These proceedings commenced by the filing of a statement of claim on 4 August 2023. The first plaintiff is a company, STM123 No. 28 Pty Ltd ("STM 28") which is controlled by the second plaintiff, Vaughan Rudd Blank.
Mr Blank is also the controller of STM123 No. 26 Pty Ltd ("STM 26"). That company was the registered proprietor of land and improvements at 36 Hall Street, Bondi Beach. Mr Blank is also the controller of STM123 No 27 Pty Ltd ("STM 27") which is the registered proprietor of land and improvements at 30-32 Hall Street, Bondi Beach.
Adjoining land at 34-36 Hall Street was owned by a company called Bioka Pty Ltd ("the Property"). The property on the other side of the Property, at 38 Hall St, was owned by Robert Graham. That property had a caveat lodged on it in favour of Bondi Beach Ventures Pty Limited ("BB Ventures") pursuant to a Call Option Deed between BB Ventures and Mr Graham dated 22 September 2021.
Mr Blank was interested in purchasing (using STM 28 as the purchaser) the Property at 34-36 Hall Street. To that end, he engaged the first defendant, which traded as Richardson and Wrench Bondi Junction, and its director Andre Bernard Frack, the second defendant, to act as buyer's agent to procure the property at 34-36 Hall Street. The plaintiffs allege that, as a result of representations made to Mr Blank by the defendants on 28 and 29 July 2021, STM 28, as Mr Rudd's undisclosed agent, entered into an Exclusive Buyers Agency Agreement on 29 July 2021 with the first defendant.
The statement of claim alleges that in breach of that Agreement, the defendants, acting as agents for Bioka Pty Ltd, sold the property to BB Ventures on 23 February 2022 for $15.25m. Prior to that sale, the plaintiffs had made a number of offers through the defendants to Bioka Pty Ltd, offering an increased amount on each occasion from $11,000,000 on 29 July 2021 to $16,000,000 on 23 February 2022.
The statement of claim seeks the following relief:
1. A Declaration that from 29 July 2021 to 23 February 2022 there existed a binding and subsisting agreement between the first plaintiff and second plaintiff and the first defendant on the terms contained in Exclusive Buyers' Agency Agreement.
2. In the alternative to the declaration referred to in paragraph 1 above, a declaration that from 29 July 2021 to 23 February 2022 there existed a binding and subsisting agreement between the second plaintiff and the first defendant on the terms contained in Exclusive Buyers' Agency Agreement.
3. An order that the first defendant pay equitable compensation to first plaintiff and second plaintiff for breach of the first defendant's obligation under the agreement referred to in paragraph 1.
4. In the alternative to paragraph 3, an order that the first defendant pay equitable compensation to the second plaintiff for breach of the first defendant's obligations under the agreement referred to in paragraph 2.
5. In the alternative to paragraphs 3 and 4, an order that the first defendant account to the first plaintiff and/or the second plaintiff.
6. In the alternatives to paragraphs 3 to 5, an order that the first defendant pay damages to the first plaintiff and/or second plaintiff.
7. Further and in the alternative to paragraphs 3 to 7, orders that the first defendant pay equitable damages resulting from the second defendants' breaches of fiduciary duties as an agent and/or employee of the first defendant pursuant to s 41 of the Property and Stocks Agents Act 2002 (NSW).
8. An order that the first defendant pay damages to the first plaintiff and/or second plaintiff under section 236(1) of Schedule 2 to the Competition and Consumer Act 2010 (Cth).
9. An order that the second defendant pay damages to the first plaintiff and/or second plaintiff under section 236(1) of Schedule 2 to the Competition and Consumer Act 2010 (Cth).
10. Costs
11. Such further order as the court thinks fit.
The statement of claim pleads a number of causes of action, both common law and statutory, and seeks equitable relief. The common law claims are for breach of contract, negligence, and interference with contractual relations. The statutory claims rely on breaches of ss 18 and 60 of the Australian Consumer Law. There is a claim for breach of fiduciary duty and an estoppel claim.
After service of the statement of claim, solicitors acting for the defendants sent an email to the plaintiffs' solicitors, saying that the defendants had forwarded the claim to their insurers. The defendants were waiting to see whether they were covered by their insurance. They said that they could not do anything about putting on a defence until the indemnity issue was determined, because that might invalidate their cover. They asked for a minimum of 42 days' notice before a defence would be required.
On 12 September 2023, the plaintiffs' solicitors wrote saying that they agreed not to take any steps to enter judgment prior to the directions hearing on 22 September 2023.
The proceedings came before the Registrar on that day and directions were made for the defendants to request particulars of the statement of claim by 6 October with the plaintiffs to respond by 27 October. The proceedings were stood over for further directions to 8 November 2023.
On 6 October 2023 the defendants filed a notice of motion seeking an order that the statement of claim be struck out pursuant to r 14.28(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW). The notice of motion came before the Registrar on 25 October 2023 when it was listed for hearing today and directions were made for the filing of any evidence by the plaintiffs and for the filing of submissions by both parties.
The affidavit in support of the notice of motion by Alice Watson, the solicitor for the defendants, relevantly said:
5. I understand that Mr O'Sullivan [counsel for the defendants] foreshadowed to the court that the defendants were considering either filing a notice of motion to strike out the statement of claim or in the alternative to serve a request for particulars.
…
7. I believe that the statement of claim is liable to be struck out on the basis that it has a tendency to cause prejudice, embarrassment and delay because:
(a) it is unnecessarily prolix and if permitted to stand, will necessitate the filing of an equally prolix defence;
(b) it purports to provide "particulars" by way of multiple cross-references to large portions of the Statement of Claim and other documents that do not make sense or properly particularise the allegations made;
(c) it pleads evidence rather than allegations of material fact; and
(d) the above vices in the Statement of Claim are likely to be exacerbated rather than cured by the provision of further particulars.
The defendants' written submissions asserted that the statement of claim was unnecessarily prolix and confusing, running to 39 pages and 111 paragraphs where no more than 10 pages ought to have sufficed. The defendants submitted that the statement of claim appeared to plead "every conceivable cause of action". They submitted that it goes far beyond pleading the material facts alleged to give rise to the alleged causes of action. I interpolate here that, simply because a plaintiff pleads "every conceivable cause of action", provided they are capable of support, that does not provide any basis for a strike-out. Nor, because a defendant considers that it could have pleaded claims in fewer paragraphs over fewer pages, does that constitute a basis for striking out a pleading.
The defendants submitted that the prayers for relief claimed relief that does not flow from the "cause of action alleged". The defendants submitted that, although the proceedings had been commenced in the Professional Negligence List, there was no prayer for relief for damages for the tort of negligence.
The defendants submitted that the body of the pleading contained innumerable vices, and that that was readily apparent from examining paragraphs 15 to 17 of the statement of claim. Those paragraphs plead:
Engagement of R&W
15. On 28 July 2021 Mr Blank told Mr Frack of R&W that:
(a) he was interested in purchasing the Property;
(b) he was thinking of a price of around $14m, all inclusive;
(c) he was the purchaser of 30-32 Hall St; and
(d) he was looking for feedback and advice about offers.
Particulars
Text messages exchanged between Mr Blank and Mr Frack of R&W on 28 July 2021.
16. On 28 July 2021 each of Mr Frack, and R&W represented to Mr Blank that:
(a) R&W had a longstanding relationship with the owner of the Property;
(b) R&W managed the leasing of the Property for Bioka;
(c) Mr Blank should engage R&W as buyer's agent to procure the purchase of the Property;
(d) that any offers to purchase the Property should be made inclusive of agent's fees;
(e) that Mr Blank should nominate a company which as the potential purchaser, so that the agency agreement to be executed would be in the name of the proposed purchaser;
(f) that if Mr Blank (or an entity nominated by Mr Blank) retained R&W as buyer's agent, that each of Mr Frack, and R&W:
(i) would use their reasonable endeavours to purchase the Property for the benefit of Mr Blank;
(ii) would take instructions from Mr Blank and report to Mr Blank as buyer's agent for Mr Blank; and
(iii) as long as R&W was engaged as Mr Blank's buyer's agent, R&W would not act for the benefit of any other potential purchaser of the Property.
(28 July Representations)
Particulars
i. These representations were both express and implied. To the extent that they were express they were contained in emails and text messages from Mr Frack dated 28 July 2021 and emails from Mr Negrine dated 28 July 2021.
ii. To the extent that they were implied, they arose by reason of the matters in 2-8 and 15-16 above.
17. On 28 July 2021, in reliance upon the 28 July Representations, Mr Blank sent an email to Mr Frack and Mr Negrine to the effect that:
(a) he wanted their advice in relation to his purchasing the Property;
(b) he thought a buyers fee of 1.5% plus GST was fair and reasonable but if he purcahsed (sic) the Property at less than $11.5 million he would pay a sales commission of 1.8%;
(c) he nominted (sic) No. 28 as the purchaser of the Property: and
(d) instructed Mr Frack and Mr Negrine to put an offer to purchase the Property at $11 million with a 5% deposit and a 6 month settlement.
The defendants submitted that paragraph 15 appears simply to plead background facts, rather than any material fact that forms an element of the alleged causes of action.
Paragraph 16 is criticised because it "purports to provide 'particulars' by way of multiple cross-references to large portions of the Statement of Claim and general references to documents that do not make sense or properly particularise the allegations made with any precision". The representations set out in paragraph 16 are criticised as either being matters for evidence or background of only peripheral relevance, and it was submitted that it was difficult to see how these representations could give rise to any relevant reliance by the plaintiffs, let alone sound in damages for misrepresentation.
So that I do not do an injustice to the defendants by summarising their criticisms of paragraphs 16 and 17, they are set out hereunder:
9. The particulars to paragraph 16 allege that the representations were express by reference to emails and text messages sent by Mr Frack on 28 July 2021 and emails from Mr Negrine dated 28 July 2021. The particulars do not attribute any particular document as containing any particular representation of the 7 pleaded. The defendant is left to ponder whether it is alleged that all of the representations were made in all of the documents to which the particulars refer? If not, which representations were contained in which document? Is it alleged that Mr Frack each made all of the alleged representations in their documents, or only some. If so, which representations were made in which document? The answers to these questions cannot be gleaned from the pleading itself but rather, the Statement of Claim will require the Defendant to examine the documents to which it refers and then guess at the answers. ' ,
10. The particulars to paragraph 16 also plead that the 7 alleged representations were also partly implied from the matters pleaded in paragraphs 2 to 8 and 15 to 16 of the Statement of Claim. Paragraphs 2 to 8 simply plead that certain parties are corporations etc. How, for example, does the fact that a party is incorporated give rise to an implied representation that, for example, as pleaded in paragraph 16(a), R&W had a long-standing relationship with the owner of the Property? This is a non sequitur. The particulars to paragraph 16 cross refer to paragraph 15 as particulars of the implied representations pleaded in paragraph 16. Presumably paragraph 15 is pleaded as if it were an allegation of material fact so how can it also be a particular of a material fact? It can't be both. In fact, it seems that paragraph 15 is neither a pleading of a material fact nor a particular of the material fact pleaded in paragraph 16 as it simply pleads matters for evidence. The particulars to paragraph 16 also cite paragraph 16 as particulars of paragraph 16. This is entirely circular and non-sensical.
11. Paragraph 17 alleges that Mr Blank sent an email to Mr Frack and Mr Negrine on 28 July 2021 "in reliance on the 28 July Representations''. Whether Mr Blank relied on the alleged representations or not, it is difficult to see how Mr Blank sending an email can sound in damages for "misrepresentation" or be an element of a cause of action.
This last submission is an extraordinary one. The pleading in paragraph 17 simply forms part of the historical narrative which leads to the breaches later pleaded. It is also a basis for the estoppel claim pleaded at pars 93 to 95.
The defendants then said that it was apparent from the analysis of paragraphs 15-17 that the defects in the pleading could not be remedied by the provision of further particulars because the statement of claim is incurably prolix and convoluted. The written submissions said that the defendants did not attempt to analyse exhaustively all of the defects in the statement of claim because this would inflict on them the very prejudice, and delay that their motion seeks to avert. They submitted that even a cursory examination of the balance of the statement of claim was sufficient to demonstrate that it should be struck out.
In oral submissions, further paragraphs were criticised. For example, both pars 17 and 18 were said to plead the inconsistency that both Mr Blank and STM 28 were purchasing the Property. Further, the particulars were criticised because of the references to the earlier paragraph numbers. For example, the defendants asked rhetorically how the pleading in par 2 was relevant to what appeared in par 18 of the statement of claim. Par 20 was said to contain irrelevant allegations. Par 26 was criticised for not including clause numbers from the Exclusive Buyers' Agency Agreement. Par 27 was criticised because particular (ii) was not related to the particular implied terms pleaded in the paragraph. Par 28 was said to be a defective pleading of negligence because proximity and foreseeability were not set out.
Mr O'Sullivan of counsel for the defendants reiterated that the remainder of the statement of claim suffered from the same or similar problems to those particularly identified in the written and oral submissions, and to deal with them seriatim would only highlight the prejudice, delay and difficulty for the defendants brought about by the way the statement of claim was pleaded.
Rule 14.28 UCPR relevantly provides:
14.28 Circumstances in which court may strike out pleadings (cf SCR Part 15, rule 26; DCR Part 9, rule 17; LCR Part 8, rule 3)
(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) …
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or
In my opinion, the notice of motion is misconceived and the criticisms made of the pleading are largely captious.
Although the statement of claim is lengthy, that is because it sets out what are asserted to be material facts in the somewhat detailed history involved from the first engagement of the defendants by Mr Blank on 28 July 2021 until the sale of the Property on 23 February 2022. That history is set out in a clear and chronological fashion with appropriate particulars being supplied at various places in the pleading. These particulars refer to emails and correspondence, and other portions of the statement of claim in an entirely appropriate way.
Whilst some criticism may be made about the way the prayers for relief are drafted, these are matters which, properly could have been dealt with in correspondence between the solicitors. I will return to that matter later.
The prayers for relief are not well drafted, although there can be little doubt about what is sought by them. One criticism that can be properly made is in relation to seeking declarations about an agreement which forms the basis of causes of action. This statement of claim would not, however, be an outlier in that regarded. Too often, unnecessary declarations are sought about the existence of a contract which will be found to exist or not, as the case may be, in the determination of the claim either for breach of contract or some similar cause of action.
Further, prayer 6 should be disconnected from prayers 3 to 5. Indeed, damages in such cases should be the first claim, with claims for equitable relief by way of equitable damages, compensation or an accounting following as alternative claims. This is an apposite example of the maxim that equity follows the law.
Contrary to the defendant's submission that there is no prayer for relief for damages for negligence, the statement of claim pleads a duty of care at paragraph 28 and breaches of the duty of care at paragraph 84 leading to the claim for loss at paragraphs 85 and 86. Damages are sought in prayer 6 although, as I have said, it may be more appropriate to omit the words "in the alternatives (sic) to paragraphs 3-5" which might be misinterpreted as a claim for damages only for breach of contract. I accept, however, that the claim in negligence derives from the contractual arrangements.
Those infelicities do not mean that the statement of claim is embarrassing or that it should be struck out.
The particular criticisms levelled at the pars identified are without foundation. Cross-referencing in a statement of claim is neither unusual nor undesirable. It frequently has the advantage of minimising repetition. The mistake the defendants are making is not to read the cross-referenced paragraphs as a whole, rather than focusing on individual paragraphs. So, for example, where in par 18, it is said that the knowledge arises from pars 2 to 8, those paragraphs set out the basic information about Mr Blank's relationship with the various companies, and the various landholdings of those companies and their relationship to the Property. In that way, they effectively explain what might otherwise be thought to be the asserted inconsistency complained of in pars 17 and 18. They also identify the basis for the assertion of knowledge in par 18.
As a further example, the allegations in par 20 form the basis of the estoppel claim in pars 93 to 95. It was faintly suggested that it would have been better to plead them in close proximity to the estoppel pleading. In my opinion, it was far more appropriate that the historical matters should be pleaded chronologically, as they have been.
The criticism of the pleading in par 28 concerning negligence is misconceived. What is set out there is the duty said to arise from the relationship between the parties. In the circumstances of the relationship, it was scarcely necessary to mention proximity and foreseeability: rr 14.10(a) and 14.11(c) UCPR might be thought to be relevant.
It is not necessary to descend into more detail regarding individual pars of the statement of claim.
In Young v Hones [2013] NSWSC 580 Garling J said at [79]:
The function of pleadings is to state with sufficient clarity the case that must be met by a defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirements of procedural fairness, namely that a party should have the opportunity to meet a case against him or her: Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286, 296, 302-3. As well, the issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible at trial upon the ground of relevance: Dare v Pulham [1982] HCA 70; (1982)148 CLR 658 at 664.
In my opinion, the statement of claim sets out the material facts and the causes of action with sufficient clarity to enable the defendant to plead to the statement of claim.
In McGuirk v The University of New South Wales [2009] NSWSC 1424 Johnson J set out the principles relevant to identifying an embarrassing pleading as follows:
[30] A pleading is embarrassing where it is "unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him": Meckiff v Simpson [1968] VR 62 at 70; Gunns Limited v Marr at [14]-[15].
[31] In Shelton v National Roads & Motorists Association Limited [2004] FCA 1393 at [18], Tamberlin J explained the concept of "embarrassment" with respect to pleadings:
"Embarrassment in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434."
[32] A pleading may be embarrassing even though it contains allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited (Bryson J, 7 March 1995, BC9504276 at 5-6).
[33] Although the pleading of a conclusion may, in some circumstances constitute a material fact, nevertheless, the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet: Charlie Carter Pty Limited v Shop Distributive and Allied Employees Association (1987) 13 FCR 413 at 417-418. In such a case, the appropriate remedy is to strike out the pleading rather than to order the provision of particulars, as it is not the function of particulars to take the place of the necessary averments in a pleading: Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 at 112-114.
[34] Rule 14.28 UCPR provides that pleadings that involve non-compliance are liable to be struck out as an embarrassment. However, generally the Courts recognise that a wide range of discretionary considerations arise where there is a failure to comply with the technical requirements of the pleading rules: Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466. In many instances, the appropriate order may be to strike out the offending pleading, but grant leave to amend: Rubenstein v Truth & Sportsman Limited [1960] VR 473 at 476; H 1976 Nominees Pty Limited v Galli (1979) 30 ALR 181 at 186.
[35] It is not the function of the Court to draw or settle a party's pleading. The Court is confined to the function of ensuring that pleadings are within the rules and fulfil the functions for which they exist. Objectionable matter that is so mingled with other matter may lead to the conclusion that the pleading as a whole would tend to embarrass the fair trial of the action ought be struck out: Turner v Bulletin Newspapers Co Pty Limited (1974) 131 CLR 69 at 72, 87-88, 97-98; Gunns Limited v Marr at [57]-[58]; Fleet v Royal Society for the Prevention of Cruelty to Animals NSW and Ors [2005] NSWSC 926 at [55].
The statement of claim follows a standard pattern of (1) identifying the parties and related entities, (2) setting out the factual narrative, (3) setting out what are said to be the obligations brought about as a result of the alleged representations and the entry into the contract, (4) setting out the breaches of the obligations including breaches of the duty of care alleged, and (5) pleading the loss and damage said to have been incurred. The different causes of action and claims are clearly set out under headings, including the relevant sections of the Australian Consumer Law. I do not consider that the present pleading is embarrassing, nor is there anything that suggests a tendency to cause prejudice or delay in the proceedings. The pleading is set out with sufficient clarity to enable a defence to be pleaded. That defence may be lengthy because the statement of claim is a long one, but I do not consider that its length derives from any defect in its pleading.
It is significant that, prior to the service of the notice of motion and, notwithstanding that directions had been made for the defendants to request particulars of the statement of claim, the present motion was filed without any correspondence to the solicitors for the plaintiff asserting the matters now complained of or endeavouring to clarify matters which the defendants and their solicitors were unable to understand from the pleading. The Court expects that one side should extend the opportunity to the other side to deal with issues that the first party has problems with, before notices of motion are filed.
Although I consider that a little more care could have been taken in relation to the claims for relief, no basis is shown for striking out paragraphs 15-28 of the statement of claim. To the extent that the defendants' submissions were intended to embrace the remainder of the statement of claim, no basis is shown for striking out any of the other paragraphs in the statement of claim. I will give the plaintiffs leave, if they wish, to amend the relief sought for the reasons given and discussed with senior counsel for the plaintiff at the hearing. Whether they do so is a matter for them. Following the hearing, the defendants cannot be in any doubt about what is sought.
Accordingly, I make the following orders:
Leave to the plaintiffs to file an amended statement of claim amending the relief claimed. Any such amended statement of claim is to be filed and served by 24 November 2023.
The notice of motion filed 6 October 2023 is dismissed.
The defendants are to pay the plaintiffs' costs of the notice of motion.
The defendants are to file a defence by 7 December 2023.
Stand over for further directions before the Registrar on 8 December 2023.
[2]
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Decision last updated: 20 November 2023