Plaintiff v Defendant

PRACTICE AND PROCEDURE - Pleadings - Insufficient particulars - Whether appropriate to order particularisation of pleading after discovery - Arab Monetary Fund v Hashim (No 2) [1990] 1 All ER 673.

TRUSTS - Constructive trusts - Barnes v Addy knowing receipt claim - Allegations of knowledge - Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89; Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) (recs and mgrs apptd) [2008] FCA 1920; (2008) 252 ALR 41.

1 This is an application by the defendant, Saxo Bank A/S ("Saxo"), to strike out paragraphs 15 and 25 of the statement of claim filed by the plaintiff, Taverners J Pty Ltd ("Taverners"), dated 29 October 2010. It was common ground that paragraphs 15 and 25 of the statement of claim are the critical elements of the claim by Taverners against Saxo on the basis of its alleged "knowing receipt" of trust property supplied or transferred in breach of trust or fiduciary duties. It is a claim under the first limb of Barnes v Addy.[1]

2 The application was made by summons dated 17 December 2010 seeking, principally, the following orders:

"(a) Pursuant to Rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2005 ("the Rules"), or the inherent jurisdiction of the Court, the Plaintiff's Statement of Claim dated 29 October 2010 ("the Statement of Claim") be struck out on the ground that it may prejudice, embarrass or delay the fair trial of the proceeding and/or is an abuse of the Court's process;

(b) Alternatively, pursuant to Rule 23.02 of the Rules, paragraphs 15 and 25 of the statement of claim be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the proceeding and/or are an abuse of the Court's process."

3 Section 7(1) of the Civil Procedure Act 2010 provides for an "overarching purpose" in the following terms:

"The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute."

Section 8(1) of this Act provides that the court must seek to give effect to the overarching purpose in the exercise of any of its powers or any interpretation of those powers, whether they are part of the court's inherent, implied or statutory jurisdiction. Section 9(1) of the Act further provides that in making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the objects which are set out in those provisions. These requirements are also reflected in rule 1.14(1)(a) of the Rules, which provides that:

"In exercising any power under these Rules the Court shall endeavour to ensure that all questions in the proceeding are effectively, completely, promptly and economically determined."

4 The fundamental rules of pleading are contained in Order 13 of the Rules, the provisions of which may be summarised as follows:[2]

(a) Every pleading must contain in a summary form a statement of all the material facts upon which a party relies, but not the evidence by which those facts are to be proved: r 13.02(1)(a);

(b) the effect of any document or the purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or conversation must not be pleaded unless those words are themselves material: r 13.03;

(c) every pleading must contain the necessary particulars of any fact or matter pleaded: r 13.10(1);

(d) particulars must be given if they are necessary to enable the opposite party to plead, to define the questions for trial or avoid surprise at trial: r 13.10(2); and

(e) every pleading must contain particulars of any condition of the mind, including knowledge or notice: r 13.10(3)(b).

5 These rules are further reinforced or elaborated upon in the Commercial Court Practice Note,[3] which provides that:

"12.1 Pleading should focus on the real or substantial issues in dispute, supported by proper particulars.

...

12.5 Proper particulars should be provided in all pleadings as required by RSC Ch I 13.10. A party in breach of this requirement may expect to be ordered to bear the costs of the request for and the provision of further and better particulars."

6 In relation to strike out applications, r 23.02 of the Rules, which is relied upon by Saxo in this application, relevantly provides that:

"Where an endorsement of claim on a writ or originating motion or a pleading or any other part of an endorsement of claim or pleading -

(a) does not disclose a cause of action or defence;

(b) is scandalous, frivolous or vexatious; or

(c) may prejudice, embarrass or delay the fair trial of the proceeding; or

(d) is otherwise an abuse of the process of the Court -

the Court may order that the whole or part of the indorsement or pleading be struck out or amended."

The present applicant, Saxo, relied only on paragraphs (c) and (d) of this rule. In particular, it did not rely on paragraph (a) of this rule, namely that the statement of claim did not disclose a cause of action.

7 Reference was made by Saxo to the pleadings principles and strike out principles relevant to applications such as the present, which I summarised recently in Clarke v Great Southern Finance Pty Ltd.[4] It is useful in the present context to set out the passages from my judgment in that case which were referred to by Saxo in its submissions. In relation to pleadings and strike out principles I said, among other things, that:

"7. It is quite clear that the function of the statement of claim is to set out with sufficient clarity the case which a defendant must meet. It is also clear that in so doing, the statement of claim must plead all material facts necessary to constitute a complete cause of action. It should also be stressed, particularly in the present context, that it is necessary to allege what must be a cause of action, not merely what might be one. ..."[5] [footnotes omitted]

"9. The object and function of particulars is conveniently described as being to:

(a) inform the other party of the nature of the case it has to meet, as distinguished from the way in which such case will be proved, and to prevent surprise and consequential delay;

(b) limit the generality of pleadings and thereby limit and define the issues to be tried;

(c) determine the relevance of evidence and thereby restrict the evidence to be led at trial; and

(d) limit and define the issues as to which the discovery process may be appropriate."[6] [footnotes omitted]

"11. ... The power to strike out or compel amendment of a pleading is discretionary but, as a rule, it is only when some substantial objection to the pleading complained of or where some real embarrassment is shown that the power will be exercised."[7] [footnotes omitted]

8 Reference was also made by Saxo to the following statement made by Bongiorno J in relation to when a pleading will be regarded as embarrassing:[8]

"15. ... The full Court of this Court has described a pleading as being embarrassing - ... 'where the pleading is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him.'" [footnotes omitted]

9 In relation to the pleading and particularisation of allegations of knowledge, Saxo made reference to the following statement of Harper J in Montclare v Metlife Insurance Ltd:[9]

"7. ... I do not wish to suggest that inadequate particulars can never result in a pleading that is embarrassing or which may prejudice or delay the fair trial of a proceeding. If the absence of particulars, or their manifest inadequacy to support the material allegation in support of which they are put forward, is not corrected after proper opportunity for correction has been provided, then it may be entirely appropriate for the opposite party to bring that circumstance to the notice of the court; and the court may be of the opinion that such particulars as have been pleaded cannot sustain the material allegation they are intended to support, and for which particulars are necessary."

"9. ... In my opinion, the rules of pleading, which have not changed materially as between their 1996 and their present (2005) form, should be construed so as to ensure that pleadings reveal the real issues in dispute and avoid surprise. This is unlikely to be achieved in the absence of relevant particulars, especially where an allegation of knowledge is made by one party and denied by the other. Every particular by which the party pleading knowledge intends to support that allegation should be included in the pleading if there is any prospect that its absence will take the other party by surprise when evidence is given at trial. If particulars cannot be given, then it may be that the allegation of knowledge will be susceptible of objection as being embarrassing, or as prejudicial to the fair trial of the proceeding. This may be the occasion for an order for the removal of untenable claims."

"20. In Ristevski & Anor v Kyriacou & Ors,[10] I said, when dealing with the adequacy of particulars in a pleading alleging fraud (but the principle applies more generally):

'... It follows that, whether or not particulars are properly described as forming part of the pleading itself, they may very well perform an essential function; and their absence may very well deprive the pleading of all efficacy.

It may also very well be that a person who suspects fraud, and who wishes to allege it, is unable to point to any more than mere speculation as a means of supporting the allegation. Hard as it may be for such a person to appreciate the fact, it is nevertheless inappropriate to allow such an allegation to go forward to trial. If the person making the allegation does not have sufficient evidence to support it, then the sooner the allegation is removed from the list of issues between the parties, the better. The Court should not be concerned with hunches, no matter how reluctant litigants may be to put their hunches aside.' ..."

10 More particularly, in relation to allegations of knowledge for the purpose of a "knowing receipt" claim, reference was made by Saxo to the following statement of Finkelstein J in Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) (recs and mgrs appointed):[11]

"15. For a knowing receipt claim under Barnes, there are three elements: (1) receipt by the defendant of (2) trust property with (3) knowledge of the facts that (a) the property was trust property and (b) receipt was pursuant to a breach of fiduciary duty or misapplication of the property." [references omitted]

"27. ... Precisely what constitutes knowledge for purposes of a Barnes knowing receipt claim has not been explicitly settled by the High Court, but I consider that the cases establish that it is sufficient to plead and prove knowledge of facts that would put an honest and reasonable person on notice (but not merely inquiry) of a real and not remote risk that the transfer was in breach of trust or fiduciary duty or involved the misapplication of trust property."[12] [references omitted].

Application of the statutory provisions, Rules and principles

11 In order to establish a claim based on "knowing receipt" within the first limb of Barnes v Addy,[13] Taverners must prove that:[14]

(a) the defendant was in receipt of "trust property"; and

(i) the property received was "trust property"; and

(ii) circumstances attendant on the transfer of that property made the transfer a breach of trust or fiduciary duty.

12 In Farah Constructions Pty Ltd v Say-Dee Pty Ltd,[15] the High Court said that the species of knowledge required for a claim of "knowing assistance" (the second limb of Barnes v Addy[16]) was any of the first four categories propounded in Baden v Société Générale pour Favoriser le Dévélopment du Commerce et de l'industrie en France SA, namely:[17]

(iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make;

(iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man.

13 The fifth category propounded in Baden was "knowledge of circumstances which would put an honest an reasonable man on inquiry". It has, however, been reaffirmed that "knowledge" within the fifth category will not suffice.[18] This means that, as reaffirmed by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd:[19] "all that is necessary is that the known facts would have communicated to a reasonable person a general understanding that fraud, breach of trust or fiduciary duty had occurred".[20] The prevailing view in Australia (both before and after Farah v Say-Dee) is that the same Baden four categories are required for a claim in "knowing receipt".[21]

14 It is against this background that the pleadings contained in paragraphs 15 and 25 of the statement of claim must be viewed. Paragraph 15 of the statement of claim alleges that:

"15. In receiving the USD Sum Drawing, Saxo:

(a) was wilfully blind to; or alternatively

(b) wilfully and recklessly failed to make such inquiries as an honest and reasonable man would make in relation to; or alternatively

(c) had knowledge of circumstances which would indicate the facts to an honest and reasonable man of,

the fact that the USD Sum Drawing constituted trust property being misapplied or transferred pursuant to a breach of trustee and/or fiduciary duties by Sonray.

PARTICULARS

Saxo had the requisite level of knowledge given its association with Sonray, which can be inferred from all the circumstances including the White Label Partnership Agreement between Saxo and Sonray (entered into on or about 23 December 2004), Saxo's familiarity with Sonray's business model, and Saxo's advertisement or promotion of its services as a provider of a trading platform, Saxo's knowledge of irregularities with Sonray and the trading platform, including deficits in the Sonray segregated account and Saxo's permission for Sonray to override the usual controls imposed in relation to margin calls under the White Label Partnership Agreement.

According to the Report by the then Administrators of Sonray to Creditors pursuant to s 439A(4)(a) of the Corporations Act, dated 19 October 2010, page 39:

(a) Saxo allowed Sonray to upload deposits onto the trading platform before funds were transmitted to Saxo. This allowed Sonray to process unfunded transactions, and Saxo agreed that Sonray could provide a daily netting sheet of movements of funds effectively allowing Sonray to retain funds received to meet withdrawals from the Client Segregated Account.

(b) In early 2008, by mutual agreement, Sonray stopped sending Saxo funds received from clients and Sonray began to retain substantial funds in the Client Segregated Account.

(c) In February 2009 Saxo demanded that Sonray: (i) transfer $1 million to Saxo; (ii) provide Saxo with an explanation of where and how client funds not held at Saxo were held and in what form; (iii) provide third party bank confirmation about these funds; and (iv) provide an explanation of how Sonray intended to go back to normal operations. Whilst no money or explanation was provided by Sonray to Saxo, the relationship continued.

Further particulars will be provided after discovery."

15 The material facts alleged in paragraph 25 of the statement of claim are virtually identical to those alleged in paragraph 15. The difference is that paragraph 25 pleads that the drawing constituted the trust property being misapplied or transferred pursuant to a breach of fiduciary duty by Sonray, rather than also in breach of trustee's duties. In any event, the particulars to paragraph 15 are adopted by reference as particulars to paragraph 25 and, consequently, if paragraph 15 is to be struck out, then paragraph 25 should also be struck out; and the converse is also true.

16 The principal and general criticism of the pleadings in paragraphs 15 and 25 which are made by Saxo are that the material facts pleaded are very general and, for example, refer to Saxo's failure to make (unspecified) inquiries and its knowledge of (unspecified) circumstances. It was submitted that the material facts alleged do not sufficiently define the issues in the proceeding concerning Saxo's knowledge and that it is incumbent on Taverners to provide proper and full particulars which (together with the material facts alleged) comply with the relevant rules and principles.

17 Saxo submitted that there were a number of reasons why paragraphs 15 and 25 of the statement of claim were embarrassing as pleadings and ought to be struck out. First, it was said that the extremely vague particulars provided in paragraph 15 do not constitute a proper basis for the pleaded material facts which concern Saxo's "constructive knowledge" in relation to a particular transaction on or about 27 November 2009. It was said that the particulars provided refer to various general matters, frequently unconfined by reference to any date or time period, and apparently occurring at various times between about 23 December 2004 and 1 February 2009. It was submitted that the particulars are inadequate to support the material allegations in support of which they are put forward and, consequently, even if the matters set out in the particulars were established, that would not be sufficient to make out the material facts alleged. Secondly, it was submitted that the particulars to paragraph 15 do not inform Saxo of the nature of the case it has to meet because the pleadings are too general and, consequently, fail to limit and define the issues to be tried; and do not assist in determining the relevance of evidence and limiting and defining the issues for discovery, as required by the pleading rules to which reference has been made.[22]

18 A particular concern raised in the Saxo submissions was that the generality of the particulars to paragraph 15 would result in time consuming and costly trial preparation because the discovery process and the subsequent process of preparing evidence and preparing and conducting the trial would need to be very broad ranging and unfocused. In particular, it was said that the issues in dispute presently appear to encompass numerous aspects of the business relationship between Saxo and Sonray extending back as far as December 2004 and the particulars do not limit and define the issues in the proceeding.[23] It was also submitted that the particulars provided subsequently by Taverners[24] did not address these deficiencies.

19 Consequently, it was submitted that allowing paragraphs 15 and 25 of the statement of claim and the particulars to those paragraphs in their present form would not be conducive to the effective, prompt or economical determination of all questions in the proceeding,[25] but would rather inevitably lead to a far-reaching inquiry regarding numerous aspects of the relationship between Saxo and Sonray stretching back over many years. In other words, it was said that the pleading in its present form bears the appearance of a speculative fishing expedition, largely relying upon general matters referred to in the Administrator's Report that do not relate to the particular transaction in issue, seeking to "unearth documents upon discovery" that might enable it to make out its case concerning Saxo's knowledge.

20 The third issue raised in support of the application was that the pleadings in paragraphs 15 and 25 concern Saxo's knowledge and, it was submitted, the issue of knowledge is one that is specifically recognised in the authorities as one that is required to be fully particularised. At this point it is convenient to note the reliance placed by Saxo in support of its application on my decision in Clarke v Great Southern Finance Pty Ltd (in liq).[26] It should, however, be stressed that the problem with the pleading in that case, and the reason why the pleading failed was because the material facts as pleaded did not establish a cause of action. Consequently, regardless of the extent to which the pleadings were particularised, they could not be saved because the material facts as alleged, the object of the particulars, were in themselves deficient.[27]

21 Taverners submitted that in paragraphs 15 and 25 of the statement of claim, it alleges that Saxo had knowledge which fell within the second, third or fourth categories on the scale formulated in Baden v Société Générale pour Favoriser le Dévélopment du Commerce et de l'industrie en France SA.[28] It submitted further that if it is able to prove this allegation, namely that Saxo had the requisite degree of knowledge of the fact that the USD Sum Drawing constituted trust property being misapplied or transferred pursuant to a breach of trustee or fiduciary duties by Sonray, then the claim of knowing receipt would be made out.

22 Taverners submitted that paragraphs 15 and 25 of the statement of claim do comply with the relevant statutory provisions, rules and principles applicable to pleadings, particularly r 23.02 of the Rules. In so doing, it also emphasised that an application to strike out pleadings is concerned with the sufficiency of the pleadings, rather than the underlying prospects of success, and is assessed on the basis that the facts pleaded will be established at trial and that all the necessary inferences will be made in the pleading party's favour.[29] More particularly, it was submitted that Clarke v Great Southern Finance Pty Ltd[30] was concerned with an allegation of knowing involvement in a statutory contravention, a claim which the authorities made clear that the standard is actual knowledge.[31] It was said that a claim in "knowing receipt" is very different as the standard of knowledge is much lower and, relevantly, constructive knowledge suffices.[32]

23 Taverners also submitted that the present case is very similar in relevant respects to the circumstances applying to the strike out application in Arab Monetary Fund v Hashim (No. 2).[33] This case concerned claims under both limbs of Barnes v Addy[34] where the statement of claim alleged that Dr Hashim was guilty of the theft of money from a fund, that the fund had the right to trace against Mrs Hashim, and that she was accountable as a constructive trustee based on her actual or constructive knowledge of Dr Hashim's dishonest and fraudulent breach of trust. It was alleged that Mrs Hashim assisted in the breach of trust, receiving trust property and disposing of it.

24 The pleading of this claim was supported by certain particulars, but they were prefaced by the statement that they were the best that could be given until after discovery. It was submitted on behalf of both Dr and Mrs Hashim that the particulars were inadequate to support any allegation of knowledge sufficient to impose liability on Mrs Hashim, and certainly could not sustain a charge of want of probity. It was submitted that the claim should be struck out. In refusing to strike out the claim, Hoffman J (as His Lordship then was) said:[35]

"It seems to me that, subject to particularisation, the pleading is adequate to support an allegation of accountability as a constructive trustee. The facts on which the knowledge allegations are based are matters which entirely concern the Hashims. The bank can obtain such information only by investigation and discovery. I do not accept that the bank has already had so much information about what happened to the money after it left Switzerland that there is nothing more to be found on discovery. It is accepted that a fair amount of information about the movements of the money has not yet been disclosed and no doubt the production of further bank documents will raise more questions. This is, in my view, a case in which the fund is entitled to plead in general terms and to defer particularisation of its case until after discovery: see eg Leitch v Abbot (1886) 31 Ch D 374. Of course, by the time the case comes to trial Mrs Hashim will be entitled to full particulars of the detailed allegations on which the fund will rely. But the absence of such particulars is not, in my judgment, a ground for striking the claim out now."

25 It was submitted that similar observations to those made by Hoffman J could be made about the statement of claim in the present case. Further, it was said that there is sufficient material on which Taverners is entitled to plead the species of knowledge that is pleaded in paragraphs 15 and 25.

26 In light of its submissions in relation to the applicable principles, Taverners submitted that a reading of the statement of claim in its entirety indicates that the relevant circumstances to its claim of "knowing receipt" are as follows:

(b) Saxo and Sonray entered into a White Label Partnership Agreement in relation to the trading platform.

(c) Saxo allowed Sonray to upload deposits onto the trading platform before funds were transmitted to Saxo. This allowed Sonray to process unfunded transactions, and Saxo agreed that Sonray could provide a daily netting sheet of movements of funds effectively allowing Sonray to retain funds received to meet withdrawals from the Client Segregated Account.

(d) In early 2008, by mutual agreement, Sonray stopped sending Saxo funds received from clients and Sonray began to retain substantial funds in the Client Segregated Account.

(e) In February 2009 Saxo demanded that Sonray: (i) transfer $1 million to Saxo; (ii) provide Saxo with an explanation of where and how client funds not held at Saxo were held and in what form; (iii) provide third party bank confirmation about these funds; and (iv) provide an explanation of how Sonray intended to go back to normal operations. Whilst no money or explanation was provided by Sonray to Saxo, the relationship continued. It may be inferred from this that Saxo knew that Sonray was in financial difficulties.

(f) Seven months later, on 27 November 2009, the following events occurred:

(i) At 9.19 am an email was sent from Mr Murray (of Sonray) to Mr Russell (also of Sonray) in which Mr Murray stated that the margin (being the margin owed by Sonray to Saxo) was "getting up there again" and he was concerned that "things would get interesting again". It may be inferred from this that Sonray had had difficulties meeting margin calls made by Saxo in the past;

(ii) After 9.19am but before 11am, Sonray paid USD4,642,468.69 (USD Sum Drawing) to Saxo, in response to a margin call;

(iii) At 11am and 11.12am emails were sent from Mr Murray to Christoffer Moltke-Leth (of Saxo), which confirmed the transfer of USD4,642,468.69 from Sonray to Saxo to cover the margin;

(iv) At 5.02pm an email was sent from Mr Murray to Mr Johnson in which Mr Murray said that the money had hit Saxo but had not yet been booked;

(v) At 5.05pm an email was sent from Mr Johnson to Mr Murray in which Mr Johnson said that he would "hate to have the same problems as last time", and at least Saxo would know Sonray "could move cash in size if needed"; and

(vi) At 5.13pm an email was sent from Mr Murray to Mr Johnson in which Mr Murray said that he "spoke to Chistoffer [sic] and they couldn't believe we tt'd US4.5m on the spot. They have the receipt so risk mgmt is off our back". The reference to "Chistoffer" can be inferred to be a reference to Christoffer Moltke-Leth from Saxo, and the reference to "risk mgmt" can be inferred to be a reference to Saxo's risk management department.

(g) Sonray provided the USD Sum Drawing to Saxo in response to a margin call made by Saxo. The payment of the USD Sum Drawing was in an amount nearly 5 times as large as the US$1 million which had been demanded 7 months earlier and which Sonray could not pay. Saxo did not make proper enquiries to ascertain if these funds which constituted the USD Sum Drawing were available (or if Sonray was entitled to use them) to meet margin calls, in circumstances where it was put on enquiry given its level of knowledge about the matters referred to above. Saxo can be liable in knowing receipt even if it had no specific knowledge of the way in which Sonray came to have the funds in question.

27 Having regard to the principles discussed, particularly emphasising the difference between the present circumstances and those applying in the strike out application in Clarke v Great Southern Finance Pty Ltd,[36] I am of the opinion that the proper approach to the present application is encapsulated in the passage from the judgment of Hoffman J which is set out above. Further, I am of the view that the circumstances which have been pleaded and particularised in the statement of claim in support of Taverners "knowing receipt" claim do appear to be reasonably comprehensive when it is borne in mind that many, if not most, of the critical facts upon which the knowledge allegations are based are matters which entirely concern Saxo; information which will only become available to Taverners as a result of discovery.

28 One of the issues of prejudice raised by Saxo in the event that the proceeding was allowed to continue with paragraphs 15 and 25 of the statement of claim (including the particulars) unmodified was the extent of discovery that would be required; a process that it was said would be extremely time consuming and costly. At the outset in the hearing of this application, I raised with counsel for Saxo the question whether this was the critical matter to which its application was directed and, if so, whether the matter could be addressed by orders for discovery which would have the effect of constraining the process within reasonable bounds. This suggestion was rejected and the application was pursued. Nevertheless, for the preceding reasons, I am of the opinion that this was the critical issue and is a matter which should now be addressed specifically in the orders flowing from the present application.

29 For the preceding reasons, I am of the opinion that the application by Saxo fails and that its summons should be dismissed.

30 I will hear the parties further in relation to the form of formal orders, further directions in relation to the trial of the matter (particularly in relation to the narrowing of discovery by means of specified categories of documents for discovery) and in relation to costs.

[1] (1874) 9 Ch App 244.

[2] See Clarke v Great Southern Finance Pty Ltd (in liq) [2010] VSC 473; (2010) 243 FLR 451 at 453-6 ([5]-[10]).

[3] Supreme Court of Victoria, Practice Note No. 1 of 2010 - Commercial Court.

[4] (2010) 23 FLR 451 at 453-6 ([6]-[12]).

[5] Clarke v Great Southern Finance Pty Ltd [2010] VSC 473; (2010) 243 FLR 451 at [7].

[8] Gunns Ltd v Marr [2005] VSC 251 at [15].

[9] [2009] VSC 402, at [7], [9] and [20].

[10] (Unreported) 15 October 1996, No 12137 of 1991

[11] [2008] FCA 1920; (2008) 252 ALR 41 at [15].

[12] Ibid [27]; and see also [28]-[30].

[13] (1874) 9 Ch App 244.

[14] See Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 47 ACSR 285, [55]; Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920; (2008) 252 ALR 41, [15]; cf [28]-[31] and The Bell Group Ltd (in liq) v Westpac Banking Corporation [2008] WASC 239; (2008) 225 FLR 1, [4748], [8733].

[15] [2007] HCA 22; (2007) 230 CLR 89, [177].

[16] (1874) 9 Ch App 244, 251-2.

[17] [1993] 1 WLR 509 at 575-6.

[18] See Consul Developments Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 at 412 (Stephen J).

[19] [2007] HCA 22; (2007) 230 CLR 89 at 163-164 [176]- [178].

[20] See Young, Croft and Smith, On Equity (Law Book Co, 2009) [6.910], at p 459.

[21] Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Limited [1998] 3 VR 16, 85, 105; Hancock Family Memorial Foundation Ltd v Porteous [1999] WASC 55; (1999) 151 FLR 191, 209; Spangaro, [60]; Bell Group, [4748], [8733]; Imobilari v Opes, [27]; Chameleon Mining NL v Murchison Metals Limited [2010] FCA 1129, [132].

[22] See above, paragraphs 4 to 7; and see Clarke v Great Southern Finance Pty Ltd [2010] VSC 473; (2010) 243 FLR 451 at [9].

[23] In relation to the alleged role of Sonray, see below; paragraph 26.

[24] By letters from its solicitors date 22 November 2010 and 28 January 2010.

[25] See Supreme Court (General Civil Procedure) Rules 2005, 1.14(1)(a).

[26] (2010) 23 FLR 451.

[27] See Clarke v Great Southern Finance Pty Ltd (in liq) [2010] VSC 473; (2010) 243 FLR 451 at 460 and 463-4, ([22], [31] and [32]).

[28] [1993] 1 WLR 509, 575-6.

[29] See Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) (recs and mgrs apptd) [2008] FCA 1920; (2008) 252 ALR 41 at 43, [4].

[30] (2010) 23 FLR 451.

[31] Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661, 667-71; Compaq Computer Australia Pty Ltd v Merry [1998] FCA 968; (1998) 157 ALR 1, 5; Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1, [9] (Full Ct); Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 133, [278]; Pandee Services Pty Limited (ACN 060 674 160) v Roberts [2007] FCA 68, [66]-[68]; Melewar Steel Ventures Ltd v Opes Prime Stockbroking Ltd [2009] NSWSC 22, [47]; and I have already made reference to the basis upon which the pleading failed in the Clarke case (see above, paragraph 20).

[32] Reference is made to the observation in Young, Croft and Smith, On Equity (Law Book Co), 2009 (at 249) that all that is necessary for a knowing receipt claim is that the known facts would have communicated to a reasonable person of general understanding that fraud, breach of trust or fiduciary obligations had occurred.

[33] [1990] 1 All ER 673.

[34] (1874) 9 Ch App 244.

[35] [1990] 1 All ER 673 at 679; a similar approach was adopted in Silversafe Ltd (in liq) v Hood [2006] EWHC 1849, [33]-[35].

[36] (2010) 23 FLR 451.