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EX TEMPORE Judgment

1. HIS HONOUR: The background to these proceedings is set out in Williamson v Elders [2016] NSWSC 1505 ("Williamson v Elders"), which I will not repeat. It should be read together with this judgment.
2. Before the Court are two notices of motion. The first is a notice of motion filed by the plaintiff, Hugh Francis Arthur Williamson, on 26 April 2017, seeking leave to file a third further amended statement of claim. The second is a notice of motion filed by the existing defendant, Elders Limited (ACN 004 336 636), seeking the summary dismissal of the proceedings, or in the alternative, an order striking out so much of the existing second further amended statement of claim that seeks relief against it.
3. The structure of the existing second further amended statement of claim is described in Williamson v Elders at [2] to [5].
4. Ultimately the form of the proposed third further amended statement of claim relied on by Mr Williamson was that set out at pages 12 to 24 of the annexures to an affidavit sworn by him on 22 May 2017, as supplemented by a further attachment to that affidavit which seeks to clarify the particulars to the proposed paragraph 25.
5. In broad terms, the amendments fall into four related categories. The first is a set of amendments which have the effect of adding a second defendant, namely, Elders Rural Services Australia Limited (ACN 004 045 121) ("Elders Rural").
6. The substantive parts of the statement of claim make allegations against Elders Rural. The proposed third further amended statement of claim pleads that in 2009, after the events that gave rise to the proceedings, "Elders Limited" changed its name to Elders Rural. Mr Williamson was apparently unaware of this and mistakenly sued another entity, being Elders Limited (ACN 004 336 636) as the defendant, not knowing that that was not the corporate entity with whom he dealt in 2007. It appears that he only became aware of this upon reading the defence of Elders Limited in these proceedings.
7. The second set of changes appear to be largely cosmetic, in that they add some further details as well as make changes consequential on the change in the name of the defendant.
8. The third set of changes seeks to plead that Elders Rural effectively authorised the agent in question, Mr Hannan, not to tell Mr Williamson and his wife that there was a development application for a quarry on the property next door to Reevesdale and that Mr Hannan acted on that direction.
9. The fourth set of changes are related to the third in that they seek to plead an entitlement to exemplary damages based upon an allegation of fraud by Elders Rural that arises not just from the conduct of Mr Hannan, but from the alleged direction given by Elders Rural as to how he would conduct himself.
10. I will address so much of the amendments that concern the change in identities of the defendants first. In that regard the motion filed by Elders Limited seeks to take advantage of the fact that it now appears to be common ground that it is not a proper defendant to the proceedings, and that instead Elders Rural is the appropriate defendant. To the extent that the amendment, in effect, seeks a joinder of a new party, although it could be characterised as a substitution in the case of misnomer, then it is not opposed. However, the position of Elders Rural is that the question as to whether or not its substitution takes effect from the time of the commencement of the proceedings or from the date of the amendment should be stood over to the trial.
11. Mr Williamson resists so much of Elders Limited's notice of motion that seeks to remove it from the proceedings. It was not entirely clear what the basis for the resistance was, although it appeared to be related to a concern over costs. Nevertheless, a perusal of the proposed third further amended statement of claim reveals that no substantive case is sought to be propounded against Elders Limited (ACN 004 336 636). Instead, as I have already stated, all the substantive allegations in the proposed pleadings concern the conduct of Elders Rural. Whatever be the concern about costs, in circumstances where a plaintiff does not make substantive allegations against a party and it wishes to be extracted from the proceedings, there is simply no basis upon which it should stay.
12. I will address this by conditioning any grant of leave to Mr Williamson, so that any pleading he is allowed to file cannot include Elders Limited as a defendant. To further confirm the position, I will grant prayer 2 in Elders Limited's notice of motion which will effect a striking out of the claim against it in the existing second further amended statement of claim. This will avoid the circumstance that it might somehow linger on as a defendant while some further disputation about a revised pleading occurs.
13. In relation to the position of Elders Rural, it seems very likely that the circumstances concerning its change of name bring the matter within s 65(2)(b) of the Civil Procedure Act. Nevertheless, as that matter was not fully debated, I will stand over to the trial the question as to whether the Court should otherwise order under s 65(3). Instead, as some of the various amendments are not opposed, I will grant Mr Williamson leave under s 64(1)(b) to bring in a third further amended statement of claim which names Elders Rural as the sole defendant. As stated, the question as to when those amendments will have effect will be stood over to the trial. This deals with the first category of proposed amendments.
14. The second category of proposed amendments is not opposed. The third and fourth categories are opposed.
15. At present, the second further amended statement of claim pleads a claim of fraudulent representation by Mr Hannan, the agent of Elders Rural, in relation to the sale of Reevesdale. The broad effect of the pleading is that Mr Hannan misled Mr Williamson as to the reasons why the vendors were selling Reevesdale and that he was otherwise obliged, but deliberately failed, to tell him, that is, Mr Williamson, of an intended quarry development on the adjacent land.
16. As stated, the third category of amendments seeks to expand responsibility for this alleged fraud on the part of Mr Hannan to others within Elders Rural. To that end, proposed paragraphs 25 and 26 plead as follows: 25. It is averred that the second defendant said to Mr Hannan that he should not tell Mr Williamson and his wife that there was a DA on the property next door to Reevesdale so they had a chance of selling it. PARTICULARS a. The second defendant who was at the time known as Elders Limited deliberately refrained from making a disclosure about the DA and the permission generally and told their agent and employee not to mention it either. This they did before the inspection on 17th May 2007. b. The second defendant at that time had a related company (Elders Rural Bank Limited) which was the mortgagee of Reevesdale). c. Russell Cooper had among other business interests, a company called Trazoy Pty Ltd ("Trazoy") that earned over $7m a year (with 3 employees). d. Trazoy owned Reevesdale. e. Elders Rural Bank Limited wanted to achieve the best possible price for Reevesdale and appointed Elders Limited (as they were then known) as the selling agent when Reevesdale failed to sell at auction in 2006. f. The second defendant in turn wanted the best possible price for Reevesdale even if it meant not disclosing a DA on the property which would be very relevant. 26. In particular it is averred that at the time of Hannan making the statement at paragraph 21 above, Hannan:- 26.1 Knew that CEAL had plans to develop Ardmore Park; 26.2 Knew that the proposal had been submitted, refused by the Minister and was currently on appeal; 26.3 Knew that the reason that the Vendor was selling was because of the threat posed to Reevesdale by the potential development of Ardmore Park. 26.4 Was using a reason for the sale that had been worked upon in Goulburn office and was reporting back to his employer all of the details of the visit as he was a junior employee who had only held his real estate exam for less than 12 months.
17. The wording of these proposed paragraphs had its difficulties. What emerged from submissions is that the precise allegation that Mr Williamson seeks to make is that Elders Rural directed Mr Hannan to specifically not tell Mr Williamson and his wife that there was a development application for a quarry on the property adjacent to Reevesdale, that it did so for the purpose of maximising the prospects of selling Reevesdale and that Mr Hannan gave effect to that direction.
18. Within the fourth category of amendments to which I have referred is proposed paragraph 41, which alleges that Elders Rural "has committed fraud upon the plaintiff" and proposed paragraph 42, which pleads that Elders Rural "should be punished and that it should pay exemplary damages". These amendments are all related, in that the claim sought to be made is that Elders Rural should be found to have committed fraud, not just because of any fraud of Mr Hannan, but because of the fact that Mr Hannan was acting as directed and as pleaded in proposed paragraphs 25 and 26.
19. Elders Rural seeks to resist these amendments on the basis that, as they seek to plead a separate and wider basis of attributing fraud to it, then given the strictness with which such pleadings must be formulated insufficient particulars are provided. There is no doubt that the proposed particulars to paragraph 25 are deficient. There is a dissonance between particular (a), which simply refers to Elders Limited refraining from making a disclosure about the DA, and the substantive allegation, which is to the effect that a specific direction was given to Mr Hannan not to mention the DA. The balance of the particulars simply recites some background circumstances to the transaction which, in effect, indicate that Elders had a substantial financial stake in having Reevesdale sold successfully. Those particulars are not sufficient to support the substantive allegation of fraud.
20. During argument, Mr Williamson stated that the basis upon which he makes this allegation is to reflect a contention that he will make at trial, namely, that an inference should be drawn that Mr Hannan acted on direction because of a combination of the relatively junior position that he held, the significant size of the transaction involved in the sale of Reevesdale and the financial interests that Elders Rural had in the transaction. I will pass over any assessment as to whether that generally would be sufficient and the problem that those matters are not currently particularised. Even if those matters were particularised and in some general way were said to give rise to an inference that someone more senior than Mr Hannan may have given such a direction, that would still not be sufficient to particularise a case of fraud on the part of Elders Rural beyond what could simply be attributed to it from the conduct of Mr Hannan.
21. The requirements for attributing fraud in respect of a corporate body are not straightforward; (Krakowski v Eurolynx Properties Limited [1995] HCA 68; 183 CLR 563; "Krakowski"). In Krakowski at pp 582 to 583, Brennan, Deane, Gaudron and McHugh JJ approved a statement by Bright J in Brambles Holdings Limited v Carey [1976] 15 SASR 270; 2 ACLR 176 at 279 to the effect that it is: "...necessary to specify some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons, can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company."
22. Further, in the case of fraud by a corporation, although it is not strictly necessary to prove that the person who made the representation knew it was fraudulent, ultimately it is necessary to demonstrate that another officer or officers at the requisite level "knew of the representation and knew that it was false" (Commonwealth Bank of Australia v Kojic [2016] FCAFC 186 at [136] per Edelman J).
23. However much one attempts to redraft the particulars to paragraph 25 of Mr Williamson's proposed third further amended statement of claim, it cannot at this stage be sufficient to simply refer to the "second defendant" without instead identifying the "person or those persons" who are to be "treated as being identified with the company". It would follow, therefore, that leave to plead proposed paragraphs 25 and 26.4 must be refused.
24. As stated, the fourth category of amendments are those that, in effect, seek to assert fraud on the part of Elders Rural and alleged that Elders Rural should be punished and pay exemplary damages. In one sense there is already a pleading of fraud against Elders Rural, but only in the sense that it is said to be liable for the allegation of fraud pleaded against Mr Hannan. As stated, the intent of the proposed amendments is to make Elders Rural liable to pay exemplary damages on a wider basis. However, Elders Rural contended that if all that remained was an allegation of fraud against Mr Hannan, that is not sufficient to justify a claim for exemplary damages against it (see Canterbury Bankstown Rugby League Football Club v Rogers; Bugden v Rogers [1993] Aust Torts Reports 81-246 at 62554). Whether or not that is so will, to a large extent, depend upon the responsibility and duties of Mr Hannan. At the moment there is nothing pleaded in the proposed third further amended statement of claim that would justify a claim for exemplary damages against Elders Rural simply because Mr Hannan was their agent and that he acted fraudulently in the arrangement of a transaction to sell Reevesdale.
25. Thus, it follows that if paragraphs 25 and 26.4 of the proposed amendment are not allowed, then paragraphs 41, 42 and 44 of the proposed third further amended statement of claim must also be rejected.
26. This leaves paragraph 40 which pleads that in 2015 Elders Rural moved its "Goulburn shop from the commercial district of Goulburn to its agricultural operation out of the commercial district, has removed all the staff and brought in staff from Wagga Wagga". That fact is self-evidently irrelevant to any part of the pleading that survives. Otherwise, I note that during the course of submissions, it became evident there was a cross-referencing difficulty with paragraphs 26 and 27, which referred to paragraph 21, when it was intended to refer to the statements and conduct of Mr Hannan pleaded in paragraphs 23 and 24.
27. I will shortly make orders on the two motions to reflect these conclusions. I can indicate that after I make those orders, I will then hear the parties on directions designed to take the matter up to trial. It is my strong suspicion that, unless the matter gets moving towards a trial, it will simply become bogged down in further pleading issues that do not appear to be getting anywhere.
28. Accordingly, the Court makes the following orders:
29. Pursuant to s 64(1)(b) of the Civil Procedure Act I grant leave to the plaintiff to file a third further amended statement of claim in the form attached at pages 12 to 24 of the annexures to the affidavit of Hugh Francis Arthur Williamson sworn 22 May 2017, except that: (a) Elders Limited (ACN 004 336 636) is to be removed as a party; (b) Elders Rural Services Australia Limited (ACN 004 045 121) is to be named as the sole defendant and any references to the "second defendant" are to be removed and changed to "the defendant" and any references to the "first defendant" are to be changed to "Elders Limited (ACN 004 336 636)"; (c) proposed paragraphs 25 and 26.4 are disallowed; (d) the references to paragraph 21 in existing paragraphs 26 and 27 are to be changed to paragraphs 23 and 24; (e) proposed paragraphs 40, 41, 42 and 44 are disallowed.
30. Direct the plaintiff to file a third further amended statement of claim in conformity with Order 1 within 14 days.
31. Stand over to the trial the question as to whether the Court should, in respect of the amendments made by Order 1, otherwise order under s 65(3) of the Civil Procedure Act 2005.
32. Otherwise dismiss the plaintiff's notice of motion filed 26 April 2017.
33. To the extent necessary, that so much of the plaintiff's second further amended statement of claim as pleads a cause of action against Elders Limited (ACN 004 336 636) be struck out.
34. Otherwise dismiss the notice of motion filed by Elders Limited (ACN 004 336 636) on 26 April 2017. [Discussion as to costs and trial estimate]
35. Counsel for Elders Limited and Elders Rural seeks the costs of the two motions that I have just disposed of on an indemnity basis. He also seeks an order in respect of the costs thrown away by the amendment and, a protective order so that, in light of the removal of Elders Limited and the joinder or substitution of Elders Rural, Elders Limited does not lose its ability to seek its costs of the proceedings.
36. As for costs on an indemnity basis, it is the case that Elders Limited and Elders Rural have largely been successful in vindicating a position that they have maintained in correspondence for some time. Nevertheless, bearing in mind what I regard as the complexities of attributing fraud to a corporate entity, and the fact that some amendments would have had to have been made in any event, I do not consider that Mr Williamson's conduct in pursuing his motions was so egregious as to warrant an order for indemnity costs. There is, however, no basis upon which Mr Williamson could resist paying for the costs of the two motions on an ordinary basis.
37. As for the question of costs thrown away by reason of the amendments, that is complicated by the fact that the Court has not made a final determination as to whether the necessity to bring in Elders Rural was because of a misnomer and, if so, where responsibility for that circumstance lay. In circumstances where I will make an order protecting Elders Limited's costs and that Elders Rural has its costs of the motions, I do not think it is appropriate to make a further order in respect of costs thrown away. I will, however, order that Elders Limited's costs of the proceedings be Elders Rural's costs in the cause.
38. Accordingly, I will make the following orders:
39. The plaintiff pay the costs of Elders Limited (ACN 004 336 636) and Elders Rural Services Australia Limited (ACN 004 045 121) of the plaintiff's notice of motion filed 26 April 2017 and the notice of motion filed by Elders Limited (ACN 004 336 636) on the same day.
40. Order that the costs of Elders Limited (ACN 004 336 636) in the proceedings be the costs in the cause of Elders Rural Services Australia Limited (ACN 004 045 121).
41. Otherwise reserve liberty to apply to Elders Limited (ACN 004 336 636) to apply for an order for its costs of the proceedings. [Parties addressed on directions for filing pleadings and evidence. His Honour indicated that on the next occasion the parties should approach the List Manager to obtain a hearing date and made the following orders:]
42. The plaintiff is to serve all evidentiary statements, including any expert reports as well as any outline of the evidence it is anticipated that any witness will provide, by 20 June 2017.
43. Elders Rural Services Australia Limited (ACN 004 045 121) is to file a Defence to the third further amended statement of claim within 14 days of receiving a filed third further amended statement of claim.
44. Elders Rural Services Australia Limited (ACN 004 045 121)is to serve all its statements, including any expert report and any notice under the Evidence Act, by 18 July 2017.
45. Stood over for directions before a Registrar on 8 August 2017 at 9:00am.