Supreme Court New South Wales Medium Neutral Citation: Hughes v Fong [2016] NSWSC 1451 Hearing dates: 10 October 2016 Date of orders: 13 October 2016 Decision date: 13 October 2016 Jurisdiction: Common Law Before: Campbell J Decision: (1) The second defendant's application to strike out the statement of claim as having been filed contrary to rule 6.19 Uniform Civil Procedure Rules (2005) is dismissed; (2) Direct the parties to otherwise bring in short minutes of order giving effect to my reasons and for the future management of the proceedings; (3) I will hear counsel as to costs. Catchwords: PROCEDURE – adequacy of pleadings – multiple plaintiffs – whether joinder of 17 plaintiffs on the same statement of claim complies with the UPCR – where all parties in agreement that claims should travel together Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 157 Commonwealth of Australia Constitution Act, s 90 High Court Rules 2004 (Cth), O.16, r 1 Practice Note SC Gen 17 Uniform Civil Procedure Rules 2005 (NSW), rr 6.1, 14.28 Cases Cited: ASIC v Sommerville [2008] NSWSC 788 Belcastro v Gabriel Nakhl & Ors [2014] NSWSC 1305 Berowra Holdings Limited v Gordon (2006) 225 CLR 364; [2006] HCA 32 Bishop v Bridgelands Securities (1990) 25 FCR 311 Carter v Commissioner of Taxation (2001) 109 FCR 215 Cheque One Pty Ltd v Cheque Exchange (Australia) Pty Ltd (in liq) [2002] FCA 593 Dean-Willcocks v Air Transit International Pty Ltd (2002) 55 NSWLR 64; [2002] NSWSC 525 Lloyd v Great Western Dairies Company [1907] 2 KB 727 Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135; [2002] NSWCA 44 Marino v Esanda Ltd [1986] VR 735 McGuirk v University of New South Wales [2009] NSWSC 1424 O'Grady v North Queensland Co. Limited (1990) 169 CLR 356; [1990] HCA 16 Payne v Young (1980) 145 CLR 609; [1980] HCA 54 Workers' Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642; [1988] HCA 49 Category: Procedural and other rulings Parties: Mark Hughes & 16 Ors (Plaintiff) Richard Michael Fong (First Defendant) Maguy Bernadette Nakhl (Second Defendant) Representation: I E Davidson SC with D Habashy (Plaintiff) T L Hollo (First Defendant); C Colquhoun (Second Defendant) File Number(s): 2016/00029923 judgment 1. I am dealing with the second defendant's notice of motion dated 27 June 2016 by which she applies to strike out the amended statement of claim filed on 1 June 2016 pursuant to r 14.28 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). The second defendant and the plaintiffs commendably have reached agreement on two of three matters grounding the second defendant's application. It is important to record that their agreement will require the plaintiff's to re-plead in any event. 2. A similar application was brought by the first defendant but not on identical grounds. The parties have resolved the matter sought to be agitated by the first defendant. Again, their agreement requires the plaintiffs to re-plead. 3. What remains in issue is the second defendant's contention that the joinder of 17 plaintiffs in the one statement of claim does not conform, or comply, with the requirements of UCPR r 6.19. The second defendant says the claims asserted by the plaintiffs do not satisfy the conjunctive criteria established by sub-rule 6.19(1)(a); and the circumstances are such that leave should be refused under sub-rule 6.19(1)(b) . 4. Counsel for the plaintiffs and the first defendant have handed up short minutes of order giving effect to their agreement. It is necessarily implicit in the orders proposed that the first defendant makes no objection to the constitution of proceedings as propounded by the plaintiffs. In the course of opening discussion on the hearing of the second defendant's application, I indicated that I would take this non-opposition, or tacit approval, as a relevant consideration in dealing with the second defendant's application. The weight of this consideration would need to be assessed together with all other relevant circumstances. Counsel perhaps with a degree of reservation, accepted this was an appropriate approach. Relevant background facts 1. This narrative of fact is derived from the pleadings and for present purposes only is not in dispute. The 17 plaintiffs are concerned, either as sometime trustees, or potential beneficiaries, with nine self-managed superannuation funds. At the material times the funds were in the hands of a now disgraced financial planner, Mr Gabriel Nakhl. The second defendant is Mr Nakhl's mother who acted as accountant for the funds mainly, not exclusively, on the introduction of Mr Nakhl. The first defendant, Mr Fong, was the auditor for each of the funds. 2. The second defendant provided professional services in preparing financial reports and annual returns for the funds for the 2010 and 2011 financial years. 3. Mr Nakhl provided his services to the funds between 2009 and 2013 through various licensed, corporate entities. 4. The amended statement of claim pleads as relevant primary facts misconduct of Mr Nakhl in managing, and misapplying funds invested by the self-managed superannuation funds ("SMSF"). That misconduct included: misapplying clients' funds entrusted to him for investment, to buy assets for entities controlled by him; cover his and their running costs; dabble in personal trading or speculation; pay personal expenditure; and repaying clients demanding the return of their investment with other clients' funds. 5. Mr Nakhl executed what is referred to as an "Enforceable Undertaking" accepted by ASIC in November 2013 permanently prohibiting him from providing financial services. Mr Nakhl is not a party to the proceedings. 6. It is not alleged the second defendant was in some way in cahoots with Mr Nakhl in his defalcations (see [123] of the amended statement of claim). It is, however, alleged that she did not disclose that she was Mr Nakhl's mother and therefore that she was "not independent of the financial advisor". At [65] it is alleged that the first defendant failed to disclose that the second defendant was Mr Nakhl's mother and therefore that she was "not independent". This fact or circumstance was said to expose the plaintiffs to "an increased risk of financial misstatements". As against the second defendant, the increased risk of misstatement is alleged to be "due to fraud". The allegation of fraud is not further amplified. Presumably, the case is that as his mother, she was unwilling to expose her son. However, that case is not further developed in the pleading. Fraud is certainly not in the vanguard of the plaintiffs' cases and I think it can be put to one side for the purpose of this interlocutory judgment. 7. The plaintiff's case is that by her acts and omissions, the second defendant caused each of the plaintiffs' financial losses. The basis of the claim seems to be that they were not alerted to the misconduct of Mr Nakhl early enough, (presumably at the time of the 2010 returns) to withdraw their investments from Mr Nakhl in good time to avoid the losses they subsequently incurred. Total losses allegedly amount to $2,459,103.60. The amount said to be lost by each trust varies from around $71,000 to around $620,000. As the pleading presently stands the aggregate amount is claimed as "damages and recovery of debt" in a single sum. The claim is framed in professional negligence, breach of retainer, misrepresentation and on various statutory causes of action, Commonwealth and State, for the protection of consumers of financial planning services. Applicable legal principles 1. UCPR 6.19 is in the following terms: "Proceedings involving common questions of law or fact (cf SCR Part 8, rule 2; DCR Part 7, rule 2; LCR Part 6, rule 2) (1) Two or more persons may be joined as plaintiffs or defendants in any originating process if: (a) separate proceedings by or against each of them would give rise to a common question of law or fact, and (b) all rights of relief claimed in the originating process are in respect of, or arise out of, the same transaction or series of transactions, or if the court gives leave for them to be joined. (2) Leave under subrule (1) may be granted before or after the originating process is filed." It's common ground that there are two alternatives, first satisfaction of the conjunctive test in paragraphs (a) and (b) of subrule (1), or by leave where the conjunctive test is not satisfied and the court considers it appropriate in the interests of justice and its administration, that on balance, practical justice will be enhanced by a common determination of the issues. 1. The interpretation of the rule largely continues to be governed by the decision of the High Court of Australia in Payne v Young (1980) 145 CLR 609; [1980] HCA 54 ("Payne v Young") concerning O.16, r 1 High Court Rules 2004 (Cth). That provision, although not in identical terms, was, in substance, to the same legal effect as what I have referred to as the conjunctive test. The High Court rule contained no general power to grant leave for claims which did not meet the conjunctive test to be joined in the one proceeding. (The current High Court rule, r 21.01 High Court Rules 2004, is in somewhat different, and in less stringent terms.) 2. It is important to observe the distinction between the limbs of the conjunctive test. The first limb looks to whether joinder of separate claims "would give rise to a common question of law or fact"; the second limb focuses upon whether "all rights of relief claimed… are in respect of, or arise out of, the same transaction or series of transactions." In Payne v Young, Mason J (as the Chief Justice then was) in respect of what is limb (b) of the UCPR test said (at page 618): "The consequence is that, [under par. (b)] of the rule, joinder of separate causes of action accruing to different plaintiffs is authorized when the relief claimed is in respect of, or arises out of, the same or a particular series of transactions. Joinder is not authorized when the relief claimed is in respect of, or arises out of, two or more different series of transactions, when the participation of each individual plaintiff is limited to participation in one series of transactions, the other plaintiffs not participating in that series." From this it is accepted that the relief claimed must arise out of the same transaction, or, the same series of transactions. 1. In Payne v Young, seven plaintiffs brought proceedings seeking a declaration of invalidity of State regulation as contrary to s 90 of the Constitution. The argument was that State law constituted an excise duty. But they also claimed restitution of the amounts paid by each of them to different State authorities under the regulation. Barwick CJ at 614 said: "But the relief claimed in the action is not confined to a declaration of invalidity. Each plaintiff claims against a defendant a sum of money representing the amount of inspection fees which have been paid by that plaintiff to that defendant. No plaintiff has any interest in the money claim of any other plaintiff, nor is any defendant concerned with the amount claimed against any other defendant. A right to recovery of the money sums is individual to each plaintiff and particular to the appropriate defendant. The right in each case arises out of the payment by the particular plaintiff to the particular defendant of the inspection fee demanded pursuant to the Regulations." His Honour went on to say: "Of course, the basis of the individual's claimed relief by payment of a money sum is common to all. All claim invalidity and because of invalidity in each case the right to be refunded by a particular defendant money improperly demanded would arise. But I am quite unable to see how the transactions of each plaintiff with a different defendant can be treated as a series of transactions within the meaning of the rule, however liberally one might construe and apply it." 1. Mason J's conclusion was to the same effect (at page 618): "In the present case, each series of transactions was peculiar to each individual plaintiff. There was no common participation in the inspection services which were performed, in the liability to pay the fees demanded or in the payments which were actually made. Accordingly, it cannot be said that the relief claimed by way of recoupment of inspection fees from the defendants ….. is in respect of, or arises out of, "the same transaction or series of transactions"." (See also Dean-Willcocks v Air Transit International Pty Ltd (2002) 55 NSWLR 64; [2002] NSWSC 525 at [21] – [27].) 1. As Austin J pointed out in Dean-Willcocks, as a matter of construction the word "series" is governed by the words "the same" (at [22]). This point is well illustrated by Austin J's reference to Marino v Esanda Ltd [1986] VR 735 where Tadgell J (at 740): "… I think that the rule no more applies here than it would be toauthorize the joinder as plaintiffs of a hundred unrelated members of thepublic who all went to a supermarket on a Saturday morning and bought,each of them, a pound of butter that happened to be contaminated. Eachpurchaser, if he consumed part of his purchase and became ill as a result,might have a right of action against the vendor by virtue of breach of animplied condition or warranty derived from the Goods Act, and perhapsalso some other statutory rights to compensation. Those who sued wouldsue a common vendor and each would presumably have a cause of actionof a kind identical to that of each of the others. Moreover, the 100purchase transactions could well be described as a series, but the reliefobtainable by none of the purchasers could be said to arise out of thesame transaction or series of transactions: in the case of each the reliefwould be in respect of or arise out of his individual transaction andnothing else." 1. So far as the general discretion is concerned, reference is most frequently made to the judgment of Wilcox J in Bishop v Bridgelands Securities (1990) 25 FCR 311 at 314. The guideposts derived from his Honour's judgment seem to be: the exercise is fact-sensitive and no general rule can be stated; the basic principle is the adoption of the course "most conducive to a just resolution of the disputes between the parties", and (these days) by application of the overriding purpose of the just, quick and cheap resolution of the real issues; leave ought not to be granted unless the court is "affirmatively satisfied the joinder is unlikely to result in unfairness to any party" [emphasis added]; and regard must be had to practical matters such as is there single representation, are the similarities of the cases so outweighed by the differences "as to make it inexpedient to join the claims". Austin J pointed out (at [31]), Wilcox J's guideposts were augmented by Goldberg J in Carter v Commissioner of Taxation (2001) 109 FCR 215 at 221 [23] by adding the consideration "that the Court should also be concerned to determine what is the most efficient use of the resources of the parties and also of the Court." This, of course, is entirely consistent with the application of the overriding purpose. Austin J said this requires "a practical calculation of advantages and disadvantages". The submissions of the parties 1. Mr I E Davidson SC, with Mr D Habashy, appeared for the plaintiff; Mr T L Hollo of Counsel for the submitting first defendant; and Mr C Colquhoun of Counsel for the second defendant. Mr Davidson and Mr Colquhoun were in agreement as to the applicability of the principles of laws I have discussed which both advanced as settled principle. 2. Mr Colquhoun focused on the nine self-managed superannuation funds. He emphasised that each individual interaction with the second defendant was a different transaction in respect of that fund, and that fund only. It was not enough that there be a series of similar transactions: Bishop v Bridgelands at [12] – [16]; Cheque One Pty Ltd v Cheque Exchange (Australia) Pty Ltd (in liq) [2002] FCA 593 at [17] – [18]. The accountant that was engaged to act for each was engaged by a separate oral retainer which was not necessarily identical. If entitled, each fund had a separate cause of action referrable to the separate financial and other reports prepared for it by the second defendant. A similar act or omission may on each occasion be said to constitute negligence but they were separate acts, or omission. Likewise in regard to the statutory causes of action, necessarily there were separate acts of reliance by the individuals controlling the different funds. The opportunity of each to avoid the loss was different. Naturally the loss suffered by each was separate. Counsel argued to the extent to which there are common questions of law and fact they concerned the conduct of the financial planner who is not a party, and related largely to him mixing the funds of each plaintiff (not of itself impermissible) and putting them to his own use. There are similarities, but not common questions. 3. Concerning the second limb, learned counsel submitted that at best the dealings of the plaintiffs with the second defendant constituted similar transactions or a similar series of transactions. They were not the same to the extent to which there may have been "pooling" of funds by the financial planner. These transactions, did not give rise to "all rights to relief claimed in the proceedings". At best they were relevant matters of primary fact. 4. As to the general discretion, Mr Colquhoun argued that I could not be satisfied that the second defendant was not disadvantaged by joinder. He referred to a number of matters: that each cause of action had to be pleaded separately; the case would not be conducted solely on the paper, but perhaps extensive oral testimony would be required; in each and every case there were likely to be very different issues about reliance, causation and loss; the failure to differentiate between the various claims made it impossible for the second defendant to admit and pay a claim if it chose and made settlement difficult; it was possible that some plaintiffs may win and others lose, giving rise to real disadvantages for the plaintiffs because of joint and several liability for costs; and that running what was in effect nine separate cases in the one proceeding was likely to give rise to delay. 5. Mr Davidson took a preliminary point by reference to Lloyd v Great Western Dairies Company [1907] 2 KB 727, that by her consent to the filing of the amended statement of claim, the second defendant should be taken to have waived any right to object to joinder of the plaintiffs in a single proceeding. He submitted there were many common questions of law and fact relating not only to the misconduct of the financial planner but also the consideration that he had referred most of the plaintiffs to the second defendant; the retainer for services was the same; and, of course, the duty of care and implied warranties at common law and by statute were the same. Learned Senior Counsel properly accepted in written submissions that there was "at least a real argument that separate proceedings for each of the plaintiffs would not have involved the same "series of transactions"". The real question may be whether "the residual discretion in UCPR 6.19(1)(b)" was engaged. 6. Having made that, with respect, proper concession, Mr Davidson argues, however, that the case was somewhat different from Payne v Young because of the pooling of their funds by the financial planner and his misapplication of the pooled funds. This was not an element of the cause of action against the second defendant, but the misapplication of funds was an essential primary fact going to causation. As the funds were mixed, and as causation and damage were essential elements of most of the causes of action pleaded, it was right to say, at least in very substantial part, "all rights to relief claimed" … "are in respect of" the same transaction even if they could not be said to "arise out of the same transaction". 7. In relation to the exercise of the discretion, Mr Davidson referred to ASIC v Sommerville [2008] NSWSC 788 at [16] and [45]. Austin J repeated his analysis of the principles from Dean-Willcocks and observed that the considerations were best viewed as an application of the overriding purpose, and that satisfaction of one limb of the conjunctive test but not the other may be a relevant factor pointing to a favourable exercise of the discretion. Mr Davidson argued that the considerations of practical justice greatly favoured the joinder in one proceeding and that the obstacles identified by the second defendant were either illusory or capable of accommodation by appropriate case management orders. It was argued that I should be affirmatively satisfied "that joinder is unlikely to result in unfairness to the second defendant". 8. Learned Senior Counsel referred in passing to the concept of "class actions" and by implication the provisions of s 157 Civil Procedure Act 2005 (NSW) and Practice Note SC GEN 17. However, no application was made to proceed under these provisions and I will not consider those matters further. Decision 1. I confess that I have not found the application of r 6.19 in the present circumstances clear cut or free from difficulty. I have, however, decided that these proceedings fall within what I have termed the conjunctive test. 2. But before detailing my reasons for this conclusion, I wish to record that I reject Mr Davidson's argument based upon "waiver". Even if the second defendant's consent to the filing of the amended statement of claim could be conduct inconsistent with her present application, she clearly telegraphed her opposition to the claims of all the plaintiffs being joined in the one proceeding from the start. On 19 February 2016 her solicitors wrote to the plaintiff's solicitors (Exhibit B) explaining in detail her opposition to the joinder of the parties and reserving her right to seek the relief now sought. For completeness I record that on 22 February 2016 the plaintiffs' solicitors sought to explain in detail why they disagreed. Moreover, the order granting the plaintiffs' leave to file the amended statement of claim, made on 9 May 2016 was contained in short minutes of consent orders which included an order, inter alia, that the second defendant file a motion seeking to strike out the amended statement of claim. There is no approbation and reprobation here. 3. Moreover, times have changed since Lloyd v Great Western Dairies was decided in 1907. There are few hard and fast rules in the application of procedural law in the management of civil litigation. Concepts such as waiver may be at best unhelpful. In Berowra Holdings Limited v Gordon (2006) 225 CLR 364; [2006] HCA 32 at [39] a unanimous High Court said: "It is one thing to speak of the waiver of a legal, equitable or statutory right or privilege. However, once it is appreciated that the court has jurisdiction and that its procedural rules have been engaged, concepts such as "waiver" (and acquiescence and estoppel) are confusing and imprecise. This was pointed out by Dawson J in and Lord Browne-Wilkinson in Roebuck v Mungovin. The conduct of pending proceedings by a party is relevant upon an application by that party for the exercise in its favour of a power of the court. The outcome of such an application depends not upon the exercise of the right of a litigant or upon its denial, but upon the exercise of a discretionary power given to the court. The decision of the court often will depend upon many different factors. An outcome favourable to one party cannot be described adequately in terms of the waiver of the legal, equitable or statutory rights of the unsuccessful party." [Citations omitted.] 1. Returning to the central question, at its simplest, each plaintiffs' claim is that each defendant failed in his and her professional duties, respectively, whether such duty was imputed by law, implied by contract, or arose under statute to protect them from the defalcations of the financial planner. The case is that an accountant and auditor reviewing the accounts of each trust would have detected the misconduct and drawn it to the attention of each plaintiff, and had that occurred each plaintiff would have had the opportunity, which they say would have been taken, to withdraw the funds from the control of the financial planner thereby avoiding or minimising the financial loss that in fact incurred. The particular and various misconduct of the financial planner accordingly are material facts upon which the claim of each claimant is based. Those matters are properly pleaded in the amended statement of claim: for example see [20] – [28]; [32] – [36], [45] – [56]. 2. Given that the financial planner "pooled" or "mixed" the funds of the plaintiffs (itself permissible) and is alleged to have misapplied or misappropriated monies from the common fund so produced, the proceedings do give rise to common questions of fact. Subject to any specific defence that may be available to the defendants arising out of the terms of a particular retainer in respect of a specific SMSF, the nature, content or scope of the duty, whether delictual, contractual or statutory, is likely to give rise to a common question of law. 3. I fully accept that the dealings between each group of plaintiffs responsible for controlling the particular SMSF on the one hand, and each of the defendants on the other, whilst similar are not the same transaction or series of transactions. It is that transaction or those transactions out of which the right to relief claimed in the amended statement of claim arises. But, the right to relief claimed in the amended statement of claim may be said to be in respect of the same series of transactions by which the financial planner effected those defalcations. As a practical matter, as I have stressed more than once, his misconduct is a governing fact in the sense that it must be established before liability may be sheeted home to the first and second defendants. As Mr Davidson argued, the plaintiffs need to prove that but for the breach of duty of either or both of the first and second defendant, however the duty arises, the plaintiffs would not have suffered loss through defalcations of the financial planner. 4. Subject to context, the phrase "in respect of", where it appears in a statute, is one "of broad import" requiring "no more than a relationship whether direct or indirect between two subject matters": O'Grady v North Queensland Co. Limited (1990) 169 CLR 356; [1990] HCA 16 at 374 and 376. However, the qualification about context is important; the statutory context determines "the matters to which it extends": Workers' Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642; [1988] HCA 49 at 653. The question in the present context is the required closeness of connection between "all rights of relief claimed", on the one hand, and the "series of transactions" by which the financial planner defrauded the plaintiffs, on the other. The purpose of the rule is facilitative: to advance "the just, quick and cheap resolution of the real issues in the proceedings". The misconduct of the financial planner is central to the claims of the plaintiffs and the putative liability of the defendants. Whatever the full width of the permissible connection between the right to relief and transactions contemplated by the Rule, it covers the present case. It is not necessary that each plaintiff is a party to the same series of transactions with the first and second defendants. That is to say, the transaction or series of transactions which engage the rule need not be elemental to the cause of action pursued. Where they are, the transaction or transactions would give rise to the claimed right of relief. However, paragraph (b) admits of two alternatives: rights of relief in respect of the same transaction; and rights of relief which arise out of the same transaction. The juxtaposition of these two phrases provides important grammatical context. Both expressions, "in respect of" and "arise out of" are phrases that generally accommodate a broad and indirect connection between two subject matters. The phrase "arise out of" will generally connote a causal connection; the same is not necessarily true of "in respect of". 5. Were it necessary to exercise the general discretion, having regard to considerations discussed at [18] above, and notwithstanding the great persuasion with which contrary argument was put, I would have been persuaded, even if only narrowly, that the plaintiffs ought to have the benefit of leave. Although my own view is that the general discretion operates independently of the conjunctive test, there is, with great respect, much to be said for Austin J's observation in ASIC v Sommerville that satisfaction of one limb but not the other of the conjunctive test is a relevant factor pointing to a favourable exercise of the discretion. This accommodates close cases, and avoids the need for unduly refined decisions in, albeit significant, matters of practice and procedure. Where I wrong in my interpretation of the second limb of the conjunctive test, the consideration that the misconduct of the financial planner is central to the case of all plaintiffs is a strong indicator that the interests of the administration of justice, as understood by reference to the provisions of s 56 Civil Procedure Act 2005 (NSW), favour the grant of leave. 6. I am affirmatively satisfied that proceeding in this way does not unduly disadvantage the defendants. This conclusion, however, is subject to the plaintiff's re-pleading in a satisfactory manner so that the separate cause of action of each is clearly identified in averments of material fact rather than by a process of close inspection of particulars. Likewise, each individual claim for relief should be separated to enable the defendants', should they wish, to consider acceding to smaller claims or settling with separate plaintiffs. I accept that there may be disadvantages as to costs. But as the defendants accept that the cases ought to be managed, and perhaps heard, together and there is single representation for all plaintiffs, there will be cost complexities however the proceedings are constituted. These will not be insoluble. Dealing with all cases together whether in the one proceeding or by concurrent management and hearing is likely to give rise to other complexities and perhaps a degree of delay. But I am not satisfied that those factors themselves or in conjunction with the other matters to which I have referred justify separating the proceedings. 7. Re-pleading so that the statement of claim deals with each relevant claim separately will be an exercise involving a degree of difficulty. This factor favours ordering that the proceedings be separated. On the other hand, given the significance of the common facts that would need to be individually pleaded in each of nine statements of claim it is not obvious that the difficulty of the exercise would thereby be reduced. In either event, the redrafting exercise will doubtless require care and ingenuity on the part of the plaintiffs' legal team, but there is no reason to suppose they are not up to it. 8. In response to a question of mine, and as a consideration in favour of separating the proceedings, the second defendant proffered an undertaking in the following terms: "In the event that the claims of any of the first to seventeenth plaintiffs against the second defendant are separately constituted through the commencement of fresh proceedings by reason of the order of the Court, the second defendant undertakes not to raise any limitation defence against any of the first to seventeenth plaintiffs that was not otherwise available to her on 29 January 2016, being the date that the statement of claim was filed." I accept that this would have been a powerful consideration adverse to the plaintiff. It is for this reason, at least in part, that I said a decision favoured the plaintiff but "narrowly". Future conduct 1. All parties agree that the case whether separated, or not, ought to be case managed in the professional negligence list and I am prepared to accede to this application. 2. As I have said, it is accepted that in any event the plaintiff needs to further plead. Proper pleading principles were admirably summarised by Johnson J in McGuirk v University of New South Wales [2009] NSWSC 1424 at [21] – [35] and I will not repeat what his Honour said. It is important, however, to bear steadily in mind that it is not the Court's function to settle a party's pleadings. They will either measure up to the requirements of the rules or they will be struck out. In Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135; [2002] NSWCA 44 at [20] – [21] Hodgson JA said, inter alia: "The general requirement to avoid surprise means that material facts must be stated in such a way that the defending can understand the materiality of the facts, that is, how they relate to a cause of action." 1. This statement, it seems to me, has particular relevance in the circumstances of this case. It is not the Court's function to be prescriptive of the contents of the statement of claim. I observe, however, that the common facts may be set out in a way that demonstrates their materiality to all plaintiffs' causes of action, but the individual claims of the groups of plaintiffs that control each of the nine SMSFs will need to be pleaded separately so that the defendants can understand how the case of each is to be advanced; the claims for relief must be separated-out. 2. I hesitatingly set out part of what I said on this topic in Belcastro v Gabriel Nakhl & Ors [2014] NSWSC 1305 at [35] – [36]: "[Kirby v Sanderson Motors Pty Ltd] has continuing vigour under the Uniform Civil Procedure Rules. It may be taken as indicating that where, on the basis of the same facts, a number of different causes of action are said to arise, there is an obligation on the part of the party whose pleading is called into question to demonstrate that it is well organised so that those matters going to each relevant legal category are clearly identifiable. This may extend to showing the differing application to various causes of action of facts common to some or all of them. Repetition or recitation may be called for where the same fact is material to more than one legal category relied on; especially where, as here, the pleading is long and complex. The responding party ought not to be left in a position where it must guess about the legal significance of an averment, or a particular. Generally, material facts should be pleaded rather than merely included in a pleading as a particular of another material fact. The question is not what the defendant has made of the statement of claim but rather what reasonably can be made of it. These considerations are relevant to the pleading against the insurers discussed ….. above. I accept the argument of the insurers that the effect of this pleading is to do no more than say everything pleaded previously in this voluminous document goes to show that SydFA is in breach of its professional duty within the meaning of the policy. To my mind, to plead in this fashion is not to state the material facts relied upon against SydFA's insurers in such a way that SydFA's insurers can understand how what has gone before is material to the cause of action SydFA would have had on either policy against the insurers: what is in question, of course, is the liability of the insurers to indemnify under the policy." 1. My orders are: 1. The second defendant's application to strike out the statement of claim as having been filed contrary to rule 6.19 Uniform Civil Procedure Rules (2005) is dismissed. 2. Direct the parties to otherwise bring in short minutes of order giving effect to my reasons and for the future management of the proceedings. 3. I will hear counsel as to costs. ********** 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 October 2016