The First and Third Defendants by an Amended Notice of Motion filed 4 May 2017 seek orders that the proceedings be dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW), alternatively that the Amended Statement of Claim filed on 18 April 2017 be struck out pursuant to r 14.28, and in any event seek an order that two Notices to Produce issued to the First and Third Defendants dated 30 March 2017 and 6 April 2017 be set aside.
These proceedings commenced on 30 September 2016. The Plaintiff has at all times acted for himself. The original Statement of Claim filed 30 September 2016 sought two orders as follows:
(1) $130,000 worth of investment return for property 165 Fitzwilliam Road, Toongabbie NSW 2146 from the First and Second Defendant.
(2) $1,250,000 (subject to actual value) worth of investment return for property at 50 Rosedale Road, Gordon NSW 2070 from the First and Third Defendants.
The three Defendants named were respectively Kaijun He, Li Li and View Land Properties Pty Ltd.
The lengthy pleading was difficult to follow. The First and Third Defendants filed a Defence dated 23 December 2016. On 4 April 2017 the solicitors for the First and Third Defendants wrote to the Plaintiff referring to a directions hearing before the Registrar the previous day where directions were given enabling the Plaintiff to file an Amended Statement of Claim. I am informed that it was actually at the initiative of the First and Third Defendants that the Plaintiff was given leave to do so. The letter pointed out some of the difficulties in the manner of pleading in the Statement of Claim.
The Plaintiff thereafter filed an Amended Statement of Claim on 18 April 2017. The same two prayers for relief were set out and the pleading in the Amended Statement of Claim did not differ significantly from what had been contained in the original Statement of Claim.
Leaving aside many matters in the Amended Statement of Claim that are obviously irrelevant, the claim made by the Plaintiff appears to be based on a loan that he and another person, his ex-wife Qian Min Li, made to the Second Defendant on 3 October 2007. The loan agreement was in writing and it was between the Plaintiff and Qian Min Li as lenders and the Second Defendant in the present proceedings as the borrower. The amount loaned was $75,000 for a term of three years.
The loan was not repaid and on 28 June 2012 the lenders filed a Statement of Claim in the Parramatta Local Court claiming the sum of $92,972.62 from the Second Defendant. Judgment was given in their favour on 31 October 2013 in the amount of $70,935.35. The Second Defendant filed a Summons to appeal to this Court from that judgment but in the meantime the judgment creditors obtained a sequestration order against the Second Defendant in the Federal Circuit Court on 18 March 2014. The Second Defendant remains an undischarged bankrupt.
The claim in the Amended Statement of Claim appears to be based on some sort of equitable principle involving tracing. The two properties referred to in the prayers for relief were properties respectively purchased by the First and Second Defendants in October 1999 and by the First and Third Defendants in March 2006. The property purchased by the First and Second Defendants was 165 Fitzwilliam St, Toongabbie. The property purchased by the First Defendant (as to 1/100 share) and the Third Defendant (as to 99/100 shares) was 50 Rosedale St, Gordon.
In the Amended Statement of Claim the Plaintiff sets out at length a conversation he said that he had with the First and Second Defendants in April 2007 where the Second Defendant said that "they" had purchased the Gordon property but "they" could not raise funds for refinancing the property. The Second Defendant asked if the Plaintiff would lend "them" $75,000 in order to settle an investment apartment "they" were purchasing in Charlotte Street, Brisbane. In fact the Second Defendant alone had apparently purchased this property off the plan, having paid a 10% deposit of $45,800 in April 2004. It is necessary to infer from the conversation set out in the Amended Statement of Claim that the Second Defendant was obliged to pay the balance of the purchase price shortly after April 2007 when the conversation with the Plaintiff was held.
The loan agreement was entered into with the only reference to the purpose of the borrowing as being that the money would be used by the Second Defendant "to partly fund the purchase of property".
What the Amended Statement of Claim thereafter appears to suggest is that, although the First and Second Defendants sold the Toongabbie property in December 2012 for $530,000 and had refinanced the Gordon property with Westpac, they had not repaid the monies due under the loan agreement but instead had, seemingly, somehow used the $75,000 in association with those properties, and that the result should be that the Plaintiff should acquire or has acquired an interest in those properties.
There is simply no basis in law or equity for the claim that the Plaintiff makes. It suffers from a number of significant problems. The Plaintiff was not able to articulate a principle of law which would entitle him to obtain any interest in the properties or the proceeds.
First, the proceedings are defective for want of necessary parties. The Loan Agreement makes clear, as does the Statement of Claim in the Local Court, the judgment in that court, and the sequestration order, that the Plaintiff was only one of two persons who lent this money. The other lender/judgment creditor appears to be his ex-wife Qian Min Li. Rule 6.20 UCPR provides that unless the court otherwise orders, all persons jointly entitled to the same relief must be joined as parties in any claim for the relief that is made by any one or more of them.
The Plaintiff is in fact aware of this problem because in October 2016 he sought to move on an unfiled Notice of Motion in these proceedings before me as the Duty Judge seeking freezing orders over the Gordon property. In a judgment I gave when dismissing this Notice of Motion I said this:
[2] The proceedings were commenced against three Defendants the Second of whom, Li Li, was the Defendant in Local Court proceedings. In those proceedings the present Plaintiff and another person, Qian Min Li, obtained a judgment against the present Second Defendant Li Li in October 2013. The Second Plaintiff in those proceedings has not been joined to the present proceedings and she is a necessary party either as a Plaintiff or a Defendant. For that reason alone these proceedings are misconceived, because no orders could be made in favour of the present Plaintiff alone.
Further, the Plaintiff then sought the same relief in a Notice of Motion he subsequently filed. That matter came before Schmidt J on 25 October 2016. Justice Schmidt drew the Plaintiff's attention to my judgment and gave him a copy of it to read before she also dismissed the Motion.
Secondly, the Second Defendant is an undischarged bankrupt. Any rights the Plaintiff and Qian Min Li would have arising from the loan of $75,000 would be debts provable in the Second Defendant's bankruptcy. If the Plaintiff has any right to make the present claim, which I do not accept, he would need the consent at least of the Second Defendant's trustee in bankruptcy and, more likely, the trustee would need to be a party to the proceedings. The true position may be that the only right of the Plaintiff would be for him to prove in the Second Defendant's bankruptcy at least to the extent of the proceeds of the Toongabbie property.
Thirdly, there is nothing in the evidence filed by the Plaintiff on this application nor in the Amended Statement of Claim which could lead to the view that any equitable rights exist against the Toongabbie or the Gordon properties, both of which were purchased some time before the loan agreement was entered into. On the evidence and the pleading, the $75,000 was borrowed to assist in the completion of the Charlotte Street, Brisbane property. No claim is made in respect of that property. In any event, there is nothing in the terms of the loan agreement to suggest that the Plaintiff and Qian Min Li have any rights except to have the loan repaid with the interest as set out in clause 3 of that agreement. Nothing in the loan agreement contains any suggestion that the lenders should obtain any equitable interest in any real property of the borrower.
The Second Defendant is not in any fiduciary position to the Plaintiff that might enable tracing of the funds lent. Nor is any basis shown for declaring any form of a constructive trust from the arrangements between the parties which are to be found in the terms of the Loan Agreement. It is an unremarkable arrangement whereby one party borrows money from another with promises to repay at a designated time, to pay interest and, if the borrower defaults, to pay some extra charges. The fact that the Second Defendant may have used the loan funds to repay some mortgages or to assist in the refinancing of those mortgages does not create any form of trust nor any interest on the part of the lenders to that money.
Fourthly, and associated with the third matter, the one property owned by the Second Defendant in respect of which the Plaintiff claims some sort of equitable interest is not solely owned by the Second Defendant. The Toongabbie property was owned by the First and Second Defendants. The Second Defendant has no interest at all in the Gordon property. It is, as I have said, owned by the First and Third Defendants.
The basis for claiming against the First and Third Defendants appears to be that the First and Second Defendants used money they had or had borrowed from other lenders to refinance the Toongabbie and Gordon properties instead of repaying the Plaintiff. Two things should be said about this. First, the claim is based on the assumption that the First Defendant owed money to the Plaintiff under the Loan Agreement (see paras 6, 13, 14 and 15 of the Amended Statement of Claim). She was not a party to the Loan Agreement. Secondly, nothing in the Loan Agreement gave any priority to the Plaintiff and Qian Min Li for the repayment of the loan over any other use to which the Second Defendant could put funds available to him.
Much of the Amended Statement of Claim concentrates on what are said to be deceptions of the First and Second Defendants in relation to other loans they obtained to buy and refinance property. These were not loans where the Plaintiff was a party except to the extent, apparently, that some of them were obtained from businesses where he was employed. The relationship between these loans and any deception in relation to obtaining them on the one hand and the Loan Agreement with the Second Defendant on the other was not apparent either from the pleading or the Plaintiff's affidavit.
There is a suggestion in the Amended Statement of Claim that the Loan Agreement was also made with the First Defendant as a borrower but that the Second Defendant had his solicitor draw up the agreement with himself as the only borrower. There is no claim in the present proceedings to rectify the agreement, but any such claim would fail because the Plaintiff and Qian Min Li sued and obtained judgment on the agreement on the basis that it represented the true legal arrangement between them and the Second Defendant.
The principles to be applied when considering applications under r 13.4 are well known. Great care must be taken before depriving a plaintiff of his or her opportunity to have a full trial of the case. The claim made must be "so obviously untenable that it cannot possibly succeed", "manifestly groundless", "so manifestly faulty that it does not admit of argument" or "discloses a case which the Court is satisfied cannot succeed": General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 at 129-130; Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [57], subsequently affirmed in Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28 at [24].
I am entirely satisfied for the reasons I have given above that the various descriptions used in General Steel Industries are applicable in the present case. The proceedings are misconceived. There is no basis for the claims made and the proceedings are defectively constituted.
It is not necessary, therefore, to consider in detail the form of the pleading. It can be said to be "embarrassing" in the sense the law understands. As Johnson J said in McGuirk v The University of New South Wales [2009] NSWSC 1424:
[30] A pleading is embarrassing where it is "unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him": Meckiff v Simpson [1968] VR 62 at 70; Gunns Limited v Marr at [14]-[15].
[31] In Shelton v National Roads & Motorists Association Limited [2004] FCA 1393 at [18], Tamberlin J explained the concept of "embarrassment" with respect to pleadings:
"Embarrassment in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434."
[32] A pleading may be embarrassing even though it contains allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited (Bryson J, 7 March 1995, BC9504276 at 5-6).
[33] Although the pleading of a conclusion may, in some circumstances constitute a material fact, nevertheless, the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet: Charlie Carter Pty Limited v Shop Distributive and Allied Employees Association (1987) 13 FCR 413 at 417-418. In such a case, the appropriate remedy is to strike out the pleading rather than to order the provision of particulars, as it is not the function of particulars to take the place of the necessary averments in a pleading: Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 at 112-114.
The Amended Statement of Claim does not comply with the proper principles of pleading. It does not plead only material facts. It pleads irrelevant matters and it sets out evidence instead of material facts and particulars. It is not possible to understand what cause of action is relied on, nor what the basis is for the claim made.
The Plaintiff has been given one opportunity to re-plead the claim and, prior to doing so, was provided with some assistance from the solicitors acting for the First and Third Defendants as well as from the Registrar at a Directions hearing. Furthermore, in my judgment of October 2016 earlier referred to I held that the proceedings were defective for want of parties. The Plaintiff was reminded of that judgment by Schmidt J less than a fortnight later. No steps were taken by the Plaintiff to rectify that matter.
Whilst I accept that the Plaintiff is unrepresented, a number of the problems with the pleading have been pointed out to him but nothing has been done to produce a pleading that complied with the rules for pleading and is not embarrassing. I have been referred to the judgment of Barr AJ in Waters v Commonwealth of Australia [2012] NSWSC 790 where his Honour discussed a similar situation at paragraphs [51] and [54] of that judgment. For similar reasons, I agree with Barr AJ's assessment that there is no point in this case, as in Waters, in giving the Plaintiff any further chance to amend the document. Were I not of the view that the proceedings should be summarily dismissed I would have struck out the Amended Statement of Claim but not given any further leave to re-plead.
The Notices to Produce are premature. Until the pleading is put in order the issues in the proceedings cannot be understood to know if there is any relevance to the documents sought. On the face of the pleading the documents appear to be irrelevant as being concerned with the alleged deceptions in relation to other loans, not the Loan Agreement. However, it is not necessary to say anything further about them because the proceedings are to be dismissed.
I make the following orders:
1. The proceedings are dismissed pursuant to r 13.4 Uniform Civil Procedure Rules 2005 (NSW).
2. The Plaintiff is to pay the costs of the First and Third Defendants.
[3]
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Decision last updated: 17 April 2018