Allstate Life Insurance & Ors v Australia & New Zealand Banking Group Ltd & Ors [1995] FCA 191

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G381 of 1994 ) GENERAL DIVISION )

BETWEEN: ALLSTATE LIFE INSURANCE CO. & OTHERS Applicant AND AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED & OTHERS Respondent

CORAM: Beaumont J. DATE: 22 March 1995 REASONS FOR JUDGMENT (No.8) (On motion to strike out part of statement of claim) Before the court is a notice of motion by Freehill Hollingdale & Page ("Freehills") seeking to strike out para.62 and, to a limited extent, paras.63 and 64 of the further amended statement of claim filed on 16 December 1994. In order to understand the context in which those paragraphs appear in the pleading it is necessary to refer, inter alia, to paras.58 and 60 of the pleading. Paragraphs 58, 60 and 62-64 of the further amended statement of claim are now annexed. There is a limited challenge made to para.62, that is, it is sought to strike out para.62 insofar as it relates to paras.63 and 64.

As has been indicated in previous reasons for judgment the applicants plead in their statement of claim a number of causes of action. For present purposes it is sufficient to note that the causes of action include claims of fraud and misleading conduct. In those circumstances, the general principles which govern this application are clear. They are conveniently found in the judgment of the Court of Appeal of the Supreme Court of New South Wales in the Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 at 204-5. This matter is also discussed in Bullen and Leake Precedents of Pleadings (1990) 13th ed. at pp.427-429 where the principles, all of which are well established, are set out as follows: "Where fraud is intended to be charged, there must be a clear and distinct allegation of fraud upon the pleadings, and though it is not necessary that the word fraud should be used, the facts must be so stated as to show distinctly that fraud is charged (Wallingford v. Mutual Society (1880) 5 App.Cas. 685 at 697, 701, 709, Garden Neptune v. Occidental [1989] 1 Lloyd's Rep. 305, 308). The statement of claim must contain precise and full allegations of facts and circumstances leading to the reasonable inference that the fraud was the cause of the loss complained of (see Lawrance v. Lord Norreys (1890) 15 App. Cas. 210 at 221). It is not allowable to leave fraud to be inferred from the facts pleaded and accordingly, fraudulent conduct must be distinctly alleged and as distinctly proved (Davy v. Garrett (1878) 7 Ch.D. 473 at 489). 'General allegations, however strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any court ought to take notice' (Wallingford v. Mutual Society ante, at 697, see the remarks of Lords Hatherley and Blackburn at 701, 704; Re Whitworth [1919] 1 Ch. 320; affirmed sub nom. O'Rourke v Darbishire (1920) A.C. 581; in order to displace the privilege of communication between solicitor and client a real prima facie case of definite fraud must be found in the pleadings and particulars (ibid at 622). Where misrepresentation was not pleaded unilateral mistake could not be relied on for the purposes of rectification or rescission (Blay v. Pollard [1930] 1 K.B. 638; L'Estrange v. Graucob [1934] 2 K.B. 394 at 403). An amendment introducing a charge of fraud for the first time will not be allowed at the trial (see Bentley & Co. Ltd. v. Black (1893) 9 T.L.R. 580, per Lord Esher M.R.; Behn v. Bloom (1911) 132 L.T.J. 87), except in the most exceptional circumstances, though usually an adjournment would be granted at the cost of the party applying (see Riding v. Hawkins (1889) 14 P.D. 56). There is, however, no rule of practice that allegations of fraud have to be pleaded at the outset and could not be added by amendment, for amendments alleging fraud are no different from other amendments (Atkinson v. Fitzwalter [1987] 1 W.L.R. 201 C.A. (amendment allowed to add a plea of justification in a libel action, even though fraud was the gist of the plea.) Such an amendment will not be allowed by the Court of Appeal (Bradford Third Equitable Benefit Building Society v. Borders [1942] 2 All E.R. 205, H.L.). It is the duty of counsel not to put a plea of fraud on the record 'unless he has clear and sufficient evidence to support it' (Associated Leisure Ltd. v. Associated Newspapers Ltd. (1970) 2 Q.B. 450, per Lord Denning M.R. at 456). The extension of liability for misrepresentation to innocent misstatements under section 2 of the Misrepresentation Act 1967 and to negligent misstatements under the doctrine of Hedley v. Byrne may well mean that, in many cases, the plaintiff need not and perhaps should not undertake the heavier burden of pleading and proving a charge of fraud, and that the misrepresentation relied on was made fraudulently. Where charges of fraud are made which are not sustained, the judge has power to order the party making such charges to pay the costs occasioned thereby (Parker v. McKenna (1874) L.R. 10 Ch. 96). The proper method of impeaching a completed judgment on the ground of fraud is by action, or in special cases by motion for a new trial; in either case exact particulars of the fraud must be given (Jonesco v. Beard [1930] A.C. 298). Particulars. Full particulars of any misrepresentation relied on must be given in the pleading (R.S.C., Ord. 18, r. 12(1)(a)). Any charge of fraud or misrepresentation must be pleaded with the utmost particularity (Garden Neptune v. Occidental, above). The statement of claim must show the nature and extent of each alleged misrepresentation (Newport Dry Dock & Engineering Co. v. Paynter (1886) 34 Ch.D. 88) and contain particulars showing by whom and to whom it was made, and whether orally or in writing, and if in writing, identifying the relevant document (Seligmann v. Young (1884) W.N. 93). Where the plaintiff alleged that the entries made by the defendant in certain books were false, he was ordered in the first place to give particulars of those entries, and subsequently to give further particulars showing in what respects each of these entries was false (Newport Dry Dock & Engineering Co. V. Paynter, above); 'all the accounts rendered to the plaintiff are untrue' did not comply with an order for further particulars of fraud (Harbord v. Monk (1878) 38 L.T. 411). Moreover, the necessary particulars of the fruadulent intention relied on must also be contained in the pleading (R.S.C., Ord. 18, r.12(1)(b)), and accordingly, the pleading must set out the facts, matters and circumstances relied on to show that the party charged had or was activated by a fraudulent intention."