STM123 No. 28 Pty Ltd v Eastern Suburbs Commercial Pty Ltd

These proceedings commenced by the filing of a statement of claim on 4 August 2023. The first plaintiff is a company, STM123 No. 28 Pty Ltd (“STM 28”) which is controlled by the second plaintiff, Vaughan Rudd Blank.

Mr Blank is also the controller of STM123 No. 26 Pty Ltd (“STM 26”). That company was the registered proprietor of land and improvements at 36 Hall Street, Bondi Beach. Mr Blank is also the controller of STM123 No 27 Pty Ltd (“STM 27”) which is the registered proprietor of land and improvements at 30-32 Hall Street, Bondi Beach.

Adjoining land at 34-36 Hall Street was owned by a company called Bioka Pty Ltd (“the Property”). The property on the other side of the Property, at 38 Hall St, was owned by Robert Graham. That property had a caveat lodged on it in favour of Bondi Beach Ventures Pty Limited (“BB Ventures”) pursuant to a Call Option Deed between BB Ventures and Mr Graham dated 22 September 2021.

Mr Blank was interested in purchasing (using STM 28 as the purchaser) the Property at 34-36 Hall Street. To that end, he engaged the first defendant, which traded as Richardson and Wrench Bondi Junction, and its director Andre Bernard Frack, the second defendant, to act as buyer’s agent to procure the property at 34-36 Hall Street. The plaintiffs allege that, as a result of representations made to Mr Blank by the defendants on 28 and 29 July 2021, STM 28, as Mr Rudd’s undisclosed agent, entered into an Exclusive Buyers Agency Agreement on 29 July 2021 with the first defendant.

The statement of claim alleges that in breach of that Agreement, the defendants, acting as agents for Bioka Pty Ltd, sold the property to BB Ventures on 23 February 2022 for $15.25m. Prior to that sale, the plaintiffs had made a number of offers through the defendants to Bioka Pty Ltd, offering an increased amount on each occasion from $11,000,000 on 29 July 2021 to $16,000,000 on 23 February 2022.

The statement of claim seeks the following relief:

The statement of claim pleads a number of causes of action, both common law and statutory, and seeks equitable relief. The common law claims are for breach of contract, negligence, and interference with contractual relations. The statutory claims rely on breaches of ss 18 and 60 of the Australian Consumer Law. There is a claim for breach of fiduciary duty and an estoppel claim.

After service of the statement of claim, solicitors acting for the defendants sent an email to the plaintiffs’ solicitors, saying that the defendants had forwarded the claim to their insurers. The defendants were waiting to see whether they were covered by their insurance. They said that they could not do anything about putting on a defence until the indemnity issue was determined, because that might invalidate their cover. They asked for a minimum of 42 days’ notice before a defence would be required.

On 12 September 2023, the plaintiffs’ solicitors wrote saying that they agreed not to take any steps to enter judgment prior to the directions hearing on 22 September 2023.

The proceedings came before the Registrar on that day and directions were made for the defendants to request particulars of the statement of claim by 6 October with the plaintiffs to respond by 27 October. The proceedings were stood over for further directions to 8 November 2023.

On 6 October 2023 the defendants filed a notice of motion seeking an order that the statement of claim be struck out pursuant to r 14.28(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW). The notice of motion came before the Registrar on 25 October 2023 when it was listed for hearing today and directions were made for the filing of any evidence by the plaintiffs and for the filing of submissions by both parties.

The affidavit in support of the notice of motion by Alice Watson, the solicitor for the defendants, relevantly said:

The defendants’ written submissions asserted that the statement of claim was unnecessarily prolix and confusing, running to 39 pages and 111 paragraphs where no more than 10 pages ought to have sufficed. The defendants submitted that the statement of claim appeared to plead “every conceivable cause of action”. They submitted that it goes far beyond pleading the material facts alleged to give rise to the alleged causes of action. I interpolate here that, simply because a plaintiff pleads “every conceivable cause of action”, provided they are capable of support, that does not provide any basis for a strike-out. Nor, because a defendant considers that it could have pleaded claims in fewer paragraphs over fewer pages, does that constitute a basis for striking out a pleading.

The defendants submitted that the prayers for relief claimed relief that does not flow from the “cause of action alleged”. The defendants submitted that, although the proceedings had been commenced in the Professional Negligence List, there was no prayer for relief for damages for the tort of negligence.

The defendants submitted that the body of the pleading contained innumerable vices, and that that was readily apparent from examining paragraphs 15 to 17 of the statement of claim. Those paragraphs plead:

The defendants submitted that paragraph 15 appears simply to plead background facts, rather than any material fact that forms an element of the alleged causes of action.

Paragraph 16 is criticised because it “purports to provide ‘particulars’ by way of multiple cross-references to large portions of the Statement of Claim and general references to documents that do not make sense or properly particularise the allegations made with any precision”. The representations set out in paragraph 16 are criticised as either being matters for evidence or background of only peripheral relevance, and it was submitted that it was difficult to see how these representations could give rise to any relevant reliance by the plaintiffs, let alone sound in damages for misrepresentation.

So that I do not do an injustice to the defendants by summarising their criticisms of paragraphs 16 and 17, they are set out hereunder:

This last submission is an extraordinary one. The pleading in paragraph 17 simply forms part of the historical narrative which leads to the breaches later pleaded. It is also a basis for the estoppel claim pleaded at pars 93 to 95.

The defendants then said that it was apparent from the analysis of paragraphs 15-17 that the defects in the pleading could not be remedied by the provision of further particulars because the statement of claim is incurably prolix and convoluted. The written submissions said that the defendants did not attempt to analyse exhaustively all of the defects in the statement of claim because this would inflict on them the very prejudice, and delay that their motion seeks to avert. They submitted that even a cursory examination of the balance of the statement of claim was sufficient to demonstrate that it should be struck out.

In oral submissions, further paragraphs were criticised. For example, both pars 17 and 18 were said to plead the inconsistency that both Mr Blank and STM 28 were purchasing the Property. Further, the particulars were criticised because of the references to the earlier paragraph numbers. For example, the defendants asked rhetorically how the pleading in par 2 was relevant to what appeared in par 18 of the statement of claim. Par 20 was said to contain irrelevant allegations. Par 26 was criticised for not including clause numbers from the Exclusive Buyers’ Agency Agreement. Par 27 was criticised because particular (ii) was not related to the particular implied terms pleaded in the paragraph. Par 28 was said to be a defective pleading of negligence because proximity and foreseeability were not set out.

Mr O’Sullivan of counsel for the defendants reiterated that the remainder of the statement of claim suffered from the same or similar problems to those particularly identified in the written and oral submissions, and to deal with them seriatim would only highlight the prejudice, delay and difficulty for the defendants brought about by the way the statement of claim was pleaded.

Rule 14.28 UCPR relevantly provides:

In my opinion, the notice of motion is misconceived and the criticisms made of the pleading are largely captious.

Although the statement of claim is lengthy, that is because it sets out what are asserted to be material facts in the somewhat detailed history involved from the first engagement of the defendants by Mr Blank on 28 July 2021 until the sale of the Property on 23 February 2022. That history is set out in a clear and chronological fashion with appropriate particulars being supplied at various places in the pleading. These particulars refer to emails and correspondence, and other portions of the statement of claim in an entirely appropriate way.

Whilst some criticism may be made about the way the prayers for relief are drafted, these are matters which, properly could have been dealt with in correspondence between the solicitors. I will return to that matter later.

The prayers for relief are not well drafted, although there can be little doubt about what is sought by them. One criticism that can be properly made is in relation to seeking declarations about an agreement which forms the basis of causes of action. This statement of claim would not, however, be an outlier in that regarded. Too often, unnecessary declarations are sought about the existence of a contract which will be found to exist or not, as the case may be, in the determination of the claim either for breach of contract or some similar cause of action.

Further, prayer 6 should be disconnected from prayers 3 to 5. Indeed, damages in such cases should be the first claim, with claims for equitable relief by way of equitable damages, compensation or an accounting following as alternative claims. This is an apposite example of the maxim that equity follows the law.

Contrary to the defendant’s submission that there is no prayer for relief for damages for negligence, the statement of claim pleads a duty of care at paragraph 28 and breaches of the duty of care at paragraph 84 leading to the claim for loss at paragraphs 85 and 86. Damages are sought in prayer 6 although, as I have said, it may be more appropriate to omit the words “in the alternatives (sic) to paragraphs 3-5” which might be misinterpreted as a claim for damages only for breach of contract. I accept, however, that the claim in negligence derives from the contractual arrangements.

Those infelicities do not mean that the statement of claim is embarrassing or that it should be struck out.

The particular criticisms levelled at the pars identified are without foundation. Cross-referencing in a statement of claim is neither unusual nor undesirable. It frequently has the advantage of minimising repetition. The mistake the defendants are making is not to read the cross-referenced paragraphs as a whole, rather than focusing on individual paragraphs. So, for example, where in par 18, it is said that the knowledge arises from pars 2 to 8, those paragraphs set out the basic information about Mr Blank’s relationship with the various companies, and the various landholdings of those companies and their relationship to the Property. In that way, they effectively explain what might otherwise be thought to be the asserted inconsistency complained of in pars 17 and 18. They also identify the basis for the assertion of knowledge in par 18.

As a further example, the allegations in par 20 form the basis of the estoppel claim in pars 93 to 95. It was faintly suggested that it would have been better to plead them in close proximity to the estoppel pleading. In my opinion, it was far more appropriate that the historical matters should be pleaded chronologically, as they have been.

The criticism of the pleading in par 28 concerning negligence is misconceived. What is set out there is the duty said to arise from the relationship between the parties. In the circumstances of the relationship, it was scarcely necessary to mention proximity and foreseeability: rr 14.10(a) and 14.11(c) UCPR might be thought to be relevant.

It is not necessary to descend into more detail regarding individual pars of the statement of claim.

In Young v Hones [2013] NSWSC 580 Garling J said at [79]:

In my opinion, the statement of claim sets out the material facts and the causes of action with sufficient clarity to enable the defendant to plead to the statement of claim.

In McGuirk v The University of New South Wales [2009] NSWSC 1424 Johnson J set out the principles relevant to identifying an embarrassing pleading as follows:

The statement of claim follows a standard pattern of (1) identifying the parties and related entities, (2) setting out the factual narrative, (3) setting out what are said to be the obligations brought about as a result of the alleged representations and the entry into the contract, (4) setting out the breaches of the obligations including breaches of the duty of care alleged, and (5) pleading the loss and damage said to have been incurred. The different causes of action and claims are clearly set out under headings, including the relevant sections of the Australian Consumer Law. I do not consider that the present pleading is embarrassing, nor is there anything that suggests a tendency to cause prejudice or delay in the proceedings. The pleading is set out with sufficient clarity to enable a defence to be pleaded. That defence may be lengthy because the statement of claim is a long one, but I do not consider that its length derives from any defect in its pleading.

It is significant that, prior to the service of the notice of motion and, notwithstanding that directions had been made for the defendants to request particulars of the statement of claim, the present motion was filed without any correspondence to the solicitors for the plaintiff asserting the matters now complained of or endeavouring to clarify matters which the defendants and their solicitors were unable to understand from the pleading. The Court expects that one side should extend the opportunity to the other side to deal with issues that the first party has problems with, before notices of motion are filed.

Although I consider that a little more care could have been taken in relation to the claims for relief, no basis is shown for striking out paragraphs 15-28 of the statement of claim. To the extent that the defendants’ submissions were intended to embrace the remainder of the statement of claim, no basis is shown for striking out any of the other paragraphs in the statement of claim. I will give the plaintiffs leave, if they wish, to amend the relief sought for the reasons given and discussed with senior counsel for the plaintiff at the hearing. Whether they do so is a matter for them. Following the hearing, the defendants cannot be in any doubt about what is sought.

Accordingly, I make the following orders: