Plaintiff v Defendant

1 The defendant applies by summons filed on 23 December 2020 for the following orders:

(a) That paragraphs (g) and (h) of the particulars to paragraph 17 of the Statement of Claim be struck out pursuant to the inherent jurisdiction of the Court as an abuse of the process.

(b) That paragraphs (d), (e) and (f) of the particulars to paragraph 17 of the Statement of Claim be struck out pursuant rr 23.02 (c) and (d).

(c) That paragraphs 15 and 16 of the Statement of Claim be struck out pursuant to rr 23.02 (a) to (d).

(d) That the Plaintiff pay the Defendant's costs of this application.

2 The proceeding was commenced on 9 July 2020. The defendant filed a defence on 14 August 2020. Both plaintiff and defendant have made and answered a request for further particulars. On 3 September 2020 an order was made by consent for discovery of documents and for mediation. In October 2020 each party provided an affidavit of documents and a mediation was conducted on 28 October 2020. The proceeding did not settle. After the mediation the defendant changed his legal representation. A directions hearing fixed for 17 November 2020 was adjourned to 8 December 2020.

3 On 8 December 2020 the proceeding came before a Judicial Registrar for further directions. Counsel for the defendant foreshadowed making a request for clarification of certain issues relating to the plaintiff's statement of claim. The court ordered the defendant to raise any concerns regarding the statement of claim in writing by 4.00 pm on 9 December 2020. The proceeding was then adjourned to 15 December 2020 for further directions.

4 On 9 December 2020 the plaintiff's solicitor received a letter from the defendant's solicitors raising three issues with the statement of claim. The plaintiff's solicitor replied by letter dated 11 December 2020. The plaintiff disputed the defendant's criticisms of the statement of claim. The proceeding returned on Court on 15 December 2020. The Court directed the defendant to file and serve any application in respect of the statement of claim by 23 December 2020, made orders for affidavits to be filed by each party and adjourned the directions hearing to 16 February 2021. The defendant filed and served its summons on 23 December 2020 as ordered, together with an affidavit in support by the defendant herself ('defendant's affidavit'). The defendant's affidavit was principally in support of a claim that a letter referred to in the plaintiff's statement of claim was subject to 'without prejudice' privilege and any reference to it should be deleted.

5 On 28 January 2021, the plaintiff's solicitor made an affidavit in response to the defendant's summons and affidavit ('plaintiff's solicitor's affidavit'). The affidavit exhibits the correspondence between the parties concerning the defendant's complaints regarding the statement of claim and responds, on behalf of the plaintiff, to the factual matters in the defendant's affidavit concerning the allegedly privileged letter. The defendant submits that the evidence set out in paragraphs 11 to 13 of the plaintiff's solicitor's affidavit is inadmissible.

6 On 12 February 2021, orders were made by consent for the hearing of the defendant's application on 23 March 2021, with each party to file outlines of submission.

7 I heard the application on 23 March 2021. In the course of argument the defendant added further criticisms of the statement of claim of which no proper notice had been given, and submitted a range of authorities not previously referred relied upon. In the circumstances I considered it appropriate to permit the plaintiff to supplement his written Outline of Argument. Subject to that, my decision was reserved. The plaintiff filed further submissions on 1 April 2021.

8 The plaintiff and the defendant are brother and sister. The plaintiff claims an interest in the proceeds of the sale of a farming property known as 'Ettrick'. The property was purchased in 2006 by the defendant in her name alone. In essence, the plaintiff claims an interest in the property based on agreement made with his sister and work subsequently performed by him on the property and in the farming business conducted from Ettrick and from other properties. The plaintiff claims a 49% interest in Ettrick and the proceeds of its subsequent sale.

9 The defendant denies the agreement as alleged by the plaintiff. She contends, however, that there was an agreement under which the plaintiff would contribute labour to the farming business and as his contributions increased he would obtain a share up to 49% representing the value of his work. The defendant pleads that work performed by the plaintiff never amounted to 49% of the value of the land.

10 The statement of claim begins with some introductory allegations concerning the relationship between the plaintiff and defendant, their parents (who owned a property called 'Oomoo' about a kilometre from Ettrick), an earlier joint venture business between the parties breeding squab pigeons, discussions regarding undertaking a farming business together, looking for a suitable property to buy, the identification of Ettrick and the defendant's entry into a contract of sale to buy Ettrick. Then paragraph 8 of the statement of claim alleges:

During a conversation between the plaintiff and the defendant prior to completion of the purchase contract the defendant recognised that the amount of work required was significant and proposed to the plaintiff that (the proposal):

(a) the defendant would provide finance to complete the purchase of Ettrick and to operate it as a farm;

(b) the plaintiff would manage Ettrick and carry out and oversee work required to establish and operate the property as a functioning, self-sufficient farm;

(c) Ettrick would be owned by the plaintiff and the defendant equally.

11 The defendant denies paragraph 8 and says that no agreement was reached prior to completion of the purchase contract. She alleges further that:

(a) It was later agreed the plaintiff would provide labour in the amount of 4 days per week while he worked with the Metropolitan Fire Brigade on a roster of 4 days on and 4 days off.

(b) As his labour contribution increased over time he would be given a share in the property up to 49% representing the value of the work performed.

(c) At no time did the work performed by the plaintiff amount to 49% of the value of the property.

12 It is then pleaded in the statement of claim that the plaintiff agreed to the proposal (paragraph [9]) and in paragraph [10] it was pleaded:

As a result of the matters referred to above in paragraphs 3 to 9 above, in January 2006 the plaintiff and the defendant entered an agreement (the agreement) to conduct a joint endeavour for the purchase, use and ownership of Ettrick (the joint endeavour) whereby:

(a) the defendant would provide finance for the purchase and improvement of Ettrick;

(b) Ettrick would be used for the operation of a farming business in the name of the defendant;

(c) the plaintiff would provide his services to improve the property and to establish and operate the farming business;

(d) the defendant would be registered as owner of Ettrick for the benefit of the plaintiff and the defendant equally.

13 The defendant denies paragraph 10 and refers to the pleading in paragraph 8 of her defence.

14 It is then pleaded that the defendant completed the purchase and became the registered proprietor of Ettrick in January 2006 ([11]), that the defendant acquired Ettrick pursuant to the agreement and the joint endeavour for the benefit of both herself and the plaintiff ([12]), that after the acquisition of Ettrick the plaintiff 'in reliance on the agreement and in performance of the joint endeavour', to his detriment devoted considerable time and effort to ([13]):

(a) managing, improving and working on Ettrick to make it a functioning, self‑sufficient, operating farm (the work);

(b) managing the operation of a farming business conducted in the name of the defendant (the farming business).

15 Curiously, having regard to what is later pleaded by the defendant in response to allegations concerning the 'farming business' (as to which see below at [16]), the defendant admits the allegation in paragraph 13 of the statement of claim that the plaintiff (mis-described as the defendant) 'devoted time and effort in working on Ettrick', but otherwise denied the allegations in par 13 and made alternate allegations including particular work performed by the plaintiff on Ettrick. It was also responded by the defendant that in the absence of proper particularity, paragraph 13 is embarrassing.

16 The plaintiff next alleges the defendant, or a company controlled by her, purchased a property known as the 'New Block' located opposite Ettrick ([14]) and that it too was used in the operation of the farming business ([15]). In response to paragraph 15, the defendant admits that the New Block was used in the operation of the farming business.

17 The statement of claim then alleges that 'the plaintiff performed the work and managed the farming business encouraged by and in reliance on the agreement and the joint endeavour in the expectation and belief that he had an interest in Ettrick' ([16]). The defendant denies this allegation and alleges the plaintiff did not have the skill set to do it and the defendant did.

18 The particularly important part of the statement of claim for the purposes of the application is paragraph [17], which provides:

At all times from 2006 onwards the defendant:

(a) was aware that the plaintiff was undertaking the work;

(b) knew that the plaintiff was undertaking the work in the expectation of having an interest in Ettrick.

19 In the current defence filed on 14 August 2020, the defendant admits paragraph 17(a) and save admitting that the plaintiff undertook some work on the farm, denies paragraph 17 (b). There is no response or comment regarding the particulars to paragraph 17 (and of course, no response to particulars is necessary), which I now set out in full, as they are one of the main subjects of complaint by the defendant:

Particulars

The defendant was employed on a full time basis from 2006 to 2012 in various places including Melbourne, Perth and Brisbane.

The defendant's awareness and knowledge is derived from or to be inferred from the following facts and circumstances:

(a) The defendant visited Ettrick from time to time and spoke with the plaintiff about the affairs of the farm and the farming business.

(b) The defendant maintained the books and records of the farming business.

(c) At various times the plaintiff asked for his name to be placed on the title of Ettrick and for a written agreement to record his interest in the property.

(d) In about October 2007 the plaintiff agreed with the defendant that she sell a property in Egan Street, Richmond, and apply proceeds from the sale to reduce debt owed in respect of Ettrick.

(e) The plaintiff and the defendant agreed to vary their respective interests in Ettrick to be 49% for the plaintiff and 51% for the defendant.

(f) The plaintiff and the defendant also agreed that the defendant would be repaid the Egan Street sale proceeds used to reduce debt when the debt was paid out or when Ettrick was sold.

(g) In a letter provided by the defendant to the plaintiff in July 2018, the defendant acknowledged the existence of the joint endeavour. A copy of the letter may be inspected at the office of the plaintiff's solicitors by prior arrangement.

(h) In the letter of July 2018 the defendant said she had made provision in her will that two-thirds of Ettrick be left to the plaintiff.

Further particulars may be provided following discovery.

20 It is then pleaded that the plaintiff was excluded from the farming business in early 2019 ([18]), that Ettrick and the New Block were agreed to be sold for $6,920,800 in December 2019 ([19]), that the sale was completed in March 2020 and $1,400,00 of the proceeds of the sale were 'retained by the solicitors for the defendant on trust pending agreement between the parties or order of the Court ('the funds)' ([20]), that the defendant denies that the plaintiff is entitled to share in the proceeds of the sale of Ettrick in accordance with the agreement and the joint endeavour ([21]), that in 'the premises' the defendant is estopped and precluded from asserting that the plaintiff had no interest in Ettrick and that the plaintiff has no entitlement to the proceeds of the sale of Ettrick or 'the funds' ([23]) and further that 'by reason of the matters referred to above the defendant held Ettrick on a constructive trust for the benefit of herself and the plaintiff' ([24]).

(a) A declaration that the defendant held her interest in Ettrick on a constructive trust for the benefit of herself and the plaintiff.

(b) A declaration that the defendant is estopped from denying that the plaintiff:

(i) had a 49% interest in Ettrick; and

(ii) has an interest in the funds.

(c) An order for the taking of all necessary accounts and the making of all necessary enquiries in relation to the conduct of the farming business and the acquisition and sale of Ettrick.

(d) An order for payment to the plaintiff of all of or such portion of the proceeds of the sale of Ettrick or the funds as the Court determines.

(e) An order for payment to the plaintiff by the defendant of such amount in addition to the amount of the funds as the Court determines.

(f) Further and alternatively, equitable compensation or damages.

(g) Interest, costs and such further or other relief as the Court sees fit.

22 The defendant complains that there are three aspects of the statement of claim that are embarrassing. First, the pleading in particulars of what should be pleaded as material allegations of fact (paragraph 2 of the summons seeking that paragraphs (d), (e) and (f) of the particulars to paragraph 17 be struck out). Second, it is unclear from paragraphs 15 and 16 what relationship the New Block has to the alleged October 2007 agreement referred to in sub-paragraph (e) of the particulars to paragraph 17, or to any relief claimed (paragraph 3 of the summons which seeks paragraphs 15 and 16 be struck out). Third, that the reference in the particulars to paragraph 17 to the privileged letter should be struck out (paragraph 1 of the summons).

23 The defendant contends that the defects in the Statement of Claim have the following consequences:

(a) the defendant is denied the procedural fairness which should be afforded to her by virtue of a properly pleaded and particularised case being articulated;

(b) the defendant is deprived of a sufficient understanding of the plaintiff's claim in aid of her right to make a payment into court; and

(c) the Court is deprived of clearly defined issues for decision in the litigation.

24 The defendant contends that the pleading of material allegations of fact in paragraphs (d), (e) and (f) the particulars to paragraph 17 are embarrassing. She contends that:

(a) The prayer for relief in paragraph B(b) (see above at [21(b)(i)]) makes it clear (by its reference to 49%) that it is really the agreement alleged in paragraph (e) of the particulars that underpins the relief claimed.

(b) Paragraphs 21 to 23 plead the 'agreement' in paragraph 10 as the agreement upon which an estoppel is allegedly based and that this is confusing.

(c) The 2007 agreement alleged in sub-paragraph (e) of the particulars to paragraph 17, and its terms, should be pleaded as a material fact - either on its own or as a variation of the original alleged agreement - together with proper particulars because, as matters presently stand, the following important issues are so unclear as to be a matter of speculation:

(i) what is relied upon as constituting the agreement: conversations, oral statements, statements and documents, conduct or a combination of one or more of these matters?

(ii) what are alleged to be the terms of the alleged agreement and how do they arise?

(iii) when was the plaintiff's interest intended to vest under the agreement?

(iv) with particular reference to the alleged term that '..the defendant would be repaid the Egan Street sale proceeds used to reduce debt when the debt was paid out or when Ettrick was sold' does the term alleged merely mean that the defendant was entitled to be paid only the same monetary amount as the Egan Street sale proceeds (in which case the agreement made in 2007 was a highly improvident one which effectively involved, on the plaintiff's case, the form of an interest-free loan by the defendant to the plaintiff) or was the agreement that she receive something for her additional investment?

(v) do the terms of the agreement alleged take into account any other contributions that may have been made by the defendant for the repayment of principal borrowed to purchase the property, apart from the Egan Street proceeds?

25 These questions arise against a background where:

(a) it is unclear what the plaintiff's primary case is: does his claim involve:

(i) seeking a potential windfall by seeking to enforce a promise, irrespective of how much he worked on Ettrick? or

(ii) is it in truth a claim that the plaintiff (as well as the defendant) have an entitlement to the proportionate repayment of their contributions to the property: see Muschinski v Dodds?[1]

(b) the relief claimed in paragraphs A and B of the prayer for relief (see above [21](a) and (b)) is claimed with respect to the Ettrick property. The relief claimed in paragraph C of the prayer for relief (see above [21(c)]), however, is in relation not only to the 'acquisition and sale of Ettrick' but also in relation to the conduct of the farming business. The 'farming business' is referred to in the pleading at paragraph 13(b). It is not alleged to involve a partnership. The basis for any taking of accounts with respect to this business is not stated; nor is its relationship to the alleged agreement.

26 In paragraphs 14 and 15 it is pleaded that the New Block was acquired in 2011 and used in the operation of the farming business. The defendant in fact became the registered proprietor of that land on 29 February 2012 and Ettridge Investments Pty Ltd, who has not been joined as a party to the proceeding, became the registered proprietor of the New Block on 25 November 2016.[2] What relationship the New Block has to the alleged October 2007, or to any relief claimed, is unclear.

27 In paragraph (g) of the particulars there is reference to and reliance on a letter given by the defendant to the plaintiff in July 2018 in which it is claimed the defendant acknowledged the existence of the joint endeavour between the parties. It is common ground that the letter referred to is dated 3 July 2018 and it has been exhibited to the defendant's affidavit ('Letter').

28 In the defendant's affidavit she sets out the background to the letter, excluding preliminary matters, substantially as follows:

(a) In about February and March 2018 the plaintiff told the defendant that he wished to have an interest in Ettrick recognised in writing (he had once previously raised this issue, in 2012). Around this time there was a fight about their father's wish to put sheep onto the back of a trailer. The plaintiff had a huge 'meltdown' about this and after that episode the plaintiff became very dogmatic about having an interest in the farm put into writing.

(b) About two weeks after this, the defendant remembers they had a discussion (maybe two) which took place in the machinery shed (known as the 'Big Shed') at Ettrick, and the plaintiff said he wanted to get a mediator in. The plaintiff agreed, and said they also had to deal with the personal issues between them, so that they could know how to go forward with the business. The plaintiff said, however, that they had to focus on the business side and the personal side could be worked out afterwards.

(c) By early July, the plaintiff had not identified a mediator. At around this time the plaintiff came to the farm only spasmodically. On one occasion they had another fight over when he would attend the farm and when he would not. At this time their relationship was fractious, the plaintiff was volatile and they had little communication. The defendant asked him where was he up to regarding the mediator, but did not get a proper response.

(d) On 3 July 2018 the defendant wrote to the plaintiff. She had put together in the letter a whole series of things that were troubling her. She says it was a working document with the intention of setting things out for mediation. The letter referred to the plaintiff in the third person because the defendant wanted to present the issues at an arm's distance without personalising it.

(e) When the plaintiff was at the farm on the next occasion after the defendant wrote the letter, she handed it to him and said words to the effect of 'here are my thoughts about what we've got to work through'. The plaintiff took this very badly, became very angry and said 'what is this shit?' and threw the letter back at her. However before leaving he picked up the letter and put it in his pocket and took it.

(f) After this episode, the plaintiff continued to acknowledge the need for a mediator and he eventually found one, Clare de Bruin, who the defendant understood to be a professional mediator. Sometime in September 2018 Clair de Bruin contacted the defendant to ask her to find time to come in to meet. They met prior to a mediation on 14 November 2018. Ms de Bruin outlined the fact that they would each pay for their individual sessions and pay half of the costs of the joint sessions, which they did.

(g) On 14 November 2018 the parties signed a written mediation agreement and a mediation was conducted before Ms de Bruin on that date, and on two subsequent dates. The defendant produced a copy of the mediation agreement and exhibited to her affidavit.

29 The mediation agreement includes a provision that the parties agree that any settlement proposal, the willingness of a party to consider any such proposal and any admission or concession made by a party will be privileged and will not be disclosed in or relied upon or be the subject of any subpoena to give evidence or to produce documents in any arbitral or judicial proceeding between the parties.

30 The defendant submitted initially that reliance on the letter is a breach of that mediation agreement provision and that it is not admissible by virtue of s 131 of the Evidence Act 2008 (Vic) (evidence of settlement negotiations, otherwise known as 'without prejudice privilege'). The defendant submitted that:

(a) The without prejudice privilege is available whenever there is a dispute of a kind in which relief in a proceeding commenced in due course might be given.[3]

(b) It is axiomatic that a matter cannot be pleaded if there is no hope of there ever being admissible evidence led in support of the plea.

(c) The impermissibility of pleading fraud where there is no reasonable ground for believing that there will be admissible evidence of the fraud is an axiomatic application of this principle.

31 In his oral submissions, Counsel for the defendant, developed the submission a little differently. It was submitted, correctly in my view, that s 131 (read with s 131A and s 134) of the Evidence Act did not apply to the determination of whether the reference to a privileged document in particulars should be struck out. That is because s 131 prohibits a without prejudice communication being adduced in evidence, s 134 makes that evidence inadmissible and s 131A applies s 131 where there is a 'disclosure requirement', and the reference to the Letter in the particulars does not give rise to a disclosure requirement as defined in s131A(2). The Evidence Act is not a code (s 9(1)) and thus the common law applicable to without prejudice privilege applies to the current circumstances.[4]

32 The defendant continued that despite this, the Evidence Act provisions (ss 131 and 134) are not irrelevant because pleadings have to be connected to evidence, and that it is inappropriate to include in a pleading a reference to material that, by reason of its privilege, will never be admissible in court. It was submitted that having regard to the basis of without prejudice privilege,[5] when considering issues of the privilege in aid of settlement the court should adopt an expansive approach to what is covered by the privilege in considering what is and what is not privileged.

33 Submissions were then made as to why the facts to which I have referred should be found to give rise to the Letter being found to be the subject of without prejudice privilege. This included the proposition that the agreement to mediate went back to the time of the proposal to mediate[6] and the entry into the formal mediation agreement was no more than a fuller and more complete statement of the terms of the agreement. On the basis that the privilege was established and governed by the mediation agreement entered into later in the year, it was submitted that the agreement made between the parties that there will be non-disclosure of the Letter in litigation was breached when the statement of claim was filed referring expressly to the Letter in the particulars to paragraph 17. For that reason alone the relevant paragraphs should be struck out as being contrary to the mediation agreement between the parties. Further, as a matter of public policy, it should not be allowed to remain in a pleading where it will never see the light of day in court should the matter come to trial.

34 After referring to the relevant principles relevant to applications of this kind, the plaintiff submitted that any suggestion the defendant cannot understand the plaintiff's claim or the allegations set out in the statement of claim is unsustainable. The defendant had sufficient understanding to file a defence, to request further particulars, to provide discovery and to participate in a court ordered mediation.

35 In relation to the first issue, the plaintiff submitted that:

(a) Paragraph 17 concerns the defendant's state of mind. It alleges she was aware of the plaintiff's contributions and knew he was undertaking work in the expectation of having an interest in Ettrick. Particulars (d) to (f) set out matters from which the defendant's awareness and knowledge can be inferred. These include the contribution of additional capital by the defendant on the basis that the plaintiff's entitlement would be 49% after repayment of the contribution.

(b) The matters alleged in the impugned particulars are clear and they identify matters relevant to the defendant's knowledge.

(c) It is clear that he claims a 49% interest in the proceeds of sale of Ettrick based on the well-established and familiar principles of estoppel and constructive trust. These principles are routinely engaged in cases such as the present. Somewhat cryptically, the defendant says in paragraph 21 of her defence that the plaintiff is entitled to remuneration for work performed by him, 'but not in the manner he alleges'.

(d) The claim by the plaintiff should not be approached as if it is the enforcement of a contract, in which case a variation of the contract would need to be pleaded. Here, the claim is pursuant to a constructive trust (or an equitable or proprietary estoppel) pursuant to an agreement and a joint endeavour that commenced in 2006 and went through a change in 2007. It is clear that in the end what the plaintiff claims is limited to 49% interest in the proceeds of the sale of Ettrick arising from the constructive trust or proprietary estoppel.

36 In relation to the second issue, the plaintiff submitted that the New Block is referred to in the particulars of paragraph 13 as a property where work was done for the operation of the farming business. The doing of work by the plaintiff is central to both parties' cases. The plaintiff relies on it as founding his claim to an entitlement to the proceeds of sale of Ettrick; the defendant says the plaintiff is entitled to remuneration for his work. The use of New Block as part of the farming business is relevant to the nature and extent of the plaintiff's contributions to the farming business. It is also relevant to the defendant's assertion the plaintiff is entitled to remuneration for his work.

37 In relation to the third issue, the plaintiff submitted that:

(a) It is not appropriate at the hearing of an interlocutory application to determine whether a particular document will be admissible at the trial of the proceeding. A court hearing an application regarding pleadings is not in a positon to resolve questions of admissibility which, if raised at trial, would involve contested issues of fact. Moreover, questions of admissibility may be affected by what occurs at trial.

(b) The defendant's reliance on the written mediation agreement is misplaced. It refers to an agreement with a named mediator under which the mediator would conduct a mediation. It speaks of matters occurring during the mediation and identifies matters that 'will be privileged'. The agreement, dated 4 November 2018, says nothing about matters that occurred in July 2018.

(c) The case referred to in the defendant's outline is illustrative of the proper approach. The trial judge's actual ruling, referred to at [168] of the May decision, is Brown v FCT,[7] shows his Honour conducted a voire dire at the trial and made an order rejecting the evidence 'at this stage': [25]. In the preceding paragraph his Honour observed that the operation of s 31 might be affected by matters occurring at trial.

38 The plaintiff also submitted that in any event, the following matters are pertinent to the proposition that whether the letter is admissible at trial is not a matter to decide at this stage:

(a) The letter is not expressed to be without prejudice. Nor does it convey any offer or refer to any attempt to negotiate a settlement. It makes no reference to mediation or any other dispute resolution procedure. It is, in its face, a communication setting out the writer's position on various matters with a request for feedback.

(b) The defendant's affidavit draws no connection between the provision of the letter to the plaintiff and any mediation. Her assertion in that she prepared the letter 'with the intention of setting things out for mediation' does not assist. There is no suggestion she said this to the plaintiff.

(c) The circumstances of how the letter was handed to the plaintiff are disputed. In this regard the plaintiff's solicitors affidavit[8] gave evidence on information from the plaintiff that:[9]

(i) during 2018 there were communications about the need to resolve matters between him and the defendant. In relation to the time that the defendant said she gave the Letter to the plaintiff, the defendant simply indicated to him she had written a letter which she left on a bench at the farm. The plaintiff then took the letter home and read it later. The plaintiff disputes the defendant's account of what she claims to have said or his response;

(ii) the plaintiff did not arrange a mediation until September 2018. On 11 September 2018 he sent an email to the defendant telling her he had made contact with a mediation service. The mediation took place in November 2018; and

(iii) the plaintiff disputes the assertion that the Letter falls within s 131 of the Evidence Act.

(d) A mediation was not arranged until September 2018 and the mediation agreement is dated 4 November 2018, some four months after the letter.

(e) The evidence does not show any agreement to mediate prior to November 2018. At most, on the defendant's version (which is contested), the plaintiff said 'he wanted to get a mediator in'. The defendant's vague assertion 'I agreed' (even if accepted) does not amount to making an agreement to mediate.

(f) The defendant did not object to the reference to the July 2018 letter in her defence dated 14 August 2020.

(g) The defendant discovered the letter in her affidavit of documents dated 14 October 2020 without claiming privilege or making any objection. The claim in her later affidavit of 23 December 2020 that the letter was 'inadvertently' included in the earlier affidavit is disingenuous and unexplained. It is more likely connected with the last sentence of Harwood Andrews' letter of 11 December 2020, which advanced the proposition that whether or not s 131 of the Evidence Act is engaged is a matter for trial.

39 Finally, the plaintiff submitted that there is a discretion to be exercised in this application which should be guided by the overarching purpose set out in the Civil Procedure Act 2010 (Vic). That is 'the just, efficient, timely and cost-effective resolution of the real issues in dispute'. Even if the court took the view the impugned paragraphs might otherwise be liable to be struck out, it should not exercise its discretion to do so. There has been undue and unexplained delay in making the application. The defendant agreed to directions and was able to undertake all steps required prior to mediation without complaint. The defendant attended a mediation without complaint. The parties understand the issues in dispute and it is premature to consider the admissibility of the Letter.

40 In a supplementary submission filed by the plaintiff, the arguments advanced for the first time by the defendant in oral submission were addressed. The applicability of the common law principles, to the extent they were sought to be applied (which is unclear) is disputed. The plaintiff maintained that:

(a) in respect of the application of without prejudice privilege to the reference to the Letter in the particulars, the Evidence Act is a code as it covers the field;

(b) the common law principles of without prejudice privilege concern the admissibility of evidence, just as do the provisions of the Evidence Act so far as applicable to the particulars;

(c) the question whether the letter is covered by the common law principles is not an issue that can or should be decided at this stage of the proceeding. Without prejudice privilege does not automatically attach to correspondence. Frequently, the communication will state it is without prejudice. Where such words are absent, it may attach to communications which are genuine negotiations with an attempt to compromise an existing dispute;[10]

(d) the Letter is not headed Without Prejudice and it makes no reference to being without prejudice. The Letter sets out the writer's views on certain matters and invites comments and feedback. The letter does not convey an offer, nor is it part of a process of negotiation. Whether or not an agreement to mediate existed prior to the date of the Letter is disputed. Even if there were an agreement, that does not by itself make the letter a without prejudice communication within common law principles;

(e) there is no separate limb of without prejudice privilege which concern the reference to documents in pleadings. The defendant puts her application on the basis a pleading should not include matters about which no evidence can be called. To the extent the common law principles of without prejudice privilege relate to the admissibility of evidence, those principles are now to be found in s 131.

Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading-

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

(b) is scandalous, frivolous or vexatious;

(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.

42 Under this Rule, the objection is to the manner of expression of the claim or defence in the indorsement of claim or pleading. The applicant for relief under this Rule seeks an order that the offending indorsement be struck out or amended, and that the plaintiff present the claim in the proper way.[11] The meanings of some of the terms are not immediately obvious to the modern eye. They are:

(a) Scandalous: Allegations made in a pleading for the purpose only of abusing or injuring the opposite party and allegations which are indecent or offensive are scandalous within the meaning of the rule, and liable to be struck out;[12]

(b) Frivolous or vexatious: These words in combination have traditionally been used to describe a wide variety of circumstances in which a claim is found to be groundless, or lacking a legal basis or merit;

(c) Prejudice, embarrass or delay: In general**,** a pleading or indorsement is embarrassing when it places the opposite party in the position that they do not know what is alleged against them;[13] Thus, a pleading which is unintelligible,[14] or is vague or ambiguous,[15] or is too general[16] is embarrassing.[17]

43 There are many recent cases in which a summary of the principles applicable to pleadings and particulars may be found.[18] The Court of Appeal of this Court said in Uber Australia Pty Ltd v Andrianakis,[19] that in Wheelahan v City of Casey (No 12),[20] John Dixon J exhaustively summarised the principles to be applied in the following terms:

(a) Order 13 of the [Supreme Court (General Civil Procedure) Rules 2005] set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;

(b) the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;

(c) the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression 'material facts' is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;

(d) as a corollary, the pleading must be presented in an intelligible form - it must not be vague or ambiguous or inconsistent. Thus a pleading is 'embarrassing' within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;

(e) the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;

(f) pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);

(g) a pleading which contains unnecessary or irrelevant allegations may be embarrassing - for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;

(h) it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;

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

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

(k) particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement - namely, to fill in the picture of the plaintiff's cause of action (or defendant's defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;

(l) a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it;

(m) extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;

(n) in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;

(o) the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown; and

(p) if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.[21]

44 The Court in Uber also referred with approval to what Hargrave J said in Babcock & Brown DIF III Global Co-Investment Fund, LP & Anor v Babcock & Brown International Pty Limited & Ors (No 2),[22] when he added to this summary that:

... the Court should consider the pleading under a challenge as a whole and adopt a practical case management approach to pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole and there is no embarrassment to filing a responsive pleading. Such an approach accords with the discretionary nature of the power to strike out and with the overarching purpose under the Civil Procedure Act. However, in cases alleging dishonesty or fraud, precise pleadings with full particulars are required.

45 In Babcock & Brown, Hargrave J also noted that, in considering pleading objections on the ground that the pleading is embarrassing, the Court should stand back and consider the pleading as a whole and in that light ask: does the case alleged give clear notice of the case to be met at trial?[23]

46 In Uber the Court noted that the modern approach to applications to strike out pleadings on the ground that they are embarrassing is reflected Court of Appeal's decision in CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd,[24] where the Court stated that, while important, pleadings are primarily used 'to help the parties define the real issues in dispute', while bearing in mind that pleadings are 'procedural tools only'.[25] Observance of the rules of pleading is intended to facilitate the fair determination of the real issues in dispute between the parties, and is not an end in itself.[26]

47 The particulars to paragraph 17 that are sought to be struck out under this issue are said by Counsel for the plaintiff to be no more than particulars of the defendant's awareness and knowledge (sub-paragraphs (d), (e) and (f)). It may be that was his intention when drawing the statement of claim, but it leaves the reader, including the Court, in doubt as to the content and scope of the agreement and joint endeavour pleaded earlier in paragraph 10. This lack of clarity arises not just from a reading of the particulars, which use the language of agreement between the parties, but also from elements of the prayer for relief. The relief sought of 'a declaration that the defendant is estopped from denying that the plaintiff had a 49% interest in Ettrick', suggests that it is the agreement alleged in paragraph (e) of the particulars (the plaintiff and the defendant agreed to vary their respective interests in Ettrick to be 49% for the plaintiff and 51% for the defendant) that underpins the relief claimed. If that aspect of the prayer for relief does not entirely depend upon a variation of the agreement as pleaded in paragraph 10, then it is equally unclear how the pleader gets to the 49% interest as opposed to the equal (or 50%) interest alleged in paragraph 10. Paragraphs 21 to 23 plead the 'agreement' (defined in paragraph 10) as the agreement upon which an estoppel is allegedly based, even though there is no specification of the level of the proprietary interest identified in paragraph 23, and this adds to the lack of clarity.

48 Further, it is unclear how it might be said that an agreement in October 2007 is evidence of the awareness of the defendant that the plaintiff was undertaking the work (as defined in paragraph 13) or knowledge that the plaintiff was doing so in the expectation of having an interest in Ettrick. It simply does not follow logically.

49 In addition, paragraph (d) of the particulars (in about October 2007 the plaintiff agreed with the defendant that she sell a property in Egan Street, Richmond, and apply proceeds from the sale to reduce debt owed in respect of Ettrick) seems to say very little about the defendant's awareness that the plaintiff was undertaking the work or knowledge that the plaintiff was undertaking the work in the expectation of having an interest in Ettrick. On its face, it can only be a variation of the original agreement, or a new agreement.

50 The same reasoning applies to the 'allegation' in paragraph (f) of the particulars to paragraph 17. (The plaintiff and the defendant also agreed that the defendant would be repaid the Egan Street sale proceeds used to reduce debt when the debt was paid out or when Ettrick was sold). It says nothing about the defendant's supposed awareness and knowledge and its language is redolent with a further aspect of the alleged agreement, or its variation.

51 For these reasons, when the pleading is read as a whole, there is a distinct lack of definition of the precise issues for determination, in that it is unclear what is alleged to be the agreement which underpins the claim for a constructive trust, or an interest arising by equitable or proprietary estoppel, in the proceeds of the sale of Ettrick. It is, accordingly, 'embarrassing' within the meaning of r 23.02 because it places the defendant, and the Court, in the position of not knowing what is alleged. The offending paragraphs should accordingly be struck out with leave to file and serve an amended statement of claim.

52 This is also a case where particulars are being used to fill gaps in the statement of claim. These particulars do rather more than fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the other party on guard as to the case that must be met. These particulars do not, as I have said, address the awareness and knowledge said to be their purpose. They do not limit the generality of a pleading, and thereby limit and define the issues to be tried, they expand them.

53 Under this issue, paragraph 3 of the defendant's summons seeks that paragraphs 15 and 16 of the statement of claim be struck out pursuant to rr 23.02 (a) to (d). The defendants submissions, however, seem to concentrate on paragraphs 14 and 15. In support of this part of the application the defendant sought to rely on evidence in the defendant's affidavit. That is not permissible in an application of this kind.[27]

54 The point sought to be made by the defendant does not depend, however, on that evidence. The substance of the complaint is that it is unclear what relationship the New Block has to the alleged October 2007, or to any relief claimed.

55 In paragraph 13 of the Statement of Claim it is alleged that after the acquisition of Ettrick the plaintiff 'in reliance on the agreement and in performance of the joint endeavour', to his detriment devoted considerable time and effort 'to managing the operation of a farming business conducted in the name of the defendant' (emphasis added). The particulars to that allegation refer to the fact that the farming business was operated from Ettrick, Oomoo and the New Block (referred to in paragraph 14). Paragraph 14 then picks up the thread and alleges the acquisition of the New Block by the defendant or a company controlled by her and paragraph 15 alleges that it too was used in the operation of the farming business. Paragraph 16 then alleges that the plaintiff performed the work (as defined) and managed the farming business (as defined) 'encouraged by and in reliance on the agreement and the joint endeavour in the expectation and belief that he had an interest in Ettrick'.

56 Thus it can be seen that the pleading in paragraphs 14, 15 and 16 clearly expose that the work performed and the management of the farming business are clearly relevant to reliance and detriment which, in part, underpin the claim to an equitable or proprietary estoppel or constructive trust. The pleading is tight and logical in this respect.

57 But there is a further element arising from the allegation of the management of the farming business (which includes the New Block as well as Ettrick and Oomoo) that is not clear. That is the part of the prayer for relief that claims an 'order for the taking of all necessary accounts and the making of all necessary enquiries in relation to the conduct of the farming business and the acquisition and sale of Ettrick'. That claim has two elements, the second being the taking of accounts and the making of enquiries in relation to the acquisition and sale of Ettrick. That claim can be seen to arise from the claim to a constructive trust or an equitable or proprietary estoppel giving rise to an proportionate interest in Ettrick and in the proceeds of its sale_._ But the first element - a taking of accounts and the making of enquiries in relation to the conduct of the farming business - stems from no clear allegation that might support it. This offends the principles of pleading by being unclear or vague. It is thus embarrassing.

58 The solution, it seems to me, is that a part of paragraph C of the prayer for relief should be struck out in so far as it refers to the first element, the taking of accounts, etc, 'in relation to the conduct of the farming business'. There can be no objection to the plaintiff repairing the deficiency by re-pleading the statement of claim

59 Under this issue, paragraph 1 of the defendant's summons seeks that paragraphs (g) and (h) of the particulars to paragraph 17 be struck out pursuant to the inherent jurisdiction of the Court 'as an abuse of process'. The restrictions applying in the case of an application under r 23.02 do not apply. The inherent jurisdiction is not confined to cases where the abuse is manifest from the pleadings, and the application may be supported by evidence on affidavit or by other proper material.[28] That is what the defendant has done, and the plaintiff has responded.

60 The defendant's affidavit puts forward facts which may, not must, give rise to a valid claim that the Letter is the subject of without prejudice privilege to which s 131 of the Evidence Act applies or to which the common law applies. If it is the subject of that privilege, then subject to one of the exceptions set out in ss 131(2), the letter must not be adduced into evidence at the trial. It may be, as the defendant submits, that if the Letter is the subject of without prejudice privilege, then it should not be permitted to be referred to as a particular, thus indicating that evidence will be given of it to the Court. This may follow because of the operation in futuro of s 131 of the Evidence Act upon the ability of the plaintiff to adduce the Letter in evidence.

61 The affidavit filed on behalf of the plaintiff by his solicitor,[29] shows, however, that there are disputes as to the facts advanced by the defendant's affidavit to support the claim to privilege. Moreover, the plaintiff's counsels criticisms of, and comments on, the facts advanced in the defendant's affidavit show that the issue of whether the privilege applies is not a straight forward matter susceptible to determination on an application of this kind. This a case where there is likely to be a real need for cross‑examination of each of the parties as to the circumstances in which the Letter was produced and given by the defendant to the plaintiff and what happened thereafter leading up to the entry into the written mediation agreement.

62 I agree with the plaintiff's submission that it is not appropriate at the hearing of this interlocutory application to determine whether the letter will be admissible at the trial of the proceeding. The issue of whether the Letter is the subject of the privilege is raised indirectly in an application regarding the sufficiency of the statement of claim as a pleading. It is not appropriate to determine on the current material whether the Letter is subject or not to the privilege and thus whether it is admissible in evidence at trial. Questions of admissibility which, if raised at trial, will involve contested issues of fact should not be determined on the limited material that is before me on this application. It may be that the trial judge will think it better to require the trial of the issue by a different judge as a separate question before the trial, pursuant to r 47.04 of the Rules.

63 It is noteworthy that in the defendant's first affidavit of documents the letter was discovered and was not the subject of any claim to privilege, despite its description as 'letter prepared by Lia Sarto dated 3 July 2018 for mediation'.[30] After the change of solicitors acting for her, the defendant made a Supplementary Affidavit of Documents on 23 December 2020 in which she stated with reference to the Letter:

This document was prepared by me following an agreement between Marcus Sarto and me that we would jointly engage a mediator to address our differences. It has been inadvertently included in the table of discoverable documents.[31]

64 If the Letter were a document the subject of client legal privilege under ss 118 or 119 of the Evidence Act, then its disclosure in the first affidavit of documents may have (not must have) given rise to a waiver of privilege under s 122. But this is a case of a claim to without prejudice privilege, in relation to which both parties have the Letter and have knowledge of its contents. Disclosure to each other could not give rise to a disclosure within the meaning of s 131(2)(b) of the Evidence Act.

65 In light of my conclusions, each party has had a measure of success. In so far as the defendant has been successful, that is in the circumstance that it has made the application quite late, after the filing of the Writ and statement of claim, the filing of the defence, which took no issue with the pleading in any material respect, the discovery of documents and mediation. It is the change of representation of the defendant that has been the catalyst for the application in circumstances where the defendant has proposed to seek to amend her defence in any event. In these circumstances, it is not appropriate that the defendant be allowed the costs of re‑pleading to any amended statement of claim.

66 In these circumstances I propose to order that the parties' costs of the summons filed on 23 December 2020 shall be their respective costs in the proceeding, but subject to the parties having an opportunity to make submissions if they have good reason to disagree with that proposal.

(a) that paragraphs (d), (e) and (f) of the particulars to paragraph 17 of the statement of claim be struck out pursuant rr 23.02 (c) of the Rules;

(b) that the words 'in relation to the conduct of the farming business' in paragraph C of the prayer for relief be struck out pursuant rr 23.02(c) of the Rules;

(c) that the plaintiff have leave to file and serve an amended statement of claim within, say, 28 days.

(d) that the defendant have leave to file a defence to the amended statement of claim and any counterclaim within, say, a further 28 days;

(e) that the plaintiff have leave to file and serve a reply and defence to the defence and counterclaim by, say, a further 28 days;

(f) that the proceeding be listed for further directions before a judicial registrar on a date to be fixed'

(g) that the parties' costs of the summons filed on 23 December 2020 shall be their respective costs in the proceeding; and

(h) otherwise the defendant's summons filed on 23 December 2020 be dismissed.

68 I will ask the parties to submit appropriate minutes of order.

[1] [1985] HCA 78; (1985) 160 CLR 583, 618-19 (Deane J).

[2] This is the subject of evidence in the affidavit of Lia Sarto.

[3] Brown v Commissioner of Tax [2001] FCA 596; (2001) 187 ALR 714 at [170]- [172] (Emmett J).

[4] Applying by analogy the reasoning in Northern Territory of Australia v GPAO and Ors (1999) 196 CLR 553, [16], (Gleeson CJ and Gummow JJ).

[5] The public interest in promoting the settlement of disputes and an express or implied agreement between the parties that their communications will be kept confidential: Pihiga Pty Ltd v Roche [2011] FCA 240, [86]-[87] (Lander J); Lake Torrens Overlap Proceedings [2015] FCA 519, [46] (Mansfield J); Tommy on behalf of the Yinhawangka Gobawarrah v State of Western Australia (No 2) [2019] FCA 1551, [129], [134] (Mortimer J).

[6] There being an agreement with an intention that it would be subsequently replaced by another agreement with fuller terms, that is, the first category of cases referred to in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360 (Dixon CJ, McTiernan and Kitto JJ).

[7] [2001] FCA 240.

[8] Affidavit of Amy May Jenkinson made 28 January 2021.

[9] The defendant objected to this evidence, but did not develop the objection. In interlocutory applications this evidence is prima facie admissible: s 75 of the Evidence Act.

[10] Cross on Evidence (Electronic Edition) paragraph 25355.

[11] Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937.

[12] Christie v Christie [1873] UKLawRpCh 36; (1873) LR 8 Ch App 499; Coyle v Cuming (1879) 40 LT 455; Cashin v Craddock [1876] UKLawRpCh 272; (1876) 3 Ch D 376; See Williams, Civil Procedure Victoria, 23.02.30.

[13] Girando v Padbury [1919] WALawRp 17; (1919) 22 WALR 7; Meckiff v Simpson [1968] VicRp 7; [1968] VR 62 at 70; Gunns Ltd v Marr [2005] VSC 251 at [15].

[14] Hoffnung v Fletcher (1887) 4 WN (NSW) 68.

[15] Byrd v Nunn [1877] UKLawRpCh 305; (1877) 7 Ch D 284.

[16] British & Colonial Land Assn Ltd v Foster (1888) 4 TLR 574.

[17] See Williams, Civil Procedure Victoria, 23.02.35.

[18] SMEC Australia Pty Ltd & Anor v McConnell Dowell Constructors (Aust) Pty Ltd & Ors (No 2) [2011] VSC 492; Environinvest Ltd v Pescott & Ors; Environinvest Ltd v Blackburne Pty Ltd & Ors [2011] VSC 325; Clarke & Ors v Great Southern Finance Pty Ltd & Ors [2010] VSC 473; Wheelahan v City of Casey (No 12) [2012] VSC 316, [25]; Hoh & Ors v Frosthollow Pty Ltd & Ors [2014] VSC 77, [13]; Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2) [2017] VSC 556, [14]; Uber Australia Pty Ltd v Andrianakis [2020] VSCA 186, [50].

[19] [2020] VSCA 186, [50] (Niall, Hargrave & Emerton JJA) ('Uber').

[20] [2013] VSC 316 ('Wheelahan').

[22] [2017] VSC 556, [15] ('Babcock & Brown').

[24] (2017) 55 VR 62; [2017] VSCA 11.

[26] Timbercorp Finance Pty Ltd (In Liq) v De Vries [2021] VSC 37, [59(b)] (Riordan J) citing Bauer Consumer Media Ltd v Evergreen Television Pty Ltd [1999] FCAFC 1020; (2019) 367 ALR 393, 455 [250] (Burley J), in turn citing Banque Commerciale SA (en liqn) v Akhil Holdings Ltd (1990) 169 CLR 279, 286-7 (Mason CJ and Gaudron J).

[28] Dey v Victorian Railways Cmrs (1948) 78 CLR 62, 109. Williams, Civil Procedure Victoria, I 23.01.45.

[29] Affidavit of Amy May Jenkinson made 28 January 2021.

[30] Affidavit of Documents of Lia Sarto made 14 October 2020, item 91.

[31] Supplementary Affidavit of Documents made 23 December 2020, [4].