Rudenko v Rudenko & Sons Pty Ltd

1. [1]

   HER HONOUR: By notice of motion filed 19 July 2019, the defendants seek an order pursuant to r 15.10 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that the plaintiff file and serve all or part of the particulars that have been requested by the defendants in their written request dated 21 June 2019.

2. [2]

   The plaintiff is Genady Rudenko. The first defendant is Rudenko & Sons Pty Ltd. The second defendant is Wolodymyr Rudenko aka Volodia Rudenko. The plaintiff relied upon the affidavit of Daniel O’Brien dated 15 August 2019. The defendants relied upon the affidavit of their solicitor Bradley James Kelly dated 18 July 2019. The parties also relied upon a joint court book.

Procedural history

1. [3]

   The defendants first sought particulars of the plaintiff’s proposed further amended statement of claim (“PFASC”) on 8 October 2018 (“the first request”). This was in response to an order made by me, over the plaintiff’s objections, on 20 September 2018 directing that the plaintiff respond to the request for particulars, after which the defendants were to inform the plaintiff whether or not they would consent to the filing of the PFASC.

2. [4]

   On 22 October 2018, the plaintiff provided replies to the defendants’ lengthy requests for particulars. Three days later on 25 October 2018, the defendants indicated that they would not provide their consent to the filing of the PFASC.

3. [5]

   On 10 May 2019, the plaintiff was successful in his application in this Court before Walton J, who granted him leave to file a PFASC: see Rudenko v Rudenko & Sons Pty Ltd [2019] NSWSC 532. Significantly, the defendants did not avail themselves of the opportunity to raise the issue of the alleged inadequacy of the defendants’ particulars for determination at the hearing. As Walton J observed at [15]:

4. [6]

   On 4 June 2019, the further amended statement of claim was filed (“FASC”). On 21 June 2019, the defendants requested further and better particulars, essentially repeating their earlier request. On 27 June 2019, the plaintiff answered the further request for further and better particulars. The plaintiff’s solicitor has helpfully prepared a comparative table of requests for particulars and responses. It is lengthy and not necessary to reproduce here.

The law

1. [7]

   UCPR 15.1 reads:

2. [8]

   UCPR 15.10 reads:

3. [9]

   In Sims v Wran [1984] 1 NSWLR 317 (“Sims”) Hunt J stated at 321:

4. [10]

   Particulars when ordered are to ensure that the issues in dispute may be clearly defined, and that evidence is directed (and argument advanced) to the issues in dispute: see Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214; (1977) 13 ALR 41 at 52.

5. [11]

   The plaintiff and second defendant are son and father, respectively. The first defendant is the vehicle through which the second defendant conducts his business. The second defendant and his wife, the plaintiff’s mother, are the two directors of the first defendant.

6. [12]

   In Deemah Marble & Granite Pty Ltd (in liq) v Sutherland [2001] NSWSC 829, Young CJ in Eq at [6] set out the principles of particulars. Of relevance to these proceedings is principle (5), in which his Honour states:

7. [13]

   In this case, the second defendant allegedly borrowed money from his son, the plaintiff. Therefore, the second defendant has the means of knowing the real facts.

8. [14]

   More recently, with the advent of case management procedures in this Court, two more cases are of relevance: Fregnan v Stanizzo (2016) 92 NSWLR 318; [2016] NSWCA 264 (“Fregnan”) and Verner v Giannaros [2016] NSWSC 242 (“Verner”).

9. [15]

   In Fregnan, MacFarlan (with whom Beazley P and Leeming JA agreed) stated at [14] and [15]:

10. [16]

    In Verner, White J stated at [27] and [28]:

11. [17]

    I have adopted the above approach. It is lengthy and not necessary for it to be reproduced here.

12. [18]

    The defendants submitted that they require particularisation in order to know the case that they have to meet, and guard against being caught by surprise in the proceedings.

13. [19]

    The defendants noted that the plaintiff has replied to a number of the defendants’ requests for further particulars to be provided in the plaintiff’s evidence. The claim is significant in size and extends over a long period of time, involving at least 52 alleged oral loan contracts coupled with a concurrent (alleged) joint venture. The defendants wish to be provided with this evidence in draft form, so as to distill and clarify the issues between the parties, after which the pleadings can be closed. The defendants submitted that it has been nearly three years since the proceedings commenced, and by now the plaintiff should be in a position to provide the information.

14. [20]

    The plaintiff opposes the orders sought for the following reasons.

15. [21]

    Firstly, the FASC clearly sets out the factual allegations and issues, and discloses arguable causes of action and apprises the defendants of the case that they have to meet. In the circumstances, the plaintiff submitted that orders for particulars should not have been sought before the filing of a defence or affidavits: see Verner.

16. [22]

    Secondly, the plaintiff argued that many of the defendants’ requests are vague, unmoored from precise factual allegations or merely speculative. The plaintiff submitted that the defendants’ written submissions mischaracterise the nature of the plaintiff’s case and erroneously claim that background allegations form “important aspects of the case the defendants have to meet”. The plaintiff submitted that these errors indicate that the defendants have failed to bring a discriminating focus to their requests. By contrast, the plaintiff’s specific replies evince a genuine attempt to provide a reasonable and measured response to the requests where warranted.

17. [23]

    Thirdly, the plaintiff submitted that the there is no evidence filed on behalf of the defendants to indicate why, in relation to the specific paragraphs, the particulars in the FASC are inadequate, or why particulars are necessary for them to conduct their case.

18. [24]

    Fourthly, many of the requests are pedantic and oppressive, seeking details of the case that go far beyond any fair view of what can reasonably be necessary to allow the defendants to know the case they have to meet and plead accordingly. The plaintiff argued that the requests are actually probing for evidence.

19. [25]

    Fifthly, the defendants’ primary concern expressed in their written submissions of being “caught by surprise” has minimal force in the modern case management landscape. Moreover, the plaintiff argued that the defendants already know many of the relevant details of the requested particulars, and it would, as a consequence, be unreasonable to make the orders sought.

20. [26]

    Finally, the plaintiff submitted that it is not necessary that particulars detail the matters of background or context, or even in respect of central allegations. Granting a request for detailed particulars of this kind does not advance the overriding purpose of facilitating the “just, quick and cheap” resolution of the real issues in the proceedings.

Particulars in relation to paras [2A] and [3A]

1. [27]

   Paragraphs [2A] and [3A] of the FASC plead:

2. [28]

   The defendants complain about the answer to particulars in respect of paras [2A] and [3A] of the FASC. By way of example, the defendants made general complaints about the answers and then more specific complaints in relation to requests 4 to 9. I shall reproduce them here.

3. [29]

   The defendants argued that the plaintiff’s allegation that the first defendant “was a vehicle by which the second defendant engaged in the business of residential property” requires clarification.

4. [30]

   Firstly, the term “vehicle” is ambiguous and the intended legal effect of the allegation is unclear.

5. [31]

   Secondly, as pleaded at para [3A], the second defendant is one of two directors and holds only 10 of 200 shares in the first defendant. In light of this further pleading, it is unclear what is meant by the term “vehicle” and further, in light of the allegations at para [3A] of the FASC, whether it was also a “vehicle” for the other director or shareholders.

6. [32]

   Thirdly, the response created further confusion by stating, “The net proceeds of the settlement of the sale of the 6 XXXX XXXXX property in the amount of $521,623.14 (upon which the first defendant constructed a dwelling as part of the Joint Venture)...” The defendants submitted that this response points to the first defendant playing a significant role in the later pleaded joint venture, which is alleged to be between the plaintiff and the second defendant.

7. [33]

   The defendants submitted that the response requires proper particularization, as it appears to suggest that the alleged joint venture was between the first defendant and the plaintiff. The defendants are entitled to know the case they have to meet.

8. [34]

   The defendants requested confirmation as to whether para [2A(c)] of the FASC outlined the extent of the dealings between the plaintiff and the first defendant, as this is the impression provided by the relevant pleading.

9. [35]

   The reply to this request was, “...In any event, we are instructed that the plaintiff’s dealings with the first defendant included being employed by the first defendant, being a shareholder of the first defendant and in respect of the first defendant’s business of residential property construction and development.”

10. [36]

    The defendants submitted that the reply is vague as to the dealings of the plaintiff with the first defendant. It is not clear whether these alleged dealings “in respect” of the first defendant’s business extend to the plaintiff providing or receiving monies from the first defendant.

11. [37]

    The defendants requested of the plaintiff, “Specifically, please confirm whether the plaintiff had any involvement with the first defendant in respect of the later pleaded ‘joint venture’ or at all?” The defendant submitted that the plaintiff’s reply was non-responsive and unhelpful in clarifying the issue. The defendants argued that they will be caught by surprise if, after the pleadings have closed, the plaintiff adduces evidence of his dealings with the first defendant, particularly in respect of intermingling finances. The difficulty is compounded by the plaintiff’s reluctance to properly particularise what involvement, if any, the first defendant may have had with the pleaded property which was the subject of the alleged joint venture, other than an oblique reference in an earlier reply.

12. [38]

    The defendants submitted that the first defendant’s request as to the plaintiff’s alleged employment is straightforward. The request goes to the financial relationship between the first defendant and the plaintiff. For example, is it alleged that the plaintiff was employed by the first defendant during the construction of the dwelling on the subject property? This is an important aspect of the case that the defendants have to meet.

13. [39]

    Rather than being “background information”, as alluded to by the plaintiff, the defendants submitted that they are requesting proper particulars of what dealings the plaintiff had with the first defendant, especially in light of the plaintiff’s previous replies that the first defendant constructed a dwelling on the relevant property and that the plaintiff was not only employed by the first defendant, but further had dealings “in respect of the first defendant's business of residential property construction and development”.

14. [40]

    The defendants submitted that the plaintiff’s allegation that the second defendant “controlled” the first defendant is vague and embarrassing. The defendants are unaware of what the plaintiff means by “controlled”, as the term has not been properly particularised. As a result, the defendants are unable to plead to this allegation. If it simply refers to the second defendant being a director of the first defendant, then the defendants argued that the allegation of “control” should be removed from the pleading. The defendants argued that the plaintiff’s attempt to give an example of control, being that the second defendant allegedly deposited moneys into the first defendant’s bank account, creates confusion and is not evidence of control.

15. [41]

    The defendants submitted that they are unaware of the reasons why the plaintiff decided not to provide any particulars of his dealings or employment. Requests 8 and 9 were an attempt to put squarely to the plaintiff the issue as to what role the first defendant played in the later alleged joint venture between the plaintiff and the second defendant. The defendants submitted that the FASC pleads that the first defendant is the “vehicle” for the second defendant, and that a joint venture existed between the plaintiff and the second defendant, yet fails to provide any particulars of the dealings between them, which would be the inevitable conclusion from the pleadings as they stand. The defendants submitted that the real issue that requires clarification and particularisation is whether the alleged joint venture was between the plaintiff and the first or second defendant, or somehow, both.

16. [42]

    The plaintiff submitted that paras [2A] and [4] fall under the introductory heading of “Parties” in the FASC. Their purpose is to provide background information, and they do not contain allegations central to the pleaded causes of action. The plaintiff submitted that the defendants are attempting to imbue the prefatory paragraphs with a significance they do not have by erroneously claiming that their content amounts to “important aspects of the case the defendants have to meet.”

17. [43]

    As previously stated, the plaintiff and second defendant are son and father, respectively. The first defendant is the vehicle through which the second defendant conducts his business. He and his wife, the plaintiff’s mother, are the two directors of the first defendant. The second defendant is the one who allegedly asked to borrow money from his son, the plaintiff. As such, the second defendant has the means of knowing the real facts. Moreover, these paragraphs provide background facts. It is my view that these pleadings are straightforward particulars, and that they are not necessary to enable the defendants to identify the case that the pleadings requires them to meet.

Particulars in relation to paras [6] to [14] – loan 1

1. [44]

   There are 52 separate loans pleaded in the FASC. I will take, as an example, the pleading of loan 1. Loan 1 is set out in paras [6] to [14]. They plead:

2. [45]

   The FASC pleads 52 separate and individual contracts of loan between the plaintiff as lender and the second defendant as borrower. Each alleged loan contract was oral and was said to have taken place at the second defendant’s residence at Beecroft. Along with the amount of the alleged loan and an approximate date, the plaintiff provides no further particularisation.

3. [46]

   The defendants submitted that the pleaded terms of the loan contract, being the first and second repayment terms, are not the particulars of the loan contract that the defendants require to understand the case they have to meet.

4. [47]

   The FASC does not plead a contract in existence between the plaintiff and the second defendant on an ongoing basis, where each of the alleged advances forms part of that contract. Instead, the plaintiff pleads 52 independent and separate loan contracts.

5. [48]

   Importantly, the amounts said to be advanced vary considerably. The defendants submitted that it could not be said that each loan contract was for the same expense or liability. The second defendant argued that he requires proper particulars of what was said in the formation of each oral loan contract.

6. [49]

   By way of illustration, the defendants noted loan 16 at para [115] of the FASC in the sum of $4,810.74. The defendants argued that it can only be assumed that the alleged request for a loan in this sum must be different to that of loan 17 in the sum of $10,000. The same is true of the circumstances surrounding loans 17 and 18, both of which were advanced on 1 March 2013, yet one in the amount of $10,000 and the other $1,000.

7. [50]

   The defendants argued that the plaintiff, despite numerous requests, failed to provide any meaningful response to the defendants’ request. The second defendant argued that he will be caught by surprise in respect of 52 individual oral loan contracts that have no discernible difference other than the amount and the date. The FASC does not plead any arrangement or agreement between the plaintiff and the second defendant that facilitated the alleged payments to the first defendant. The second defendant argued that he should know the case he has to meet for each and every loan contract.

8. [51]

   The defendants argued that request 18 is straightforward. For alleged loans made by deposit, rather than an electronic transfer or a cheque, the defendants have requested particulars of the allegation being the deposit “from the plaintiff’s Suncorp Account”.

9. [52]

   The second defendant argued he is unable to meet this matter, as pleaded, without particulars of the corresponding withdrawal from the plaintiff’s bank account. The defendants are unaware of why these matters are unable to be swiftly dealt with the production of the relevant bank statements by the plaintiff, especially in circumstances where the plaintiff refers to his specific bank account as the source.

10. [53]

    The alleged deficiency levelled at the plaintiff’s FASC appears to be that he has pleaded the loan terms, but not provided particulars of the “loan contract”. It is unclear whether this is a defined term employed by the defendants, as it does not appear in the FASC. The plaintiff submitted that these requests are misconceived, as the relevant paragraphs have been adequately pleaded and particularised to include the parties (plaintiff and second defendant), the form of the contract (oral), the relevant terms and consideration alleged (first and second repayment terms) and the circumstances and place of its making. The plaintiff argued that it is inconceivable that the defendants are not able to plead to these allegations. The absence of any rational connection between the requested particulars and the pleading is also oppressive, having the effect of stultifying the proceedings. The plaintiff argued that the particulars provided to date in relation to the loans are more than sufficient to enable the defendants to know the case they have to meet and plead accordingly.

11. [54]

    The 52 contracts were allegedly oral in nature. In the course of these proceedings, a timetable will be made where the plaintiff will be ordered to file an affidavit or statement concerning what was said between the plaintiff and second defendant in relation to each contract, and if they were similar, details of their similarities and differences. The amounts vary. He will also be required to address the other matters in dispute. The second defendant will also address what he alleges was said, if anything, in answer to the plaintiff’s statement or affidavit, and will also address other relevant events. Likewise, the second defendant will be required to file an affidavit or statement addressing the loans and other matters. Before this, the defendants have to file a defence.

12. [55]

    Loan 1 pleads the date of the contract, the location of its formation, the parties to the contract, the date of the advance, the amount and the account into which the moneys were deposited. It is my view that the defendants have the necessary particulars to enable them to identify the pleading that the ASC requires them to meet.

Net Sale Proceeds

1. [56]

   Paragraphs [398] and [399] of the ASC pleads:

2. [57]

   The defendants sought clarification through Requests 24 and 25 to ascertain what was meant by the term “net sale proceeds”. The significance of the reference to “net” is of critical importance for understanding the allegations in respect of the joint venture agreement. The defendants argued that the plaintiff’s answer, “Insofar as it relates to the distribution of the net sale proceeds, yes”, further confuses rather than clarifies this issue.

3. [58]

   For example, is it the plaintiff’s position that all expenses and liabilities were met equally by the plaintiff and the second defendant and that the sale proceeds were therefore “net”? Or is that there were no expenses? Or is it that the expenses were borne by the first defendant, who is said to have constructed the dwelling, and is required to be paid equally by the plaintiff and second defendant? The defendants argued that the plaintiff is required to provide particulars of the facts in support of their claim as to their alleged entitlements to these amounts. At this stage, the defendants submitted that they are unaware of the underlying basis for the amounts being claimed under the alleged joint venture.

4. [59]

   The plaintiff submitted that the net proceeds are properly particularised.

5. [60]

   The net proceeds are pleaded as the settlement sum of $521,623.14, less the mortgage and Ccnveyancing fees of the 6 XXXX XXXX property. The amounts are set out in a letter, details of which are provided in the FASC. The defendants can plead to this claim.

Paragraphs [373] and [374] – Interest and bank charges

1. [61]

   Paragraphs [373] and [374] plead:

2. [62]

   The defendants submitted that these paragraphs are not properly particularised. The plaintiff submitted that it is not necessary to supply the degree of particularity that the defendants seek this stage in the proceedings in order for the defendants to be able to plead to the allegations. It is a matter for evidence. The plaintiff intends that this will be subject of an expert accounting report. The defendants have not provided any cogent explanation as to why they are unable to plead to an allegation that the loan agreements included a term that interest would be repaid.

3. [63]

   It is not necessary to set out the separate amounts of interest and bank charges for each loan. In any event, interest will accrue over time.

4. [64]

   The plaintiff is the son; the second defendant is his father. The second defendant requested loans from the plaintiff. Moneys were paid by the plaintiff into the first defendant’s bank account. The second defendant is a director of the first defendant. In these circumstances, and as previously stated, the second defendant has the means of knowing the real facts.

5. [65]

   Further, the plaintiff has provided particulars in the FASC and its answers to particulars contain what is necessary to enable the defendants to identify the case that the FASC requires them to meet in this defence.

6. [66]

   The defendants are to file and serve a defence on or before 5.00 pm on 1 November 2019.

7. [67]

   The result is that the defendants’ notice of motion filed 19 July 2019 is dismissed.

Costs

1. [68]

   Costs are discretionary. Costs usually follow the events. The defendants are to pay the plaintiff’s costs on an ordinary basis.