Equititrust Limited v Tucker & Others [2021] QSC 188 [2021] 32 QLR

SUPREME COURT OF QUEENSLAND CITATION: Equititrust Limited v Tucker & Others [2021] QSC 188 PARTIES: EQUITITRUST LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ON ITS OWN ACCOUNT AND AS TRUSTEE OF THE EQUITITRUST PREMIUM FUND ACN 061 383 944 (plaintiff) v DAVID ROBERT WALTER TUCKER (first defendant) TUCKERLOAN PTY LTD ON ITS OWN ACCOUNT AND AS TRUSTEE OF THE TUCKERLOAN TRUST ACN 101 109 157 (second defendant) DAVID ROBERT WALTER TUCKER AND RICHARD TERRICK COWEN CARRYING ON PRACTICE AS PARTNERS UNDER THE NAME TUCKER & COWEN SOLICITORS (A FIRM) (fifth defendants) TCS SOLICITORS PTY LTD ACN 610 321 509 (sixth defendant) FILE NO/S: BS No 7399 of 2018 DIVISION: Trial Division PROCEEDING: Application DELIVERED EX TEMPORE ON: 30 July 2021 DELIVERED AT: Brisbane HEARING DATE: 30 July 2021 JUDGE: Bradley J ORDERS: THE ORDER OF THE COURT IS THAT: 1. Subparagraph 131(g) of the fourth further amended statement of claim is struck out with leave to replead. 2. The plaintiff is to file and serve any fifth further amended statement of claim by 4pm on 6 August 2021. 3. The costs of the application filed 29 July 2021 are each party’s costs in the proceeding. 4. The application filed 23 July 2021 is adjourned until 10am on 26 August 2021. -- 1 of 5 -- 2 5. The costs of the application filed 23 July 2021 are reserved. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – EMBARRASSING, TENDENCY TO CAUSE PREJUDICE, SCANDALOUS, UNNECESSARY ETC OR CAUSING DELAY IN PROCEEDINGS – where the plaintiff is entitled to a presumption in law without having to prove the matters alleged in sub-paragraph 131(g) of its fourth further amended statement of claim – where the particular sub-paragraph is unnecessary and has created unintended and unhelpful consequences Uniform Civil Procedure Rules 1999 (Qld), r 151(1), r 171 Campbell v Turner [2008] QCA 126, cited Cureton v Blackshaw Services Pty Ltd [2002] NSWCA 187, cited Equititrust Limited v Tucker and Others (No 2) [2019] QSC 248, cited Hagan v Waterhouse (No 2) (1991) 34 NSWLR 308, cited Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298, followed Herrod v Johnston (2013) 2 Qd R 102; [2012] QCA 360, followed Nominal Defendant v Manning (2000) 50 NSWLR 139, cited COUNSEL: S Couper QC, with N J Derrington, for the plaintiff M R Hodge QC, with D L Tay, for the first defendant, second defendant and the first-named fifth defendant SOLICITORS: Russells for the plaintiff Bartley Cohen for the first defendant, second defendant and the first-named fifth defendant Background [1] On 30 July 2021, an Order was made determining the respective entitlements of Equititrust Limited (Receivers and Managers Appointed) (In Liquidation) (the plaintiff) and David Robert Walker Tucker1 and Tuckerloan Pty Ltd2 (the Tucker defendants) in respect of the interlocutory relief sought in an application filed in this proceeding on behalf of the Tucker defendants on 29 July 2021 (the Tucker defendants’ application) seeking orders pursuant to r 171 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). Another application was filed on behalf of the plaintiff on 23 July 2021 (the Equititrust application) seeking orders pursuant to r 223 and r 367 of the UCPR. [2] On 30 July 2021, I gave ex tempore reasons for my decision in respect of the Tucker defendants’ application. The orders made had direct implications for the Equititrust 1 Mr Tucker is the first defendant. He is also one of two persons sued as the firm Tucker & Cowen, which is the fifth defendant. 2 Tuckerloan, on its own account and as trustee of the Tuckerloan Trust, is the second defendant. -- 2 of 5 -- 3 application. It was adjourned to a date after the plaintiff is to replead in accordance with the orders. [3] The following is an edited version of those reasons. Reasons [4] This is an application by the Tucker defendants to strike out a particular subparagraph of the plaintiff’s fourth further amended statement of claim. By that paragraph, the plaintiff pleads that one of the Tucker defendants, Mr Tucker, has had the opportunity to use the fruits of his alleged breaches of duty in trade or business. [5] The plea goes on to identify some of the particular things that are included in that opportunity. [6] The Court has been taken to, amongst other cases,3 the decision of the Court of Appeal in Herrod v Johnston,4 in which Muir JA dealt with the circumstances in which a beneficiary who had been deprived of trust funds could be entitled to recover compound interest against the defaulting trustee or fiduciary.5 [7] I am satisfied from my review of that decision, in particular the analysis (of the reasons of Heydon JA in Harris v Digital Pulse Pty Ltd6) contained in paragraph [43] of his Honour’s reasons, that a person in the position of a beneficiary is entitled to a presumption that the alleged wrongdoer, against whom relief is sought, has made a profit from the relevant funds that a person would ordinarily make in trade or that the alleged wrongdoer has made the most beneficial use of the funds to which the beneficiary alleges an entitlement. [8] These presumptions operate in addition to the presumption that the deprived beneficiary would have made the most beneficial use of the funds open to it, had the funds been available to it. [9] In the circumstances, it seems that the allegation in subparagraph (g) of paragraph 131 of the fourth further amended statement of claim is unnecessary. [10] This matter has been considered previously by the Court. On that occasion, the authorities relied upon today were not raised. Indeed, Bowskill J identified in reasons that: “No authority was relied upon to support the argument that what appears as in (g) is, as a matter of a law, incapable of supporting a decision to award compound interest and/or indemnity costs.”7 [11] Her Honour’s reasons demonstrate that the contest about this part of the pleading on that occasion was brought in a different manner and without authority. 3 The Tucker defendants also relied on: Campbell v Turner [2008] QCA 126 at [71]-[72]; Hagan v Waterhouse (1991) 34 NSWLR 308, 393; and Cureton v Blackshaw Services Pty Ltd [2002] NSWCA 187 at [115]. 4 (2013) 2 Qd R 102; [2012] QCA 360 (Muir and Gotterson JJA, Applegarth J). 5 See: [25]-[45]. 6 (2003) 56 NSWLR 298, 367-369. 7 Equititrust Limited v Tucker and Others (No 2) [2019] QSC 248 at [132]. -- 3 of 5 -- 4 [12] Ordinarily, the Court would not readily revisit a strike out argument that had previously been directed to the same part of a pleading.8 I am reluctant to do so on this occasion. [13] However, this particular part of the pleading seems to have given rise to a good deal of disputation between the parties as to the meaning of the allegation and its consequence in terms of onus of proof and, therefore, its importance in terms of shaping the scope of the duty of disclosure as it falls upon particular parties. [14] In those circumstances, the pleading, of something which I am satisfied is unnecessary, has not had a merely benign effect on the progress of the dispute, but seems to have given rise to probably unintended but equally unhelpful consequences. The things that indicate this to have been the case are that other defendants, not represented here today, have responded in their pleadings with a non-admission of this allegation. The consequence of this would appear to be that they understand the plaintiff is to be put to proof on that factual allegation. [15] I am satisfied that would be an incorrect understanding of the law with regards to the subject matter of the paragraph. In fact, the plaintiff is entitled to a presumption (of an entitlement to compound interest, and perhaps indemnity costs) in the circumstances, without having to prove the matters pleaded in paragraph 131(g). The plaintiff’s decision to plead some part of the circumstances seems to have given rise to this confusion. [16] It has also given rise to argument about whether the plaintiff ought to have pleaded more expressly its entitlement to the presumption or the effect of the presumption in this case. [17] I am similarly satisfied that the law does not require the plaintiff to do so. [18] For the efficient conduct of the proceeding and to assist the determination of the real matters in issue, the preferable course is to strike out sub-paragraph (g) of paragraph 131 on the basis that the entitlement to compound interest, alleged in paragraph 131, arises by way of a presumption that the law makes in the plaintiff’s favour. [19] The consequence of this is that rule 151(1)(a) of the UCPR does not require the plaintiff to plead such a matter.9 If any of the defendants wish to contest the plaintiff’s entitlement to compound interest or indemnity costs on the basis that the legal presumptions available to the plaintiff ought not to apply, then it is for that defendant to plead facts that might rebut the presumption, and to prove them at trial. [20] This approach to pleading will avoid the consequence that parties might mistakenly view the onus of proof to operate in a different, indeed, a reversed manner. [21] For the plaintiff, Mr Couper QC and Mr Derrington have made some submissions about facts that might be necessary to give rise to the relevant presumptions. To the extent that any such facts might be necessary for that purpose, the plaintiff should have leave to replead those matters, as it might be advised. 8 Mr Couper QC referred the court to the reasons of Heydon JA in Nominal Defendant v Manning (2000) 50 NSWLR 139, 156 [72]. 9 It follows that the burden of proving that fact does not lie with the plaintiff pursuant to UCPR r 151(1)(b). -- 4 of 5 -- 5 [22] The order of the court will be that sub-paragraph (g) of paragraph 131 of the fourth further amended statement of claim is struck out, and the plaintiff has leave to replead any fact that, as a consequence of the strike out, it might be advised is appropriate for the entitlement otherwise alleged in paragraph 131 of the pleading. Costs [23] It is not uncommon in matters of this nature for the detailed analysis to occur close to and at the hearing, in proximity to the determination. The matters that led to the determination here are matters that have arisen during oral argument. It is the interaction of the different contentions and their testing by the Court that gives rise to the decision on this occasion. [24] Although I understand that the Tucker defendants contend that costs should follow the event, they are following the event in a rather different way than was anticipated. [25] I also accept the force of the submission that if an offer by the Tucker defendants had been accepted by the plaintiff over the weekend, then the position with regard to the plaintiff’s pleading would be different to the position that it will be in as a result of the orders made today. However, if that offer had been accepted, the real difficulties that lie in this part of the pleading would remain unexamined and unresolved, in particular, questions about who bears the onus of pleading and proving relevant facts in light of the legal presumptions. [26] In the circumstances, the costs of the Tucker defendants’ application should be each party’s costs in the proceeding. -- 5 of 5 --