Plaintiff v Defendant

2 Since 1995 the defendant, Simon Lidgett, has been the registered proprietor of 6 Lerderberg Street, Bacchus Marsh (Property). The plaintiff, Jillian Lidgett, Simon's mother, has lived in the Property since around that same time. In early 2023 the plaintiff registered a caveat on the title to the Property. The plaintiff's asserted interest in the Property is described as an implied, resulting or constructive trust. The defendant disputes the plaintiff has the interest she claims in the caveat. The plaintiff has commenced this proceeding seeking a declaration that the defendant holds 66.66% of his interest in the Property on resulting trust for the plaintiff.

(a) the plaintiff's application for leave to file an amended statement of claim; and

(b) an application by the defendant to dismiss the plaintiff's statement of claim on the basis that it has no real prospect of success.

4 For the reasons that follow I have decided to grant the plaintiff leave to file an amended statement of claim and to dismiss the defendant's summary dismissal application.

5 In support of her application for leave to amend her statement of claim, the plaintiff relied upon:

(a) the affidavit of Simon John French sworn 14 August 2023 (first French affidavit);

(b) the affidavit of Simon John French sworn 25 August 2023;

(c) the affidavit of Simon John French sworn 26 October 2023 (third French affidavit); and

(d) written submissions dated 26 October 2023.

6 In support of his dismissal application filed 23 June 2023 the defendant relied upon:

(a) the affidavit of Simon John Lidgett sworn 22 June 2023;

(b) the affidavit of Brett Ashley Bryants sworn 29 June 2023; and

(c) written submissions dated 29 August 2023.

7 The parties supplemented their written submissions with oral submissions at the hearing.

8 The statement of claim filed on 2 May 2023 relevantly pleads the defendant is the sole registered proprietor of the Property.

9 Under the heading 'Purchase Price Resulting Trust', the plaintiff pleads:

(a) The purchase price of the Property was $112,500;

(b) Around 15 September 1995 the plaintiff contributed $75,000 to the acquisition of the Property (particularised as a payment in the sum of $75,000 from a named Westpac bank account to the defendant's bank account); and

(c) By virtue of the above the defendant holds his interest in the Property on trust for the defendant in proportion to her contribution, being 66.6%.

10 The pleading then continues under the heading 'Caveat':

(a) On 13 February 2023, the plaintiff caused caveat AW40879X to be registered on the title to the Property, the grounds described as 'Implied, Resulting or Constructive Trust';

(b) By this statement of claim the plaintiff has substantiated her claim in relation to the land and her estate or interest therein within the meaning of s 89A(3)(b) of the Transfer of Land Act 1958 (Vic).

(a) a declaration that the defendant holds 66.66% of his interest in the Property on resulting trust for the plaintiff as tenant in common;

(b) an order that the defendant do all such things and execute all such documents as are necessary to transfer to the plaintiff a 66.66% share as tenant in common in the Property; and

(c) costs.

12 The defendant has filed a defence in which he relevantly denies:

(a) the plaintiff contributed to the acquisition of the Property and says he paid the entirety of the purchase price - the deposit from funds he derived from selling shares he owned and the balance on settlement from a loan from Westpac Banking Corporation and further funds he derived from selling shares;

(b) he holds 66.66% of his interest in the property on trust for the plaintiff; and

(c) the plaintiff has substantiated her asserted interest described in the caveat.

The plaintiff's proposed amended statement of claim

13 The third French affidavit exhibits the plaintiff's proposed amended statement of claim (Third PASOC). The Third PASOC amends the Purchase Price Resulting Trust pleading by:

(a) deleting the timing of the plaintiff's alleged contribution of around 15 September 1995 and inserts a new timing of around July, August or the first half of September 1995, with the former particulars deleted and replaced with a statement that the plaintiff cannot recall the date of the contribution and may provide further particulars following discovery and production of documents on subpoena;

(b) inserting a new paragraph that the plaintiff made the contribution as a contribution to the acquisition of the Property; and

(c) continuing to plead the defendant holds his interest in the Property on trust for the plaintiff in proportion to her 66.66% contribution.

14 The Third PASOC also inserts a new section under the heading 'Constructive trust - funds contributed by the plaintiff'.

15 The previous Caveat pleading and prayer for relief remain unchanged.

16 The plaintiff's proposed Constructive Trust pleading is in the following terms;

5A The Plaintiff refers to and repeats [her allegation of contribution made above].

5B In around 1995, the parties agreed that they would carry out a joint endeavour by which:

(a) the parties would enter into a partnership pursuant to which:

The defendant would live in and farm the Plaintiff's property (Highton Property) without being required to pay the Plaintiff rent; and

Each of the Plaintiff and Defendant would receive 50% of the proceeds of the Defendant's farming of the Highton Property (Partnership);

(b) the parties would jointly acquire a property to be held in the name of the Defendant, and the Defendant would affect necessary improvements to that new property so that the Plaintiff could reside therein; and

(c) the Plaintiff would live in that new property while the Defendant lived in and farmed the Highton Property in furtherance of the Partnership (Joint Endeavour).

Particulars

1. As to paragraph 7(a),[1] the Plaintiff refers to and repeats paragraphs 16(a)-16(c) of the Defendant's Amended Statement of Claim in proceeding S ECI 2023 01185.[2]
2. As to paragraphs 7 (b)-(c),[3] the Plaintiff provides the following particulars.

In 1995, the Defendant was 26 years of age and living with the Plaintiff, his mother, at the Highton Property.

The Defendant had recently completed a farming apprenticeship by which he was apprenticed to the Plaintiff and was working on Highton.

The Defendant was not paid a wage for working at Highton, though he received room and board and was able to use funds in the farm account for personal expenses.

The Defendant had not had an opportunity, through his career, to build savings.

The Defendant was to be married, and in fact was married in January 1996.

In 1995, the Plaintiff had informed the Defendant that she intended, after the Defendant married, to move away from Highton so that the Defendant and his wife could move into the house at Highton.

The Plaintiff and Defendant inspected properties in Bacchus Marsh together as prospective homes for the Plaintiff and the Plaintiff selected the Property as the property she wanted as her home.

The Defendant did not have sufficient funds to purchase the Property, pay the costs associated with the purchase and pay to renovate and improve the Property so that the Property was fit for the Plaintiff to reside therein.

At around the time the Plaintiff provided the Defendant with the Contribution:

The Plaintiff told the Defendant that he was to use the Contribution for the purposes of the Defendant paying the purchase price and costs associated with the acquisition of the Property, as well as renovations and improvements required for the Defendant to reside in the Property; and

The Plaintiff told the Defendant that she agreed for the Defendant to be the registered owner of the Property in order to provide him with a sense of security as he had no other assets.

5C The Plaintiff made the Contribution for the purpose of the Joint Endeavour.

Particulars

1. At around the time she made the contribution, the Plaintiff told the Defendant that he was to use the Contribution for the purposes of the Defendant paying the purchase price and costs associated with the acquisition of the Property.
2. Prior to either providing the Contribution or moving in to the Property, the Plaintiff told the Defendant that the Property was old and would therefore need improvements in order for her to live in it comfortably.
   1. The Defendant made or arranged the following renovations and improvements to the Property in 1995/96: renovations to bedrooms, building of an en-suite bathroom, installation of bathroom cabinetry in the main bathroom, installation of pantry, cupboards and flooring in the kitchen, installation of larger windows and French doors in the lounge room, internal repainting of most of the house, installation of a garden shed and chook-house, installation of shelves and doors in the garage, paving the front garden and the rear garden, installation of a reticulated water system, installation of heating and gas to the house, installation of two hot water services and installation of a rainwater tank.

5D In the course of the Joint Endeavour, in around 1996:

(a) the Plaintiff moved to the Property, where she still currently resides; and

(b) the Defendant moved to the Highton Property, where he and his family still currently reside.

5E By notice of dissolution of Partnership by the Plaintiff to the Defendant dated 10 February 2023, the Partnership dissolved.

5F By letter from the Defendant to the Plaintiff dated 6 April 2023, the Defendant told the Plaintiff that the [P]artnership had been terminated and was in the process of dissolution.

5G In the premises of paragraphs 5E-5F above, the Joint Endeavour came to an end and therefore the substratum of the Joint Endeavour was removed.

5H The Joint venture ended without attribution of blame to the Plaintiff.

5I In the circumstances pleaded herein, it would be unconscionable for the Defendant to deny that the Plaintiff holds a beneficial interest in the Property.

5J In the premises, the Defendant holds the Property on trust for the Plaintiff to the extent of her contribution to its purchase and improvement and it would be unconscionable to permit the Defendant to assert his registered proprietorship as denying the Plaintiff an interest in the Property.

17 The plaintiff's summons sought leave to file an amended statement of claim in the form exhibited to the first French affidavit (First PASOC). The plaintiff's written submissions filed on 25 August 2023 annexed a second proposed amended statement of claim which the submissions stated had superseded the First PASOC. The third French affidavit exhibited a further proposed amended statement of claim (ie, the Third PASOC) which Mr French deposed was the document now the subject of the leave application. During the course of the hearing I granted the plaintiff leave to amend her summons to seek leave to file an amended statement of claim in the form of the Third PASOC.

18 Rule 36.01[4] of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) allows the Court to order that a party has leave to amend a document in the proceeding for the purpose of determining the real question in controversy between the parties, correcting a defect, or avoiding a multiplicity of proceedings.

19 In ABL Nominees Pty Ltd v Mackenzie (No 2),[5] Derham AsJ usefully summarised the principles relevant to an application to amend pleadings:

It is common ground that an amendment which is futile because it is obviously bad in law will not be allowed: Commonwealth v Verwayen. Similarly, if a proposed pleading would be liable to be struck out if it had been contained in an original pleading, either because the pleading is bad in law or is defective as a pleading, then leave to file the proposed pleading will not be allowed: Horton v Jones (No 2); Gimson v Victorian Workcover Authority. The court, on this type of application, will not engage in an examination of the merits of the case foreshadowed by the proposed amendment, but where that amendment introduces a patently hopeless issue for determination then its inclusion will be futile and that will be a significant, and probably decisive, matter in the exercise of the court's discretion.

As J Forrest J observed in Matthews v SPI Electricity Pty Ltd (Ruling No 6), having regard to the terms of the Civil Procedure Act 2010 (CPA), the test is best expressed in the words of s 63 of that Act: if the amendment has no real prospect of success at trial then that would be a highly relevant factor in the exercise of the discretion to refuse the application.

In Namberry Craft Pty Ltd v Watson, Vickery J summarised the relevant factors to be considered, as a result of the decision in AON Risk Services Australia v Australian National University, as follows:

...

(a) Whether there will be substantial delay caused by the amendment;

(b) The extent of wasted costs that will be incurred;

(c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded;

(d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials;

(e) Whether the grant of the amendment will lessen public confidence in the judicial system; and

(f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it was sought.

This list of factors is not exhaustive. It is made against the background of the earlier decision of the High Court in Queensland v JL Holdings Pty Ltd, and the authorities that preceded it, including the famous case of Cropper v Smith, where the liberal approach to the amendment of pleadings finds it lead in the dissenting judgment of Bowen LJ.

On the other hand, pleadings are not an end in themselves. They are a means of ensuring that real issues of controversy are raised for determination in a way that is procedurally fair, both to a plaintiff and a defendant. This allows claims and defences to be clearly articulated, granting parties an opportunity to present their case properly prepared, on clear notice of allegations and defences raised in the proceedings. On this basis, the authorities clearly establish that, absent extraordinary circumstances, leave to amend will be granted.

20 In Mandie v Memart Nominees Pty Ltd,[6] the Court of Appeal considered the meaning of the 'no real prospect of success' test:

Since the introduction of the CP Act and the 'no real prospect of success' test, various authorities have used different language to explain what the test means.

According to Lysaght: a prospect which is not 'real' is 'fanciful'; although the 'no real prospect of success' test in s 63(1) of the CP Act is more liberal than the common law test of 'hopeless' or 'bound to fail', there may not be much difference between them in practice; and, properly understood, a real question to be tried is one which realistically might result in the respondent to an application for summary judgment succeeding in the proceeding.

21 As Elliott J noted in S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd;[7]

This is a low bar. The proposed amendment(s) need only be arguable to be allowed. It is not appropriate to refuse an amendment on the basis that it raises a claim or defence which appears not to have much chance of success, as the question of whether a claim or defence ought to succeed is a question for the judge at trial.

Nevertheless, a proposed amendment must satisfy the requirements which apply to any other pleading, meaning that it must:

(1) State all the material facts on which the amending party relies.

(2) Alert the defending parties to the case that they need to meet and define the precise issues for determination (in order to ensure procedural fairness and a fair trial).

(3) Not be vague, ambiguous, inconsistent or embarrassing.

22 The defendant opposed the Constructive Trust pleading in the Third PASOC. Unfortunately, due to the plaintiff further amending the First PASOC after the defendant had filed his written submissions, those submissions were not directly responsive to the Third PASOC.

23 From the defendant's written submissions, refined by his counsel's oral submissions at hearing, the defendant's basis for opposing the Third PASOC was as follows:

(a) The allegation that the plaintiff made a payment of $75,000 has no real prospect of success because the overwhelming effect of the available evidence is that the defendant paid the entirety of the purchase price from his own funds (including borrowings) and not from any payment by the plaintiff;

(b) The plaintiff has not provided affidavit evidence of the payment of the $75,000 or the Joint Endeavour and 'has absolutely no independent recollection of this $75,000';

(c) If there was a basis for the Constructive Trust allegations they would have been included in the original statement of claim;

(d) The plaintiff's solicitor had no proper basis for the allegations in the original statement of claim and the claim was constructed by the plaintiff's solicitor without specific instructions;

(e) The Purchase Price Resulting Trust claim is inconsistent with the Constructive Trust claim because the former says the $75,000 contribution was made to purchase the Property not as a contribution for improvements;

(f) The Joint Endeavour pleading does not particularise any dates or details of the conversations said to establish the Joint Endeavour nor any allegation of the payment of the $75,000 as contribution to the improvements;

(g) The plaintiff lodged the caveat as a tactical response to the related proceeding;

(h) In the related proceeding the plaintiff pleaded that the improvements to the Property were paid from money held in a bank account used to conduct the farming business at the Highton Property; and

(i) The plaintiff's pleading in the related proceeding does not refer to the Joint Endeavour, meaning the pleadings are inconsistent.

24 I have decided to grant the plaintiff leave to file an amended statement of claim substantially in the form of the Third PASOC. My reasons are as follows.

25 First, in my view the defendant's submissions - that leave should not be granted because the weight of the evidence overwhelmingly supports the defendant's case - are misplaced. As the principles in the authorities referred to above make clear, the Court will not engage in an examination of the merits on an application to amend a pleading.

26 Second, the defendant's submissions that the plaintiff's solicitor is acting without instructions and making allegations without a proper basis, is speculation and the submission should not have been made. Similarly, the submission that the plaintiff plainly has no independent memory of making the contribution is but one inference that might be drawn from the materials filed on the application. The same can be said of the defendant's submission that the plaintiff lodged the caveat as a tactical response to the related proceeding. None of these submissions address the test: whether the proposed amendments have no real prospect of success.

27 Third, any failure by the plaintiff to plead the Joint Endeavour in the related proceeding does not preclude the Joint Endeavour pleading in this proceeding. Any inconsistency in the plaintiff's pleadings in each proceeding is a matter more appropriately addressed in cross-examination and submissions at trial.

28 Fourth, I accept that the plaintiff's Purchase Price Resulting Trust pleading is, in the terms of the Third PASOC, inconsistent with the allegations made in the Constructive Trust pleading. I accept the plaintiff's submission that this can be addressed by clarifying that the Constructive Trust case is wholly or partially in the alternative to the Purchase Price Resulting Trust case. I will allow the plaintiff to further amend the Third PASOC to include this clarification.

29 Fifth, I accept that the Joint Endeavour pleading is not fully particularised. It appears to me that this defect could be addressed through a request for further and better particulars.

30 On 23 June 2023, the defendant filed a summons seeking orders dismissing the plaintiff's statement of claim. The defendant's application was made pursuant to ss 62 and 63 of the Civil Procedure Act 2010 (Vic) and r 22.22 of the Rules.

31 The principles relevant to an application for summary dismissal are well established.[8]

32 The defendant relied on his submissions made in opposition to the plaintiff's application for leave to amend her statement of claim to also support his summary dismissal application. In particular the defendant submitted that the defendant's evidence that he was the source of the funds used to purchase the Property was overwhelming and would be accepted, and that the plaintiff's documentary evidence of her contribution was inadmissible.

33 In addition the defendant submitted that this was not a case where the plaintiff had any prospect of obtaining further evidence to support her case because the defendant had already provided his documents to the plaintiff; the plaintiff had already subpoenaed bank records from the relevant bank in the related proceeding; and the plaintiff's personal evidence was already known.

34 The plaintiff submitted that the Court could not be satisfied that the plaintiff has no real prospect of success.

35 The plaintiff submitted that in order to be successful in her Purhase Price Resulting Trust claim she must establish on the balance of probabilities that she made the contribution towards the purchase price. The plaintiff argued that whether or not the defendant used the funds for that purpose is irrelevant to whether a resulting trust arose in favour of the plaintiff.

36 On the documentary evidence before the Court, the plaintiff relies on a memorandum made by the plaintiff's former solicitor in April 1999 as evidence of the contribution. The memorandum was prepared by the solicitor in the context of preparing the plaintiff's Will. The memorandum refers to an amount of $75,000 advanced by the plaintiff to assist in the purchase of the Property, which was purchased in the defendant's name. The memorandum records a question about whether the defendant should disgorge the $75,000 such that the amount would be included in the plaintiff's residuary estate.

37 The plaintiff disagreed with the defendant's submission that the memorandum would be inadmissible at trial and, even if admitted, afforded no weight. The plaintiff submitted questions of admissibility of evidence were matters for the trial judge and should not be decided on a summary judgment application.

38 The plaintiff argued that the defendant's evidence was not as comprehensive as the defendant's counsel submitted. According to the plaintiff, the defendant's evidence did not provide details of the dates and types of shares allegedly sold by the defendant to partially fund the purchase of the Property.

39 The plaintiff also submitted that, in order to succeed on her Constructive Trust case, she does not need to prove that the funds provided to the defendant for the purpose of the Joint Endeavour were in fact used by the defendant for that purpose.

40 The plaintiff argued further that even if the Court were satisfied she had no real prospect of success, the Court should allow the matter to proceed to trial because it is not in the interests of justice to summarily dispose of the case and because the dispute is of such a nature that only a full hearing on the merits is appropriate. In making this argument the plaintiff stressed that the proceeding was at a very early stage, discovery had not been ordered and the plaintiff intended to subpoena the defendant's stock-broker and bank.

41 I am not satisfied that the plaintiff has no real prospect of success such that her proceeding should be summarily dismissed. I agree with the plaintiff that the admissibility of, and weight to be given to, the solicitor's memorandum is a matter best left to the trial judge. On its face the memorandum is evidence of a contribution towards the purchase of the Property. How that evidence might be weighed against the other evidence ultimately admitted at trial cannot be gainsaid on this application.

42 I accept the plaintiff's submission that the proceeding is at an early stage. Interlocutory processes have not been ordered, nor has all evidence been filed. Even were I satisfied that the plaintiff had no real prospect of success, this leans in favour of allowing the matter to proceed to trial because it is not in the interests of justice to summarily dispose of the proceeding at this stage.

43 It follows that the defendant's summons will be dismissed.

44 For the reasons given above I have decided to grant leave to the plaintiff to file an amended statement of claim substantially in the form of the Third PASOC. I have also decided to dismiss the defendant's application for summary judgment.

45 I request the parties to confer on the terms of any costs orders. If the parties are unable to agree on the issue of costs within seven days of the date of this judgment, the proceeding will be relisted for oral submissions.

[1] At the hearing the plaintiff confirmed this should have referred to paragraph 5(a).

[2] A copy of the unamended statement of claim was exhibited to the defendant's affidavit. Simon Lidgett is the plaintiff in that proceeding. His mother is the defendant. By paragraph 16 of that statement of claim, Simon pleaded:

(a) Simon and Jill entered the Partnership with each having a 50/50 interest in it;

(b) Simon undertook the bookkeeping for the Partnership;

(c) Simon remained working on the Highton Property.

The term Partnership is defined in paragraph 1(a) of that pleading as "known as "S J Lidgett & J R Lidgett" ABN 21 144 783 051.

[3] At the hearing the plaintiff confirmed this should have referred to paragraphs 5(b) and 5(c).

[4] The plaintiff's summons sought an order under r 34.04, which is not applicable.

[5] [2014] VSC 529, [18]-[22].

[6] [2016] VSCA 4, [44]-[45] (citation omitted).

[7] [2023] VSC 253, [40]-[41] (citations omitted).

[8] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; (2013) 42 VR 27; Padella Pty Ltd v Elliott [2018] VSC 301, [19]-[28].