BETWEEN : YOULDEN ENTERPRISES PTY LTD (ACN 063 388 947)

HEALTH SOLUTIONS AUSTRALIA PTY LTD (ACN 063 345 077)

Practice and procedure - Application by plaintiff for further and better particulars of defence - Whether particulars provided by defendant inadequate - Turns on own facts

American Flange & Manufacturing Co Inc v Rheem (Australia) Pty Ltd [1963] NSWLR 1121

Astrovlanis Compania Naviera SA v Linard [1972] 2 QB 611

Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214

Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658

Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218

Palmos v Georgeson [1961] Qd R 186

Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148

1 MASTER NEWNES: The first-named plaintiff ("Youlden") has applied to strike out the defence of the third defendant ("Mr Fogarty") on the ground that it is inadequately particularised. The application arises out of Mr Fogarty's response to a request by Youlden for further and better particulars of his defence. On the hearing of this application it was agreed between the parties (I might say very sensibly) that the application should be treated as an application for further and better particulars of the defence.

2 The principles to be applied on an application of this nature are well established. It is fundamental that a party is entitled to a statement of the opponent's case sufficiently clear to allow him or her a fair opportunity to meet it: Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664. The function of particulars is to carry into operation the overriding principle that the litigation between the parties, and particularly the trial, should be conducted fairly, openly and without surprise, and to reduce costs: Astrovlanis Compania Naviera SA v Linard [1972] 2 QB 611 per Edmund Davies LJ at 620; Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214 at 221. Particulars are intended to inform the other side of the nature of the case which it has to meet, as distinguished from the mode in which that case is to be proved, and to limit the generality of the pleadings, so as to limit and define the questions to be tried and as to which discovery is required. They must allow the parties to an action to meet with necessary evidence any questions that may be raised at the trial, to prevent surprise and consequent delay: Bailey v Federal Commissioner of Taxation (supra). They were described in Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218 by Lord Radcliffe (at 241) as follows:

"It seems to me that it is the purpose of such particulars [certain further and better particulars of the statement of claim] that they should help to define the issues and to indicate to the party who asks for them how much of the range of his possible evidence will be relevant, and how much irrelevant, to those issues. Proper use of them shortens the hearing and reduces costs."

3 The question of the degree of particularity required of a party giving particulars depends on the nature of the case and, in general terms, "the good sense of the thing"; the other party must not be left in doubt as to the case it must meet: American Flange & Manufacturing Co Inc v Rheem (Australia) Pty Ltd [1963] NSWLR 1121 at 1126. But particulars will not be ordered where it would be unreasonable or oppressive to do so.

4 It is not, of course, a ground for refusing particulars that the party applying for particulars has knowledge of the facts. The applicant is entitled to know the outline of the case his opponent will try to make against him, which may be something very different from the facts of the case: Palmos v Georgeson [1961] Qd R 186. The question, therefore, is not whether the applicant has adequate knowledge of the facts; it is whether he has adequate knowledge of what the other party will allege to be the facts, for that is the case which he must meet: Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148 at 154.

5 The first complaint by Youlden relates to the answer to a request for further and better particulars of par 22.1 of the defence. In its defence Mr Fogarty pleads at par 22.1 that "in or about April or May 1999 Gorton made representations to [Mr Fogarty] including the following representations ... [and ten specific representations are then set out]."

6 The plaintiff requested particulars, to the extent the representation is alleged to be oral, of the date, place and substance of each conversation said to constitute the representation. The response to that request was that the representations were oral and were "made during a series of discussions between Gorton and Fogarty the exact number which cannot be identified" and that "the substance of each discussion was directed to how Gorton and Fogarty could obtain a controlling interest in HSWA".

7 Youlden says that the particulars are inadequate as neither the date nor place of the alleged discussions has been given and particulars of the substance of the discussion are inadequate. Counsel for Mr Fogarty said that those were the best particulars Mr Fogarty could provide and were sufficient to inform the plaintiff of the nature of the case it must meet. Counsel accepted that the particulars did not give the substance of the discussions alleged, but said that that was the best Mr Fogarty could do.

8 In my view, the particulars are inadequate. If Mr Fogarty is unable to give the date and place of the relevant conversations the particulars should say so. Similarly, to the extent Mr Fogarty is unable to state the substance of the discussions he should give the best particulars he is able and state that those are the best particulars he is able to give. Otherwise, Youlden is left not knowing whether or not it will be met at trial with contentions as to specific conversations, places and dates.

9 The next complaint related to the particulars provided in relation to subpars 42.1 to 42.4 of the defence. In par 42 of the statement of claim it is pleaded that in or about 2000 Mr Fogarty caused HSWA to make a number of payments to a company called Fopar, of which Mr Fogarty is the sole shareholder and director. It is alleged in par 43 that Mr Fogarty caused those payments to be made without the authority of the directors of HSWA. In par 44 it is alleged that no consideration was provided by Fopar for the payments and there was no reason for the payments to be made. In par 42 of the defence Mr Fogarty admits that the payments specified in subpar 42.1 to par 42.5 were made but otherwise denies the allegations in par 42 of the statement of claim and, in particular, denies that he caused the payments to be made. Mr Fogarty denies the allegations in par 43 of the statement of claim and further denies that he caused the payments to be made or that the payments were made without the authority of the directors of HSWA or some of them. In the particulars of that paragraph, Mr Fogarty says that in the relevant period the directors of HSWA included Mr Foo and Mr Chee.

10 The request for particulars in respect of the payments pleaded in the defence is whether it is alleged that Mr Foo or Mr Chee had approved the making of the payments and, if so, the facts and matters relied upon in support of that allegation. It was submitted that the particulars go to the issue of who caused the payments to be made, the pleading in par 43 being ambiguous or unclear as to that. Mr Fogarty has objected to the request on the ground that it is irrelevant to the matters pleaded in par 42.1 to par 42.4. It was also contended that the request is in the nature of an interrogatory.

11 In the course of argument counsel for Youlden accepted that the request should properly be directed to par 43 of the defence, rather than par 42.1 to par 42.4. When so directed it is, in my view, a proper request for particulars and the particulars should be provided. As it is currently formulated, directed to par 42 of the defence, it is not a proper request. I would order the particulars to be given of par 43.

12 The next request was in relation to par 43.2.6.4 of the defence which, as to a payment of $80,000 referred to in par 42, pleads that an error had been made in relation to the payment and "within about two days of the payment being made, [Mr Fogarty] learned of the error and promptly caused Fopar to repay the $80,000 to HSWA". Youlden has requested particulars of the date on which, and the means by which, the repayment was made. The date has been provided but no particulars have been given of the manner of repayment. In his written outline of submissions counsel for Mr Fogarty said the best particulars Mr Fogarty could give was that the payment was made by way of cheque drawn on the first defendant's account. Those particulars have not been formally provided and plainly they should be so that they form part of the pleadings.

13 The next requests related to par 43.3 of the defence. The relevant plea in that paragraph, in substance, is that in about September 2000 Mr Fogarty caused Fopar to repay the various payments made to it by HSWA, and arranged for the delay in payment of further management fees due to Fopar from HSWA, and did not recover or delayed recovery of any other sums owed by HSWA to Fopar, to offset any interest foregone by HSWA by reason of the payments it had made to Fopar.

14 A request for particulars of the repayments made by Fopar to HSWA was acknowledged by counsel for Mr Fogarty to be inadequately answered in that the answer failed to provide particulars of how the repayments were made. In my view, that concession was properly made and the particulars should be provided.

15 Youlden has also sought particulars of the further management fees which it is alleged were due to Fopar, including particulars of the agreements under which the fees were alleged to have been payable.

16 It was submitted on behalf of Mr Fogarty that the agreement under which the fees were due to Fopar is not a matter in issue on the pleadings. I do not, however, accept that. The pleading in par 43.3 impliedly asserts that further management fees were due and payable to Fopar by HSWA. It is reasonably to be inferred that those fees were payable pursuant to some agreement. In order to know the case it must meet, Youlden is entitled to particulars of the management fees, including of any agreements under which it is alleged those management fees were payable.

17 Youlden has also sought particulars of the other sums Fopar is alleged not to have recovered, and in respect of which recovery was delayed, as pleaded in par 43.3 of the defence. I consider that Youlden is entitled to those particulars.

18 Youlden has sought, too, full particulars of the interest alleged to have been forgone by HSWA by reason of the Fopar payments, as pleaded in par 43.3 of the defence. Counsel for Mr Fogarty submitted that the plea was simply that the payment of management fees and other money owed by HSWA to Fopar was delayed to offset "any interest" that had been forgone by HSWA and it was not suggested that there was some specific formula or calculation, or legal basis, for calculating the interest. Mr Fogarty did not seek to plead, and does not seek to prove, a precise sum by way of interest but simply that the arrangement was made to compensate HSW generally for being kept out of its money. It was therefore not possible to provide further particulars.

19 On the basis that the plea is as explained by counsel for Mr Fogarty - and I should say that it seems to me that is how the plea is to be understood - I would not require further particulars to be provided.

20 Youlden has sought further particulars of the plea in par 44.1.1.4.1 of the defence, which is to the effect that Mr Fogarty advised Mr Gorton that various of the representations which had been made had proved to be inaccurate, in that, among other things, "HSWA's financial position was substantially different from the financial position stated on HSWA's financial statements for the period ending June 1999 in that the income generated by the trading operations of HSWA was not sufficient to meet payments due to PSC and the State Government ...". Youlden has sought particulars of the income generated by the trading operations and each of the payments alleged to have been due to PSC and the State Government. Counsel for Mr Fogarty submitted that those matters are not in issue. The plea is simply as to what Mr Fogarty advised Mr Gorton. I accept that submission. In my view, it is not a proper request for particulars.

21 A request for particulars has been made of par 44.1.2 of the defence, in which it is alleged that Mr Gorton advised Mr Fogarty that Mr Gorton had caused HSWA to make certain payments to Fopar to compensate it for the inaccuracy of the representations. To the extent it is alleged that Mr Gorton advised Mr Fogarty orally, Youlden has sought particulars of the date and place of each conversation, the natural persons who were parties to each conversation and the substance of each conversation. The particulars provided in response to that request are to the effect that the advice was oral and was given by Mr Gorton during several conversations with Mr Fogarty, and that further particulars cannot be provided. Mr Fogarty has objected to the request for particulars of the substance of the conversations as a request for evidence.

22 I consider the particulars provided to be inadequate. If Mr Fogarty cannot say when and where the relevant conversations took place he should say so. I do not accept that the request for the substance of the conversations is a request for evidence. Those particulars should therefore be provided. If Mr Fogarty is unable to provide those particulars he should specifically say so and say why he is unable to do so.

23 A similar approach was taken by Mr Fogarty to a request for particulars of the same nature in relation to par 47.2 of the defence. In my view, for the same reasons, the response is inadequate and the particulars should be provided.

24 The next request for particulars relates to par 49 of the defence. That is a plea in response to par 49 of the statement of claim, which pleads that the remuneration paid to Mr Fogarty was excessive and not reasonable. In par 49 of the defence Mr Fogarty denies those allegations and says the remuneration was not excessive and was reasonable for the tasks he performed, by reason of, among other things, his assumption of the role of sole executive director. Youlden has sought particulars of the responsibilities allegedly assumed by Mr Fogarty upon becoming the sole executive director of HSWA, including the approximate hours per week that Mr Fogarty spends attending to those responsibilities. The particulars provided state that the time spent per week has varied but usually ranges from approximately 15 to 50 hours per week and has included periods of more substantial workloads. The duties are said to be "the responsibilities concomitant with the usual role of a sole executive director, namely overall responsibility to [HSWA] and its Board for the management of [HSWA] including strategic planning and contract negotiations".

25 I accept, as submitted by counsel for Mr Fogarty, that the adequacy of particulars in response to such request is a matter of degree. It was submitted that it was not possible to provide a detailed timesheet or to set out in complete detail all the tasks and responsibilities that a person in the position of Mr Fogarty undertakes.

26 That may be so, but I consider that the particulars provided are inadequate. It is not sufficient to give, in respect of an extended period of time, simply the maximum and minimum number of hours per week that it is said Mr Fogarty spent on the duties concerned over that period, nor is sufficient to state his responsibilities in such general terms. It is inconceivable that Mr Fogarty does not have specific responsibilities and functions that can properly be specified so as to give a reasonable picture of the nature and ambit of his role. It is also inconceivable that he cannot give a more accurate estimate of the time he has spend on a regular basis on those activities and responsibilities so as to give a reasonable indication of the amount of time so spent. In my view, the particulars are quite inadequate and particulars of a greater degree of specificity must be provided.

27 Youlden has also sought further particulars of par 49, in respect of the duties of managing director and of executive chairman of HSWA that Mr Fogarty alleges he has performed. In my view, in each case the particulars provided are inadequate for the reasons I have already given in relation to the plea as to Mr Fogarty's position as sole executive director.

28 The next request for particulars also goes to par 49 of the defence, but to the plea that, in addition to the other services he has provided, Mr Fogarty has since late 1999 assumed responsibility for negotiating a sublease. Among other things, particulars have been sought by Youlden of the approximate hours per week that Mr Fogarty has spent on that activity. No particulars have been provided and in my view particulars, of the nature I have referred to in relation to Mr Fogarty's other roles, should be given.

29 Further particulars have also been sought of the allegation in par 49 of the defence that Mr Fogarty has "overseen the operation of the Peel Health Campus". Particulars have been requested of the tasks performed and duties undertaken in that respect, including the approximate hours per week spent on it. The particulars provided are to the effect that "Mr Fogarty [liaises] with and [reviews] report from senior administration and financial personnel, [attends] to department meetings, approval of major expenditure and review and [approves] major contracts". It is said that to provide a more comprehensive list of tasks would be unduly onerous. It is also said the approximate hours worked varied, depending upon a multitude of factors, from 15 to 50 hours per week. In my view, for the reasons I have given in relation to the other pleas in par 49, those particulars are inadequate and a greater degree of specificity is required in order to provide a proper answer to the request.

30 It was acknowledged by counsel for Youlden that particulars of a request directed to par 51 of the defence have now been provided by way of the written submissions filed on behalf of Mr Fogarty in response to this application. The particulars set out in the submissions should, however, be formally provided by way of particulars.

31 The next request also goes to par 51 of the defence. In par 51 of the statement of claim it is pleaded that, in or about the period 1999 to 2001, HSWA made a number of loans to HSA, particulars of which loans will be provided after discovery and answers to interrogatories. In par 51 of the defence, Mr Fogarty admits that in that period HSWA made a number of loans to HSA and says that the loans were repaid, and otherwise he denies par 51 of the statement of claim. He then sets out by way of particulars 19 separate loans made in that period. Youlden has sought particulars of each of those loans and, specifically in relation to each, particulars of whether they were written, oral or implied and the further usual particulars. Mr Fogarty has declined to provide the particulars on the ground that the request is not a proper request. Mr Fogarty says that the plea in par 51 of the defence is merely additional detail to the allegation in par 51 of the statement of claim.

32 It is not, however, apparent that the loans pleaded in par 51 of the defence are the same loans as those referred to in par 51 of the statement of claim, no particulars of the latter loans having yet been given. The question of the loans is plainly an important issue on the pleadings because it is alleged by Youlden, and denied by Mr Fogarty, that the loans which HSWA made to HSA were unsecured, interest free, with no repayment times stipulated, and were uncommercial transactions. In my view, Youlden is entitled to the particulars of the loans referred to in par 51 of the defence.

33 It was common ground between the parties that the particulars requested of each of par 61 and par 68.2 of the defence have now been provided and they simply needed to be provided formally by Mr Fogarty as a response to the request. That should be done.

34 The next matter in issue was the request for particulars of par 70 of the defence. That pleads to par 70 of the statement of claim, in which it is alleged that no dividends have been declared or paid by HSWA and Mr Fogarty has taken no steps to cause HSWA to declare or pay any dividends. In par 70 of the defence it is pleaded, among other things, that HSWA has from time to time considered whether a dividend ought to be declared and paid to its shareholders. Youlden has sought particulars of that allegation, including the dates on which such consideration took place, the persons who participated in it and the reason why a dividend was not paid. The particulars provided by Mr Fogarty are to the effect that question has been considered at "numerous Board meetings of HSWA, the minutes of which are being discovered by HSWA, including ..." and then the dates of several meeting are set out. The particulars also refer to a written statement given to the Police by Mr Youlden.

35 I accept the contention of Youlden that the response is not an adequate answer to the request. The onus cannot be cast on Youlden to go through the minutes of the Board meetings in an endeavour to ascertain when the subject was discussed. Mr Fogarty must give specific details, so far as he is able, of the occasions on which it was discussed. It is also not sufficient to say that the occasions on which it was discussed "included" certain specified meetings. If Mr Fogarty believes the subject was discussed on occasions that he is unable to specify he should say so expressly.

36 Youlden has requested particulars of par 71.1 of the defence, in which it is pleaded that HSWA notified its shareholders, and its shareholders have been aware, that "it requires funding for proposed expansion". Youlden has sought particulars of the alleged proposed expansion. Mr Fogarty has refused to provide the particulars on the basis that the relevant plea is simply as to the content of a notice to shareholders, not of the fact that HSWA required funding for expansion, and the request is therefore irrelevant. I do not agree. In my view the effect of what is pleaded is that HSWA has notified its shareholders (who were aware) of the fact that it requires funding for proposed expansion. It is not merely a plea as to the terms of the notification given to shareholders. Accordingly, in my view, Youlden is entitled to particulars of the allegation.

37 A request has also been made for particulars of the allegation in par 71.2 that HSWA notified its shareholders, and its shareholders knew, that "several million dollars are required to fund existing operations at the Peel Health Campus." Particulars have been sought of the alleged existing operations requiring funding. Mr Fogarty has again objected on the ground that the plea is simply as to the terms of the notice that was given and the request is irrelevant. For the reasons I have given in respect of par 71.1, I do not agree. I consider Youlden is entitled to the particulars. It was also said on behalf of Mr Fogarty that giving the particulars to the level of detail sought would be onerous and impractical. I accept that the level of detail reasonably required involves questions of judgment and degree. It is impossible to specify the requisite level of detail in the abstract but sufficient particulars must be given fairly to inform the plaintiff of the nature of the case it has to meet.

38 A request for particulars of par 71.3 of the defence, to which objection had been taken by Mr Fogarty, was conceded by his counsel to be a proper request and those particulars should accordingly be provided.

39 Youlden has requested further particulars of the pleas in par 73 and par 75 of the defence, as to a loan it is pleaded was made by HSA to HSWA. I accept that the particulars given in respect of the loan do not appear to support the plea. If the plea is to be persisted with in its current form, proper particulars of it must be provided. Otherwise, it would appear the substantive plea must be amended to reflect what is currently alleged in the particulars.

40 The next request for particulars was directed to par 85B.1 of the defence, in which it is pleaded that HSWA's existing funds were required, among other things, to expand its facilities for Peel Health Campus. Youlden has requested particulars of the expansion. I accept the submission on behalf of Youlden that Mr Fogarty's response is in such general terms that it is not a proper, or indeed any, answer to the request. Youlden is entitled to proper particulars in accordance with the request. The same position applies to the request for particulars of par 85B.2 of the defence, which pleads that HSWA's existing funds were required to fund the then existing operations of the Peel Health Campus. The particulars provided are, in my view, plainly inadequate and are not a proper response to the request.

41 In par 96 of the defence Mr Fogarty pleads that a certain recommendation made to HSWA by the Australian Council on Healthcare Standards "was addressed prior to the publication of the report" by the Council. Youlden has sought particulars of the steps allegedly taken to address the recommendation. The response by Mr Fogarty is that the best particulars he can give are that "the recommendations have been discussed and dealt with or are in the process of being dealt with on an ongoing basis administratively by and with appropriate HSWA officers and employees".

42 Mr Fogarty's answer was, I think not unfairly, characterised by counsel for the plaintiff as having a "Sir Humphrey Appleby style to it". It is plainly so vague as to be of no assistance in informing the plaintiff of the case it must meet and is not a proper answer to the request. The same applies to the particulars provided in response to the request made by Youlden in respect of par 102.1 of the defence. The particulars are stated in such general terms that they are insufficient to inform the plaintiff of the case it must meet and are not proper particulars.

43 Youlden has sought particulars of par 102.2 of the defence, in which it is pleaded by Mr Fogarty that the delay in the provision of audited financial statements for the period ending 30 June 2001 was caused by, among other things, the "time required by the auditors to prepare the accounts and for HSWA to respond to their request for information during that process". Youlden has sought particulars of the alleged time required by the auditors to prepare the accounts and for HSWA to respond to request for information, including the date or dates on which the auditors prepared the accounts, the date or dates of requests made by the auditors for information and the response thereto, and particulars (in the usual form) of the manner and content of each request for information by the auditors and the response to it. Mr Fogarty says that is not a proper request for particulars but is rather a request for evidence.

44 In my view, the request goes further than is reasonably necessary to enable the plaintiff to know the case it must meet. It would be unreasonable to require Mr Fogarty to specify the date of each and every request by any member of the auditor's staff for information, and to give specific details of the manner and content of each request and the response to it. I consider that the request for the date or dates on which the auditors prepared the accounts to be a proper request and, in general terms, the request for particulars of the time required by the auditors to prepare the accounts, and for HSWA to respond to requests for information, to be proper requests, but I do not consider that the request for specificity as to each and every request and response is justified. In addition to the date or dates on which the auditors prepared the accounts, Mr Fogarty should provide the best particulars he can of the period of time over which requests for information were made by the auditors and the time it took for HSWA to provide the auditors with all of the information requested by them, but I would not order particulars beyond that level of specificity.

45 A request for particulars has also been made in respect of par 102.3 of the defence, which pleads that the delay in the provision of the audited financial statements was caused by, among other things, the refusal by Mr Gorton to assist by providing information about loan arrangements that he had previously negotiated with PSC. The request seeks particulars of an allegation, said to be implicit, that a request or requests was made of Mr Gorton by HSWA for Mr Gorton to provide information about loan arrangements, and the usual particulars are sought of each such request. Mr Fogarty says the best particulars he can provide are that Mr Gorton "was requested by HSWA orally, on at least one occasion in 2001 to provide relevant financial information in relation to loans previously negotiated with PSC". Mr Fogarty says that the particulars are adequate to inform the plaintiff of the nature of the case it will have to meet. I do not consider, however, that the particulars are adequate. They do not, for instance, say by whom the request was made or, with sufficient particularity, when that request was made. In my view, Youlden is entitled to particulars of those matters. If Mr Fogarty cannot give those particulars, the basis for the allegation that such a request was made at all will need sufficiently to appear in order to demonstrate that there is a proper basis for the allegation.

46 Requests have also been made in respect of par 104.1 and par 104.4 of the defence. In the written outline of submissions filed by his solicitors on this application, Mr Fogarty has provided further particulars. They should, however, be formally provided by way of particulars.

47 The final request by Youlden goes to par 104.4 of the defence, where it is pleaded "the Board of HSWA decided to advance loans to [Mr Fogarty] to fund his defence of criminal charges in relation to the CFS payment". Youlden has requested the usual particulars of the alleged loans to Mr Fogarty. Mr Fogarty has objected to the request on the basis that the plea is simply as to a decision of the Board, not as to the advance of loans to him. I do not consider, however, read in the context of the whole of par 104 of the defence, and having regard to par 104 of the statement of claim to which it responds, that that is the meaning to be given to the plea. In my view, the plea can only properly be read as an assertion that the funds pleaded in par 104 of the statement of claim were in fact advanced by way of loans. Accordingly, in my view, Youlden is entitled to the particulars requested.

48 Youlden's solicitors should bring in a minute of orders to give effect to these reasons. I will hear the parties on the question of costs.