Second Plaintiff v WILLIAM WILSON [2014] VSC 56 | Case summary

Supreme Court of Victoria|2014-03-03|Before: ROBSON J

PRACTICE AND PROCEDURE - Application - Whether self-executing order enlivened - Whether allegation of conspiracy properly particularised.

For the Second plaintiff and First defendant by counterclaim

For the Third and Fourth defendants by counterclaim

For the First, Second and Third Defendants and the First and Second plaintiffs by counterclaim

1 By a summons dated 25 October 2013, the third defendant by counterclaim (Fleurie Pty Ltd) (Fleurie) and the fourth defendant by counterclaim Wayne Collins (Collins) (collectively, the applicants) applied to have the proceedings against them each dismissed.

2 The applicants contend that the plaintiffs by counterclaim (the Wilsons) failed to comply with a self-executing order I made on 21 June 2013, that unless the Wilsons filed and served a counterclaim against Fleurie and Collins by 28 June 2013 Fleurie and Collins would be removed as parties from the proceeding.

3 The Wilsons served a counterclaim against Fleurie, but not Collins, by 28 June 2013. The applicants contend that the counterclaim did not disclose a good cause of action against Fleurie or Collins and thus the Wilsons should be treated as having failed to comply with the order, with the result that Fleurie and Collins must be removed as parties from the proceeding.

4 For the reasons given below, I find that the Wilsons did not file a counterclaim against Collins. In accordance with the order of 21 June 2013, Collins should be removed as a party from the proceeding and I so order.

5 In my view the Wilsons did serve a counterclaim against Fleurie as required by the order even though, as I find, it did not disclose a good cause of action against Fleurie.

6 In the circumstances, I refuse the application to remove Fleurie as a party. I propose to hear submissions as to whether or not the counterclaim against Fleurie should be struck out and further submissions as to the course of the proceedings.

7 Central to this case are four properties that lie along Westernport Road and its extension Pioneer Road, at Lang Lang in Eastern Victoria. The road runs from west to east. Travelling east the first relevant property is 325 Westernport Road, known as the Westhead land. Next, on the eastern boundary of the Westhead land is 345 Westernport Road, known as the Walker land. On the eastern boundary of the Walker land is the Jeffreys land. To the east of the Jeffreys land is 65 Pioneer Road, known as the Nerlane land. Thus the four properties in order are:

8 The four properties are the subject of a permit or permits to extract sand issued by the Department of Primary Industries.

9 The defendants to the claim are William Wilson, his son Peter Wilson, and three companies controlled by them (the Wilsons). The plaintiffs by counterclaim are William and Peter Wilson and Barry Moshel (a solicitor).

10 On 21 March 2012, Annesley Plant Hire Pty Ltd (APH) and Paul Annesley instituted proceedings against the Wilsons claiming moneys allegedly advanced under an agreement initially made in August 2009 and thereafter varied from time to time. Annesley allege that there were implied terms of the agreement that the interest would accrue on the loans and that the advances would be repaid within a reasonable time. Annesley claimed the various advances amounted to $1,825,481.94. Annesley also alleged that William and Peter Wilson represented that they would personally guarantee the advances. The representations were alleged to have been made in the course of trade and commerce within the meaning of the Fair Trading Act 1999 (Vic) (the Act). Annesley allege the representations were false and seek damages under the Act, interest and costs.

11 On 3 May 2012, the Wilsons filed a defence that, inter alia, alleged that Annesley and the Wilsons entered into a number of agreements to purchase two properties: lots 1 and 2, 275 Nobles Road, Madewarre (Nobles Road) and 65 Pioneer Road, Lang Lang (the Nerlane land).

12 The Wilsons alleged that the agreements broadly entailed the purchase of Nobles Road and the Nerlane land (using Pioneer Road Holdings Pty Ltd (PRH) as the purchasing entity).

13 The Wilsons alleged that the purchases were to be funded by Annesley and that the Wilsons would apply their expertise in matters of sand extraction such that Nobles Road and the Nerlane land was expected to yield a profit either from sand mining operations or by reason of their on-sale to a person or company interested in exploiting their sand resources. Nobles Road was ultimately on-sold.

14 The Wilsons alleged that any profit from the purchase and subsequent exploitation or on-sale of Nobles Road or the Nerlane land would be divided evenly between Annesley and the Wilsons.[1]

15 The Wilsons alleged that in the course of dealings between Annesley and the Wilsons in connection with their joint endeavours, including but not limited to Nobles Road and the Nerlane land, moneys were provided by Annesley to the Wilsons for various purposes, some being loans and others being in respect of profit share from the purchase and on-sale of Nobles Road.

16 The Wilsons alleged that the plaintiffs have failed to provide to the William and Peter Wilson an accounting in respect of the profits from the purchase and on-sale of Nobles Road, and in respect of their joint commercial endeavours generally, despite numerous requests by the William and Peter Wilson that they do so.[2]

17 The defendants allege that they could not further plead to the allegations of the plaintiffs until such time as the plaintiffs have provided proper accounting in respect of the amounts passing between the parties and the relative entitlements flowing to each of the plaintiffs and William and Peter Wilson as a result of their joint enterprises.

18 The Wilsons alleged that they will be in a position to respond to the allegations with greater particularity once they have received further and better particulars (in response to a request for such) and the plaintiffs' discovery.

19 On 17 May 2012, a directions hearing was held before Daly AsJ. Mediation was ordered to be conducted before 31 July 2012. The Wilsons were ordered to file and serve any counterclaim by 31 May 2012.

20 On 2 July 2012, the Wilsons issued a summons seeking an order under the Corporations Act 2001 (Cth) that Paul Annesley transfer to each of William Wilson and Peter Wilson 50 shares in PRH; that Paul Annesley cause PRH to pass resolutions appointing William and Peter Wilson directors of PRH and that Paul Annesley provide to the Wilsons documents evidencing the sale of the shares in PRH for $15m (or any other amount) in or about November 2011 or any time since then.

21 The Wilsons also sought an order that Paul Annesley swear an affidavit deposing as to the current status of the PRH share sale and the current status of the application by PRH to the Department of Primary Industries (DPI) for Work Authority Proposal no 1471 at the Nerlane land.

22 Peter Wilson swore an affidavit dated 2 July 2012 in support of the 2 July 2012 summons.[3] He deposed that in August 2009, his father, William Wilson, and he agreed with Paul Annesley that together they would enter into "joint ventures" to the effect alleged in the defence.

23 Peter Wilson described the agreement for the purchase and the sand mining of Nobles Road as the "Nobles Road venture." He said that Nobles Road was to be purchased in the name of APH.

24 He described the agreement for the purchase and sand mining of the Nerlane land as the "Lang Lang venture." He said that the PRH was incorporated for the purpose of carrying out the Lang Lang venture.

25 Peter Wilson deposed that the "Lang Lang venture" was documented in two deeds dated 31 August 2009. Peter Wilson deposed that the first deed provided that the funding for the purchase of the property was to be provided by Annesley; and that the town planning and licensing approvals in respect of the property were to be handled by the Wilsons.

26 Peter Wilson said that the second deed provided for the incorporation of PRH and for it to be substituted as the purchaser of the Nerlane land. The second deed also provided that Barry Moshel was to be appointed as a director of PRH and allocated a 10 per cent shareholding in PRH. He said that the remaining shares were divided 45 per cent as to Paul Annesley and 45 per cent as to the Wilsons, although all those shares were held by Moshel as nominee for the respective shareholder interests.

27 Peter Wilson said that a third deed was executed on 17 December 2009 in which the Wilsons and Paul Annesley indemnified Barry Moshel from all liabilities forever as a result of his entering into guarantee arrangements.

28 Peter Wilson deposed that on 24 August 2010, APH sold Nobles Road to the Barro Group for $7.3m, yielding a profit to APH of approximately $2.9m, which he calls the Nobles Road profit.

29 Peter Wilson said that APH has never properly accounted to the William and Peter Wilson for the profit derived by it from the sale of Nobles Road although APH has paid to the William and Peter Wilson $900,028 on 27 August 2010 (that is three days after the purchase and on-sale by APH of Nobles Road. Mr Wilson says that this sum appears in the table contained in the statement of claim as a particular of the advances allegedly made by the plaintiffs to the defendants.

30 Peter Wilson deposed that the proceeding seems to be largely concerned with the plaintiffs' alleged entitlements arising from the Nobles Road venture. Peter Wilson denied liability by his father and himself and foreshadowed the subsequently filed counterclaim seeking the taking of accounts and an inquiry into the entitlements of the respective parties arising from the joint commercial dealings.

31 Peter Wilson deposed that at the time of swearing the affidavit in July 2012the fate of the Lang Lang venture was unknown to him and his father. He said that on 17 November 2011, Paul Annesley attended at Peter Wilson's place of business and hand delivered a letter from Paul Annesley's solicitors concerning the proposed sale of the shares in PRH for $15m payable by way of a deposit of $4.5m (30 per cent) with the balance to be paid on 30 June 2012.

32 Peter Wilson says that notwithstanding his concern as to the accuracy of the figure of $300,000 presented as being owed by the Wilsons to Paul Annesley, he did not wish to impede the sale of shares in PRH that Paul Annesley had purportedly negotiated with the anonymous buyer, who the Wilsons were informed had set a deadline for acceptance of midday the next day. Peter Wilson says that he was prepared to accept Paul Annesley's assurance that he, Paul Annesley, would provide a proper accounting and that final figures with regard to their respective entitlements would be provided at an appropriate time.

33 Peter Wilson said that he and his father William Wilson reluctantly agreed to the sale. Peter Wilson claimed that since then, Paul Annesley and his solicitors have failed or refused to tell the Wilsons whether an agreement or contract evidencing the share sale exists or whether the share sale was proceeding or had been completed.

34 Peter Wilson said that on 27 April 2012 his solicitor wrote to Paul Annesley seeking proper accounting in respect of the profit derived by APH from the sale of Nobles Road, details of the alleged or proposed sale of shares in PRH, and a proper accounting as between the Wilsons and Paul Annesley in respect of the Nobles Road venture and the Lang Lang venture.

35 Peter Wilson then dealt with the dealings with the shares in PRH. He said that Paul Annesley had become the sole director (replacing Barry Moshel) and the holder of all 200 shares in the company.

36 Peter Wilson said that he and his father feared that Paul Annesley had covertly taken control of PRH and had taken a transfer of all the shares in the company in an attempt to preclude the Wilsons from exercising any control and obtaining any benefit that they may otherwise have derived from their 45 per cent interest in PRH from the share sale (if indeed there had been a share sale).

37 Peter Wilson deposed that as part of the Lang Lang venture PRH obtained options to purchase several pieces of land adjoining the Nerlane land, the purchase of which would make the venture more viable. He said that the option agreement with Donald Jeffrey and other surrounding landowners was not exercised on the due date and therefore the property being the subject of the option agreement was no longer in the control of PRH. Presumably, the option with Donald Jeffrey related to the Jeffreys land that adjoined the Nerlane land.

38 Peter Wilson said that if the option was not exercised then PRH would not have used some $2.4m of funds to purchase the Jeffery land and that he and his father Wilsons would be thus entitled to 45 per cent of the $2.4m that PRH would not have expended as a result of not exercising the option.

39 Peter Wilson said that his solicitor Robert Taylor demanded the transfer of the Wilson's shares in PRH to Paul Annesley be reversed so as to reinstate their interest in PRH. Peter Wilson said that what he and his father wanted was that the covert transfer of their shares in PRH to Annesley be reversed. Peter Wilson said that their view with regard to the sale of shares in PRH would depend on what they are finally told about the sale, if indeed a sale has occurred. Peter Wilson said, for example, if the sale of the Nerlane land was to proceed along the lines envisaged in the 17 November 2011 letter, he and his father would be content but at that stage they did not know whether the sale referred to in that letter had taken place and whether it remained the case that settlement was to proceed on 30 June 2012.

40 Peter Wilson said that on 26 June 2012, he was advised that the sale of the PRH shares by Paul Annesley had not been completed.

41 Peter Wilson claimed that the transfer of shares in PRH to Paul Annesley was oppressive and sought orders that the transfer be reversed so that their shareholding was restored to the position as it was in early February 2012.

42 Peter Wilson also sought an order on behalf of himself and his father that Paul Annesley provide an accounting in respect of both the Nobles Road venture and the Lang Lang venture. Peter Wilson said a mediation would be appropriate.

43 On 4 July 2012, the Wilsons' summons came on before Ferguson J. Annesley undertook pending the hearing and determination of the 2 July 2012 summons of the Wilsons that Annesley would not affect the transfer of any shares in PRH nor pass any resolutions affecting the number of directors or appointing new directors to that company.

44 On 7 August 2012 Defteros lawyers, the solicitors for Annesley, confirmed that whilst Paul Annesley was presently the registered owner of 100 shares in PRH that he in fact held 45 per cent of those shares on trust for the Wilsons in the same manner as they were previously held by Barry Moshel.[4]

45 The further hearing of the summons of 2 July 2012 was adjourned several times. On 7 September 2012, the Wilsons were given leave to amend their 2 July 2012 summons.[5] By the amendment they sought orders, inter alia, that Paul Annesley make file and serve an affidavit deposing as to and where appropriate exhibiting relevant documents to, the current status of:

(b) the application by PRH for Work Authority No 1471 at Lang Lang;

46 On 12 September 2012, Peter Wilson swore a further affidavit in support of the amended 2 July 2012 summons.[6]

47 Peter Wilson deposed that the joint venture between the Wilsons and Paul Annesley comprised:

(a) the incorporation of PRH to be the corporate entity to purchase and hold properties in Lang Lang on behalf of the joint venturers;

(b) an agreement dated 31 August 2009, under which PRH agreed to purchase land in Pioneer Road, Lang Lang from Nerlane (Land) Pty Ltd for $7.2m (the Nerlane Contract);

(c) a contract of sale dated 14 January 2010, under which PRH agreed to purchase land in Lang Lang (adjacent to the Nerlane land) from Maxwell and Lois Walker for $1.45m (the Walker contract);

(d) an Option Agreement dated 29 March 2010, under which PRH obtained an option to purchase land at Lang Lang (adjacent to the Walker land) with Donald Jeffrey and others (the Jeffrey Option Agreement); and

(e) a contract of sale dated May 2010, under which PRH purchased land in Lang Lang (adjacent to the Walker land) from Kathleen and Richard Westhead for $2,173,913 (the Westhead Contract).

48 Peter Wilson quoted from the joint venture agreement on the responsibilities of the parties to each other. Peter Wilson said that prior to November 2011, he and his father had fallen out with Paul Annesley. Peter Wilson said that since November 2011, Paul Annesley had failed to consult the Wilsons regarding the affairs of the joint venture and the conduct of PRH.

49 Peter Wilson said that he was informed by Tino Grossi the owner of the Nerland land that the purchase of the Nerlane was to be settled on 14 September 2012 and he believed that it would be immediately on sold. Mr Wilson said that PRH purchased and continued to own the Walker property and that the Jeffrey option had expired.[7]

50 Peter Wilson said that Paul Annesley had sought and obtained from the Westheads an extension of time within which to settle the Westhead Contract to January 2013.

51 Peter Wilson said that the application to the work authority for a licence to mine sand at Lang Lang had not progressed since at least November 2011.

52 On 12 September 2012, Paul Annesley swore and filed his first and only affidavit to date. Paul Annesley deposed that the contract of sale for 65 Pioneer Road Lang Lang (also known as the Nerlane land as the present owner is Nerlane Pty Ltd) was in the name of PRH. Paul Annesley said that APH was to supply the funding and the Wilsons were to facilitate the obtaining of town planning approvals and licensing for sand extraction.

53 Paul Annesley said that APH ultimately provided the funding, however, the Wilsons failed to obtain the town planning approvals and licensing. Paul Annesley deposed that the Nerlane land was due to be settled on 31 August 2012, however, this had not proceeded as PRH was no longer a party to the contract and did not have the ability to pay for the properties.

54 Paul Annesley deposed that PRH presently held one property 345 Westernport Rd Lang Lang (the Walker land) with a first mortgage to Central Victorian Investments Pty Ltd for $500,000 and a second mortgage to APH for $1,000,050.

55 Paul Annesley said that there were two other properties under contract:

(a) 325 Westernport Rd Lang Lang (the Westhead land) which had a contract that had been extended to 31 January 2013; and

56 Paul Annesley said that there were three further properties being 7, 9 and 25 Pioneer Rd Lang Lang that had options on them due to be exercised by March 2012, however these had ceased to be carried forward as PRH did not have the ability to pay for the properties.

57 Paul Annesley agreed with Peter Wilson that shares in PRH were to be held as Peter Wilson described in his 2 July 2012 affidavit.

58 Paul Annesley deposed that the property at Nobles Road was purchased in his name and that the Wilsons had no interest in it. He said that any alleged interest was lost on the basis of the Wilsons failing to secure the relevant town planning approvals and licences as agreed.

59 Paul Annesley said that Barry Moshel transferred the shares in PRH without his consent or the consent of the Wilsons.

60 Paul Annesley said that the properties to be purchased under options were two parcels of property. The first was the Flower Farm Property, for which the option was not settled. The second was 7, 9 and 25 Pioneer Road Lang Lang. Mr Annesley said the option was not settled.

61 On 13 September 2012, Peter Wilson swore an affidavit in response to Paul Annesley's affidavit.[8] He deposed to a conversation with Tino Grossi who owns Nerlane (Land) Pty Ltd. Mr Grossi said the sale was proceeding but not to PRH. Peter Wilson says that Paul Annesley had failed to provide information on the settlement of the Nerlane land.

62 Peter Wilson said that if PRH had nominated another party as the purchaser of the Nerlane land, then PRH effectively on-sold it. Peter Wilson said that it presumably did so for some consideration and that he and his father were not consulted, despite the fact that any such nomination or on-sale constituted the disposal of one of PRH's most significant assets, namely the right to purchase the Nerlane land.

63 Peter Wilson said that the nomination or on-sale of the Nerlane contract to a third party will or would significantly diminish the value of the other land and contracts which form part of the Lang Lang joint venture between Annesley and the Wilsons.

64 On 13 September 2012, the matter came on before Ferguson J. Her Honour made orders extending the time for mediation.

65 On 13 November 2012, the matter came on before me. I made orders that leave be given to add Barry Moshel as a third plaintiff by counterclaim and that a counterclaim in the form of exhibit PW 26 to the affidavit of Peter Wilson sworn 12 November 2012 be filed and served.

66 The counterclaim pleaded that Moshel held 200 shares in PRH as follows:

67 The counterclaim also alleged the existence of the joint venture agreement to purchase land in Lang Lang.[9] The joint venture involved improving the land's value by obtaining requisite town planning approvals and licences for the extraction of sand and the ultimate sale of the land at a profit. It was alleged that PRH was incorporated for the purpose of acquiring the land.

68 The counterclaim pleaded that on 31 August 2009, PRH entered into a contract of sale to purchase the Nerlane land for $7.2m with settlement to occur on 31 August 2012.

69 The counterclaim alleged that in or about December 2009, the Wilsons and Paul Annesley identified land adjacent to the Nerlane land that contained sand deposits. The Wilsons alleged that the 31 August 2009 agreement was varied to allow for further acquisitions by PRH on behalf of the joint venture.

70 The counterclaim alleged that on 14 January 2010, PRH entered into a contract of sale to purchase the Walker land for $1.45m and that purchase was completed on 17 May 2010.

71 The counterclaim alleged that the purchase of the Walker land was partly funded by a loan from Central Victorian Investments Pty Ltd to PRH for $500.000 secured by a second mortgage over the Walker land and by personal guarantees given by William Wilson, Paul Annesley and his wife, and Barry Moshel.

72 The counterclaim alleged that on 29 March 2010, PRH entered into an option agreement for the purchase of three blocks of land on Pioneer Road, Lang Lang including the Jeffreys land for $2.4m.

73 The counterclaim alleged that in May 2010, PRH agreed to purchase the Westhead land for $2,173,913 with settlement due on 7 September 2010.

74 The counterclaim alleged that sale of PRH for $15m as previously referred to and the Wilsons consent to the sale.

75 The counterclaim alleged that in breach of the 31 August 2009 agreement and the December agreement, since in or about 21 November 2011, Paul Annesley has conducted the affairs of PRH and the Lang Lang venture without reference to the Wilsons. Particulars were given. The counterclaim seeks damages, and transfer of 45 shares in PRH to each of Peter and William Wilson and 20 shares to Moshel. The counterclaim also seeks the taking of accounts and the making of inquiries.

76 On 12 November 2012 Peter Wilson swore his fourth affidavit in support of the summons.[10] He deposed that Barry Moshel had informed him that the February 2012 transfer of shares in PRH from Moshel to Paul Annesley was performed at Paul Annesley's request.

77 On 13 November 2013, I ordered that Paul Annesley be restrained until 4.00 pm on 20 November 2012, from dealing with, disposing of, changing or in any way encumbering the shares in PRH being the subject of the defendants' counterclaim.

78 On 20 November 2012 I ordered that the injunctive relief ordered in this proceeding on 13 November 2012 be extended until the hearing and determination of this proceeding or further order.[11] I also restrained Paul Annesley from dealing with or disposing of the assets of PRH until 4.15 pm on 21 November 2012.

79 On 21 November 2012, I ordered that:[12]

(a) Paul Annesley be restrained from disposing of, charging or in any way encumbering those shares in PRH being the subject of the defendants' counterclaim; and

(b) Paul Annesley depose to a number of matters including as to the current status of various contracts referred to in Peter Wilson's affidavit of 12 September 2012; the status of the share sale referred to in the November 2011 letter; whether Paul Annesley intends to repay or cause to be repaid the sum of $500,000 borrowed from Central Victorian Investments Pty Ltd; and details of the second mortgage given by PRH to APH.

80 Also on 21 November 2012, I made certain orders by consent. I made orders for the transfer of 20 shares in PRH to Moshel and 90 shares in PRH to Peter Wilson or his nominee, and for the doing of all things necessary to appoint Peter Wilson as a director of PRH.

81 I also ordered that until the transfer of shares had been completed Paul Annesley be restrained from dealing with or disposing of the shares in PRH other than in accordance with the order, and from dealing with or disposing of the assets of PRH.

82 The Wilsons allege that on 20 and 21 November 2012, Paul Annesley set out to defeat the orders that I made on 20 and 21 November 2012. The Wilsons allege that Paul Annesley sold PRH's major asset the Walker land to Fleurie for $860,000. As mentioned above, the Walker land was subject to a mortgage to Central Victorian Investments Pty Ltd for $500,000.

83 On 22 November 2012, a caveat no AK039192M was lodged over the Walker land on behalf of the Wilsons. The interest claimed was an interest in fee simple. The grounds were pursuant to a constructive and/or resulting trust of which the registered proprietor is trustee and the caveators are beneficiaries.[13] At the time the caveat was lodged, the Wilsons were unaware that Paul Annesley had arranged for PRH to sell the Walker land the next day.

84 On 26 November 2012 a withdrawal of caveat was filed withdrawing the caveat AK039192M. It was purportedly signed by RD Taylor & Assoc, the solicitors for the Wilsons.[14] Mr Taylor, the principal of RD Taylor & Assoc, has sworn that the withdrawal of caveat was not drawn or lodged by him or his agent Ms Ryan, despite the name of his firm appearing next to the words "signature of caveator".

85 The Wilsons contend that a Mr Collins who was acting for Fleurie produced the withdrawal of caveat to the solicitor for the mortgagee to enable Fleurie to complete the purchase of the Walker land from PRH.

86 Mr Merlo, a solicitor from Melbourne Legal Chambers, was acting for the proposed mortgagee of the Walker land. Mr Merlo informed the court on 20 December 2012 that on 21 November 2012, he attempted to lodge the mortgage over the Walker land. He said that he understood settlement had taken place the previous day on 20 November 2012. Mr Merlo informed the court that the mortgage was rejected by the titles office because of the caveat. Mr Merlo says that he then contacted Mr Collins, who was the representative of Fleurie with whom he was dealing. Mr Merlo said that he advised Mr Collins that he should take action to have the caveat removed. He said that subsequently, Mr Collins attended at Mr Merlo's office and delivered a withdrawal of caveat to Mr Merlo's staff together with the transfer of land and the mortgage.[15]

87 On 27 November 2012 PRH was placed into voluntary liquidation by Paul Annesley.[16]

88 On the basis of the evidence before me, on 20 December 2012, I ordered ex parte that:

(a) Fleurie (the third named defendant by counterclaim) and Wayne Collins (the fourth named defendant by counterclaim) be added as parties to the proceeding;

(b) Fleurie be restrained from dealing with 345 Westernport Road, Lang Lang (the Walker land);

89 On 25 January 2013, Wayne Collins swore and filed an affidavit in the proceedings.[17] He deposed that he was a director of Fleurie. Mr Collins deposed that Fleurie is the registered proprietor of the Walker land at 345 Western Port Road and the property at 65 Pioneer Road, being the Nerlane land. Fleurie became registered proprietor of both properties on 26 November 2012.

90 Mr Collins said that both properties are part of a joint venture with another company Australian Property and Finance Group Pty Ltd which is the purchaser of the property adjoining 345 Westernport Road, being 325 Westernport Road, the Westhead land. Mr Collins did not address his possession of the allegedly forged withdrawal of caveat. On 27 November 2013 Mr Schlicht, counsel for Mr Collins, informed the court that he had been instructed that the withdrawal was provided to Mr Collins. "It's located in his post box, his letter box."[18]

91 Subsequent to the joinder of Fleurie and Collins there were several attempts by the Wilsons to file and serve a statement of counterclaim against Fleurie and Collins. On 7 February 2013, I ordered that the plaintiffs by counterclaim serve any proposed amended counterclaim by 26 February 2013.[19] It will be recalled that I had ordered the joining of Fleurie and Collins as parties to the counterclaim without any pleading of a cause of action against them being filed at that time, based on the affidavit material filed.

92 On 4 March 2013, the Wilsons filed a proposed amended counterclaim that purported to plead a claim against Fleurie and Collins.[20] On 7 March 2013, Fleurie and Collins opposed the Wilsons' application for leave to file the proposed amended counterclaim on the basis that it did not disclose a proper claim against Fleurie and Collins. After a contested hearing, I refused leave to the Wilsons to file the proposed amended counterclaim on the grounds that it did not disclose a good cause of action against Fleurie or Collins. I gave leave to the Wilsons to file a further proposed counterclaim by 21 March 2013.[21] The plaintiffs by counterclaim failed to do so.

93 On 26 April 2013, I made orders by consent that the time for the Wilsons to serve a proposed counterclaim be extended to 17 May 2013.[22] I also directed that the proceedings be listed for directions and any subpoenas be returned on 31 May 2013. On 10 May 2013, the Wilsons issued subpoenas returnable on 31 May 2013 for production of documents:

(a) to the secretary of the Department of Environment and Primary Industries (DPI) to produce certain work authorities;[23]

(b) to Douglas Constable to produce documents relating to the sale by PRH to Fleurie of the Walker land;[24] and

94 On 10 May 2013, notices to attend for cross examination on 31 May 2013 were issued to Paul Annesley and Wayne Collins.[25]

95 By 17 May 2013, the Wilsons had failed to file and serve the proposed amended counterclaim. On 31 May 2013, the matter returned to court. Fleurie and Collins renewed their application to be removed as defendants to the counterclaim. Mr Taylor, solicitor for the Wilsons, applied for a further extension of time to file and serve the Wilsons' further amended counterclaim. Mr Taylor informed the court that it was imperative for the drawing and drafting of the counterclaim that he have access to the DPI files and the full transcript of the hearing of 7 March 2013. At that stage, the DPI had produced to the Wilsons for inspection the relevant files. No application was made that day to cross examine Paul Annesley or Wayne Collins even though they had been subpoenaed to attend for cross-examination

96 The court extended the time for the Wilsons to file and serve an amended counterclaim against Fleurie and Collins to 14 June 2013 and listed the matter for further hearing on 21 June 2013. Mr Taylor had informed the court that 14 days would easily be sufficient to file and serve the Wilsons' amended counterclaim against Fleurie and Collins.

97 By 21 June 2013, the Wilsons had failed to file and serve a proposed amended counterclaim against Fleurie and Collins. On 21 June 2013, the matter came on for directions. I ordered that unless the Wilsons file and serve a counterclaim against Fleurie and Collins by 28 June 2013, Fleurie and Collins be removed as parties to the proceeding. I further ordered that in the event that no counterclaim was filed the Wilsons pay the costs of Fleurie and Collins of and incidental to the proceedings, including reserved costs.

98 I gave reasons for my ruling. In those reasons I referred to the fact that Mr Taylor had informed me that he now had the material to support his allegation that Fleurie and Collins were involved in the alleged conspiracy to deprive the Wilsons of the benefit of the joint venture. I said in my ruling that the key to the case against Fleurie and Collins was the allegation that they were aware of the existence of the previous joint venture between the Wilsons and Paul Annesley. I also said that Mr Taylor had informed the court that he now had material from which the inference could be drawn that Fleurie and Collins were aware of the involvement of the Wilsons in the joint venture assets. It was argued that the inference may be sufficient to articulate a case that Fleurie and Collins were privy to or party to a conspiracy to deprive the Wilsons of their joint venture interest.

99 On 28 June 2013, the Wilsons filed an amended counterclaim.[26] On 25 October 2013, Fleurie and Collins issued a summons seeking orders that the proceedings as against Fleurie and Collins be dismissed and that the Wilsons pay their costs including reserved costs.[27] On 31 October 2013, Mr Taylor filed a notice of ceasing to act for the Wilsons and the plaintiffs by counterclaim.

100 On 11 November 2013, Fleurie and Collins sought orders under their summons of 25 October 2013. The Wilsons were represented by new solicitors MCP Commercial Lawyers. Mr Tragardh, counsel for the Wilsons, asked for an adjournment for 30 days to permit the new solicitors to familiarise themselves with the file. I reserved my decision on the adjournment application. On 18 November 2013, I granted the adjournment application but only to Wednesday 27 November 2013. On 27 November 2013 I heard the summons of 25 October 2013 and reserved my decision.

101 The essence of the submission by Fleurie and Collins is that the Wilsons failed to file and serve a counterclaim against them and that accordingly, they ought perforce the guillotine order be removed as parties to the proceedings.

102 Fleurie and Collins contend that the amended counterclaim filed on 28 June 2013 does not constitute a counterclaim against them. In argument Fleurie and Collins contended that the counterclaim is bound to fail as it does not disclose a good cause of action against them.

103 Mr Rodbard-Bean, counsel for the Wilsons, argued that a counterclaim was filed on 28 June 2013. Therefore the guillotine order is not enlivened. He said that if further particulars are required they can be requested.

104 As it is, no counterclaim was filed against Collins. Accordingly, the guillotine order should take effect and Collins should be removed as a party to the proceeding. For the reasons that follow, I agree that the counterclaim filed against Fleurie does not disclose a good cause of action. I do not agree, however, that the Wilsons failed to file a counterclaim against Fleurie. In my opinion, that the claim as filed has been demonstrated not to disclose a good cause of action does not, by itself, mean that the guillotine order of 21 March 2013 was enlivened.

105 In view of the arguments before me, it is appropriate for me to rule on whether or not the pleading discloses a good cause of action.

106 In undertaking that task the allegations of fact in the pleading are assumed to be true, for the purposes of argument only. As Williams states, the court is invited to strike out the claim on the ground that it is bound to fail even if all the allegations are proved.[28]

107 Under the amended counterclaim filed 28 June 2013, the Wilsons refer to and repeat paragraphs 5 and 6 of the defence.

(a) in or about August 2009, Annesley and the Wilsons entered into a number of agreements with regard to, inter alia:

(i) the purchase of Lots 1 and 2, 275 Nobles Road, Madewarre (Nobles Road);

(ii) and the purchase of land at Pioneer Road, Lang Lang (Lang Lang)

which broadly entailed the purchase of Nobles Road and Lang Lang (in the case of Lang Lang using PRH Road Holdings Pty Ltd as the purchasing entity), which purchases were to be funded by the plaintiffs and in respect of which the Wilsons would apply their expertise in matters of sand extraction such that Nobles Road and Lang Lang would yield the profit either from sand mining operations or by reason of their on-sale to a person or company interested in exploiting their sand resources; and

(b) any profit derived from the purchase and subsequent exploitation, or alternatively on-sale, of Nobles Road and/or Lang Lang would be divided evenly between the plaintiffs and the Wilsons.

109 In paragraph 6 of the defence, the Wilsons plead that in the course of dealings between the plaintiffs and the Wilsons in connection with their joint commercial endeavours, including but not limited to Nobles Road and the Nerlane land, monies were provided by the plaintiffs to the Wilsons for various purposes, some being loans and others being in respect of profit share from the purchase and on-sale of Nobles Road. The Wilsons say that the plaintiffs have failed to provide to the Wilsons an accounting in respect of the profits derived by the plaintiffs from the purchase and on-sale of Nobles Road, and in respect of the results of their joint commercial endeavours generally, despite numerous requests by the Wilsons that they do so. The Wilsons say that, thus, they cannot plead further to the allegations in paragraph 6 of the statement of claim until such time as the plaintiffs have provided proper accounting in respect to the amounts passing between the parties and the relative entitlements flowing to each of the plaintiffs and the Wilsons as a result of their joint enterprises.

110 Further and alternatively, the Wilsons say they will be in a position to respond to the allegations in paragraph 6 with greater particularity once they have received further and better particulars (in response to the Wilsons' request) and the plaintiffs' discovery.

111 In paragraph 4 of their proposed amended counterclaim, the Wilsons allege that in August 2009, they and Annesley entered into an agreement to purchase land in Lang Lang, Victoria (the August agreement) with the objective of improving its value by obtaining requisite town planning approvals and licences for the extraction of sand from the land and subsequently extracting sand therefrom, or by selling the land at a profit (the Lang Lang venture). They allege that PRH was incorporated for the purpose of acquiring the said land.

112 The Wilsons allege that there were terms of the August agreement, inter alia, as follows:

(b) Annesley and the Wilsons would add value to the land by arranging permits for extraction of sand and thereafter conducting sand extraction operations, and they would share in the profits; and

(c) Annesley would provide an initial deposit of $700,000, arrange for the funding for the purchase of the land and provide the funds required to obtain a work authority permit and planning permit for extraction of sand from the land, including the cost of consultants and further drilling of the land.

113 There were further terms of the agreement which are pleaded.

114 The Wilsons allege that on 31 August 2009, PRH entered into a contract of sale in respect of land pursuant to which it agreed to purchase from Nerlane (Land) Pty Ltd land at 65 Pioneer Road, Lang Lang (the Nerlane land) for $7.2m with settlement to occur on 31 August 2012.

115 The Wilsons allege that in or about December 2009, they and Annesley identified land adjacent to the Nerlane land that contained sand deposits and decided to cause PRH to purchase that land (being the Walker land) in addition to the Nerlane land. Accordingly, they say the August agreement was varied to allow for further land acquisitions by PRH on behalf of the Lang Lang venture in order to increase the size of the sand extraction project, which further land acquisitions Annesley agreed to fund on the same basis as they had agreed to provide funding pursuant to the August agreement (the December agreement).

116 The Wilsons allege that these arrangements gave rise to fiduciary duties owed by Annesley to the Wilsons.

117 The Wilsons allege that on 14 January 2010, in furtherance of the Lang Lang venture, PRH entered into a contract of sale pursuant to which it agreed to purchase from Maxwell and Lois Walker the Walker land for $1.45m and that purchase was completed on 17 May 2010.

118 The Wilsons allege that the purchase of the Walker land was partly funded by a loan from Central Victorian Investments Pty Ltd to PRH in the sum of $500,000 (the CVI loan) secured by a mortgage over the Walker land and further secured by personal guarantees given by William Wilson, Paul Annesley and his wife, and by Moshel. The Wilsons allege it was agreed between the Wilsons, Paul Annesley and Moshel that the CVI loan would be serviced by Annesley.

119 The Wilsons allege that on 29 March 2010, in furtherance of the Lang Lang venture, PRH entered into an option agreement pursuant to which it acquired an option to purchase three blocks of land on Pioneer Road, Lang Lang from the owners of that land, including Donald Jeffrey for $2.4m, such option to be exercised within 24 months of the date of the agreement (the Jeffrey option agreement).

120 The Wilsons allege that in May 2010, in furtherance of the Lang Lang venture, PRH executed a contract for the sale of real estate pursuant to which it agreed to purchase from Kathleen and Richard Westhead land at 325 Westernport Road, Lang Lang (the Westhead land) for $2,173,913 with settlement due on 7 September 2010 or within 30 days of the contract becoming unconditional, whichever was later (the Westhead contract).

121 The Wilsons allege that the Wilsons and Annesley were the beneficial owners of the assets of PRH and that PRH held them as trustee for each of the Wilsons and Annesley.

122 The Wilsons allege that from in or about June 2010, Paul Annesley experienced financial difficulties and APH went into liquidation. They allege that, in breach of his obligations under the August agreement and the December agreement, Paul Annesley was unable to:

(a) provide the funding required to initiate and progress PRH's application for the requisite mining licences, which was not commenced until August 2011, at which time the DPI allocated the work authority number 1471; or

(b) service or adequately service the debts of the Lang Lang venture.

123 The Wilsons allege that on 17 November 2011, Annesley's solicitors, Defteros Lawyers, wrote to the Wilsons advising that an unidentified person from New South Wales had expressed a commitment to purchase PRH for $15m payable by way of a deposit of $4.5m, with the balance to be paid on 30 June 2012. It was proposed that from the proceeds of the said sale, there would be a guaranteed minimum return to the Wilsons of $200,000 (the November proposal).

124 The Wilsons allege that they agreed to the November proposal, but the proposed purchase did not proceed.

125 The Wilsons allege that subsequent to November 2011, Annesley ceased to communicate with the Wilsons with respect to the Lang Lang venture or at all.

126 The Wilsons allege that on or about 16 February 2012, at Annesley's direction:

(a) Annesley replaced Moshel as the director of PRH; and

(b) Moshel transferred all 200 shares in PRH to Annesley

without the Wilsons' knowledge or consent, thus enabling Annesley to have control of the conduct of the affairs of the Lang Lang venture and PRH to the exclusion of the Wilsons.

127 The Wilsons allege that, in breach of the fiduciary duties owed by Annesley to them, from in or about August 2012, Annesley directed and engaged in a scheme with Collins (the scheme). Collins acted in his own capacity, or alternatively, in his capacity as the controlling mind of and agent for Fleurie. The objective of the scheme, so it was alleged, was to shift the assets of the Lang Lang venture and PRH away from PRH and his joint venture partners, the Wilsons, and to create an alternative joint venture arrangement. The new joint venture was to have the same aim, namely, to acquire the said properties at Lang Lang, obtain the requisite sand mining licence and then sell the combined land, together with the licence, at a profit, or to conduct profitable sand mining operations thereon.

128 The Wilsons allege that the scheme comprised a conspiracy between Annesley, Collins, Fleurie and others, including Douglas Constable (Constable) and his company, Australian Property and Finance Group Pty Ltd (AFPG), insofar as it was the intention of the participants of the scheme to deprive the Wilsons of the benefits of the joint venture and to obtain a benefit for themselves (the conspiracy).

(a) was at all material times the sole director and shareholder of AFPG;

(b) was appointed the sole director of Fleurie and acquired all the shares in Fleurie on 5 April 2010;

(d) carries on the business of Quick Fix Solutions which specialises in advising persons experiencing financial difficulties;

(e) had knowledge of the joint venture between the Wilsons and Annesley since in or about February 2012 because at that time he assisted Annesley and APH by lodging a caveat on APH's behalf over the Walker land then owned by PRH for the benefit of the Lang Lang venture;

(f) in June 2012, assisted Annesley and PRH by lodging a caveat on behalf of PRH on the Nerlane land in order to secure the deposit paid by Annesley in respect to the proposed purchase by PRH of that land for the benefit of the Lang Lang venture;

(g) in November 2012, Constable assisted Annesley by lodging a caveat over land owned by William Wilson (which caveat was removed by order of the Court made 5 December 2012 on the basis Annesley had no caveatable interest in that land);

(h) was reinstated as the director of Fleurie on 1 May 2013; and

(i) ceased to act as the director of Fleurie on 1 May 2013.

130 The Wilsons allege that from in or about December 2011, Paul Annesley failed or refused to provide any information to the Wilsons regarding the Lang Lang venture despite their numerous requests that he do so.

131 The Wilsons allege that the scheme and conspiracy commenced in August 2012 at the latest because in August 2012 the nomination form referred to later was executed.

132 The Wilsons allege that in or about August 2012, there were discussions between Paul Annesley, Collins as agent for Fleurie, and Constable, whether in his own capacity or as an agent for AFPG of which he was and is a director, concerning how each of the pieces of land at Lang Lang could be acquired by entities other than PRH.

133 The Wilsons allege that on 20 August 2012, a nomination form was executed by Paul Annesley and Constable pursuant to which PRH nominated AFPG as the purchaser of the Westhead land.

134 The Wilsons say that in the event that the nomination form was executed on 20 August 2012, its existence was concealed from both the Wilsons and the Westheads until early December 2012.

135 The Wilsons allege that in or about August 2012, Paul Annesley, on behalf of PRH, and Fleurie entered into a contract for the sale of land, or alternatively an agreement, in respect of the sale of the Walker land by PRH to Fleurie.

136 The nomination form and the sale of the Walker land to Fleurie were interdependent by reason of the subdivision requirements in respect of the Westhead land. Therefore, as at that time, Annesley, PRH and AFPG had negotiated to move all the assets of PRH into a new vehicle or venture, as is evidenced by the new joint venture agreement referred to earlier.

137 In substance, the Wilsons' claim was initially that Annesley had not properly performed the joint venture agreement between them and was not properly accounting to them for profits made on the sale of the Nobles Road land.

138 As the litigation progressed, the Wilsons became aware that other property at Lang Lang in which PRH had an interest has been transferred to another company, Fleurie.

139 The Wilsons allege that Fleurie has acquired assets in which the Wilsons had a beneficial interest.

140 The Wilsons claim by counterclaim that, by reason of the Wilsons' beneficial ownership of the assets of PRH, they seek a declaration that PRH is and has at all material times been seised of the beneficial estate and is entitled to a legal estate in fee simple in respect of the Walker land and the Nerlane land.[29]

141 The Wilsons also seek an order that Fleurie forthwith transfer the Walker land and the Nerlane land to PRH, and a declaration that Fleurie holds the Walker land and the Nerlane land wholly or in part as constructive trustee for PRH.[30]

142 The essence of the claim against Fleurie is that Fleurie purchased the Walker land. The allegation is that Fleurie forged a withdrawal of caveat, which caveat had been lodged by the Wilsons over the Walker land. Previously, on 14 January 2010, PRH had agreed to purchase the Walker land for the purposes of the Lang Lang venture.[31]

143 The main allegation against Fleurie is that Paul Annesley engaged in a scheme with Fleurie (through Collins) to shift the assets of the Lang Lang venture and PRH away from PRH and the Wilsons and create an alternative joint venture arrangement with the same aim, namely, to acquire the properties at Lang Lang and obtain the necessary sand mining licences.

144 The Wilsons allege that the scheme comprised a conspiracy between Paul Annesley, Collins, Fleurie and others including Constable, as it was the intention of the participants of the scheme to deprive the Wilsons of the benefits of the joint venture and to obtain the benefits for themselves.[32]

145 Fleurie contends that there is no allegation that it knew of the existence of the joint venture between the Wilsons and Paul Annesley.

146 The Wilsons allege that the Wilsons and Annesley were the beneficial owners of the assets of PRH and PRH held them as trustee for each of the Wilsons and Annesley. This allegation is not of a material fact but of a conclusion that would arise from other material facts. There is no reference to a trust deed, or an agreement or some other facts that would create the relationship of trustee and beneficiary. The material facts from which one could conclude that a trustee relationship existed have not been pleaded.

147 In my view, the pleading fails to disclose a good cause of action because it fails to properly plead the trustee relationship of PRH to the Wilsons and Annesley. Annesley has admitted that shares in PRH are held on trust for the Wilsons but makes no such admission about the assets of PRH.

148 I turn now to the alleged conspiracy. In CC Containers Pty Ltd v Lee[33] Ferguson J dealt with the pleading requirements where a conspiracy or fraud is pleaded. Her Honour dealt with the relevant principles as follows:

"[6] A pleading must contain in summary form a statement of all the material facts on which the party relies.[34] The Court has a discretion as to whether to allow a pleading to be amended. Where there is no prejudice, amendments are generally allowed.[35] On a strike out application or where leave to amend is opposed, it is assumed that the matters pleaded can be proven.[36] If the case pleaded is arguable, that is all that is required to permit the amended pleading to be filed. Its ultimate success or failure is a matter for determination at trial.[37]

[7] There are two reasons why material facts must be pleaded. First, such a pleading enables a party's opponent and the Court to know what the case is that is to be met. Secondly, it discloses whether the party has a claim or defence (whichever may be the case) which is known to law.[38] In more recent times, courts have been more willing to allow a pleading to stand if these prerequisites are satisfied when the pleading and particulars are read together.[39] Nevertheless, what the contended case is must be pleaded and the pleading must disclose a complete cause of action.

[8] It is well established that fraud and conspiracy are allegations which should not be made lightly.[40] Allegations of criminality, fraud or serious wrongdoing must be pleaded with precision and sufficient supporting particularity.[41] The rules of Court require that particulars be given of any fraudulent intention that is alleged.[42]

[9] The discretion to allow a proposed amendment is unlikely to be exercised if the proposed amended pleading would be liable to be struck out. In this regard, the relevant principles are well known. A pleading will be struck out if it is:

... 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them (the pleadings) to stand would involve useless expense'.[43]

[10] In Dey v Victorian Railways Commissioners,[44] Dixon J said:

'A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.'[45]

[11] Conspiracy may take one of two forms:

(1) an 'unlawful means' conspiracy in which the participants combine together to perform acts which are themselves unlawful; and

(2) a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant.[46]

[12] The learned authors of Bullen & Leake & Jacob's Precedents of Pleadings identify the necessary elements that must be pleaded where the tort of conspiracy is alleged:

(a) a combination or agreement between two or more individuals (required for both types of conspiracy);

(b) an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type (2) above);

(c) pursuant to which combination or agreement and with that intention certain acts were carried out;

(d) resulting loss and damage to the claimant. [47]

[13] A conspiracy can be proved without evidence of an express agreement:[48]

A court is entitled to have regard to the overt acts pleaded, and to Infer from those acts that there was an agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert.[49]

[14] An intention to injure is an important part of establishing the tort of conspiracy. In this regard, a conspiracy to injure a person is distinguishable from an agreement to do an unlawful act that results in damage to that person."[50]

149 The central allegation against Fleurie is in paragraph 17. The Wilsons allege that:

In breach of the fiduciary duties, from in or about August 2012 Annesley directed and engaged in a scheme, with Collins in his own capacity further and alternatively in his capacity as the controlling mind of and as agent for Fleurie, to shift the assets of the Lang Lang venture and PRH away from PRH and his joint venture partners, the Wilsons, and to create an alternative joint venture arrangement with the same aim, namely to acquire the said properties at Lang Lang, obtain the requisite sand mining licence and then sell the combined land together with the licence at a profit, or to conduct profitable sand mining operations thereon (the Scheme).

150 Assuming for the purpose of analysis only, that Collins was the controlling mind and agent of Fleurie, the essential fact that needs to be pleaded and established is that Collins was aware of the joint venture between the Wilsons and Annesley, its essential features and that it had not been terminated. It may be sufficient, to establish the cause of action, that Fleurie was aware that Annesley was in a joint venture with another person rather than specifically the Wilsons. Unless Fleurie was aware of the joint venture between Annesley and the Wilsons or perhaps of a joint venture with another unknown person, there could be no intention to injure the Wilson or that unknown person.

151 There is no allegation that Collins knew of these matters or any of them. There are allegations about Constable. It is not alleged however that Fleurie was a party to the conspiracy through the knowledge of Constable. Even if it was alleged that Fleurie obtained knowledge of the joint venture between Annesley and the Wilsons through Constable, the only matter pleaded raising a connection between Annesley and the Wilsons is the allegation that Constable assisted Annesley by lodging a caveat over land owned by William Wilson. In my opinion, that is not sufficient to raise knowledge of the joint venture.

152 An alternative claim is made against Fleurie based on the forged withdrawal of caveat. Putting to one side whether knowledge of the forgery would be sufficient to enliven s 43 of the Transfer of Land Act to enable PRH to recover the land, and the standing of the Wilsons to make such a claim, there is no allegation that Collins knew that the withdrawal of caveat was forged.

153 Further again, the Wilsons allege that by reason of the fraud, further or alternatively conspiracy, Fleurie holds the Walker land and the Nerlane land wholly or in part as constructive trustee for PRH.

154 It appears therefore that in addition to alleging the tort of conspiracy, the Wilsons are also seeking to raise a Barnes v Addy[51] claim presumably based on knowing receipt by Fleurie of trust property being the Walker land and the Nerlane land or by knowing participation by Fleurie in a breach of trust by Annesley in disposing of joint venture assets to Fleurie. The first point to note is that none of these allegations are in fact pleaded. Rather, the pleading merely alleges a legal conclusion without pleading the material facts that support the conclusion.

155 As the High Court has held in Farah Constructions Pty Limited v Say-Dee Pty Ltd (Say-Dee),[52] there are several types of knowledge that may establish knowing participation (known as the second limb of Barnes v Addy). As it is, the Wilsons have not alleged any of these types of knowledge as material facts. On the second limb of Barnes v Addy, knowing participation, the High Court held that relevant knowledge could be established in the following categories:[53]

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

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

The Court held that in terms of the second limb, it would not be sufficient to establish the fifth category of knowledge; knowledge of circumstances which would put an honest and reasonable man on inquiry. Similarly, there is no plea of the knowledge or notice of the trust by Fleurie to enliven the first limb of Barnes v Addy. In Bell Group v Westpac Banking,[54] Owen J held that a third party is taken to have known of the trust and of the misapplication of trust property in the relevant sense in the first four categories of Baden v Societe Generale pour Favoriser le Development du Commerce et de l'Industrie en France SA (Baden),[55] which are those referred to above.

156 There has been no attempt to plead actual knowledge or constructive knowledge in the sense laid down in the first four categories in Baden and in Say-Dee to establish the first or second limb of Barnes v Addy.

157 In my view, the pleading does not plead material facts that would give rise to a constructive trust.

Second Plaintiff v WILLIAM WILSON

At a glance

Court

Decision date

Before

Source

Judgment (236 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (6)