New South Wales Supreme Court CITATION : Bell v Eldridge & Ors [2005] NSWSC 58 HEARING DATE(S) : 17.12.2004 JUDGMENT DATE : 16 February 2005 JURISDICTION : Equity Division JUDGMENT OF : Acting Master Berecry at 1 DECISION : See paragraph 64 CATCHWORDS : Strike out - Summary dismissal - Specific performance - Trust - Estoppel - Unconscionable conduct - Conversion - Detinue - Bailment - Arguable case - Real questions to be determined - Whether pleading oppressive and embarrassing - Elements of claim - Whether made out - Winding up - Standing to bring proceedings LEGISLATION CITED : Supreme Court Rules General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Philip Morris v Brown (1980) 33 ALR 475 Dey v Victorian Railways Commissioner (1949) 78 CLR 62 Webster v Lampard (1993) 116 ALR 545 Commercial Bank of Australia Ltd v Amadio 46 ALR 402 Bomley v Ryan (1956) 99 CLR 362 CASES CITED : Commonwealth v Verwayen (1990) 170 CLR 394 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Baumgartner v Baumgartner (1987) 164 CLR 137 Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 Re Dernacourt Investments Pty Ltd 1990 20 NSWLR 588 John Start (Real Estate) Pty Ltd v Robert R Andrew (Aust Asia) Pty Ltd (1991) 6 ACSR 63 Kathleen Ann Bell Raymond Eldridge Florenville Pty Ltd PARTIES : Glen Eldridge Timothy Eldridge Anthony Eldridge FILE NUMBER(S) : SC 3718.04 Mr D Hassall COUNSEL : Ms S Mason Jeanine Lloyd & Associates, Canberra SOLICITORS : Baker Deane & Nutt, Queanbeyan LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION A/MASTER BERECRY 16 February 2005 3718.04 Kathleen Ann BELL v Raymond ELDRIDGE & Ors JUDGMENT 1 CORAM: On 26 October 2004 the defendants filed a notice of motion seeking to strike out the plaintiff's amended statement of claim pursuant to Pt 15 r26 or, alternatively, that paragraphs 50 to 73 of the amended statement of claim, be dismissed pursuant to Pt 13 r5. 2 On 26 November, the motion was heard before me and orders were made in accordance with paragraph 1, namely that the amended statement of claim be struck out together with costs. Leave was granted to the plaintiff to file and serve a further amended statement of claim by 10 December. Following a failure to do so by that date, the proceedings were to stand dismissed. The proceedings were stood over to 17 December. 3 On 10 December, the plaintiff filed a further amended statement of claim. On 17 December, the defendants made the same complaints that had been made in respect of the amended statement of claim in the notice of motion filed 26 October 2004. 4 The amended statement of claim was attacked on a number of bases. First, that it was oppressive and embarrassing because it failed to disclosure a course of action; second, because it lacked particularisation and material facts in respect of most of the paragraphs of the amended statement of claim. 5 The principles to be applied to an application under either Pt 13 r5 or Pt 15 r26 are the same. There have been a number of cases where the courts have set out the basis for striking out or summarily dismissing proceedings. In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, the Court described the test to be applied to a successful strike out or summary dismissal application as: "the proceedings are obviously so untenable that it cannot possibly succeed; manifestly groundless; so manifestly faulty that it does not admit of argument; one which the Court is satisfied cannot succeed; one where under no possibility can there be a good cause of action …" 6 In Philip Morris v Brown (1980) 33 ALR 475, Barwick CJ said: "In these days of free and ready amendment, it may not be fatal if the facts alleged would not, if proved, entitle the plaintiff to the particular relief he claims, provided that the facts would entitle him to some relief within the jurisdiction of the Court, though in strictness a pleading amendment may be necessary." 7 In Dey v Victorian Railways Commissioner (1949) 78 CLR 62 at 91, the Court said that: "But as soon as it appears that there is a 'real question' either of fact of law, and the rights of the parties depend on it, then it is not open for the court to summarily intervene". 8 In Webster v Lampard (1993) 116 ALR 545, the Court said: "The power to order summary judgment must be exercised with exceptional caution and should never be exercised unless it is clear that there is no real question to be tried." Proceedings may be struck out where they disclose no cause of action or where the proceedings cannot succeed. Plaintiff's claim: 9 The plaintiff alleges that she and the first defendant entered into an agreement and subsequently a deed, whereby, upon certain things being done by the plaintiff, the first defendant would subdivide and transfer that part of the land subdivided to her. The plaintiff alleges that the first defendant has failed to honour his part of the bargain. 10 The plaintiff seeks, inter alia, specific performance of the agreement by the first defendant, and a declaration that the first defendant holds the said land on trust for the plaintiff. 11 The plaintiff alleges that the first defendant has refused to return the mobile home owned by the plaintiff and brought onto the land by her pursuant to the agreement. She pleads an action in conversion of detinue and bailment. 12 Further, the plaintiff, in the alternative, pleads that the first defendant holds the mobile home on trust for the plaintiff. 13 Finally, she seeks damages for any loss she has suffered as a result of the first defendant's actions. In addition, the plaintiff seeks relief against all defendants pursuant to the Corporations Act including the winding up of the second defendant, based on the oppressive conduct by the majority of its shareholders and directors. Further, the plaintiff seeks payment from the second defendant of unpaid wages owed by it to the plaintiff. 14 The plaintiff sets out the statement of claim under various headings. Paragraphs 4 to 21 plead an alleged oral agreement between the plaintiff and the first defendant, which agreement is particularised in paragraph 4, including a description of the land it is alleged would be the subject of a subdivision. Those paragraphs also plead material facts upon which the plaintiff relies to show that there was a reliance by her in respect of the actions of the first defendant, and that, as a result of his conduct, she has subsequently suffered a detriment. Paragraphs 7 and 8 plead those matters. 15 Paragraph 13 is irrelevant and does not go to any issue. That paragraph is struck out. 16 Paragraph 14 pleads the deed entered into between the plaintiff and the first defendant. However, the paragraph does not plead that the land was to be transferred to the plaintiff. Paragraph 36 does, however, plead that the deed provided for the transfer of the land. In my view, paragraph 14 should be amended to include that term of the deed whereby the land was to be transferred to the plaintiff. 17 Paragraph 20 refers to irrevocable easements and the irrevocable right of way. Where the word "irrevocable" appears in that paragraph, it should be deleted and the paragraph amended. 18 Paragraph 21 refers to the first defendant acting against equity and good conscience. The complaint made by the defendants is that that does not disclose a cause of action. However, it seems to me, based on the comments of Deane J in Commercial Bank of Australia Ltd v Amadio 46 ALR 402, and in particular at 423, that paragraph 21 is merely a rolled up paragraph which does not cause the defendant confusion. It is clear that it goes to the plaintiff's claim based on the alleged unconscionable conduct of the first defendant in obtaining a benefit by his changed position which was inconsistent with the alleged agreement entered into by the parties. In Commercial Bank of Australia Ltd v Amadio (supra), Deane J (at pp422-3) said as follows in respect of unconscionable dealings: "The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them, and (ii) that that disability was sufficiently evident to the stronger party to make it a prima facie unfair or 'unconscientious' that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: the burden of showing the fairness of the transaction is thrown onto the person who seeks to obtain the benefit of the contract." 19 Further, his Honour said: "Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity and good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued." 20 Examples that have been given of a special disability include poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. 21 In Bomley v Ryan (1956) 99 CLR 362 at 405, Fullager J remarked a common characteristic of such adverse circumstances "seems to be that they have the effect of placing one party at a serious disadvantage viz a viz the other". 22 Paragraphs 21, 43 and 44 refer to unconscionability. However, neither those paragraphs nor the preceding paragraph pleads any special disability that the plaintiff was under when entering into the transaction with the first defendant. In my view, therefore, those paragraphs cannot stand and must be struck out. It would appear however, having regard to the earlier paragraph which set out the matrix of facts the plaintiff relies on, that there may well be an arguable claim properly pleaded in relation to unconscionability. 23 Paragraphs 22-25 plead the claim by way of estoppel as an alternative claim. The plaintiff relies on a number of paragraphs between paragraph 4 and paragraph 21 to set out the material facts upon which the claim in estoppel is based. In particular, paragraphs 4 and 8 by way of example. The elements required to found an estoppel discussed in Commonwealth v Verwayen (1990) 170 CLR 394 at 410, 411 per Mason CJ. In my view, the pleadings disclose the elements of a claim based in estoppel, namely reliance by the plaintiff of the actions or conduct of the defendant and a detriment suffered by the plaintiff as a result of the first defendant changing his position. The reliance was of course that the first defendant would make a certain part of his land available to the plaintiff for use and ultimately would be transferred to her. The detriment that the plaintiff has suffered is that she has not become the registered proprietor of that portion of the land, she neither resides nor is able to enter upon the land, she has lost the benefit of the mobile home she and her deceased husband purchased and can therefore neither live in the mobile home nor gain an income from rentals. 24 The plaintiff has, in paragraph 22, particularised the allegations to an extent that would enable the defendant to file a defence. Paragraph 25 however, it seems to me, by and large to be couched in terms of a prayer for relief rather than a pleading. It seems to me that paragraph 25 should stand down to the word "herein" on the third line, and the balance of the paragraph be struck out. 25 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 entitles a plaintiff to plead an equitable estoppel as an action independent of the law of contract. In essence, this is what the plaintiff seeks to do in the alternative in these proceedings. 26 Paragraphs 26-33 plead an oral agreement in relation to the plaintiff's occupation of the land. In my view, those paragraphs are sufficiently pleaded to enable the defendant to know what case it has to meet, both in respect of agreement and also estoppel. 27 Paragraphs 34-36 plead the deed entered into between the plaintiff and the first defendant. Subject to paragraph 14 being amended to be consistent with the terms of the deed as expressed in paragraph 36, it seems to me that those paragraphs should stand. 28 Paragraphs 37-39 plead a trust in respect of the land or, alternatively in paragraph 40-42, in relation to a portion of the land. 29 Paragraphs 38 and 41 plead that the land is held upon trust by the first defendant as trustee upon an express trust resulting implied or constructive trust. However it seems to me that the plaintiff must apply greater precision in formulating its pleadings in relation to a claim in trust. It would appear that there cannot be a resulting trust in favour of the plaintiff. If the land is owned by the first defendant, any resulting trust would mean that the land as a result of a failure of a substratum of a relationship would revert by way of resulting trust to the owner of the land ie the first defendant. There is nothing upon which the plaintiff owned at the time of going into the relationship which could be construed as creating a resulting trust in favour of the plaintiff. Therefore, it seems to me that paragraphs 37-42, where it is alleged that there was a resulting trust, the paragraph must be struck out and amended accordingly. 30 It would seem to me however, having regard to decisions such as Baumgartner v Baumgartner (1987) 164 CLR 137, that the plaintiff has an arguable case for a finding that a constructive trust exists. In my view, the matters pleaded in paragraphs 1-36 (subject to amendment), form the basis for a claim based on a constructive trust. Although, in establishing a constructive trust, a court will consider the demands of justice and good conscience without reference to any presumed intention of the parties, it seems to me that there is an arguable case that the plaintiff has such a claim. It should be noted, however, that a claim based on unconscionable conduct such as that found in Commercial Bank of Australia Ltd v Amadio (supra), raises a different considerations to a claim pleading a constructive trust (see Baumgartner v Bartner (supra)). 31 Paragraphs 45-50 pleads in the alternative a claim for conversion. The elements to such claim being, firstly, that the plaintiff has right to possession of the chattels, secondly, a person (a defendant) has acted inconsistent with the plaintiff's rights in respect of a person entitled to lawful possession, and, thirdly, if the plaintiff is able to demonstrate an immediate entitlement to possession of the chattels (see Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204). In the relevant paragraphs, the plaintiff pleads that she was the owner at all material times of the house and is entitled to possession, and that since late 2001 the first defendant has deprived her of possession. In respect of a limitation question, the proceedings therefore are brought within time. Thirdly, she pleads that the first defendant has remained in wrongful possession of the chattel to the exclusion of the plaintiff. Fourthly, that the demand has been made for the return of the chattel, but that the first defendant has not returned same. The plaintiff claims damages for conversion of the house by the first defendant. Paragraph 49 particularises the loss allegedly suffered by the plaintiff. It seems to me that the particulars at this early stage of the proceedings are sufficient to enable the first defendant to know what he has to meet. In any event, the Court will make determinations on the substantive claims in the proceedings, and, in all probability, any question of damages, will be referred to the Master. It seems to me that the first defendant is not put to any disadvantage by not having complete particulars of the plaintiff's damages at this point in time. 32 Paragraph 48 pleads the demand for return of the goods made by the plaintiff to the first defendant. It seems to me that the plaintiff should give particulars of the demand. 33 Paragraphs 51-56 plead, in the alternative, the claim in detinue. This pleading is in the alternative to the claim for conversion and, in my view there is nothing in the pleading which would attract criticism, therefore I make no comment in relation to those paragraphs. 34 Paragraphs 57 and 58 plead as trust in respect of the house. These paragraphs are embarrassing to the extent that the defendant does not know what type of trust is alleged to exist. In my view, these paragraphs should be struck out. The plaintiff is able to properly plead the respective elements of the trusts that she is relying on, then the statement of claim should be amended, however in the absence of any proper pleading, paragraphs 57 and 58 are struck out. 35 Paragraphs 59 to 61 plead, in the alternative, bailment. The elements of such claim are as follows. Firstly there is the delivery of chattels by the plaintiff to the defendant, secondly at the time of such delivery there was a mutual intention to create a bailment although procession without such intention may later become a bailment if the necessary intention is subsequently created. Thirdly, delivery may be actual, token or constructive. The plaintiff pleads in paragraph 59 the delivery of the house by her to the first defendant for safekeeping and care, then to be returned to the plaintiff by the first defendant on demand. Secondly, in paragraph 60 the plaintiff pleads the demand for return of the said house and further that the first defendant has failed to return the house. Paragraph 59 in my view does not plead that there was an agreement between the plaintiff and the first defendant for the first defendant to keep safe and take care of the property and to return it to the plaintiff upon demand, that element of bailment is missing. Paragraph 59 in its present form, therefore, is struck out. If the plaintiff is able to plead a mutual intention, the plaintiff ought be permitted to amend that paragraph. However, if the plaintiff is unable to plead mutual intention, then paragraphs 59 to 61 of the third amended statement of claim are struck out. 36 Paragraphs 62 and 63 particularise the damages sustained by the plaintiff. With the exception of paragraph (a) and (f), the plaintiff has not quantified the particulars. However, the quantification of damages at this point is not necessary for determination of the substantive matters. If the Court finds for the plaintiff on the facts in respect of the assertions in the statement of claim, then the matter will be referred to a Master for quantification of the damages in respect of those matters where the plaintiff has succeeded. 37 Paragraphs 64 to 79 set out the prayers for relief. Paragraph 68 cannot stand for the reasons given in relation to the trust claim in respect of the house. 38 There is no indication in the further amended statement of claim of the basis for equitable damages. The prayer is embarrassing and is therefore struck out. 39 Paragraphs 80 to 100 plead relief under the Corporations Act. Those paragraphs seem to plead matters concerning the plaintiff as an officer and shareholder of the second defendant, as well as matters relating to her employment with the second defendant. 40 In my view paragraph 83 should be struck out as it is unnecessary and pleads a matter that is not known in law, namely a family concern. 41 Paragraph 85 also does not appear to be relevant to a claim under the Corporations Act and therefore should be placed under that part of the statement of claim dealing with the claim for unpaid wages. 42 In paragraph 86, the plaintiff pleads that, under duress, she signed certain documents. However, she does not give particulars of the duress, and, in my view, particulars of such duress ought be furnished. In the absence of those particulars, paragraph 86 should be amended by deleting the last sentence thereof. 43 Paragraph 87 seems to be a matter that goes to the unpaid wages claim and is not relevant to relief under the Corporations Act and therefore should be removed from this part of the statement of claim. 44 Paragraph 88 is irrelevant and should be struck out. 45 Paragraph 90 should be repleaded under the plaintiff's wages claim and therefore should be removed from this part of the statement of claim. 46 Paragraph 91 is irrelevant to the Corporations Act claim and is therefore struck out. 47 Paragraph 92 is irrelevant to any claim under the Corporations Act. The relationship between the plaintiff and the first defendant in respect of the plaintiff's use of the land is irrelevant to any claim against the second defendant. Therefore, the paragraph is struck out. 48 Paragraph 93, in the absence of a further pleading and particulars, is struck out. 49 Paragraph 94 should be read in conjunction with paragraph 100. 50 Paragraph 95 is irrelevant to a claim under the Corporations Act and is struck out. 51 Paragraph 96 is irrelevant to a claim under the Corporations Act and is struck out. 52 Paragraph 97 should be amended by striking out the last sentence thereof as irrelevant, and I make an order to that effect. 53 The particulars in paragraph 100(h) and (j) are struck out. 54 The plaintiff's claim for unpaid wages and other entitlements is pleaded in paragraphs 106 to 114. The assertions in paragraph 108 in respect of the hourly rates the plaintiff was paid from time to time should be particularised and, in the absence of such particulars, should be struck out. 55 Paragraph 109 should be struck out. It seems that is a pleading of unfair dismissal and has nothing to do with the relief sought in this part of the statement of claim, namely a claim for unpaid wages. 56 Paragraph 111 sets out the particulars of wages and other entitlements. Having regard to s24 of the Limitations Act 1969 however, any claim in respect of wages prior to part of the financial year 1997-1998 must fail and the particulars and any claim in respect of wages for the period of March 1992 to the relevant date for the fiscal year 1997/98, are struck out. Paragraph 111 in any event should be amended by deleting the words "said wrongful and oppressive dismissal of the plaintiff" and in lieu thereof, after the word "company's", the word "failure to pay the plaintiff's wages and other entitlements" should be inserted. Sub paragraph (j) of paragraph 111 is inconsistent with paragraph 110. In (j), the plaintiff pleads that she is entitled to the sum of $178,782 plus superannuation, however paragraph 110 pleads that amount as inclusive of superannuation and other benefits. To the extent of that inconsistency, the paragraph is struck out. 57 Paragraphs 112 to 114 go to the relief sought in respect of unpaid wages. The plaintiff has not particularised the amount of $250,000 in the statement of claim, and to the extent that that is inconsistent with the pleadings and particulars, it is struck out, but may be repleaded subject to amendment. 58 Paragraphs 80 to 100 plead a number of matters. Broadly speaking, the plaintiff pleads oppressive conduct on behalf of her fellow members of the second defendant, and secondly a claim for unpaid wages. The claim for unpaid wages is also pleaded at para's 106 to 111, and I refer to my comments above. Particulars of the oppressive conduct are found at the foot of paragraph 100(a) to (t). In my view, those particulars coupled with paragraphs 80 to 82, 84, 86, 89, 94 and 97 to 100 are sufficiently comprehensive and detailed to support the allegation of oppressive conduct. The assertions in those paragraphs prima facie establish elements of oppression which give the plaintiff an arguable case. The defendants are able to identify the matters complained of by the plaintiff which would enable them to file a defence. Those paragraphs of the statement of claim assert that certain steps were taken, or attempted to be taken, against the plaintiff's interest, and without her consent or acquiescence, and that those actions by the defendants constituted an overbearing act or attitude on their behalf towards the plaintiff. 59 This part of the statement of claim in part also pleads a failure to pay wages. An application to wind up a company based on oppressive conduct is to be found in Part 2F.1 of the Corporations Act. Such an application may be brought by a member or former member of a company. Whilst s9 does not define the phrase "member of a company", s231 sets out who are members of a company. A member is, inter alia, a person who was a member at the date of registration or becomes a member after registration. On the pleadings, the plaintiff clearly is or was a member of the company. She therefore has a standing to bring the application. It appears from the authorities that it is not settled whether a person bringing an application under Part 2F.1 can bring an application limited to unfair prejudice in her capacity as a member or whether it extends to other matters. In Re Dernacourt Investments Pty Ltd 1990 20 NSWLR 588, Powell J found that inclusion of the equivalent to these provisions under the Companies Code permitted relief to be granted where the oppressive conduct affected the member in some other capacity, such as a director or an employee of the company. 60 However, in John Star (Real Estate) Pty Ltd v Robert R Andrew (Aust Asia) Pty Ltd (1991) 6 ACSR 63 at 65, Young J, as he then was, took a restrictive view of the provision and said that, if the only effect of the conduct complained of is against the plaintiff in his capacity as franchisee, then normally the Court would decline to give relief. 61 In the current proceedings, the plaintiff complains of not only conduct in respect of her capacity as an employee, but also in her capacity as a director of the company. It would seem to me that, although it is arguable, the plaintiff has standing to bring these proceedings. However, there are a number of paragraphs of the statement of claim seeking relief under s233 which are not necessary and should be struck out. There are other paragraphs which are more properly completed under the previous heading of 'failure to pay wages'. 62 Despite the third attempt at curing the deficiencies in the statement of claim, in my view and having regard to the authorities referred to earlier, it would be unsafe to dismiss these proceedings. 63 In my view, the plaintiff has established that it has an arguable case against the defendants to the extent that I have allowed paragraphs of the current document to remain and have given leave to amend other paragraphs, the statement of claim should stand subject to those amendments. 64 The orders I make, therefore, are that: (1) the following paragraphs be struck out: 13, 21, 25 (in part), 43, 44, 68, 78, 83, 85, 88, 91, 92, 95, 96, 97 (in part), 108, 109 and 111 (in part); (2) the following paragraphs be struck out, with leave granted to amend: 14, 20, 37, 38, 39, 40, 41, 42, 57, 58, 59, 60, 61, 86, 93, 112, 113 and 114; (3) the plaintiff provide particulars to the following paragraphs: 48, 86, 93 and 108; (4) such further amended statement of claim to be filed within fourteen days; (5) the defendants to file and serve a verified defence within twenty-one days thereafter; and (6) the plaintiff to pay the defendant's costs of the notice of motion incurred since 26 November 2004. ********** 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.