutory application. Most of Benscrape’s requested strike-out and summary judgment orders were refused because the claims and cross-claim raised arguable matters and disputed facts. The exception was the serious allegation that the defendants knowingly distorted the partnership accounts: the plaintiffs had to re-plead it with greater detail. Benscrape had to pay the costs of the motion.
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Deep Dive
2,386 words · generated 01/10/2026
What happened
The case was an interlocutory dispute within a broader partnership proceeding, not a final determination of the parties’ rights or accounts. Ward CJ in Eq heard Benscrape Pty Ltd’s notice of motion on 6 May 2020 and made orders on 18 May 2020. Benscrape sought three main forms of relief: strike-out orders against parts of the plaintiffs’ statement of claim, summary judgment on its cross-claim for an alleged debt of $617,120, and, alternatively, strike-out of the defence to that cross-claim.
Whether the proprietary estoppel claim was unarguable or inconsistent with the contractual claim.
Whether the alternative restitution claim based on unilateral mistake was manifestly hopeless.
Whether paragraph 53 adequately pleaded the allegation that the defendants knowingly distorted partnership accounts.
Cited legislation
4 cited instruments linked from this judgment.
The underlying arrangement concerned sheds built on land owned by Benscrape in Griffith. The parties did not dispute that a partnership, or at least an oral agreement to form one, existed. The central dispute was about the terms of that arrangement and the plaintiffs’ share. The written partnership agreement initially specified a 75% share for Benscrape and 12.5% for each plaintiff. The plaintiffs alleged that later arrangements changed their combined share, ultimately to 45%; Benscrape disputed that allegation.
The statement of claim advanced several alternative or overlapping bases for relief, including contract, proprietary estoppel, restitution, and quantum meruit. It also alleged that the defendants had knowingly distorted the partnership accounts. Benscrape challenged the adequacy and legal viability of many of these allegations. It also relied on the partnership accountant’s reconciliation, which was based on a 75/25 division and supported Benscrape’s claim that the plaintiffs had overdrawn $617,120.
The Court made a limited order concerning the allegation about the accounts. It required the plaintiffs to re-plead paragraph 53 with particularity. It otherwise dismissed the notice of motion with costs. The Court did not resolve whether the shares were 75/25 or 55/45, whether the accountant’s work satisfied the partnership agreement, or whether the claimed overdrawn amount was payable.
Why the court decided this way
The Court’s approach was shaped by two related principles. First, summary dismissal is reserved for cases that are clearly untenable. Ward CJ in Eq referred to General Steel Industries Inc v Commissioner for Railways (NSW) and to Pi v Pierce and Attorney General for NSW for the requirement that a claim be taken at its highest and dismissed only if it is manifestly groundless or so obviously untenable that it cannot succeed. A court should not determine a disputed factual case through an interlocutory application simply because one party considers the other’s pleading weak.
Second, pleadings must perform their basic procedural function. They must state material facts and tell the opposing party the substance of the case it must meet. The Court referred to Banque Commerciale SA (in Liq) v Akhil Holdings Ltd for the connection between adequate pleadings, procedural fairness and defining the issues for decision. Particulars and evidence are not substitutes for missing material facts in a pleading.
On the contractual claim, Benscrape argued that the 1999 Augmentation Agreement was an unenforceable agreement to agree because it contemplated a larger partnership share to be determined later. The Court considered Booker Industries Proprietary Limited v Wilson Parking (Qld) Proprietary Limited, which addresses incomplete agreements. But the plaintiffs also alleged that the parties later agreed, in 2014, that their combined share would be 45%. Ward CJ in Eq therefore was not persuaded that the claim had no tenable or arguable basis. That was a procedural conclusion only. It did not establish that the 1999 arrangement was enforceable or that a 2014 agreement was made.
The proprietary estoppel claim also survived. Benscrape said the plaintiffs’ conduct was pleaded as performance of express agreements and therefore could not also be reliance on an assumption or representation. The Court treated that as an alternative case rather than an inherent contradiction. The plaintiffs’ alleged conduct could be said to have been undertaken in reliance on a contractual promise, or, if the promise was not legally binding, in reliance on a promise to the same effect. The Court referred to Sidhu v Van Dyke when discussing the eventual question of relief. It did not decide whether the plaintiffs could prove the representation, reliance, detriment or other elements of the claim.
The restitution claim was also allowed to remain. The plaintiffs’ contingent argument was that, if the agreement or representation was not legally effective, the work had been performed under a mistake about whether the partnership arrangements would change. Ward CJ in Eq observed that unilateral mistake could, in some circumstances, be relevant to restitution and referred to David Securities Pty Ltd v Commonwealth of Australia. Whether the mistake could support recovery, and whether it would be unconscionable for the defendants to retain the benefit, were matters for trial. The Court did not find that the plaintiffs had established a restitutionary entitlement.
The allegation about the accounts was different. Paragraph 53 alleged that the defendants had deliberately and knowingly distorted the partnership accounts for their benefit. The Court accepted that this was a serious allegation, tantamount to fraud. It found the pleading deficient because it did not state with sufficient particularity the material facts and circumstances supporting that allegation. Re-pleading, rather than simply providing further particulars, was required so the defendants could understand the precise case.
Finally, summary judgment on the cross-claim was refused because important facts were disputed. The alleged debt depended on the partnership shares, the accountant’s reconciliation and the treatment of other transactions. The Court considered that these matters were not suitable for summary determination.
Before and after state of the law
This judgment did not purport to alter the general law of pleadings, contract, estoppel or restitution. Its significance lies in the application of established procedural standards to a complex partnership dispute.
Before the ruling, the statement of claim contained alternative claims based on an alleged 1999 arrangement, a later 2014 agreement, proprietary estoppel and restitution. Benscrape argued that deficiencies in one claim meant that other claims should also be struck out. The Court applied the high threshold for summary dismissal and declined to remove those claims at this stage. Its conclusion was not that the claims would succeed, but that they could not then be characterised as manifestly groundless or obviously untenable.
The decision also illustrates the distinction between an arguable case and an adequately particularised allegation. The Court considered the contract, estoppel and restitution claims arguable enough to proceed despite the disputes about their legal and factual foundations. By contrast, the serious allegation of deliberate accounting distortion needed further specification. An allegation may be capable of being advanced in principle while its current pleading remains inadequate.
The Court’s discussion of the alleged incomplete agreement should be read narrowly. It did not decide that an agreement to agree is enforceable, nor did it displace Booker Industries. Rather, it reasoned that the alleged later agreement in 2014 meant the pleaded case was not necessarily doomed at the pleading stage. Any final assessment of what was agreed, when it was agreed, and whether it was sufficiently certain remained open.
Similarly, the Court did not settle the scope of restitution for unilateral mistake. It noted that a unilateral mistake may be relevant in some circumstances and that the question could not be resolved summarily on the material before it. The legal and factual requirements for the claim remained for determination later.
The procedural setting mattered. Under ss 56–59 of the Civil Procedure Act 2005 (NSW), the Court considered the just, quick and cheap resolution of proceedings, the parties’ conduct, and the avoidance of unnecessary delay. Most objections had been raised close to the listed trial, after the defendants had pleaded and served evidence. The Court treated that timing as relevant, though it still required correction of the serious pleading deficiency.
Key passages with plain-English translation
The judgment’s conclusion on the contract claim was: “I am not persuaded that it can be said that there is no tenable or arguable case based on there being a binding contract.” In plain English, the Court was not deciding that a binding contract existed. It was saying that, because the plaintiffs alleged a later agreement settling the increased share, Benscrape had not shown that the claim was so hopeless it should be stopped before trial.
On estoppel, the Court said: “I cannot conclude that there is no arguable cause of action in proprietary estoppel.” The Court considered that relying on a promise as a contract and relying on a similar promise in estoppel were not necessarily incompatible alternative positions. The evidence and final legal characterisation remained undecided.
On restitution, the Court stated: “I am not persuaded that a claim for restitution of benefits conferred under the operation of a unilateral mistake would of itself be hopeless or doomed to failure.” That passage does not establish that unilateral mistake automatically permits recovery. It means that this particular argument could not be dismissed without trial simply because the alleged mistake was unilateral.
The clearest direction concerned paragraph 53. The Court said Benscrape was “entitled to know precisely what are the material facts and circumstances on which reliance is placed for that serious allegation.” The plaintiffs therefore had to amend the pleading itself, rather than expect the defendants to assemble the case from other documents.
The Court also explained the broader role of pleadings by referring to Banque Commerciale: pleadings state “with sufficient clarity the case that must be met.” In practical terms, the other party should be able to understand the factual allegations and the issues to be tried from the pleading, rather than reconstruct them from affidavits or correspondence.
What fact patterns trigger this precedent
The decision is relevant to interlocutory applications seeking to terminate a claim before trial where the pleaded facts, taken at their highest, may support an arguable cause of action. It is particularly relevant where a party argues that an agreement is too uncertain, but the pleading also alleges later agreement or conduct that may have resolved the uncertainty. In that setting, the question at strike-out stage is not whether the claim is proved, but whether it is plainly incapable of success.
It is also relevant where a plaintiff advances alternative legal characterisations of the same conduct. A contractual claim and an alternative estoppel or restitution claim are not necessarily inconsistent merely because they rely on related events. The decision indicates that a court may allow such alternatives to remain where the pleaded case is that a promise was made and acted on, but its ultimate legal status is disputed.
The decision has particular force where a pleading alleges dishonesty, deliberate falsification, fraud or similar serious misconduct. A general assertion of wrongdoing, even with descriptions of its alleged consequences, may not give adequate notice of the material facts relied on. The pleading must make clear what conduct is alleged and the factual basis for attributing it to the defendant.
For summary judgment, the case is relevant where the amount claimed depends on disputed underlying matters such as the parties’ shares, accounting treatment, withdrawals or the effect of a certificate under an agreement. The presence of a reconciliation prepared on one party’s assumptions will not necessarily resolve those disputes if the assumptions themselves are contested.
The case also illustrates that timing matters. A pleading objection raised shortly before trial may be considered in the context of the parties’ previous conduct and the statutory case-management obligations. However, late timing does not eliminate the need to correct a material defect in a serious allegation.
How later courts have treated it
The supplied judgment contains no account of later judicial treatment of Lucantonio v Benscrape Pty Ltd. It therefore does not establish whether later courts have followed, applied, distinguished or criticised this decision.
The judgment itself discusses a range of authorities. It applies the summary-dismissal principles associated with General Steel Industries Inc v Commissioner for Railways (NSW), considers Booker Industries on incomplete agreements, refers to Sidhu v Van Dyke in relation to estoppel relief, and discusses David Securities in relation to mistake and restitution. It also discusses Barclay Mowlem Construction Ltd v Dampier Port Authority in the context of contemporary case management and pleadings.
Those authorities are part of Ward CJ in Eq’s reasoning in this judgment. They should not be treated as evidence of how later courts have treated Lucantonio itself. On the material supplied, the later-treatment question remains unanswered.
Still-open questions
The judgment left the substantive partnership dispute unresolved. The parties still had to establish whether the plaintiffs’ combined share remained 25% or had increased to 45%, and whether the alleged 1999 and 2014 arrangements were made and legally effective.
The Court did not decide whether the pleaded Augmentation Agreement was sufficiently certain, whether the alleged 2014 agreement filled any uncertainty, or whether either agreement could be established on the evidence. Those questions were preserved for the substantive proceeding.
The elements of the proprietary estoppel claim also remained open. The Court did not determine whether the alleged representation was made, whether the plaintiffs adopted the asserted assumption, whether they relied on it to their detriment, or what relief would be appropriate if the claim were made out. It noted that relief could involve questions of proportionality, but those questions were not determined on the motion.
The restitution claim remained contingent. The Court did not decide whether the alleged mistake was sufficiently fundamental, whether the defendants knew of it, whether retention of the benefit would be unconscionable, or how any recovery should be assessed. It also did not resolve how the quantum meruit claims interacted with the alleged contract. Mann v Paterson Constructions Pty Ltd was discussed in relation to a possible issue about contractual limits on quantum meruit, but Benscrape did not press that strike-out complaint at the hearing.
The cross-claim also remained unresolved. The Court did not determine whether the accountant had issued a certificate under clause 18 of the partnership agreement, whether any certificate was binding, whether the partnership shares used in the reconciliation were correct, or whether other payments and transactions affected the claimed $617,120.
Finally, paragraph 53 had to be re-pleaded. The judgment did not decide whether the accounting allegations were true. It decided only that, because they were serious, the factual basis had to be set out with particularity before the claim proceeded in its existing form.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have a qualified Australian lawyer check it.
Catchwords
[1990] HCA 11
Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82[1979] FCA 74
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Market Ltd (2008) 73 NSWLR 653[2002] NSWCA 44
Mann v Paterson Constructions Pty Ltd (2019) 93 ALJR 1164[1987] HCA 5
Pharma-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 3) (2010) 267 ALR 494[2009] FCA 320
Shelton v National Roads and Motorist Association Ltd (2004) 51 ACSR 278[2004] FCA 1393
Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284
Sidhu v Van Dyke (2014) 251 CLR 505
Judgment (13 paragraphs)
[1]
Background
The underlying dispute between the parties relates to a partnership between the plaintiffs (Mr and Mrs Lucantonio) and the first defendant (Benscrape). The existence of a partnership, or at least of an oral agreement to form a partnership, is not disputed (see [5] of the defence) although there is a dispute as to the terms of the partnership agreement. Relevantly, the arrangement (to use a relatively neutral term) between the parties was one pursuant to which Mr Lucantonio, a licensed builder, built a number of concrete "tilt-up" sheds on land owned by Benscrape in an industrial area of Griffith (the Griffith land). The partnership arrangement (in respect of which there was at the outset a written partnership agreement) was carried on from around 1996/1997. The dispute between the parties is as to the share that the plaintiffs maintain they have in the partnership (namely a 45% share held equally between the two plaintiffs; as opposed to the 25% share between the plaintiffs on the defendants' case) and as to amounts that the defendants claim are owing to them (as claimed in the cross-claim). The partnership itself is, self-evidently, at an end, at least in any practical sense (relief being sought in that regard in the proceeding).
[2]
Statement of claim
In their statement of claim filed 22 September 2017, the plaintiffs seek the following declaratory relief: a declaration that they and Benscrape have carried on a partnership (the Partnership) from around June 1996 (and in any case no later than January 1997); a declaration that on and from January 2014 the partnership shares were 22.5% as to each of the first and second plaintiffs and 55% as to Benscrape; and, alternatively, a declaration that Benscrape holds 45% of the Griffith land on trust for the plaintiffs in equal shares arising out of a proprietary estoppel. Orders are sought for: specific performance of an agreement defined in the statement of claim as the Augmentation Agreement; alternatively, damages for breach of the Augmentation Agreement; alternatively, restitution of the value of the Work (as defined); in the further alternative, a quantum meruit claim in respect of the value of the Work. Damages are sought for breach of another alleged agreement (the Management Agreement, as defined), or alternatively a quantum meruit claim is made for the value of the Management Work (as defined). Relief is also sought in relation to the dissolution of the partnership, including the taking of accounts and an inquiry into damages.
I set out the allegations made in the statement of claim (and the complaints made as to the pleading of those allegations) as follows.
Formation of partnership
Paragraph 5 of the statement of claim pleads the formation of the partnership (through an oral agreement defined as the Preliminary Agreement reached in or about June 1996), a term of which agreement was that the partnership shares would be 75% for the entity controlled by Mr Salvestro and 25% equally between the plaintiffs; and that the terms of the agreement would be reduced to writing. Paragraph 6 of the statement of claim pleads that, in or around late 1996, the plaintiffs and Benscrape "formalised" the Preliminary Agreement by entering into a written partnership agreement (dated 30 November 1996), which contained material terms no different in effect to those agreed under the Preliminary Agreement.
Benscrape says that it is apparent from [6] that the written agreement superseded the oral agreement pleaded in [5]. It is said that the agreement alleged in [5] is not relied on to found any of the asserted causes of action and, in the written submissions - though this was not ultimately pressed in oral submissions, it is said that this is not a material fact, is irrelevant, and should be struck out.
Performance of partnership agreement
Paragraphs 7 and 8 of the statement of claim then plead to certain matters under the heading "Performance of the Agreement to Date"; namely the acquisition by Benscrape on or about 25 June 1996 of the Griffith land (which from that time is said to have been held as an asset of the Partnership) ([7]) and steps in relation to the construction of the sheds between 1996 and 2003 ([8]).
Payments by plaintiffs
Paragraphs 9 to 11 of the statement of claim, under the heading "Payments by the Plaintiffs", plead to the making of the Incidental Payments (as defined at [9]); an agreement that any amounts paid for the development and upkeep of the sheds by Mr Lucantonio would be "accounted for in circumstances when the Sheds ceased to be an asset of the Partnership" (defined as the First Incidental Payment Agreement at [10]); and that between 26 June 1997 and 1999 Mr Lucantonio made payments pursuant to the First Incidental Payment Agreement (see at [11]).
Insofar as it is alleged, at [9] of the statement of claim, that "it was apparent to both Trevor [Mr Lucantonio] and Peter [Mr Salvestro] that it was more efficient for the operation of the Partnership for Trevor from time to time to make some incidental payments", complaint is made in the written submissions that that allegation is vague and embarrassing (but this was not pressed in oral submissions). Complaint is also made in the written submissions (but not pressed orally) as to the particulars provided to [9] of the statement of claim (namely that the particulars "are a sham because they are meaningless and do not narrow the generality of the pleading") and it is there said that the paragraph should be struck out because it is impossible to join issue with it.
Again, although complaints are made in the written submissions that [10] of the statement of claim is so vague as to be embarrassing; that a critical element of this allegation is that payments by Mr Lucantonio would "be accounted for" without specifying how; that, if it is not possible to plead the agreement with any further specificity, the agreement would be void for uncertainty; and that there must be a real doubt as to whether the allegation at [10] has any relevance (as it does not appear to be an integer of any of the pleaded causes of action), these complaints were ultimately not pressed in the oral submissions.
As to [11], in the written submissions it is said that this paragraph should be struck out: as being vague and embarrassing, as it does not set out any detail as to the payments made; that it is unclear how payments could be made pursuant to an agreement the terms of which, so far as they can be ascertained, did not require any payments; and that it is irrelevant. Again, this complaint is not taken up in the oral submissions.
The Augmentation Agreement
The first of the complaints made in the oral submissions as to the pleading (these being the only complaints now pressed in relation to the statement of claim) is as to [12] of the statement of claim, which (with [13]-[24]) appears under the heading "The Augmentation Agreement".
The allegation at [12] of the statement of claim is that, in or about 1999, the plaintiffs and the defendants entered into an agreement (particularised as being oral and reached in a discussion between Mr Lucantonio and Mr Salvestro). Paragraph 12 pleads to three aspects or terms of the alleged agreement, namely that: (a) rather than sell the sheds they would be held by the Partnership and rented; (b) the management of the shed leases, as well as the sheds' maintenance and repair, would be undertaken by Mr Lucantonio (save for two sheds which, for a period of time, were managed by a third party managing agent before being managed by Mr Lucantonio); and (c) if the plaintiffs, through Mr Lucantonio, performed what was there defined as "Work", and/or the Partnership assets were applied by either of the defendants for business activities unrelated to the business of the Partnership, or the plaintiffs continued to make the Incidental Payments and in acknowledgement of the Incidental Payments already made; then the defendants "(jointly or otherwise) would augment the plaintiffs' share of the Partnership to a larger share to be determined at a later date".
Criticism is made that this paragraph does not plead the material facts necessary to make good the asserted legal conclusion; and that the term pleaded at 12 is not one that is capable of enforcement in contract (being either an agreement to agree or void for uncertainty). (Pausing here, much of the contentions here made by Benscrape as to pleading deficiencies are premised on [12] being incapable of giving rise to a cause of action.) Benscrape presses for [12], which it maintains pleads an "incomplete", and therefore unenforceable, agreement, to be struck out.
As to [13], which pleads that on and from entry into the Augmentation Agreement the plaintiffs made Incidental Payments pursuant to the Augmentation Agreement, Benscrape says that this pleads a factual conclusion; that it does not plead any details of those payments; and that there are no material facts pleaded that could lead to a conclusion that payments were made pursuant to the relevant agreement (for example, the date, manner or circumstances of each payment), and therefore it should be struck out.
Paragraph 14 pleads that, since 1999 to date, Mr Lucantonio has continued to perform management work (there defined as Management Work) including the activities set out at 14-(h); and at [15] it is alleged that between about 1999 and 2016 Mr Lucantonio performed and continues to perform the Work pursuant to the Augmentation Agreement. Particulars are provided to both paragraphs.
Complaint is made by Benscrape that there is not a pleading of any details of the Work allegedly performed; it being noted that these allegations are relied on to support a claim for restitution and quantum meruit (see at [34]-[42], [48]-[50] of the statement of claim). Benscrape complains that the level of generality with which [14] and [15] are pleaded cannot support a claim for restitution and quantum meruit. It is said that it is not possible to determine the value of any alleged benefit received by the defendants, or a reasonable remuneration for the pleaded Work. It is said that, to be adequate, the statement of claim ought to have identified the dates on which Work was allegedly performed, the time involved for each task, and the nature of the task performed. Benscrape says that the assertions as they stand are vague and embarrassing, and cannot support any of the pleaded causes of action and should be struck out.
Proprietary estoppel by encouragement
The next section of the statement of claim (at [25]-[33]) pleads a proprietary estoppel by encouragement claim. It is submitted by Benscrape that these paragraphs do not plead an arguable case of estoppel and ought to be struck out. It is said that so much arises from the deficiencies in the pleading of the key integers of the alleged estoppel (see below).
As to [26], which asserts a representation (defined there as the Representation, and particularised as an oral representation) that the plaintiffs would "enjoy a partnership share larger than 25% if the plaintiffs, through Trevor [Lucantonio], performed construction or site management work for the benefit of the defendants, their agents or those who would otherwise obtain a benefit from the defendants at locations in and around Griffith to be nominated by the defendants from time to time in circumstances where Trevor would not charge any fees or charges for his time, skill and expertise"; this is said to be vague and embarrassing. Benscrape complains that it does not plead the alleged Representation with enough specificity to enable the defendants to know the case they will have to meet. In particular, it is said that: it does not even plead who made the Representation but, rather, says it was "the defendants (one or both)"; that it does not plead precisely when the Representation was alleged to have been made (simply, in or about early 1999); and that it does not plead precisely any other details about the conversation in which the Representation was alleged to have been made.
As to [27] of the statement of claim, this pleads an Assumption (as there defined), based on the Representation, namely that Mr and Mrs Lucantonio assumed that in Mr Lucantonio providing his time, skill and expertise, the respective partnership shares would change in the future such that the plaintiffs obtained a larger partnership share than the 25% identified in the Schedule to the Partnership; and Benscrape would not be free to withdraw from the "expected legal relationship". Benscrape says that the pleading that the plaintiffs made the Assumption based on the Representation depends on the said Representation and that in the absence of an adequate pleading of that Representation, it is embarrassing to plead that the alleged Assumption was based on that Representation. It is said that the pleaded Assumption is also too imprecise to found a case for estoppel.
Benscrape says that the deficiencies in [26] and [27] of the statement of claim are further highlighted by [28], which pleads that between early 1999 and 2014 the defendants induced the plaintiffs to adopt the Assumption. The particulars to [28] assert that between July 1999 and 2014 the defendants repeated the Representation in conversations identified in general terms in sub-paragraphs (a)-(f). Benscrape complains that the particulars "point [out] the vague and embarrassing nature of the allegations concerning the representation", noting that it is particularised that the Representation was repeated in a conversation on 26 June 1997, whereas at [26] the allegation is that the Representation was made in early 1999.
Restitution
The next section of the pleading (at [34]-[38] of the statement of claim) pleads a case based on restitution.
Paragraph 35 of the statement of claim pleads that "[i]n the premises of the particulars of paragraph 15" (thus, it would seem, here incorporating into the pleading of the restitutionary claim matters that were hitherto not pleaded but only particularised), the plaintiffs through Mr Lucantonio provided substantial work and services at the request of Mr Salvestro, as the controlling mind of Benscrape, in return for an alteration in favour of the plaintiffs of their share of the partnership. Benscrape says this allegation is deficient in that it does not plead the material facts on which it is based; rather, it simply refers to the particulars to [15] (which, as noted above, Benscrape says are deficient). Complaint is made that it also alleges a number of matters in a "rolled up fashion that has the capacity to hide the real issues in dispute".
Further complaint as to the pleaded claim for restitution is made as follows.
It is noted that, at [36] of the statement of claim, it is alleged that, if no alteration of the plaintiffs' share of the partnership is made, the benefit bargained for by the plaintiffs was never received and the consideration for the provision of the Work and the Terra Ag Occupation has failed. Benscrape says that the acts (pleaded at [36]) that are said to give rise to a right to restitution are acts said to have been taken pursuant to the Augmentation Agreement pleaded at [12] (there referring to [15] and [17]). Thus Benscrape says that [36] is inconsistent with an allegation that there was no Augmentation Agreement.
Benscrape says that the plaintiffs do not appear to contend that the Augmentation Agreement has been discharged; noting that they claim specific performance (see prayer 4). It is submitted that, in those circumstances, the plaintiffs are restricted to suing on the contract (citing Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221 at 256, per Deane J; [1987] HCA 5; Mann v Paterson Constructions Pty Ltd (2019) 93 ALJR 1164; [2019] HCA 32 (Mann v Paterson Constructions) at [19]-[20], per Kiefel CJ, Bell and Keane JJ; [164], per Nettle, Gordon and Edelman JJ).
As to [37], which pleads in the alternative that if there is any finding that the plaintiffs' understanding of the Augmentation Agreement or the Representation was mistaken (which is denied) the plaintiffs through Mr Lucantonio have carried out work and consented to the Terra Ag Occupation "under a mistake", Benscrape says that a unilateral mistake on the part of the plaintiffs is not sufficient to make good a claim for restitution (although I note Benscrape provides no authority for this proposition).
It is thus submitted that, in [34]-[38], the plaintiffs have not pleaded material facts sufficient to show a reasonable cause of action for restitution and those paragraphs should be struck out.
Quantum merit claim for the value of the Work
Next there is a claim pleaded at [39]-[42] of the statement of claim, further and/or in the alternative, for quantum meruit for the value of the Work. Benscrape notes that this is the Work which, on the plaintiffs' primary case, was governed by the terms of the alleged Augmentation Agreement. It is said that the plaintiffs cannot plead precisely who requested the Work to be done (the pleading being "defendants (either or both)").
It is further said that this aspect of the pleading suffers from at least three deficiencies, such that it should be struck out: first, that [39] simply repeats the "defective" [15]; second, that [41] (which pleads that "[t]he defendants have, repeatedly, acknowledged the right or title vested in [Mr Lucantonio] arising from the matters pleaded hereinabove") is "legally meaningless"; and third, that there is no pleading as to what is a reasonable sum for the Work, or how it is to be calculated.
Breach of contract in relation to the Management Agreements
There are then allegations at [43]-[47] of the statement of claim as to a breach of contract. Paragraph 43 alleges the First Management Agreement. It is said that it does so in a vague and embarrassing form; and it is noted that it alleges that the agreement was entered into between the Partnership and Mr Lucantonio (a partner of the Partnership). It is said that "[s]urely what is contended for is an agreement between the partners, given that this is the way in which the multiple agreements in the Statement of Claim are pleaded". For these reasons, it is submitted that [43] should be struck out; and it is said that [44] which pleads the Second Management Agreement suffers from the same defects and should be struck out also.
Complaint is made that [45] of the statement of claim (which pleads that between early 1999 and 2017 Mr Lucantonio performed Management Work and continues to do so) is unclear. It is said that, to the extent it simply seeks to repeat [14], it suffers from the same defects as that paragraph; and, if it seeks to allege matters beyond [14], it is vague and embarrassing and should be struck out for that reason.
It is submitted that, because the critical paragraphs of the pleading concerning the alleged breach of contract ought be struck out, the pleading discloses no relevant cause of action and therefore [46]-[47] of the statement of claim (which plead the breach of the Second Management Agreement and that loss and damage were suffered) ought also be struck out. However, Benscrape did not in oral submissions press for a strike-out of these parts of the pleading.
Quantum meruit claim in relation to the value of Management Work
As to the quantum meruit claim pleaded in relation to the Management Work (at [48]-[50] of the statement of claim), it is said that this suffers similar defects as [39]-[42] as to who previously had made the request; that these paragraphs repeat defective paragraphs ([5], [12]-[14]); and that there is no allegation as to how the claimed reasonable sum is to be calculated. It is said that the pleading also suffers the further deficiency of alleging (in a "wholly deficient manner") that the defendants requested Mr Lucantonio to perform certain works. Complaint is made that those requests must be pleaded. It is said that [48]-[50] should be struck out (although, again, that does not appear now to be pressed).
Breach of Partnership Agreement
Paragraphs 51-54 of the statement of claim then make claims under the heading "Breach of Partnership Agreement". It is noted that [53] alleges, in substance, that the defendants knowingly instructed the Partnership's accountants to create false accounts of the Partnership for their benefit. Complaint is made that this is an extremely serious allegation (being tantamount to fraud), and that such an allegation must be pleaded with great specificity and precision (Benscrape here citing Pharma-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 3) (2010) 267 ALR 494; [2010] FCA 361 (Pharma-a-Care) at [68]-[69], per Flick J). Complaint is made, having made the allegation, the plaintiffs do not plead "a single material fact" to support the allegation. Further, it is submitted that the particulars are a "sham" (though it is not clear to me what is intended by that aspersion). It is said that [53] and its particulars are embarrassing; and should be struck out.
Relevantly, [53] of the statement of claim and the particulars thereto are as follows:
53. In breach of the Agreement, and in contravention of section 28 of the Partnership Act 1892 (NSW) (Act) and/or in breach of their fiduciary obligations the defendants:
i. provided instructions to the Partnership accountant for the preparation of accounts;
ii. failed to be just and faithful in the provision of such instructions;
iii. created accounts which failed to justly and faithfully record the expenses and capital contributions of the business; and
iv. deliberately and knowingly distorted the accounts for the benefit of the defendants or, alternatively, Benscrape.
Particulars
During the course of the Partnership the defendants have provided incorrect instructions and information to the Partnership's accountant in consequence of which the following has occurred:
(i) expenses have been incorrectly attributed to the Partnership which do not concern the Partnership business;
(ii) such expenses should properly be characterised as drawings made by Benscrape in consequence of which the existing accounts overstate Benscrape's capital position;
(iii) in further consequence of (i) and (ii) the value on a costs basis of the Partnership assets has been overstated and, in turn, the quantum of depreciation has been overstated;
(iv) in consequence of (i) and (iii) the accounts reflect an incorrect, deflated profit; and
(v) the artificially deflated profits reflect an artificially deflated profit store for the plaintiffs and, in turn, an artificial reduction in the plaintiffs' capital accounts (which a corresponding artificial increase in the capital accounts of Benscrape).
[3]
Cross-Claim
By its cross-claim filed on 1 December 2017, Benscrape claims declaratory and other relief. It seeks, in effect, the recovery of a debt claimed to be owing by the cross-defendants (Mr and Mrs Lucantonio) to the Partnership. The claim is made in reliance on the terms of the Partnership Agreement ([3] to [6] of the cross-claim). Benscrape notes that there is no dispute that the parties entered into a written Partnership Agreement, a copy of which is exhibited to the affidavit of an accountant, Allan Joseph Andreazza, sworn 20 March 2020 (see the statement of claim at [6]; defence at [6]; cross-claim at [1]; defence to cross-claim at [1]).
At [3] of the cross-claim it is pleaded that, by cl 13 of the Partnership Agreement, the profits and losses of the Partnership, including of a capital nature, belong to and are to be borne by the partners "in equal shares or in such other proportions as the partners may from time to time agree". Benscrape says in this regard that although the term "equal shares" may suggest an "even split" between the partners, the Partnership Agreement as a whole makes plain that the partners had agreed on a different division of profits and losses. Reference is made to cl 6, "Equal shares", which provides that the partners will be entitled to the capital and property of the business in the shares specified in Item 4 of the Schedule to the Partnership Agreement. That item specifies that the cross-claimant's share is 75% and that each cross-defendant's share is 12.5%.
At [4]-[5] of the cross-claim, it is pleaded that cl 18 of the Partnership Agreement provides that as soon as practicable after 30 June of every year during the continuance of the Partnership: the Partnership's accountant shall take a general account and valuation of the assets, property, debts and liabilities of the Partnership and all transactions and other matters usually contained in a general account, as at 30 June; each account and valuation is to be balanced, agreed to and signed by all of the partners; when certified by the accountant to be correct by the accountant, each account will be binding on all partners except in the case of any manifest error notified by a partner within one month; and an account of profits was to be prepared quarterly after 30 June in each year, and after signing and settling such account, each partner was entitled to draw out and receive his or her share of the profits for the past quarter. The cross-defendants, in their defence to the cross-claim, deny the matters pleaded at [4] and, to a large extent, the matters pleaded at [5] of the cross-claim.
[4]
Benscrape's submissions
In summary, Benscrape's position as to the statement of claim is that unless the statement of claim is redrawn to be an intelligible and legally defensible document, it will be impossible for the defendants to join issue with it and there is "every possibility that the trial of the action will abort because the parties will not agree what they are fighting about".
Complaint is made that Mr and Mrs Lucantonio were ordered to file and serve an amended statement of claim by 26 November 2019, and that no such amended pleading has been served. (If I understand the import of this complaint correctly, what Benscrape is here putting forward is that Mr and Mrs Lucantonio had their chance to amend the pleadings but did not take it - and that it is now too late for them to do so or they should not be permitted to do so. Benscrape did not appear to be prepared now to consent to any late filing of the amended pleading to the filing of which the defendants had consented last year.)
Benscrape refers to the relevant principles as to the function and content of pleadings (see below), emphasising that a statement of claim must plead all material facts (in the sense of facts on which the cause of actions asserted depend), citing Kirby v Sanderson Motors Pty Ltd (2002) 54 NSWLR 135; [2002] NSWCA 44 (Kirby v Sanderson) at [20], per Hodgson JA, with whom Mason P and Handley JA agreed). In particular, Benscrape points out that the requirement that a party must plead specifically any matter that might otherwise take the other side by surprise is to ensure that each party is able fully to appreciate the materiality of that matter to the alleged cause of action or defence (see r 14.14 of the UCPR and Kirby v Sanderson at [20]); and that, if a pleading alleges particularly serious matters, those matters must be pleaded specifically or precisely (referring to Pharma-a-Care at [67]-[69] and the authorities there cited).
Benscrape further notes that a pleading that is "unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged" is embarrassing and liable to be struck out under r 14.28 of the UCPR (see Meckiff v Simpson [1968] VR 62 at 70, per Winneke CJ, Adam and Gowans JJ, quoted with approval in McGuirk v University of New South Wales [2009] NSWSC 1424 (McGuirk) at [30], per Johnson J). It is noted that a pleading of a conclusion will be embarrassing if made at such a level of generality that the defendants do not know the case to be met, in which case the pleading should be struck out, as particulars cannot take the place of necessary pleadings (see McGuirk at [33], per Johnson J).
[5]
Strike-out of paragraphs of the statement of claim - prayer 1
Insofar as the first of the prayers for relief is concerned (for the striking out of various paragraphs of the statement of claim), Mr and Mrs Lucantonio submit that the statement of claim properly pleads and adequately discloses the nature of the case (and that the criticisms made of the pleading are not well-founded). They point out that the defence filed on 1 December 2017 pleaded to each of the (here impugned) paragraphs in the statement of claim without any suggestion that the pleading was embarrassing or that the claims were liable to be struck out. Insofar as leave was given (albeit not ultimately exercised) on 19 November 2019 for the filing of an amended statement of claim, it is said that, had the impugned paragraphs truly presented the difficulties now raised, it might be expected that the rectification of those impugned paragraphs would have been a condition of consent for such leave or that a motion would have been filed opposing such leave being given (it being said that the defendants were bound to raise their complaints at that stage, or earlier, pursuant to the duties imposed on them by ss 56-57 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act)). It is said that the defendants have served affidavits from six lay witnesses and one expert witness, joining issue with an affidavit served by Mr Lucantonio (an affidavit apparently made on 23 April 2018) (and hence it is said the defendants were not, to that extent, embarrassed by the alleged defects in the pleadings). Further, it is noted that the defendants consented (without qualification) on 19 November 2019 to this matter being set down for hearing commencing on 10 August 2020 with an estimate of 10 days.
Mr and Mrs Lucantonio submit that those matters suggest that the complaints now raised by Benscrape have not, to date, caused any prejudice; and that there is no basis for the court's discretion now to be invoked. It is said that no explanation is proffered as to why the complaints were not pressed earlier (and at relevant milestones) and that there should not now be embarkation on a minute examination of the pleadings. Reference is made in this regard to contemporary case management principles as identified by Colvin J in Zaghloul v Woodside Energy Limited (No 9) [2019] FCA 1718 at [16].
Turning first to the alleged pleading deficiencies, Mr and Mrs Lucantonio maintain that, even if there were merit in some of the criticisms, significance attaches to what was said by Martin CJ in Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82; [2006] WASC 281 (Barclay Mowlem) at [10], namely that:
10. In many cases, consideration and determination of each objection would give rise to precisely the type of time and resource wasting forensic exercise which the Commercial and Managed Cases List was created to discourage. That is not to say that buried within those voluminous objections there might not be a criticism that should be properly be seriously entertained, but having looked myself at the statement of claim, it is my view that any lawyer looking at that pleading, genuinely interested in knowing what issues are to be tried and the case that has to be met, would have no difficulty in ascertaining those matters.
[6]
Summary judgment/strike-out application in relation to the cross-claim - prayers 2-3
It is noted that, at [3]-[9] of the cross-claim, it is asserted that: the cross-claimants were entitled to 75% of, relevantly, the profit of the Partnership, and the cross-defendants were entitled to 25%; for the financial year ending 30 June 2016 the capital account for the Partnership was overdrawn in the amount of $617,120; and the cross-defendants were liable to repay the Partnership, or owed the Partnership, the sum of $617,120. The cross-defendants deny these claims; they assert that, by reason of dealings which occurred in early 2014, the shares in the Partnership were amended so that they were collectively entitled to 45% thereof.
In relation to Mr Andreazza's affidavit sworn 20 March 2020 and its exhibits, the cross-defendants note that Mr Andreazza deposes to "a review of the Partnership records for the period 1 July 2002 to June 2016" (see at [12] of his affidavit, sworn 20 March 2020); and that Mr Andreazza exhibits a "reconciliation spreadsheet" which, relevantly, is predicated upon a 75/25 equity split; shows that the cross-claimants had accumulated profit distributions of (and thus were entitled to draw upon, consistent with their 75% share) $1,355,626, but had drawn $688,131; and shows that the cross-defendants had accumulated profit distributions of (and thus were entitled to draw upon, consistent with their 25% share) $451,875, but have overdrawn by $617,120.
Mr and Mrs Lucantonio say that the application here made by the cross-claimants (which is in effect for summary judgment) is misconceived for the following reasons.
First, they say that a critical issue in the case is whether the Partnership profits were to be divided 75/25 (as the cross-claimants contend) or 55/45 as the cross-defendants allege (pointing to the allegations made in the statement of claim at [12]-[13] and [20]-[33]; the defence to cross claim at [11]; and the matters raised in Mr Lucantonio's affidavit sworn 23 April 2018 at [93]-[94], [102], [166], [332]-[333], [350]-[351], [379] and [420]). They assert that the percentages stipulated in the Partnership Agreement were amended by agreement (the Augmentation Agreement pleaded at [12] of the statement of claim) or by way of an estoppel. They say that this dispute is a matter to be determined at trial. It is submitted that to accede to the cross-claimants' orders would require the summary determination of a fact which is the subject of dispute.
[7]
Determination
At the outset one must bear firmly in mind the requirements of ss 56-59 of the Civil Procedure Act. Regard should be had to: the overriding purpose of facilitating the just, quick and cheap resolution of the proceedings, and the parties' obligations in that regard (sub-ss 56(1)-(3)); the efficient disposal of the business of the court and the timely disposal of the proceedings (sub-ss 57(1)(b) and (d)); the degree of expedition with which the respective parties have approached the proceedings (s 58(2)(b)(ii)); the degree to which the respective parties have fulfilled their duties in respect of the overriding purpose (s 58(2)(b)(iv)); and the elimination of any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required (s 59).
In Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104, Ipp JA (at [36]) (with whom Tobias and McColl JJA agreed) recognised that these principles require consideration to be given, amongst other things, to whether the party seeking the exercise of a discretion in its favour has: diligently pursued the object of disposing of the proceedings in a timely way; used, or could reasonably have used, available opportunities under the rules or otherwise, to avoid delay; and reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination.
Turning then to the relief now sought by Benscrape, with one exception I am not persuaded that the relief sought should be granted.
[8]
Strike out in relation to the statement of claim
The submissions by Benscrape as to the striking out of parts of the statement of claim (prayer 1 of the relief sought) are put on a twofold basis: first, that the impugned paragraphs do not disclose an arguable cause of action and, second, that some or all of those impugned paragraphs suffer from pleading deficiencies such that the pleading is embarrassing and/or that the defendants do not know what case it is that they have to meet.
As was emphasised by Senior Counsel for Benscrape on the hearing of the application, the power here invoked is one that may be exercised "at any time" - hence Benscrape resists the proposition that it is now too late for it (having already filed its defence and served its evidence) to make the application. However, the state of the proceeding at the time that the application is brought is a matter highly relevant to take into account.
The first basis on which the strike-out of the impugned parts of the pleading is sought turns on whether they disclose an arguable cause of action. In essence, it is a summary dismissal application. The test on such an application is well-known (see, for example, Pi v Pierce and Attorney General for NSW [2015] NSWCA 118 (at [24]):
[24] There is a high test to be met on a summary dismissal application: the plaintiff's claim must be taken at its highest and must be "manifestly groundless" or "so obviously untenable that it cannot succeed". If there is an arguable issue to be tried summary dismissal should be refused. (See General Steel Industries v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 at 46; Shaw v State of New South Wales [2012] NSWCA 102.)
In the present case I consider each of the "no cause of action" complaints in turn.
Incomplete agreement
First, as to the complaint that the alleged agreement is incomplete and therefore a nullity, much weight is placed by Benscrape on Booker Industries Proprietary Limited v Wilson Parking (Qld) Proprietary Limited (1982) 149 CLR 600; [1982] HCA 53 (Booker), where the High Court considered whether in the circumstances there at hand there was a concluded agreement. Gibbs CJ, Murphy and Wilson JJ made clear (at 604) that courts will not lend their aid to the enforcement of an incomplete agreement (being no more than an agreement of the parties to agree at some time in the future). Reference was made also by Benscrape to the following further authorities both during the course of the submissions (see Relwood Pty Ltd v Manning Homes Pty Ltd [1990] 1 Qd R 481, a decision of the Full Court of Queensland which held that a contract of guarantee which failed to determine the fundamental or essential term led to the guarantee not coming into existence) and after judgment was reserved (see Allison v Tuna Tasmania Pty Ltd [2018] TASFC 5 at [118]-[126], per Martin AJ, Brett and Pearce JJ agreeing; Plankton Australia Pty Limited v Rainstorm Dust Control Pty Limited [2018] FCA 174 at [14]-[15], per Colvin J).
[9]
Perceived pleading deficiencies
As to the second basis on which the relief is sought (i.e., the perceived pleading deficiencies), as noted Benscrape ultimately did not press its complaint as to many of the paragraphs of which complaint was made in its written submissions.
Again, the relevant principles as to what is required of a pleading are well-known (see, for example, as summarised in Watiwat v Dixon [2017] NSWSC 360). There, I pointed to what was said in Banque Commerciale SA (in Liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 by Mason CJ and Gaudron J (at [18]) as to the function of pleadings, namely:
… to state with sufficient clarity the case that must be met … In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision.
That passage was cited with approval by Ipp JA in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Market Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 at [422] (and see also what was said by Jessel MR in Thorp v Holdsworth [1876] 3 Ch D 637).
It is well established that what is required of a statement of claim under the UCPR is that it state all material facts, those being the facts which are necessary for the purpose of formulating a complete cause of action (see Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713; see also Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591 at 44, 154 (Goldberg J at 44, 154); Wride v Schulze [2004] FCAFC 216 at [25]). Particulars, even those that are clear and unambiguous, cannot supply the deficiency in pleadings (see Bond Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 223 (French J, then sitting in the Federal Court); PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407 at [46] (Campbell J)). The requirement that all material facts constituting the cause of action be plainly stated in the pleading has been described as one of the plainest and most fundamental of all the rules of pleading (Pinson v Lloyds and National Provincial Foreign Bank Ltd [1941] 2 KB 72 at 75-76). Rule 14.8 of the UCPR requires a pleading to be as brief as the nature of the case allows; nevertheless it must be clear from the pleading what the cause of action is and the material facts upon which that cause of action is based.
[10]
Summary judgment/strike-out re cross-claim
As to prayers 2 and 3 of the relief sought by Benscrape, which relate to the cross-claim, the strike-out application obviously raises similar issues to the strike-out application made in relation to the statement of claim.
It is, again, well-established that a party will not be denied a hearing on the merits unless the absence of a defence is clearly demonstrated (see Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125), having regard to the test stated by Barwick CJ in General Steel at 129 (to which I have already referred). There, with reference to the plaintiff in an action, Barwick CJ said that:
… the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow [the pleadings] to stand would involve useless expense"…
There is a heavy burden on a party seeking summary judgment (see Bendigo and Adelaide Bank Ltd v Williamson [2017] NSWSC 939 at [10]). It is recognised that a very clear case is required and the power is one that should only be sparingly used (see, again, Dey at 91; as well as Webster v Lampard (1993) 177 CLR 598 at 602-603; [1993] HCA 57; Air Services Australia v Zarb [1998] NSWCA 7; Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2005] NSWCA 81 at [37]-[38]). Where there are discrete questions of statutory construction not involving findings of fact (complex or otherwise), resort to the summary judgment procedure may be warranted (as, for example, I considered to be the case in Stojanovski v Stojanovski [2018] NSWSC 1967). Here, however, I am not persuaded that that is the case.
True it is that the defence to the cross-claim pleads a broad denial (or in some cases non-admission of the allegations), thus putting the cross-claimants to proof of its case. The general rule is that in a defence or subsequent pleading a party must plead specifically any matter that, if not pleaded specifically may take the opposite party by surprise, or that the party alleges makes any claim of the opposing party not maintainable; or that raises matters of fact not arising out of the preceding pleading (see r 14.14); the fundamental requirement being that each party have a proper opportunity to prepare and present its case (and see the admonition of Allsop J, as the Chief Justice then was, in White v Overland [2001] FCA 1333 at [4]).
[11]
Conclusion
For the reasons set out above, in substance Benscrape has failed on its application. While I am persuaded that the allegation at [53] of the statement of claim should be re-pleaded (and not simply made the subject of further particulars), so that the claim of dishonesty is clearly articulated in the pleading, I am otherwise not persuaded that the relief sought by Benscrape is warranted. In those circumstances I consider that Benscrape should bear the costs of the present application (particularly having regard to the extensive evidence adduced on the present application, which turned what should have been a simple pleading dispute into a far more extensive exercise). I do not, however, consider that an order for indemnity costs (as was sought by Mr and Mrs Lucantonio) is warranted.
Insofar as an application for a gross sum costs order was foreshadowed, I do not here preclude the making of such an application but in circumstances where the parties are now only a matter of about three weeks before the final hearing is listed to commence I would have thought the parties' energies were better expended in preparation of the matter for hearing.
[12]
Orders
I make the following orders:
1. Order the plaintiffs to re-plead [53] of the statement of claim in order to specify with particularity the material facts matters and circumstances on which they rely for the allegation there contained.
2. Direct the plaintiffs to file and serve an amended statement of claim (encompassing the amendments for which leave was granted in 2019 and complying with order 1 above) within 14 days and, to the extent necessary, grant leave for the filing of that amended pleading.
3. Direct the defendants to file and serve within 28 days thereafter their defence to the amended statement of claim.
4. Otherwise dismiss the notice of motion filed by the first defendant with costs.
[13]
Amendments
19 May 2020 - Counsel representation
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: 19 May 2020
td v Marr [2005] VSC 251
H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242; [1979] FCA 74
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Market Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206
Ingot Equity Capital Markets Pty Ltd v Macquarie Equity Capital Investments Ltd [2004] NSWSC 1136
Kirby v Sanderson Motors Pty Ltd (2002) 54 NSWLR 135; [2002] NSWCA 44
Mann v Paterson Constructions Pty Ltd (2019) 93 ALJR 1164; [2019] HCA 32
McGuirk v University of New South Wales [2009] NSWSC 1424
Meckiff v Simpson [1968] VR 62
Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591
Northam v Favelle Favco Holdings Pty Ltd (Supreme Court (NSW) 7 March 1995 unrep)
Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125
Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221; [1987] HCA 5
Pharma-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 3) (2010) 267 ALR 494; [2010] FCA 361
Pi v Pierce and Attorney General for NSW [2015] NSWCA 118
Pinson v Lloyds and National Provincial Foreign Bank Ltd [1941] 2 KB 72
Plankton Australia Pty Limited v Rainstorm Dust Control Pty Limited [2018] FCA 174
PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407
Relwood Pty Ltd v Manning Homes Pty Ltd [1990] 1 Qd R 481
Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66; [2009] FCA 320
Shelton v National Roads and Motorist Association Ltd (2004) 51 ACSR 278; [2004] FCA 1393
Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19
Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405
St Clair v Timtalla Pty Ltd [2010] QSC 480
Steiner v Strang [2016] NSWSC 9
Stojanovski v Stojanovski [2018] NSWSC 1967
Tamaya Resources Limited (in Liq) v Deloitte Touche Tohmatsu (A Firm) [2015] FCA 1098
Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15
Thorp v Holdsworth [1876] 3 Ch D 637
Upper Hunter County District Council v Australian Chilling and Freezing Co [1968] 118 CLR 429
Watiwat v Dixon [2017] NSWSC 360
Webster v Lampard (1993) 177 CLR 598; [1993] HCA 57
Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534
White v Overland [2001] FCA 1333
Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97
Wride v Schulze [2004] FCAFC 216
York Air Conditioning & Refrigeration (A/sia) Pty Ltd v Commonwealth (1949) 80 CLR 11
Zaghloul v Woodside Energy Limited (No 9) [2019] FCA 1718
Texts Cited: Cheshire & Fifoot's Law of Contract (LexisNexis, 11th ed, 2017)
Edelman and Bant, Unjust Enrichment (Hart Publishing, 2nd edition, 2016)
JW Carter, Contract Law in Australia (LexisNexis, 7th ed, 2018)
Category: Procedural and other rulings
Parties: Trevor Edward Lucantonio (First Plaintiff/First Respondent on the Motion)
Dianne Wendy Lucantonio (Second Plaintiff/Second Respondent on the Motion)
Benscrape Pty Ltd (First Defendant/Applicant on the Motion)
John Peter Salvestro (Second Defendant)
Representation: Counsel:
M Condon SC with B Le Plastrier (Plaintiffs/Respondents on the Motion)
D Cooper QC (First Defendant/Applicant on the Motion)
The plaintiffs were ordered to re-plead paragraph 53 of the statement of claim to specify with particularity the material facts, matters and circumstances supporting the allegation. They were directed to file and serve an amended statement of claim within 14 days, incorporating previously authorised amendments, and the defendants were directed to file and serve their defence within 28 days thereafter. The balance of Benscrape’s notice of motion was dismissed with costs. Indemnity costs were not ordered.
It is said that the particulars to [15] of the statement of claim do not address these concerns for two reasons: first (which is undoubtedly correct but not necessarily determinative), that one does not plead to particulars; and, second, that they are in any event inadequate to establish the propositions for which they are "pleaded". Further, it is noted that particular A to [15], which concerns Work allegedly performed in 1997, is inconsistent with the allegation that the Work was performed under the Augmentation Agreement, which is said to have been entered into in 1999.
Paragraphs [16] to [17] of the statement of claim plead to the making of a request by Benscrape and/or Mr Salvestro that the plaintiffs allow Terra Ag Services Pty Ltd (a company said to be controlled at all times by Benscrape and/or Mr Salvestro) or a party related to the first and/or second defendant to occupy part of the Griffith land without paying rent to the Partnership (the Terra Ag Occupation); and that the consent to that request was given "pursuant to the Augmentation Agreement". Paragraph 18 pleads that, but for the consent, either another tenant would have occupied that part of the land and paid market rent, or Terra Ag Services Pty Ltd would have done so.
As to these paragraphs, Benscrape says first that they are vague, conclusory, and improperly pleaded because they use the expression "and/or" (citing St Clair v Timtalla Pty Ltd [2010] QSC 480 at [11], per Martin J). It is submitted that the material facts alleged to support those paragraphs must be pleaded clearly and that, in the absence of such a pleading, they should be struck out. Second, it is submitted that the allegation of "consent" in [17] is irrelevant because of the "contractual term" pleaded in 12(i).
Paragraph 19 then pleads that, but for Mr Lucantonio's performance of the Work, one or both of the defendants would have incurred cost and expense in undertaking the Work, directly or through a third party. Benscrape says that this is a conclusion unsupported by any allegation of material facts; that its purpose is not entirely clear; and that "it may be that it is irrelevant and should be struck out for that basis". In any event it is submitted that even if it is said to be relevant to one of the pleaded causes of action, it should be struck out in the absence of the pleading of any material facts said to support the conclusion.
Paragraph 20 of the statement of claim pleads that, on 20 January 2014, pursuant to the Augmentation Agreement and in performance thereof, Benscrape and/or Mr Salvestro and Mr and Mrs Lucantonio (through Mr Lucantonio) agreed that Mr and Mrs Lucantonio's share in the partnership would be increased to 45% (namely 22.5% each). Benscrape complains that the pleading of "what appears to be alleged to be an oral agreement" is in a conclusory manner. It is said that there are no material facts pleaded that would support the conclusion; and it does not precisely identify the parties to the alleged agreement. It is said further that the statement of claim fails to plead the material facts that support the allegation and it should be struck out.
There are then allegations (about which no express complaint appears to be made in the submissions) at [21]-[24] of the statement of claim to the effect that: the Work performed by Mr Lucantonio was a benefit for the defendants, their agents or those who benefitted from the defendants; at no time subsequent to 1999 has Benscrape or Mr Salvestro implemented the Augmentation Agreement; on or about 22 October 2016, in circumstances where the defendants had not implemented the Augmentation Agreement, Mr Lucantonio requested the defendants perform their obligations under the Augmentation Agreement and they refused to do so and have since then refused to acknowledge the plaintiffs' 45% share of the Partnership; and the defendants have manifested an intention no longer to perform the Augmentation Agreement and have not since that date taken any steps to do so.
As to the allegation of reliance (at [29] of the statement of claim), namely that the plaintiffs between 1999 and 2014 acted in reliance upon the Assumption and that the defendants intended the plaintiffs to do so, Benscrape complains that the pleading concerning the Assumption and reliance thereon is inconsistent with: the allegations at [9]-[11], [15] and [16]-[18]; the particulars to which are repeated as particulars to [29]. It is said that those earlier paragraphs plead conduct said to be pursuant to express agreements between the parties. It is submitted that there is an inconsistency between the allegations that the plaintiffs engaged in the same conduct pursuant to multiple express agreements and also in reliance on the Assumption. It is submitted that the inconsistency between the allegations is embarrassing and [29] ought to be struck out.
As to the allegation (at [30] of the statement of claim) that the defendants intended the plaintiffs to rely on the Assumption by "manifesting an awareness" of certain matters (see at 30-(c)), complaint is made that the meaning of this allegation is "wholly opaque"; that it is unclear what is meant by "manifesting an awareness"; and that it is unclear how manifesting an awareness of certain matters amounts to an intention for the plaintiffs to rely on the Assumption. It is submitted that [30] is vague and embarrassing and should be struck out.
Accordingly, it is said that the essential elements of the claim based on an estoppel in [25]-[33] of the statement of claim ought to be struck out and that, without those paragraphs, there is no reasonably arguable cause of action based on estoppel, so the balance should be struck out.
Benscrape accepts that a pleading should only be struck out on the basis it discloses no reasonable cause of action in plain and obvious cases (citing General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, per Barwick J; [1964] HCA 69 (General Steel)), and that, in general, the power should not be exercised if there is a real question to be tried (Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91, per Dixon J; [1949] HCA 1 (Dey)). It is noted that the test is whether the matter is "so obviously untenable that it cannot possibly succeed", is "manifestly groundless", or "would involve useless expense" (General Steel at 129, per Barwick CJ; Commonwealth of Australia v Griffiths (2007) 70 NSWLR 268; [2007] NSWCA 370 at [11], per Beazley JA, as Her Excellency then was, with whom Mason P and Young CJ in Eq, as his Honour then was, agreed).
It is further noted that, in order to disclose a reasonable cause of action, a statement of claim must contain all of the relevant facts to support any allegation made and that particulars cannot be relied on to fill gaps in the pleaded facts (H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 at 246-7, per Northrop J; [1979] FCA 74; Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 at [99], per Gleeson JA, with whom Beazley P, as her Excellency then was, and Barrett JA agreed).
As to the cross-claim, Benscrape relies upon the proposition that summary judgement may be given in proceedings seeking a declaration (referring to GPI Leisure Corporation Ltd (In Liq) v Yuill (1997) 42 NSWLR 225).
Benscrape says that there is no apparent basis for the denial by the cross-defendants of the allegation at [4], given the terms of cl 18 of the Partnership Agreement. It is said that a bare denial is insufficient to defeat a claim for summary judgment.
Benscrape notes that Mr Andreazza was the accountant for the partnership from 1999, although he only took over primary responsibility for it in 2008 or 2009 (referring to Mr Andreazza's affidavit, sworn 20 March 2020, at [4]) and that Mr Andreazza has deposed that he assisted in the preparation of the financial reports for the Partnership each year, shortly after 30 June) (see Mr Andreazza's affidavit, sworn 20 March 2020, at [7]). It is noted that Mr Andreazza has verified the facts alleged in the cross-claim from his own knowledge, and that he swears that the cross-defendants have no defence to the cross-claim (though the weight to be placed on Mr Andreazza's belief in this regard seems to me to be moot, in circumstances where not only has a verified defence been filed but there is affidavit evidence seemingly putting in issue various factual contentions on which the cross-claim is based - see below).
It is further noted that Mr Andreazza has prepared accounts for the Partnership for the year ending 30 June 2016, which he has certified to be correct and which show that the plaintiffs have drawn $617,210 from the Partnership in excess of that to which they were entitled (see Mr Andreazza's affidavit, sworn 20 March 2020, at [12]-[13]). It is said that pursuant to cl 18 of the Partnership Agreement the results of Mr Andreazza's certification are binding on all the partners in each year. Benscrape says that, having drawn from the Partnership amounts in excess of that to which they were entitled, the cross-defendants are obliged to pay that amount back to the Partnership. (That, of course, begs the question as to the amounts to which the cross-defendants were in fact entitled to draw from the Partnership, which their defence, by denying the cross-claim, puts in issue.)
Benscrape notes that Mr Andreazza deposes that each year he confirms with the plaintiffs' accountant that the level of the plaintiffs' drawings recorded in the Partnership Accounts corresponds with the same entry in the plaintiffs' accountants records (Mr Andreazza's affidavit, sworn 20 March 2020, at [9]). It is said that the partners then used the information certified by Mr Andreazza to prepare their tax returns for submission to the Australian Taxation Office.
Benscrape contends that the evidence of Mr Andreazza establishes the elements of the cross-claim and shows that there is no arguable defence. It is submitted that the defence to cross-claim is "completely deficient" in that it fails to plead any material facts to sustain the general denial of liability. It is submitted that, given this failure, it should be struck out; and that summary judgment should be given in favour of the cross-claimants.
By way of illustration, Mr and Mrs Lucantonio point to the criticism made by Benscrape of [9] of the statement of claim. They say that the particulars to that paragraph identify why the parties thought, by 26 June 1997, that Mr and Mrs Lucantonio (rather than the Partnership) should make the Incidental Payments. As to the complaint that the particulars assert material facts which ought to be pleaded so that issue can be joined, they say that issue has already been joined (technically) by the filing of a defence as long ago as 1 December 2017, in which the defendants denied the allegations, and (in substance) by the subsequent service of affidavits. Reference is made in this regard to Mr Lucantonio's affidavit sworn 23 April 2018 at [62] where he deposes to a conversation in this regard.
The incongruity in the defendants' position is said to be illustrated by reference to [16] of the statement of claim (see earlier), in respect of which Benscrape here complains as to its adequacy but to which the defendants were able to plead (with precision) in their defence. It is noted that, at [16] of the defence, the defendants: admit that the first and/or second defendant requested of the plaintiffs that Terra Ag be allowed to occupy part of the Griffith land; deny that the plaintiffs were asked to allow Terra Ag to occupy the Griffith land without paying rent to the Partnership; and go on to say that: an initial 12 month rent free period was agreed with Terra Ag for one of the sheds on the Griffith land on the basis that Terra Ag spent significant funds on fitting out that shed; Terra Ag received 4 months' rent free in exchange for fitting out the shed, and thereafter rental was paid at market rates and in an amount higher than rental for other spaces in the same block; the first plaintiff carried out negotiations for the fit out costs and rental amount directly with Terra Ag; and Terra Ag subsequently leased two additional sheds which were also negotiated directly with the First Plaintiff and rent was paid at market rates, and in an amount higher than rental for other spaces in the same block.
For Mr and Mrs Lucantonio it is said (referring to Barclay Mowlem by way of example) that it is no longer appropriate for lawyers to approach any pleading by parsing and scrutinising each aspect for objection, and that the proper approach to objections to pleadings must be informed by the modern approach to case management. They say that the question is whether the pleading adequately discloses an arguable case and does so in a manner that discloses the issues and informs the other party of the case to be met (which they maintain is here the case); and, if it does, then objections of this kind should not be raised (citing Barclay Mowlem at [6]-[8]; which was applied in Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13], per Greenwood, McKerracher and Reeves JJ). It is noted that objections must be directed towards facilitating the efficient and effective management of the case to a hearing directed towards considering the real issues in the case.
In that regard they note that, in Barclay Mowlem, Martin CJ said (and it is worth here setting out in full) (at [4]-[8]):
[4] It is, I think, important when approaching an issue of that kind to bring to mind the contemporary purposes of pleadings. The purposes of pleadings are, I think, well known and include the definition of the issues to be determined in the case and enabling assessment of whether they give rise to an arguable cause of action or defence as the case may be, and apprising the other parties to the proceedings of the case that they have to meet.
[5] In my view, the contemporary role of pleadings has to be viewed in the context of contemporary case management techniques and pre-trial directions. In this Court, those pre-trial directions will almost invariably include; first, a direction for the preparation of a trial bundle identifying the documents that are to be adduced in evidence in the course of the trial; second, the exchange well prior to trial of non-expert witness statements so that non-expert witnesses will customarily give their evidence-in-chief only by the adoption of that written statement; third, the exchange of expert reports well in advance of trial and a direction that those experts confer prior to trial; fourth, the exchange of chronologies; and fifth, the exchange of written submissions.
[6] Those processes leave very little opportunity for surprise or ambush at trial and, it is my view, that pleadings today can be approached in that context and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pre-trial case management will exist and be implemented to aid in defining the issues and apprising the parties to the proceedings of the case that has to be met.
[7] In my view, it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment.
[8] Most pleadings in complex cases, and this is a complex case, can be criticised from the perspective of technical pleading rules that evolved in a very different case management environment. In my view, the advent of contemporary case management techniques and the pre-trial directions, to which I have referred, should result in the Court adopting an approach to pleading disputes to the effect that only where the criticisms of a pleading significantly impact upon the proper preparation of the case and its presentation at trial should those criticisms be seriously entertained.
Mr and Mrs Lucantonio say that the same processes which produce "very little opportunity for surprise or ambush at trial" (see Barclay Mowlem at [6]) apply in the Equity Division in this Court and they maintain that (consistent with what was said in Barclay Mowlem at [8]), in the absence of evidence that the pleading in fact hampers the proper preparation of the case and its presentation at trial, this part of the motion should be dismissed. By way of example, it is noted that one of the complaints advanced in relation to the claim in quantum meruit is that there is no pleading as to what is the reasonable value of the work and how that sum is calculated. Mr and Mrs Lucantonio say that such matters do not need to be pleaded but, in any event, that they have led expert evidence in support of their claim (referring to a report dated 29 March 2019 of Mr Madden).
Second, they say that, even if the factual controversy on this issue were now (on this summary judgment application) to be explored, and there were to be a finding that Mr Andreazza's assumption (that the partnership split was 75/25) was correct, that would not be the end of the factual issues that would need to be examined because it would then be necessary to consider whether the $617,120 (which it is alleged that the cross-defendants overdrew) should be reduced by reference to the following matters which arise from Mr Lucantonio's affidavit sworn 23 April 2018. The matters to which they there refer are: that the cross-claimants had, in lieu of drawings, paid for construction projects unrelated to the Partnership and for the sole benefit of the crossclaimants, with Partnership funds (see at [73(b)], [88], [93], [130], [244], [245], [248], [250], [288], [304], and [462]); that such withdrawals were consensual (see at [258], [271], [325], [326], and [358]); that Mr Lucantonio was to receive a management fee of $35,000 per year (see at [118], [227], [234] and [350]); that Mr Lucantonio, contrary to the Partnership Agreement, had been required to put money into the Partnership due to cash-flow shortages in relation to the construction of Partnership assets, and so was entitled to take that money back out (see at [88], [93], [236] and [379]); and that the "reconciliation spreadsheet" exhibited to Mr Andreazza's affidavit commenced in 2003, not 1999, when (on Mr Lucantonio's evidence) he was entitled henceforth to receive a 45% share of the partnership profits.
Third, they say that it is a triable issue that Mr Andreazza has not given a certificate of the kind referred to in cl 18 of the Partnership Agreement. It is noted that cl 18 required him to certify the account to be correct. Mr and Mrs Lucantonio maintain that the exhibit AJA-2 to Mr Andreazza's affidavit is not such a certificate (noting that it does not refer to cl 18 and submitting that the first paragraph of page 12 of the accounts, read with note 1, records a different purpose, namely that the financial statements are to "meet the needs of the partners"). It is submitted that, far from page 12 certifying the correctness of certain information, there is a disclaimer as to the accuracy of the figures. In particular it is noted that Mr Andreazza states that the partners are solely responsible for the information; that his procedures "do not include verification or validation procedures"; and that "no audit or review has been performed and accordingly no assurance is expressed".
Mr and Mrs Lucantonio invoke the observations made in Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284 at 288-289, per Young J (as his Honour then was) to the effect that: provisions such as cl 18 must be strictly construed; the certifier would have either a contractual or fiduciary duty to investigate the facts and give an impartial decision; and, on the true construction of the clause, such investigations may be a condition precedent to the efficacy of the certificate. Mr and Mrs Lucantonio say that it is difficult to see how Mr Andreazza has discharged the aforementioned duties when he accepts (without giving reasons, and without reference to the above matters or their case more generally), that the division of the Partnership's profits and assets is to be determined in accordance with the cross-claimants' contentions.
It is noted that Mr Lucantonio's evidence is that Mr Andreazza was well aware that the crossclaimants had, in lieu of drawings, paid for construction projects unrelated to the Partnership and for the sole benefit of the cross-claimants by the use of Partnership funds (referring to [134], [215], [217], [220], [244] and [304] of Mr Lucantonio's affidavit, sworn 23 April 2018; which allegations are denied by Mr Andreazza in his affidavit of 5 September 2018). Mr and Mrs Lucantonio say that they have flagged their intention to cross-examine Mr Andreazza on those matters at the trial and they say that there will be a challenge to his credit. They maintain that the question as to whether Mr Andreazza has complied with his duties is a matter to be determined at trial.
Fourth, Mr and Mrs Lucantonio say that cl 18 of the Partnership Agreement does not expressly clothe any certificate (to the extent there is one) with conclusive force.
Fifth, Mr and Mrs Lucantonio say that the combined effect of the relief sought in prayers 10 and 11 of the plaintiffs' statement of claim is the winding up of the partnership and the taking of an account. It is submitted that the prayers for relief at 2-3 of the notice of motion seek an outcome that circumvents that process; and that there is no justification given for so doing.
The complaint here made is that the pleading at [12] of the statement of claim is of an oral agreement (the Augmentation Agreement) that is alleged to have become binding and operative on the date that it was made in 1999 (see at [13] of the statement of claim). It is said that the case is on all fours with that considered in Booker, in that the pleaded agreement is incomplete and hence an unenforceable agreement. Insofar as the Augmentation Agreement is then pleaded throughout the statement of claim as the justification for other claims pleaded in the statement of claim, it is said that those other claims must also fail insofar as they are based on an unenforceable agreement.
The force of this argument to my mind is that the allegation at [12] of the statement of claim is that the agreement included the terms that "the defendants (jointly or otherwise) would augment the plaintiffs' share of the Partnership to a larger share at a later date". Benscrape says that this is clearly an incomplete agreement (noting that it does not identify, inter alia, how and when this augmentation would be made or would become operative). It is said (citing Booker) that the agreement is thus "a nullity from its inception"; i.e., that it is no more than an agreement to agree.
Benscrape argues from that premise that it is an impossibility for things to have been done (as is here alleged) pursuant to the Augmentation Agreement if that agreement is a nullity (and hence complaint is made as to the allegations at [13]-[20] of the statement of claim). (It is said that this is underscored by the allegation at [22] that at no time subsequent to 1999 has Benscrape or Mr Salvestro performed it.)
Thus, the first tranche of the pleading that Benscrape now seeks to have struck out is that comprised by [13]-[17], [19]-[20] (see T 9.15), on the basis that those paragraphs only have relevance if the Augmentation Agreement was ever effected (and, as I understand it, Benscrape also seeks [12] itself to be struck out).
The response by Mr and Mrs Lucantonio is that the effect of what is contended for at [12] of the statement of claim is that there was a discussion between the parties in about 1999 that the (then existing) written Partnership Agreement (which provided for a 75%/25% "split") would be varied if the plaintiffs undertook additional works and undertook additional burdens (and, although it was accepted that the evidence would not inform my determination of the pleadings, I was taken to the evidence in support of that allegation at [73]; [90]ff; [379] of Mr Lucantonio's affidavit). In essence, as I understand it, Mr and Mrs Lucantonio's case is that it was ultimately agreed (in 2014) that the augmented share would be a 45% share of the Partnership (thus, as I understand it, that even if incomplete and unenforceable at the time it was made it has subsequently been rendered complete and enforceable).
Mr and Mrs Lucantonio do not take issue with the statement of the law in Booker but they argue that it does not constitute a complete and comprehensive statement of the law (and they maintain that it cannot be said that there was not an arguable basis to bring the claim). Reference is made to academic commentary in Cheshire & Fifoot's Law of Contract (LexisNexis, 11th ed, 2017) at 274-275; 279 and the authorities referred to at fn 64), citing, inter alia, Upper Hunter County District Council v Australian Chilling and Freezing Co [1968] 118 CLR 429 at 436-7 (Barwick CJ); F&G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyd's Rep 53; and JW Carter, Contract Law in Australia (LexisNexis, 7th ed, 2018) at [4-12], citing York Air Conditioning & Refrigeration (A/sia) Pty Ltd v Commonwealth (1949) 80 CLR 11 at 53 (Latham CJ). It is said that the plaintiffs' case at the hearing will be that the parties themselves agreed the larger share in 2014.
Particular reference was made by Mr and Mrs Lucantonio in this regard to Callahan v O'Neill [2002] NSWSC 877, where Young CJ in Eq, as his Honour then was, said at [45]-[47]:
45 I do not consider that the present case is analogous to the Masters v Cameron situation. That situation is one where the court needs to consider whether or not the parties have entered into contractual relations. In the present case, there is clearly a contract between the parties whereby they purchased the property and there was clearly a contract between them as to how the property was to be financed and who would live in what unit. The parties had set up a contractual regime. What is unclear is what other terms they agreed upon.
46 In such cases, there is no reason why the parties cannot make a vague or fuzzy contract on the basis that they will in mutual trust and goodwill fill in the uncertainties in their arrangement as the contract is played out. Indeed, even in cases where the courts might have held the arrangement void for uncertainty in its initial stages, the conduct of the parties may fill in the gaps and make the contract good and certain. However, where there is an established contractual regime, particularly if the contract has been partly executed, a court is less inclined to say that there is voidness for uncertainty.
47 Indeed, this principle applies even if there is in law no contract initially because of uncertainty. Examples are Macaulay v Greater Paramount Theatres Ltd (1921) 22 SR (NSW) 66, 73 (where until plans and specifications were supplied, the contract might have been unenforceable, but once they were supplied, the deficiency was overcome); Bradford v Zahra [1977] Qd R 24 (where a "subject to finance" provision was saved by satisfactory finance actually being obtained).
As to this issue, I am not persuaded that it can be said that there is no tenable or arguable case based on there being a binding contract, in circumstances where it is alleged that an agreement was reached in about 1999 (to the effect that Mr and Mrs Lucantonio's Partnership shares would be augmented or increased to an unspecified amount at an unspecified later date if certain things were done) and it is then alleged that at a later (albeit much later) date the parties reached agreement as to that augmented share.
Proprietary estoppel claim
The second tranche of the pleading about which complaint is made is that which pleads a claim in proprietary estoppel (see from [25]-[33] of the statement of claim). It is submitted that the Representation pleaded is ambiguous and imprecise; as is the alleged Assumption; and that the pleaded acts of reliance are not acts of reliance on the Assumption (rather, they are acts in reliance on the alleged contractual obligation). It is said that a more fundamental difficulty with the pleading is that there is nothing pleaded in those paragraphs which sustains the relief sought in the prayer for relief at [3] of the statement of claim (namely, a declaration that Benscrape holds 45% of its legal ownership of the Griffith land on trust for Mr and Mrs Lucantonio in equal shares).
In response to this, Mr and Mrs Lucantonio say that the so-called "fundamental difficulty" does not attack the cause of action (pointing out that if a proprietary estoppel claim is made good then the remedy is in the hands of the Court - and that the prima facie relief is the making good of the expectation or assumption - see Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 (Sidhu v Van Dyke)).
In the present case, it is said that the plaintiffs have acted over a period of 15 years, to their detriment, in reliance that there would be an increased percentage of their share in the Partnership. It is not said that the promise was always that they would obtain a 45% share but it is submitted that, when the Court comes to assess the appropriate relief (assuming the factual contentions are made out for the proprietary estoppel claim) then "the best and surest guide is what they agreed in 2014 consensually". It is submitted that there is no need to plead that, when the Court comes to determine what the Partnership percentage should be, it should be 45%, because that is really a matter of evidence; but that there is no incongruity with the pleading (simply that the submission will be, based upon the evidence, that 45% is the appropriate figure).
As to this part of the complaint, I cannot conclude that there is no arguable cause of action in proprietary estoppel (taking the facts as alleged at their highest). The suggestion that the conduct of the plaintiffs (alleged to be the making of contributions and additional benefits) cannot be said to be reliance on the alleged Representation (because those acts are alleged to be in reliance on or in purported performance of a contractual promise or obligation) seems to me to be little more than an exercise in semantics. The proprietary estoppel claim is an alternative to the contractual claim. I see no inherent inconsistency between reliance on what is understood to be a contractual promise and reliance, if that promise not be found to have the status of a binding contractual obligation, on a promise to the same effect as that which was the subject of the alleged contract.
If the plaintiffs make good their claim of proprietary estoppel by encouragement, as is here being invoked, then the relief that will ultimately be granted would be determined by reference to the principles in cases such as Sidhu v Van Dyke. This is not to suggest the framing of relief by idiosyncratic notions of fairness or good conscience (or palm tree justice), as the defendants here seemed to suggest. It is possible that there could be argument as to whether, in a particular case, the making good of the relevant assumption or representation would be wholly disproportionate, and hence that different relief ought to be granted than the prima facie making good of the expectation; but as I understand it is not necessary that the relief to be sought is a material fact that is an element of the cause of action (and any defence based on relief on the basis of disproportionality would also not need to be pleaded - see E Co [a pseudonym] v Q [a pseudonym] (No 4) [2019] NSWSC 429).
Accordingly, I would not strike out this second tranche of the pleading about which complaint is made.
Claim in restitution
As to the third tranche of the pleading in respect of which issue is taken, this is the claim for restitution based on the allegations at [37]-[50] of the statement of claim. The allegation is that, if there is any finding that the plaintiffs' understanding of the Augmentation Agreement or the Representation was mistaken, which the pleading makes clear is an allegation which is denied, then Mr and Mrs Lucantonio, through Mr Lucantonio, took certain action (including carrying out the Work) "under a mistake". In the response to the request for particulars it is identified that this is an allegation of unilateral mistake (see [10] of the response to the request for particulars by letter dated 10 November 2017 from the solicitors acting for the plaintiffs to the solicitors acting for the defendants).
Complaint is made that there is no allegation in this pleading as to a mistake about the meaning of the Augmentation Agreement or the Representation, (and it is pointed out that [37] of the statement of claim expressly denies such a proposition). It is said by Benscrape that there will never be a finding made at trial that Mr Lucantonio was mistaken about anything because there is no pleading anywhere that he was mistaken about the Augmentation Agreement or the Representation.
For their part, Mr and Mrs Lucantonio say that the mistake (which they say is a matter which emerges plainly from the terms of the pleadings) is that Mr Lucantonio provided substantial work in relation to an alteration to the Partnership arrangements and the allegations at [36] of the statement of claim postulate the counter-factual, if there was no variation to the Partnership arrangements.
It is said that the mistake of Mr Lucantonio (and hence Mrs Lucantonio) is in relying upon the mistaken belief that there would be an alteration, or there could be a valid alteration, to the Partnership Agreement. Mr and Mrs Lucantonio say that this is a classic case where, if there is no valid contract (because the defendants' defence about the contract is made good, i.e., it is held to be uncertain) and if there was no estoppel, then, on the plaintiffs' case, work was "manifestly undertaken" on the faith or the belief of recompense which was mistaken.
It seems to me that this part of the pleading is no more than an example of a contingent pleading - in other words, Mr and Mrs Lucantonio maintain the existence of the Augmentation Agreement and maintain that the Representation as alleged was made and was relied upon; however, if there be a finding that the Augmentation Agreement did not exist (or was a nullity, as Benscrape contends), or that the Representation was not made, then the import of the quantum meruit claim here pleaded is that, in that event, Mr and Mrs Lucantonio took the steps that it is there pleaded they did, under a mistake; that the defendants acknowledged the right or title "vested" in Mr Lucantonio (which I read to be, in effect, that they contributed to the mistake and/or were aware of it at the relevant time); and hence that it is unconscionable for the defendants to retain the benefit of the Work.
As to the submission by Benscrape that a unilateral mistake on the part of the plaintiffs is not sufficient to make good a claim for restitution, that might give rise to interesting academic debate at the trial but it does not appear to me that the cause of action is manifestly hopeless. There are certainly cases in which the existence of an apparently unilateral mistake may of itself be an "unjust factor" for the purposes of a restitutionary claim, at least where the question is whether the defendant should retain the benefit of the contract in respect of which the mistake has arisen (see David Securities Pty Ltd v Commonwealth of Australia (1992) 175 CLR 353 (David Securities) at 392, per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; Edelman and Bant, Unjust Enrichment (Hart Publishing, 2nd edition, 2016) at 133, 140; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 117, per Hill J). I am not persuaded that a claim for restitution of benefits conferred under the operation of a unilateral mistake would of itself be hopeless or doomed to failure. A fundamental mistake may, for example, concern the existence or nature of a legal obligation; and it may be unilaterally made. The cases on mistake grounding a basis for restitution have in the past distinguished between mistakes of fact and mistakes of law (although I note that since David Securities there is no longer a bar against claims for mistakes of law); not, as I read them, whether the mistake is unilateral or common. If (as may be the case) the focus by Benscrape on the unilateral nature of the mistake presages a suggestion that it would not be unconscionable for the defendants to retain a benefit conferred on them under a mistake of which they were not aware, that seems to me to be an issue for the trial, not for summary determination at this stage.
For completeness, I note that the complaints made as to the alternative quantum meruit claim (which I do not understand now to be pressed on this strike-out application) which the defendants base on Mann v Paterson Constructions, seemingly raise an issue of inconsistency in the pleading between those pleadings and prayer 4 of the statement of claim.
In Mann v Paterson Constructions, the issue concerned the import of a contractual allocation of price in considering the amount that might be recoverable on a quantum meruit claim. The High Court considered whether a contractor, having terminated a building contract following an alleged repudiation by the principal, could recover payment for its work, including variations, upon a quantum meruit basis. Gageler J (who agreed with the orders proposed by Nettle, Gordon and Edelman JJ) said (at [101]-[102]) that the "contract price should limit a non-contractual quantum meruit to recover remuneration for services rendered in part performance of an enforceable contract", such that the "common law rule should accordingly be that the amount recoverable on a non-contractual quantum meruit as remuneration for services rendered in performance of a contract prior to its termination by acceptance of a repudiation cannot exceed that portion of the contract price as is attributable to those services" (see also the plurality at [215]).
In the present case, as I understand the complaint being raised by the defendants, it is there is an inconsistency between the claim that there was an agreement and a claim (if that principal claim not be upheld) for quantum meruit claim for work performed in the belief that there was such an agreement. I do not see any inherent inconsistency in the raising of that claim in the alternative. In any event, as I have noted, Benscrape here did not press its strike-out application in relation to those parts of the pleading.
Allegation of dishonesty
Finally, complaint is made to the allegations at [51]-[53], which are said to amount to a pleading of conspiracy with "simply vacuous general statements" and particulars that are "just useless". Benscrape says that an allegation of this seriousness cannot be pleaded without the particularity of an indictment. Benscrape seeks to have [53] struck out on that basis.
I have set out above the entirety of the pleading at [53] (at [47] above). I accept that it is a serious allegation to make that there was a deliberate and knowing distortion of the accounts by the defendants (in breach of their fiduciary duties) for the benefit of the defendants or alternatively of Benscrape. I accept that an allegation of that kind is tantamount to fraud (at least equitable fraud if not, indeed, fraud at common law). It should be properly pleaded and I accept that the pleading at present is deficient in that regard. Furthermore, I do not accept that the complaint as to this aspect of the proceeding can be dismissed as an arid dispute on a technical pleading point. (Senior Counsel for Mr and Mrs Lucantonio accepted as such in that there was no resistance in oral argument to the re-pleading of the allegation at 53, which is where I considered that there was real difficulty as to the adequacy of the pleading.)
It is also well-established that a pleading is liable to be struck out if it is embarrassing (see 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); Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 58 FCR 26 (Lindgren J, Lockhart and Tamberlin JJ agreeing)). What is meant by an embarrassing pleading, in the context of an application such as the present, relates to whether the pleading can serve the function of a pleading under the rules; i.e., whether it puts the defendant properly on notice of the real substance of the claim made against it and enables the defendant to know what case it is that the defendant has to meet. A pleading is embarrassing if it is unintelligible, ambiguous or imprecise in its identification of material factual allegations so as to deprive the opposing party of proper notice of the real substance of the claim or defence (Gunns Ltd v Marr [2005] VSC 251 at [14]-[15]) or if it contains inconsistent, confusing or irrelevant allegations (Shelton v National Roads and Motorist Association Ltd (2004) 51 ACSR 278; [2004] FCA 1393 at [18]).
In Arthur Young v Tieco International (1999) 182 LSJS 367 (which was approved by McDougall J at first instance in Ingot Equity Capital Markets Pty Ltd v Macquarie Equity Capital Investments Ltd [2004] NSWSC 1136 at [46]), Lander J said (at 670) that a Court ought to approach a consideration of the adequacy of a pleading by seeking to answer the ultimate question whether the pleading gives fair notice of the case to be made against the other party at trial, thus minimising the risk of injustice resulting from surprise.
I accept that it is not an answer to a complaint as to the adequacy of a pleading to point to the affidavit evidence that may have been filed or served in the proceeding. Bryson J in Northam v Favelle Favco Holdings Pty Ltd (Supreme Court (NSW) 7 March 1995 unrep), when speaking as to what a pleading is to contain and as to the requirement for particularity of pleading extending to all causes of action, explained the unfairness to a defendant if the defendant is required "to flesh out general expressions or indirect allusions by piecing together information in other documents such as affidavits or experts' reports" (and see Collier v Country Women's Association of New South Wales [2017] NSWCA 22, where leave to appeal was refused in respect of a decision of the primary judge refusing leave amend a pleading by the annexation of an affidavit thereto).
However, I did not understand the reference by Mr and Mrs Lucantonio in the present case to the affidavit evidence served in the proceeding to suggest that the affidavits could properly make good a deficiency in the pleadings; rather, I understood the proposition to be that the defendants cannot here contend that they are not aware of the case they have to meet, when they have been capable both of pleading to it and of adducing evidence to meet it and that this is a factor which may be taken into account in considering the exercise of the discretion at this stage.
Moreover, to the extent that there is or may here be any pleading deficiency, there is a clear admonition by the High Court 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 at 129 (Barwick CJ) and Dey at 91 (Dixon J)). If a pleading is struck out then leave to re-plead ought ordinarily be granted unless the Court takes the view 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" (referring to 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] VSCA 11 at [24], the Victorian Court of Appeal 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 recognised (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.)
Even carrying out the exercise that Mr and Mrs Lucantonio maintained should not here be embarked upon (of addressing the minutiae of the pleading complaints), I would have given leave to re-plead unless the case now sought to be put could fairly be described in the terms set out above (i.e., as hopeless or manifestly groundless or the like); and I am not satisfied that it could be so described.
One cannot lose sight of the time at which these pleading complaints have been made (i.e., not long before the matter has been listed for hearing for a number of days). Pleading disputes are by no means unprecedented but, whatever criticism might be levelled at the pleading in this case, it is extraordinary for such a dispute to be raised at the eleventh hour, so to speak, at a time when the case is ready for trial (or at least was said to be so when it was last year listed for hearing this year). There was no suggestion, when the matter was before me for listing for hearing last year, that there was any inability on the part of the defendants to understand the case that they were here to meet. There is thus a real issue as to whether the bringing of the application at this stage is consistent with the overriding statutory mandate for the just, quick and cheap resolution of the real issues in dispute between the parties in the present case. Although the plaintiffs (perhaps charitably) did not initially invoke this part of the language used by Martin CJ in Barclay Mowlem, there would be some force in describing many of the complaints now made as "pettifogging". In any event, common sense clearly prevailed and ultimately Benscrape only pressed its complaints as to a more limited portion of the pleading.
Turning to the particular pleading complaints that were ultimately pressed, in my opinion only that made in relation to [53] warrants an order for re-pleading. That is because the allegation at [53] is one of dishonesty. Particulars of that paragraph of the statement of claim were first sought by letter dated 12 November 2019 (as part of a much broader request for particulars). The response to the request (which pointed to the much earlier request for and supply of particulars; and the absence of any complaint as to the adequacy of that earlier response), by letter dated 18 November 2019, is not to my mind sufficient. I consider that Benscrape is (as indeed are both defendants) entitled to know precisely what are the material facts and circumstances on which reliance is placed for that serious allegation (and, during the course of oral submissions, adverted to above, Senior Counsel for Mr and Mrs Lucantonio made clear that they would not resist an order for the re-pleading of that allegation).
Accordingly, I will direct the plaintiffs to re-plead the allegation made at [53] of the statement of claim. For that purpose it will be necessary for there to be leave to file an amended statement of claim and I will grant such leave. For the avoidance of any further interlocutory pleading dispute I will make clear that the leave to file an amended statement of claim encompasses leave to make the amendments the subject of the amended pleading that was the subject of the earlier grant of leave (that I am told was inadvertently not exercised), since I understand there was no opposition to the filing of that amended pleading at the time.
However, in the present case, it does not appear that Mr and Mrs Lucantonio seek to rely in their defence to the cross-claim on a positive case (so, for example, they do not seek to plead an estoppel as such). Insofar as they contend that their entitlement under the Partnership arrangement or agreement was to a larger share than Mr Andreazza's reconciliation statement is premised upon. The allegations of fact on which they rely for that contention are as pleaded in their statement of claim. Insofar as they raise assertions in submissions as to whether Mr Andreazza may have breached obligations owed in relation to any "certification" of partnership amounts, as I understand it this is not put as a positive case but this is foreshadowed as a challenge to his credibility and/or to the import of the documents created by Mr Andreazza in relation to the partnership accounts.
I consider that it is evident from the material to which I have been taken in the course of argument that the claims made in the cross-claim raise disputed issues of fact (as explained in the plaintiffs' submissions) and it is not appropriate that those be dealt with on a summary basis.