Supreme Court New South Wales Medium Neutral Citation: Baiada Poultry Pty Ltd v Sztrochlic [2014] NSWSC 576 Hearing dates: 2 May 2014 Decision date: 02 May 2014 Before: McCallum J Decision: The defendant's application is rejected. The defendant is to pay the plaintiff's costs of and incidental to the defendant's notice of motion filed 3 April 2014 as agreed or assessed on the ordinary basis. Catchwords: PROCEDURE - civil - pleadings - application to have pleadings struck out - whether pleadings have the tendency to cause prejudice, embarrassment or delay - whether it is necessary to strike out the proceedings in the interests of justice Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Arthur Young v Tieco International (Australia) Pty Ltd (Supreme Court of South Australia, Lander J, 19 July 1995, unreported) Ingot v Macquarie [2004] NSWSC 1136 McGuirk v University of New South Wales [2009] NSWSC1424 Northam v Favelle Favco Holdings Pty Ltd (Supreme Court of New South Wales, Bryson J, 7 March 1995, unreported) Texts Cited: William Blake Odgers, Odgers on Pleading and Practice, 8th ed (1918) Stevens and Sons at 178 - 210. Category: Interlocutory applications Parties: Baiada Poultry Pty Limited (plaintiff) Raphael Sztrochlic (defendant) Representation: Counsel: T Maltz (plaintiff) P Biber (solicitor for defendant) Solicitors: Coleman and Greig Lawyers (plaintiff) David Landa Stewart (defendant) File Number(s): 2013/255115 Publication restriction: None Judgment - ex tempore 1HER HONOUR: This is an action to recover the sum of $1.9 million allegedly owed by the defendant, Mr Sztrochlic, as guarantor of the debts of Raphco Pty Ltd, which is in liquidation. The proceedings were commenced by statement of claim filed 22 August 2013. Raphco was the first defendant to the claim. However, it went into liquidation shortly after the proceedings were commenced. The plaintiff accordingly filed an amended statement of claim on 17 March 2014 discontinuing the proceedings as against Raphco and amending the claim as against Mr Sztrochlic. 2The amendment was unauthorised in the sense that the amended statement of claim was filed more than twenty-eight days after the original statement of claim (and, indeed, after a defence had been filed) without either the leave of the Court or the consent of Mr Sztrochlic. Mr Sztrochlic does not take issue with the pleading on that basis but moves to have parts of the pleading struck out on the grounds that they have a tendency to cause prejudice, embarrassment or delay in the proceedings or otherwise fail to comply with the rules of pleading at common law and under the Uniform Civil Procedure Rules 2005. The power of the Court invoked by the application is the power to strike out a pleading or part of a pleading under r 14.28 of the Rules. This judgment determines that application. 3Neither party suggested that the plaintiff's claim is anything other than a relatively straightforward conventional claim against a company director as guarantor of the debts of the company. The original statement of claim alleged that Mr Sztrochlic was liable as guarantor under a written guarantee and indemnity provided by him in 2012. By his defence filed on 21 November 2012, Mr Sztrochlic denied entering into that agreement, alleging that he had offered to provide the guarantee but that the plaintiff never accepted the offer in writing, orally, by conduct or otherwise. Mr Sztrochlic further alleged by way of defence that, upon the winding up of Raphco, the offer was automatically withdrawn or lapsed. The present amendments were made in that context. 4The objections taken by Mr Sztrochlic to the amended pleading are set out in a letter dated 28 March 2014 (page 12 of the affidavit of Mr Phillip Biber sworn 1 April 2014). That letter identified, in response to the 34 new paragraphs of the amended pleading, some 26 discrete objections. 5Before turning to each of those objections, it may be helpful to summarise the principles invoked by the parties in their submissions. Mr Biber, who appears for Mr Sztrochlic, took me to the principles stated by Bryson J in Northam v Favelle Favco Holdings Pty Ltd (Supreme Court of New South Wales, Bryson J, 7 March 1995, unreported) (a case in which I appeared as junior counsel) at paragraphs 5 to 6 as follows: A pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a case of action, if the material facts alleged are couched in expressions which leave difficulties or doubts without recognising or piecing together what is referred to, or if imprecise or slang words are used with unduly broad ranges of possible meanings or without clear meanings. What is referred to must be clearly stated showing, as appropriate, when and where an event happened, who participated, what was said, what was the relevant effect of any documents and so forth. It is not fair to require a defendant to flesh out general expressions or indirect allusions by piecing together information in other documents such as affidavits or experts' reports. He might get it wrong, and the greater the complexities are, the more probable it is that he will understand what is alleged in some different way to what the plaintiffs will rely on. Procedural justice can be upset just as much by opportunistic advocacy exploiting a choice among several possibilities as by an ambush from complete concealment. In the world of practicalities a defendant is unlikely to receive much protection when evidence is tendered which is an available meaning of a pleading if he has not attacked the pleading at an interlocutory stage. A pleading is to contain and contain only a statement in summary form of the material facts on which the party relies but not the evidence by which those facts are to be proved; see Pt15 R7(1). It is also to contain the necessary particulars of any claim; see Pt16 R1(1); including particulars of any fraud, misrepresentation, condition of mind including fraudulent intention, and of any negligence: see Pt16 R2, 3 and 4. A pleading should be brief and should state the effect of documents or spoken word referred to, and should plead specifically matter which may take the defendant by surprise. See Pt15 R8, 9 and 13. Of course the requirement for particularity extends to all causes of action including causes of action in contract. The more complex the circumstances and legal principles, the more important it is to allege the material facts fully with particularity; and claims based on the s52 of the Trade Practices Act and on promissory or other estoppels clearly exemplify this need. 6As noted by Mr Biber, those remarks were cited with approval by Johnson J in McGuirk v University of New South Wales [2009] NSWSC1424 at [32]. Mr Biber relied upon the summary of the principles set out by Johnson J in that decision at paragraphs [21] to [35]. 7Mr Biber's submissions identified the particular provisions of the Uniform Civil Procedure Rules upon which he relied, being r 14.7, which provides that a pleading must contain only a summary of the material facts on which the party relies and not the evidence by which those facts are to be proved; rule 14.8, which provides that a pleading must be as brief as the nature of the case allows; r 14.9 dealing with the manner in which references to documents and spoken words must be pleaded and r 14.19, which provides that a pleading may raise any point of law. 8The objections set out in Mr Biber's letter dated 28 March 2014 reflect certain assumptions as to the proper application of those principles and rules. Perhaps most obviously, Mr Biber's position reflects the assumption that it can do no injury to the overriding purpose in s 56 of the Civil Procedure Act (to facilitate the just, quick and cheap resolution of the real issues in the proceedings) to insist upon their strict observance. 9Mr Biber submitted as much, contending that this Court remains a court of strict pleading. Not without a sense of humour as to what it reflects about his personal library, Mr Biber annexed to his submissions an extract from Odgers on Pleading and Practice, 8th edition, a text published in 1918 setting out the principles relating to the task of attacking an opponent's pleading. He submitted that the principles there stated have continuing application almost a century later. 10Mr Maltz, who appears for the plaintiff, took issue with the assumed premise of the application that meticulous adherence to the principles and rules of pleading will always best serve the overriding purpose. His search for an authoritative statement of principle approving a more adaptable approach led him to the decision of the Supreme Court of South Australia in Arthur Young v Tieco International (Australia) Pty Ltd (Supreme Court of South Australia, Lander J, 19 July 1995, unreported), cited with approval by McDougall J in Ingot v Macquarie [2004] NSWSC 1136 (also a case in which I appeared as junior counsel) at [46]. 11In Arthur Young v Tieco, Lander J said: Whether the material facts and whether sufficient particulars have been pleaded must depend upon the cause of action, the complexities of the case and the whole of the circumstances of the case. None of those matters can be considered in isolation any more than each of the paragraphs of the pleading can be considered in isolation. When the court considers a pleading it will not consider the pleading with the same degree of scrutiny which the courts are required to give to an Act of Parliament. With the complexities of modern litigation, a pleader can usually point to some deficiency in the opponent's pleadings. One can usually, if one approaches the matter with a critical eye, identify some failing in a pleading. But that is not the approach that in this age ought to be adopted. A court would not sit down in the manner of a nineteenth century pleader seeking to find an error capable of sending a party away to re-plead his claim or defence. Such a technical approach is inconsistent with modern litigation and inconsistent with the court's function, which is to try to arrive at a just result. A successful result, if arrived at after too great an expense may not be considered by even the successful party to be a just result. A court ought to approach a consideration of the adequacy of a pleading seeking to answer the ultimate question; does the pleading give fair notice of the case to be made against the other party at trial, thereby minimising the risk of injustice resulting from surprise. 12Mr Biber submitted that those statements reflected a "benign" approach, evidently suggesting that gentleness or kindness is, at least in this context, a vice. That submission assumes that the overriding purpose can only be met with punctilious adherence to the rules of pleading. But as it has often been said, the rules are the servants, not the masters, of justice. 13Mr Maltz noted that even as long ago as 1918 that was recognised by Mr Odgers in the text from Mr Biber's library. At p 178 of the text in the opening remarks of the chapter to which I have referred, the author said: And experienced pleaders often break the letter of these rules for the sake of clearness or brevity. Thus, thought it is in general unnecessary to allege matter of law, yet it is sometimes convenient to do so, and it may make the statements of fact more intelligible and show their connection with each other. 14An illustration given in the text book of an instance in which a matter of law may appropriately be alleged in a pleading is, "the plaintiff is entitled to the possession of a farm and premises", a formulation which at that time appeared in the statutory forms of the rules. 15To that may be added the more modern examples of the common pleading of a cause of action in defamation, "the defendant published of and concerning the plaintiff the following matter defamatory of him", and the common pleading of an agreement that on a particular date, the parties entered into an agreement including identified terms. Each of those examples provides an illustration of an instance in which a matter of law or at least mixed law and fact is alleged for the sake of clearness and brevity. 16One category of objection taken by Mr Biber touched on that issue. A number of the paragraphs of the amended pleading are objected to on the basis that they are in the nature of a "legal submission" or legal conclusion. 17In response to that category of objection, Mr Maltz noted that contentions of mixed law and fact are not uncommon in modern pleadings and the distinction between the two is sometimes grey. Mr Maltz submitted that the compass by which objections to that kind of pleading should be determined is whether it is necessary to allow or strike out the pleading in order to advance the interests of justice. He submitted that there were no "legs hanging over the boundary fence" of that kind in the present pleading. I would respectfully accept Mr Maltz's submissions on that issue as an eloquent and, perhaps more importantly, correct expression of the proper approach. It will in each instance be a matter of judgment whether a failure to achieve strict compliance with the rules should be tolerated for the sake of clearness or brevity. 18That is not to condone the vice of beneficence. Rather, it is a recognition that the dictates of justice in any individual instance cannot always be preempted in the articulation of rigid rules. I should add that, in making those submissions, Mr Maltz did not intend any concession as to any breach of the rules of pleading in the present case. 19Against those principles, I turn to consider the defendant's individual objections to the pleading. As already noted, the original statement of claim relied on an alleged guarantee and indemnity provided by Mr Sztrochlic in 2012. The amended pleading pleads an alternative claim based on a guarantee allegedly provided earlier, in June 2003. 20That claim was set out in paragraphs 4A - 4H of the amended pleading as follows: 4A On or about 27 June 2003 the Defendant, in his capacity as a director of Raphco, signed an application form titled "Application for Commercial Credit Account" (Initial Credit Account Application). 4B On or about 27 June 2003 the Defendant, in his own capacity, signed beneath a section of the Credit Account Application titled "Company Liability: Guarantee by Directors" and which contained terms (First Director's Guarantee Terms). 4C By the First Director's guarantee terms the defendant, in consideration of the granting of credit by the plaintiff to Raphco, was liable with Raphco for the due payment of all sums, which are owed to the plaintiff in relation to Raphco's account. 4D Further, by the First Director's Guarantee Terms, the Defendant agreed that the Plaintiff would be at liberty to act as though the Defendant were the principal debtor. 4E The signed Initial Credit Account Application, including the signed First Director's Guarantee Terms, were communicated or provided to the plaintiff by or on behalf of Raphco and the defendant (First Director's Guarantee Offer). 4F After the receipt of the Initial Credit Account Application, including the First Director's Guarantee Offer: a. Raphco ordered, from time to time, poultry products from the Plaintiff; and b. the Plaintiff, from time to time delivered poultry products to Raphco. 4G In respect of some or all of the poultry products supplied to Raphco, the plaintiff did not require payment on or before delivery to Raphco. 4H The plaintiff, by its conduct, accepted the First Director's Guarantee Offer made by the Defendant. 21Mr Biber took a global objection to the claim based on the earlier guarantee on the basis that the whole claim is manifestly untenable. For that purpose, he tendered a copy of the guarantee. He relied on the credit terms set out on the third page of the document as follows; CREDIT TERMS 1. Normal Supply Terms: Baiada's terms and conditions are cash on delivery. 2. Credit Terms: The Customer agrees that it is not entitled to credit facilities until the Customer receives notice in writing from Baiada stating that credit facilities have been approved and confirming the credit terms (and conditions) upon which such facilities have been approved. 3. Termination of Credit: Baiada reserves the right to terminate credit facilities from time to time or at any time. 4. Security: Baiada reserves its right at any time to require the Customer to provide security as a condition for the continuation of credit facilities. Security may take the form of a Bank Guarantee or Mortgage or Change or Bill of Sale as required by Baiada. 22Mr Biber submitted that, in the absence of any pleading that the customer (Raphco) had received notice in accordance with term 2 set out above, the contention that there arose a binding agreement was manifestly untenable. 23That submission generated a deal of debate between the parties as to whether the provision of the notice in writing to which that term refers is a condition precedent to the existence of an agreement. That does not necessarily answer the pleading point. The question is whether, without any specific averment as to compliance with the term, the plaintiff's claim on the basis of the 2003 guarantee is manifestly untenable, as alleged. 24I think the proper analysis is that, whilst it would have been open to the plaintiff to plead a material fact pertinent to the issue of compliance or otherwise with that so-called term, it is not a necessary averment. That is partly because, on a fair reading of the whole of the paragraphs set out above, it simply does not appear to be the way in which the plaintiff puts its claim and partly because of the provisions of r 14.11 to which Mr Maltz drew my attention during argument. 25Rule 14.11 provides: If it is a condition precedent necessary for a party's case in any pleading that: (a) a thing has been done, or (b) an event has happened, or (c) a state of affairs exists, or has existed at some time or times, or (d) the party is ready and willing, or was at all material times ready and willing, to perform an obligation a statement to the effect that the condition has been satisfied is taken to be implied in the party's pleading. 26If there is a real issue, based on compliance or otherwise with condition 2, as to whether the agreement came into force that is a matter which is open to the defendant to plead. I do not think the absence of any pleading on that issue renders the plaintiff's pleading liable to be struck out. 27Separately, Mr Biber relied on credit term 4 set out above. He submitted that it is confusing that the plaintiff relies upon a form of security (namely, a guarantee contained within the document) whereas the document relied upon also contains a term contemplating the provision of further security. For my part, I do not think the juxtaposition of those two matters generates confusion as to the plaintiff's claim. For those reasons, the global objection to the pleading of the 2003 guarantee must be rejected, in my view. 28Dealing then with a series of specific objections, it was submitted that paragraph 4B is surplusage because the document speaks for itself. However, when the whole of that part of the pleading is read together, it is tolerably clear in my view that the pleader intended to set out the sequence of events which it is contended gave rise to the existence of a concluded agreement. The matter pleaded in paragraph 4B is one of the steps in that sequence. The relevant averment is the fact that the defendant signed the application. It is not an instance in which the document speaks for itself. 29Paragraph 4C was objected to on the basis that it is in the nature of a legal submission. That was said to arise from the inclusion of the term "was liable". Again, I think it is necessary, in order to assess that submission, to consider paragraphs 4A to 4H as a whole. It is tolerably clear in my view that paragraphs 4C and 4D are intended to identify the terms of the "first director's guarantee terms" relied upon by the plaintiff. If the defendant does not accept that those were terms of the guarantee, that can simply be denied and the defendant can indicate that he relies on the terms of the document. I do not think the existence of that allegation on the pleading causes embarrassment in the legal sense. 30Paragraph 4E was objected to on the basis that the phrase "communicated or provided" is general, ambiguous and causes embarrassment. Understood as a pleading of one of the steps in the sequence of events allegedly resulting in a concluded agreement, I would not accept that submission. It is clear enough in my view that the pleader was intending to allege that, after the application was completed and signed by Mr Sztrochlic, that document was in turn remitted to the plaintiff. If further particulars as to when and where that occurred are required, they can be requested. Mr Biber submitted that that is not a matter that should be left to particulars, since a pleading should allege all of the material facts, matters and circumstances of a plaintiff's claim. In my view, this is an instance in which the confusion or uncertainty, if any, could readily be rectified by a simple request for particulars. 31Paragraph 4F was objected to on the basis that it was vague and imprecise and that it is not possible for the defendant to plead to the paragraph in its present form. I do not accept that submission. It seems to me that a man who ran a company which, as I think is admitted on the pleadings but I may be wrong, traded as "Poultry Palace", could respond to the allegation that, from time to time, the company purchased poultry products. The plain object of that particular allegation in the pleading is that it is relied upon as part of the conduct on the strength of which it is alleged that the plaintiff accepted the guarantee offer submitted by Mr Sztrochlic. 32Paragraph 4G was objected to on the basis that it is irrelevant, but I understood that contention to have been withdrawn along with the withdrawal of the original objection in paragraph 1 of the letter. A separate objection to paragraph 4G is that it identifies matters of evidence, not material facts. I do not accept that submission. Reading the paragraph in the context of the sequential pleading to which I have referred, it is plain in my view that the pleader intended to identify the fact that the plaintiff did not require payment on a COD basis as part of the conduct referred to in paragraph 4H, that is, the conduct by which the plaintiff accepted the guarantee offer. 33The next part of the pleading objected to is the pleading of the 2012 guarantee and indemnity set out in paragraphs 8A to 8F of the amended pleading as follows: 8A. On or around 16 July 2012, the Defendant, in his own capacity, signed the Second Credit Application on the sixth page, under a section titled "Baiada Poultry Pty Limited - Guarantee and Indemnity." And which contained terms (2012 Director's Guarantee and Indemnity Terms). 8B. By the 2012 Director's Guarantee and Indemnity Terms, the Defendant offered that in consideration of the supply or continued supply of goods by the Plaintiff to Raphco, he could (2012 Director's Guarantee Offer): a. guarantee to the Plaintiff the punctual payment of all moneys owing by Raphco to the Plaintiff for the supply of goods or services (Guaranteed Moneys); and b. indemnify the Plaintiff against any loss suffered by the Plaintiff because any agreement between the Plaintiff and Raphco for the supply of goods is unenforceable, or because any Guaranteed Moneys are not recoverable from Raphco; and c. indemnify the Plaintiff against any loss suffered by the Plaintiff because of any failure by Raphco to punctually pay to the plaintiff the Guaranteed Moneys. (2012 Director's Guarantee Offer) 8C. The Second Credit Application, including the signatures noted above, was communicated or provided to the Plaintiff by or on behalf of Raphco and the Defendant. 8D. After the receipt of the Second Credit Application: a. Raphco continued to order, from time to time, poultry products from the Plaintiff; and b. the Plaintiff from time to time delivered poultry products to Raphco. 8E. In respect of some of the poultry products supplied to Raphco, the Plaintiff did not require payment on or before delivery to Raphco. 8F. The Plaintiff, by its conduct, accepted the 2012 Director's Guarantee Offer made by the Defendant. 34An objection to paragraphs 8A and 8B that they are matters of evidence and that in any event the document speaks for itself is the same objection as I have dealt with above in respect of paragraph 4B and is rejected on the same basis. 35Paragraph 8A was objected to on the further basis that the phrase "and which contained terms" is ambiguous and embarrassing. I frankly confess that I do not understand why the inclusion of that phrase was contended to be ambiguous or embarrassing. In my view, it is clear that what is intended to be pleaded is that Mr Sztrochlic signed an application which set out the terms upon which the plaintiff relies as having ultimately become binding. 36Paragraph 8C is the same objection as was taken to the words "communicated or provided" in respect of paragraph 4E and is rejected on the same basis. 37Paragraph 8D is objected to on the basis that it is ambiguous in that it does not specify who received the second credit application. On the contrary, the application specifies that Raphco received the application, Raphco being the relevant corporate entity. To the extent that the identity of the individual person who received the application is relevant, that is a matter which, for the reasons already articulated, can in my view appropriately be dealt with by a request for particulars. 38An objection to paragraph 8E in the same terms as the objection taken to paragraph 4G above should be rejected for the same reasons. Paragraph 8F raises an issue not addressed in oral submissions and as to which I overlooked calling on Mr Maltz. I will hear further submissions as to that issue at the conclusion of this judgment. 39The next section of the pleading deals with the contention that the 2012 Director's Guarantee is binding as a deed poll. The plaintiff has pleaded that claim or contention in paragraphs 8H to 8K of the amended pleading as follows: 8H. Further or in the alternative, the 2012 Director's Guarantee is binding as against the Defendant as a deed (poll) (Deed of Director's Guarantee). 8I. The Deed of Director's Guarantee was signed, attested and deemed to be sealed by the defendant, pursuant to s. 38, Conveyancing Act 1919 (NSW). Particulars of Attestation Signature of the Defendant on page 6 of the Second Credit Application Signature of Anne Pettiona on page 6 of the Second Credit Application Particulars of Deemed Sealing Clause 2.2(g) of the 2012 Director's Guarantee and Indemnity Terms Section 38(3), Conveyancing Act 1919 (NSW) 8J. The signed Deed of Director's Guarantee was 'delivered' (within the legal meaning of that word) to the Plaintiff by or on behalf of the Defendant on or around 16 July 2012. 8K. The Deed of Director's Guarantee was binding on the Defendant as a deed (poll) from the date of its delivery to the Plaintiff as pleaded above. 40Paragraph 8H is objected to on the basis that it is a legal submission. Mr Maltz distilled the objections to the contention as follows: first, it was put that the Director's Guarantee of 2012 could not possibly be a deed, and secondly, it was put that there was some pointlessness in pleading it. 41Mr Maltz explained that the deed poll contention was pleaded in circumstances where, as I have already noted, Mr Sztrochlic by his defence already filed has denied that his offer to provide a guarantee was accepted by the plaintiff. In that legal context, Mr Maltz submitted that it is not only permissible but important for the plaintiff to put the defendant on notice that, at the hearing, the plaintiff will contend that the document is a deed poll and does not require acceptance. He said that the pleading in effect says to the defendant, "Watch out, your case that the plaintiff never accepted the 2012 offer is endangered by the fact that it could operate as a deed poll and so operate as a unilateral legal act". 42In my view, understood in that context, the pleading plainly falls within the category of permissible pleadings of matters of law. That conclusion in effect disposes of all of the objections to those paragraphs of the amended pleading (paragraphs 8H to 8K). 43The next part of the pleading appears under the heading "Estoppel in respect of the 2012 Guarantee" at paragraphs 8L to 8Q of the amended pleading as follows: 8L. The Defendant by his conduct represented to the Plaintiff that the 2012 Director's Guarantee was binding (Defendant's Representation). Particulars of conduct Provision of the signed 2012 Directors Guarantee Form. Orders made by Raphco and deliveries accepted without payment on or prior to delivery 8M. The plaintiff relied on the Defendant's Representation when delivering poultry products to Raphco. 8N. The Defendant knowingly induced in the Plaintiff the assumption that the 2012 Director's Guarantee was binding. Particulars of inducement See particulars of conduct above. 8O. The Plaintiff would suffer detriment if the Defendant were permitted to resile from the assumption he induced in the Plaintiff. Particulars of detriment The debt owed by Raphco to the Plaintiff is no longer collectable from Raphco, a company in liquidation. 8P. It would be unconscionable in the circumstances to permit the Defendant to resile from the assumption he induced in the Plaintiff. Particulars of unconscionability The Defendant, by his position as the sole director of Raphco knew that in respect of some or all of the orders, the Plaintiff was making deliveries to Raphco without insisting on payment on or prior to delivery. 8Q. The Defendant is estopped from denying that he is bound by the terms of the 2012 Director's Guarantee. 44The principal objection to that part of the pleading arose from the adoption of the term "unconscionable" in paragraph 8P. Mr Biber understood that paragraph as an attempt to plead a claim of unconscionable conduct under the Australian Consumer Law. 45It was explained by Mr Maltz during argument that it was not an attempt to plead any such claim but rather was a pleading of an element of the estoppel case based on the defendant's alleged representation that the 2012 guarantee was binding, it being an aspect of that case to complain that if such a representation was made and knowingly relied upon, it would be unconscionable to permit Mr Sztrochlic to resile from it. Mr Biber submitted that in that instance the pleader should have used the term "unfair" or "inequitable". 46I am satisfied that the terms in which the pleading has been presented do not create any confusion in that respect, certainly at least not after the clarification provided by Mr Maltz. There is no rule that the term "unconscionable" cannot be used as opposed to either of the terms proposed by Mr Biber. The import of the pleading is now clear. I should add that on my reading of the whole of that part of the pleading, it was clear in any event. 47The final objections relate to paragraphs added at the conclusion of the pleading, first under the heading "Entitlement to an Indemnity" in paragraphs 11B to 11E as follows: 11B. The amounts owed to Raphco are 'Guaranteed Moneys' within the meaning of the 2012 Director's Guarantee and Indemnity Terms (see above). 11C. Unless paid by the Defendant, the Plaintiff will suffer a loss as a consequence of the non-payment by Raphco of its debts. 11D. The Plaintiff is entitled to be indemnified by the Defendant pursuant to the 2012 Director's Guarantee and Indemnity. 11E. In the alternative, the Plaintiff is entitled to treat the Defendant as primarily liable for the unpaid amounts pursuant to the First Director's Guarantee, and to be paid directly by the Defendant. 48Mr Biber submitted that paragraph 11B is a legal submission. In my view, that contention falls rather within the category of contentions of mixed law and fact which are necessary and which may be put in such terms for the sake of clearness and brevity to put the defendant on notice of the case he has to meet. I do not think that paragraph is objectionable. 49It was submitted that paragraph 11C is irrelevant and liable to be struck out on that basis. In my assessment, the averment probably could have been omitted from the pleading without doing any injustice to its strength or clarity, but it may be intended to assert no more than that the plaintiff remains out-of-pocket and is thus entitled to an indemnity, it being an unexceptionable principle of law that a person who has already been indemnified cannot claim an indemnity. I do not think that the paragraph is liable to be struck out on that basis. 50The next part of the pleading appears under the heading "Conclusive evidence of indebtedness by Raphco" in paragraphs 11F to 11J as follows: 11F. It was a term of the 2012 Director's Guarantee that a document signed on behalf of the Plaintiff which stated the amount owing by Raphco on a specific day will be binding on the Defendant in the absence of manifest error (Evidence of Indebtedness Clause). 11G. As at the date of the signature on this Amended Statement of Claim, the amount owing by Raphco to the Plaintiff is $1,822,418.08. 11H. This amended statement of claim, signed on behalf of the Plaintiff, is a signed document within the meaning of the Evidence of Indebtedness Clause. 11I. The amount owing by Raphco as stated in this pleading is binding on the Defendant. 11J. There is no 'manifest error' (within the meaning of that phrase in the Evidence of Indebtedness Clause) in the amount stated herein as owing by Raphco. 51Mr Biber submitted that paragraph 11F attempts to usurp the Court's jurisdiction to make a determination on the evidence whether a debt is due and owing. I do not accept that submission. Parties can agree to remove the jurisdiction of the Court. The plaintiff relies on this term as a clause of that kind, to the extent that it is effective. 52The terms of the clause are set out in Mr Maltz's submissions at paragraph 34 as follows; 3. Evidence of indebtedness A document signed on behalf of Baiada as to the amount owing by the Debtor on a specific day or the occurrence of a specific event will be binding on the Guarantor in the absence of manifest error. A judgment, order, award or document binding on the debtor is also binding on the Guarantor. 53As frankly acknowledged by Mr Maltz, it may be that the argument on the basis of that clause will be unsuccessful. However, he submitted that the clutch of objections to that part of the pleading ultimately reduce to the proposition that the deeming provision is pointlessly pleaded because it can have no effect, since it is such an extravagant provision that it could not possibly mean what it says. 54Mr Maltz submitted that it is not fanciful to plead that the clause could have an effect and it is an effect that the defendant should know about in advance of the trial. It has the potential to shift the onus of proof as to the quantum of debt from the plaintiff to the guarantor in the sense that, if the clause applies in its terms, the guarantor will have the onus of shaking the presumption it creates. 55Understood in that context, I would accept that it is appropriate for the plaintiff to have put the defendant on notice of those contentions. Whether or not the point is ultimately successful is, as acknowledged by Mr Maltz, not certain but it is a point for another day. 56Finally, Mr Biber objected to paragraphs 12 and 13 as being unnecessary, since the plaintiff's position is made clear in paragraph 11. Paragraph 12 and 13 state: 12. Pursuant to the terms of the 2012 Director's Guarantee (or in the alternative, the First Director's Guarantee), the Plaintiff claims from the Defendant, the total balance sum of $1,822,418.08 being the sum that remains unpaid by Raphco to the Plaintiff 13. The Defendant has failed or neglected to pay the balance sum of $1,822,418.08 to the Plaintiff and the Plaintiff claims this sum from the Defendant pursuant to the 2012 Director's Guarantee (or in the alternative, the First Director's Guarantee). 57I see no vice in the repetition, if it is repetition. Those paragraphs simply close the narrative, if I can put it that way. I do not think those paragraphs are liable to be struck out on that basis. 58In conclusion I would, on the whole, accept Mr Maltz's contention that the objections taken to the pleading did not reveal anything more than perhaps the occasional technical breach of the rules. The case is one in which, in my respectful opinion, the approach of parsing the pleading paragraph by paragraph to identify every individual alleged breach of the rules of pleading obscured the more important question whether a case which was tolerably clear was conveyed. For those reasons the application must, in my view, be rejected, subject to the matter on which I indicated I would hear from Mr Maltz. 59[Further submissions were made]. 60I have now heard Mr Maltz on the issue referred to in the judgment concerning the particulars to paragraph 8F. Those submissions have persuaded me that I distracted myself with a point which was not taken by the defendant on this application. No further determination is necessary. 61[Further submissions were made as to costs]. 62I have this afternoon given judgment on an application by the defendant to have parts of the plaintiff's amended statement of claim struck out. The plaintiff was, I would venture to say, wholly successful in resisting the application. 63Mr Biber, who appears for the defendant, has noted that I have, in respect of two aspects of the pleading, indicated that any difficulty could more properly be addressed by a request for particulars, but I hope I made it clear in saying so that I did not think either paragraph was liable to be struck out. Further, I did not express any view as to whether any particulars could properly be requested or would necessarily have to be given. Accordingly, I would assess the plaintiff as having been wholly successful. 64In those circumstances, the plaintiff seeks the costs of and incidental to hearing of the motion on the basis that costs ordinarily follow the event. Mr Biber resisted that application, submitting that what has been achieved by the argument is the exposition of a case in respect of which the pleading "did not stand on its own feet". I do not accept that submission. 65It may be that the case has now been exposed to the better understanding of Mr Biber but in my assessment of the pleading it was not only tolerably clear but in many respects completely clear. I do not think there is any basis on which I could properly deprive the plaintiff of its entitlement to be awarded the cost of argument. 66Mr Maltz submitted that the plaintiff's costs should be assessed on the indemnity basis. He provided in support of that application an additional letter beyond the correspondence I have already seen. The letter is dated 2 April 2014 and marked "without prejudice save as to costs". It sets out, seriatim, a response to each of the objections taken by the defendant which I have dealt with in my judgment this afternoon. Broadly speaking, although perhaps not point-by-point, the further responses provided reflect the ground on which in each instance the plaintiff was successful this afternoon. 67The ordinary rule is that costs are payable as agreed or assessed on the ordinary basis. The award of an order for indemnity costs should reflect a party's entitlement to be fully indemnified where the costs which were incurred were the result of some unreasonable conduct on the part of the unsuccessful opponent. 68I confess I have not found this issue easy to resolve. I would respectfully accept without equivocation that each of the points taken by Mr Biber was a point taken entirely genuinely and based in the firm belief that it was a point not only properly taken, but one which ought to be taken. The competing arguments considered in my judgment reflect what might be regarded as a front-on confrontation between the old school and the new (although, as the judgment acknowledges, some flexibility in strict adherence to the rules of pleading was commended even as early as 1918). 69For my part, I think the application was a difficult one and one which to a degree did not best serve the overriding purpose. That said, however, disputes as to the strictness with which rules of pleading should be complied with often generate vigorous dispute. On balance, I am not persuaded that it was unreasonable to bring the application, although I would accept that a more tempered approach would have been desirable. I am not persuaded that the plaintiff's costs should be assessed on the indemnity basis. 70Mr Maltz submitted alternatively that a middle ground may be to order that the costs be payable forthwith, contrary to the default position in the rules that costs are payable at the conclusion of the proceedings. For substantially the same reasons, I am not persuaded that this is an appropriate occasion on which to depart from the ordinary position. 71For those reasons, the order I make as to costs is that the defendant pay the plaintiff's costs of and incidental to the defendant's notice of motion filed 3 April 2014, as agreed or assessed on the ordinary basis. ********** 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: 13 May 2014