Oates v Pascoe

The Court had before it today two notices of motion in the Applications List.

The issues for determination were narrowed to two by the time the motions came on for hearing:

Mr Oates appeared for himself. He is the plaintiff and the first cross-defendant to the cross-claim. Mr J R Anderson of Counsel appeared for the defendants. Mr J Song, Solicitor, appeared for the Deputy Commissioner of Taxation, the second cross-defendant to the cross-claim.

Mr Oates’ claim in the proceedings seeks declaratory and other relief in relation to a fund comprising the proceeds of settlement of litigation brought by the defendants against third parties. The defendants have received the first of three instalments of those proceeds, being $3.3 million of $10 million.

In their cross-claim, the defendants seek relief including:

Turning to Mr Oates’ motion, one concern of Mr Oates has been satisfied by Mr Anderson’s clarification that “settlement proceeds” in prayer 1 is not meant to be anything other than the “settlement sum” defined in paragraph 17 of the cross-claim.

The primary test for the adequacy of a pleading is to ascertain whether all material facts which are necessary to make out the relief sought have been pleaded. Noting that what is sought are a declaration and directions as to the distribution of the settlement proceeds, in my view all the material facts to make out that relief have been pleaded. As Mr Anderson pointed out, the relief in the cross-claim would normally be sought by summons. This has had to be done here by cross-claim because of the existing proceedings (see UCPR Pt 6 r 6.4(2)).

Mr Oates submits that it is necessary for the right of exoneration to be expressly pleaded because he says it is that right which the defendants are relying on, Matrix only ever having been a bare trustee: Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth of Australia (2019) 268 CLR 524; [2019] HCA 20. I agree that is the right being relied on but, with respect, I disagree as to the pleading point and accept Mr Anderson’s submission that the pleading properly exposes the issues. The facts which are the context in which the right is exercised have been sufficiently pleaded. It is not necessary to plead the legal result or principle relied upon.

If there are matters of fact which Mr Oates might wish to rely upon in support of denials that he will wish to assert of the defendants’ entitlement to the relief sought in the cross-claim, he will have that opportunity by way of his defence.

I am not persuaded that there is anything inadequate about the cross‑claim that would warrant it being struck out.

I also note that nobody appears to be in any doubt before me today that the right of exoneration underlies the relief sought and there has been no objection raised to the pleading by the second cross-defendant, the Deputy Commissioner of Taxation.

Insofar as there is an application for the proceedings to be transferred to the Corporations List, I acceded to Mr Anderson's submission that this is clearly a matter that would benefit from judicial case management. It involves questions of the Corporations Law, and the rights of liquidators and other parties to trust assets in a corporate winding up. I did not accept Mr Oates’ submission that because the proceedings involve a trustee’s right of exoneration – an equitable entitlement – the proceedings should remain in the General List.

The fact of the matter is that in the General List of the Equity Division the proceedings will not receive judicial case management. If transferred to the Corporations List, they will receive specialist case management. That is an outcome which will facilitate the achievement of the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW), in particular the just, quick and cheap identification of the real issues in dispute.

I ordered Mr Oates to pay the defendants’ costs of his motion because he had failed in his application to have the cross-claim struck out. I did so applying the general principle that costs should follow the event.

I ordered the costs of the defendants’ motion to be costs in the cause because each party had enjoyed a measure of success. The defendants had obtained an order for transfer to the Corporations List. On the other hand, they had not pressed the other relief sought in their motion, being to strike out substantial parts of Mr Oates’ reply.