By a Byzantine pathway, I return to consideration of the pleading of a cross claim the subject of reasons for judgment published by me as Steiner v Strang [2016] NSWSC 9 on 1 February 2016.
Those reasons for judgment assume familiarity with: (a) reasons for judgment published by the Court of Appeal as Steiner v Strang [2015] NSWCA 203 on 16 July 2015; and (b) the reasons for judgment under appeal to the Court of Appeal, published as Steiner v Kenneth Ross Strang and Jason Tang [2014] NSWSC 1250 on 12 September 2014.
The subject matter of all three judgments is a cross claim (seeking to establish in the cross defendant an indebtedness to the deceased estate of his mother, Dorothy Margaret Steiner, of which the cross claimants are executors) in proceedings commenced by a summons filed by the cross defendant, the only son (and one of three children) of the deceased, on 3 June 2012 (seeking family provision relief against the estate).
The summons is one of two applications for family provision relief made against the estate of the deceased. The other application is made by one of the cross defendant's two sisters, Robyn Webster, in proceedings numbered 2012/00129833.
The family provision applications have been adjourned from time to time to allow for the determination of two separate proceedings, the determination of which may affect the size and composition of the deceased's estate:
1. One of those proceedings is the cross claim filed in the current proceedings, the subject of an order made on 20 June 2014 for the cross claim (originally filed, as a cross summons, on 30 November 2012) to be determined separately from, and in advance of, the cross defendant's family provision summons.
2. The other is a separate set of proceedings, between John Steiner (the present cross defendant) and others (numbered 2014/0010747) determined by a judgment published by Slattery J as Steiner v Strang [2016] NSWSC 395 on 12 April 2016.
Whilst continuing (by a notice of motion filed on 19 February 2016) to contest the form of the cross claimants' latest form of (amended) statement of cross claim filed (on 19 February 2016) in the current proceedings, the cross defendant filed, on 10 March 2016, a notice of motion in which he seeks:
1. an order that his family provision summons (seeking relief under section 59 of the Succession Act 2006 NSW) be heard on an expedited basis; and
2. pending preparation of the summons for final hearing, an order (apparently sought under section 92A of the Probate and Administration Act 1898 NSW) for an interim "maintenance" distribution from the estate or, alternatively, an order (under section 62 of the Succession Act 2006) for interim family provision relief.
The current judgment is directed to a determination of the notice of motion filed by the cross defendant on 19 February 2016 seeking an order that the cross claimants' amended statement of cross claim, filed on the same date, be struck out (pursuant to the Uniform Civil Procedure Rules 2005 NSW, rule 14.28) as defective, together with consequential orders designed to have the cross claim summarily stayed, or dismissed, without allowance to the cross claimants of a further opportunity to replead the cross claim.
That notice of motion can be dealt with as a discrete item of business; but it must, necessarily, be considered in its procedural context, mindful that the parties are agreed that, subject to cross examination of witnesses at any future hearing of the cross claim, the whole of the evidence to be adduced in support of, or in opposition to, the cross claim has been filed.
That evidence is the same evidence that was before the Court, at first instance and on appeal, culminating in the judgment of the Court of Appeal published on 16 July 2015.
The present judgment cannot, in detail, anticipate the future course of the cross defendant's family provision proceedings, the future course of his sister's related family provision proceedings, or the possibility of an appeal from orders made by Slattery J on 12 April 2016. Any attempt to do so would be, beyond heroic, an invitation to error. Mindful of the procedural context within which a decision must be made about the cross claimants' pleading, I must focus primarily upon the question whether the cross claimants' amended statement of cross claim can, and should, be permitted to go to a final hearing.
As each party to the current proceedings has reminded me of the case management imperatives for which Part 6 Division 1 (sections 56-60) of the Civil Procedure Act 2005 NSW provides, I cannot forbear from noticing that the deceased died on 12 October 2011; probate of her will was granted to the cross claimants on 14 December 2011; and, amidst protests about financial constraints, the parties appear to have been engaged in litigation (only part of which I have here expressly noticed) ever since.
Following publication of the present judgment, I propose to conduct a directions hearing, in these proceedings and Ms Webster's family provision proceedings combined, with a view to exploring the possibility that the whole proceedings might be heard without further delay.
Upon the hearing of the cross defendant's present strikeout application, counsel on both sides of the record addressed the Court only briefly in support of written submissions earlier filed.
Each side of the record, in one way or another, accuses the other of abusing the processes of the Court. The cross claimants complain of the cross defendant's repetitive applications for summary disposal of the cross claim, and his refusal, or failure, to engage their case on the merits. The cross defendant complains of poor draftsmanship attending the pleaded cross claim.
On the hearing of his current strikeout application, the cross defendant contends that the judgment of the Court of Appeal gave rise to issues estoppel, notwithstanding that: (a) by an order for a retrial of the cross claim, the orders made by the Court of Appeal lack the character of finality (in earlier proceedings) required for a finding of issue estoppel (Kuligowski v Metrobus (2004) 220 CLR 363 at 373 [21] and 375 [25]); and (b) by an agreement between the parties, on the rehearing of the cross claim neither side of the record is limited by the manner in which the proceedings were initially conducted at first instance or in the Court of Appeal ([2016] NSWSC 9 at 22).
In the amended statement of cross claim presently under challenge, apart from pleading undisputed facts (in paragraphs 1-7 and 34-35) the cross claimants plead "causes of action" or the like (within the meaning of UCPR rule 14.28) identifiable as:
1. a cause of action on an "accounts stated", the formal document (styled "acknowledgment of loan") signed by both the deceased and the cross defendant, ostensibly incorporating an admission of indebtedness on the part of the cross defendant (paragraphs 8-12);
2. a cause of action for moneys had and received, grounded upon the deceased's undisputed payment of money to the cross defendant and his retention of it despite the cross claimants' demands for repayment (paragraphs 14-19); and.
3. an estoppel by convention founded upon the written acknowledgement, coupled with an allegation of detrimental reliance in the way the deceased ordered her estate (via several wills) ostensibly on the basis of the cross defendant's acknowledged indebtedness (paragraphs 23-33).
There is, or may be, an issue about whether the cross claimants can set off any indebtedness owed by the cross defendant against any entitlements he has, or may have, under the deceased's will (cross claim, paragraphs 20-22 and 36-39); but it is not presently material. The focus for attention is on articulation of the cross claimants' case for claiming that the cross defendant is obliged to repay his mother's estate $881,000 she transferred to him, by two instalments, in December 2007.
If there are any formal deficiencies in the pleading, nevertheless: (a) the "causes of action" on which the cross claimants rely are demonstrably clear; (b) the case for which the cross claimants contend is based upon a common substratum of facts not in dispute; and (c) the real, central question in dispute is whether the cross claimants can discharge their onus of proof, in the principal proceedings on the cross claim, in light of evidence the cross defendant proposes to adduce for the purpose of explaining away his written acknowledgement of indebtedness to the estate. There is no utility in allowing the proceedings to stagnate further on "pleading points" taken by the cross defendant.
The common substratum of undisputed facts upon which the cross claimants sue are these: (a) On 16 November 2007 the deceased transferred $100,000 to the cross defendant; (b) On 7 December 2007 she transferred another $781,000 to him; (c) On or about 18 December 2007 both the deceased and the cross defendant executed the written acknowledgement (prepared via solicitors) in which the cross defendant acknowledged that the total sum of $881,000 paid to him by the deceased was a loan, repayable by him on demand or her death; (d) Upon the death of the deceased, and in accordance with a direction from the deceased in her last will, admitted to probate, the cross claimants demanded of the cross defendant that he repay the amount of the putative loan; and (e) The cross defendant has refused to repay any of the money.
To these facts might be added, as relevant to the cross claimants' estoppel claim, the objective fact that, in each of several wills made by the deceased, after the date of the written acknowledgement and before her last will, the deceased included a direction to her executors, similar to that found in the last will, that the amount referred to in the written acknowledgement as a loan be recovered, or brought to account, against the cross defendant.
The cross defendant's response to the claim made against him by the cross claimants, as the deceased's legal personal representatives, appears to be that, notwithstanding his execution of the written acknowledgement and its terms, the deceased and he expressly agreed, and always intended, that the $881,000 paid to him by the deceased was a gift, not a loan. In recent written submissions there is a hint that he may also plead a defence based on the Limitations Act 1969 NSW.
In forensic terms, the cross defendant evidently seeks to take advantage of the fact that, by reason of her death, the deceased is unable to give evidence directly in contradiction to his evidence about the "true character" of dealings between the two of them. Forensically, he persists in demanding of the cross claimants that, notwithstanding their inability to take instructions from the deceased beyond the grave, they should be required to articulate a case of an express agreement for a loan antecedent to the deceased's payment of the money they seek now to recover. Forensically, he seeks to force upon them acceptance of his uncontradicted, but uncorroborated, version of events. Forensically, he ostensibly seeks to do that without having to plead (as, I apprehend, he might be forced to plead) that the written acknowledgement he signed was, in law, a sham; without exposing himself to cross examination at any future hearing of the cross claim; and without allowing the cross claimants the further hearing on the merits that the Court of Appeal, on my reading of its judgment, anticipated that the cross claimants would have on remittal of the proceedings to the Equity Division.
In pleadings properly crafted, there is no obligation on the cross claimants to conform to the cross defendant's case theory or to accept his foreshadowed evidence. The responsibility for articulation of his case lies with him even if, as I have held ([2016] NSWSC 9 at [29]), the cross claimants bear the onus of proof that the deceased's advance of money to him should be characterised as a loan rather than as a gift. He says that he is entitled to retain the property transferred to him by the deceased, and not obliged to account to her estate for it, because she gave it to him for his own use and benefit, intending that he keep it and reserving to herself no entitlement to recall it.
I do not propose to enter upon a detailed examination of particular paragraphs of the amended statement of cross claim in circumstances in which, on my reading of the pleading, the essential, practical function of a pleading (as recognised Dare v Pulham (1982) 148 CLR 658 at 664) has been fulfilled. The cross claimants have stated their case in a manner sufficiently clear to allow the cross defendant a fair opportunity to meet it.
Even in a case management regime in which a party's case might be articulated, in advance of a final hearing, by written submissions and affidavits, pleadings retain that essential function, which cannot be subordinated either to foreshadowed evidence or to submissions contingent upon evidence. In the last resort, in proceedings proceeding by way of pleadings, evidentiary disputes depend for their resolution upon the definition, by the pleadings, of facts in issue. The admissibility of evidence critically depends on it being relevant to, and probative of, a fact in issue.
That said, a pleading, no less than any other document, must be read by reference to both text and context. In this case, the context in which the text of the amended statement of cross claim is to be read includes (as the parties have agreed) the whole of the evidence to be relied upon, at a final hearing, in support of or in opposition to the cross claim; debate on the cross defendant's strikeout applications; the judgment of the Court of Appeal; my earlier judgment consequential on the Court of Appeal's remitter of the proceedings to the Equity Division; and the present judgment.
There is no constructive purpose in my engaging (as the cross defendant would have me do) in a process of parsing the amended statement of cross-claim with the object of characterising some allegations as allegations of law or evidence, or surplusage, rather than pristine allegations of material facts. The substance of the pleading conforms to the case I have described, in narrative form, in these reasons the judgment. To dwell further on the pleading would be to deflect attention away from real questions in dispute.
The system of pleading that prevails in the Court is that of "fact pleading", historically derived from traditional Equity practice predating the introduction of a Judicature Act system of court administration. Its guiding principle (enshrined in UCPR rule 14.7) is that "a party's pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved." This rule is closely associated with the historical predisposition of Equity judges, sitting alone, to ground each decision on "all the circumstances" of the particular case material to the decision to be made, as known at the time of decision.
"Fact pleading" stands in contrast to the formulary system of pleading (sometimes called "issue pleading"), characteristic of an old style Common Law action tried by a jury called upon to say "Yea" or "Nay" to a single question, in which a pleading identifies a recognised cause, or form, of action into which a pleading party seeks to fit the facts of the particular case on the way to definition of an issue for determination.
Whether the abstract distinction between "fact pleading" and "issue pleading" was ever routinely observed in practice might be doubted. Any process of identifying "law" and "facts", and fitting the two together, necessarily requires a focus on both a factual narrative and categories of liability, connected by a concept of "materiality". Identification of the "factual" and "legal" elements of a claim may, indeed, be a single process in which each element is interdependent with the other.
In practical reality, a court in which case management principles hold sway may be required, and authorised, by the imperative of an "overriding purpose" such as that identified in CPA section 56(1), to accommodate an amalgam of the two, familiar historical models of pleading designed, by a dialectic process, to identify "material" facts in issue. Pleading rules must yield to the larger purpose they serve. That larger purpose, identified in CPA section 56(1) - itself a servant of the due administration of justice - is "to facilitate the just, quick and cheap resolution" of "real issues" in proceedings.
In the current proceedings, the parameters of the factual matrix confronting the parties (including central facts agreed and a controversial penumbra) are manifest. So too are the parameters of, and areas of controversy attaching to, each "cause of action" (in the sense of a substantive law principle rather than a procedural device) sought to be engaged. To ask more of the pleader of the cross claim at this stage of the proceedings, without calling upon the cross defendant to articulate his case, would be to subvert, not serve, the "overriding purpose" of rules of court in circumstances in which the essential, practical function of a pleading has been fulfilled.
Accordingly, I propose to order that the cross defendant's notice of motion filed 19 February 2016 be dismissed.
I will, if necessary, allow the parties an opportunity to be heard about the costs of the proceedings before me, culminating, initially, in the judgment published on 1 February 2016 and, subsequently, this judgment. All in all, the proceedings have been before me on six occasions, including today: 18 December 2015; 1, 4 and 19 February and 6 and 19 April 2016.
The cross defendant has failed, not once but twice, in attempts to secure a summary disposal of the cross claim. On the first occasion he failed on an application for summary dismissal of the cross claim, but obtained an order for a defective pleading to be struck out. On the second occasion, channelling a summary disposal application through an application for a pleading to be struck out, he has failed entirely. In between times he has, with justification, criticised deficiencies in the cross claimants' draughtsmanship.
I am inclined to think that offsetting each party's successes and failures would result in a zero net balance between them, or something close to it, leaving aside the question whether the cross claimants should be, in any event, indemnified for their costs out of the estate of the deceased.
Given that whatever, if any, costs order is made may have implications for the family provision applications of both the cross defendant and his sister, Ms Webster, it is desirable, if not necessary, to reserve all questions of costs for the time being pending clarification of the size and composition of the deceased's estate or, at least, until Ms Webster's perspective can be taken into account.
For the moment, the only order I make is an ORDER that the notice of motion filed by the cross defendant on 19 February 2016 be dismissed.
[3]
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: 19 April 2016