... "
50 It would not be a proper pleading to plead the fact of the alleged admission. Nor does the pleader do so. He pleads facts about which, in due course, it will be said an admission has been made. The fact that the alleged admission is "undisclosed" in the pleading is immaterial. It would be improper for the admission to be pleaded.
51 The defendants' submission may be that the pleader ought to have expressly alleged fraud. However, whilst fraud must be pleaded specifically and with particularity, it does not appear that fraud is an element of the cause of action pleaded in para 32. In Middleton v O'Neill (1943) 43 SR (NSW) 178 Jordan CJ said (at 184):
" It is well established that if a party intends to set up fraud, fraud must be clearly charged: Davy v Garrett (1877) 7 Ch. D. 473 at 489; but the use of the word 'fraud' is neither necessary nor sufficient for this purpose. Thus, a statement of claim is demurrable if it merely alleges fraud without pleading the facts alleged to constitute it: Wallingford v Mutual Society (1880) 5 App. Cas. 685 at 701; Lawrence v Norreys (1890) 15 App. Cas. 210 at 221; In re Rica Gold Washing Company (1879) 11 Ch. D. 36. On the other hand, if facts amounting to fraud are plainly alleged it is no defect in the pleading if the word 'fraud' is not used: M'Calmont v Rankin (1849) 8 Hare 1 at 15-16; Davy v Garrett; Reddaway v Banham [1896] A.C. 199 at 219; Angelides v James Stedman Hendersons Sweets Ltd (1927) 40 C.L.R. 43 at 82; 20 Austn Digest 847. It has been said, also, that if a plaintiff bases his case solely upon fraud it is not open to him, if he fails in establishing the fraud, to pick out from the allegations of the statement of claim facts which might, if not put forward as proofs of fraud, have yet warranted the plaintiff in asking for relief: Hickson v Lombard (1866) L.R 1 H.L. 324 at 336; Brindley v Scott (1902) 2 S.R. (Eq.) 49; 9 Austn Digest 290. But this does not follow from the mere fact that a charge of fraud is made; the statement is applicable if fraud is a necessary element of the type of wrong complained of. If, however, the facts alleged, together with the element of fraud which is included, would entitle the plaintiff to relief, and the same facts minus the fraud element would also entitle him to relief, although not necessarily the same relief, the latter form of relief may in a proper case be granted if everything but fraud is made out. I respectfully adopt the statement of Harvey J, in Adey v Fisher (1914) 14 S.R. 407 at 410; 9 Austn Digest 259: ' The real principle seems to me to be that the Court must be satisfied that the defendant had to address himself to those issues which are material to the relief sought, and that the parties have addressed their evidence to these issues' ..."
52 I do not consider the proposed additional allegations against Paul Ekstein are objectionable on the ground that the word "fraud" is not used. However, later in these reasons I address the cognate allegations in the proposed para 34.5(H) against Mr Ward-Harvey. I there say that the plaintiff needs to make clear whether the only claim against Mr Ward-Harvey is his acting as principal, or whether it is also to be alleged that he is liable as an accessary under the second limb of Barnes v Addy (1874) LR 9 Ch App 244. If it is to be alleged that Mr Ward-Harvey is liable as an accessary by providing knowing assistance to a dishonest and fraudulent design on the part of the trustee (Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [160], [163]), then the allegation of a dishonest and fraudulent design should be specifically pleaded.
53 The facts on the basis of which the plaintiff alleges that the first defendant ought to have made an adjustment for the application since 1992 of income and emoluments from Boucher & Muir are specifically pleaded at paras 72.1-72.94.
54 Objection is taken to proposed paras 34.1-34.4. In the existing paragraph 34 the plaintiff pleads that the first defendant breached clause 25 by not acting in accordance with the wishes of Otto Ekstein expressed in his will by not distributing to the plaintiff 50 percent of the distributed income of the trust. The claim is made for the period from 1992 to 2003. The defendants say that the claims are statute-barred by s 48 of the Limitation Act.
55 In Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533-534, the High Court warned against deciding limitation questions in interlocutory proceedings. The possibility of a successful defence to the claim or part of it under the Limitation Act is not a reason for refusing leave to amend. If the first defendant pleads the Limitation Act as an answer to the claims, or some of them, the plaintiff may have arguable answers which could be pleaded by way of reply to such a defence. In this connection it is relevant that the plaintiff alleges that she was deprived of information in relation to the affairs of the trust.
56 I do not consider that the amendments add a new cause of action to that contained in the original pleading. As noted above, the statement of claim includes the allegation that the first defendant acted in breach of trust by not distributing 50 percent of the distributed trust income to the plaintiff. The additional paragraphs provide particulars of that allegation. In any event, even if the amendments did add a new cause of action, they arise out of the same, or substantially the same, facts as those giving rise to the existing cause of action and claim for relief in the statement of claim. Where an amendment is made under s 65 of the Civil Procedure Act 2005 (NSW), it is taken to have effect as from the date on which the proceedings were commenced unless the Court otherwise orders. I decline to order otherwise.
57 Objection is taken to paras 44(e) and (f) on the ground that allegations of misappropriation from corporate defendants have not been specifically pleaded or properly particularised. Standing on their own, those paragraphs are certainly deficient. However, the pleading has to be read with the specific allegations concerning Boucher & Muir in paragraph 72.1 and following and in relation to Elysee in para 73 and following in which those matters are specifically pleaded. The effect of paras 44(e) and (f) is to charge the defendant with breach of his duty as trustee of the Otto Ekstein Family Trust in relation to those matters. Paras 44(e) and (f) should be clarified by the provision of particulars, which may be done by cross-reference to other paragraphs in the pleading.
58 Objection is taken to proposed para 44(g). The objection is in the same category as that taken to para 32D.15. The paragraph is sufficiently pleaded.
59 The defendants object to paragraph 50.1. In that paragraph the plaintiff pleads:
" By a deed poll dated 21 January, 2004 the first defendant has purported to:
(a) expropriate and convert to his own use as trustee for Tara Ekstein, Brendan Ekstein, Matthew Ekstein and Joseph Power the plaintiff's interest in the property at 148 Milson Road, Cremorne and;
(b) make other provision inconsistent with the wishes expressed in the will of Otto Felix Ekstein."
60 I do not understand the pleader to be using the word "convert" in its technical sense as referring to the tort of conversion. It appears to add nothing to "expropriate". There is no reason that a person acting in capacity as trustee cannot convert or expropriate property. The deed appears to have been brought into existence to confirm the effect of the distribution of July 2003 about which the plaintiff complains elsewhere in the pleading. I do not think that the defendants will be taken by surprise by the allegation in para 50.1(b). However, I agree that the plaintiff ought to identify the respects in which she alleges that provisions in the deed are inconsistent with the wishes expressed in the will of Otto Felix Ekstein. In other words, particulars should be provided of para 50.1(b), even if that is by cross-reference to other paragraphs of the pleading.
61 Provisions to the same effect as the deed dated 21 January 2004 were made in a deed made 21 September 2004 to which Mr Ward-Harvey was also a party. The same allegations are made in para 50.2 in respect of that document and the same objections are taken. I will allow the amendment in para 50.2 but direct that particulars of para 50.2(b) be provided as with para 50.1(b).
62 The remaining proposed amendments so far as they affect the existing defendants expand the existing allegations of improprieties in the administration of the affairs of Boucher & Muir Holdings, Boucher & Muir, Newton & Co and HP Holdings.
Boucher & Muir Holdings
63 In the existing statement of claim the plaintiff complains that on 29 March 2004, the directors of Boucher & Muir Holdings resolved that various shares in that company be compulsorily transferred to Paul Ekstein and to David Frish. Included in the shares the subject of the alleged resolution were eight "B" class shares held by the plaintiff. The plaintiff alleges that the resolution and purported subsequent transfer of her shares were invalid for various reasons. These include that notice provision under the articles of Boucher & Muir Holdings for such a resolution were not complied with. The plaintiff alleges that in passing the resolution the directors of Boucher & Muir Holdings breached their fiduciary duty owed to members of the company and committed a fraud on the minority. She alleges that no dividends have been paid by any of the companies to her or to the executor of the estate. She alleges that no fair or reasonable provision has been made for members of the companies to realise their investment by sale or other disposition of their shares at a fair value and that the plaintiff has not been provided with reasonable information in relation to the financial position and affairs of those companies.
64 The proposed amendments in relation to Boucher & Muir Holdings expand on these allegations. The plaintiff alleges that the article pursuant to which the transfer was purportedly made did not on its true construction authorise the compulsory acquisition of her shares. This is elaborated in various ways to which it is not necessary to refer. The plaintiff alleges that Messrs Paul Ekstein, Sydney Frish and David Frish, the latter two being proposed additional defendants, acted in fraud of the affected shareholders including the plaintiff. Allegations are made to support a claim for a winding-up on the just and equitable ground or for relief in respect of allegedly oppressive conduct. Further allegations are made in relation to whether the purported transfer of the plaintiff's shares was registered. The plaintiff alleges that she was refused access to the share register of Boucher & Muir Holdings. She alleges that Paul Ekstein set out to ensure that she would get no benefit from her shareholding in Boucher & Muir and to ensure that her shares would be a worthless minority interest.
65 In para 68.21 of the proposed amended statement of claim the plaintiff alleges that:
" 68.21 In the premises,
(a) it is probable that the third defendant will not, unless the plaintiff brings proceedings on its behalf, bring or properly take responsibility for proceedings against the said Paul George Ekstein and Sydney George Frish and David Victor Frish and Boucher & Muir Pty Limited and Newton & Co Pty Limited in respect of the conduct concerning the affairs of Boucher & Muir Pty Limited and Newton & Co Pty Limited affecting the third defendant as a shareholder in those companies;
(b) the plaintiff in seeking leave to bring such proceedings on behalf of the third defendant is acting in good faith,
(c) it is in the best interests of the third defendant that the plaintiff be granted leave to commence proceedings on its behalf against the said Paul George Ekstein and David Victor Frish in respect of the matters aforesaid,
(d) at least 14 days prior to the filing of this amended statement of claim and the amended originating process the plaintiff gave notice to the third defendant of her intention to apply for leave to commence proceedings on its behalf and of the reasons for so applying, and
(e) leave ought be give leave [sic] to the plaintiff to bring proceedings on behalf of the third defendant against the said Paul George Ekstein and Sydney George Frish and David Victor Frish and Boucher & Muir Pty Limited and Newton & Co Pty Limited in respect of the matters aforesaid. "
66 All the matters complained about in para 68 leading to the contentions in para 68.21 relate to alleged breaches of duty owed to the plaintiff, or to particular shareholders in the company, or misconduct in relation to the plaintiff. None of the allegations in para 68, if substantiated, would lead to claims which the company, as distinct from its shareholders, might have against the directors or persons acting as directors. The defendants submit that the plaintiff's claim for leave to bring proceedings on behalf of the company cannot properly be brought as a claim for final relief, but must be sought by way of interlocutory relief, presumably pursuant to ss 236 and 237 of the Corporations Act. I deal with the same submission later in these reasons in relation to claims the plaintiff contends the companies have against Paul Ekstein, Sydney Frish and David Frish. The allegations in paras 55-68 may support a claim for relief by the plaintiff in her personal capacity, but do not support a claim for relief by the company against the first defendant and the proposed additional defendants. The fact that the plaintiff complains that other shareholders were also mistreated, and this is arguably relevant to her claim for oppression, does not mean that the pleading discloses a cause of action by the company. No question arises of the plaintiff having leave to bring proceedings on behalf of Boucher & Muir Holdings against the persons acting as its directors in relation to the conduct of its affairs. As the plaintiff is a shareholder of Boucher & Muir and Newton & Co and seeks to bring claims on behalf of those companies against Paul Ekstein, Sydney Frish and David Frish there is no need for her to seek leave to bring an action on behalf of Boucher & Muir Holdings to enforce what she contends to be its entitlement as a shareholder of those companies to seek leave to bring an action by those companies against the persons acting as directors of those companies. Although no argument was addressed to this issue it would appear in any event that the decision in Oates v Consolidated Capital Services Ltd (2008) 66 ACSR 277 would preclude the plaintiff using ss 236 and 237 to make a derivative claim on behalf of Boucher & Muir Holdings, not to enforce any cause of action it has, but to seek to cause it to bring a derivative claim to enforce causes of action of companies of which it is a shareholder. Accordingly, I refuse leave to file the amended statement of claim including para 68.21.
67 Other objections are made to particular paragraphs, but it is unnecessary to deal with them in detail. Contrary to the defendants' submissions, the pleading discloses the legal foundations for its claims, is not frivolous or vexatious, and pleads specifically the facts giving rise to the claims for oppression or for a winding-up on just and equitable grounds. There is no substance to the allegation that if the matters pleaded are established, they would not arguably found the claims for relief.
68 The defendants contend that there is no utility in the plaintiff pleading claims in respect of the alleged passing of a resolution, presumably, the resolution of 29 March 2004 because "the defendants have already pleaded [that the resolution] was never passed and accepted and is not operative". Accordingly, the defendants say that the pleading has no utility. I do not understand this submission. It may be that some or all of the plaintiff's allegations are or will be admitted, but that is no reason for refusing leave to amend. The plaintiff may be entitled to say that the passing and acting on a resolution which the existing defendants admit to be invalid is a reason for granting relief under s 233 of the Corporations Act. This is part of the plaintiff's allegation that Paul Ekstein has endeavoured to ensure that she receive no value from her minority holding in the proprietary companies which she alleges is controlled by him and David Frish.
Boucher & Muir
69 Paras 72.1-72.122 contain new allegations in relation to the conduct of the affairs of Boucher & Muir. In their written submissions the solicitors for the defendants assert that many of these paragraphs contain allegations that are embarrassing, irrelevant, frivolous, untenable, vague, lacking particularity, or which otherwise have no legal foundation. The written submissions did not seek to demonstrate the basis for these assertions. To a large extent no attempt was made in oral submissions to justify these assertions. I will confine myself to those submissions where the defendants sought to demonstrate the correctness of their assertions.
70 The defendants' primary case was that the allegations concerning the conduct of the companies should not be joined to the case concerning a breach of trust. I deal with that later in conjunction with the similar submission advanced for Mr Ward-Harvey.
71 One of the allegations addressed in oral submissions is that since at least 31 December 1993 Boucher & Muir has had no directors. Counsel for the defendants submitted that it was "frivolous, vexatious and entirely untenable to contend that a company can have no directors, without more." The allegation is not made "without more". The plaintiff alleges that the articles required directors within two months of their appointment to acquire at least ten "A" class shares. The plaintiff alleges that the persons who purported to act as directors were not validly so appointed because they did not have the requisite shareholdings at various times. The plaintiff also pleads that the effect of the articles is that a general meeting is required to be held every year and one-third of the directors for the time being must retire from office each year. The plaintiff alleges that no general meetings have been called since at least 28 October 1993 and that by the operation of certain specified articles, the company has had no directors. The plaintiff also alleges that by not later than 31 August 1992 there ceased to be, if there were then, a sufficient number of directors of Boucher & Muir to form a quorum and that the remaining directors had no powers other than to summon a general meeting of the company. Mr Rickard for the defendants did not explain why it was entirely untenable that a company could have no directors. He referred to no authorities. Authorities such as Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883 at 888-889, Club Flotilla (Pacific Palms) Ltd v Isherwood (1987) 12 ACLR 387 and Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424 at 436-437 show that it is plainly arguable that if the facts alleged by the plaintiff are established, the persons who purported to act as directors were not in fact appointed as such.
72 In oral submissions counsel for the defendants also submitted that paras 72.86-72.90 were "vague". It was submitted that the paragraphs effectively alleged fraud or improper behaviour without sufficient specificity of alleged breaches of duty. In those paragraphs the plaintiff alleges:
" 72.86. In the financial statements for the year ended 30 June, 2002 the said Paul George Ekstein and Sydney George Frish and David Victor Frish have caused the 2001 comparable figure directors emoluments to be reported as consultancy fees and have not disclosed any directors' emoluments in the fourth defendant's 2002 financial statements.