FEDERAL COURT OF AUSTRALIA Ananda Marga Pracaraka Samgha Ltd v Tomar (No 5) [2012] FCA 390 Citation: Ananda Marga Pracaraka Samgha Ltd v Tomar (No 5) [2012] FCA 390 Parties: ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 879) & ORS (ACCORDING TO THE ATTACHED SCHEDULE) v SUNIL KUMAR SINGH TOMAR & ORS (ACCORDING TO THE ATTACHED SCHEDULE); SUNIL KUMAR SINGH TOMAR & ORS (ACCORDING TO THE ATTACHED SCHEDULE); ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 879) & ORS (ACCORDING TO THE ATTACHED SCHEDULE) File number: VID 208 of 2010 Judge: DODDS-STREETON J Date of judgment: 5 April 2012 Catchwords: PRACTICE AND PROCEDURE – Cross-examination – Defendants sought to cross-examine second plaintiff in relation to proceeds of sale of two company properties – Whether proposed line of cross-examination relates to pleaded claim or otherwise sufficiently notified Cases cited: Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445 discussed Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 discussed Date of hearing: 5 April 2012 Date of publication of reasons: 18 April 2012 Date of last submissions: 5 April 2012 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 30 Counsel for the Plaintiffs/Cross-Defendants: Mr C Gunst QC with Mr M Irving Solicitor for the Plaintiffs/Cross-Defendants: Holding Redlich Counsel for the Defendants/Cross Claimants: Mr BE Walters SC with Mr TR Messer Solicitor for the Defendants/Cross Claimants: Moores Legal IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 208 of 2010 BETWEEN: ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 879) & ORS (ACCORDING TO THE ATTACHED SCHEDULE) Plaintiff SUNIL KUMAR SINGH TOMAR & ORS (ACCORDING TO THE ATTACHED SCHEDULE) Cross-Claimant AND: SUNIL KUMAR SINGH TOMAR & ORS (ACCORDING TO THE ATTACHED SCHEDULE) Defendant ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 879) & ORS (ACCORDING TO THE ATTACHED SCHEDULE) Cross-Defendant JUDGE: DODDS-STREETON J DATE: 5 APRIL 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) 1 On 4 April 2012, in the course of the trial of the proceeding, senior counsel for the defendants, Mr Walters SC, sought to cross-examine the second plaintiff, Mr Devendhran Vadiveloo Pillay, in relation to the proceeds of sale of two properties of the company, which were sold in 2008 and 2009, for about $250,000 and $600,000 respectively. The plaintiffs objected to the proposed line of cross-examination on the ground that it was not relevant to any question validly at issue in the litigation and should be disallowed, save as going to credit. Mr Walters indicated that the defendants would allege that the sale of the first property was not recorded in the company's accounts for the relevant period, and that the defendants had not been provided with accounts for the period in which the sale of the second property occurred. 2 On 5 April 2012, the parties made further submissions in relation to the question. The defendants submitted that the court was required to consider all of the evidence before it, and as the company the subject of the proceeding was a public company with charitable objects, the issue concerned the public interest and should be dealt with as required. The defendants reiterated that the issue could not take the plaintiffs by surprise, as it had been the subject matter of frequent and prolonged correspondence between the parties and their solicitors and the question had been raised clearly in opening. Further, oppression claims were, under the relevant Corporations rules, in the usual course, made by affidavit rather than on pleadings. 3 The defendants submitted that they sought to raise a simple point, that is, whether the relevant information had been provided in relation to the properties, and then, if not, where the proceeds were. Such matters went to dysfunctionality of the company's board, and the defendants were entitled to explore them. 4 Mr Gunst QC, senior counsel for the plaintiffs, reiterated that the pleadings governed the proceeding, and were clear. There was no allegation of failure to provide information or financial impropriety. Further, the allegation had not been included in the defendants' written outline dated 21 March 2012, and to the extent to which it was raised at all in exchanges during the defendants' oral opening, was at best ambiguous. The oppression claim was dealt with at paragraphs 109 to 114 of the defendants' written submissions as based merely on control and failure of expectation, rather than on financial misdealing or failure to account. The plaintiffs further submitted that any allegations of fraud should not be made without the plainest warning, affording the relevant party an adequate opportunity to answer them. 5 The plaintiffs submitted that they did not object to cross-examination as to credit, but that the allegations were not relevant to issues in the proceeding. The plaintiffs also submitted that the interim regime pursuant to the orders made on 13 December 2010 conferred a limited rather than an unqualified entitlement to information on the defendant directors. Nevertheless, the defendants had never asserted during the interim period since December 2010 any breach of the orders, and had not made any application in relation to inadequate disclosure or provision of information to the court. 6 Mr Gunst further submitted that any application to amend to incorporate the new allegations would, if granted, significantly expand and dislocate the course of the trial. BACKGROUND 7 As the plaintiffs contended, the allegations of failure to account for the proceeds of sale of the company properties appear nowhere in the defendants' pleadings. 8 The defendants' further amended cross-claim dated 4 November 2011 pleads: (a) that the company holds its assets on trust or is bound to apply them for the object of propagating the "ideals, the philosophy and practice of the religion known as Ananda Marga"; (b) that the religion has various rules and practices, including that monks and nuns must obey posting orders and the commands of the General Secretary of Ananda Marga Pracaraka Samgha (Central) ("AMPS Central"); (c) that on a proper construction of the company's memorandum and articles, persons not members of Ananda Marga in good standing shall not remain members, directors or secretary of the company; (d) that company assets shall not be used contrary to the lawful directives of AMPS Central; and (e) that directors shall not treat company assets as if beneficially owned by the company or to satisfy their personal wishes or financial interests. 9 The further amended cross-claim further alleges that various persons, including the second plaintiff, failed to obey posting orders, lost their spiritual titles in Ananda Marga and were thereby prohibited from acting as directors, members or secretary of the company, and, further, that other persons described as "supporting parties", having failed to comply with letters of the General Secretary, also lost standing under the rules and practices of Ananda Marga and, thus, were no longer qualified to hold office as a director or to be a member or secretary of the company. 10 The further amended cross-claim also pleads a conflict of interest in relation to the bringing and funding of the proceeding. Under the heading "Oppressive Conduct", the further amended cross-claim, in paragraph 31, states that if, and only if, the members of the company are those identified by the plaintiffs, do the defendants make the contentions that are pleaded in the succeeding paragraphs 32 to 38. Paragraphs 32 to 38 of the further amended cross-claim plead that the company was incorporated for the sole purpose of being the vehicle by which the Ananda Marga religion was expressed, promoted and organised in Australia, and that subscribers had the expectation that the company's affairs would be conducted consistently with the Ananda Marga religion's rules and practices. 11 The further amended cross-claim pleads that the company was required to give effect to the expectation notwithstanding the provision of the articles, and that by reason of the allegations in paragraphs 11 to 23 (which relate to disobedience of posting orders and non-compliance with letters of the General Secretary) the company was not conducted consistently with the rules and practices of the Ananda Marga religion so as to give effect to the expectation. The defendants plead that, in the premises, the company's conduct has been, and remains, oppressive, contrary to the interests of the members as a whole, and unfairly prejudicial or discriminatory to the defendants. By paragraph 38 of the further amended cross-claim, the defendants claim relief under s 233 of the Corporations Act 2001 (Cth) ("the Act") by reason of the above matters. 12 The defendants' pleaded oppression claim thus wholly coincides with the allegation of invalidity of the membership and office holding of the persons identified by the plaintiffs as members and directors. The oppression allegation does not come into play unless those persons are held to be valid members or officers, and the sole basis on which the oppression claim is pleaded is that such persons are members and directors, despite their alleged disobedience of posting orders, or non-compliance with the letters of the General Secretary. 13 The further amended cross-claim makes no allegation of breach of duty by directors constituted by misapplication, unauthorised treatment or dissipation of the company's assets, of failure to keep proper records or of withholding of records or information from other directors, contrary to general law or statutory obligations. No specific company properties or assets, or instances of withholding information or records, or failing properly to prepare accounts in relation thereto, or indeed, in relation to any other matter, is identified in the pleadings. Unsurprisingly, as the matters on which the oppression claim was alleged wholly coincided with the allegations in relation to ineligibility to maintain membership or office, the plaintiffs apparently sought no further and better particulars of the oppression obligations. 14 The further amended cross-claim (as alternatives to matters pleaded in the defence and preceding paragraphs of the cross-claim), on the basis of matters already pleaded in paragraphs 9 to 24, pleads (in paragraphs 39 to 42) that the second and third plaintiffs' control of the company would be contrary to the charitable object, and, if the plaintiffs obtain the relief they sought (or the defendants did not obtain certain relief sought in their prayer for relief), then the company would have ceased to apply its assets to the alleged charitable objects, and would no longer be a practical or appropriate vehicle for the same. 15 The relief that the defendants seek in their prayer for relief, the failure to obtain which would allegedly lead to a failure of the charitable objects, is as follows: (a) paragraph A of the prayer for relief is relief sought in relation to membership; (b) paragraph B of the prayer for relief is relief sought in relation to directors' holding of office; (c) paragraph C(1) is alternative relief in relation to section 233 of the Act, being specifically, amendment of the register of members, modification of the company's constitution, or alternatively, winding up; and (d) paragraph C(2) of the prayer for relief is, alternatively, an order under section 461(1)(k) of the Act, that the company by wound up under that alternative provision. 16 Thus, section 461(1)(k) of the Act appears only in the prayer for relief, and no allegations are independently directed at it. Nor, perforce, are there any relevant independent particulars, and the section 461(1)(k) relief depends wholly on the matters pleaded in relation to the other heads of relief. 17 The defendants' pleadings, which have been amended on more than one occasion in this longstanding matter, thus do not contain any allegations that particular plaintiffs, or any other person, has misappropriated or failed to account for company property generally, or in relation to particular assets, have withheld information, excluded parties, or have otherwise breached their judicial or statutory obligations. Save for the allegations in relation to the funding of the litigation, the relevance of which has fallen away, the characteristic indicia of oppressive conduct are not alleged. 18 In summary, on the basis of the pleadings, therefore, the defendants' essential claim relates to alleged breaches of the objects, membership and directors' status, as I have previously observed. Further, as I observed at the outset of the case, on the pleadings, the basis of the oppression claim wholly overlaps with and is constituted by the same allegations of material fact as support those primary claims, and oppression is an alternative which comes into contention only if the plaintiffs' claims in relation to membership and directors are upheld. 19 In the course of the opening, I indicated my apprehension that the defendants' alleged membership of the company, as advocated by the plaintiffs, in itself constituted the oppression and the failure of objects, and this was discussed at transcript page 24-25 and again more fully at transcript page 92. Mr Walters, at transcript page 92, stated that the defendants were shut out of management, referred to the properties sold in Western Australia, and stated that the defendants had not received an account of the proceeds, despite a dozen or so requests. Mr Walters stated that the defendants did not assert impropriety, but rather, lack of knowledge, despite those requests. When asked whether those bases of oppression were particularised, Mr Walters referred to the failure to obey posting orders and the question was not conclusively addressed. 20 Dr Tomar's witness statement, however, dated 23 February 2003, refers in paragraphs 240 to 244 to the land sales in Western Australia, and in paragraphs 232 to 236 to his request for information and financial records, and to documents received in response, which were asserted to be only or mostly summaries and general in nature. The defendants relied particularly on Dr Tomar's witness statement to support the submission that the matters were appropriately and adequately notified to the plaintiffs, and should be considered valid issues in the trial. 21 Senior counsel for the plaintiffs, however, submitted that the plaintiffs, as made clear in their written submissions, had consistently taken the view that the case they had to answer did not involve allegations of mismanagement of the company. The plaintiffs therefore did not file material in response to Dr Tomar's specific assertions, and did not cross-examine him on them, as they were not relevant to the pleaded case. The plaintiffs submitted that preparation to meet the complaints would require the examination of records, the calling of the company's auditors and solicitors, and the recall of Dr Tomar, and would constitute a sizeable exercise. discussion 22 The present proceedings commenced by an application and affidavits, but due to the complexity of the claims and cross-claims, pleadings were ordered at an early stage. 23 In Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445, the Full Court stated at [304]: This court has recently reiterated that "[m]aterial facts must be pleaded with the degree of specificity necessary to define the issues and inform the parties in advance of the case they have to meet." (citing, in that context, Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (1991) 217 ALR 171 at 173, and Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356 at [49]). 24 In Castel, the respondent, in defending a claim against it, attempted to rely on a matter that it had not pleaded. The respondent had referred to the matter only in final written submissions, in reliance on admissions it had elicited in cross-examination, which was ostensibly going only to credit. The Full Court disallowed reliance on the new argument. It observed (at [305]) that, as the High Court had held in Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 296-297, a party is entitled at trial to have the opposing party confined to its pleadings, because the first party is entitled to come to trial to meet only the issues raised on the pleadings. 25 The Full Court recognised, as acknowledged in Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490, that if a party allows the other party to raise other material facts and issues for the determination of the court, then the court may proceed to determine the proceeding on those further issues. In the early case of Gould, Isaacs and Rich JJ recognised at 517 that: as a general rule of fair play, pleadings should state with sufficient clearness the case of the party whose averments they are. 26 Their Honours acknowledged, however, that pleadings are only a means to an end, and if the parties choose to disregard them and: [m]eet each other on issues fairly fought out, they could not then hark back to the pleadings. 27 In Gould, the defendants had adopted the course of: [f]ighting the claims as presented in argument upon the evidence, as if the particular claims had been specifically alleged, and as if there were no other evidence upon those claims which the defendants desired to adduce. 28 In other words, the parties had effectively consented to conduct their dispute at trial outside the pleadings. In contrast, in Castel, as the Full Court noted, the respondent had not applied to amend its pleadings to rely on the new point (which would in any event have been resisted as too late), and the appellant in that case did not indicate at trial that it was content to depart from the pleadings and deal with the new point as a defence to its claim. 29 Similarly, in the present case, the plaintiffs have objected, rather than consented to, the defendants' introduction of a claim which was not pleaded. In my opinion, the inclusion of the material in Dr Tomar's affidavit did not, in substitution for a pleading, clearly or sufficiently notify the plaintiffs that such matters would be pressed as discrete, independent allegations. Had it done so, the raising of the allegations in relation to the proceeds of property transactions so close to the trial would have raised the question whether there was an adequate opportunity to prepare to answer them. It has been contended that the relevant issues were the subject of longstanding complaint by Mr Tomar and the defendants' solicitors, but that in itself would not signify that they were to be the subject of litigation. Nor, in my view, even in opening, was the discrete case now sought to be raised unambiguously flagged. In any event, this is clearly not a case in which the plaintiffs are content to depart from the pleadings, and to meet an expanded case on the basis of evidence at trial. 30 The defendants foreshadowed, but ultimately did not make, an application to amend the further amended cross-claim to include the relevant allegations. I therefore do not deal with that issue. However, it follows, in my opinion, that the sale of the West Australian properties, the handling of their proceeds and the keeping or provision of records in relation to the same are not issues in the proceeding, and are not properly the subject matter of cross-examination, save to the limited extent appropriate in relation to testing credit. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton. Associate: Dated: 5 April 2012 SCHEDULE TO PARTIES ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 897) First Plaintiff/First Cross-Defendant DEVENDHRAN VADIVELOO PILLAY Second Plaintiff/Second Cross-Defendant PRABANJAMURTHI PILLAI Third Plaintiff/Third Cross-Defendant SUNIL KUMAR SINGH TOMAR First Defendant/First Cross-Claimant CLAUDIA ALISTER Second Defendant/Second Cross-Claimant RICHARD PFEIFFER Third Defendant/Third Cross-Claimant TIWARI DAYASHANKAR Fourth Defendant/ Fourth Cross-Claimant PAUL ALISTER Fifth Defendant/Fifth Cross-Claimant DIETER DAMBIEC Sixth Defendant/Sixth Cross-Claimant JAKE KARLYLE Seventh Defendant/Seventh Cross-Claimant LUKE DEACON Eighth Defendant/Eighth Cross-Claimant MIRAI DEACON Ninth Defendant/Ninth Cross-Claimant MICHAEL TOWSEY Tenth Defendant/Tenth Cross-Claimant DHARANENDRAN PARTHY Eleventh Defendant/Eleventh Cross-Claimant