Duhs v Pettett & Ors [2009] QSC 100

SUPREME COURT OF QUEENSLAND CITATION: Duhs v Pettett & Ors [2009] QSC 100 PARTIES: DUHS, Wilfred Henry (plaintiff) v PETTETT, Trevor (first defendant) and KEA-WATT & ASSOCIATES PTY LTD ACN 100 005 490 (second defendant) and RATHDOWNEY DEVELOPMENTS PTY LTD ACN 115 908 137 (third defendant) FILE NO/S: 12147 of 2008 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 6 May 2009 DELIVERED AT: Brisbane HEARING DATE: 30 April and 1 May 2009 JUDGE: Applegarth J ORDER: 1. The application for summary judgment is dismissed. 2. The first defendant pay into court the sum of $540,000, or alternatively give security in that sum in a form acceptable to the Registrar, within 28 days of this order, failing which the plaintiff be at liberty to enter judgment against the first defendant for the amount of his claim together with interest and costs. 3. The plaintiff be granted leave to deliver an amended statement of claim within 28 days. 4. The cross-application otherwise be adjourned to a date to be fixed. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – SUMMARY JUDGMENT – where $2,700,000 was given by the plaintiff to the first defendant to invest – where the plaintiff alleges this arrangement with the first defendant was not a contractual relationship – where the arrangement is alleged to have failed – whether there is a -- 1 of 15 -- 2 claim for restitution – whether the defendant’s defence has a real, as opposed to fanciful, prospect of success PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – OTHER MATTERS – UCPR r 298 – whether the Court should make other orders or impose conditions on the further conduct of the proceeding PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PLEADING – STATEMENT OF CLAIM – cross- application to strike out statement of claim – whether statement of claim properly pleads and particularises material facts Uniform Civil Procedure Rules 1999 (Qld), r 292, r 298 Beynon v Aikman Stoddart Accountants Pty Ltd [2004] QSC 387, cited Brypat Pty Ltd v Endless View Holdings Pty Ltd [2005] QSC 171, cited Commonwealth Development Bank of Australia Ltd v Kerr [2001] QSC 234, cited Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232; [2005] QCA 227, applied DMS Shipping & Trading Co Ltd v Lionheart Asia Ltd [1996] 2 Qd R 20, cited Elderslie Property Investments No 2 Pty Ltd v Dunn [2007] QSC 192, cited Eng Mee Yong v Letchumanan [1980] AC 331, applied Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, cited Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour [1943] AC 32, cited Moses v Macferlan (1760) 2 BURR 1005; (1760) 97 ER 676, considered MPM Civil Pty Ltd v Ammbar Pty Ltd [2004] QSC 079, cited National Australia Bank Ltd v Troiani [2002] QCA 196, cited Pavey & Matthews Ltd v Paul (1987) 162 CLR 221, cited Queensland Pork Pty Ltd v Lott [2003] QCA 271, cited Re Divoca’s Caveat [1991] 2 Qd R 121, applied Roxborough v Rothmans of Pall Mall (2008) 208 CLR 516, applied Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880, cited State of Western Australia v Bond Corporation Holdings Ltd (1991) 28 FCR 68, followed Ward v Eltherington [1982] Qd R 561, considered COUNSEL: D R Cooper SC with L J Nevison of Counsel for the plaintiff D J Campbell SC and P White for the defendant -- 2 of 15 -- 3 SOLICITORS: Ferguson Cannon Lawyers for the plaintiff Richardson McGhie for the defendant [1] The plaintiff (“Duhs”) “invested” $2,700,000 with the first defendant (“Pettett”). The terms upon which the money was invested are disputed. What became of the money is a mystery. Despite demand, it has not been repaid. Duhs bases his application for summary judgment principally upon the contention that no contractual relationship exists between him and Pettett, and that Pettett is obliged to “make restitution” to him for $2,700,000. Pettett denies that Duhs has such an entitlement and pleads that he informed Duhs “that any investment would be repaid after 5 years”.1 [2] Under r 292 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) Duhs must satisfy the Court that Pettett has no real prospect of successfully defending his claim, and that there is no need for a trial. The issue is whether there exists a real, as opposed to a fanciful, prospect of success.2 If Duhs establishes a prima facie entitlement to judgment, an evidentiary burden shifts to Pettett and the focus will be on determining whether he has placed sufficient material before the Court such that it “should not be satisfied that [he] has no real prospects of defending the claim”. 3 The facts [3] Duhs worked for most of his life on a family farm. With the encouragement and assistance of a Ms Betty Allen (“Allen”) he sold substantial portions of it in 2003. He was introduced by Allen to Pettett. He says that Allen told him that Pettett would be able to get him “good interest” on his money. 4 There are disputes arising from the affidavit material about the dates of meetings between Duhs and Pettett in late 2004 and early 2005, and Duhs’ affidavits are lacking in precision about whether Pettett was present when Allen told him that Pettett could invest his money and get him “good interest”.5 Duhs swears that it was his understanding from discussions that occurred in late 2004 that any money that he paid to Pettett would be returned to him in two years, unless he wanted it repaid earlier. He also swears that there was no discussion about a percentage return.6 [4] Duhs pleads that in or about September 2004 he, Allen and Pettett met at the Kawana Waters Hotel, that Allen told him that Pettett could secure him “good interest” on the money he had realised through the sale of his property if it was given to Pettett, and that he told Pettett that any money paid by him was to be repaid when he wanted it back, and no later than two years after it was paid. Duhs pleads that Pettett, by his silence, represented that any money paid to him would achieve “good interest” and be repaid when Duhs wanted, and no later than two years after it 1 Amended Defence, para 5(u). 2 Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232. 3 Elderslie Property Investments No 2 Pty Ltd v Dunn [2007] QSC 192 at [7]-[8]; Queensland Pork Pty Ltd v Lott [2003] QCA 271 at [41], [45]-[47]; National Australia Bank Ltd v Troiani [2002] QCA 196 at [11]. 4 Duhs affidavit 25 November 2008, Court Document Index (CDI) 2, para 5. 5 This may be implicit in paragraphs 16 and 17 of Duhs affidavit 1 April 2009, CDI 13. Paragraphs 23, 29 and 30 of his first affidavit, CDI 2, do not refer to Pettett being present when Allen referred to “good interest”. 6 Duhs affidavit 1 April 2009, CDI 13; para 20. -- 3 of 15 -- 4 was paid (“the Kawana Waters Hotel Representation”). Pettett denies that he made this representation. [5] Duhs pleads that the Kawana Waters Hotel Representation was untrue, and was made by Pettett knowing it was untrue or with reckless indifference as to whether it was true or not. His statement of claim raises a number of other matters about his lack of commercial sophistication, that Pettett held himself out as a financial or investment adviser and that a relationship of trust existed between them with respect to the investment. These matters are denied by Pettett in his defence and in his affidavit. I consider that these matters should be the subject of evidence at trial in order to determine whether Duhs can prove his case that Pettett deceived him, breached a fiduciary duty and engaged in unconscionable conduct in contravention of Part IVA of the Trade Practices Act 1974 (Cth). The claim for restitution [6] Duhs’ claim for restitution is based on the contention that the alleged “arrangement” whereby he would be paid “good interest” on the sum of $2,700,000 was uncertain because no rate of interest was agreed, and that no contractual relationship existed between them. Pettett is said to have been “unjustly enriched” and Duhs claims an order that Pettett “make restitution” to him in the sum of $2,700,000. [7] Duhs’ written submissions on the application for summary judgment describes this as a claim “in debt7 and money had and received”. The only authority cited by Duhs in respect of the action for money had and received is Moses v Macferlan,8 to which scholars refer in discussing the juridical origins of the law of restitution.9 In Moses v Macferlan Lord Mansfield stated that the gist of the action for money had and received is: “that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.” Lord Wright said of Lord Mansfield’s statement: “Like all large generalisations, it has needed and received qualifications in practice.”10 These qualifications are not addressed in Duhs’ submissions and they assume significance in the case of money given to another to invest on a person’s behalf. [8] The statement of claim does not illuminate the basis for restitution in full of the sum invested. In the prayer for relief the order to “make restitution” is consequential upon the making of a declaration that no contractual relationship exists. That relief is sought in circumstances in which “the arrangement” was that the monies would be invested by Pettett “on behalf of” Duhs, Duhs would be paid “good interest” and Duhs would be repaid the sum of $2,700,000. By reason of this non-contractual “arrangement” and Pettett’s receipt of “the benefit” of the sum of $2,700,000, 7 As to the action in debt for money lent see Young v Queensland Trustees Limited (1956) 99 CLR 560 at 566-567, and as to the origin of the form of action known as indebitatus assumpsit see Pavey & Matthews Ltd v Paul (1987) 162 CLR 221 at 265-266. 8 (1760) 2 Burr 1005 at 1012; (1760) 97 ER 676 at 681. 9 Goff & Jones The Law of Restitution (7 th ed) 1-008–1-016; Birks An Introduction to the Law of Restitution pp 32, 36-38, 79-80; Mason, Carter & Tolhurst Restitution Law in Australia (2 nd ed) [120]-[123], [132]-[135]. 10 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour [1943] AC 32 at 62-63. -- 4 of 15 -- 5 Pettett is said to have been “unjustly enriched”. The source of the obligation to “make restitution” of the original sum invested, as distinct from the amount to which the monies invested on behalf of Duhs have grown or shrunk is not apparent from the pleading. They do not depend on a contractual promise to repay the sum of $2,700,000, since none is alleged. The retention without authority of the investment made on behalf of Duhs may be characterised as “unjust”, not by reference to “a subjective evaluation of what is unfair or unconscionable”11 but by recourse to the general considerations referred to in Moses v Macferlan which have been said to “resonate with equitable notions”. 12 The qualifying factor entitling Duhs to the return of his investment may be the termination of Pettett’s authority to retain it. However, the basis for Duhs to claim restitution of the full amount of his original investment in circumstances in which the investment was at risk of being lost is not evident. [9] Resort to the general considerations that Lord Mansfield described in Moses v Macferlan as the gist of the action for money had and received does not adequately address the basis for an order to “make restitution” of the sum originally invested in a case in which the sum invested on behalf of Duhs might grow, but was also at risk of being lost, in whole or in part. The pleading does not clearly disclose a basis upon which the law would impose on Pettett an obligation to pay to Duhs the sum originally invested where Duhs arguably assumed the risk that his investment would diminish. If the basis is the making of a representation in late 2004 that the money would be returned in full, then the representation should be proved at trial. If other circumstances are relied upon, they should be proved at trial. The making of promises or predictions by Pettett in more recent times that Duhs would be repaid is not relied upon in the pleading. [10] In oral submissions Senior Counsel for Duhs confirmed that the action in debt or for money had and received is not based on the contention that there had been a loan by Duhs to Pettett. It is based on the contention that there has been a failure of whatever arrangement Pettett proposed to Duhs, and Duhs is said to be entitled to repayment. The authority cited in support of this entitlement to repayment is the contract case of Ward v Eltherington. 13 In that case a condition precedent to performance by payment of a fee for engineering services was discharged by the impossibility of performance. This left the plaintiffs’ right to a fee “unconditional and unimpaired”.14 McPherson J (as his Honour then was) stated that the circumstances did not call for the application of restitutionary principles, such as were considered by Sheppard J in Sabemo Pty Ltd v North Sydney Municipal Council.15 The obligation to pay was founded on evidence that the common intention of the parties was that the plaintiffs should be paid for their work. The obligation to pay was founded on the existence of an agreement, and was not “the product of some external solution imposed by law in the interests of doing justice between them”. 16 11 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 156 [150]. 12 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 553 [95] per Gummow J; See also the references to “the general equitable notions” which find expression in the common law count in the judgment of Gleeson CJ, Gaudron and Hayne JJ at 525 [16]. 13 [1982] Qd R 561. 14 ibid at 562-563. 15 [1977] 2 NSWLR 880 at 898. 16 Ward v Eltherington (supra) at 563. -- 5 of 15 -- 6 [11] In this case the obligation to repay the sum invested is founded on restitutionary principles. The claim for relief upon which the application for summary judgment effectively stands is an order to “make restitution” following a declaration that no contractual relationship exists between Duhs and Pettett. It is supported by evidence that Duhs submits shows that Pettett has acknowledged his “indebtedness”. Duhs did not address submissions on the basis of a “failure of consideration” or address whether what was described in his submissions as “a failure of whatever arrangement Pettett proposed to [Duhs]” attracted the principles discussed in Roxborough v Rothmans of Pall Mall Australia Ltd.17 Roxborough and other recent authorities on the action for money had and received were not addressed in submissions, and the issue of whether there has been a “failure of consideration” in the sense discussed in Roxborough18 is one best determined after the nature of “the arrangement” for the investment of funds is determined at trial. [12] Whilst many matters of fact are in issue between the parties, the fact of the payment is not. Duhs paid $2,000,000 to Pettett on 2 September 2004 by cheque payable to “Kea-Watts & Associates Trust Account”. A further $700,000 was paid by cheque on 14 January 2005. Pettett’s evidence is that he had agreed to assist Duhs and Allen in “converting” funds held in this trust account into Euros, and utilising companies that he had incorporated overseas at their request. [13] Pettett’s original defence pleaded that at a “third meeting” Duhs signed various documents. These documents were produced by Pettett pursuant to r 222 of the UCPR. They bear Duhs’ signature but he says that he does not recall seeing them before. It is likely that they were signed by him at Pettett’s request. Duhs’ Counsel described the documents as “legalese, intended to confuse and mislead the poorly educated and unwary”. That description is reasonable. They are remarkable documents. What is perhaps more remarkable is that, despite pleading them, Pettett disclaims any reliance upon them as a charter of the parties’ rights and obligations. [14] Duhs says that since paying the sum of $2,700,000 he has received “some payments as interest”. These total approximately $70,000 by payments of $7,000 to $8,000 each. Duhs says that after he requested the return of his money, Pettett responded that he would be repaid. Pettett does not deny this. [15] In December 2006 Duhs’ then solicitors requested Pettett to provide “a full and detailed summary” of what he had done with Duhs’ funds, their whereabouts and when the monies would be repaid. In response Pettett wrote on 29 December 2006 that it was never his intention to “run away with the money” and that he was doing his utmost to have the funds returned to Pettett “as soon as possible”. He did not say what he had done with the money or where it was. In a further letter dated 5 February 2007 Duhs’ solicitors pursued the request for information about how the monies had been dealt with, and sought copies of all documentation, including documents that Duhs recalled signing at about the time he paid the money. Pettett did not respond. His failure to provide the documents eventually produced in these proceedings pursuant to UCPR 222 is understandable. The documents are relied upon by Duhs’ Counsel to contend that “the whole of Pettett’s conduct was a hoax” and that Pettett perpetrated a fraud. Pettett’s failure to respond to solicitors’ letters in late 2006 and early 2007 by saying anything about what had been done with the 17 (2008) 208 CLR 516 at 525 [15]-[16]. 18 ibid at 525 [15]-[16], 555-558 [101]-[109]. -- 6 of 15 -- 7 money is relied upon as undermining his recent account in these proceedings about what he did with the money. [16] Duhs obtained freezing and ancillary orders in December 2008 under UCPR 260A. In response to an order that he provide information relating to his knowledge of the investment of the sum of $2,700,000, Pettett claimed privilege on 5 December 2008 on the grounds that such information may make him liable to a civil penalty. [17] Pettett’s defence filed 8 January 2009 stated that in a telephone conversation in December 200519 Duhs informed him that Duhs had “selected a financial program in Europe from a list of programs provided by Pettett” in which he wanted the funds placed.20 No further particulars were provided, although the defence tended to suggest that one of the documents that Duhs signed, particularly a “Private Placement Agreement”, may have identified to whom Duhs authorised the payment to be made. It does not. This odd document says many things, including that Kea Watt & Associates Ltd verified that the funds would be held “in the Investment Portfolio in a Bank ranked in the top 50 Banks in Europe”. It states: “At no time do Funds leave the Portfolio during the Investment period without written authority from Party A. The Investor will receive monthly statements of their progress in the investment”. Party A is the company FAA Limited that Pettett says he registered in England and Wales to enable Duhs to invest offshore. [18] Pettett does not state that the funds were placed in accordance with this document. Instead, in an amended defence filed 24 April 2009 he pleaded for the first time that he had told Duhs in December 2004 that Pettett was “presently in a program operated by a Mr Rick’s (sic) (in association with the Hoffman Bank)” and that at the “third meeting” Duhs said that he wanted the amount of $2,700,000 to be placed in the same program. Pettett pleaded that he produced documents for Duhs to sign to permit the investment of the money, as requested, and that in accordance with his instructions, he arranged for the sum to be placed “in the same program operated by a Mr Rick’s (sic) (in association with the Hoffman Bank)”. [19] No document is produced by Pettett which mentions a Mr Rick or the Hoffman Bank. The “Private Placement Agreement” dated 7 January 2005 signed by him and Duhs does not. Unsurprisingly, Pettett does not now rely on this document as authorising the investment which he says occurred. He does not contend that the Hoffman Bank (if it exists) is “ranked in the top 50 Banks in Europe”, or that the funds were held in a bank ranked in the top 50 Banks in Europe. He produces no written authority from FAA Limited (or Duhs) authorising the withdrawal of the funds from “the Investment Portfolio” held in such a bank. [20] In his affidavit filed in response to the application for summary judgment Pettett swears that in accordance with Duhs’ instructions he arranged for FAA Ltd to place $2,700,000 “in the same program operated by a Mr Rick (in association with the Hoffman Bank)”. He had the opportunity when the hearing of the application was stood over to Friday 1 May 2009 to file further affidavit material to supplement this assertion, and produce documents verifying the transfer of funds that he alleges. He did not do so. There is no document that verifies the authorisation of the 19 This date apparently was in error. The amended defence alters it to December 2004. 20 Defence, CDI 8, para 5(p). -- 7 of 15 -- 8 “investment” of the money in a program operated by a Mr Rick (in association with the Hoffman Bank). There is no evidence that Mr Rick exists. [21] Another remarkable recent amendment to Pettett’s defence is the insertion of a contention that Pettett informed Duhs “that any investment would be repaid after 5 years”.21 No such contention was included in the original defence which denied Duhs’ allegation that he was told that the money would be repaid no later than two years after it was paid. The late pleading of such an important matter is notable. It has added significance in circumstances in which Pettett made no mention of a five year period in response to previous demands for repayment, and instead, stated that he was taking steps to recover the funds. [22] In his affidavit Pettett swears that, contrary to Duhs’ affidavit, there was no discussion concerning the return of the funds within two years. Pettett positively asserts that the agreement “was to the effect that funds would not be returned prior to a five (5) year period”. No evidence is given by Pettett about when and where this agreement was reached, and whether it was oral or in writing. He produces no document which he says incorporates such a term. [23] The “Private Placement Agreement” earlier referred to between KEA Watt & Associates and FAA Ltd includes a clause that: “The initial term of this Agreement shall run for not more than Five Year (sic) and One Day, and shall run concurrently with the above referenced CPPA”. The “CPAA” is described in the recital as a “Contractual Private Placement Agreement… which Agreement is a proven investment vehicle”. However, as previously noted, despite pleading that Duhs signed this and other documents, Pettett does not plead or contend that its terms govern the rights and obligations that exist between him and Duhs. If it did, then Pettett, by his own admission, would have been party to investing the sum in the program operated by a Mr Rick (in association with the Hoffman Bank) contrary to the mandate that the funds would be held “in the Investment Portfolio in a Bank ranked in the top 50 Banks in Europe”. [24] The foundation of Pettett’s defence to Duhs’ restitution claim, namely that there was an agreement that the funds would not be returned prior to a five year period, was laid very late. The sworn contention that there was such an agreement does not necessarily mean that the defence has a real, as opposed to a fanciful, prospect of success, and that there is a need for a trial of the claim for restitution. In Re Divoca’s Caveat22 Connolly J described a sworn contention as “simply incredible” and not raising a serious triable issue. His Honour applied the observations of Lord Diplock in delivering the judgment of the Privy Council in Eng Mee Yong v Letchumanan: 23 “Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with 21 Amended Defence filed 24 April 2009, CDI 14, para 5(u). 22 [1991] 2 Qd R 121. 23 [1980] AC 331 at 341. -- 8 of 15 -- 9 undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.” [25] These observations apply to Pettett’s belated assertion of a five year agreement. It is incredible that no mention was made of this agreement in response to solicitors’ letters of demand for payment in late 2006 or in the original defence. The omission of any reference to it is unexplained. Even at this late stage, no details are given in Pettett’s affidavit of the agreement. For instance, Pettett does not say whether the alleged five year agreement was reached at a meeting in which Allen participated. No affidavit is forthcoming from Allen, although Pettett swears that he intends to call her as a witness at the trial of this matter. [26] Mr Kenneth Morris (“Morris”), a chartered accountant, who was asked to prepare accounts for Duhs had occasion from April 2006 onwards to seek information from Pettett about the investment. In June 2006 Pettett told Morris that the $2,700,000 investment was “tied up in a development at Rathdowney” and did not say anything about the money being invested in Euros. Morris’ evidence is that Pettett said Duhs and he had agreed that the money would be invested and interest paid to Duhs, and that Duhs would get his money back. Over time Pettett gave Morris further information about the delay in repayment of the money and said it was due to delays associated with the Rathdowney development. Morris requested Pettett to repay the sum as previously promised, and for documents in relation to the matter. He was told by Pettett that Pettett could not recall any written agreement, and that any agreement was verbal. A file note that Morris wrote on 17 January 2008 of a conversation with Pettett records: 24 “According to Pettett there was some initial agreement or discussion that Henry Duhs would be a participant in project profits but Henry changed his mind about this and it was agreed to be a loan attracting interest.” [27] Morris says that Pettett gave vague information about the money being “invested in Euros and that it was connected as security with the development at Rathdowney”. Pettett’s statements did not make sense to Morris. [28] Morris’ evidence is that he was not told by Pettett of any program operated by a Mr Rick in association with the Hoffman Bank, and it was always represented to him that the monies were tied up with the Rathdowney development. Pettett initially represented to Morris that the money would be paid in December 2006, but the date was extended with Pettett blaming delays in the Rathdowney development for the extension of this date. Pettett did not ever indicate to Morris that there was an agreement between Duhs and Pettett that the funds would not be returned prior to a five year period. [29] Morris’ affidavit evidence on this aspect was responsive to Pettett’s affidavit filed 24 April 2009, and I stood the application over to Friday 1 May 2009 to enable Pettett to respond to it. I was informed by Senior Counsel for Pettett that day that Pettett did not wish to respond to Morris’ evidence. I was given no reason why I should not act on Morris’ evidence. I do so. It further undermines Pettett’s defence that there was an agreement that the funds would not be returned prior to a five year period. 24 Morris affidavit filed 30 April 2009, KCM-5. -- 9 of 15 -- 10 [30] Whether, as Duhs claims, Pettett represented in late 2004 that he could invest Duhs money and get him “good interest” and that any money that he paid to Pettett would be returned to him in two years unless it was repaid earlier, is a matter that should not be determined on an application for summary judgement. The circumstances in which these things are alleged to have been said or represented by Pettett and Allen should be the subject of evidence at trial, and there should be a trial of Pettett’s claims for fraud, breach of fiduciary duty and contravention of the Trade Practices Act. [31] The issue is whether I should be satisfied that: (a) Pettett has no real prospect of successfully defending that part of Duhs’ claim that no contractual relationship exists between him and Pettett, and that he is entitled to restitution from Pettett of the sum of $2,700,000; and (b) there is no need for a trial of the claim for restitution. [32] To the extent that Pettett seeks to defend the claim in restitution by asserting that there was an agreement “to the effect that the funds would not be returned prior to a five (5) year period”,25 Pettett has failed to descend to any detail about the circumstances under which the agreement was made. The amended defence does not particularise where and when he informed Duhs “that any investment would be repaid after 5 years”. The belated assertion of this agreement, the absence of any reference to it when a reference to it might be expected in Pettett’s dealings with Duhs’ solicitors and Morris and the improbability that someone with such a defence would not refer to it over a period of years leads me to be satisfied that Pettett does not have a real, as opposed to a fanciful, prospect of success on this ground of defence. [33] The absence of any real prospect that Pettett will establish that there was an agreement for a five year term does not establish that there was no contractual relationship between Duhs and Pettett. Duhs has some prospects of establishing that the arrangement between him and Pettett was uncertain because no rate of interest was agreed. However, a trial is required in order to determine what the nature of their arrangement was, whether Pettett assumed contractual obligations towards Duhs and, if so, the terms of any such contractual relationship. [34] Whether Duhs is entitled to restitution in full depends upon evidence at trial concerning the basis upon which the money was invested, including at whose risk losses were to be. This claim is unlike one in which monies are loaned and an obligation to repay is enforced. The claim in restitution is unlike one in which monies are advanced, or services are provided, in anticipation of a contract being concluded, and no contract eventuates. The sum of $2,700,000 is said to have been invested by Duhs with Pettett, not loaned to him. If, for instance, the evidence at trial supports the conclusion that the sum was to be converted into Euros, at whose risk was an adverse currency fluctuation of the Euro against the Australian dollar to be? Was the arrangement such that Duhs assumed no risk for losses incurred on authorised investments? If not, and if losses were sustained by the investment of his funds on authorised investments, can Pettett be said to have been “unjustly enriched” to the extent of $2,700,000? These and other questions which bear upon 25 Pettett affidavit paragraph 34(f). -- 10 of 15 -- 11 Duhs’ claim for restitution in the amount of $2,700,000 cannot be answered in an application for summary judgment. I am not satisfied that there is no need for a trial of Duhs’ claim for restitution in the sum of $2,7000,000. [35] In summary, Duhs has a strong case for restitution of what may loosely be called his “investment”. However, the claim that Pettett should “make restitution” to Duhs of the amount he originally invested requires consideration of the precise nature of the arrangement he made with Pettett and the respects in which it failed. The claim for restitution in the amount sought is not necessarily based on the “unconscientious retention”26 of that amount. Duhs apparently intended the sum to be invested, and if the sum invested was diminished through authorised investments, then the law may not impose an obligation to pay Duhs the amount that Pettett originally received, as distinct from the amount he unconscientiously retained after the arrangement failed. [36] Whilst Duhs has established that he has a strong case for restitution, he has not satisfied me that this is a case in which summary judgment should be given for the full amount claimed by him. A trial is necessary to determine whether any order for restitution should be for the amount claimed or some lesser amount. Accordingly, I decline the application for summary judgment. Conditions about the future conduct of the proceeding [37] Rule 298 of the UCPR provides that if the court dismisses an application for summary judgment, it may give directions or “impose conditions about the future conduct of the proceeding”. This rule differs in its terms from O 18 r 6 of the former Rules of the Supreme Court under which conditions could be imposed on a defendant’s “leave to defend”. However, decisions of this Court have recognized that a condition may be imposed requiring an amount to be paid into court.27 Such an order should not be made if it would be tantamount to giving judgment on the basis that such an order could not be met. 28 Duhs sought the imposition of a condition for payment into court in the event that I did not order summary judgment. Pettett did not dispute the power to impose such a condition and did not make submissions as to the terms of any such condition. He did not submit that such an order would frustrate the action, and the material read before me does not make me reach this conclusion. [38] Pettett declines to reveal what has become of the money. He does not say that the money has been lost through misappropriation by a third party to whom it was entrusted. An uninformative reference is made by Pettett to continuing attempts to recover funds that were “invested through Mr Jay Rick in the Hoffman Bank”. Despite being invited to verify this assertion with further evidence, and given an opportunity to do so, there is no evidence, apart from Pettett’s bald assertion in paragraph 31 of his affidavit, that the moneys were so invested. Duhs has told Morris that the sums invested secured a development at Rathdowney, and he forwarded documents to Morris in which there are account transactions in 2005 and 2006 styled “Rathdowney Development… investment income; interest”. Pettett’s affidavit confirms Duhs evidence about the payment of about $70,000 in interest. 26 Roxborough v Rothmans of Pall Mall Australia Ltd (supra) at 551 [89] per Gummow J. 27 Brypat Pty Ltd v Endless View Holdings Pty Ltd [2005] QSC 171; MPM Civil Pty Ltd v Ammbar Pty Ltd [2004] QSC 079; Beynon v Aikman Stoddart Accountants Pty Ltd [2004] QSC 387. 28 Commonwealth Development Bank of Australia Ltd v Kerr [2001] QSC 234 at [23]; cf DMS Shipping & Trading Co Ltd v Lionheart Asia Ltd [1996] 2 Qd R 20 at 22-23. -- 11 of 15 -- 12 However, he says nothing about the ownership or value of the Rathdowney development, and the use of Duhs funds. [39] In circumstances in which Pettett declined to disclose in paragraph 3 of his December 2008 affidavit what has become of Duhs’ funds and in his April 2009 affidavit has not been forthcoming with details, I am not in a position to conclude that the sum has been lost through a misguided investment, misappropriation or some other cause. Pettett has not relied on any material to say that the sum invested cannot be recovered in whole or in part. Pettett describes the funds that were invested as Duhs’ funds, rather than his own. [40] In circumstances in which Pettett does not swear or submit that an order of the kind sought would frustrate the litigation, I am disposed to make an order under UCPR 298. The position might have been different if Pettett had provided evidence that the investment, or a substantial part of it, had been lost and that there was no prospect of recovering it. [41] The possibility exists that all or part of the investment was lost in the course of making authorised investments. If so, this may affect the terms of any order to “make restitution” in the event that Pettett succeeds in his claim for restitution. However, the distinct possibility exists that the sum was “invested” by Pettett without authority. In circumstances in which Pettett has been reluctant to disclose details of the fate of the investment, and where the odd assortment of documents produced by him casts doubt upon his bona fides, I am reluctant to conclude that the investment has been lost in the course of making authorised investments. [42] In the circumstances, I consider that it is appropriate that Pettett be required to pay 20% of the claim into court as a condition for the future conduct of the proceeding. Conclusion – plaintiff’s application for summary judgment [43] I conclude that Duhs has a claim for restitution that should be tried, that the defence that there was to be no repayment for a period of five years has no real prospect of success and that any other defences to the claim for restitution are at best “shadowy”. 29 The application for summary judgment should be dismissed and a condition imposed for the further conduct of the proceeding. [44] I shall hear submissions as to costs. Cross-Application [45] The defendants filed a cross-application to strike out the statement of claim on the basis that it fails to disclose a reasonable cause of action, or is confusing and does not enable the defendants to know the case that they have to meet. Alternatively, they seek an order that Duhs be given leave to replead. The complaints made in this cross-application were not foreshadowed in correspondence prior to the hearing, which is unfortunate. However, it is convenient to deal with the matters that have been raised. [46] The first complaint relates to the pleading of fraud based upon representations that are alleged to have been made by silence. The complaint is that there is no pleading 29 Brypat Pty Ltd v Endless View Holdings Pty Ltd (supra) at [39]; MPM Civil Pty Ltd v Ammbar Pty Ltd (supra) at [18]. -- 12 of 15 -- 13 that Pettett had a duty to correct a statement made in his presence, that there must be a “special relationship” so as to give rise to an obligation on the party to look after another’s interests and that no such relationship is pleaded. State of Western Australia v Bond Corporation Holdings Ltd30 held that silence which in context conveys a representation may be fraudulent “in at least three cases”. French J (as his Honour then was) was not prepared to decide that silence which conveys a representation, even when outside the listed categories, was incapable of amounting to deceit. Pettett cites no authority for the proposition that there must be a “special relationship” before silence may constitute a representation. Subject to what immediately follows, I consider that paragraph 5 of the statement of claim adequately informs the defendants of the case that they are required to meet based upon the making of a representation by silence. [47] Paragraph 5(b) should be supplemented by further and better particulars. It pleads that certain things were said by Allen to Duhs “in the presence of the first defendant”. It is implicit that the first defendant knew or heard what was said and understood its meaning. This should be made explicit in further particulars. [48] Whether or not the statement that Pettett could secure Duhs’ “good interest” obliged the first defendant to correct this statement if he believed it to be untrue is a matter best determined in the light of the evidence at trial, rather than determined on an application to strike out. [49] The representations relate to future matters and in such a case it is appropriate for there to be an adequate pleading of the matters which made the representation untrue at the time it was made. The facts, matters and circumstances relied upon by Duhs to plead that Pettett knew the representation to be untrue, or alternatively, was recklessly indifferent as to whether it was true or not should be pleaded.31 Paragraph 11 of the statement of claim is defective. The Kawana Waters Hotel Representation was not untrue at the time it was made simply because, as events transpired, Duhs was not paid good interest and he was not repaid. [50] Pettett submits that the case in deceit requires proof of the element that the representation was made with the intention that Duhs should believe it. Duhs does not contest this proposition and the point was not argued. The point should be addressed in an amended pleading. [51] I accept the complaint that paragraph 13 of the pleading does not adequately plead or particularise the basis upon which the second defendant and/or the third defendant are alleged to have been “knowingly involved or concerned in” the deceit of the first defendant. Simply because Pettett exercised control over them is insufficient. [52] Greater precision is required concerning the respects in which the omissions and other matters pleaded in paragraph 17 of the statement of claim are alleged to have breached the fiduciary duty that is pleaded. The pleaded duty is to act in good faith in giving Duhs financial or investment advice, to act honestly with respect to the financial affairs of Duhs, to “faithfully serve” Duhs with respect to the investment of his money and to not act for any improper purpose. At least some of the matters raised in paragraph 17 are suggestive of a failure to act with reasonable care rather 30 (1991) 28 FCR 68 at 89. 31 UCPR 149(1)(c), 150(2). -- 13 of 15 -- 14 than a failure to perform a fiduciary duty. The respects in which the matters pleaded in paragraph 16 are relevant to the claim for breach of fiduciary duty should be clarified in an amended pleading. These allegations may have a relevance to the claim of unconscionable conduct. [53] As to paragraph 18(b) of the statement of claim, the respects in which the second defendant and/or the third defendant were “knowingly involved or concerned in” the breach of fiduciary duties pleaded in paragraph 15 should be better pleaded. The respects in which the second defendant and the third defendant were each involved or concerned in the breach of fiduciary duty should be apparent from the pleading. The mere fact that Pettett exercised control over them is insufficient to adequately plead that each entity was knowingly involved or concerned in his breach of fiduciary duty. [54] The particular acts of the second defendant and the third defendant that are said to constitute unconscionable conduct should be better pleaded. Paragraph 21 is conclusionary in its terms and reliance on “the premises of paragraphs 1 to 20 of the Statement of Claim” does not adequately inform the defendants or the Court of the specific conduct of each defendant that is relied on for the purpose of this part of the claim or the basis upon which the conduct is alleged to have been unconscionable. [55] The appropriate course in the circumstances is to grant leave to Duhs to deliver an amended statement of claim which addresses the complaints that I have upheld, and such other amendments as he may be advised to make. [56] Finally, the further conduct of this litigation and the identification of the issues for trial will be assisted if the parties plead with precision the agreement, if any, which he contends existed between the plaintiff and the first defendant. Duhs may wish to adhere to the position that no contractual relationship exists between him and the other defendants. If Pettett contends that an agreement existed between him and Duhs, then the agreement should be clearly pleaded and properly particularised. [57] The appropriate order on the cross-application is that: 1. The plaintiff be granted leave to deliver an amended statement of claim within 28 days. 2. The cross-application otherwise be adjourned to a date to be fixed. I shall hear submissions as to costs. Orders 1. The application for summary judgment is dismissed. 2. The first defendant pay into court the sum of $540,000, or alternatively give security in that sum in a form acceptable to the Registrar, within 28 days of this order, failing which the plaintiff be at liberty to enter judgment against the first defendant for the amount of his claim together with interest and costs. 3. The plaintiff be granted leave to deliver an amended statement of claim within 28 days. -- 14 of 15 -- 15 4. The cross-application otherwise be adjourned to a date to be fixed. -- 15 of 15 --