Sondakh v Herliman

Summary judgment/or summary dismissal

1. The third defendant seeks that the plaintiff's claim against her be dismissed pursuant to UCPR 13.4 or struck out pursuant to UCPR 14.28.
2. Rules 13.4 and 14.28 of the Uniform Civil Procedures Rules 2005 (NSW) ("UCPR") read: "13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings- (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading - (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)."
3. UCPR 14.28 enunciates grounds, upon which a defective pleading may be struck out. UCPR 13.4 focuses on the weakness of a party's case rather than the defects of a pleading: see Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937.
4. The present application needs to be approached upon the basis that a very clear case is required before summary dismissal is granted, and that the power to make such an order should be sparingly employed: see Dey v Victorian Railway Commissioners (1949) 78 CLR 62 ("Victorian Railway") at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 ("General Steel") at 129; Webster v Lampard (1993) 177 CLR 598 at 602-603.
5. The test to be applied by a court when considering summary dismissal is clear. It has been expressed as a claim being "so obviously untenable that it cannot possibly succeed", "manifestly groundless", or "so manifestly faulty that it does not admit of argument": see General Steel at 128-129. In Victorian Railway at 91 Dixon J observed that before summary intervention can be justified, the case must be a very clear one and there must be no real question of fact or law to be determined.
6. By bringing an application for summary dismissal, the defendants undertake the burden of establishing that there is no triable issue: see Wickstead v Browne (1992) 30 NSWLR 1 at 11. The General Steel test remains the primary touchstone for such an application. The mere fact (if it be the case) that a plaintiff's prospects of success might be characterised as slim would not be enough to strike out a pleading: see Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at [73]; Preston v Star City Pty Ltd [1999] NSWSC 1273 at [31].

The proposed amendments in the PFASC

1. The proposed amendments pleaded against the third defendant involve the allegations against the second defendant at [6] and the allegations against the third defendant at [7] to [10]. They fall into two categories, first is what I will refer to as the 'Power of Attorney allegations' and the second as the 'change of password allegations'. The proposed amendments are in bold. The personal bank details of the plaintiff have been anonymised by way of XXX. Paragraph 6 reads: "The Second Defendant 6. On or about 8 February 2012, Second Defendant Maddock, in fraud upon the Plaintiff: (i) falsely represented by certificate in writing that she had witnessed the execution of the Purported Power of Attorney by the Plaintiff in circumstances where the Plaintiff did not so execute the Purported Power of Attorney, whether in the presence of the Second Defendant Maddock or otherwise; (ii) falsely represented by certificate in writing that she had explained the effect of the Purported Power of Attorney to the Plaintiff when she had not so explain explained the effect of the Purported Power of Attorney.
2. The plaintiff's allegations against the third defendant are as follows: The Third Defendant 7. At all material times the Third Defendant ("Kessegian") was acquainted with the Plaintiff and the First Defendant Herliman. 8. In or about 2012 the third Defendant Kessegian falsely in fraud upon the Plaintiff represented to the Second Defendant Maddock: (i) that the Third Defendant Kessegian was the accountant for the Plaintiff; (ii) that the Plaintiff required that the Second Defendant Maddock provide to the First Defendant Herliman an unexecuted power of attorney which, when executed, would give to the First Defendant Herliman power of attorney on behalf of the Plaintiff. 8AA As at 8 July 2014 the Plaintiff was the operator of Westpac Bank Account Number XXX XXX. 8AB On or about 8 July 2014, without the knowledge of the Plaintiff, Kessegian falsely and in further fraud upon the Plaintiff: (i) in telephone communication with Westpac represented to Westpac that she, Kessegian, was the Plaintiff; (ii) that the Plaintiff wished to change the Plaintiff's password which operated the Plaintiffs Westpac Account Number XXX XXX. 8AC On or about 8 July 2014, by reason of the fraudulent actions of Kessegian pleaded in paragraph 8AA above, Westpac created a new password with respect to the Plaintiff's Westpac Account Number XXX XXX and thereafter forwarded the new password to email address XXX XXX XXX which email address was operated by Herliman and which email address was unknown to the Plaintiff. 8AD Thereafter Herliman, without the knowledge of the Plaintiff, by use of the new password, fraudulently withdrew funds from the Plaintiff's Westpac Account Number XXX XXX no less than the sum of $420,349.21 8AE By reason of the matters pleaded in paragraphs 8AA, 8AB, 8AC, 8AD and 8AE, the Plaintiff has suffered loss and damage. 8A The representations pleaded in paragraph 8 hereof were false and fraudulent. Particulars of Falsehood and Fraud (i) The Third Defendant Kessegian knew that she was not the accountant for the Plaintiff. (ii) Kessegian was aware that the Plaintiff did not require that the Second Defendant Maddock provide to the First Defendant Herliman an unexecuted power of attorney or, in the alternative, was recklessly indifferent as to whether the Plaintiff required that Maddock provide Herliman with an unexecuted power of attorney. 9. By reason of, and in reliance upon, the representations pleaded in paragraph 8 hereof, the Second Defendant Maddock: (i) supplied to the First Defendant Herliman an unexecuted power of attorney naming the First Defendant Herliman as the attorney for the Plaintiff which document the First Defendant Herliman thereafter, on or about 8 February 2012, forged with the apparent signature of the Plaintiff; (ii) was induced to make and made the representations pleaded in paragraph 6 hereof. 10. By reason of the matters pleaded in paragraphs 3, 4, 5, 6, 7, 8, 8A and 9 the first Defendant Herliman was, from or about from 8 February 2012, able to hold himself out as the attorney of the Plaintiff and thereafter did so hold himself out as the attorney of the Plaintiff.

The pleading of fraud

1. An allegation of fraud is required to be pleaded specifically and particularised, including to make clear precisely which aspect of the "fraudulent conduct" is causative of the loss: Nadinic v Drinkwater [2017] NSWCA 114, [45]-[49], [155].
2. UCPR 15.3 reads: 15.3 Allegations of behaviour in the nature of fraud

A pleading must give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies.

1. UCPR 14.14 reads: 14.14 General rule as to matters to be pleaded specifically (1) In a statement of claim, the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise. (2) In a defence or subsequent pleading, a party must plead specifically any matter-- (a) that, if not pleaded specifically, may take the opposite party by surprise, or (b) that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or (c) that raises matters of fact not arising out of the preceding pleading. (3) Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud, performance, release, statute of limitation, extinction of right or title, voluntary assumption of risk, causation of accident by unknown and undiscoverable mechanical defect and facts showing illegality.

The relevant evidence so far

1. The plaintiff relies upon a statement by the second defendant, a solicitor, dated 30 May 2019, and an email by the first defendant addressed to the third defendant dated 8 July 2014.
2. The second defendant has provided a discretionary statement to the Legal Services Commissioner dated 30 May 2019. She says: "My signature appears on the Enduring Power of Attorney bearing date 8 February 2012 as having witnessed the signature of Fanya Sondakh. In the circumstances which I detail below I confirm that she did not sign the document in my presence and to that extent the statements to that effect in the form and in the Certificate under s 19 of the Powers of Attorney Act 2003 are incorrect. The handwriting on the Enduring Power of Attorney is mine. I did not procure the registration of the Enduring Power of Attorney on 4 April 2013 or at all. Prior to the execution of the Revocation of the Enduring Power of Attorney by Fanya Sondakh, in my presence, on 4 December 2017, I had not personally met with her. The handwriting on the Revocation Document is mine." As part of the disclosure made by Mr Pearson he makes reference to conveyancing transactions involving a mortgage said to have been entered into by Fanya Sondakh executed by her attorney. I was not aware of any such transactions and as far as I can recollect no mention was made of those transactions at the time of the meeting on 4 December 2017- The only persons that I had met were Vincentius Herliman and Takouhi Kessegian (Emphasis added) At the time of entry into the Enduring Power of Attorney my recollection is that the sequential circumstances were as follows: 1. (Omitted - irrelevant to the present application) 2. Takouhi Kessegian approached me with a view to an Enduring Power of Attorney being executed by Fanya Sondakh in favour of her husband, Vincentius Herliman. Takouhi Kessegian had previously made it known to me that she was acting as Fanya Sondakh's accountant and the accountant for The Awesome Church. I was led to believe by Takouhi Kessegian that she was at the time a Certified Practicing Accountant. 3. I met with Takouhi Kessegian and Vincentius Herliman in relation to the preparation of the Enduring Power of Attorney and said that I would require Fanya Sondakh to attend so that I could explain to her the nature and operation of the document which I had written out by way of completion of the printed form. 4. Vincentius Herliman advised me, I recollect in the presence of Takouhi Kessegian, that Fanya Sondakh was suffering from severe migraines and was unable to attend with me, requesting that I make the document available and he would have his wife Fanya Sondakh sign the document. 5. After much pressure from both of Takouhi Kessegian and Vincentius Herliman, I agree to this course. Vincentius Herliman produced a detective badge in a wallet with his identification. 6. Subsequently, Vincentius Herliman, returned the Enduring Power of Attorney executed, I believed, by Fanya Sondakh. At that time it had not been witnessed or certified. 7. I believing that it was Fanya Sondakh's signature and quite incorrectly, thereafter put my signature on the Enduring Power of Attorney as a witness and executed the Certificate.
3. In the voluntary disclosure Ms Maddock expressed remorse for what she described as her "error of judgment".
4. The email from the first defendant to the third defendant is dated 8 July 2014. Its subject is "Favor please", and it is marked as being of high importance. It reads: "Good morning Takouhi, Thank you for chatting with me this morning, was fun as always to tease you around in the morning. Takouhi, I need another favor from you if you don't mind that I need this to be done as soon as possible. I need you to ring Westpac Online Banking on 1300 655 505 as I have made mistakes on the password and they lock the account. I know this is silly but I don't want Fanya to know as she will think that her ID is stolen (I handled all the online banking issue here at home as Fanya don't want to deal with it). She has severe headache last night so I told her to sleep. The details what I will give you is in confidence as usual and these are some of the questions they might ask you to verify which I always know with Fanya's account: Name: XXX XXX DOB: XX XX XX Place of birth Surabaya Indonesia Mother's Maiden Name is XXX Phone Banking password might not remember this but l think XXXX Account Number is: XXX XXX BSB: XXX XXX Branch: XXX Internet banking account: XXX XXX I need to reset the password and if they asked where is the password can be send through is to XXX XXX. Also they will need you to verify what is the latest purchases or transfer, please tell them these: Yesterday at Woolworth Northbridge Shopping XX Last Thursday July 3rd spent approx XXX at Ella Rouge Then Friday July 4"1 there were withdrawal of XXX by cheque. Last month June 5th there were withdrawal of $200K by cheque I think these should be sufficient information to convince them that you are the account holder. I am sorry if I asked you to do this and if you don't mind after you are done please disseminate this email so that not traceable. Thank you so much for your kind help and really appreciate it, Fanya is too excited to go to NZ as she has been dreaming to go back there. Fortunately God gave us the opportunity to go all paid for therefore we asked you to come to enjoy it as well. Please let me know with the outcome we will be leaving on October 3rd back November 1st. I speak to you later & thank you once again, God bless you always. Kind regards, Vincent Herliman"
5. A request for details in relation to the change of password was made to Westpac. An audit by Westpac showed that the password for the account was changed on 8 July 2014, the same date as the email.

The third defendant's submissions

1. The PFASC alleges that the third defendant made false statements which led to the provision of an unexecuted power of attorney ("Power of Attorney Claim").
2. The plaintiff alleges that the power of attorney was fraudulently executed, witnessed and used to carry out fraudulent transactions in the plaintiff's name.
3. Even if the false statements were made by the third defendant (which is denied), those statements can be said to have caused, at most, a blank power of attorney to be provided to the first defendant. The existence of the blank power of attorney caused no loss. That document could have been drafted by any solicitor, or obtained from other sources, at any time and with any names identified on them, without a fraud arising.
4. It was the false execution, witnessing and use of the document which, if proven, comprises the fraud.
5. The plaintiff seeks damages as her remedy as against the third defendant. It is the function of common law causation that the plaintiff must prove that every item of loss for which she claims damages is connected to the third defendant's wrong in the sense that the wrong caused or materially contributed to that loss: Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613, at [43].
6. Even if the Power of Attorney Claim was capable of being repleaded (which is denied), further opportunity to the plaintiff to do so is unlikely to render the desired result and is likely to cause the third defendant further prejudice and undue expense.
7. In addition to the Power of Attorney Claim leveled against the third defendant by way of the amended statement of claim, the principal amendment of the PFASOC is leveling a new, factually distinct claim against the third defendant relating to the alleged changing of a bank password ("Bank Password Claim"). For abundant clarity, the third defendant denies this claim.
8. The plaintiff deposes in paragraphs 11 to 16 of the First Gubbay Affidavit sworn 17 July 2021 that the Bank Password Claim has been added to the pleading primarily in reliance on two newly discovered documents, first, an email discovered by NSW Police as part of an investigation (see annexure J, p 44), and second, a bank cheque (see annexure M, p 49).
9. In the first document, NSW Police's representative states: "I just wanted to confirm that we have had the remaining devices analysed. There is a considerable amount of data on these which I am yet to review. Of interest I found this email below on one (sic) the devices."
10. Evidently, NSW Police's investigation is at a preliminary stage. The email uncovered by NSW Police is provided by way of 'interest' only. The email notes "a considerable amount of data" which has not been reviewed. The email provides no commentary or findings around the email uncovered. Aside from the email address bearing the third defendant's name (a feature not determinative of ownership of the email account - as the PFASOC itself identifies at [8AC]), NSW Police does not identify it to be an email account owned by the third defendant. There is no direct evidence of the serious fraud alleged in paragraph 8AB of the PFASOC, that the third defendant fraudulently impersonated the plaintiff to procure the change of the plaintiff's bank account password. To the contrary, the bank's solicitors have indicated that: "Our client's audit logs suggest that the password for the Account was changed on 8 July 2014. We are instructed that our client is unable to retrieve any further information from the audit logs regarding the password change, including who requested or performed it": (see annexure L, p 48 of the First Gubbay Affidavit).
11. The second document appears to be a screenshot of a bank cheque which is largely illegible, the circumstances surrounding which are unclear and are not pleaded or particularised in the PFASOC.
12. The Bank Password Claim is prematurely brought and incompletely pleaded.
13. The third defendant, a natural person, submitted that she has already incurred costs of approximately $37,000 in responding to a claim which is yet to be properly particularised with any certainty or finality: lacono Affidavit 11 August 2021, [8]. Those costs have been thrown away and, unless otherwise ordered, will not be payable until the conclusion of the proceedings pursuant to Uniform Civil Procedure Rules 2005 ("UCPR") r 42.7(2),

Changes in paragraphs 7 and 10 of the PFASOC

1. The changes in paragraphs 7 and 10 are wholly cosmetic being simple changes to the descriptions of the defendants from their "defendant number" to their respective names.
2. Changes in paragraphs 8 and 8A of the PFASOC
3. The changes in paragraph 8 of the PFASOC are insubstantial.
4. The changes in paragraph 8A are partly in the nature of clarification but make some changes of substance.
5. The current pleading in paragraph 8 is that "in about 2012 the third defendant falsely represented" certain things to the second defendant i.e. Dora Maddock), those things being that: 1. Kessegian was the accountant for the plaintiff; and 2. that the plaintiff required that Maddock provide the first defendant (Mr Herliman) with an unexecuted power of attorney which, when executed, would give the first defendant power of attorney on behalf of the plaintiff.
6. The proposed pleading in the PFASOC changes the prefatory words quoted in paragraph 5.6 by addition of the words "in fraud upon the Plaintiff" so that the paragraph will read: "In or about 2012 Kessegian falsely in fraud upon the Plaintiff represented to Maddock"
7. It is submitted that the previous use of the word "falsely" was sufficient to allege fraud, but the additional words put that matter beyond question (if there was ever any genuine doubt).
8. The same applies to the addition of the words "and fraudulent" in paragraph 8A of the PFASOC.
9. The same also applies to certain of the other changes to paragraph 8A being: 1. the proposed pleading that the third defendant knew that she was not the accountant for the Plaintiff (which would seem to be axiomatic but, is now articulated expressly); 2. the proposed alternative particular that the third defendant was recklessly indifferent to the fact that the plaintiff did not seek the provision of a form of power of attorney.
10. On the case to be prosecuted by the plaintiff the third defendant played a significant role in that loss.

Addition of paragraphs 8AA, 8AB, 8AC, 8AD and 8AE of the FASOC

1. The matters sought to be added by paragraphs 8AA, 8AB, 8AC, 8AD and 8AE of the PFASOC arise as a result of new information coming into the hands of the plaintiff in July 2021.
2. Mr Gubbay's Fourth Affidavit sworn on 17 July 2021 discloses the following: 1. On 8 July 2014 the first defendant forwarded an email to the third defendant requesting that the third defendant impersonate the plaintiff for the purpose of changing the plaintiff's password on the plaintiff's bank account (Annexure J, page 44). 2. On that date, 8 July 2014, the plaintiff's password on her bank account was changed (Annexure L, page 48). 3. On 11 July 2014 a forged cheque in favour of the third defendant, about which the plaintiff had no knowledge until the current proceedings, in the sum of $23,100, was drawn on the plaintiff's bank account (Annexure M, page 49).
3. The above circumstances are more than sufficient to plead the claim now sought to be prosecuted against the third defendant in respect of paragraphs 8AA to 8AE.
4. So far as the defendant's submissions in relation to the claim being statute barred, the plaintiff submitted: firstly, the onus for establishing the expiry of limitation periods falls upon the party alleging the expiry of the limitation period; and secondly, the time limits in respect of allegations of fraud run from the time that the fraud is discovered or ought to have been discovered, not from the date of the fraud and not even necessarily from the date of damage (see Limitation Act 1969 (NSW), s 55).

Resolution:

1. The third defendant has actual knowledge of what occurred in relation to the meeting with the second defendant as she approached the second defendant with a view to have an Enduring Power of Attorney being executed by the plaintiff in favour of her then husband. The first defendant was also present at that meeting.
2. The second defendant says she met with the third defendant and the first defendant in relation to the preparation of the Enduring Power of Attorney and said that she would require the plaintiff to attend so that she could explain to her the nature and operation of the document which she had written out by way of completion of the printed form. She says that the first defendant advised her, in the presence of the third defendant, that the plaintiff was suffering from severe migraines and was unable to attend the meeting. The first defendant requested that the second defendant make the document available to him and he would have his wife, the plaintiff, sign the document. The second defendant says that after much pressure from both the third defendant and the first defendant, she agreed to this course.
3. My view accords with the decision of Brereton JA in Banks v Alphatise Pty Ltd [2014] NSWSC 1437 ("Alphatise") on the basis that actual knowledge, or the state of the defendant's mind, is something that is primarily in the knowledge of the defendant. Therefore I reject the defendant's submission that the plaintiff has not properly pleaded knowledge. A defendant does not require particulars in relation to an allegation where they are said to have actual knowledge in order to know whether or not to admit that knowledge. Their knowledge, or lack thereof as it may be, is contained within their own mind. It might ultimately be proven by documents elicited in the course of discovery or by admissions in cross examination. It might be inferred by other matters but they are all matters of evidence which inform the material fact of actual knowledge.
4. Further, if the third defendant is alleging that the plaintiff's claim is statute barred, firstly, the onus for establishing the expiry of limitation periods falls upon the party alleging the expiry of the limitation period; and secondly, the time limits in respect of allegations of fraud run from the time that the fraud is discovered or ought to have been discovered, not from the date of the fraud, and not even necessarily from the date of damage (see Limitation Act 1969, s 55).
5. In my mind, the serious allegations as to what occurred in both the first and third defendant's procuring the plaintiff's signature in relation to the Enduring Power of Attorney are properly pleaded. The allegations of fraud are not hopeless.
6. As to the password change, there is evidence that the first defendant emailed the third defendant on 8 July 2014 to ask for a "favour" which was to change the plaintiff's password. The first defendant set out the specific steps and information to enable the third defendant to do so. There is evidence that the password was in fact changed on 8 July 2014. Once again the third defendant will have actual knowledge as to what she did as a response to the email. For the pleading of actual knowledge: see Alphatise per Brereton at [7], [17-20]. The pleading of the password allegations are not premature and are properly pleaded.
7. It is my view that the amendments in the PFASC go to the real issues in dispute. They certainly are not hopeless. The third defendant is aware of the case she has to meet. In these circumstances, the plaintiff should be permitted to file and serve the PFASC within 14 days. Hence, the third defendant's notice of motion filed 5 February 2021 is dismissed.

Costs

1. Costs of both notices of motion are reserved.

The Court Orders: 1. The Registrar General be joined as the ninth defendant. 2. The plaintiff is to file and serve the PFASC (circulated 17 July 2021) within 14 days. 3. The third defendant's notice of notion filed 5 May 2021 is dismissed. 4. Costs of both notices of motion are reserved.

Amendments 09 September 2021 - Amended numbering of orders 13 September 2021 - Order (2) date of PFASC amended from 14 July 2021 to 17 July 2021. 12 October 2021 - Date of notice of motion in order (3) corrected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 October 2021