Bailey v Bailey [2004] NSWSC 49 (12 February 2004)

Last Updated: 25 May 2004

NEW SOUTH WALES SUPREME COURT

CITATION: Bailey v Bailey [2004] NSWSC 49



CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 2313/02
5315/97

HEARING DATE{S): 23 October 2003

JUDGMENT DATE: 12/02/2004

PARTIES:
Bruce Clyde Bailey (First Plaintiff 2313/02)
Janet Beatrice Shafik Bailey (Second Plaintiff 2313/02)
Arnold Neil Bailey (First Defendant 2313/02)
Glennice Margaret Bailey (Second Defendant (2313/02)
Annette Mavis Bailey (Third Defendant 2313/02)
Terence Jessop (Fourth Defendant 2313/02)
Robert Walter Locke and the other persons named in the First Schedule to the Statement of Claim who constitute the partnership practising as Locke O'Reilly McHugh, Solicitors (Fifth Defendants 2313/02)
John Baines Cheadle and the other persons named in the Second Schedule to the Statement of Claim who constitute the partnership practising as Holman Webb, Lawyers (Sixth Defendants 2313/02)
Arnold Neil Bailey (Plaintiff 5315/97)
Bruce Clude Bailey and Janet Beatrice Shafik-Bailey as executors of the estate of the late Henry Neil Bailey (First Defendant 5315/97)
Bruce Clyde Bailey (Second Defendant 5315/97)
Janet Beatrice Shafik (Third Defendant 5315/97)
Glennice Margaret Bailey (Fourth Defendant 5315/97)
Annette Mavis Bailey (Fifth Defendant 5313/97)

JUDGMENT OF: Master McLaughlin

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:
C.J. Bevan (Plaintiffs 2313/02, First, Second, Third Defendants 5315/97))
L.J. Aitken (First Defendant 2313/02, Plaintiff 5315/97)
G.A. Sirtes (Fourth Defendant 2313/02)

SOLICITORS:
Turner Freeman, Solicitors (Plaintiffs 2313/02, First, Second, Third, Fourth Defendants 5315/97)
Bryan Gorman & Co, Solicitors (First Defendant 2313/02. Plaintiff 5315/97)
Ebsworth & Ebsworth (Fourth Defendant 2313/02)
Acuiti Legal (Fifth Defendant (2313/02)
Mallesons Stephen Jaques (Sixth Defendant 2313/02)



CATCHWORDS:
Practice and procedure
Pleading
Amendment of statement of claim
Whether proposed pleading discloses a reasonable cause of action
Unadministered estate
Nature of interest of beneficiaries therein
Cause of action pursuant to mediation agreement
Application for consolidation of proceedings.

ACTS CITED:
Conveyancing Act 1919
Crown Lands Act 1989
Family Provision Act 1982
Supreme Court Rules
Water Act 1912

DECISION:
See paragraph 71.


JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


MASTER McLAUGHLIN

Thursday, 12 February 2004


2313/02 BRUCE CLYDE BAILEY -v- ARNOLD NEIL BAILEY and ORS

5315/97 ARNOLD NEIL BAILEY -v- BRUCE CLYDE BAILEY and ANOR

JUDGMENT

1 MASTER: There are presently before the Court two applications, one in proceedings 2313 of 2002, and the other in proceedings 5315 of 1997. The parties to the two sets of proceedings are not identical, although each of the three parties to the 1997 proceedings is a party to the 2002 proceedings. Each of the proceedings arises out of the same factual matrix and circumstances.

2 In proceedings 2313 of 2002 the Plaintiffs, Bruce Clyde Bailey and Janet Beatrice Shafik Bailey, by notice of motion filed on 8 May 2003 make application for leave to file a further amended statement of claim.

3 In proceedings 5315 of 1997 two of the Defendants, being Bruce Clyde Bailey and Janet Beatrice Shafik Bailey, make application (by notice of motion filed on 11 March 2003) for review of the decision of the Registrar on 21 February 2003 dismissing the application by those Defendants for consolidation of the two proceedings.

4 It should here be observed that the notice of motion filed on 11 March 2003 by those applicant Defendants describes them as being the First Defendant, the Second Defendant and the Third Defendant. The apparent reason why those two persons are thus described is that they are conjointly named as First Defendant in their capacity as “executors of the estate of the late Henry Neil Bailey”, and then Bruce Clyde Bailey is named as Second Defendant and Janet Beatrice Shafik Bailey is named as Third Defendant. The other two Defendants named in the 1997 proceedings are Glennice Margaret Bailey, described as Fourth Defendant, and Annette Mavis Bailey, described as Fifth Defendant.

5 Each of the two proceedings (and I shall, in due course, refer in greater detail to the nature of each proceeding) concerns a property called Hazeldene, located near Boomi in north-western New South Wales, which had been owned by the late Henry Neil Bailey (to whom I shall refer as “the Deceased”), who died on 5 February 1994. On Hazeldene the Deceased conducted a farming business in partnership with his five children, being Bruce Clyde Bailey (“Bruce”), Janet Beatrice Shafik Bailey (“Janet”), Arnold Neil Bailey (“Arnold”), Glennice Margaret Bailey (“Glennice”) and Annette Mavis Bailey (“Annette”). In proceedings 2313 of 2002 Bruce and Janet are the Plaintiffs, and Arnold, Glennice and Annette are three of the five Defendants. The other Defendants, Terence Jessop, Robert Walter Locke and others (constituting the partnership Locke O’Reilly McHugh, Solicitors) and John Baines Cheadle and others (constituting the partnership Holman Webb, Lawyers) are solicitors.

6 A useful factual background to the two proceedings is set forth in the reasons for judgment of Acting Master Berecry of 9 December 2002 in the 2002 proceedings. Those reasons for judgment were delivered in respect to an application by the first Defendant (Arnold) that certain parts of the statement of claim filed by the Plaintiffs (Bruce and Janet) be struck out.

7 For the reasons set forth in that judgment the Acting Master ordered that certain parts of the statement of claim be struck out and granted to the Plaintiffs leave to amend the statement of claim.

8 On 17 March 2003, pursuant to that leave, the Plaintiffs filed an amended statement of claim. Subsequently correspondence passed between the respective solicitors for the Plaintiffs and the First Defendant. (It should here be recorded that the Second and Third Defendants, Glennice and Annette have not been legally represented in the proceedings, and have appeared in person at the hearing before me.) Various complaints were made on behalf of the First Defendant against the form of the amended statement of claim. The Plaintiffs submit that they have sought to accommodate those complaints in the form of a further amended statement of claim, which they now wish to file. The First Defendant opposes the filing of such a pleading, as do the Fourth and Sixth Defendants. It should also be here recorded that the Fifth Defendant (which neither consents to nor opposes the filing of the proposed pleading) was represented by Counsel at the hearing of the application by me, and sought, and was granted, leave to be excused from further attendance at that hearing.

9 As was recorded by the Acting Master in his foregoing reasons for judgment, the Deceased by his will gave the property Hazeldene, together with the irrigation licences held in connection therewith and his share of the farming partnership conducted thereon, to his trustees to hold in trust for his children in the following shares:

Bruce - one half share

Janet - one eighth share

Annette - one eighth share

Glennice - one eighth share

Arnold - one eighth share

10 The Deceased then gave the rest and residue of his estate to be divided among his five children in equal shares.

11 As the Acting Master recorded in his reasons for judgment there have been disputes between the Deceased and various members of his family since the late 1980s. Those disputes were initially in relation to the partnership; but subsequently, after the death of the Deceased, were in relation to the estate of the Deceased. In 1995 the parties participated in a mediation of their then current dispute. On 3 July 1995 agreement was reached between them in respect to the estate of the Deceased and the partnership. The Acting Master recorded that the mediation was intended to resolve all differences between the parties in respect to the partnership, in respect to claims under the Family Provision Act 1982 and in respect to any entitlements under the Water Act 1912.

12 It is relevant not only to the form of the proposed pleading but also to the factual background to the litigation and to the basis of the various claims of the Plaintiffs that a mediation agreement was entered into between the Plaintiffs and the First, Second and Third Defendants (that is, between the totality of the children of the Deceased) in consequence of a mediation conducted by Sir Laurence Street on 3 July 1995. It was a term of that mediation agreement that Hazeldene, together with the various water licences held by the Deceased, would be sold. Subsequently, a supplementary mediation agreement was entered into between the foregoing parties on 22 January 1996, as a result of a further mediation conducted by Sir Laurence Street.

13 The mediation agreements, dated respectively 3 July 1995 and 22 January 1996, into which the parties entered in consequence of the original mediation before Sir Laurence Street and the supplementary mediation before him, were each admitted into evidence, as Exhibits A and B respectively, at the hearing before me.

14 By paragraph 19 of the statement of claim in its original form the Plaintiffs asserted that on the true construction of the mediation agreement (the relevant provisions whereof were summarised at paragraph 18 of that pleading) the parties intended that each of them have full benefit of the entitlements under the agreement with the effect of an immediate distribution of their respective beneficial interests in the proceeds of the estate and of the partnership.

15 It was submitted on behalf of the First Defendant, however, that paragraph 19 of the statement of claim was bad in law, in that it disclosed no reasonable cause of action against him. The basis of that submission was that, since the estate of the Deceased was unadministered at the time of the mediation agreement, none of the beneficiaries therein had a right to an immediate distribution of any share of the assets in specie, and that, consonant with the decision of the High Court of Australia in Commissioner of Stamp Duties v Livingston (1964) 112 CLR 12, the agreement could not operate to confer any proprietary right on the Plaintiffs, as asserted in the pleading.

16 The Acting Master observed that the mediation agreements made no specific reference to immediate distribution of any party’s beneficial interest upon the sale of Hazeldene, and that, in consequence, paragraph 19, which asserts the entitlement of the Plaintiffs to immediate distribution of their respective beneficial interests in the proceeds of the estate of the partnership, could not stand in its present form. The Acting Master concluded that, in consequence, paragraphs 20 to 29 should also be struck out, since those paragraphs pleaded that the First and Third Defendants had breached the mediation agreement. The Acting Master concluded that the mediation agreements must be construed in the context that the executors will not be hindered in the performance of their executorial duties in putting into effect the sale of Hazeldene. He said that in the absence of evidence that the executorial duties had been completed the allegation in the pleading could not stand that there was an entitlement in the Plaintiffs to an immediate distribution of the estate based solely on the sale of Hazeldene.

17 The Acting Master also accepted the submission on behalf of the First Defendant that the damages claimed by the Plaintiffs as a result of the alleged breach by the First and Third Defendants of the mediation agreements were not available. One of the grounds upon which the First Defendant relied in that regard was that the damages alleged fell into the category which might compendiously be described as economic duress, but that the material facts, especially in regard to duress, upon which such damages might be claimed were not specifically pleaded.

18 The Acting Master concluded his reasons for judgment by referring to the provisions of Part 31 rule 7 of the Supreme Court Rules (relating to consolidation of separate proceedings or trial of separate proceedings at the same time); he observed that proceedings 5315 of 1997 and proceedings 2313 of 2002 involved the same parties (other than the Fourth, Fifth and Sixth Defendants to the 2002 proceedings, who are all solicitors) and that questions of law and issues of fact arose which are common to both proceedings. He considered it was appropriate to order that the two proceedings be consolidated. However, since the application before the Acting Master was only in respect to a claim by the First Defendant against the Plaintiffs, the other three Defendants to the 2002 proceedings (the various solicitors) had not had an opportunity to be heard on the question of consolidation. Therefore the Acting Master stated that he would not make an order for consolidation at that stage, but would deal only with the application then presently before him, being the application to strike out certain parts of the statement of claim.

19 On 21 February 2003 Registrar Berecry dismissed the application made on behalf of Bruce and Janet in the 1997 proceedings, by way of notice of motion filed by them on 24 September 2002, for orders that the 1997 proceedings be consolidated with the 2002 proceedings and that Arnold forthwith pay the costs of Bruce and Janet of an incidental to that application.

20 By notice of motion filed by on 11 March 2003 Bruce and Janet now seek an order setting aside the foregoing order of the Registrar and seek an order that the 1997 proceedings be consolidated with the 2002 proceedings.

21 It is appropriate that I should deal firstly with the application by the Plaintiffs in the 2002 proceedings for leave to file a further amended statement of claim.

22 That proposed pleading is Exhibit 5 to the affidavit of Terence Louis Goldberg sworn 8 May 2003 (and is part of Exhibit C in the hearing before me). As I have already recorded, The First Defendant and the Fourth and Sixth Defendants oppose the filing of that document. The Second and Third Defendants (who are unrepresented and who each appeared in person at the hearing before me) took a stand which I treated as opposing the application for leave to amend the pleading.

23 It will be appreciated that the proposed pleading cannot be filed without the leave of the Court. It will also be appreciated that the Court should not grant leave to the Plaintiff to file the further amended statement of claim if the form of that proposed pleading is such as to make it, if filed, liable to be struck out. To grant leave for the filing of a pleading in such form would be an exercise in futility.

24 By the proposed pleading the Plaintiffs allege various causes of action against Neil, Glennice and Annette together; various causes of action against Neil alone; various causes of action against the Fourth Defendant Terence Jessop, who is a solicitor; various causes of action against Locke O’Reilly McHugh, Solicitors (the members of the partnership constituting which firm are the Fifth Defendant); and various causes of action against Holman Webb, Lawyers (the members of the partnership constituting which firm are the Sixth Defendant). The proposed pleading is lengthy, containing ninety-eight paragraphs, and extending over some fifty pages. In respect to the claims against the Fourth, Fifth and Sixth Defendants (being the claims which may compendiously described as claims against solicitors in their professional capacity) I have already recorded that the Fourth and Sixth Defendants oppose the application for leave to amend, whilst the Fifth Defendant, Locke O’Reilly McHugh, neither opposes nor consents, and was excused from further attendance at the hearing of the application.

25 The present application is brought pursuant to the provisions of Part 20 rule 1 of the Supreme Court Rules (which enables the Court to grant leave for the amendment of a document, including a pleading). It has frequently been said that liberal use of the power to amend is one of the hallmarks of the modern judicial system, and that, generally speaking, amendments ought to be allowed if they give rise to an arguable cause of action or matter of defence. (See Ritchie, Supreme Court Procedure, [20.0.0].) However, as I have already observed, the Court in the instant case should not grant leave to the Plaintiffs to file the further amended statement of claim if that proposed pleading is in a form which makes it liable to be struck out, since the filing of such a pleading would merely be an exercise in futility.

26 The basis upon which the Defendants successfully sought to have parts of the original pleading struck out was that no reasonable cause of action was disclosed.

27 For the reasons set forth in his judgment of 9 December 2002 the Acting Master struck out paragraph 19 of the statement of claim, granting leave to replead, and, in consequence, struck out paragraphs 20 to 29 of the statement of claim, granting leave to replead.

28 The essence of the complaint of the Defendants in respect to paragraph 19 was that by that paragraph the Plaintiffs asserted that on the true construction of the mediation agreement the parties intended that each of the parties to that mediation agreement would have the full benefit of the entitlements under the agreement with the effect of having an immediate distribution of their respective beneficial interests in the proceeds of the estate of the Deceased and of the partnership.

29 To the extent that in the original pleading there was alleged an entitlement in the Plaintiffs to receive the immediate benefit of their entitlement as residuary beneficiaries in the estate, the Master held that such an allegation was contrary to the decision of the Judicial Committee of the Privy Council in Commissioner for Stamp Duties v Livingston (1964) 112 CLR 12 at 18 and the decision of the House of Lords in Barnado’s Homes v Special Income Tax Commissioners [1921] UKHL TC_7_646; [1921] 2 AC 1 at 8.

30 There can be no doubt that, to the extent that the original pleading asserted an entitlement of the Plaintiffs to any interest in residue in the estate of the Deceased, consequent upon the mediation agreements, there being no allegation in that pleading of completion of the administration of the estate, such allegation is contrary to the foregoing decisions of the highest authority. It follows that the allegation contained in paragraph 19 (and, in consequence, paragraphs 22 to 29) does not disclose a reasonable cause of action.

31 I have had the benefit of receiving written outlines of submissions from respectively Counsel for the Plaintiffs and Counsel for the First Defendant. Those documents will be retained in the Court file.

32 The Plaintiffs now submit that both the amended statement of claim which was filed on 17 March 2003 and the proposed further amended statement of claim fully address the foregoing defects in the original pleading, by deleting paragraph 19 and inserting paragraphs 19A to 19E.

33 In consequence, it is submitted on behalf of the Plaintiffs, both the amended statement of claim and the further amended statement of claim now allege that:

(a) the mediation agreements on their proper construction provided for the complete administration of the estate (paragraph 19A), thus answering the complaint that there was incomplete administration;

(b) the proprietary entitlements of the Plaintiffs in the estate did not arise in their capacity as residuary beneficiaries in respect of the proceeds of sale of Hazeldene and the water licences attached thereto, but rather in their capacity as specific beneficiaries pursuant to clauses 4A(i) and (ii), as to 62.5 percent of those estate assets and any proceeds of sale thereof;

(c) the immediate distribution entitlement was not merely a proprietary entitlement in the estate but was also a contractual entitlement arising under the two mediation agreements (alleged in paragraphs 19C, 19E, 19F and 19G).

34 It is submitted on behalf of the Plaintiffs that new paragraphs which fully answer the original complaints of the Defendants which resulted in the striking out of the relevant paragraphs by the Acting Master are contained in the amended statement of claim and in the proposed further amended statement of claim.

35 However, subsequent to its filing, the First Defendant raised a fresh complaint against the amended statement of claim, as set forth in correspondence passing between the parties.

36 The gravamen of that complaint is, so it is submitted on behalf of the First Defendant, that the Plaintiffs cannot allege an entitlement to receive proceeds of sale of assets (those assets being Hazeldene and the water licences attached thereto) before the assets are sold.

37 The present complaint of the First Defendant, as formulated in the letter of 23 April 2003 from his solicitor, is that there can be no contractual or proprietary entitlement to immediate distribution of the proceeds of sale of the estate assets pursuant to the mediation agreements because, at the date of those agreements, the estate had not been fully administered (which fact is not in dispute), with the consequence, asserted on behalf of the First Defendant, that there could be no breach of the mediation agreements until all the sales of the assets were completed.

38 The Plaintiffs respond to that complaint in two ways. Firstly, they submit that the Livingston issue does not arise on the amended and further amended pleadings, because the immediate distribution entitlement is not an entitlement to an interest in the residue of the estate (a claim in respect to residue being the subject of the decision in Livingston), but rather is an entitlement to specifically gifted assets in which the Plaintiffs acquired a 62.5 percent absolutely vested interest under clauses 4(i) and (ii) of the will of the Deceased.

39 Further, the Plaintiffs submit that the Livingston issue can have no application where, as is the case under the amended and proposed further amended pleadings, the entitlement to immediate distribution arises contractually (under the mediation agreements) and independently of any proprietary entitlement which arises under the terms of the will alone.


40 Whilst Livingston was concerned with a residuary estate, it was held by the High Court of Australia in Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306 that the observations in Livingston apply with equal force in the case of a specific bequest or devise. In its joint judgment the Court (constituted by Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) said, at 312,

Not only does the legal ownership in the property not vest in the named beneficiary at the time of death of the testator, nor does the equitable ownership. That emerges from the Privy Council’s decision in Commissioner of Stamp Duties v Livingston [1964] UKPC 2; (1964) 112 CLR 12; [1965] AC 694. The reason for this is that, prior to administration of the deceased estate, there is no specific property capable of constituting the subject property of any trust in favour of the beneficiary. It could not be said at that stage what part or parts of the testator’s property would need to be realised for the purposes of administration. So it was held that the beneficiary does not have a proprietary interest in each of the assets which are the subject of the devise or bequest such that he or she can say “this is mine” or “this belongs to me”. Although Livingston was concerned with a residuary estate, the observations it contains apply with equal force in the case of a specific bequest or devise.

...

The right which any beneficiary has in an unadministered estate springs from the duty of the executor to administer the estate, to preserve the assets and to deal with them in the proper manner. Each beneficiary has an interest in seeing that the whole of the assets are treated in accordance with the executor’s duties. In that sense, the beneficiaries as a class may be said to have an interest in the entire estate. But it does not follow that each piece of property which goes to make up the estate is held on a particular trust for the beneficiary named as its intended recipient upon completion of the administration: Horton v Jones [1935] HCA 7; (1935) 53 CLR 475 at 486.

41 (See also Barns v Barns [2003] HCA 9, 196 ALR 65; Gonzales v Claridades [2003] NSWCA 227 (18 August 2003).)

42 In the light of the decision of the High Court of Australia in Schultz, the submission of the Plaintiffs that they have an entitlement to specifically gifted assets in which they have an absolutely vested interest under the will, before the estate has been administered, cannot be sustained. Nevertheless, I recognise (as was relied upon by the Plaintiffs in support of the foregoing submission) that Schultz dealt with a situation where the beneficial entitlements were indeterminate until the completion of the administration of the estate, whereas, in the instant case, the financial entitlements of the beneficiaries are known, as a result of the mediation agreements.

43 However, I am in agreement with the further submission of the Plaintiff that the entitlement to immediate distribution arises contractually (under the mediation agreements) and independently of any proprietary entitlement which arises under the terms of the will alone. Thus, the Livingston issue can have no application in the circumstances of the cause of action in contract asserted by the Plaintiffs.

44 I am also in agreement with the further submission of the Plaintiffs that, if the submissions of the First Defendant are correct, then there could never be a deed of family arrangement in respect to an estate before the complete administration of the estate. But it is only before the administration of an estate is completed that parties ever enter into a deed of family arrangement, since the effect of such a deed is to substitute the provisions thereof for the terms of the will, and it would defeat the purposes of a deed of family arrangement if the estate were to be administered in accordance with the terms of the will.

45 The second complaint raised by the First Defendant in respect of the present and proposed further amended pleadings is that, as a matter of law, there can be no entitlement to damages for breach of an implied obligation to perform the express terms of the mediation agreement in good faith. The relevant part of the pleading is paragraph 19F of the proposed further amended statement of claim, which is as follows,

The mediation agreement also contained an express term under which the parties to them each promised to do all things necessary for the due performance of both the terms of that agreement and any agreement which supplemented or varied its terms and also each of the transactions to be entered into pursuant to the terms of the mediation agreement and any agreement which supplemented or varied its terms (hereafter “the due performance term”).

46 In their undated letter received by the solicitors for the Plaintiffs on 14 April 2003 (part of Exhibit C) the solicitors for the First Defendant stated,

Furthermore, as a matter of law the obligation of good faith pleaded in paragraph 19F is not capable of sounding in damages by way of relief.

47 The solicitors for the Plaintiff responded by stating,

The plaintiffs do not allege the breach of an independent obligation to co-operate in good faith but rather they allege that the defendants refused to perform the express terms of the mediation agreements in co-operation with the plaintiffs in good faith and in a timely manner thereby occasioning loss to the plaintiffs. Paragraph 19F makes the reliance on the pleading on non-performance of, and consequent breach of, the express terms of the mediation agreements clear we submit with respect.

The following decisions are authority for the proposition that the breach of an implied contractual obligation to perform the express terms of a contract in good faith (in order to permit the principal objects of the contract as mutually contemplated by the parties to be achieved) sounds in damages are: Mackay v Dick (1881) 6 AppCas 251 at 263; RDJ International Pty Limited v Preformed Line Products (Aust) Pty Limited (1996) 39 NSWLR 417 at 421-423; Burger King v Hungry Jacks Pty Limited [2001] NSWCA 187 (21 June 2001) at [141]-[185]; Renard Constructions (ME) Pty Limited v Minister of Public Works (1992) 26 NSLWR 234 at 266.

48 By their letter of 23 April 2003 the solicitors for the First Defendant impliedly conceded that their complaint concerning paragraph 19F was not, in fact, a pleading issue. (“We note the authorities to which you refer in relation to the ability to obtain damages for a breach of an implied term to perform a contract in good faith. We disagree with your reading of them.”)

49 I am in agreement with the submission on behalf of the Plaintiffs that the complaint of the First Defendant is not a pleading point, but is a matter for trial, since it involves a debate about the present state of the authorities in Australia concerning breach of implied obligations of good faith in contract (which the First Defendant’s solicitor suggests to be unsettled), such not being an appropriate issue to be debated on the pleadings. But, in any event, it does not seem to me that a complaint that an allegation in a pleading does not entitle the party making that allegation to some specific form of relief necessarily constitutes a defect in the pleading such as to require that the pleading be struck out.

50 If the pleading alleges a cause of action in the Plaintiffs, or if it is arguable that the cause of action is established by the facts thus pleaded, then the Court is always entitled to mould its relief to the circumstances of the case. Strictly speaking, prayers for relief do not form part of the pleading.

51 If, as would here appear to be the case, the complaint of the First Defendant is, not that the allegations contained in paragraph 19F cannot be established, but rather, that if established, they do not entitle the Plaintiffs to damages, then it seems to me that that part of the pleading should stand.

52 The next complaint raised by the First Defendant is that paragraph 25 of the amended statement of claim was embarrassing, although no specific grounds for such a complaint were given by the First Defendant. The Plaintiffs, however, assumed that the complaint was based upon the absence of any identification of a cause of action in the pleading as it then stood. In consequence, paragraphs 25 and 25A of the proposed fresh pleading allege a breach of contract (being the mediation agreements) which occurred at a time when the Defendants were obligated to perform the immediate distribution entitlement term of the mediation agreements. It is submitted on behalf of the Plaintiff that these amended pleadings clearly identify a cause of action and the temporal elements giving rise thereto, that they are arguable, and can thus be replied to by the Defendants. The letter of 23 April 2003 from the solicitors for the First Defendant does not maintain any complaint against the form of paragraph 25 and 25A in the proposed pleading.

53 I do not consider that there are any grounds for the striking out of the foregoing paragraphs.

54 The final complaint of the First Defendant is in respect to paragraph 28A of the proposed further amended statement of claim. That paragraph (to which particulars are appended) is as follows,

The Bailey defendants’ breaches constituted unconscionable conduct on the part of each of Neil, Glennice and Annette (hereafter “the unconscionable conduct”).

55 The First Defendant complains that the foregoing allegation of unconscionability alleged against the First, Second and Third Defendants should be struck out, upon the basis that the Plaintiffs have not gone far enough to challenge the validity of the contingency fund agreement (into which they entered with those Defendants), in order to avoid being bound by its terms and the consequent displacement by it of the previous contractual arrangements between the parties which the Plaintiffs allege have been breached by the First, Second and Third Defendants.

56 The Plaintiffs, however, submit that the pleading and particulars of unconscionability and special disadvantage which have been made in paragraphs 28A, 28B, 28F-28I are sufficient to make out a case to have the contingency fund agreement set aside for unconscionability. In this regard, the Plaintiffs rely upon the decision of the High Court of Australia in Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362. At 392 McTiernan J referred to the judgment of Lord Hardwick in Earl of Chesterfield v Janssen [1750] EngR 119; (1751) 2 Ves Sen 125 [28 ER 82] (“This Court has an undoubted jurisdiction to relieve against every species of fraud”). Fullager J said, at 405, “The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified.” At 415 Kitto J spoke of that “well known head of equity” which

applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.

57 The Plaintiffs also in this regard rely upon the decision of the High Court of Australia in Commonwealth Bank of Australia v Amadio [1983] HCA 14; (1982) 151 CLR 447.

58 The submission of the First Defendant that there was no fiduciary or other relationship between the Plaintiff and the First Defendant cannot preclude the assertion alleged in the proposed pleading.

59 It seems to me that this submission of the First Defendant is essentially one going to the strength or weakness of the case of the Plaintiffs in respect to the cause of action grounded upon asserted unconscionable conduct on the part of the First, Second and Third Defendants. In considering a challenge to the form of a pleading, it is appropriate that the Court should assume that the Plaintiffs at a final hearing will be able to establish the facts asserted in the pleading. That is, in the instant case they will be able to establish the alleged unconscionable conduct on the part of the First, Second and Third Defendants. The foregoing authorities to which I have referred make it clear that it is not possible, and indeed is not desirable, that there be any attempt to delimit the available categories of unconscionable conduct which attract the intervention by a court of equity. The present submission of the First Defendant is grounded upon whether or not the Plaintiffs can ultimately, at a final hearing, establish certain factual matters. Accordingly, the strength or weakness of the likelihood of the Plaintiffs establishing those matters cannot impact upon the validity of the pleading.

60 I am not persuaded, therefore, that the complaint of the First Defendant in respect to paragraph 28A can be sustained.

61 The submissions of the Second and Third Defendants (who, as I have already observed, were unrepresented and appeared in person) were wide ranging. They largely addressed the merits of the asserted claims of the Plaintiffs, and relied upon the provisions of various sections of the Crown Lands Act 1989 in respect to fraudulent transactions and illegal transactions. They also referred to the provisions of section 23C of the Conveyancing Act 1919 (re-enacting the relevant provisions of the Statute of Frauds) and referred to a certain deed dated 4 February 1991 which the Second and Third Defendants in their submissions asserted have been signed by them as a result of unfair and fraudulent conduct and as a result of duress.

62 The submissions of the Second and Third Defendants did not, however, address themselves to the only question which I must decide in regard to the pleading, which is whether the form of the proposed pleading is such that if it were to be filed it would be liable to be struck out. Many of the matters referred to by the Second and Third Defendants in their respective addresses to the Court were more appropriate to a final hearing of the substantive proceedings rather than to the present application. I express no view upon the substance of the allegations made by those Defendants in the course of their submissions. It is, however, regrettable if, as was asserted by the Second and Third Defendants, the present litigation (being litigation among siblings) has extended over many years, has involved the participation of more than thirty lawyers and has incurred costs in the range of $1.5 million to $2 million. (I would however emphasise that the foregoing statements of the Second and Third Defendants were assertions made by those parties during the course of oral submissions, and were not evidence presented to the Court by affidavit or otherwise.)

63 In opposing the application for leave to amend Counsel for the Fourth and Sixth Defendants relied, in respect to paragraph 19E of the proposed pleading, upon the passage from the judgment of the High Court of Australia in Official Receiver in Bankruptcy v Schultz which I have already set forth.

64 The final submission of the Plaintiffs in support of their application to file the proposed pleading was that the First, Second and Third Defendants should not be rewarded for their failure to carry out their obligations under the mediation agreements. It seems to me that that submission has considerable substance. The parties voluntarily entered into the mediation agreements. The First, Second and Third Defendants now oppose the Plaintiffs having leave to file a fresh pleading which asserts reliance upon those mediation agreements.

65 For all the foregoing reasons I consider that it is proper that leave be granted to the Plaintiffs to file the proposed further amended statement of claim.

66 I turn now to the application by Bruce and Janet (described therein in as First, Second and Third Defendants) in proceedings 5315 of 1997, made by way of notice of motion filed by those parties on 11 March 2003. Those applicants seek, inter alia, an order setting aside the order of Registrar Berecry of 21 February 2003 by which the Registrar dismissed the application of those applicants for an order that proceedings 5315 of 1997 be consolidated with proceedings 2312 of 2002 and for a consequential order in respect of costs.

67 The 1997 proceedings relate to the partnership which existed between the Deceased and his five children, and seek orders for the winding up of the partnership and the taking of an account.

68 In his judgment of 9 December 2002 the Acting Master adverted to the question of consolidation of the two sets of proceedings and said, at paragraph 21,

Having regard to Part 31 rule 7 and to the fact that proceedings number 5315 of 1997 involve the parties in these proceedings with the exception of the fourth, fifth and sixth defendants and that questions of law and issues of fact arise which are common to both sets of proceedings, in my view the appropriate order to make is that the proceedings be consolidated. As the application before me is only between the first defendant and the plaintiff, the other defendants have not had an opportunity to be heard on the question of consolidation. Therefore, I will not make an order for consolidation at this stage.

69 It would appear that when the application for consolidation came before Registrar Berecry on 21 February 2003 the solicitor who appeared for the Plaintiff in proceedings 5315 of 1997 and who mentioned the matter on behalf of Bruce and Janet did not draw to the attention of the Registrar the foregoing passage from the judgment delivered by him in his capacity as Acting Master some two and a half months earlier. Had the Registrar’s attention been directed to the view which he had earlier expressed, there appears to be little doubt that he would have made the order for consolidation.

70 Despite the opposition by various parties (including Glennice and Annette) to such consolidation, I consider that the fact that both sets of proceedings arise out of the same factual matrix and circumstances, the fact that all the parties to the 1997 proceedings are parties to the 2002 proceedings, and the fact that common issues of fact and of law will emerge make it appropriate that the two proceedings be heard together and that the evidence in the one, so far as is relevant, be treated as evidence in the other. An order for actual consolidation of the two sets of proceedings would, however, in my view unnecessarily complicate the situation and would require a fresh pleading to be prepared on behalf of Bruce and Janet.

71 I make the following orders:

2313 of 2002:

(1). I order that leave be and hereby is granted to the Plaintiffs to file a further statement of claim in the form of the document being Exhibit F to the affidavit of Terence Louis Goldberg sworn 8 May 2003.

(2). I order that the Plaintiffs pay the costs of the Fifth Defendant of the notice of motion filed by the Plaintiffs on 8 May 2003.

(3). I order that, subject to order 2 hereof, the costs of the Plaintiffs of the aforesaid notice of motion be the costs of the Plaintiffs in the proceedings.

(4). The exhibits may be returned.

5315 of 1997:

(1). I make an order in the terms of paragraph 1 in the notice of motion filed by the First, Second and Third Defendants on 11 March 2003.

(2). I order that proceedings 5315 of 1997 and proceedings 2313 of 2002 be heard together and that the evidence in the one, so far as is relevant, be treated as evidence in the other.

(3). I order that the Plaintiff and the Fourth and Fifth Defendants pay the costs of the First, Second and Third Defendants of the aforesaid notice of motion.

(4). The exhibits may be returned.


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LAST UPDATED: 24/05/2004