Supreme Court New South Wales Medium Neutral Citation: Dimarti v Westpac Banking Corporation [2020] NSWSC 1342 Hearing dates: 26 August 2020 & 3 September 2020 Date of orders: 2 October 2020 Decision date: 02 October 2020 Jurisdiction: Common Law Before: Rothman J Decision: The Court makes the following orders: (1) Pursuant to the provisions of s 64(1)(b) and s 65(2)(c) of the Civil Procedure Act, the plaintiff has leave to amend the Statement of Claim by including a claim based on an allegation that the fraud was reported on 4 October 2011; (2) The plaintiff shall file and serve within two weeks of the date of this judgment an Amended Statement of Claim in a form that is appropriate and which, to the extent that there is contained therein a claim for personal injury, is accompanied by a statement and documentation referred to in r 15.12 of the UCPR; (3) The plaintiff shall pay the defendant's costs of and incidental to the proceedings thrown away as a result of any amendments to the Statement of Claim on an indemnity basis; (4) Pursuant to the terms of s 61 of the Civil Procedure Act, the Court directs that no amended pleading filed by the plaintiff later than the time ordered above may be filed or served and, subject to any subsequent order of the Court, no further attempt at an appropriate pleading may be agitated. Catchwords: CIVIL PROCEDURE – Pleadings – Fraud – Amendment – Form and Content of Pleadings – Non-compliance with Rules relating to personal injury – lack of specificity in fraud allegation – leave granted to file amendment over objection. LIMITATION OF ACTIONS – Fraud and personal injury – amendment to allege different cause of action – same or similar facts – operation of Civil Procedure Act – leave granted. Legislation Cited: Civil Liability Act 2002 (NSW), ss 5B, 5C Civil Procedure Act 2005 (NSW), ss 56, 64, 65(2) Limitation Act 1969 (NSW), s 14 Uniform Civil Procedure Rules 2005 (NSW), rr 12.7, 13.4, 15.12 Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Barnes v Addy (1874) LR 9 Ch App 344 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Farah Custodians Pty Limited v Commissioner of Taxation (No 2) [2019] FCA 1076 Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181 KTC v David (No 1) [2019] NSWSC 281 Lachlan v HP Mercantile Pty Ltd (2015) 89 NSWLR 198; [2015] NSWCA 130 Category: Procedural and other rulings Parties: Carmelo Dimarti (Plaintiff/Applicant) Westpac Banking Corporation (Defendant/Respondent) Representation: Counsel: N Obrart (Plaintiff/Applicant) J Entwisle (Defendant/Respondent) Solicitors: Harper James Law Group (Plaintiff/Applicant) DLA Piper Australia (Defendant/Respondent) File Number(s): 2017/295316 Judgment 1. HIS HONOUR: By Motion on notice, dated 23 June 2020, the plaintiff, Carmelo Dimarti, seeks leave to file a proposed Further Amended Statement of Claim (hereinafter "FASOC") in respect of proceedings in which the defendant is the Westpac Banking Corporation (hereinafter "Westpac"). Notwithstanding that leave that has been sought to file the FASOC, no Amended Statement of Claim has ever been filed. The current state of the pleadings is that there is a Statement of Claim (hereinafter "SOC") and a Defence. 2. The Motion, as filed, also seeks an order that the defendant pay the plaintiff's costs of the Motion. Notwithstanding the terms of the last mentioned prayer for relief, the plaintiff's written submissions in reply, dated 25 August 2020, at [46], reflects a different position and the plaintiff now consents "to the payment of the defendant's costs thrown away by reason of the amendments". 3. The plaintiff relies upon the Affidavit of Mouna Youssef, dated 23 June 2020, which annexes the FASOC. The plaintiff further relies upon a second Affidavit of Mouna Youssef, dated 25 August 2020 (hereinafter "the second Youssef Affidavit"), which indicates that the plaintiff's solicitors responded to requests for particulars on 14 April 2020. 4. The defendant opposes leave to file the FASOC and relies upon the Affidavit of Lucy Val Connell, dated 14 July 2020. Background 1. The substantive proceedings concern the discharge by the defendant of a mortgage over a property in Kogarah (hereinafter "Property") in or around September/October 2011. The Property was jointly owned by the plaintiff and his brother, Antonio Dimarti. 2. The plaintiff alleges that this discharge was procured by fraud, perpetrated by his brother, and that the registration of the discharge by the defendant caused him to lose his half share in the property. 3. The defendant submits that the plaintiff has since recovered that half share in separate proceedings against Antonio, who is now deceased. Those proceedings will be referred to in these reasons for judgment as the "Antonio Proceedings". Notwithstanding the recovery of that half share, the plaintiff brings these current proceedings, according to the defendant, and in them seeks to hold the defendant liable for a series of consequential losses that the defendant submits are too remote to sound in damages. 4. The cause of action against the defendant is said to arise, it seems, from a breach of duty owed by the defendant to the plaintiff. That breach consisted of a failure to detect that the plaintiff's purported signature on the discharge was forged. The defendant submits that the Antonio Proceedings were resolved by consent, with an order being made to the effect that the transfer of the plaintiff's interest was declared to be void and of no effect as between the parties and that no order be made as to costs. [1] 5. The defendant submits that the plaintiff's original SOC did not articulate any recognisable cause of action. The SOC purports to plead that the plaintiff did not authorise the defendant to agree to the discharge of the mortgage over the property and asserts that "the Plaintiff holds liable the Defendant for allowing and/or permitting the fraudulent conduct". [2] The particulars of that allegation were that the defendant had failed to confirm the Plaintiff's signature on the discharge documents or otherwise confirm with the plaintiff that he agreed to the discharge. 6. The loss and damage claimed in the SOC included: 1. Legal costs associated with the Antonio Proceedings; 2. Loss of income as a result of not being able to work as a real estate agent; and 3. Psychiatric/psychological injury. [3] 1. The plaintiff did not (and does not) make any claim with respect to the loss of his half share in the property. The proposed FASOC seeks relief on two bases: 1. An equitable claim apparently based on the principles in Barnes v Addy [4] ; and 2. A negligence claim. 1. The key allegations underlying the Barnes v Addy claim, as set out in the proposed FASOC, are: 1. Antonio defrauded the plaintiff of his interest in the Property by procuring a discharge of the mortgage over that property from the defendant (hereinafter "the Fraud") and transferring the Property to himself; 2. The Fraud was carried out using documents provided to the defendant upon which Antonio had forged the signature of the plaintiff (hereinafter "the Forgeries"); 3. The defendant executed the discharge by processing the Forgeries as if they were legitimate documents; 4. The plaintiff notified the defendant of the suspected fraud, before the fraudulent transaction was finally completed. 1. The action against the defendant arises from the allegation of the plaintiff that the defendant's assistance was involved in the carrying out of the Fraud by processing the Forgeries and effecting the discharge (hereinafter referred to as the "Assistance"). 2. The plaintiff alleges that the Assistance was engaged in with the relevant degree of knowledge required to create financial culpability for the defendant, within the meaning of the second limb of the principles in Barnes v Addy, as further discussed in Farah Constructions Pty Ltd v Say-Dee Pty Ltd. [5] The second limb of the principles in Barnes v Addy involves four categories of knowledge: 1. Actual knowledge; 2. Wilfully shutting one's eyes to the obvious; 3. Wilfully and recklessly failing to make such enquiries as an honest and reasonable person would make; and 4. Knowledge of circumstances which would indicate the true facts to an honest and reasonable person. 1. The plaintiff relies upon categories (ii), (iii) and (iv) of the foregoing categories. The plaintiff does not rely upon actual knowledge. 2. In order to prove the necessary knowledge in the defendant, other than actual knowledge, the plaintiff relies on the contents of the discharge application; the defendant's failure to confirm with the plaintiff that the plaintiff intended to discharge following receipt of the application; and the failure to take steps following the plaintiff providing a fraud notification document to the defendant, as particulars establishing the defendant's liability. 3. The plaintiff also pleads that the conduct of the defendant also constituted a breach of its duty of care. [6] The line of authority relied upon in this respect establishes, according to the plaintiff, that, if a bank were to know a fact which might suggest fraud or dishonesty, it would breach the duty of care owed to its customer, if it were to act on the instruction without making further enquiry. [7] 4. Despite the proceedings being commenced over two years ago, the proceedings have not progressed beyond the pleadings stage. According to the defendant, this is primarily as a result of significant delays occasioned by the plaintiff. In particular, the defendant points to the failure by the plaintiff to respond to the defendant's request for particulars and various iterations of its proposed amended pleadings. 5. There have been 18 appearances before the Court, including a hearing on a notice of Motion where there was no appearance for the plaintiff. 10 sets of timetables have been breached in respect to outstanding particulars alone. Further, there have been 3 changes in solicitor for the plaintiff, each change resulting in considerable further delay. The history of the proceedings is addressed comprehensively in the Connell Affidavit and summarised in the defendant's submissions. [8] Defendant's submissions 1. Leaving aside the principles to be applied in the determination of the Motion, the defendant submits that both claims or causes of action (knowing assistance and negligence) are misconceived and have no reasonable prospect of success. The defendant submits that the claims would be liable to be struck out, were the Court to allow the amendments, and for that reason alone the Court would not grant the plaintiff leave to amend. 2. Further, the defendant relies upon the alleged previous abandonment of part of the claim, which the plaintiff now seeks to re-plead. That abandonment was confirmed by consent orders issued by the Court. The defendant submits that to allow the amendments would be, in those circumstances, inconsistent with the dictates of justice. In that regard, the defendant relies also on what it alleges is the general conduct of the proceedings without due despatch. The defendant submits that the appropriate order is to dismiss the proceedings summarily pursuant to the powers vested in the Court under the Uniform Civil Procedure Rules 2005 (NSW) (hereinafter "UCPR"), namely, UCPR rr 12.7 or 13.4. 3. The defendant submits that there are four significant problems with the proposed Barnes v Addy claim (to which the Court has referred as "knowing assistance"). 4. First, Barnes v Addy liability is confined to liability in equity for knowing receipt or knowing involvement in a breach of trust or breach of fiduciary duty. [9] There is no allegation in the proposed FASOC that the pleaded fraud involved a breach of fiduciary duty or breach of trust. Nor is there any claim for equitable relief. Rather, the relief claimed by the plaintiff is confined to damages, interest and costs. 5. Secondly, the defendant submits that the plaintiff, in order to succeed, would need to show, at the very least, knowledge of circumstances that would indicate the facts to an honest and reasonable person. So much is conceded by the plaintiff in its written submissions. [10] Knowledge of circumstances that would put an honest and reasonable person on enquiry is not sufficient. [11] The defendant submits that it is a remarkable extension of any principle in Barnes v Addy for the plaintiff to suggest that the mere failure to check a signature properly against the signature held on file is a sufficient basis to establish knowing assistance in a fraud. 6. Thirdly, the cause of action based upon the plaintiff's submission of a fraud report to the defendant (hereinafter the "Second Notice of Fraud") is based on entirely newly pleaded facts and, on the submission of the defendant, ought not to be permitted. The events occurred, according to the defendant, approximately nine years ago and formed no part of the original SOC. [12] The plaintiff submits that the Court would not allow an amendment to add a cause of action based upon entirely new facts after the expiration of the relevant limitation period. The limitation period is, relevantly, six years from the date the cause of action accrued. [13] 7. The cause of action is said by the defendant, therefore, to have accrued no later than when the plaintiff lost the share of the Property by reason of the registration of the transfer in October 2011, with the result that the limitation period expired in October 2017. According to the defendant's submissions, even if the facts are "substantially similar", for the purposes of s 65(2) of the Civil Procedure Act 2005 (NSW), the Court would not grant leave to raise this claim in circumstances where no explanation has been provided for why the claim was not included in the SOC and the presumptive prejudice to the defendant is significant, considering that this new case is likely to require the defendant to call further witnesses, whose memory of relevant events will have diminished by reason of the significant lapse of time. 8. Fourthly, the defendant submits that the fraud claims are not properly pleaded or particularised. The defendant submits that the pleading of knowledge at FASOC [10D] and [10M] is a rote repetition of the test in Farah Constructions, without in any way identifying the material facts upon which the plaintiff relies. The defendant relies on the comments of Kunc J in KTC v David (No 1). [14] 9. The defendant submits, in light of the comments of Kunc J, that an allegation of this seriousness must be responsibly pleaded by confining the allegation to those categories of knowledge that are likely to succeed and by providing proper particulars of each allegation, including particulars of the enquiries it will be alleged that the defendant failed to make. The plaintiff, according to the defendant's submissions, does not attempt to do that. 10. Over and above the foregoing alleged difficulties with the claim under Barnes v Addy, the defendant also submits that there are at least two significant difficulties with the proposed negligence claim. [15] 11. First, the defendant submits that the harm that the plaintiff alleges he suffered by reason of the defendant's alleged negligence is too remote to be recoverable under ss 5B and 5C of the Civil Liability Act 2002 (NSW). Pursuant to those provisions, a defendant can only be held liable for failing to take precautions against the risk of harm, if the alleged negligence was a necessary condition of the harm (factual causation) and it is appropriate for the scope of liability to extend to the harm so caused (scope of liability). 12. According to the defendant, the losses now claimed, which largely relate to expenses incurred in connection with the judicial sale of the Property and the costs of the Antonio Proceedings, do not have a sufficient causal connection with the alleged negligence to establish liability under the foregoing provisions of the Civil Liability Act, or, to the extent that it still applies, at common law. The defendant submits that the alleged negligence and the harm are connected, if at all, only in the most extreme "but for" sense. 13. Secondly, the defendant submits that the alleged breach based upon the "further notice" [16] is based on entirely new facts. This submission is similar in effect to the submissions made in relation to the Second Notice of Fraud in relation to the knowing assistance claim. The defendant submits that this further claim, or the new facts upon which it is based, would not be allowed to be pleaded almost 3 years after the expiration of the applicable limitation period, which occurred in or around October 2017. 14. Finally, the defendant submits that the damages claim seeks to re-agitate an un-particularised economic loss claim connected, in some way, to the psychiatric injury that has been alleged. The defendant submits that the psychiatric injury has previously been abandoned and the damages claim, to the extent that it relies on those issues, is contrary the consent orders made by the Court on 28 May 2020 and 11 June 2020. 15. The defendant submits that the plaintiff has offered no explanation as to the precise nature of the claim relating to economic loss and/or psychiatric injury and the manner in which it is said to be different from the psychiatric injury and related loss of income claim that were previously agitated and abandoned. Further, the defendant submits that the claim is subject to a complete limitation defence, having been filed (to the extent that it was pleaded in the original SOC) approximately three years after the expiry of the limitation period applicable to personal injury claims. The plaintiff submits that if, on the other hand, the new paragraphs were to refer to some other unarticulated loss claim then, in light of the plaintiff's repeated failure to respond appropriately to requests for particulars and the making of the guillotine order with respect to those matters, the Court should not allow the plaintiff to raise the claim. 16. The written submissions in chief of the plaintiff were brief. Instead, the plaintiff relied upon facts as established in the Affidavits and the underlying procedural history. In reply, however, the plaintiff filed submissions purporting to answer the defendant's submissions. 17. The plaintiff noted that, whilst aspects of the procedural history would be relevant to an application by the defendant for the proceedings to be dismissed for want of prosecution, no such application had been made. Nor was any such application before the Court. 18. The plaintiff submits that, given the parties have not yet put on evidence in the proceedings, the matter is to be clearly distinguished from the considerations that moved the High Court in Aon Risk [17] and to which reference had been made by the defendant. 19. In written submissions, the plaintiff foreshadowed the filing of a Motion prior to the hearing of the matter, seeking to set aside the Consent Orders made on 28 May 2020 and 11 June 2020, relating to the alleged "abandonment" of the claim for damages for psychological injury. When the matter first came before the Court, there were issues associated with whether the foreshadowed second Motion was before the Court for hearing. By Direction of the Court, each of the Motions was listed for hearing together, before the Court, as presently constituted, on 3 September 2020. On that date, the Court reserved judgment on each of the Motions. 20. For obvious reasons, the two Motions are related. The plaintiff submits, in relation to the issues associated with the Limitation Act 1969 (NSW), that the new issues, if any, raised in the FASOC concern the same course of events relied on in the original SOC. That, fundamentally, relates to the submission of the authority to release security, which authority was dated 25 March 2011. Further, it relates to the transfer of the property on 12 October 2011. 21. The plaintiff submits that there is a similar identity of facts and that the Limitation Act point is governed by the terms of s 65(2) of the Civil Procedure Act 2005 (NSW). 22. Further, in response to the defendant's submission relating to the presumptive prejudice caused by the delay, the plaintiff submits that any prejudice is not significant in circumstances where the proceedings are, essentially, based upon the content of documents and not the memory of witnesses. 23. As to the form of the FASOC, the plaintiff submits that the proposition of the defendant that a claim for knowing assistance in respect of a fraud claim cannot be sustained, unless it involves a breach of trust or fiduciary duty, on the basis of the knowledge requirements set out in Farah Constructions, is incorrect and not in accordance with the principles. Further, the plaintiff submits that the FASOC pleads, in detail, the facts upon which the defendant relies and the elements of the legal test as to how the fraud arises derive from those facts and, therefore, the plaintiff says, the defendant has been sufficiently informed of the case it would have to meet, were the plaintiff to be granted leave to file the FASOC. Consideration 1. It is appropriate to deal first with the issue associated with the timeliness of the new cause of action (as described by the defendant) and whether it is appropriate for the Court to grant leave to file a claim after the expiration of the alleged limitation period. The provisions of s 65(2) of the Civil Procedure Act relate to the amendment of an existing originating process and are in the following terms: "65 AMENDMENT OF ORIGINATING PROCESS AFTER EXPIRY OF LIMITATION PERIOD (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64 (1) (b), amend the originating process so as-- (a) to enable the plaintiff to maintain the proceedings in a capacity in which he or she has, since the proceedings were commenced, become entitled to bring and maintain the proceedings, or (b) to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court's opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process." 1. As has been described earlier in these reasons, s 65(2) of the Civil Procedure Act allows a plaintiff, with the leave of the Court, to amend the originating process, in this case the Statement of Claim, relevantly, to add or substitute a cause of action to be agitated, together with the claim for relief already pleaded, where the cause of action, in the Court's opinion, arises "from the same or substantially the same facts as those giving rise" to the existing cause of action. Essentially, as has been stated, the plaintiff relies upon the damage caused by the plaintiff's brother in fraudulently transferring the plaintiff's property and the current defendant is sued for its complicity in that process. 2. It is said that the defendant ought to have known of the fraud because the signature appearing on the discharge application could be seen to be forged, on its face, and because of the Second Notice of Fraud. . 3. The evidence before the Court at this interlocutory stage does not allow the Court to draw any conclusion, final or otherwise, as to the defendant's state of knowledge upon receiving the forged documents and the Second Notice of Fraud. It is for the plaintiff to prove, as a matter of fact, on the balance of probabilities, the state of mind of the defendant, either by direct evidence or by inference. As far as the Court is aware, the forgery may be so obvious and so plain that there would be a necessary inference that the defendant knew it was not genuine or, at the least, ought to have known it was not genuine. 4. If the defendant, by inference or otherwise, can be shown to have known of the forgery, then there are consequences in the causes of action available to the plaintiff. If, on the other hand, the defendant cannot be shown, on the balance of probabilities, to have known that the document was a forgery, then, if the defendant ought to have known it was a forgery, different consequences arise. 5. One of the difficulties in terms of signed documents is that a document not signed by the person over whom a signature appears may not, necessarily, be evidence of a forgery. A signature by a person who is signing with the authority of the person on behalf of whom it is alleged to be signed may be a valid signature, at least for most purposes. Nevertheless, the application of a false signature to the document and its acceptance by the defendant is at the heart of the causes of action pleaded and the cause of action sought to be pleaded. 6. While there may be some differences of fact in the detail of the "new" cause of action, the new cause of action is based upon the same or substantially the same facts as those giving rise to the existing cause of action. As a consequence, the provisions of s 65(2)(c) of the Civil Procedure Act apply. 7. In those circumstances, the alleged failure to abide by the limitation period prescribed by the Limitation Act does not prevent the Court from allowing the amendment to be effected. Leave is necessary and, on the basis of the issue associated with the time period since the cause of action arose, it is in accordance with the Court's duty to facilitate the cheap, quick and just resolution of the real issues between the parties, for leave to be granted to amend the document. Leave will be granted, on this issue, pursuant to the terms of s 64(1)(b) of the Civil Procedure Act. It is unnecessary to deal with the date on which the limitation period expired, but it may not necessarily be calculated from the period commencing at the date of the Fraud. 8. The circumstance that the Court is prepared to grant leave to amend the SOC, notwithstanding the time period between the conduct giving rise, it is said, to a cause of action and the pleading of it, does not deal with the other issues raised by the defendant in opposition to leave being granted to file the FASOC. 9. The first cause of action is, as has been described, said to be a claim under the second limb of the principles in Barnes v Addy. [18] Without, in this interlocutory judgment, determining whether there is truly a second limb to the Barnes v Addy principles, it is necessary to show, for such an action to succeed, that the defendant knowingly assisted in the fraud. As earlier stated, it may be, on the evidence available to the plaintiff, that the Court may take the view that the defendant had actual knowledge of the fraud. But actual knowledge is not pleaded and has been disavowed by the plaintiff. 10. Liability in Barnes v Addy is confined to liability for knowing receipt or knowing involvement in a breach of trust or breach of fiduciary duty. The plaintiff and his brother were joint tenants of property. Underlying the necessary liability of the bank, being the defendant, under the principles in Barnes v Addy is the assumption that a fiduciary duty was owed by the plaintiff's brother to the plaintiff. Yet such a duty is not pleaded in the SOC or in the proposed FASOC. 11. Accepting that the claim for "damages" includes "equitable damages", there is a claim for relief that can apply to the principles in Barnes v Addy. Nevertheless, it would be necessary, for the liability of the defendant to be established under these principles, for the plaintiff to plead the fiduciary duty owed, either by the defendant or by the plaintiff's brother, the breach of which gave rise to damage and in which breach the defendant was involved either as a result of being involved in the breach itself or by knowingly receiving the result of the breach of trust or fiduciary duty. [19] 12. Further, while the Court is prepared to accept that the evidence may ultimately allow for the drawing of an inference that the defendant had the requisite state of mind, given that this is a claim in fraud, that state of mind (or knowledge) would need to be pleaded. In other words, the current pleadings, the SOC and the proposed FASOC, do not expressly plead the knowledge required to establish liability under the principles in Barnes v Addy; or do not plead with sufficient specificity the facts that give rise to the inference of knowledge. 13. If the evidence were available that could ultimately establish such knowledge, even on the basis of some inference, at the moment such evidence would not be allowed to be adduced, because such facts are not pleaded and the evidence going to such knowledge would not be a fact in issue, unless it were adduced for some other relevant purpose. 14. A further submission advanced by the defendant took issue with the pleading in the FASOC at [10B] to the effect that the forged discharge application put the defendant "on notice that the Plaintiff may not have knowledge of the Discharge Authority and… Antonio Dimarti may be carrying out a fraud on the Plaintiff." The defendant submitted that this pleading, taken at its highest, claimed that the circumstances merely put the defendant on enquiry of a possible fraud, not that those circumstances indicated the fact of fraud to the defendant. 15. Contrary to the defendant's submission, I do not accept that the use of the subjunctive "may" undermines the plaintiff's allegation of fraud or involvement in fraud or knowledge of the fraud. The use of the term "may" does not give rise only to the possibility of fraud and putting the defendant on enquiry, it leaves open the possibility of an authorised affixing of the plaintiff's signature by the plaintiff's brother, to the actual knowledge of the defendant. 16. Nevertheless, as is clear from the foregoing, in my opinion the fraud claims are not properly pleaded and particularised. Fraud claims are treated extremely seriously by the Court and, understandably, by legal representatives appearing for persons alleging such fraud. Nevertheless, an allegation of such seriousness needs to be pleaded in a manner that is precise and properly particularised. [20] 17. Were the issue raised by the defendant confined to the inappropriateness of the pleading of fraud, the Court would grant leave to amend the SOC, but not in terms of the proposed FASOC, and allow the plaintiff to plead the fraud cause of action properly. However, the defendant's issues in relation to the proposed FASOC are not so confined. 18. A similar approach would be taken by the Court to the allegedly generalised allegations of fraud, to the extent that it refers to damages under the second limb of Barnes v Addy, and not equitable compensation. The Court must next deal with the issues associated with the remoteness of damage and the claim in negligence, together with the issues associated with the plaintiff's claim alleging psychiatric injury. 19. The defendant relies upon the remoteness of the damage claimed and, in particular, the provisions of s 5B of the Civil Liability Act as to the taking of precautions. The primary basis upon which the plaintiff claims damage does not seem to rely upon the failure of the defendant to take precautions. Rather, it is a failure to take care or reasonable care in executing those precautions already in place. In other words, the defendant has in place precautions directed to possible fraud, namely, the holding for comparison purposes of the plaintiff's signature and the comparison of them. That comparison was undertaken negligently, on the plaintiff's claim. 20. The defendant retained a signature of the plaintiff on file. The defendant required a signature on the documents purporting to effect the discharge and transfer. The defendant, through its employee, failed to take appropriate care, or any care, in ensuring that the signatures matched. It may be that the defendant could have overcome such an issue by ensuring further precautions, but that is not the primary submission of the plaintiff. 21. The allegation in the SOC and the proposed FASOC is that the defendant was negligent in failing to check the signature on the discharge and the signature on file. There is no suggestion that the defendant's precautions did not require such a checking. The issue ultimately turns on the provisions of s 5B of the Civil Liability Act. Did the defendant's absence of due care, through its employee, amount to negligence and was that negligence a necessary condition of the occurrence of harm (factual causation); and is it appropriate for the scope of the defendant's liability to extend to the harm so caused (scope of liability)? Again, the Court is summarising from the terms of [10B] a basis for the claim in negligence that is not, or not adequately pleaded. 22. More accurately, is such a claim arguable, in which circumstance it could not, if pleaded be struck out. Nor should I refuse leave to amend to plead it. The viability or success of the claim depends essentially on facts. 23. Before those two issues are engaged, it is necessary to determine whether the plaintiff suffered damage as a consequence of the defendant's alleged negligence. In the circumstances of these proceedings, where the plaintiff has caused the discharge and the transfer of the property in question to be declared void in the Antonio proceedings, serious questions arise as to the damage suffered as a consequence of the defendant's "negligence", or any other basis. 24. Plainly, as a consequence of the plaintiff's actions, the plaintiff did not lose the property in question. As a consequence, the value of the plaintiff's interest in the property cannot be the subject of damage arising from the conduct of the plaintiff's brother or the defendant. 25. However, as a consequence of the conduct of the plaintiff's brother and allegedly the defendant, the plaintiff incurred costs associated with stopping the effective transfer and, according to the plaintiff, suffered psychiatric injury as a consequence of the trauma associated with the episode. The difficulty with the damages there described is that the plaintiff commenced proceedings against his brother, which proceedings have been finalised. 26. Those proceedings achieved the plaintiff's retention of the property and were, otherwise, settled. They were settled on the basis that there would be no order for costs. 27. Costs compensate a successful party for the expense of enforcing rights or successfully defending against the assertion of another's rights. 28. The claim against the defendant in these proceedings is not that the defendant was, itself, perpetrating the fraud against the plaintiff. Rather, the defendant is an innocent, but, according to the plaintiff, knowing facilitator of the fraud. 29. Any claim against the defendant, in these proceedings, for damages associated with the compensation of the expenses incurred in preventing the disposal of the property against the plaintiff's brother, would be subject to a third-party contribution claim in which the brother (or his estate) would, on any reasonable basis, be 100% liable to compensate for the costs associated with the fraud perpetrated by him. But the plaintiff has foregone any claim for compensation against the brother by settling the claim against the brother on the basis that neither party would pay the costs of the other. 30. As to the psychiatric injury, it was disavowed by the plaintiff and orders were made by the Court. This is the reason that the second Motion has been filed. It seeks to have those orders overturned and seeks to have the Court grant leave to withdraw the consent and/or the undertaking that he would not seek to rely on psychiatric injury. The plaintiff maintains that such an undertaking (and the consent giving rise to the orders) was a misunderstanding of the position that the plaintiff adopted. 31. By his latest Motion, the plaintiff seeks to plead damages in respect of the psychological injury he says arose from the events pleaded in the SOC, namely the fraud committed by his brother with the knowing assistance of the defendant. The Consent Orders, dismissing the psychiatric claim, issued on 11 June 2020. 32. There is communication before the Court between the plaintiff and the defendant relating to the terms of the Consent Order and the terms of any proposed FASOC. The terms of the correspondence between the plaintiff and the defendant refer, expressly, to particular paragraphs of the SOC. It is difficult to accept that the plaintiff misunderstood the nature of the orders to which he was consenting. 33. Nevertheless, four days after the Orders were made, on 15 June 2020, the plaintiff informed the defendant that it would be seeking to have the Consent Orders set aside. On 24 August 2020, the plaintiff received a psychiatric report of Dr Dayalan and the next day filed the second Motion, which seeks to set aside the Consent Orders. 34. There can be no doubt that the Court has power to set aside the Consent Orders and, even without setting aside the Consent Orders, grant liberty to file the proposed FASOC, even though it re-agitates, or agitates for a first time, psychiatric injury arising from the alleged fraud. The Consent Orders were interlocutory in nature. 35. Further, it is not suggested that the defendant has acted to its detriment as a consequence of the consent of the plaintiff or the making of the Consent Orders. The exercise of any discretionary power by the Court is enjoined by the provisions of s 56 of the Civil Procedure Act and following. 36. That requires the Court, in the exercise of any discretionary power under the Civil Procedure Act or the UCPR to give effect to the overriding purpose. As already explained, that overriding purpose is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". 37. The real issues in the proceedings are defined by the pleadings. As a consequence, it is essential, where the Court is to deal with a substantive claim, for the parties to have expressed that claim and any defence to it with sufficient precision to enable the Court (and the other parties) to understand the nature of the real issues between the parties. 38. At the same time, there is an obligation on each of the parties, and their legal representatives, also to facilitate the overriding purpose of the Civil Procedure Act. There are a number of factors involved in the Court balancing the three goals to be achieved as part of the overriding purpose. 39. In all, the Court is required to follow the dictates of justice. [21] In so doing, the Court is required to consider the dictates of justice in light of the obligations for appropriate and efficient case management, avoiding delay and minimising the costs of proceedings, at the same time as ensuring, to the extent otherwise possible, that "justice" is served. 40. These proceedings were commenced in 2017. It is now in the latter half of 2020. On the basis of the Motion that is now before the Court, the pleadings are not yet concluded and the plaintiff wishes to restructure its case against the defendant. In so doing, it wishes to go behind orders that were made by consent and to claim psychiatric damage, once more, in circumstances where it had disavowed any such claim. 41. Providing a party with the opportunity to set aside consent orders into which it has entered or to which it has agreed is inconsistent with the purpose of avoiding unnecessary cost and facilitating the resolution of proceedings. The process reopens issues that had seemingly been dealt with to finality. It does so in circumstances where the claim is based upon facts, albeit facts that are the same as or similar to facts already pleaded, that are pleaded, at least in some aspects, for the first time since the conduct is said to have occurred approximately nine years earlier and in circumstances where the damage caused by the conduct was the subject of proceedings against the primary fraudster, the plaintiff's brother, which was resolved in favour of the plaintiff and without any order for costs. 42. As is clear, a claim for psychiatric injury is a claim for personal injury and governed by the provisions of UCPR r 15.12. Those provisions require the plaintiff to serve on the defendant "on or as soon as practicable after serving the Statement of Claim", a statement setting out the particulars of injuries received; particulars of continuing disabilities; and particulars of out-of-pocket expenses. 43. That statement is required to be served together with all hospital, medical and similar accounts; letters from any workers compensation insurer; letters from any employer, including wage records et cetera; and reports, award rates and correspondence relating to domestic assistance or attendant care; together with all hospital and medical reports available at the time. None of the foregoing has been provided. 44. While it is not unusual for a plaintiff to fail to comply precisely with the provisions of UCPR r 15.12(1), the plaintiff's conduct is more than a technical non-compliance. 45. There are a number of troubling aspects to the Motions before the Court. The first is that, despite a number of attempts, the plaintiff is yet to plead his claim in a manner that is satisfactory to the Court. 46. The second is the amount of time that has already been taken in the conduct of these proceedings, in circumstances where the plaintiff is still finalising the claim to be filed. In this type of claim, a three-year gap between the original filing of a Statement of Claim and a proposal to file and serve an Amended Statement of Claim is unusual. It is certainly the antithesis of expedition and inconsistent with the facilitation of proceedings that are not disproportionately costly. 47. Ultimately, the issue is one of balancing the various interests of the parties. Procedural directions such as the filing of documents; the answering of interrogatories or particulars; and the granting of leave, are required to be performed in a manner that complies with the orders of the court. 48. Fundamentally, the tension in this case between the aspects of the overriding purpose is significant. Frankly, on the material that is currently before the Court, it is unlikely that the plaintiff will succeed in his claim against the defendant. 49. Such a forecast is based not on remoteness of damage or the scope of damage, but, rather, on the lack of the likelihood of disclosing or proving any damage, beyond that which was obtained as a result of the settlement with the plaintiff's brother. The foregoing estimate assumes that the plaintiff will be able to adduce evidence that shows the defendant has acted negligently. I do not underestimate the difficulty of that task. 50. However, each of the difficulties posed in the immediately preceding paragraph are difficulties that are capable of being overcome, if the evidence is adduced to prove the allegations of fact that would give rise to the liability, on the one hand, and, on the other hand, to damages. Other than in extreme situations, where there is a factual issue that, albeit unlikely, may allow for success for the plaintiff, it is inappropriate to dismiss the proceedings or not to allow the plaintiff to agitate the proceedings in an appropriate form. At this stage, the Court ought not to preclude the pleading of the breach of trust or any claim in reliance on Barnes v Addy. 51. The ultimate effect of accepting the submission of the defendant is that the proceedings would be dismissed. In my view, the principles applicable to summary dismissal of proceedings or the refusal of leave to amend at a point in time when the effect would be to dismiss the proceedings do not encourage such a course. 52. It may well be that it is impermissible because the Court is not being asked, strictly, to dismiss the proceedings as un-arguable. Instead, the Court is being asked not to allow the plaintiff to agitate the proceedings as he sees fit, as a consequence of which there would be no cause of action and the proceedings would need to be dismissed. 53. In his original Motion, the plaintiff sought costs. During the course of the proceedings, confirmed by the written submissions, the plaintiff conceded that the costs thrown away must be borne by the plaintiff. 54. When a court orders one party to pay another party for costs incurred in certain aspects of a proceeding, it does not do so as a matter of punishment. An order for costs is a form of compensation for asserting successfully one's rights or in successfully defending against another person's assertion of right. 55. In these proceedings the compensation should be complete. Indemnity costs will be ordered. 56. In this case, the conduct of the litigation so far, at least from the perspective of the defendant, has been wholly wasted. This is the result of the inappropriate pleading of matters by the plaintiff; the delay in the proceedings caused by the plaintiff; and, now, agreeing to forego psychiatric injury and then recanting. In my view, the plaintiff should pay the defendant's costs of the proceedings so far in relation to all costs thrown away. This will be almost all of the work performed thus far. It may not be all of it, because the Court is unaware all of the work performed. 57. One other matter needs to be noted. The defendant relies upon actual and presumptive prejudice arising as a result of the delay in proceeding with what has been referred to as the Second Notice of Fraud. Under that claim, the plaintiff alleges that his brother's fraud was notified to the defendant and the defendant failed to take action to cease facilitating the transfer of the plaintiff's property interests. 58. The issues associated with the Second Notice of Fraud are almost identical to the issues associated with the factual circumstances surrounding the original claim of fraud. The defendant's preparation in relation to the fraud already pleaded would have been required to include correspondence between the plaintiff and the defendant in relation to the subject matter (including any alleged second fraud of which notice is said to have been given) and witness statements in relation to conversations with the plaintiff. 59. It seems to me that any actual or presumptive prejudice associated with the second notice of fraud is no better or worse than that which applies to the originally pleaded fraud. Further, the preparation and compiling of material in relation to the originally pleaded fraud would include all material that would be relevant to the Second Notice of Fraud. I do not consider that the actual or presumptive prejudice associated with the delay in the pleading is significant. 60. The leave that is to be granted to re-plead will not preclude an application to dismiss the pleading. Nor does it preclude an application to dismiss as unarguable any alleged cause of action. Each should await the amended pleading. 61. As a result of the foregoing, the Court makes the following orders: 1. Pursuant to the provisions of s 64(1)(b) and s 65(2)(c) of the Civil Procedure Act, the plaintiff has leave to amend the Statement of Claim by including a claim based on an allegation that the fraud was reported on 4 October 2011; 2. The plaintiff shall file and serve within two weeks of the date of this judgment an Amended Statement of Claim in a form that is appropriate and which, to the extent that there is contained therein a claim for personal injury, is accompanied by a statement and documentation referred to in r 15.12 of the UCPR; 3. The plaintiff shall pay the defendant's costs of and incidental to the proceedings thrown away as a result of any amendments to the Statement of Claim on an indemnity basis; 4. Pursuant to the terms of s 61 of the Civil Procedure Act, the Court directs that no amended pleading filed by the plaintiff later than the time ordered above may be filed or served and, subject to any subsequent order of the Court, no further attempt at an appropriate pleading may be agitated. ********** Endnotes 1. Connell Affidavit at [119]. 2. SOC at [17]. 3. SOC at [18]. 4. Barnes v Addy (1874) LR 9 Ch App 344. 5. Barnes v Addy, supra; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [112], [174]-[178]. 6. FASOC, at [10HH]. 7. Farah Custodians Pty Limited v Commissioner of Taxation (No 2) [2019] FCA 1076 at [79]-[85]. 8. Defenders Written Submissions dated 14 July 2020, at [10]-[17]. 9. Farah Constructions, supra, at [179], [181]. 10. Plaintiff's Written Submissions at [10]-[11]. 11. Farah Constructions, supra, at [176]-[177]. 12. FASOC at [10J]-[10N]. 13. Limitation Act 1969 (NSW), s 14; Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181 at [70]-[73]. 14. KTC v David (No 1) [2019] NSWSC 281 at [28]-[32]. 15. The negligence claim is set out at FASOC [10HH]-[10LL]. 16. Pleaded at FASOC [10II(v)]. 17. Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. 18. Barnes v Addy (1874) LR 9 Ch App 244 19. Farah Constructions (High Court), supra, at [179], [181]. 20. KTC v David (No 1) [2019] NSWSC 281 at [28]-[32], per Kunc J. 21. Lachlan v HP Mercantile Pty Ltd (2015) 89 NSWLR 198; [2015] NSWCA 130. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 October 2020