New South Wales Supreme Court CITATION : Johnston v Australia and New Zealand Banking Group Limited & 2 ors [2007] NSWSC 584 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 18/5/07 JUDGMENT DATE : 8 June 2007 JUDGMENT OF : Bell J at 1 DECISION : 1. Within 14 days of today's date the plaintiff is to provide the second defendant with a substantive reply to the request made by Ebsworth & Ebsworth in their letter dated 11 December 2006 for particulars of subparagraphs 44(j) and (k) of the TFASOC; 2. Dismiss the balance of the motion filed on behalf of the second and third defendants; 3. Within 14 days of today's date the plaintiff is to supply the first defendant with a schedule incorporating all of the particulars upon which it is proposed to rely in support of the allegations of agency pleaded in paragraph 14 of the TFASOC; 4. Dismiss the motion filed on behalf off the first defendant. Blackburn Low & Co v Vigors (1987) 12 App Cas 531 CASES CITED : Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280; [2006] ANZ Conv R 142 Johnston v Australia & New Zealand Banking Group Ltd [2006] NSWCA 218 Daryl Lindsay Johnston (Plaintiff) PARTIES : Australia and New Zealand Banking Group Limited (1st Defendant) John Edward Star (2nd Defendant) Stuart Karim Ariff (3rd Defendant) FILE NUMBER(S) : SC 20553/00 W. Washinton (Plaintiff) COUNSEL : G. Lucarelli (1st Defendant) A. Leopold (2nd and 3rd Defendants) JP Leong & Co (Plaintiff) SOLICITORS : Minter Ellison (1st Defendant) Ebsworth & Ebsworth (2nd and 3rd Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BELL J Friday 8 June 2007 20553/00 Darryl Lindsay Johnston v Australia and New Zealand Banking Group Limited (ACN 005 357 5222) JUDGMENT 1 BELL J: By notice of motion filed on 5 March 2007, the second defendant, John Star, and the third defendant, Stuart Ariff, claimed orders including an order striking out the third further amended statement of claim (TFASOC), and in the alternative, an order requiring the plaintiff to provide further particulars of his claim. 2 The first defendant, the Australia and New Zealand Banking Group Limited (the Bank), by notice of motion filed on 5 April 2007, claimed an order for a "substantive response" to their request for particulars, which was the subject of a consent order made on 24 April 2007. 3 The two motions were heard together. 4 The history of the proceedings is set out in the judgment of the Court of Appeal in Johnston v Australia & New Zealand Banking Group Ltd [2006] NSWCA 218. The appeal was argued by reference to a draft of the TFASOC. The plaintiff was given leave to file the TFASOC in the form of the draft subject to re-pleading the allegations contained in paragraphs 40 and 41 conformably with the reasons of the Court. The deficiency identified by the Court in the pleading of these two paragraphs was that the allegations of the elements of the tort were rolled-up against the three defendants. The Court required the plaintiff to plead the allegations against each defendant separately by reference to the acts alleged to be his, or its, or those of his, or its agents (at [65]). 5 The TFASOC was filed on 9 October 2006 in conformity with the leave given by the Court of Appeal. 6 On the hearing Mr Leopold, who appeared on behalf of Mr Star and Mr Ariff, confined the relief claimed in prayer one of the motion to an order striking out paragraph 14 of the TFASOC, and giving leave to re-plead the allegations of agency involving Mr Star, Mr Ariff, and Mr Mitchell separately and the allegations of the appointment of Mr Morton, Ms White and Mr Bernard Star as caretakers of the farm, Lilydale, separately. 7 The Bank's complaint concerns the adequacy of the particulars of the agency allegations pleaded in paragraph 14. 8 I will set out paragraph 14 in full: [14] The First Defendant appointed, the Second Defendant, the Third Defendant and Mr Mitchell, a solicitor in the firm Norton Smith & Co ("Norton Smith"), the First Defendant's solicitors, as its agents to take possession of and thereafter manage the Farm on its behalf, and it appointed as its caretakers to occupy the Farm on its behalf Donald George Morton ("Mr Morton"), Ann White ("Ms White") and Bernard Paul Star ("Mr Star"). Particulars Agency is inferred from the following facts and circumstances - (i) An internal memorandum dated 17 June 1996, written by the First Defendant's Mr C R Griffiths ("Griffiths"), Senior Manager, Retail Asset Management Victoria, to the First Defendant's Mr J Crough ("Crough"), State Manager Retail, Victoria; (ii) Conversation between the Plaintiff and the Third Defendant on 7 June 1996, whereby the Third Defendant stated he had been appointed as the First Defendant's agent to take possession of the Farm from Hurworth and manage it thereafter on its behalf; (iii) Letter dated 13 June 1996, from Mitchell to Mr A Deluchi ("Deluchi"), the Plaintiff's then solicitor, noting the First Defendant's possession of the Farm; (iv) The Second Defendant, the Third Defendant, Mitchell, Star, Morton and White acted on the First Defendant's instructions. 9 The vice in paragraph 14 of which Mr Leopold complains is the inconsistency between the allegation that the Bank appointed the caretakers of the farm, Lilydale, and the particulars of malice pleaded against Mr Star in paragraph 44(j) and (k), which assert that the caretakers of Lilydale were appointed by him. Paragraph 44 is one of the additional paragraphs inserted into the TFASOC pursuant to the leave given by the Court of Appeal. 10 Ebsworth & Ebsworth (Ebsworths), the solicitors acting for Mr Star and Mr Ariff sought further particulars of the TFASOC. Mr Leopold complains that the response served to make the allegations more confused. In his letter of 10 November 2006 the plaintiff's solicitor, Mr Leong, said of the allegations in paragraph 14 that, "it is alleged that each of Mr Morton, Miss White and Mr Bernard Star were servants and/or agents of the first, second and third defendants. The particulars of agency are the particulars to paragraph 14 of the statement of claim". 11 Ebsworths wrote to Mr Leong on 28 November 2006 noting that paragraph 14 alleges that the caretakers were appointed by the Bank and that the further particulars appeared to extend the allegation of agency to Mr Star and Mr Ariff. They invited the plaintiff to amend the TFASOC to fully plead the allegations of agency relating to the caretakers. They also complained that the particulars in subparagraphs (i) to (iv) are inadequate. In particular it was suggested that the mere assertion of acting on instructions (in (iv)) was, without more, incapable of establishing a relationship of agency. 12 Mr Leong responded by letter dated 14 February 2007 to Ebsworths' request for further particulars stating that Mr Morton, Ms White and Mr Bernard Star were the servants or agents of Mr Star by virtue of contracts of service and that they were agents of Mr Ariff by virtue of taking directions from him in the conduct of their duties. 13 Mr Washington, who appeared on behalf of the plaintiff, submitted that the plaintiff had provided the best particulars of the agency allegations that he was able to give in the absence of discovery. He submitted that the matter was complicated by the circumstance that the Bank and Mr Star were exercising dominion over the same asset, the farm Lilydale, at the time of these events. 14 It appears from the judgment of the Court of Appeal that the inclusion of paragraph 44 in the TFASOC (pleading the particulars of malice against Mr Star) did not introduce inconsistency into the pleading arising out of the allegations made concerning the conduct of Mr Morton or Ms White. The rolled-up allegations in subparagraphs 41(k) and (l) of the draft pleading before the Court of Appeal were in the same terms as are now found in subparagraphs 44(j) and (k) of the TFASOC (paragraph 41 of the draft pleading is set out at [61] in the judgment of Basten JA). Basten JA said (at 62): So far as paragraph 40 is concerned, the allegations made against each of the defendants are particularised by reference to the beliefs, knowledge and the reasonableness of the beliefs, of each defendant. To the extent that the knowledge of the second defendant (Mr Star) was concerned, it was alleged at paragraph 4 that the third defendant (Mr Ariff) was an employee of Mr Star's firm. Mr Mitchell was the solicitor acting on behalf of the Bank, but there were further allegations that each of Mr Star, Mr Ariff and Mr Mitchell were agents of the Bank: paragraph 14. The pleading is thus comprehensible. Nevertheless, it is in a form which is inappropriate and renders unduly difficult the task of the defendants in responding. Allegations against each should be made in separate paragraphs. 15 The asserted inconsistency between the allegation that Mr Morton, Ms White and Mr Bernard Star were appointed by the Bank in paragraph 14 and the allegation that they were appointed by Mr Star in subparagraphs 41(k) and (l) does not appear to have been the subject of complaint before the Court of Appeal. An order striking out paragraph 14 on the ground that the rolled-up allegations of agency are inconsistent with pleading of the allegations of malice against Mr Star in paragraph 44(j) and (k) would not be consistent with the leave given by the Court of Appeal. 16 I approach the motion upon the basis that the TFASOC was held to articulate a comprehensible claim against Mr Star and Mr Ariff subject to separating out the allegations that had been contained in the rolled-up pleading of paragraphs 40 and 41 so as to permit each of the defendants to plead to them. 17 Mr Leopold's second complaint was the suggested failure to properly particularise the allegations of malice made against Mr Star. These are pleaded in paragraph 44. In large measure the case against Mr Star relies on the state of mind and conduct of third persons. Subparagraphs (a), (b), (c), (e), (g), (h) and (i) plead the state of mind and conduct of Mr Ariff as Mr Star's agent and subparagraphs (j) and (k) plead the conduct of the caretakers. 18 In Mr Leopold's submission Mr Star is entitled to particulars of the scope of the authority under which it is asserted Mr Ariff and the caretakers acted. He referred to the judgment of Lord Halsbury in Blackburn Low & Co v Vigors (1987) 12 App Cas 531 at 537-538: [Some agents] may have so limited and narrow authority both in fact and in the common understanding of their form of employment that it would be quite inaccurate to say that such an agent's knowledge or intentions are the knowledge or intentions of his principal. Mr Leopold also noted that where an agent acts with a particular intention outside his or her authority the intention is not attributed to the principal: Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280; [2006] ANZ Conv R 142, at [82]. 19 The facts pleaded to support the allegation that Mr Ariff acted as Mr Star's agent are that he was at all material times in the employ of Star Dean-Willcocks and that Mr Star carried on business as an accountant under that name. As I understand the case that the plaintiff seeks to make, consistently with the way it was expounded in the judgment of Basten JA, the knowledge, intentions and conduct of Mr Ariff particularised in subparagraphs (a), (b), (c), (e), (h) and (i) are alleged to be the knowledge, state of mind and conduct of Mr Star because Mr Ariff was acting in the course of his employment. I accept Mr Washington's submission that the particulars in subparagraphs 44 (a), (b), (c), (e), (h) and (i) are sufficient. 20 Subparagraph 44(f) pleads that malice can be inferred from untrue statements made by Mr Star to Mr Morton to the effect that the plaintiff was dangerous and probably armed with a firearm. Subparagraph 44(g) pleads that malice can be inferred from untrue statements made by Mr Ariff to Mr Morton to the effect that the plaintiff was dangerous and prone to violence. The latter allegation does not contain an assertion that Mr Ariff was acting as the agent of Mr Star. Further particulars of these two subparagraphs were supplied by Mr Leong in a letter dated 10 November 2006. The untrue statements pleaded in each of subparagraph (f) and (g) were identified as those set out in paragraph 15 of the TFASOC. Paragraph 15 pleads that Mr Ariff made false allegations, to Mr Morton and the Police, that the plaintiff was prone to violence including the possible use of firearms. Mr Leong in his letter dated 15 February 2007 foreshadowed that the plaintiff will apply for leave to amend subparagraph 44(f) to insert the words "by his agent Mr Ariff" after the words "Mr Star". It appears from Mr Leong's letter of 15 February that the plaintiff's earlier responses to requests for particulars had been prepared from a version of the pleading in which the subparagraphs of paragraph 44 bore different numbering to those contained in the version that had been served on the second and third defendants. Mr Leong does not give further particulars of subparagraph (g). The matter was not raised on the hearing. On the face of it subparagraphs (f) and (g) are directed to the same particular of malice, namely that Mr Ariff made false allegations to Mr Morton to the effect that the plaintiff was prone to violence. This requires clarification. Either (g) should be deleted or the plaintiff will require leave to amend it in the same respect as the foreshadowed amendment of (f) and it will be necessary to provide particulars of it. 21 I do not propose to order that the plaintiff provide further particulars of the scope of the authority conferred on Mr Ariff. The case that the plaintiff seeks to make seems to me to be sufficiently clear – the agency asserted arises from the relationship of employment. Either the plaintiff succeeds in establishing at trial that in the respects particularised Mr Ariff was acting in the course of his employment or he does not. It seems to me that Mr Star understands the case that is sought to be made. 22 The third complaint made by Mr Leopold is that to the extent that Mr Star and Mr Ariff maliciously caused the prosecution of the plaintiff, the allegation must relate to instructions or authority given maliciously by each to third persons. The only instructions pleaded are those in paragraph 16, which are said to have been given by Mr Ariff to Ms White. There is no pleading of instructions given by Mr Ariff to Mr Morton and no pleading of instructions given by Mr Star to Mr Ariff, Ms White or Mr Morton. Further, it was noted that the material facts contained in paragraphs 22, 25, 26, 28 and 30 relate to the conduct (or omissions) of third persons, which fall outside the instructions pleaded in paragraph 16. 23 Mr Leopold submitted that, at the least, Mr Star and Mr Ariff are entitled to particulars of the instructions (or authority) on which the plaintiff asserts Mr Morton acted. Mr Leopold noted that Mr Morton has supplied the plaintiff with a proof in other proceedings. The pleading of paragraph 16 suggests that the plaintiff has knowledge of the instructions given to Ms White. In Mr Leopold's submission the plaintiff is in a position to supply better particulars of his case with respect to the liability of Mr Star for the conduct of Mr Morton and Ms White. It appears that it is the plaintiff's case that Mr Morton and Ms White were employed by Mr Star. There remains some tension given the pleading that they were "appointed" by the Bank (it is to be noted that the particulars of malice against the Bank do not depend on the conduct of Mr Morton or Ms White). Ebsworths sought further particulars of the facts relied upon by the plaintiff for the allegations in subparagraphs 44(j) and (k) in their letter of 11 December 2006. Mr Leong has declined to provide the particulars sought. In light of the ambiguity concerning the appointment of Mr Morton and Ms White, I propose to order that a substantive reply to the request for these particulars be given and otherwise to dismiss the motion brought by the second and third defendants. 24 I turn now to the Bank's motion by which it claims particulars of the agency allegations in paragraph 14 of the TFASOC. Mr Lucarelli, who appeared on behalf of the Bank submitted that the fact that the Bank appointed Mr Star as receiver of the Hurworth Group of companies would not operate to make Mr Star the agent of the Bank, rather the appointment as receiver operated to make Mr Star the agent of Hurworth. I accept that this is so. Mr Lucarelli complained of the absence of pleaded facts to explain the basis of the assertion in paragraph 3 that, contrary to the usual position, Mr Star was acting as its agent. He did not develop this further and as I have noted, the plaintiff has obtained leave to proceed on the TFASOC subject only to separating out the allegations that in the earlier pleading were set out in paragraphs 40 and 41. 25 In written submissions Mr Lucarelli observed that the particulars set out in subparagraphs (i) to (iv) of paragraph 14 do not differentiate to which of the six persons named as being agents of the Bank they refer. He submitted that a chain of correspondence prior to 24 April 2007 had passed between the Bank and Minter Ellison, who act for the Bank, seeking particulars of each of the agencies alleged. Despite the supply of further particulars the basis of agency was said to remain obscure and in some respects contradictory. Mr Lucarelli submitted that, "the Bank seeks as a 'minimum' an order for the provision – 'once and for all' of proper particulars by which the agencies alleged in paragraph 14 are alleged" (WS [5]). In oral submissions he suggested that the provision of a schedule containing each particular relied upon by the plaintiff in support of the agency allegations would promote the efficient conduct of the trial since tracking given particulars of an allegation through the web of correspondence had become a time consuming exercise in itself. Mr Washington did not oppose the consolidation of all the particulars that have been supplied to the Bank into a single schedule. 26 Mr Lucarelli set out a schedule of the particulars ordered, against those given, in his written submissions. He submitted that this demonstrated the insufficiency of a number of those supplied despite the consent orders made on 24 April 2007 (by which the plaintiff agreed to the provision of further particulars of a number of matters referred to in Mr Leong's letter of 16 April 2007). 27 The particulars supplied by Mr Leong in his letter dated 16 April do serve to differentiate the facts and circumstances on which the plaintiff relies with respect to the agency allegations relating to Mr Star, Mr Ariff, and Mr Mitchell. 28 Mr Lucarelli's schedule sets out extracts of particulars supplied in the letter of 16 April relating to; (i) things said by Jan Cairns, an employee of Mr Star, to the plaintiff in a telephone conversation on 25 July 1996; (ii) statements made by Bernard Star in a conversation with the plaintiff on 25 July 1996; and (iii) a conversation between Mr Mitchell and the plaintiff on 8 August 1996. In each instance Mr Leong referred to the speaker implying certain matters. In Mr Lucarelli's submission, the Bank is entitled to particulars of the substance of the conversation that is said to give rise to the implication. Mr Leong wrote a further letter to Minter Ellison dated 4 May in which the statements relied upon as giving rise to the implications in each of these three instances is set out. It seems to me that the assertions relied upon as giving rise to the implication have been sufficiently identified. 29 I accept Mr Lucarelli's submission that it is desirable for the plaintiff to consolidate the particulars supplied to the Bank into a schedule containing each particular on which he proposes to rely at trial as giving rise to the allegations of agency pleaded in paragraph 14 of the TFASOC. ORDERS 1. Within 14 days of today's date the plaintiff is to provide the second defendant with a substantive reply to the request made by Ebsworth & Ebsworth in their letter dated 11 December 2006 for particulars of subparagraphs 44(j) and (k) of the TFASOC; 2. Dismiss the balance of the motion filed on behalf of the second and third defendants. 3. Within 14 days of today's date the plaintiff is to supply the first defendant with a schedule incorporating all of the particulars upon which it is proposed to rely in support of the allegations of agency pleaded in paragraph 14 of the TFASOC. 4. Dismiss the motion filed on behalf off the first defendant. ********** 12/06/2007 - Misspelt word - Paragraph(s) [header] 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.