Benson v Rational Entertainment Enterprises Limited (No 3)

HIS HONOUR: This litigation involves a claim by the Plaintiff, Gary Steven Benson, for the recovery, from the Defendants (who collectively have been described as "the Rational Group"), of USD$285,000, as damages for breach of contract; or by way of restitution, on the basis that the Defendants were unjustly enriched at the Plaintiff’s expense; or, as moneys had and received by the Defendants to the use of the Plaintiff. (It was submitted that “this claim is functionally equivalent to the abovementioned restitution claim”.) The Plaintiff also seeks interest, calculated at the rates prescribed from time to time under s 100 of the Civil Procedure Act 2005 (NSW), and costs.

Almost at the conclusion of the hearing, in circumstances to which I shall return, the Plaintiff sought leave to further amend his claim. Subsequently, he framed the order sought as “leave to amend the Amended Statement of Claim as per the draft Further Amended Statement of Claim a copy of which accompanies these submissions”. It was submitted by Mr M W Young SC, who appeared for the Plaintiff, that “[t]he Application is made purely and simply so that the pleadings can be brought into line with the actual case argued by the plaintiff at trial, being a case in accordance with the evidence”.

The application to amend was opposed by the Defendants. I shall return to the details of the amendment application later in these reasons.

I should start by identifying the parties to the suit, the persons to whom, or the entities to which, reference will be made; and where the evidence appears to be established, the nature of the operations conducted, or able to be conducted, by the relevant person or entity. This will also enable the chronology of events to be more readily understood.

The Plaintiff, who is a Chartered Accountant, is an Australian citizen and a resident of New South Wales. He is also said to be a professional poker player and sports bettor. In January 2009, he was one of the inaugural inductees into the Australian Poker Hall of Fame (Ex. 3).

Each of the Defendants is a company incorporated in the Isle of Man, with no presence in New South Wales. They appear to be inter-related, in some way, but their precise relationship is not disclosed in the evidence. It is asserted in the amended Statement of Claim that their relationship arose “by reason of their association and/or affiliation with each other as part of the Rational Group of Companies”; and, in the case of the first and the third Defendants, by each being a party to what is described in the evidence as “the USA Settlement Deed”.

On 27 October 2004, the first Defendant, Rational Entertainment Enterprises Limited, was incorporated in the Isle of Man (Ex. 1/16).

On 2 November 2012, the second Defendant, Rational Group Limited, was incorporated. It is described as a “Holding Company” with its registered office in the Isle of Man (Ex. B).

On 10 October 2001, the third Defendant, Oldford Group Limited, was incorporated. It, too, is described as a “Holding Company” with its registered office at the same address as the second Defendant in the Isle of Man (Ex. C).

Other evidence (Ex. D and Ex. E) reveals that there had been a change of name of the third Defendant to Amaya Group Holdings (IOM) Limited and that on 1 August 2014, Amaya Inc, through a wholly owned subsidiary, Amaya Holdings BV, acquired 100% of the issued and outstanding shares of privately held Oldford Group Limited (the third Defendant), the parent company of Rational Group Ltd, for an aggregate purchase price of USD$4.9 billion, which included a deferred payment.

Amaya Group Holdings was incorporated on 20 November 2013 in the Isle of Man and is a company limited by shares: Ex. 1/14.

The fourth Defendant, Rational FT Enterprises Limited, is a company incorporated on 18 June 2012, in the Isle of Man, and is one limited by shares: Ex. 1/13.

It appears that, at least since mid-2012, and, perhaps, earlier, the first Defendant and the third Defendant, engaged in the business of providing online facilities for persons to engage in gambling in poker games online.

Vantage Limited, Oxalic Limited, Filco Limited and Orinic Limited are companies that the Plaintiff described as the “Full Tilt Companies”, and which, collectively, traded as “Full Tilt Poker”. The Full Tilt Companies were licensed by the Alderney Gambling Control Commission, in the British Channel Island of Alderney, to trade as “Full Tilt Poker”.

In about 2004, Full Tilt Poker commenced operating through a website at www.fulltiltpoker.com as an online virtual card room for playing poker games (“the FTP website”). Through the FTP website, persons throughout the world could register on, then log on to, and use, the FTP website, to play poker, online, against other poker players who were online. The player could simply play poker, without playing for real money, or could play poker with real money involved. However, to play, a real money deposit was required to be made.

The player was required to create an online account that would record his, her, or its, money balances. Just like a traditional poker game, the player could play, and gamble with his, her or its money, but in cyberspace, using the FTP website. If the player played with real money, the player’s account balance might rise, or fall, depending on whether the player won or lost.

On the FTP website, it was explained that Full Tilt Poker “…is not in the business of betting or wagering and does not participate in the games as a player.”

Although the core business of Full Tilt Poker was in providing the online poker playing platform through the FTP website, there were other persons who, or entities which, were associated with the business. They included persons who, or entities which, were referred to as “linked” players. The linked player assisted other players to get their virtual money out of the FTP website and converted into real money.

The linked player was able to do what was required, at least in part, by what was called “Player to Player” transfers. This service enabled funds to be transferred from one player to another. In order to successfully transfer money in this way, an account registration had to be completed by both players, and the player initiating the transfer must have made a successful real money deposit. There was a minimum funds transfer of $1.00 (or $5.00).

Depending on the payment method to fund the account of the player initiating the transfer, there may have been a specific waiting period before the transfer could be completed. Players were not permitted to create, or use, more than one Full Tilt Poker account.

Almost simultaneously with each player to player transfer, Full Tilt Poker sent an automated email informing the recipient that the transfer was being processed. Full Tilt Poker then sent a second email advising whether the transfer had been accepted or declined. If the transfer was accepted, the account of the player initiating the transfer was reduced by the amount of the transfer. If the transfer was declined, the account of the player initiating the transfer remained the same.

Other persons, or entities using the FTP website, were referred to as “affiliates”. The affiliates were encouraged to refer new players to the FTP website. They earned an agreed commission for each player that was directed, or sent to, the FTP website, who, or which, then registered an account with FTP and played online poker: T63.16 – T63.20.

To become an affiliate, “an entity or person enters into a commercial arrangement with the operator of the online poker website [in this case Full Tilt Poker] pursuant to which the operator agrees to transfer to the affiliate, an agreed commission (“Affiliate Earnings”) for each player the affiliate directs or sends to the online poker website, when that player goes on to deposit funds and commence(s) playing online poker” (Ex. A/39).

The “Affiliate Commission” was defined in the Full Tilt Poker Standard Affiliate Agreement as “the amount due and payable to you, based solely on FullTiltPoker.com’s system’s data, in accordance with the Payment Plan you selected on the Affiliate Registration Form when registering and/or activating additional Trackers”.

The Full Tilt Poker Standard Affiliate Agreement also provided that “We will track and report Player activity for purposes of calculating your Affiliate Commissions… At a minimum, you will receive a monthly report with your Affiliate Commission …”.

Thus, the steps to be taken in order to receive affiliate earnings included, firstly, the affiliate joined what was described as “the affiliate program”. Then, the affiliate referred a player to the FTP website, which player would open a real money account with Full Tilt Poker. The player then was required to engage in playing poker on the FTP website using the real money account: T64.30 – T64.44.

Ryan Murphy was employed by the Full Tilt Poker Group of Companies between February 2005 and May 2011. He started in the role of a Customer Service Representative and, in 2006, was promoted to the role of Customer Service Relations Manager. That role included “liaising with high profile poker players, celebrities, professional poker players, high value affiliates and the FTP Customer Service Department”. In addition, he was required “to process the majority of all large cashier withdrawals of equal to or greater than USD$20,000 via wire transfer”. He gave evidence in the Plaintiff’s case and was not cross-examined.

Mr Murphy deposed that through his employment with Full Tilt Poker, he acquired “…an intimate knowledge of the way in which FTP operated affiliate accounts and player accounts”. He observed that Full Tilt Poker required each affiliate to maintain at least two separate accounts, one known as and referred to as an “affiliate account”, into which affiliate commissions earned by the affiliate were credited. He confirmed that it was not possible to utilise an affiliate account to play poker on the FTP website, nor to make player to player transfers. An affiliate account was also unable to be utilised to withdraw funds via wire, or to use any of the other withdrawal options that were available to a person operating a player account, such as to utilise a ‘cash-out’ facility.

Mr Murphy stated that each affiliate was also required to maintain a player account, which was used to play poker on the FTP website, make player to player transfers, and into, or out of which, deposits and withdrawals to and from the FTP website would be made. He observed that each owner of an affiliate account used his, her, or its, player account “to crystallise affiliate earnings and have those earnings converted to funds that could then be used, for instance, to play poker”.

The vast majority of people, however, who signed up, and registered, on the FTP website, did so for the purposes of playing online poker, in other words, “to be a player”: T61.46 – T61.47.

From about 2004, the Plaintiff registered himself on the FTP website, and commenced to operate from Sydney, New South Wales, an online player account with Full Tilt Poker, in the name “OzGary”. This account has been described in the proceedings as “the OzGary Account”.

In 2006, the Plaintiff filled out a registration form in his own name pursuant to which he chose to receive “affiliate earnings” under what was described as “Percentage Revenue Plan". The nature of this Plan was not explored in the evidence, but by joining it, the Plaintiff accepted that affiliate earnings had been paid to him: T68.

Exhibit 6, tendered by the Defendants, revealed that the Plaintiff used the OzGary account for different purposes. It was his “player account”. It was also the account into which “affiliate earnings” were deposited and withdrawn. It was the account into which USD$285,000, the subject of the Plaintiff’s claim, had been deposited on 22 June 2011: T10.20 – T10.35, and from which that amount was “adjusted out” on 14 November 2012: T40.33 – T40.35; Ex. A/35.

From about 3 January 2006, Intercash was a business name owned and operated by the Plaintiff. The business name was deregistered on 6 April 2009: Ex. 7. It has no involvement in the events surrounding the Plaintiff’s claims.

The Plaintiff was, and remains, the sole director, secretary and majority shareholder of Intercash Pty Limited (to which I shall refer, hereafter, as “Intercash P/L”) which was registered as an Australian proprietary company limited by shares on 31 October 2008: Ex. 1/17. Intercash P/L acted as a type of currency trader. It did not have its own distinct user account with Full Tilt Poker.

The Plaintiff accepted that he controlled Intercash P/L and anything that it did, was done at his direction, albeit that its actions may have been done by other people: T50.00 – T50.08. Since shortly after its incorporation, the Plaintiff used Intercash P/L in place of any business name used previously: T50.32 – T50.35.

On the Plaintiff’s website, he offered users of the FTP website the opportunity to use Intercash P/L, which was then defined as a “fund transfer system that will enable you to transfer money between your bank account(s), betting accounts, and online poker accounts”: Ex. 5. On the Intercash P/L Facebook Page (Ex. 4), in addition to the above statement, there was a reference to Intercash P/L providing “the best exchange deals between USD, AUD or NZD currencies”.

After 6 April 2009, if a player on the FTP website wished to use the Plaintiff to enable a money transfer out of an account with Full Tilt Poker, that business was conducted by the Plaintiff through Intercash P/L: T60.16 – T60.19.

The Plaintiff described Intercash P/L as “an independent remittance dealer entered on the AUSTRAC Remittance Sector Register, pursuant to subsection 75C(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)”: Ex. 3.

In another of the Plaintiff’s websites, the method by which new users of Intercash P/L could use it was identified. In relation to Full Tilt Poker, it was necessary for a first time user “to register your accounts”, namely “both your online poker account and your bank account” and any other accounts “you wish to move money between”: Ex. 5.

The Plaintiff described the “designated services” provided by Intercash P/L as “gambling services” and “money services”. It was said to be “considered a ‘gambling service’ as it exchanges one currency for another, exchanges gaming chips or tokens for money, pays out winnings for a game (involving chance or skill) that is played for money, and does so in the course of carrying on a business”. It was “considered a ‘money service’ as it provides currency dealing or exchange, conducts more than $1,000 in money service activity, with any one person on the same day, and provides money transfer services in any amount”: Ex. 3. He accepted that Intercash P/L was not an affiliate of Full Tilt Poker.

The Plaintiff gave the following evidence, in answer to questions from the Bench, at T91.50 – T92.46, about the way in which the Plaintiff and Intercash P/L operated:

Thus, following the incorporation of Intercash P/L, the OzGary Account was used by the Plaintiff for the purposes of receiving funds from a user of the FTP website who wished to convert his, her, or its, virtual money into real money. The user would transfer his, her, or its, virtual money into the OzGary Account, and then the Plaintiff would transfer that amount from that account into an Intercash P/L bank account. Intercash P/L would then transfer the money, after deducting its commission, to the user’s bank account as directed. In this way, “InterCash P/L provided the funds from its bank account to the end user and, and Gary Benson provided the funds to InterCash P/L to enable that to happen”: T83.25 – T83.29.

(There was a dispute whether Intercash P/L had continued to provide such services, but nothing turns on this, as it seems to have been accepted that, at the relevant time, it had done so and that it had continued to do so until a few months prior to the hearing: T53.04 – T51.10.)

From late August 2008, iBus Media Limited (“iBus”) operated a website known as “Pokernews”, which was dedicated to providing poker enthusiasts with news about the poker industry.

Since at least 1 December 2010, iBus was an affiliate of the FTP website and received affiliate earnings. On the Pokernews website, there were trackable hyperlinks to various online poker websites, including to the FTP website. When a reader of the Pokernews website clicked on such a hyperlink, he, she, or it, was directed to the FTP website. iBus was able to record how many people had been directed to the FTP website in that way.

iBus was never a poker player using the FTP website. The evidence reveals that:

For example, the “Player Account History” at Ex A/45 does not establish the contrary. That document showed that iBus had both a “player account” and an “affiliate account”. There is but a single reference to any “playing” being an entry on 14 April 2011, at 3:18 p.m. which referred to a Tournament Registration, but that was immediately reversed, one minute later, which suggests that the entry was made by mistake.

One of the directors of iBus, Jonathan Richard Sykes, gave evidence of this matter in the Defendants’ case. He was not cross-examined.

In his affidavit affirmed 31 March 2017, Mr Sykes deposed that iBus had more than one Full Tilt Poker account. It held accounts that were called ‘affiliate’ accounts and also accounts that were called ‘player’ accounts.

The player account was used for the sole purpose of being the transferee of affiliate revenue from the affiliate account and then the transfer out of funds into bank accounts for the third party Full Tilt accounts. This process was utilised in order that the affiliate revenue could be redeemed into currency in a bank account known as “cashing out” which occurred either by logging onto a Full Tilt player account and selecting to cash out the revenue or alternately, on occasion, via a transaction with a cashing out service such as Intercash P/L.

As at June 2011, iBus held only one account with Full Tilt Poker which had the username “pokernews1”. The account was used, exclusively, for the accrual of Affiliate Earnings from Full Tilt Poker. It was from the pokernews1 account that the amount of USD$285,000, the subject of the Plaintiff’s claim, was transferred on 22 June 2011. No part of the USD$285,000 which had been in the pokernews1 account was derived from playing online poker for virtual money.

The Defendants, in certain proceedings, commenced in the USA (“the USA proceedings”) to which reference will be made, were the Oldford Group Limited, Rational Entertainment Enterprises Limited, PYR Software Ltd and Stelekram Ltd and Sphene International Ltd (“the PokerStars Companies”) and were parties to the “USA Settlement Deed”. The first and the third Defendant was each identified as one of the PokerStars Companies.

Anand S Raman, a partner in the international law firm, Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), was one of the lead attorneys for the PokerStars Companies and took part in numerous discussions with the lawyers acting for the plaintiff in the USA proceedings. He gave evidence, on behalf of the Defendants, and was not cross-examined.

Israel Rosenthal was a witness whose affidavit, affirmed 11 April 2016, was served by the Defendants. Despite referring to this affidavit to be read as part of the Defendants’ case in the joint index of affidavits provided to the Court on 10 March 2017, the Defendants’ counsel did not read the affidavit at the hearing.

It is next necessary to turn to the course of events that, for the most part, do not appear to be in issue. To the extent that any of what is set out below is disputed, the following should be regarded as the findings of the Court. I have endeavoured to set out these events in date sequence.

On 11 July 2006, the Plaintiff logged on to the FTP website, accepted the terms and conditions of the licence agreement then on the FTP website, installed the FTP program necessary to play online poker on the FTP website, and created, and commenced to operate, from Sydney, an online poker account with Full Tilt Poker, in the name of "OzGary". He also made his first deposit of USD$1,000 into the OzGary Account.

After logging in to the OzGary account, he was provided with various options, including how to deposit funds, how to withdraw funds, how to make player to player transfers, how to play at poker tables, and how to review his account history.

The OzGary Account was funded through “Neteller”, described as an online “e-wallet” facility maintained in US dollars, which effected transfers of funds, player to player transfers, and winnings from playing poker on the FTP tournament and cash tables. He says that Neteller was used like an online bank account.

Over the next five years (until 29 June 2011), the Plaintiff appears to have conducted about 18,400 transactions on the OzGary Account. These transactions consisted, mainly, of player to player transfers. Ex. 6 identified those transactions.

The Plaintiff accepted that “the vast majority of the entries in Ex. 6 related to transactions that did not involve playing or gambling by anyone on the OzGary account. Indeed, he accepted that Ex. 6 revealed that that there were only nine transactions involving the Plaintiff playing for “real money” on the OzGary player account: T75.48 – T76.00. He accepted that 99.95 per cent of the transactions shown in Ex. 6 “did not involve any playing [of poker] on the OzGary account”: T74.24 – T74.27. However, the Plaintiff explained that there were many other occasions when he played for what he described as “play money”, which meant that he was “not winning or losing real money, so there’s no real money entry in [the] account”: T75.41 – T75.46.

(The Plaintiff was cross-examined on this topic because in District Court proceedings, to which reference will be made, he had denied, in a verified defence, “any inference that [he] conduct[ed] a personal betting/online poker account”.)

Exhibit 6 also reveals the occasions when an “affiliate payment” was paid into the OzGary Account. One example is the amount of $540.84 transferred on 10 December 2009; another was the same amount transferred on 6 January 2010; a third was the amount of $874.78 transferred on 7 January 2010: Ex. A/43. (An email confirming each payment was sent to the Plaintiff on the day following the transfer.)

The Plaintiff gave evidence that the affiliate earnings would accrue each month and then Full Tilt Poker would credit his affiliate account once per month. Thereafter, the affiliate had the option to withdraw the affiliate earnings from the affiliate account and deposit them into the player account, and that crystallised the payment of that affiliate income. He had not, however, created a schedule similar to Ex. 6 in relation to the OzGary affiliate account.

The Plaintiff withdrew funds from the OzGary Account on many occasions, and transferred those funds to his Commonwealth Bank Account, which was an account styled “Foreign Currency Account Statement”. At times, he also withdrew funds to other accounts that he held with Bank of America in the USA and Bank of New Zealand in New Zealand. Specific transactions involving a transfer into the bank account of Intercash P/L were not identified.

During the time he operated the OzGary Account, the Plaintiff received player to player transfers from pokernews1 on three separate occasions, being a transfer of USD$77,319 on 31 May 2007; a transfer of USD$350,000 on 22 January 2010; and the transfer of USD$285,000 on 22 June 2011 (Ex. 6).

A copy document headed ‘Player Account History for pokernews1, for the period 1 April 2011 to 30 June 2011’ (Ex. A/45), revealed amongst other things what was described as “Transaction Type” and “Balances”. The Transaction type for the amount of USD$285,000 on 22 June 2011, was described as a “’Player to Player Withdrawal’ to OzGary”.

On 14 April 2011, proceedings were commenced in the United States District Court for the Southern District of New York, in which the United States of America, as plaintiff, sought, amongst other things, the forfeiture of all assets of various companies which had conducted, or were conducting, or which were associated with, online poker playing, and which involved persons living in the United States (“the USA Proceedings”). (On 20 September 2011, an Amended Complaint was filed in the US Proceedings: Ex. 1/3.)

In the USA Proceedings, the United States Government made wide ranging allegations of illegal gambling activity in the United States and other unlawful activity against the PokerStars Companies. Two of the Defendants, namely, the first and the third Defendants (Rational Entertainment Enterprises Limited and Oldford Group Limited), were included in the identified PokerStars Companies. The second and fourth Defendants (Rational Group Limited and Rational FT Enterprises Limited) were not parties to the USA Proceedings since those companies had not even been incorporated at the time those proceedings were commenced.

Examination of the Verified First Amended Complaint (Ex. 1/3) reveals that a significant concern of the United States Government was that poker players of Full Tilt Poker had been defrauded, and that player funds had been wrongly diverted to persons, including the principals of Full Tilt Poker, and that insufficient cash was held by Full Tilt Poker to pay out all of the monies owing to its poker players.

For example, in Paragraph 5 of the Verified First Amended Complaint, the concern of the US Government was that fraud had been perpetrated by Full Tilt Poker on "its poker players by misrepresenting to players that funds deposited into their online player accounts were secure and segregated from operating funds, while at the same time using player funds to pay out hundreds of millions of dollars to Full Tilt Poker owners".

Paragraph 7 referred to Full Tilt Poker, as at 31 March 2011, owing approximately $390 million to “players around the world, including approximately $150 million owed to players in the United States”.

In Paragraph 22 of the Verified First Amended Complaint, it was alleged that through the FTP website, “Full Tilt Poker provided real-money gambling to …customers”. Paragraph 65 referred to the FTP website being “an online platform for playing poker with real money bets”.

Paragraph 68 referred to depositing real money deposits “into [your] Full Tilt Poker account”.

Paragraph 71 referred to part of the FTP website that explained “….to players how they can withdraw funds from their Full Tilt Poker accounts”.

Paragraph 99 referred to Full Tilt Poker not only operating an unlawful gambling business and committing the bank fraud, wire fraud, and money laundering, but also defrauding its poker players by paying out hundreds of millions of dollars of player funds to Full Tilt Poker owners while misrepresenting to players that funds credited to their online player accounts were secure and segregated from operating funds.

It is to be noted that in the Verified First Amended Complaint there is no expressed concern for “affiliates” or other persons who had commercial dealings with Full Tilt Poker. The group of persons who were identified as having been the victims of Full Tilt Poker's alleged fraud or alleged unlawful conduct were Full Tilt's poker players who had been playing for money.

On about 22 June 2011, USD$285,000 was transferred from the account of pokernews1 with Full Tilt Poker to the OzGary Account. There was no dispute that that the amount “came from the pokernews - what's called player account - to the OzGary player account, as those accounts were called by their Full Tilt company: T10.33 – T10.35.

On 22 June 2011, the Plaintiff received an automated message sent from Full Tilt Poker. It stated that a request had been received to transfer funds into his account from pokernews1. He was also informed that “Processing of this transfer request may take between 24-48 hours”.

Shortly after receiving the automated message sent from Full Tilt Poker, the Plaintiff received an email, dated 22 June 2011, from Tony Bromham from iBus. Mr Bromham stated that “Tony G has instructed me to send $285,000 to you (“OzGary”) from our company Full Tilt Poker player account ‘pokernews1’ and that “These funds need to be wired to our bank account as follows…”. This demonstrated the intention to “cash out” the amount that iBus had received by way of affiliate commission.

The Plaintiff received another automated message from Full Tilt Poker, on 23 June 2011, notifying the approval of the transfer in the sum of USD$285,000, and that “[t]he funds are now available in your account”. In this email, ‘Your player ID’ was identified as ‘OzGary’, and the ‘From Player ID’ was shown as ‘pokernews1’.

The Plaintiff gave evidence that on 23 June 2011, USD$150,000 was withdrawn from the OzGary account and transferred into the Plaintiff’s Commonwealth Bank account. Bank documents annexed to his affidavit (Annexure “Y”) reveal that on 28 June 2011, the two deposits, each of USD$74,987.51 were made from “Envoy Services Limited” to an account in the Plaintiff’s name. (After bank charges, the amount deposited was, in fact, USD$149,990.14.) Nothing turns on this apparent inconsistency. (There is no dispute that this was an unrelated transfer into his bank account.)

On or about 29 June 2011, the Alderney Gaming Control Commission, which had licensed Full Tilt Poker, issued suspension notices to the Full Tilt Companies. These notices required the Full Tilt Poker Companies to immediately suspend operations in any jurisdiction; to cease registering new customers; to cease accepting deposits from existing customers; to cease allowing existing customers to withdraw funds that were held in their online poker accounts; and to cease to permit customers to participate in any form of poker game play or gambling transaction, including online poker. As a result the Plaintiff was unable to withdraw funds from his account.

No attempt appears to have been made, by the Plaintiff, to transfer the USD$285,000 said to have been paid by iBus into the OzGary account at any time between the 23 June 2011 (when he was notified of the approval of the transfer) and the 29 June 2011 (the date of the suspension notices). It follows that no attempt could be made then to transfer the funds to Intercash Pty Limited, in order to complete the transaction with iBus. As at 29 June 2011, the OzGary account had a balance of USD$806,744.17.

Between 29 June 2011 and 1 November 2012, the Plaintiff was not able to access the OzGary account.

The Plaintiff gave no evidence to explain the delay in transferring USD$285,000, particularly, as outlined above, he had accessed the OzGary Account on 23 June 2011 in order to complete the unrelated transfer of USD$150,000 into the Plaintiff’s Commonwealth Bank Account. It appears that there were sufficient funds remaining in the OzGary account, on 23 June 2011, in order to have completed the transfer for iBus.

On 23 September 2011, iBus commenced proceedings in the District Court of NSW at Sydney against the Plaintiff.

In that Statement of Claim, iBus, relevantly, asserted:

The amount claimed by iBus represented the amount of USD$285,000 less commission of USD$34,200.

The Plaintiff, by the same firm of solicitors who appeared for him in the current proceedings (H A Miedzinski Lawyers) filed a Verified Defence to the Statement of Claim on 13 February 2012. In that Defence, the Plaintiff (who was the only Defendant), in Paragraph 1, denied that he was personally indebted to the Plaintiff either arising out of the Statement of Claim or at all; in Paragraph 2, asserted that all dealings and negotiations conducted by him with iBus or with iBus’ representative “were conducted by [him] on behalf of a company known as Intercash Pty Limited”; in Paragraph 3, denied that he operated a business known as “The Intercash Service” as alleged and asserted that he was employed by a company known as Intercash Pty Limited; and in Paragraph 4, denied “any inference that he conducted a personal betting/online poker account”; in Paragraph 6, denied that he “personally charged a commission as alleged”; in Paragraph 8, he denied Paragraphs 11, 12, 13, 14, 15 and 16 of the Statement of Claim.

In the current proceedings, the Plaintiff admitted that he had understood that the District Court proceedings had related to the transfer on 22 June 2011 from the pokernews1 account to the OzGary account (T85.37 – T85.40) and that by his defence he had “denied any arrangement or practice whereby you transferred money from your own bank account to a customer's bank account” and that he was asserting that “Intercash [P/L] did that”: T86.07 – T86.25.

The Plaintiff in his affidavit of 22 March 2017 had candidly stated:

In September 2011, other proceedings were commenced in the District Court of NSW at Sydney, by Antanas Guoga, against the Plaintiff, in which Mr Guoga claimed $64,240.

No direct evidence was given, in the current proceedings, about the amount claimed by Mr Guoga, although in Ex. A/45 (the ‘Player Account History for pokernews1’ of money transfers to the OzGary Account), there is a reference to a ‘Player to Player deposit’ of USD$40,000 ‘from Tony G’ on 19 May 2011, and again, a ‘Player to Player deposit’ of USD$50,000 ‘from Tony G’ on 4 June 2011. However, in a recital to the Deed of Settlement dated 7 March 2013 (Ex. 8), to which I shall refer, there is a reference to the nature of Mr Guoga’s claim. Apparently, the two District Court proceedings travelled together.

The USA Settlement Deed was entered into on 27 July 2012, and was described as “Stipulation and Order of Settlement” in which the parties were the representatives of the United States Government, on the one hand, and a number of parties, only two of which (the first and third Defendants) are parties to the current proceedings.

Relevantly, the USA Settlement Deed referred to the United States of America “seeking the forfeiture of, among other things, all assets of PokerStars, the Oldford Group Ltd, Rational Entertainment Enterprises Ltd, PYR Software Ltd, Stelekram Ltd, and Sphene International Ltd (collectively the PokerStars Companies”, their assets collectively the “PokerStars Defendant Property”)…and seeking money laundering penalties…against the PokerStars Companies”.

The PokerStars Companies entered into the USA Settlement Deed “admitting no wrongdoing in connection herewith” and “shall in no way be deemed an admission of any wrongdoing, culpability, liability, or guilt on behalf of the PokerStars Companies or any of their respective agents, officers, or employees, past and present” (Ex 1/9).

Neither the Plaintiff, nor Intercash P/L, was a party to the US Settlement Deed. As stated, the second and the fourth Defendants in the current proceedings also were not parties to the US Settlement Agreement.

It appears from a recital in the USA Settlement Deed that, under the terms of another agreement with the plaintiff, the Full Tilt Companies had forfeited assets to the value of US$731 million to the plaintiff (in those proceedings), and the effect of the settlement agreement was that this sum was going to be transferred by the plaintiff to the PokerStars Companies, on the basis that a sum of USD$547 million would be forfeited by those companies to the plaintiff, and that within 90 days of the Closing Date (as defined) the PokerStars Companies would make the balance of US$184 million available for withdrawal by all non-US players of the Full Tilt Group.

(This other agreement was not part of the evidence in these proceedings but was not the subject of any dispute between the parties: T78.20 – T78.40.)

Pursuant to Clause 2 of the USA Settlement Deed, it appears that the transfer was intended to take effect from 8 August 2012, provided a significant payment of some US$225 million was made by that date. There is, however, no evidence of when such transfer was made or, indeed, to which entity or entities the transfer was made.

The USA Settlement Deed also included, relevantly, the following terms:

(Pausing here, it is the Plaintiff's case that the amount previously held by the Full Tilt Group on his account, and in particular, the USD$285,000, fell within the description, in Clause 5 of the USA Settlement Deed, “the online poker account balances of all non-U.S. players of the Full Tilt Group”, and was required to be paid to him by the Defendants.)

Exhibit A to the USA Settlement Deed listed all of the companies in the Full Tilt Group. The list includes all of the four companies that the Plaintiff alleged in his Statement of Claim constituted the Full Tilt Group.

Exhibit B to the USA Settlement Deed contained a description of the forfeited Full Tilt Assets. Clause 7 of that exhibit stated that the assets included:

However, the USA Settlement Deed provided no definition of “the online poker account balances” or of “non-US players of the Full Tilt Group”. Reference has been made to the Verified First Amended Complaint and the terms used in that document.

As stated earlier, the terms used in the evidence of the parties referred to a "player account" and an "affiliate account". The USA Settlement Deed referred to neither of these types of account, but used the expression "poker account balances”.

On 31 July 2012, orders in terms of the USA Settlement Deed were made by the Honourable Judge Sand.

Following the USA Settlement Deed, it would appear that the Rational Group of Companies, took control and possession of, and/or participated in the operations of Full Tilt Poker, the FTP website, the online poker accounts of players, including the OzGary Account, previously operated and held by the Full Tilt Companies as well as operating PokerStars.

The Plaintiff deposed in his affidavit of 6 December 2015 that in early August 2012, he “became aware that a Deed of Settlement as between PokerStars and the US Department of Justice had been agreed”. The Plaintiff annexed a copy of the Stipulation and Order of Settlement regarding PokerStars” to this affidavit.

In a document which bears the date 14 August 2012 and which appears to be in the form of Frequently Asked Questions posted on the FTP website (Ex. A/42), the following appears under the heading “Will I be able to cashout my entire balance? (Rest of World)”:

In a document described as an “Email Update regarding Rational Group purchase of Full Tilt Poker – 16 October 2012” (Ex.1/5), the following appears:

The Plaintiff said he did not receive the email on the date it bears but “certainly read it at some time later”. He could not remember when he had first read the email but thought he had done so on the FTP website: T81.30 – T81.50.

On 1 November 2012, the Plaintiff was able to gain access to the FTP website. In his first affidavit, other than stating that he “was finally able to launch the FTP client and have it successfully establish a connection with the FTP server”, the Plaintiff stated that he “was not able to log in”.

In his affidavit of 6 December 2015, the Plaintiff explained that the message displayed when he had tried to log in was “either my user name or password was invalid”. However, in his affidavit of 20 December 2016, the Plaintiff added that on 1 November 2012, after he was able to successfully establish a connection with the FTP server, he observed that “a message appeared…informing me that a new version of the software was available for download. I was prompted to download the software, which I did”. When he continued, he observed a page featuring “FULL TILT POKER END USER LICENCE AGREEMENT”. He was able to, and did, read the Licence”.

The Licence Agreement which the Plaintiff appears to have read included:

From 1 to 8 November 2012, the Plaintiff communicated by email to "Full Tilt Poker" in an attempt to resolve the problem of being unable to log into the OzGary Account.

On 2 November 2012, having sent some earlier emails to which no reply had been received, the Plaintiff sent an email to “Stephen, Full Tilt Poker Support” (part of Ex. A/32) which, relevantly, stated:

On 3 November 2012, the Plaintiff received an email from “Stephen, Full Tilt Operations” (part of Ex. A/32) which, relevantly, stated:

By 6 November 2012, pursuant to Clause 5 of the USA Settlement Deed, the PokerStars Companies were required to “make available for immediate cash withdrawal, without limitation or restriction other than as required by any applicable law, the online poker account balances of all non-U.S. players of the Full Tilt Group, as of June 29, 2011, which are believed to total approximately $184 million”: Ex. 1/9.

On 8 November 2012, the Plaintiff was informed by the Chief Operating Officer of the Rational Group, Israel Rosenthal, that the OzGary Account was suspended.

On 14 November 2012, the Plaintiff received an email (Ex. A/56) from “Israel, Full Tilt Poker Operations”, which was in the following terms:

There is no dispute that this email was from Israel Rosenthal.

On 15 November 2012, at approximately 10:10 p.m., the Plaintiff, having earlier logged in, and having then received a request to provide identity verification documents, which he did, was informed, by telephone, that verification of his account was complete. He was then able to successfully access the OzGary account, at which time he confirmed that the balance in that account had been reduced by USD$285,000, that amount having been deducted on or about 14 November 2012. Thereafter, until 8 January 2013, he was able to use the account as he had previously.

Soon after obtaining access to the OzGary account, the Plaintiff withdrew almost all of the money in the account, give or take a few dollars.

(During the opening by senior Counsel for the Plaintiff, it was said “that through the Rational companies announcing that they were effectively taking over the previous business, what they did was adopt the same contract that existed between the Full Tilt companies and persons like the Plaintiff, subject of course to the changes that were made when they put up their own website and had their own conditions, which were conditions not too dissimilar to the original Full Tilt conditions”: T2.45 – T2.50.)

On 9 January 2013, an email was sent to the Plaintiff attaching “your transaction history report so you can review your last transactions since the site reopening”. The attached ‘Player Account History for OzGary’, said to be for the period 6 November 2012 to 9 January 2013, showed that on 14 November 2012, under ‘Transaction Type’, an ‘Adjustment Out’ was made of USD$285,000 (Ex. A/35).

Despite demanding access to the sum of USD$285,000 thereafter, the Plaintiff was unable to secure the return into his account of the amount.

On 18 February 2013, there was a settlement of both of the District Court proceedings. On 7 March 2013, the parties, being the Plaintiff, Intercash, iBus and also Mr Guoga, entered into a Deed of Settlement. The Plaintiff and Intercash were “collectively referred to as “the Benson Parties”. iBus Media Limited and Mr Guoga were referred to as “the iBus Parties”.

A copy of the signed Deed of Settlement was Ex. 8 in the current proceedings. Relevantly, it provided that the Benson Parties were to pay to the iBus parties the sum of USD$120,000 in full and final settlement by two instalments of USD$60,000. In fact, the amount comprised two payments, each of $59,975, one on 19 February 2013 and the other on 7 May 2013: Ex. 1/11 and Ex. 1/12. (Each transfer involved a transaction charge of USD$25.)

In relation to the claim by Mr Guoga, Recital C of the Deed stated that he had commenced proceedings against the Plaintiff in the District Court in relation to an alleged agreement between them entered into on or about 22 June 2011, whereby Mr Guoga had transferred USD$73,000 to the Plaintiff using the Intercash Service. A commission of USD$8,760 was to be retained and the balance was to be transferred to a bank account nominated by Mr Guoga.

Recital C also stated that the Plaintiff disputed the allegations and that on 12 February 2013 he had filed a Defence to the Guoga proceedings.

In addition, the Deed of Settlement contained the following releases:

The Plaintiff accepted that it was Intercash P/L that had made the two instalment payments referred to (T88.46 – T89.29), and, also, that he had personally made no payments at all to the iBus Parties in relation to the settlement. He accepted that this was “consistent with the position stated in your District Court defence that you did not contract with iBus and you owed it no money, and that it was all InterCash, InterCash made the settlement payment to iBus Media”: T89.37 – T89.41.

Following receipt by the iBus Parties of the amounts referred to in the Deed, on 9 May 2013, a Notice of Discontinuance was filed in each of the District Court proceedings.

The Plaintiff accepted that he had produced no documents recording any payment by him to iBus Media in connection with the transfer of $US285,000 from the pokernews 1 account to the OzGary account or in respect of the Deed of Settlement of the District Court proceedings: T49.12 – T49.18.

On 1 August 2013, solicitors for the Plaintiff sent a letter to the Operations Manager of the Rational Group Douglas Bay Complex, in the Isle of Man, which included the following:

On 2 October 2013, the lawyers in Israel for “the Rational Group” responded. Their letter stated that the Full Tilt brand and associated assets had been transferred to the Rational Group following an agreement between the Rational Group and the US Department of Justice, under the USA Settlement Agreement. The lawyers also asserted that the Plaintiff’s claim was groundless for a number of reasons: being in summary, first; that the Plaintiff was not a party to the USA Settlement Agreement; secondly, that the USA Settlement Agreement has provided that the Rational Group “shall not assume any liability of the Full Tilt Group... other than those explicitly provided”; and thirdly, that Clause 5 of the USA Settlement Agreement only required their client to “make available for immediate withdrawal... the online poker account balances of all non-US players of the Full Tilt Group as of June 29, 2011...”.

The letter then went on to explain:

Before turning to the application to amend, it is necessary to set out some of the procedural history of the proceedings.

The Plaintiff commenced these proceedings by Statement of Claim filed 14 November 2014.

In the original Statement of Claim, five Defendants were named, but by Notice of Discontinuance, filed on 26 February 2015, he discontinued the proceedings against the fifth Defendant, GP Information Services Pty Limited.

The four remaining Defendants filed a notice of motion on 13 March 2015, in which they sought an order that the Plaintiff’s Statement of Claim be set aside pursuant to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) rule 11.7 and rule 12.11.

Robb J heard the Defendants’ notice of motion on 23 June 2015. At the hearing, the Defendants were given leave to file an amended notice of motion pursuant to which they added, to their original claim for relief, alternative claims for an order pursuant to UCPR rule 12.11(1)(g) (that the Court had no jurisdiction over the Defendants in respect of the subject matter of these proceedings); an order pursuant to UCPR rule 12.11(1)(h) (the Court should decline to exercise jurisdiction in the proceedings); and an order that the proceedings be permanently stayed pursuant to s 67 of the Civil Procedure Act 2005 (NSW), or pursuant to the Court's inherent jurisdiction.

On 10 July 2015, Robb J delivered detailed reasons for judgment that bear the medium neutral citation Benson v Rational Entertainment Enterprises Ltd [2015] NSWSC 906. At [134] of the reasons, his Honour, relevantly, ordered that the amended notice of motion be dismissed. In addition, his Honour directed that the Plaintiff was to file and serve an amended statement of claim within 14 days.

The requirement to amend followed the Plaintiff’s acceptance that the trust claim that he had made in the Statement of Claim was misconceived, and that, in any event, that trust claim did not fall within any paragraph contained in Schedule 6 of the UCPR, so that he could not maintain the trust claim in this Court on the basis of a statement of claim that was served on the Defendants outside Australia.

Pursuant to the orders of Robb J, the Plaintiff filed an amended Statement of Claim on 11 August 2015. Relevantly, the Plaintiff pleaded the contract upon which he relied in paragraphs 25, 27, 28 and 29, which paragraphs were in the following terms:

Also in the Amended Statement of Claim, the Plaintiff had alleged that the second Defendant was a party to the alleged contract. The second Defendant was only incorporated on 2 November 2012.

However, in the Plaintiff’s Outline of Submissions sent to the Court prior to the commencement of the hearing, the following passage appears at [40]:

In submissions in reply (at T152.10 – T152.24), Senior counsel also submitted:

It is to be noted that the Plaintiff did not state anywhere in the pleadings, or otherwise in his evidence, that the contract upon which he was relying was entered into on 1 November 2012. It is implicit from the Paragraphs of the amended Statement of Claim to which specific reference has been made, that he alleged that he had accessed, operated and withdrawn funds from the OzGary Account, and, by that conduct had accepted the Offer said to have been made. On the evidence, all of that did not occur on 1 November 2012. As has been stated earlier, the second Defendant was not incorporated until 2 November 2012.

The Defendants filed one composite Defence to the amended Statement of Claim on 5 November 2015. In that Defence, the Defendants, relevantly, did not admit the allegations in Paragraphs 25(a), 25(c) and 27, admitted the allegation Paragraph 25(b), and denied the allegations in Paragraphs 29. Importantly, also, the Defendants denied that the Plaintiff had suffered any loss and also denied that he was entitled to any relief claimed against any of the Defendants, whether jointly or severally.

The matter was listed, for directions, on various occasions before the Registrar in Equity, until 4 August 2016, when McDougall J, by consent of the parties, referred the matter to private mediation, which took place on 16 September 2016. The mediation proved unsuccessful and on 22 September 2016, Registrar Walton listed the matter for 3 days, before me, to commence on 3 April 2017.

The hearing commenced on 3 April 2017 and concluded late in the afternoon of 5 April 2017. It was not until the Plaintiff’s further submissions in reply that the following discussion (at T181.16 - T182.39) occurred between the Bench and Mr M W Young SC, who appeared for the Plaintiff at the hearing, and who had appeared in the notice of motion before Robb J:

Mr Young SC then sought to frame the terms of the amendment.

Mr A R Zahra, who appeared for the Defendants, who had also appeared before Robb J, opposed the Plaintiff’s application to amend. He submitted that it was too late to make the application. Not unnaturally, he was unable to say whether he would require an opportunity to put on further evidence if the amendment were granted, and, in any event, stated that he would require an opportunity to obtain instructions from persons who were in the Isle of Man.

I allowed the parties a short opportunity to decide how the application to amend, and then the hearing of the application, and the proceedings, should continue. After discussion, they agreed that the matter would need to be adjourned.

I then directed the Plaintiff to identify the precise form of the amendments sought to be made to the Amended Statement of Claim, by 2:00 p.m. on Thursday, 6 April 2017, and the Defendants to inform the Plaintiff, by 4:00 p.m. on Friday, 7 April 2017, whether the Defendants opposed those amendments, and, if so, what steps needed to be taken by the Defendants to have the Court determine whether or not to grant the amendment. I adjourned the hearing, for directions, to 10 April 2017.

On the adjourned date, following discussion with counsel, I made the following directions:

The legal representatives of all parties complied with the directions made concerning the amendment application. The Plaintiff served, and relied upon, an affidavit sworn 10 April 2017, from Mr M Charles, a solicitor at the firm of solicitors, who had the carriage of the matter on behalf of the Plaintiff, whilst the Defendants served, and relied upon, an affidavit sworn 21 April 2017, of Mr M J O’Connor, a partner at the firm of solicitors, who had the care and conduct of the matter on behalf of the Defendants.

In accordance with these directions, the Plaintiff sent his written submissions in chief on the application to amend on 12 April 2017, the Defendants sent their written submissions dated 21 April 2017, in opposition to the Plaintiff’s amendment application, and the Plaintiff sent his written submissions in reply on 2 May 2017. I shall return to the submissions shortly.

On 3 May 2017, my Associate received an email from Mr Zahra, sent on behalf of both parties, in which he stated:

Following my consideration of the email, and as it seemed clear that neither of the solicitors would be required for cross-examination, I made the following orders in Chambers:

I was satisfied that the parties did not require any additional opportunity to make submissions regarding the application to amend.

The form of the proposed further amended Statement of Claim, which I have marked (in Chambers) as Ex. F, relevantly, included the following amendments:

No particulars of the variations to the Licence Agreement were identified in Ex. F.

Mr Charles, in his affidavit, gave evidence that in October 2016, following the mediation, he “became concerned the Plaintiff may not have sufficiently evidenced his entry into a contract with the Rational Group of Companies”, and that he then took instructions which enabled the preparation of the Plaintiff’s affidavit sworn 20 December 2016, which affidavit was served on that date.

He then gave the following evidence (which was not objected to):

(I have read the transcript of senior Counsel’s opening to the Court and there is no mention of the contract relied upon being entered into on 1 November 2012. He referred to “documents relating to the early November 2012 download of terms” at T44.23 – T44.24, but does not state, explicitly that the contract relied upon was entered into on 1 November 2012.)

It was not until the third day of the hearing, during submissions, at T150.03 – T150.06, that senior counsel stated that “The start of November is crucial because Mr Benson's evidence in his 20 December affidavit is that it was on 1 November 2012 when he logged onto the website, and he went through the installation procedure and he ticked yes on the licence agreement” and at T151.26 - T151.35 that he submitted:

Mr O’Connor gave the following evidence. (Objection was taken to Paragraph 11 of his affidavit, upon the basis that it referred to events at the Mediation. In Chambers, I have rejected all but the first and second sentences of Paragraph 11.)

Mr O’Connor, at Paragraph 7 of his affidavit, referred to the Plaintiff’s evidence before Robb J:

He then stated:

Mr O’Connor continued:

At Paragraphs 37 to 43 of his affidavit, Mr O’Connor identified the costs that he estimated would be incurred, including, the costs thrown away by the amendment, the further costs and disbursements that would be incurred in obtaining the evidence referred to, and the Defendants’ costs incurred in considering the application to amend. The total costs and disbursements were estimated to be almost $50,000 (excluding the costs and expenses of having any of the additional witnesses brought to Australia for cross-examination ($10,000) and the costs of any expert witness ($20,000)).

There is no reason to doubt that Mr O’Connor’s evidence accurately reflected the Defendants’ position.

As previously stated, Senior counsel for the Plaintiff repeated that the application to amend was made “purely and simply so that the pleadings can be brought into line with the actual case argued by the plaintiff at trial, being a case in accordance with the evidence”.

He referred to s 58(1)(a) of the Civil Procedure Act and the requirement for the Court, in deciding whether to make any order or direction for the management of proceedings, including any order for the amendment of a document, to seek to act in accordance with the dictates of justice.

Senior counsel did not refer to s 64(1) of the Civil Procedure Act, which provides that at any stage of proceedings, the court may order (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings, or s 64(2), which provides that subject to s 58, all necessary amendments are to be made for the purpose of determining the real questions raised by, or otherwise depending on the proceedings, correcting, any defect, or error, in the proceedings and avoiding multiplicity of proceedings.

Senior counsel pointed to the fact that rather than seeking to claim that there was no acceptance of the License Agreement, the Defendants had been content to rely upon the License Agreement as representing the relevant terms of the contract in an attempt to employ those terms against the Plaintiff. He pointed to the fact that counsel for the Defendants had made many submissions based upon those terms, both orally and writing, and a major plank of the Defendants' submissions was that Clause 5.3 of the License Agreement precluded the Plaintiff from withdrawing the USD$285,000 in dispute (see, for example, the Defendants' Additional Submissions at [28]).

He concluded his submissions by submitting that in all the circumstances, “the dictates of justice require that the amendment be allowed, and so … the Application should be granted”.

The Defendants submitted that the application to amend was opposed for four reasons:

In relation to (a), counsel pointed to the fact that the application to amend had been made by Senior counsel for the Plaintiff “after the conclusion of the Plaintiff’s reply submissions at the very end of the last day of an allocated three day hearing”.

Later in the submissions, counsel for the Defendants pointed out that the Plaintiff had been given an opportunity to amend his claim in July 2015, and had made significant amendments, presumably on advice, in August 2015. There were numerous directions hearings thereafter, including a pre-trial directions hearing before this Court. There had been a mediation. There were orders for opening submissions and there was an opening address by Senior counsel for the Plaintiff. At no time throughout that process, was any alleged error in the pleading identified or any further amendment foreshadowed.

In relation to (b), counsel submitted that although Mr Charles had asserted that the proposed amendment simply had brought the Plaintiff’s case into line with the evidence, that assertion was not supported by a proper examination of the Plaintiff’s evidence, and the way in which the Plaintiff’s case had been presented for more than 20 months. On the contrary, the evidence relied upon by the Plaintiff was consistent with, and supported, the pleaded case as set out in the existing amended Statement of Claim.

Counsel for the Defendants gave several examples of the evidence to support the submission, which I shall not repeat: see Paragraphs 8, 9, 10, and 11 of the Defendants’ submissions in opposition to the Plaintiff’s amendment application.

Counsel then submitted:

In relation to (c), counsel for the Defendants pointed to the evidence of Mr O’Connor as to the steps that would have to be taken in the event that the amendment was to be allowed, including the need to prepare, and serve further evidence relating to the question of contract formation, and the possible need to file a further Defence to any Further Amended Statement of Claim responding to the new allegations, and raising any new defences the Defendants could rely upon in answer to those new allegations. He pointed to the significant costs that the Defendants would incur in taking these steps (almost $50,000).

Counsel also pointed to the significant delay in having the case determined, pointing out that it was unlikely to be re-listed before next year. (This submission was based on my disclosure to the parties at the hearing that I am on long leave for September and October 2017).

In relation to (d), counsel reminded the Court that the Plaintiff's case was one for US$285,000 (plus interest). He submitted that if submissions made in the case by the Defendants were accepted, the Plaintiff’s claim sounded in no damages at all because the Plaintiff (based on his own evidence) had suffered no loss or damage. Those are significant considerations for the Court when weighing up all relevant matters in the exercise of its discretion.

Senior counsel for the Plaintiff replied to the Defendants’ submissions. He submitted that “…the defendants’ issue with the amendment application is that they do not want to countenance an agreement based on the Licence Agreement that was fully-formed on 1 November 2012 as opposed to such an agreement [having been] formed on 15 November 2012 when [the Plaintiff] was allowed to actually access his account”.

He submitted that this was because the Defendants wished “…the email correspondence up to and including 14 November 2012 [to] be included in the "surrounding circumstances" that can be taken into account in construing the terms of the Licence Agreement”.

In relation to the further costs that were likely to be incurred, Senior counsel for the Plaintiff submitted that “[t]he proposed $49,910 cost (looking only at the estimated costs for the defendants) is completely out of proportion to the comparatively minor significance of whether an agreement was made in the form of the Licence Agreement on 1 November 2012 or whether an agreement in the form of the Licence Agreement was made on 15 November 2012”.

Senior counsel’s submissions concluded with the following submission (omitting typographical errors):

As Mr O’Connor was not cross-examined, the Court is entitled to accept his evidence, and in the circumstances of the case, is prepared to do so. He set out, in some detail, the steps necessary to be taken by the Defendants in order to consider, and then to perform, if the amendments sought by the Plaintiff were allowed.

The fundamental principle that guides the Court upon an application by a party to amend his, her or its pleadings, so as to plead a new, or alternative claim, is that such an application should ordinarily be dealt with in accordance with the dictates of justice: s 58 of the Civil Procedure Act justice and, in so doing, to have regard to s 56 concerning the "overriding purpose" of the Act and rules of court in their application to civil proceedings.

In this regard, the proposed further amended Statement of Claim involves the new allegation, which had not previously been expressly made, putting the creation of the alleged contract upon which the Plaintiff sought to rely, earlier than had previously been alleged.

Naturally, counsel for the Defendants referred to Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27, in which the High Court, in the context of an amendment application, recognised the significance of delay and also that a costs order should not be treated as an automatic solution to problems created by failures to conform to the objectives of case management. The joint judgment also observed, in relation to a provision similar to s 56 of the Civil Procedure Act that:

In Namberry Craft Pty Ltd v Watson [2011] VSC 136, Vickery J, at [38], summarised the factors identified in Aon Risk Services Australia Ltd v Australian National University, as follows:

The Plaintiff’s case against the Defendants had already been revised and re-pleaded in August 2015 following the decision of Robb J.

In my view, the Plaintiff has provided no satisfactory explanation for not previously having raised the earlier date for the coming into existence of the contract upon which he wishes to rely. It was for the Plaintiff to identify his case, with precision as soon as he was reasonably able to do so. He was given an opportunity to amend and he did so. He served, and read at the hearing, an additional affidavit in December 2015 that did not prompt further amendment to the amended Statement of Claim. Even after receiving the submissions, in writing, of the Defendants, the Plaintiff did not seek to amend.

The evidence of the Defendants relating to correspondence between 1 November 2012 and mid-November 2012 had been included in the Defendants’ evidence upon which reliance was to be placed for some time prior to the hearing. The Defendants’ reliance on that correspondence also did not prompt the Plaintiff to amend.

Furthermore, as has been pointed out, there will be substantial delay caused by the grant of the application to amend. The completion of the hearing will be significantly delayed to enable the Defendants to have an opportunity to decide whether, and if so, what, further evidence will need to be served, and depending upon that decision, they will need an additional opportunity to obtain and serve such evidence. Of course, the Plaintiff will also need an opportunity to respond to any further evidence that is served on behalf of the Defendants.

This could result in the matter being listed for further directions, and then, after compliance with any directions, a further directions hearing will be required, at which a further hearing date (of, perhaps, 2 days) will be required. There is no prospect, if all that were to occur, that the matter could be concluded this year.

Although the Defendants’ solicitor has estimated the further costs that will be incurred based upon all of the evidence being required, the extent of wasted costs, if any, that will be incurred has not been estimated. In any event, for the reasons submitted by the Plaintiff in reply, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute: s 60 Civil Procedure Act.

The estimated costs and disbursements would not be warranted bearing in mind the quantum of the Plaintiff’s claim.

I am of the view that there could be an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and inordinate pressures placed upon the Defendants (as corporations), which cannot be adequately compensated for, whatever costs may be awarded. There is virtually no evidence on this aspect. However, the stress and inconvenience of litigation to parties and witnesses are well known.

Taking into account all of the matters referred to, including the substantial delay in making the application, the absence of any satisfactory explanation on the Plaintiff’s part in making the application so late, the real impact of granting leave on the future conduct of the proceeding, the appropriate allocation of court resources, as well as the need for the parties to incur additional costs, which costs appear to be disproportionate to the amount in issue, as a matter of discretion, I refuse the Plaintiff’s application to further amend the amended Statement of Claim and order that the application to amend be dismissed. I also order that the Plaintiff should pay the Defendants’ costs of the application to amend.

I shall next deal with the submissions of each of the parties in relation to the case asserted in the amended Statement of Claim and in the defence of the Defendants.

The Plaintiff submitted that between 2006 and 2011, by logging on to the FTP website, accepting the terms and conditions of the licence agreement on the FTP website, by installing the FTP program necessary to play online poker on the FTP website, by creating and operating, from Sydney, the OzGary Account, he was able to withdraw funds held in that online player account, at any time, using any of the numerous withdrawal options offered by Full Tilt Poker. These terms were included in the FTP website, as it existed from 2006 to 2011.

He also submitted that by creating the OzGary Account on the FTP website and depositing money into that account, the Plaintiff entered into a contract with Full Tilt Poker, pursuant to which Full Tilt Poker agreed to:

The Plaintiff also submitted in the amended Statement of Claim that on or about 1 November 2012, he managed to re-launch the FTP program and connect with the FTP server, using his personal computer. He was able to, and did, download a new version of the software that was necessary to continue playing online poker through the OzGary Account, and that he read the terms and conditions of the "FULL TILT POKER END USER LICENCE AGREEMENT", and clicked the circle appearing next to the words "I accept the terms of the Licence Agreement".

He then referred to the following terms and conditions:

Even though the Plaintiff had taken all of the steps referred to, he had been unable to log into the OzGary Account and referred to the correspondence which was exchanged between 1 November and 14 November 2012. He was, subsequently, on 15 November 2012, able to log on, and gain access to, the OzGary Account.

The Plaintiff contended that “a contract was formed between him and the Defendants when, in early November 2012, he downloaded the necessary software, accepted, by clicking at the correct place on his computer screen, the offer contained in the contractual document called "Terms & Conditions Full Tilt Poker Ender User Licence Agreement", and attempted to log in to, and continue using, the OzGary Account.

The Plaintiff submitted that the contracting parties were himself and “the Rational Group” which included, at least, the first Defendant (Rational Entertainment Enterprises Limited) and the third Defendant (Oldford Group Limited). The third Defendant was the holding company of the other three Defendants and because "Group" included the holding company of Rational FT and subsidiaries of that holding company, all of the Defendants were within the Group under the terms of the licence agreement. As Full Tilt Poker was defined in the licence agreement as Rational FT Enterprises Limited, and as it was a subsidiary of the third Defendant, it, too, was part of the “group”. In any event, the licence agreement specifically identified it as a contracting party.

Senior counsel identified the references in the Licence Agreement to “the Group”, including Clauses 1.4, 1.5, 8.1, 9 and 17.2. It was then submitted:

(He had also identified Clause 8.2 of the Licence Agreement but in oral submissions accepted (at T99.12 – T99.17), that the reference was incorrect.)

Senior counsel also pointed to the reference, "Copyright 2014-2012 Rational FT Enterprises Limited, 33-37 Athol Street, Douglas IMI 1 LB, Isle of Man", that company being the Fourth Defendant, and to the fact that it was not disputed that it had continued to operate, and trade, as "Full Tilt Poker" from 9 October 2012. It was also established that the fourth Defendant was a subsidiary of the third Defendant.

In oral submissions, senior Counsel for the Plaintiff submitted, at T93.32 – T93.35:

His oral submissions continued at T95.44 – T96.07:

The Plaintiff submitted that by continuing to operate the FTP website from October 2012, and enabling account holders to download the software and accept the terms and conditions of the Licence Agreement, the Rational Group offered to the holders of the online poker accounts, including the OzGary Account, previously operated, and held by the Full Tilt Companies, to maintain those accounts in a similar fashion as Full Tilt Poker, save that the terms were now amended to those published by the Rational Group on or about 1 November 2012 on the FTP website ("the 2012 Terms").

He added that the 2012 Terms were very similar to those contained in the OzGary Contract (the change in the contracting parties being the most important).

It was then submitted that it followed, then, since there was nothing in the 2012 Terms which sought to restrict the Rational Group's liability to account for balances accrued after 1 November 2012, and as the Rational Group had taken over an existing business operation, was using the same business name as before ("Full Tilt Poker") and had expressly agreed in the USA Settlement Deed to honour previous poker account balances, the proper construction of the 2012 Terms provided for the treatment of pre-existing poker account balances in the same way as post-1 November 2012 accruals.

In his oral submissions, senior Counsel submitted that the Plaintiff was “a non US player of the Full Tilt group”. He had played hundreds of times, mostly for play money, but he had played nine times (in amounts going from hundreds of dollars to a couple of thousand dollars) real money using the OzGary Account: T101.21 – T101.29.

In relation to the words “online poker account balances”, the Plaintiff submitted that the term could only refer to the player accounts of non-US players, of which the Plaintiff was one (T101.27 – T101.28). This was reflected by the fact that the Rational Group treated the Plaintiff, from late October 2012, as a non-US player with an online poker balance.

By mid-November 2012, the Rational Group had permitted the Plaintiff to access the OzGary Account and withdraw funds from that account, which he did. Furthermore, in the correspondence between the Rational Group and the Plaintiff about the USD$285,000, it had not been suggested that he was not a non-US player, or that he did not have an online poker account balance. Instead, the Rational Group had sought to make a special exception for the $US285,000 by asserting that it was “affiliate earnings” and was, for that reason only, not able to be withdrawn.

On this topic, senior Counsel pointed to the correspondence sent to the Plaintiff in November 2012 and thereafter, that had referred to the review of his transaction history and verification of the source of funds in his account.

Furthermore, he submitted that nothing in the 2012 Terms, the OzGary Contract, or the USA Settlement Deed, provided that the Rational Group had a right to withhold money in a poker account that had been derived from an “affiliate account”. Whatever its source, USD$285,000 had been part of the balance in the OzGary Account at the time of its suspension in late June 2011. By failing to enable the Plaintiff to access, and to withdraw, the USD$285,000 component of the OzGary Account, the Rational Group had breached its contractual obligations to the Plaintiff.

If it were found that there was no contract between the Plaintiff and the Rational Group, his alternative claim was based upon restitution. The Rational Group had enriched itself (at the Plaintiff’s expense) in the sum of USD$285,000, by failing to permit him to withdraw that sum despite the commitment to honour non-US poker accounts and despite the sum of US$285,000 being a part of the OzGary Account.

It was contended that the members of the Rational Group had been enriched because instead of having to account to the Plaintiff for the sum of USD$285,000, as they had promised to do under the USA Settlement Deed, it had “effectively cancelled this debt”. The retention of money that the Plaintiff was entitled to in the OzGary Account was “clearly at Benson's expense”.

It was also submitted that it was unjust for the Rational Group to retain the sum of USD$285,000, in circumstances where it was obliged, under the terms of the USA Settlement Deed, and the 2012 Terms, to make available the amount to the Plaintiff for immediate cash withdrawal.

The Plaintiff contended that deducting and retaining USD$285,000 from the OzGary Account on, or about, 15 November 2012, was contrary to what the parties had agreed to under the USA Settlement Deed, is a breach of that Deed and thus a wrongful act. The retention of the USD$285,000 was vitiated by the fact that it is in breach of that Deed.

Furthermore, it was put that the Rational Group had, by taking over the Full Tilt Poker business and acknowledging the general obligation to pay poker account balances, voluntarily assumed for its own business reasons, liability for paying the pre-existing poker accounts of Full Tilt Poker players such as the Plaintiff. The fact that payment of part of that voluntarily assumed liability had, “for a spurious reason”, been repudiated, was another vitiating factor in the retention of the USD$285,000.

In the above circumstances, the Rational Group could not, with a safe conscience, retain USD$285,000. The Rational Group had been unjustly enriched and, accordingly, was liable to make restitution of that sum to the Plaintiff.

The Plaintiff made no submissions in writing on the alternative claim for moneys had and received.

The Defendants’ opened their submissions by stating that there were significant difficulties with each of the claims sought to be made out by the Plaintiff and that each of the claims should be dismissed.

The principal submission made was one that relied upon the events that had occurred in relation to the proceedings that had been commenced in the District Court, in which the Plaintiff had been the sole Defendant. They relied upon the evidence relating to those proceedings.

This submission, after referring to the matters that have previously been referred to, was:

The Defendants referred to the Plaintiff’s own evidence set out above and maintained that was he was never entitled to retain the USD$285,000 transferred into the OzGary account. He had given evidence that he was required to account to InterCash P/L for those funds and that it would have been Intercash P/L that would deduct its commission before accounting to iBus for the balance. Despite his evidence, the proceedings had not been brought by, or on behalf of, InterCash P/L.

There was no evidence that InterCash P/L was pursuing the Plaintiff in respect of the settlement of the District Court proceedings. On the contrary, the terms of the District Court settlement (Ex. 8), provided that following that settlement, InterCash P/L had paid USD$120,000 to iBus, but that releases were given to each. That document in, and of itself, indicated that no claim had been, or would be, made by InterCash P/L against the Plaintiff.

(Although there was a faint submission by Senior counsel for the Plaintiff that the Defendants had not asserted, in the Defence, that the Plaintiff had not suffered any loss or damage, I am satisfied that the Defendants had denied that the Plaintiff had suffered “a loss being the sum of USD$285,000 that has not been repaid to him”: asserted by the Plaintiff in Paragraph 34(c) of the amended Statement of Claim and denied in Paragraph 34 of the Defence.

In addition, the Defendants, in Paragraph 36, had denied that the Plaintiff was entitled to the relief claimed in Paragraph 36 of the amended Statement of Claim (the claim for damages), or to any relief as against the Defendants whether jointly or severally. The Defendants had also explicitly raised the matter in Paragraph 43 of its initial written submissions.)

The Defendants’ submission on this topic did not refer to the fact that the settlement of the District Court proceedings involved the settlement of associated District Court proceedings involving Mr Guoga, about which there was virtually no evidence.

To the extent that the Plaintiff sought to rely on Clause 5 of the USA Settlement Deed, the following submissions were made by the Defendants:

Then, the Defendants turned to submissions relating to the Plaintiff’s specific claims. The first submission was that taking into account the way in which the amended Statement of Claim had been drafted, the Plaintiff did not know who to sue. The claims had been brought against four different corporate Defendants, with no attempt being made to identify which one (or more) of those Defendants was liable, and why it was, or they were, liable. Throughout, references were made to "the Rational Group of Companies" (meaning all four Defendants) or "the Rational Group of Companies, or any one or more of them…". Neither the pleading relied upon by the Plaintiff, nor his evidence, addressed this fundamental problem.

In relation to the claim for breach of contract, the Defendants submitted that there had been a vague allegation of ownership of the relevant assets in Paragraph 25(a) of the amended Statement of Claim, which did not identify which of the four Defendants had acquired the relevant assets, or the precise obligation or liability said to be owed by one or more of them towards the Plaintiff. What had been alleged was that "the Rational Group of Companies, or any one of more of them, took control and possession of, and/or participated in the operations of … Full Tilt Poker; the FTP Website; and the online player accounts of players previously operated and held by the Full Tilt Companies, including the OzGary Account." It was submitted that the evidence did not permit the Court “to make such a critical finding against any of the Defendants”. The following matters, in that regard, were said to be relevant:

It was also submitted that which of the Defendants had made the “offer”, that was said to have been accepted by the Plaintiff, had not been established.

Furthermore, it was unclear what were alleged to be the precise terms of the "offer" that was said to have been made. The pleaded case was that the offer was "to maintain the said accounts upon the same terms which bound the Full Tilt Companies, and to contract with those players in the same manner as had the Full Tilt Companies." That allegation was “so general and vague that it is meaningless”.

Then, if a new contract was alleged to have been entered into by the Plaintiff, with new and different parties, the background to that new contract, which was known to the Plaintiff, and which contained no term relating to payment of liabilities arising from previous dealings by the Plaintiff with Full Tilt Poker, was relevant.

The Defendants also submitted that even if the Court were satisfied that some contract was entered into by the Plaintiff with one, or more, of the Defendants, a question arose as to the terms of that contract. Significantly, the terms set out in the License Agreement relied upon by the Plaintiff, were materially different from the Full Tilt Terms and Conditions which founded the contract to which the Plaintiff referred many years earlier. In particular, Clauses 5.2 and 5.3 identified “prohibited uses”, and made clear that there were significant limits on how funds transferred by way of a player to player transfer could be utilised. Significantly, the “cashing out” service previously provided by transfer affiliates like the Plaintiff or Intercash P/L was no longer permitted.

Sub-clauses (c) and (d) of clause 5.3 are in the following terms:

Prior to November 2012, Full Tilt Poker sent an email on 16 October 2012, which the Plaintiff had seen that specifically referred to the pending launch of the Full Tilt Poker website on 6 November 2012. Significantly, the email stated that from that date forward, “non-U.S. players will be able to withdraw their balances, which relate to previous player activity on the site…. for those accounts where player funds are commingled with funds derived from affiliate earnings, The Rational Group will only be making the portion of the funds relating to your previous player activity available for withdrawal”.

In addition, the correspondence passing between Mr Rosenthal and the Plaintiff in early November 2012, during the period between when the Plaintiff first attempted to gain access to the OzGary Account but could not do so, and when he did, eventually do so, must also be considered.

By the time the Plaintiff was able to gain access to the OzGary Account, he was well aware, or ought to have been well aware, that the current Defendants were not going to reimburse funds derived from affiliate earnings, which included the USD$285,000 now claimed by the Plaintiff.

It was only after the receipt of the email confirming that fact, did the Plaintiff, on his own case as asserted in the amended Statement of Claim, enter any contract. It followed that it was an express term of any such contract that he would not receive into the OzGary Account the amount claimed by him in these proceedings as they were funds derived from affiliate earnings.

In relation to the allegation of “novation” in paragraph 29 of the Amended Statement of Claim, the Defendants submitted that it was “…misconceived. Novation is a transaction by which, with the consent of all the parties concerned, a new contract is substituted for one that has already been made. There was no basis for the Court to find any novated contract from the Full Tilt Companies to the Defendants because, fundamentally, there was never any contract entered into by all of those parties (including the Plaintiff or any other Full Tilt customers) - let alone one that provided for any such novation. Mr Benson does not seek to adduce any evidence of any contract involving himself and all other relevant and necessary parties”.

Next, it was submitted on behalf of the Defendants that there was no evidence that the Rational Group of Companies, or any one or more of them, held money deposited by the Plaintiff into the OzGary Account, as a borrower or otherwise.

In relation to the unjust enrichment claim, the Defendants submitted that:

It seemed to have been agreed by the parties during submissions, that in relation to iBus, it had an affiliate account and a player account. When it was time to move money from the affiliate account to the player account, called "cashing out," funds were transferred from the affiliate account to the player account. However, at this time it was still virtual money. Then, for it to be redeemed, as it were, into actual cash, it had to be transferred from the player account to another account, being a third party Full Tilt account, so that it could be redeemed into a bank account.

The Plaintiff’s evidence was that the OzGary Account was one that could be used for two purposes. One purpose was to enable him to gamble, either with play money or real money (such as the nine transactions where he used the OzGary account for real money gambling). The OzGary account was also the account into which, for example, affiliate earnings could be transferred for the purpose, then, of him paying that money to InterCash P/L, so that InterCash P/L could effectively pay the money to the player who had engaged in the transaction: T140.20 – T141.02.

Senior counsel described the Defendants’ submission regarding the Plaintiff having suffered no loss or damage, as an “an extraordinary argument”. He submitted:

It was then submitted that it could not be that the wrong plaintiff had sued, because even if there were some trust arrangement, whereby the moneys were held on trust for InterCash P/L, it was the Plaintiff, as trustee, who had the right to sue, not the beneficiary. It was also submitted that, if he had an obligation to pay money to InterCash P/L, then he had suffered the loss because of that obligation: T159.19 – T159.45.

He added at T160.13 – T160.18:

Senior counsel drew the analogy of a banker and customer relationship “where there is a debt in an account”: T170.20 – T170.24.

In regard to the Defendants’ submissions on the question of “novation”, Senior counsel submitted that the word "novation" referred to the main plank of the contractual case, being that there was a debt under contract that existed, that the Full Tilt companies had to pay, and then that debt was transferred, in other words by effectively a process of novation, to the Rational companies when the Rational companies announced that they were going to assume certain obligations to non US players, and then the 1 November agreement was entered into without any terms that prevented those old debts being paid.

For a plaintiff to recover a sum of money as damages, for harm suffered as a result of the defendant's breach of contract, the plaintiff must be able to prove the existence of the contract, the breach and the loss. A plaintiff who cannot prove any of these three requirements, generally speaking, cannot recover damages.

The basic aim of an award of damages in contract is to put the plaintiff in the position the plaintiff would have been if the contract had never been breached — or if it had been performed: Robinson v Harman (1848) 1 Exch 850; (1848) 154 ER 363.

Recently, in Ellis’s Town House Pty Ltd v Botan Pty Ltd [2017] NSWCA 20, although dealing with a breach of a covenant to repair in a lease, Gleeson JA (with whom Leeming and Simpson JJA agreed), referred to some well-established principles, at [25] – [28]:

However, a plaintiff may be able to recover “nominal” damages for a breach of contract even if there has been no actual loss - such as an award of a token amount of one dollar: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286. Nominal damages are damages for proving the point, in other words, the plaintiff has been able to show that the defendant did breach the contract but the plaintiff suffered no actual loss from the breach: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd; Huppert v Stock Options of Australia Pty Ltd [1965] HCA 30; (1965) 112 CLR 414; Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 [93], [149].

In State of New South Wales v Stevens [2012] NSWCA 415, the following passage appears at [19]:

However, as Campbell J explained in Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 (at [47] - [52]) "[i]n an action for breach of contract, if a plaintiff establishes liability, and obtains an order for payment of nominal damages, that plaintiff is usually not to be regarded as the successful party in the action".

No submissions were made, by either party, in the event that the Court found a breach of contract by one or more of the Defendants, but no actual damage suffered by the Plaintiff, that it would be appropriate to make an award of nominal damages to the Plaintiff. In light of Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65 at [14], this failure is not a detriment (see also Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39 at [100]).

The basis of the common law action for money had and received is restitution or unjust enrichment: Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673.

However, unjust enrichment is not itself a definitive legal principle but rather “a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff…”: Pavey & Matthews Pty Ltd v Paul [1987] HCA 5 at [14].

The principle of unjust enrichment was formulated by Goff J in BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783; [1979] 1 All ER 925, at 839:

In Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014] HCA 14; (2014) 253 CLR 560, French CJ wrote, at [15]-[16]:

In Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd (2012) 264 CLR 498; [2012] HCA 7 at [30], French CJ, Crennan and Keifel JJ summarised the Court’s treatment of the question in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48, as follows:

As Ward J (as her Honour then was) stated in Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587; (2012) 16 BPR 31,011; at [249] – [250]:

Restitution for unjust enrichment has no application where the enrichment is pursuant to a subsisting contract covering the rights of the parties. In Pavey & Matthews Pty Ltd v Paul, Deane J wrote at [13], that the quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution.

A defence to a claim for restitution is ‘change of position’, in circumstances where, as the High Court stated in Australian Financial Services and Leasing Pty Limited v Hills Industries Limited at [1]:

I have closely read all of the submissions made in writing and the transcript of oral submissions and have come to the view that the submissions of the Defendants are far more compelling than those of the Plaintiff. For the following reasons, in particular, I am satisfied that the Plaintiff’s case cannot succeed and must be dismissed.

Firstly, that the Plaintiff was acting as a trustee had not been pleaded in the amended Statement of Claim, and no application was made to further amend to make that allegation. Indeed, the first Paragraph of the amended Statement of Claim asserted that the Plaintiff “…is entitled to sue in his own name”. Accordingly, any suggestion that the Plaintiff was acting in that capacity must be ignored.

Secondly, the Plaintiff’s case, in these proceedings, asserted something completely different to what he had pleaded in the District Court proceedings. In the District Court he had denied any agreement between himself and iBus, but stated that the agreement had been between iBus and Intercash P/L.

Thirdly, even if I were satisfied that the Plaintiff has established the identity of the entities with which he is said to have contracted, namely as asserted by him, “The Rational Group”, there is no evidence that any of the Defendants, and if so which of them, if any, received the USD$285,000, or any part of that amount.

Fourthly, the amount held in the OzGary player account that had been transferred by from the pokernews1 player account, was accepted as being “affiliate earnings”. iBus sought to cash out those affiliate earnings through the OzGary account. “Affiliate earnings” did not metamorphosize into a "poker account balance" upon the transfer into the OzGary account.

If as pleaded in the amended Statement of Claim, the contract was entered into on or about 15 November 2012, the USD$285,000 had already been taken from the OzGary account, and the basis for doing that had been identified to the Plaintiff in the email correspondence sent before that date. Accordingly, the Plaintiff was, or should have been aware, of the terms upon which any contract between him and the Defendants was to be entered into.

Then, he was well aware, or ought to have been aware, that affiliate earnings would not be paid, even if those earnings had formed part of the OzGary account balance, and that if it were established the relevant amount was affiliate earnings, the amount would be deducted from that account. Any contract entered into was with the knowledge that “where player funds are commingled with funds derived from affiliate earnings, The Rational group will only be making the portion of the funds relating to your previous player activity available for withdrawal” (Ex. 1/5). It follows that there was no breach of contract.

Fifthly, by the time the Plaintiff commenced these proceedings, in November 2014, he had no obligation to pay an amount of $USD285,000, or any other amount, to any third party (Intercash P/L or iBus). The District Court proceedings, in which he had been named as the only Defendant, had been concluded, with payments due to iBus having been made by Intercash P/L, and a Notice of Discontinuance filed in those proceedings in May 2013. Releases had also been granted as previously identified.

Sixthly, it was not the Plaintiff who, but rather Intercash P/L which, had made all of the payments to the iBus interests. Only part of those payments involved a claim that had been made against, and defended by, the Plaintiff in relation to the USD$285,000.

Seventhly, the Plaintiff gave no evidence regarding the claim of Mr Guoga, which had also been settled as part of the District Court settlement and in respect of which the amount of USD$120,000 had also, apparently, been paid. This is evidenced by the fact that the “iBus parties” include Antanas Guoga, and, by Recital ‘C’ of the Deed (Ex. 8) to which reference has previously been made.

Neither the amount of Mr Guoga’s claim, nor any documents relating to the basis of that claim, were the subject of any direct evidence. There was no mention of that claim in the amended Statement of Claim that had been filed well after the conclusion of the District Court proceedings, and the defence to that claim was not the subject of any evidence.

Accordingly, what part of the District Court settlement sum (USD$120,000), if any, related to Mr Guoga’s claim, and not to the claim by iBus, was not the subject of any evidence. Accordingly, if any loss and damage had been suffered by the Plaintiff, the quantum of that loss and damage, referable to the contract alleged by the Plaintiff against the Defendants, has not been established.

Eighthly, it is impossible to conclude, even if there were a contract with the Defendants, or some of them, and even if a breach of that contract was established, that the Plaintiff had, thereby, suffered loss or damage, in the Defendants failing to leave the USD$285,000 in the OzGary Account, or by their failure to reimburse that amount to that account. The Plaintiff, would then, only be entitled to nominal damages.

It was for the Plaintiff to establish any loss or damage caused by a breach of contract by the Defendants that he had suffered. His own evidence makes abundantly clear, that if the contract the Plaintiff alleged had been performed, USD$285,000 would have been transferred from the pokernews1 account by iBus to the OzGary account, where it would have remained; then, on 15 November 2012, having been able to access that account, the Plaintiff would have transmitted the whole of that amount, without any deduction, to Intercash P/L; InterCash P/L, then, would have deducted the commission to which it would have been entitled and would have then transferred the balance of the USD$285,000, to “the end user”, being iBus.

There was no reason to doubt the Plaintiff’s evidence on this topic as to what would have occurred had the USD$285,000 remained in the OzGary Account. It is that evidence that demonstrates that he suffered no loss or damage. He was not placed in any different position to that in which he found himself after 15 November 2012. When sued, it was not the Plaintiff who satisfied the claim of iBus, it was Intercash P/L. He simply enjoyed no beneficial interest, direct or indirect, in the amount that had been paid into the OzGary account but was merely the conduit between iBus and Intercash P/L.

It follows that to award him USD$285,000, or any part of that amount, by way of damages, would place the Plaintiff in a superior position to that in which he would have been had the contract he alleged been performed.

Nor did he suffer a loss of commission on the conversion of the virtual money into real money. It was Intercash P/L, which was not a party to either these, or to the District Court, proceedings, that would have been entitled to claim, and receive, the commission. At no time did Intercash P/L make any claim for the commission that would have been payable to it had the transaction been completed.

Also, it is to be noted that, in the District Court proceedings brought against the Plaintiff, the amount claimed was calculated as USD$285,000, less the amount of commission to which, according to the Plaintiff’s evidence, Intercash P/L would have been entitled. It follows, that, effectively, iBus had given credit for the amount of the commission that would have been deducted had the contract alleged by the Plaintiff been performed.

In relation to the claim for unjust enrichment, in my view, the Plaintiff has not established the receipt by the Defendants, or any of them, of a benefit at the Plaintiff’s expense. He was simply not entitled, under any arrangement made with iBus, to retain any of the USD$285,000. In those circumstances, he could not establish that it would be unjust to allow the Defendants to retain any benefit.

In all of the circumstances, the amended Statement of Claim must be dismissed with costs and I so order. I also order that the Exhibits should be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10) and Practice Note No SC Gen 18 (Para 22).