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Drake v PKF (Gold Coast) Pty Ltd[2022] QSC 197

Drake v PKF (Gold Coast) Pty Ltd[2022] QSC 197

SUPREME COURT OF QUEENSLAND

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CITATION:

Drake v PKF (Gold Coast) Pty Ltd & another [2022] QSC 197

PARTIES:

PETER CHARLES DRAKE

(plaintiff)

v

PKF (GOLD COAST) PTY LTD ACN 137 531 250

(first defendant)

SCOTT JAMES McMURTRIE

(second defendant)

FILE NO/S:

2822 of 2019

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

16 September 2022

DELIVERED AT:

Brisbane

HEARING DATE:

2 August 2022

JUDGE:

Hindman J

ORDER:

  1. 1.The statement of claim filed by the plaintiff on 26 July 2022 is struck out pursuant to rule 171 of the UCPR.
  2. 2.The plaintiff has leave to file an amended statement of   claim.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COURT SUPERVISION – WANT OF PROSECUTION OR LACK OF PROGRESS – where the plaintiff is seeking damages for a claim in negligence against the defendants – where the original statement of claim was struck out and the plaintiff was given six months to re-plead – where the amended pleadings have continually contained the same defects as the earlier pleadings and been struck out – where the relevant events occurred many years ago – whether the new statement of claim should be struck out – whether leave to replead should be given – whether there are exceptional circumstances such that the proceeding should be dismissed.

Corporations Act 2001 (Cth)

Drake v PKF (Gold Coast) Pty Ltd & Anor [2020] QSC 401

Drake v PKF (Gold Coast) Pty Ltd & Anor [2021] QCA 83

Graham & Linda Huddy Nominees Pty Ltd v Byrne & Ors [2016] QSC 221

COUNSEL:

P Hackett for the applicant

B O'Donnell with DEF Chesterman for the respondents

SOLICITORS:

Mott Lawyers for the applicant

Hall & Wilcox for the respondents

Introduction

  1. [1]
    The defendants apply for the plaintiff’s amended statement of claim filed on 26 July 2022 (ninth statement of claim) to be struck out pursuant to rule 171 of the Uniform Civil Procedure Rules 1999 (UCPR), without leave to replead.  If that relief is granted, the defendants further seek that the proceeding be dismissed pursuant to rule 280 of the UCPR or the inherent jurisdiction of the court.
  2. [2]
    The proceeding was commenced in March 2019.  The defendants have not yet been required to defend the proceeding.  That is because the plaintiff has yet not delivered a statement of claim compliant with the UCPR. 
  3. [3]
    The ninth statement of claim is also non-compliant with the UCPR.  I strike it out pursuant to rule 171 of the UCPR.  I decline to dismiss the proceeding.  I give the plaintiff leave to replead the statement of claim to address the non-compliances identified in these reasons.   

Background to the progress of the proceeding

  1. [4]
    Some relevant background to the progress of the proceeding is conveniently set out in the judgment of the Court of Appeal in Drake v PKF (Gold Coast) Pty Ltd & Anor [2021] QCA 83, where at [4] the court recorded:
  1. “[4]
    The material shows that the relevant steps and other aspects of the proceedings below have been as follows:
  1. (a)
    Mr Drake first retained solicitors in June 2017;
  1. (b)
    he commenced the proceedings on 14 March 2019;
  1. (c)
    on 25 June 2019 it was conceded that the original statement of claim was deficient, and it was the intention to re-plead by 2 September 2019;
  1. (d)
    on 21 August 2019 an application was filed by the respondents, seeking to strike out the claim and statement of claim on the basis that the loss claimed was reflective of loss suffered by LMIM, or the same as that loss;
  1. (e)
    on 12 September 2019 a proposed amended statement of claim was delivered; an application was filed by Mr Drake’s lawyers, seeking leave to amend the statement of claim under r 376 of the Uniform Civil Procedure Rules 1999 (Qld);
  1. (f)
    the hearing date for each application became 16 September 2019;
  1. (g)
    on 16 September 2019 it was ordered that the original statement of claim be struck out; there was no appeal from that order; it was also agreed that a further statement of claim would be provided by 31 October 2019; no further statement of claim was delivered by that date;
  1. (h)
    on 11 November 2019 an application was filed by the respondents under r 374 of the UCPR seeking judgment; Mr Drake’s lawyers sought an adjournment based on a medical report as to Mr Drake’s mental state;
  1. (i)
    the hearing was adjourned to 18 December 2019, and when a further draft statement of claim was produced the hearing was further adjourned to 11 February 2020;
  1. (j)
    on 23 January 2020 yet another draft statement of claim (the fourth such draft) was produced; that became the pleading considered on 11 February 2020;
  1. (k)
    on 11 February 2020 the draft statement of claim was considered by Dalton J; leave to file that document was refused;
  1. (l)
    on 11 February 2020 Mr Drake’s counsel accepted the proposal that six months was to be given so that the necessary steps to re-plead could be addressed; Dalton J granted the six months period; her Honour also placed the matter on the commercial list so that directions could be sought quickly if there were problems;
  1. (m)
    no application for directions was made;
  1. (n)
    on 17 April 2020 Mr Drake advised his solicitors that he could no longer continue with them as his solicitors;
  1. (o)
    on 25 May 2020 Mr Drake requested his files from his former solicitors; and
  1. (p)
    as at 26 August 2020 Mr Drake had taken no steps to obtain the documents he said he needed to re-plead.”
  1. [5]
    At the hearing on 26 August 2020, Dalton J (as Her Honour then was) dismissed the proceeding because of the plaintiff’s persistent non-compliance with the UCPR.  That order was the subject of an appeal by the plaintiff and the Court of Appeal set the order aside on 30 April 2021.  That deals with events up to and including the fourth statement of claim.  Since the decision of the Court of Appeal on 30 April 2021:
    1. (a)
      on 13 September 2021, there was a hearing before Daubney J relating to the plaintiff’s application for leave under rule 376 of the UCPR to file a further statement of claim (the fifth statement of claim).  Leave was determined to be unnecessary;
    2. (b)
      on 5 October 2021, the plaintiff filed a further statement of claim (the sixth statement of claim);
    3. (c)
      on 2 December 2021, the defendants’ application to strike out the sixth statement of claim was heard before Martin J (as His Honour then was);
    4. (d)
      on 9 December 2021, Martin J published reasons for decision, and ordered that the sixth statement of claim be struck out, with the plaintiff having leave to file a further amended statement of claim by 21 February 2022.  In his reasons for the decision Martin J commented that because the plaintiff was now represented by a firm of solicitors he was satisfied that it was appropriate to allow the plaintiff a “final” opportunity to draw a pleading that satisfied the rules;
    5. (e)
      on 21 February 2022, the plaintiff filed a further statement of claim (the seventh statement of claim);
    6. (f)
      on 22 March 2022, the defendants filed an application to strike out the seventh statement of claim, and sought that the proceeding be dismissed;
    7. (g)
      that application came on for hearing before Flanagan J (as His Honour then was) on 6 May 2022, but was adjourned to 2 August 2022 to give the plaintiff a further opportunity to plead his statement of claim, particularly as to causation;
    8. (h)
      on 25 July 2022, the plaintiff filed another amended statement of claim (the eighth statement of claim);
    9. (i)
      on 2 August 2022, the plaintiff provided to the court (and filed) another further amended statement of claim (the ninth statement of claim) which he sought leave to rely upon for the purpose of the argument that day.
  2. [6]
    As a consequence of the filing of the ninth statement of claim that addresses some of the complaints raised by the defendants about the seventh and eighth statements of claim, there has been a limited narrowing of the pleading complaints said by the defendants to adversely affect the ninth statement of claim.  I propose to deal with the defendants’ application in the following way:
    1. (a)
      consider the remaining pleading complaints made by the defendants about the ninth statement of claim;
    2. (b)
      consider whether any pleading deficiencies in aggregate lead me to conclude that the whole of the ninth statement of claim ought be struck out;
    3. (c)
      if the whole of the ninth statement of claim is struck out, consider whether leave to replead should be given to the plaintiff;
    4. (d)
      if leave to replead is not given to the plaintiff, consider whether the proceeding ought be dismissed.
  3. [7]
    The relevant legal principles to be applied in respect of each of those steps do not appear to be contentious between the parties, are well known, and so are not necessary to set out here.  

Pleading complaints

Matters previously dealt with by Martin J

  1. [8]
    The first category of pleading complaints by the defendants concern matters that have already been dealt with by Martin J in his decision of 9 December 2021.  In that decision an earlier iteration of the statement of claim, namely the sixth statement of claim, was struck out on various bases including that the pleading incorporated irrelevant material and made references to evidence and references to opinion, which should not properly appear in a pleading.
  2. [9]
    The first specific pleading complaint relates to [9(d)] of the ninth statement of claim.  It provides: “At all times material to this proceeding … (d) [the compliance committee] never reported any financial difficulties or any symptoms of insolvency [of LMIM] on or before March 2013”.  Martin J’s reasons at [9] make clear that [9(d)] of the then statement of claim in that form incorporated irrelevant material and did not comply with the requirements of a pleading.  The defendants say that [11(c)] of the ninth statement of claim also suffers from the same problem. 
  3. [10]
    I note though that [29] of the ninth statement of claim seeks to pick up that the defendants were aware of certain matters, including those matters in [9(d)] and [11(c)] of the ninth statement of claim.  The pleading of knowledge in [29] of the ninth statement of claim is deficient in that it does not comply with rule 150(2) of the UCPR.  Further, it might be that the plaintiff intends to plead as a material fact the defendants’ knowledge of the financial circumstances of LMIM (as distinct from what might have been “reported” by a committee or team which seems of marginal, if any, relevance), but that is not what the paragraphs referred to above actually achieve.
  4. [11]
    However, on the basis that the plaintiff contends that the defendants’ knowledge of the matters in [9(d)] and [11(c)] of ninth statement of claim is relevant to the pleaded negligence claim, I am satisfied that those paragraphs are pleadings of material facts and so are not liable to be struck out. 
  5. [12]
    Complaint is also made by the defendants about [21(a)-(e)] of the ninth statement of claim.  Martin J in his decision at [14] gave as an example of opinion or irrelevant information the paragraph of the sixth statement of claim that is now [21(b)] of the ninth statement of claim.  I agree.  [21(b)] of the ninth statement of claim is deficient and is liable to be struck out commencing from the words “any proper review”. 
  6. [13]
    Further, [21(a)-(e)] of the ninth statement of claim are submitted by the defendants to be a pleading of evidence and not a pleading of material facts relevant to the cause of action.  The plaintiff says that the matters pleaded are part of the factual matrix.  I agree with the defendants that the pleading in [21(a)-(e)] of the ninth statement of claim, as currently pleaded, is not germane to the allegation of negligence made in the statement of claim.
  7. [14]
    The position might be different if it were pleaded that the defendants knew, or ought to have known of the matters pleaded in [21(a) to (e)] of the ninth statement of claim, but there is no such allegation pleaded by the plaintiff.  [21(a) to (e)] of the ninth statement of claim are liable to be struck out. 
  8. [15]
    The same problem affects new paragraphs [21(g), (h) and (j)] of the ninth statement of claim (which were not the subject of any submissions) which are also liable to be struck out.

Other complaints

  1. [16]
    Complaints about relevancy are also made by the defendants in relation to [3(h)-(i)] and [3(j)(iii)] (from the word “and” only) of the ninth statement of claim.  I do not consider any of those matters to be material facts relating to the negligence cause of action pleaded.  [3(h)-(i)] and [3(j)(iii)] (from the word “and”) of the ninth statement of claim are liable to be struck out. 
  2. [17]
    [7] of the ninth statement of claim is submitted by the defendants to be a pleading of evidence and not a pleading of material fact relevant to the cause of action.  The plaintiff says that the matters pleaded are part of the factual matrix. 
  3. [18]
    I note that [29] of the ninth statement of claim seeks to pick up that the defendants were aware of certain matters, including those matters in [7] of the ninth statement of claim.  As I have mentioned, the pleading of knowledge in [29] of the ninth statement of claim is deficient in that it does not comply with rule 150(2) of the UCPR. 
  4. [19]
    On the basis that the plaintiff contends that the defendants’ knowledge of the matters in [7] of ninth statement of claim is relevant to the pleaded negligence claim, I am satisfied that those paragraphs are pleadings of material facts and so are not liable to be struck out. 
  5. [20]
    The defendants submit that [30] of the ninth statement of claim is repetitive of [31] .  The plaintiff says the pleading at [30] provides context.  There is no allegation that the defendants knew of the alleged pressure referred to in [30].  Accordingly, it is not relevant context to the negligence claim pleaded against the defendants and it is otherwise relevantly repetitious of [31].  [30] of the ninth statement of claim is liable to be struck out.
  6. [21]
    The defendants submit that [32] of the ninth statement of claim is a pleading of evidence and not of a material fact.  The plaintiff says it provides context.  The pleaded facts that the second defendant came downstairs from his office at PKF or that the meeting was held in a particular location are not material facts.  But the fact of the meeting between the second defendant and the plaintiff is important and is required to understand who participated in the meeting referred to in [34]. 
  7. [22]
    Whilst the plaintiff should consider amending [32] to remove the non-material facts mentioned (or alternatively delete [32] and amend [34]), the paragraph is not liable to be  struck out. 
  8. [23]
    The defendants submit that [37(d)(vi)] and [45] of the ninth statement of claim are inconsistent with the balance of the statement of claim and should be struck out.  That appears correct to me.  Those paragraphs postulate a termination of the agreement that would see LMA not have the benefit of any funds, whereas the claim made in the proceeding is based on LMA receiving the funds.  Therefore, the allegations can not be causally relevant to the claim made.  The plaintiff does not appear to disagree with any force with that analysis.  [37(d)(vi)] and [45] of the ninth statement of claim are liable to be struck out.     
  9. [24]
    The defendants submit that [48(a)] of the ninth statement of claim should be struck out on the basis that the Further Advice in [23] was opinions or predictions which could not be either true or false.  I agree with that in respect of [23(a) and (d)] which are not matters which objectively could be true or false.  But I think there is scope to contend that the Further Advice in [23(b) and (c)] purported to be statements of fact and those statements of fact were not true.  I consider then that [48(a)] of the ninth statement of claim is liable to be struck out.  If that allegation was restricted only to the Further Advice mentioned in [23(b) and (c)] it would not be liable to be struck out.         
  10. [25]
    The defendants submit that [48(b)] of the ninth statement of claim should be struck out as it cannot succeed in the terms pleaded because it is an incorrect statement of s. 588G(1) of the Corporations Act 2001 (Cth).  I agree.  The negligence claim based on that fact as presently pleaded is doomed to fail – the second defendant could not be negligent for failing to give incorrect advice.  It is not a question of degree and discretion as submitted by the plaintiff.  [48(b)] of the ninth statement of claim is liable to be struck out.       
  11. [26]
    As to [48(c)] of the ninth statement of claim, the defendants submit it should be struck out as being repetitious of [47] and [37(d)(v)].  I do not agree that it is sufficiently repetitious to justify striking it out.  That is because [37(d)(v)] deals with what occurred at a specific meeting, and [47] appears to me to be a composite piece of advice that the plaintiff says the second defendant did not give – it is not appropriate to split that advice up into parts.  [48(c)] of the ninth statement of claim is not liable to be struck out.  
  12. [27]
    The defendants submit that [49] of the ninth statement of claim is not relevant to the cause of action pleaded.  I agree.  In addition, the pleading does not comply with the pleading rules where a state of mind is pleaded.  The plaintiff agrees to the deletion of “chose”.  But that leaves the allegation as merely repetitious of allegations already pleaded.  [49] of the ninth statement of claim is liable to be struck out.       
  13. [28]
    The defendants submit that [53] is liable to be struck out as a pleading of opinion.  I agree.  The plaintiff proposes to delete the words “its” and “inevitable”.  I consider that sufficient to fix the pleading problem.  The words “its” and “inevitable” in [53] of the ninth statement of claim are liable to be struck out.  The plaintiff should consider tidying up the language of the balance of the paragraph after those words are removed. 

Counterfactual complaints  

  1. [29]
    The defendants submit that [58(f)] of the ninth statement of claim ought be struck out as it is not a material fact relevant to the cause of action pleaded.  I agree.  Unless the plaintiff pleads relevant steps that would have been taken upon the receipt of such advice, the allegation is not material to the cause of action pleaded.  [58(f)] of the ninth statement of claim is liable to be struck out.  
  2. [30]
    The defendants submit that [58(h)] of the ninth statement of claim is irrelevant given the plaintiff was one of four directors at the time, and in any event does not plead the facts upon which the plaintiff formed the pleaded state of mind. A complaint is also made about the particularisation of the paragraph.  The plaintiff seems to say the answer to the director issue is as pleaded in [58(a)], but if that be the position, then it needs to be pleaded in [58(h)].  The state of mind is not properly pleaded.  The paragraph is lacking in necessary particulars.  [58(h)] of the ninth statement of claim is liable to be struck out.            
  3. [31]
    The defendants submit that [58(i)] of the ninth statement of claim ought be struck out as it is not a material fact relevant to the cause of action pleaded, or is the pleading of an opinion or a pleading of a conclusion without underlying facts.  I do not consider it is the pleading of an opinion.  It is a pleading of a counterfactual.  In so far as it is alleged that there are not sufficient underlying facts pleaded, I consider that can be addressed by way of a request for particulars.  It is presently not sufficiently particularised.  [58(i)] of the ninth statement of claim is not liable to be struck out. 

LMA Trust 

  1. [32]
    [1(b), (c), (d)(iii)], [64(c)] and [65] of the ninth statement of claim relate to the LMA Trust.  The defendants complain that the pleading does not include required detail as to, for example, the terms of the trust bearing on the trustee making distributions of profits to beneficiaries, who are the other beneficiaries, the extent of the discretion and what the terms of the deed which might control or regulate the exercise of the trustee’s power.  This was an issue remarked upon by Dalton J in her earlier decision ([2020] QSC 401[2.22 - 30]).   
  2. [33]
    Those matters ought be pleaded, at least, to prevent surprise at trial.  [1(b), (c), (d)(iii)], [64(c)] and [65] of the ninth statement of claim are not sufficiently particularised.  However, [1(b), (c), (d)(iii)], [64(c)] and [65] of the ninth statement of claim (which are themselves not objectionable as to their content) are not liable to be struck out. 

Causation

  1. [34]
    The problems with the plaintiff’s pleaded causation case have been raised both before Dalton J and Flanagan J.
  2. [35]
    The nub of the defendants’ complaint about the plaintiff’s pleading of causation by the time of hearing appeared to be that the plaintiff’s allegation as to the solvency and ongoing solvency of LMIM, LMA and each of the managed funds was contained in a particular to the ninth statement of claim (particulars (v) and (vi) to [64]) and was not properly particularised.  I agree.  Those matters appear to me to be essential material facts to the counterfactual pleaded by the plaintiff and ought be contained in the pleading proper, and properly particularised.    
  3. [36]
    The defendants also complain as to the plaintiff’s reliance in the pleading on a document described as a “Cash Flow Projection” as being a pleading of evidence.  I agree.  The pleading might be useful if the document disclosed material facts to support an allegation of solvency, but the document itself is bereft of detail, including underlying assumptions. 
  4. [37]
    The defendants also complain that in circumstances where the plaintiff pleads a loss of opportunity based on a 100% probability of the counterfactual occurring, the pleading should plead with particularity the facts by which that certain outcome would have been achieved – see Graham & Linda Huddy Nominees Pty Ltd v Byrne & Ors [2016] QSC 221 at [50].  Again, I agree.  The pleading does not achieve that.  
  5. [38]
    These are problems that cannot be fixed by striking out discrete parts of the ninth statement of claim.  Some significant amendments to the ninth statement of claim are required to cure these deficiencies. 

Should the whole statement of claim be struck out  

  1. [39]
    The fact that the plaintiff’s pleaded causation case remains deficient in a way that can not be cured by striking out of discrete parts of the ninth statement of claim, combined the parts of the pleading I have identified are liable to be struck out or are lacking in proper particulars, has persuaded me that the whole of the ninth statement of claim should be struck out. 
  2. [40]
    I strike out the ninth statement of claim. 

Leave to replead / dismiss the proceeding

  1. [41]
    I am not prepared to refuse the plaintiff leave to replead or to dismiss the proceeding at this time.  I give leave for the plaintiff to file a further statement of claim.
  2. [42]
    I take into account: 
    1. (a)
      the requirements and underlying philosophy of rule 5 of the UCPR and case management principles;
    2. (b)
      the lack of progress of the proceeding in light of the plaintiff’s difficulties pleading a compliant statement of claim;
    3. (c)
      the indulgences given to the plaintiff have been significant and the plaintiff has been warned to the effect that he would not receive further opportunities to amend his statement of claim;
    4. (d)
      the proceeding was commenced only shortly before the expiry of the relevant limitation period, meaning that the relevant discussions on which the cause of action is based now occurred some nine years ago (in March 2013) – this is a circumstance which means that the proceeding ought proceed in a particularly expeditious way;
    5. (e)
      the prospect of a fair trial is adversely affected by delay – the proceeding itself is now over three years old;
    6. (f)
      delay may result (and arguably is resulting) in other prejudice to the defendants;
    7. (g)
      the ninth statement of claim is defective (although, it appears to me, less defective than earlier versions);
    8. (h)
      the same types of complaints have been raised by the defendants about the earlier versions of the statement of claim;

to be balanced against:

  1. (i)
    it being clear enough in a general way what is the claim intended to be made against the defendants by the plaintiff (although it does need to be properly pleaded);
  2. (j)
    the intended claim is prima facie regular;
  3. (k)
    that in assessing any prejudice to the plaintiff, particular focus should be had to any prejudice that has accrued over the past three years since the proceeding was commenced – that is the prejudice resulting from the plaintiff’s inability to properly plead its claim;
  4. (l)
    some, but not all of the plaintiff’s difficulties and delays may be attributed to the plaintiff’s personal bankruptcy and periods of being unrepresented;
  5. (m)
    that to dismiss the proceeding would be to deprive the plaintiff of potentially valuable rights.
  1. [43]
    I am not prepared to act on the basis, as was submitted by the defendants, that the proceeding has negligible prospects of success.  Nor I am prepared to act on the basis that the plaintiff is unable to properly plead a cause of action compliant with the UCPR.   
  2. [44]
    With some significant hesitation, given the number of opportunities the plaintiff has already been given to deliver a compliant statement of claim, I am prepared to allow the plaintiff an opportunity to replead his statement of claim.  I do not consider that the circumstances are yet of the exceptional type that would permit me to dismiss the proceeding.   

Conclusion

  1. [45]
    The orders I make are:
    1. (a)
      The statement of claim filed by the plaintiff on 26 July 2022 is struck out pursuant to rule 171 of the UCPR.
    2. (b)
      The plaintiff has leave to file an amended statement of claim.
  2. [46]
    I will hear the parties as to costs.   
Close

Editorial Notes

  • Published Case Name:

    Drake v PKF (Gold Coast) Pty Ltd & another

  • Shortened Case Name:

    Drake v PKF (Gold Coast) Pty Ltd

  • MNC:

    [2022] QSC 197

  • Court:

    QSC

  • Judge(s):

    Hindman J

  • Date:

    16 Sep 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Drake v PKF (Gold Coast) Pty Ltd [2021] QCA 83
2 citations
Jump To
Cite 1 - [2021] QCA 83
Cite 2 - [2021] QCA 83
Drake v PKF (Gold Coast) Pty Ltd [2020] QSC 401
2 citations
Jump To
Cite 1 - [2020] QSC 401
Cite 2 - [2020] QSC 401
Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221
2 citations
Jump To
Cite 1 - [2016] QSC 221
Cite 2 - [2016] QSC 221

Cases Citing

Case NameFull CitationFrequency
Drake v PKF (Gold Coast) Pty Ltd [2023] QSC 455 citations
Drake v PKF (Gold Coast) Pty Ltd (No 2) [2023] QSC 664 citations
1

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