DEFENDANT SEEKS TO STRIKE OUT STATEMENTS FROM THE PLAINTIFF’S CLAIMS FOR FAILURE TO DISCLOSE A REASONABLE CAUSE OF ACTION

BOZIC -v- BILLIS [2021] WASC 88 (28 May 2021)

The first and fourth defendants apply to strike out three paragraphs of the plaintiff's further amended statement of claim on the basis that they fail to disclose a reasonable cause of action.

Facts:

The first defendant, Anton Billlis, is the husband of the fourth defendant, Phanatchankorn Wichaikul. The subject matter of the action is 224,000 fully paid ordinary shares in the third defendant, Tribune Resources Limited.

The plaintiff, Franjo Bozic, commenced the action against the defendants by writ with endorsement of claim, filed 15 September 2017.

On 30  June 2020, the plaintiff filed an amended writ.  Relevantly, the endorsement now claimed damages or compensation for fraud by the first, third and fourth defendants in 2010 and 2011 when 224,000 shares in Tribune Resources were transferred to the first defendant, then to the fourth defendant, without the plaintiff's consent, acquiescence or knowledge.

The plaintiff filed minutes of amended statement of claim on 30 June 2020 and 25 September 2020, and filed the Further Amended Statement of Claim, which is the subject of the present application, on 5 November 2020.

The plaintiff pleads that he is the registered holder of 250,000 shares in Rand Mining 'and ought to be the registered holder of 224,000 shares in the Third Defendant corporation. He pleads that in 1996, Tribune Resources offered him an opportunity to subscribe for 1 million shares in Tribune Resources. The plaintiff accepted the offer but the third defendant only issued him 224,000 shares.

The plaintiff pleads that he is entitled to a declaration against Tribune Resources that he is 'is legally and beneficially entitled to the 224,000 shares in the third defendant held by the Plaintiff.

The claims in the prayer for relief include:

(1) against  the  first  defendant, a declaration that the  transfer  of  the plaintiff's  shares  'was a fraud carried out by the first defendant his servants or agents on the plaintiff', and  damages or compensation in equity for fraud;

(2) against Tribune Resources an order for the rectification of the share register to show the plaintiff is the registered holder of 224,000 fully paid ordinary shares; and

(3) against the fourth defendant the declaration that she holds 224,000 shares on trust for the benefit of the plaintiff; the disgorgement of full profits obtained from her holding of the shares or for her to account, as if trustee, for those profits; and an order that she transfer the shares to the plaintiff.

Issue: Should the amended complaint be stricken out as sought by the defendant based on the ground above-mentioned?

Analysis:

The present application calls upon a further well established  principle: what is needed to satisfy the requirement for a clear statement of the case will depend upon the nature of the allegations made. Fraud must be pleaded distinctly and with particularity.

It is  quite inappropriate and unacceptable to make an allegation of fraud without proper particulars of the conduct relied upon.

An allegation of fraud must not only be pleaded distinctly and with particularity, but established by clear and cogent proof. There must be a finding that the fraudulent conduct alleged has in fact occurred.

The material facts (excluding  particulars) pleaded by the plaintiff are patently insufficient.

The plaintiff pleads no more than that:

(1) the first defendant, his agents or servants, instructed the share registry of the third defendant to transfer the plaintiff's shares to the fourth defendant;

(2) the share registry of the third defendant carried out the instructions;

(3) the instructions given by the plaintiff were fraudulent.

The particulars include the following which should have been pleaded as material facts: the instruction was given by a standard transfer form; that form was not signed the plaintiff; and it was signed without his knowledge, consent or acquiescence.

Conclusion: The court accepts the submission made by the defendants that the pleading of fraud is the assertion of a conclusion without a proper statement of the material facts on which the plaintiff relies.

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