Federal Court of Australia

Richards v Han [2020] FCA 1886

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application be dismissed.

2.    The applicant pay the respondents’ costs on a party/party basis up to and including 1 September 2020 and on an indemnity basis from after 1 September 2020, as agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application be dismissed.

2.    The applicant pay the respondents’ costs on a party/party basis up to and including 1 September 2020 and on an indemnity basis from after 1 September 2020, as agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from transcript)

THAWLEY J:

1    This judgment concerns two related proceedings commenced in October and November 2019. The applicant in both proceedings, Mr Richards, filed interlocutory applications on 17 March 2020 and 23 March 2020, seeking orders for summary judgment in respect of certain aspects of his claims and orders striking out various paragraphs of the defences filed in the proceedings. The first respondent in both claims is Mr William Zi Wei Han, a Chinese businessman. Mr Han is the Chairman of the White Horse Communication Group. In addition to extensive business interests in China, Mr Han has business interests in Australia.

2    Proceeding numbered ACD71/2019 has been referred to by the parties as the “Lindeman Claim”. It relates to work done by Mr Richards in connection with a derelict resort at Lindeman Island. Proceeding numbered ACD89/2019 has been referred to as the “Shareholding Claim”. It relates to an asserted agreement made orally on or about 31 May 2016 between Mr Richards and Mr Han concerning what has been referred to by Mr Richards as the “E-Commerce and Retail Business”. Mr Richards claims he was promised 3% of the total shareholding of the company to be listed in consideration for various matters including performing work for the “international group of companies” associated with Mr Han. Mr Richards claims that he performed work to facilitate the public listing of a company on a stock exchange and managing Mr Han’s Australian companies, namely the second to eleventh respondents in the Shareholding Claim.

3    The interlocutory application in the Lindeman Claim is supported by a 24 page affidavit of Mr Richards and an exhibit of 536 pages and an affidavit in reply. The interlocutory application in the Shareholding Claim is supported by a 31 page affidavit of Mr Richards and an exhibit of 808 pages and an affidavit in reply. The parties prepared and filed extensive written submissions and objections to evidence. This material reveals that the applicant wishes to engage in complex and fact intensive summary judgment and strike out applications with the intended result that, assuming the applicant were successful in those applications, both proceedings could then continue for an assessment of damages.

background

The parties

4    As mentioned, Mr Han is involved with numerous companies, projects and business ventures under the umbrella of “White Horse” or “White Horse Group”. The White Horse Group was established as an advertising company. It developed into a media company and now has two television channels relating to golf and television shopping. It has mining investments and several real estate projects.

5    Mr Richards, a barrister practising in Canberra, is a director of Web and Software Angels Pty Ltd (ACN 117 660 214) (WSA).

6    The Shareholding Claim involves 11 respondents. Mr Han (the first respondent) is a major shareholder and director of the second to eleventh respondents in the Shareholding Claim. The second to eleventh respondents are companies registered in the Australian Capital Territory. Mr Richards was a director of the second respondent to the Shareholding Claim, White Horse Global Holdings Pty Limited (ACN 613 378 108) from 30 June 2016 until 16 October 2019. Mr Richards was a director of the remaining respondents to the Shareholding Claim from 25 October 2017 to 16 October 2019.

7    The second respondent in the Lindeman Claim, White Horse Australia Lindeman Pty Ltd (ACN 152 242 610), is a company whose shareholders include Mr Han. Mr Richards became a director of White Horse Lindeman on 25 October 2017 and was removed as a director on 8 October 2019. The other major shareholder of White Horse Lindeman, Mr Mao, is not a party in either proceeding and nor is he a shareholder or officeholder of any other company in the proceedings apart from White Horse Lindeman.

The Shareholding Claim

8    In the Shareholding Claim, Mr Richards alleges that he did work relating to a potential public listing of a company relating to the “V-platform”, which is described in the Statement of Claim as an “E-Commerce and Retail Business”, on a stock exchange (including both the Australian Securities Exchange and the Shanghai Stock Exchange). The listing never occurred. Mr Richards also claims that he performed other work to manage the second to eleventh respondents (being the Australian-based White Horse group companies) and the proposed online business. The central arrangements on which this claim is based were not the subject of any written agreement, but were said to arise – initially at least – during a conversation on or about 31 May 2016.

9    The second respondent, White Horse Global Holdings Pty Ltd, was the company which it was considered might be listed on the Australian Stock Exchange. Mr Richards, in written submissions, says that White Horse Global was to be an Australian vehicle for the White Horse Group. He submits that the White Horse Group wanted to conduct an e-commerce online retail business in the Australian market.

10    The respondents accept that there were negotiations on 31 May 2016 with a view to entering into an agreement with Mr Richards along the lines alleged by him, but say that no agreement was ultimately reached.

11    In the Shareholding Claim, the applicant seeks the following relief:

1.    Damages for breach [of] a contract between the Applicant and First Respondent with regard to the Contract dated 31 May 2016 (as pleaded within the Statement of Claim).

2.    Further or alternatively:

a.    a declaration that:

I.     the First Respondent has contravened section 18 of Schedule 2 of the Competition and Consumer Act 2010 (the ACL) by engaging in conduct with the Applicant that was misleading and deceptive;

II.    the First Respondent has contravened section 21 of the ACL by acquiring the services of the Applicant for the Second to Eleventh Respondents, in circumstances which were unconscionable;

III.    the First Respondent has contravened section 20 of the ACL by engaging in unconscionable conduct, such that it would be unconscionable for the First Respondent and/or the Second Respondent and/or the Third to Eleventh Respondent to deny the promise made by the First Respondent to the Applicant on 31 May 2016, on the basis that there is no written contract between the parties;

IV.    the each of the Respondents have contravened section 31 of the ACL by engaging in conduct that was liable to, and did, mislead the Applicant in relation to the nature, terms or conditions of his employment with the Second to Eleventh Respondents;

b.    damages pursuant to section 236 of the ACL for conduct in contravention of sections 18, 20, 21 and 31 of the ACL;

c.    equitable damages and/or compensation for the services performed by the Applicant for the Respondents between 22 July 2017 and 5 September 2019.

3.    Interest pursuant to section 51A of the Federal Court of Australia Act 1976.

4.    Costs.

12    The background to the central conversation on or about 31 May 2016 is as follows. On 17 July 2015, WSA entered into a three month written contract with the White Horse Communications Group for the provision of services in Australia. Under this agreement, among other terms, White Horse Communication Group appointed WSA as White Horse Communication Group’s exclusive Australian agent for www.V.com.cn. During the term of the contract, WSA undertook to sign up Australian producers to become sellers on www.V.com.cn.

13    On 22 October 2015, WSA entered into a three year written contract with White Horse Communications Group and White Horse Lindeman for, among other things, WSA to be appointed as White Horse Communication Group’s exclusive Australia and New Zealand agent for www.V.com.cn, with an option to extend for further one year periods.

14    Mr Richards alleges that, on 31 May 2016, Mr Han, on behalf of White Horse Global (the second respondent), entered into an agreement with him (the Shareholding Contract). Mr Richards claims that the terms of the Shareholding Contract were agreed orally and that an express term of the contract was that Mr Richards would “receive 3% of the total shareholding of the e-commerce and retail business to be listed on a stock exchange, in consideration for the following:

a.    the Applicant, as director of Web and Software Angels Pty Ltd ACN 117 660 214, waiving the rights of that company to receive payments under a contract between it and the First Respondent dated 22 October 2015;

b.    the Applicant being appointed as a director of the proposed Second Respondent, and performing duties as a director of the proposed Second Respondent, including the management of the business and finances of the proposed Second Respondent;

c.    the Applicant being appointed in-house legal counsel for, and providing legal services to, an international group of companies of the First Respondent (the White Horse International Structure), including for and to the proposed Second Respondent, in relation to the listing of the e-commerce and retail business on a stock exchange;

d.    the Applicant providing his services for no weekly or monthly or annual remuneration;

e.    the Applicant paying his own expenses, including office expenses in Australia, travel and accommodation expenses within Australia, and travel and accommodation expenses outside of Australia.”

15    Mr Richards also claims that Mr Han represented to him that the 3% shareholding of the e-commerce and retail business would be worth between $12,000,000 and $24,000,000 Australian Dollars. The respondents admit that Mr Han sent to Mr Richards by email a document estimating that, in 2017, a 3% shareholding would be worth between $9,000,000 and $18,000,000.

16    The respondents admit that, on 31 May 2016, Mr Han was considering listing a company on the Australian Stock Exchange to import into and sell in China products sourced from Australia and New Zealand. The respondents deny that Mr Han was considering listing a company on the Australian Stock Exchange to conduct the “E-Commerce and Retail Business” as characterised by Mr Richards. The respondents admit that during the conversations on or about 31 May 2016, Mr Han indicated in principle assent “to the applicant taking approximately 3% of the shares in the Proposed Australian Business should the listing of that company proceed”, but allege that “at no time was a formal binding agreement concluded”. To the extent that any binding agreement was concluded, the respondents plead that it was abandoned or discharged by later agreement.

17    On 30 June 2016, Mr Han caused White Horse Global to be incorporated. It was originally called White Horse V Alliance Pty Ltd. Mr Richards was appointed a director.

18    On 4 August 2016, White Horse Holding Group Limited was incorporated in the British Virgin Islands (White Horse Holding BVI). Mr Richards was appointed a director. Mr Richards pleads that White Horse Holding BVI was incorporated for the purpose of listing the “E-commerce and Retail Business” on a stock exchange. The respondents deny this was the purpose.

19    Mr Richards claims damages against Mr Han under s 131(2) of the Corporations Act 2001 (Cth) on the basis that White Horse Global has not ratified the Shareholding Contract, nor entered into a substituted contract with him. The respondents plead that White Horse Global was not required to ratify the Shareholding Contract, nor enter into a substituted contract with Mr Richards, because Mr Han did not enter into, or purport to enter into, the Shareholding Contract on behalf of White Horse Global.

20    The respondents plead that by around 15 July 2017, Mr Han had decided not to proceed with listing a company on the Australian Stock Exchange to export to and sell in China products sourced from Australia and New Zealand.

21    Mr Richards pleads that the Shareholding Contract was varied by an agreement reached during a conversation between Mr Richards and Mr Han on 22 July 2017. The respondents plead that, to the extent any binding agreement had been concluded between Mr Richards and Mr Han or White Horse Global (which the respondents deny), it was not varied on 22 July 2017 or at any time; rather, it was abandoned or discharged by agreement in light of the fact that Mr Han had, to the knowledge of Mr Richards, formed the view by 15 July 2017 that the proposed Australian business was not viable and decided not to proceed with it.

22    According to Mr Richards, the express terms of the Shareholding Contract were varied on 22 July 2017 to include the following:

a.    the Applicant would continue to receive 3% of the total shareholding of the e-commerce and retail business to be listed a [sic] stock exchange, though the expectation was for that to occur on the Shanghai Stock Exchange;

b.    the Applicant was to be appointed as a director of White Horse Australian Companies, being the Third to the Eleventh Respondents, and performing duties as a director of those Australian companies, including the management of the business and finances of those Australian companies;

c.    the Applicant was to continue to work as in-house legal counsel for, and provide legal services to the White Horse International Structure, including for and to the Second Respondent and to work as in-house legal counsel for, and providing legal services to Third to Eleventh Respondents, in relation to the listing of the e-commerce and retail business on a stock exchange…

23    Mr Richards alleges that, on 22 July 2017, Mr Han represented to him that the proposed float of the business on the Shanghai Stock Exchange would be more profitable, and that this would be consideration for the additional duties required of the applicant.

24    This conversation included discussion relevant to the Lindeman Claim, discussed below.

25    On 25 October 2017, Mr Richards was appointed director of the third to eleventh respondents. Mr Richards pleads that he provided services, including legal and management services “as an employee”, and directorship services to those Australian companies.

26    Mr Richards claims that, on 29 March 2018, Mr Han represented to the applicant that the 3% shareholding of the “E-commerce and Retail Business” was valued at $43,000,000.

27    Mr Richards submits that he has performed the Shareholding Contract including through the following:

(1)    From 31 May 2016, Mr Richards did not direct WSA to enforce its rights under the contract between it and Mr Han dated 22 October 2015.

(2)    Between 31 May 2016 and 8 October 2019, Mr Richards “provided advice, represented, and acted on behalf of” various White Horse companies, including White Horse Global (the second respondent) and the third to eleventh respondents, including in relation to entering into various contracts with third parties, both in relation to the listing of the E-commerce and Retail Business on the Australian Securities Exchange, and the listing on the Shanghai Stock Exchange, as well as in relation to the E-commerce and Retail Business generally.

(3)    Mr Richards performed duties as a director of the second to eleventh respondents, including managing their business and finances and providing various legal services.

28    The respondents admit that Mr Richards provided services without remuneration, but say that “this occurred in consideration for the applicant being provided an opportunity for an equity interest in any profits generated at a development at Lindeman Island which is the subject of Federal Court proceeding ACD71 of 2019 to which the applicant and first respondent (inter alia) are parties”.

29    Mr Richards denies this in his Reply, submitting that the respondents’ position in this respect is “not maintainable” in light of the fact that Mr Richards’ services between 31 May 2016 and 22 July 2017 predated the existence of any agreement between him and Mr Han in relation to Lindeman Island.

30    The respondent denies that Mr Richards provided services as an employee and say that he was not entitled to practise law as an employee by virtue of Rules 75(a) and 81 of the Legal Profession (Barristers) Rules 2014. Mr Richards denies that he was practising law as an employee for the purposes of Rules 75(a) and 81 of the Legal Profession (Barristers) Rules 2014, and otherwise says those rules have no application to the matters in issue in the proceedings.

31    Mr Richards claims that, on 5 September 2019, Mr Han repudiated the Shareholding Contract by indicating that Mr Richards would no longer receive 3% of the total shareholding of the E-commerce and Retail Business. Mr Richards claims that Mr Han affirmed the repudiation of the Shareholding Contract by email to him on 8 October 2019. Mr Richards claims that, on 6 November 2019, he “formerly [sic] accepted the Respondents [sic] repudiation and terminated the [Shareholding] Contract”.

The Lindeman Claim

32    The Lindeman Claim relates to work undertaken with respect to a proposed redevelopment of a resort located on leasehold land situated on Lindeman Island in Queensland on the Great Barrier Reef, which the applicant describes as “derelict”. The resort is owned by the second respondent in the Lindeman Claim, namely White Horse Lindeman.

33    In broad terms, Mr Richards alleges that he was not paid for work he completed to obtain necessary development and building approvals for the Lindeman Island redevelopment project. Mr Richards claims that there was an oral agreement (the Lindeman Agreement) between him and Mr Han which was reached on 22 July 2017, during the same conversation referred to above in relation to the Shareholding Claim. Mr Richards pleads at [6] of his Amended Statement of Claim:

6.    It was an express term of the Contract that the Applicant will receive a reasonable percentage share of the profits from a proposed development of three tourist resorts on Lindeman Island in consideration for:

a.    obtaining Commonwealth Government and Queensland Government development approval, through an Environmental Impact Statement Process, for the development of three tourist resorts on Lindeman Island (the Development Application);

b.    preparing development and construction feasibilities studies for the construction of three Tourist Resorts on Lindeman Island (the Construction Feasibilities Studies);

c.    assisting with obtaining finance for the development of three tourist resorts on Lindeman Island;

d.    managing Lindeman Island throughout the Development Application and Construction Feasibility Studies process;

e.    managing the business and financial accounts of the Second Respondent, and Lindeman Island, throughout the Development Application and Construction Feasibility Studies process.

34    Mr Richards seeks damages for breach of contract and for misleading and deceptive conduct. Mr Richards also claims, in the alternative, on a quantum meruit basis.

35    In the Lindeman Claim, Mr Richards seeks the following relief:

1.    Damages for breach [of] a Contract between the Applicant and Second Respondent dated 22 July 2017 (as pleaded within the Statement of Claim);

2.    In the alternative:

a.    a declaration that the Respondents have contravened:

i.    section 18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the ACL) by engaging in conduct with the Applicant that was misleading and deceptive;

ii.    section 20 of the ACL by engaging in unconscionable conduct, such that it would be unconscionable for the Respondents to deny the promise made by it to the Applicant on 22 July 2017, on the basis that there is no written contract between the parties;

iii.    section 21 of the ACL by acquiring the services of the Applicant for the Second Respondent, in circumstances which were unconscionable;

iv.    section 31 of the ACL by engaging in conduct that was liable to, and did, mislead the Applicant in relation to the nature, terms or conditions of his employment with the Second respondent;

b.    damages pursuant to section 236 of the ACL for conduct in contravention of sections 18, 20, 21 and 31 of the ACL;

c.    equitable damages and/or compensation for the services performed by the Applicant for the Second Respondent between 22 July 2017 and 5 September 2019.

3.    Interest pursuant to section 51A of the Federal Court of Australia Act 1976.

4.    Costs.

36    In their defence, the respondents plead the following in relation to [6] of the amended statement of claim:

6.    They deny paragraph 6 and say further that:

(a)    it was an express term of the Lindeman Island Agreement that:

i.    the applicant would perform services for the first respondent where required both in relation to the development of a project at Lindeman Island and on other matters where requested by the first respondent (the Services);

ii.    in consideration for performing the Services, the applicant would be paid a share of any profits realised after successful completion of the development, or the sale, of resorts developed by the second respondent on Lindeman Island; and

iii.    the share of profits payable to the applicant would be determined by the first respondent after profits were realised from the successful completion of the development, or the sale, of the resorts developed on Lindeman Island, at the first respondent's discretion.

Particulars

The terms of the Lindeman Island Agreement were agreed orally through telephone conversations between the Applicant and the First Respondent on about 22 July 2017.

37    In his reply, Mr Richards pleads:

1    As to subparagraphs 6(a)(i), (ii) and (iii), the Applicant:

a.    admits that the Applicant would provide the Services (as that term is defined in the Defence) for the First Respondent in relation to the Lindeman Island development, but:

i.    says those Services were also for the Second Respondent;

ii.    says the Services were as set in paragraph 6 of the Statement of Claim;

iii.    denies that the provision of Services required [sic] the Applicant included performing ‘other matters where requested by the First Respondent’, and that such a term (which is denied) is vague and would be void for uncertainty;

iv.    otherwise denies subparagraph 6(a)(i);

b.    save for saying the share of profits included the sale of individual subleases for villa areas, the Applicant admits subparagraph 6(a)(ii);

c.    in answer to subparagraph 6(a)(iii), the Applicant:

i.    says the profits were as described in 1(b) above;

ii.    deny that the share payable to the Applicant would be at the discretion of the First Respondent; and

iii.    otherwise denies subparagraph 6(a)(iii).

38    The respondents plead that in late 2017 the Lindeman Agreement was varied by an oral agreement made in a conversation between Mr Richards and Mr Han. The respondents claim that it was an express term of the variation that Mr Richards “would receive monthly reimbursement from the first and/or second respondents of his expenses, including office, travel and accommodation expenses within Australia, and travel and accommodation expenses outside of Australia”.

39    In his reply, Mr Richards accepts that there was a variation but denies the express term was as pleaded by the respondents. Mr Richards alleges that Mr Han had agreed, at the suggestion of Mr Stephen Dawn (acting as agent for Mr Han), that Mr Richards would receive “a fixed monthly allowance of $10,000 for his travel and general disbursements and expenses without the requirement to submit invoices for actual expenses incurred”.

40    Mr Richards alleges he performed the following services for White Horse Lindeman in accordance with the Lindeman Agreement:

a.     from 22 July 2017 to 27 March 2018, worked in pursuit of obtaining approval from Queensland Government for the Development Application, and from 22 July 2017 to 8 November 2018 in pursuit of obtaining approval from the Commonwealth Government;

b.    on 28 March 2018, the Applicant obtained Queensland Government approval for the Development Application, specifically for the development of three tourist resorts on Lindeman Island (the Three Tourist Resorts);

c.    on 4 October 2018, the Applicant completed a construction tender process appointing Watpac as the preferred builder for the Three Tourist Resorts;

d.    on 12 October 2018, the Applicant completed an International Hotel Operator Selection process appointing Banyon Tree as the approved hotel operator for the Three Tourist Resorts;

e.    on 8 November 2018, the Applicant obtained Commonwealth Government approval for the Development Application of the Three Tourist Resorts on Lindeman Island;

f.    at the request of the First respondent, the Applicant prepared Construction Feasibility Studies for the Three Tourist Resorts on Lineman Island [sic] on 23 August 2017, 16 September 2017, 20 September 2017, 22 September 2017, 23 September 2017, 25 September 2017, 17 November 2017, 27 November 2017, 7 December 2017, 1 January 2018, 26 January 2018, 16 April 2018, 1 July 2018, 29 October 2018 and 8 January 2019;

g.    in 2018 submitting finance applications on behalf of the Second Respondent for the development of the Three Tourist Resorts on Lindeman Island;

h.    management of Lindeman Island from 22 July 2017 to 8 October 2019;

i.    management of the business and financial accounts of the Second Respondent, and Lindeman Island, from 22 July 2017 to 8 October 2019.

41    The respondents claim that on 5 July 2019, Mr Richards breached the terms of the Lindeman Agreement by submitting two invoices to White Horse Lindeman, each in the sum of $400,000 plus GST for “admin and management Lindeman Island” and demanding their immediate payment. The invoices were said to cover the period October 2017 to October 2019.

42    Mr Richards pleads that, on 5 September 2019, Mr Han and White Horse Lindeman repudiated the Lindeman Agreement. Mr Richards says that he “formerly [sic] accepted” the respondents’ repudiation and terminated the Lindeman Agreement.

43    The respondents deny that the contract was repudiated by them on 5 September 2019. The respondents plead that, on 5 September 2019, Mr Han advised Mr Richards that he did not accept that the two $400,000 invoices or the monthly invoices in the amount of $10,000 were payable and that the rendering of them with demands for payment constituted a breach of the Lindeman Agreement. The respondents plead that Mr Han “cancelled” the Lindeman Agreement by reason of Mr Richards’ breach of that agreement.

44    On 2 October 2019, Mr Richards issued three further invoices to White Horse Lindeman, totalling $1,035,126.40. On 8 October 2019, Mr Han advised Mr Richards that this sum would not be paid because the Lindeman Agreement had been cancelled on 5 September 2019.

45    The respondents deny that they repudiated the Lindeman Agreement.

THE INTERLOCUTORY APPLICATIONS

Summary judgment

46    Section 31A of the Federal Court of Australia Act 1976 (Cth) includes the following:

31A Summary judgment

(1)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is prosecuting the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

(2)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)    For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)    hopeless; or

(b)    bound to fail;

for it to have no reasonable prospect of success.

(4)    This section does not limit any powers that the Court has apart from this section.

47    It is s 31A(1), rather than s 31A(2), which is of present relevance. Rule 26.01 of the Federal Court Rules 2011 (Cth) also sets out circumstances in which a party may apply to the Court for an order for summary judgment:

(1)    A party may apply to the Court for an order that judgment be given against another party because:

(a)      the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or

   (b)      the proceeding is frivolous or vexatious; or

   (c)      no reasonable cause of action is disclosed; or

   (d)      the proceeding is an abuse of the process of the Court; or

(e)      the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.

…

(4)      If an order is made under subrule (1) dismissing part of the proceeding, the proceeding may be continued for that part of the proceeding not disposed of by the order.

48    The party seeking summary judgment bears the onus: Windsor v Sydney Medical Service Co-operative Ltd (No 2) [2009] FCA 704 at [38] per Edmonds J.

49    Demonstrating that a claim or defence has “no reasonable prospect” can be achieved by reference to an incurable defect in the pleadings or by reference to the pleadings and evidence adduced on the application. As Flick J observed in Takemoto v Moody’s Investors Service Pty Limited [2014] FCA 1081 at [13]:

[T]he requirement that there be “no reasonable prospects of success” can be satisfied where there is a defect in the pleadings which cannot be cured or, alternatively, by reference to evidence put on in support of an application under s 31A which reasonably excludes the possibility that facts essential to the success of the claim or defence will be able to be established: Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [20] per French J (as his Honour then was).

50    The power to give judgment for one party against another is not to be exercised lightly: Spencer v Commonwealth of Australia (2010) 241 CLR 118 at [24] (per French CJ and Gummow J) and [60] (per Hayne, Crennan, Kiefel and Bell JJ); Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited [2011] FCAFC 145 at [31] (Edmonds, Jessup and Robertson JJ). This is no less true in cases where summary judgment is sought by an application supported by evidence: Spencer at [24]. As French CJ and Gummow J observed in Spencer at [25]:

Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue.

51    Those observations apply with appropriate modification to s 31A(1). Section 31A(1) requires a practical judgment by the court as to whether the respondent has more than a “fanciful” prospect of defending the claim. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary judgment should not be awarded to the applicant simply because the court has formed the view that the respondent is unlikely to succeed on the factual issue.

52    In an application by a respondent under s 31A or r 26.01(1)(a), there is limited utility in describing the applicants’ claim as “manifestly deficient” or “untenable”; likewise in an application by an applicant under r 26.01(1)(e) there is limited utility in describing the respondent’s defence in such a way. Such terms do little to illuminate the ambit of the Court’s power. As the plurality observed in Spencer at [59]-[60]:

59.    In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.

60.    Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. …

53    Both parties relied upon Young v Facebook Australia Pty Ltd [2015] FCA 1440 at [42], where Griffiths J referred to what Gilmour J had said in Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [6]:

Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A:

(a)    the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings;

(b)     the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed;

(c)     in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading;

(d)     it is not Parliament’s intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial;

(e)     if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is ‘no reasonable prospect of success’;

(g)    it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial;

(h)    evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects;

(i)    in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party…

54    Whilst, as noted earlier, the Court may consider matters outside of the pleadings on an application under s 31A (Takemoto at [13]; Qualify Me Pty Ltd v Get Qualified Australia Pty Ltd [2016] FCA 192 at [24] per Markovic J), summary judgment applications are not intended to be “a mini-trial on the documents” but are “designed to deal with cases that are not fit for trial at all’: Spencer at [21] (French CJ and Gummow J) quoting Three Rivers District Council v Bank of England [No 3] [2003] 2 AC 1 at [95].

55    Caution is required where an application under s 31A requires considering “apparently complex questions of fact” and “involves resolution of issues of law and fact, or mixed law and fact”. In Spencer at [26], the plurality said (footnote omitted):

Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant. The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact.

56    A fortiori, where “real questions of fact and credit arise” as “the credit of important witnesses will not have been tested” before trial: Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 at [37] per Sundberg J.

57    In Singh v Owners Strata Plan No 11723 (No 3) (2012) 207 FCR 390 at [39], Griffiths J observed that s 31A is not concerned with pleading points which can be corrected by amendment, stating:

It is now clearly established that the Court’s power to give a judgment under s 31A of the FCA Act does not involve “mere pleading points”. The nature and scope of that power, together with the difficult issues which can arise with some litigants in person, were conveniently described by Rares J (with whom North and Emmett JJ agreed) in Wills v Australian Broadcasting Corporation (2009) 173 FCR 284 at [43]-[45] as follows:

Principles

In considering whether to exercise the power to give judgment under s 31A of the Act, the Court is not concerned with mere pleading points. Rather, as Lindgren J held in White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [50] (see too Noble Investments Pty Ltd v Southern Cross Exploration NL [2008] FCA 1963 at [34]-[40] per Lander J) the section is concerned with the bringing and defending of proceedings and with substance, not just with form.

In Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [19]-[21], French J said:

The question which has to be answered in an application for judgment under s 31A is whether the party against whom the application is made has any “reasonable prospect” of successfully prosecuting or defending “the proceeding” or the “part of the proceeding” in issue. That question is not to be answered by a finding that a party’s statement of claim or defence fails to disclose a reasonable cause of action or defence. A pleading may be rectified by amendment so as to raise a reasonable cause of action or defence. It follows that a finding that a pleading should be struck out under O 20 does not mean there must be judgment against the party whose pleading it is. There may yet, by amendment, be a reasonable prospect of successfully prosecuting or defending that proceeding.

In order to secure judgment under s 31A it must be shown that the party prosecuting or defending the proceeding has no reasonable prospect of success. This judgment can be made, by reference to pleadings, where there is a defect in the pleadings which cannot be cured. Alternatively, it may be a judgment made by reference to evidence put on in support of an application under s 31A which reasonably excludes the possibility that facts essential to the success of the claim or defence will be able to be established. …

Section 31A is not a vehicle for simply striking out parts of pleadings that are deficient. Section 31A allows for “judgment” or nothing. Alternative remedies with respect to deficient pleadings must be found in the rules of Court. …

Strike out applications

58    The power of summary dismissal is to be distinguished from the power to strike out pleadings. In Spencer at [23], the plurality observed (footnotes omitted):

Accepting that there are a number of ways in which s 31A may be applied to empower the Federal Court to dismiss a proceeding, it is to be distinguished, in its application to deficient pleadings, from rules (such as O 11, r 16 of the Federal Court Rules) which provide for the striking out of pleadings. As Lindgren J said in White Industries Australia Ltd v Federal Commissioner of Taxation:

“[E]vidence may disclose that a person has or may have a ‘reasonable cause of action’ or ‘reasonable prospects of success’, yet the person’s pleading does not disclose this. In such a case O 11, r 16 empowers the Court to strike out the pleading but … s 31A(2) would not empower the Court to give judgment for the respondent against the applicant. A failure after ample opportunity to plead a reasonable cause of action may suggest that none exists and therefore that the applicant has no reasonable prospects of success, but the existence of a reasonable cause of action and the pleading of a reasonable cause of action remain distinct concepts.”

59    Order 11 rule 6 of the Rules referred to by the High Court in Spencer at [23] was the predecessor to r 16.21 which includes:

16.21 Application to strike out pleadings

(1)    A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:

(a)    contains scandalous material; or

(b)    contains frivolous or vexatious material; or

(c)    is evasive or ambiguous; or

(d)    is likely to cause prejudice, embarrassment or delay in the proceeding; or

(e)    fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

(f)    is otherwise an abuse of the process of the Court.

(2)    A party may apply for an order that the pleading be removed from the Court file if the pleading contains material of a kind mentioned in paragraph (1)(a), (b) or (c) or is otherwise an abuse of the process of the Court.

60    Flick J summarised the principles applicable to an application under r 16.21 in Takemoto at [17]-[20] (citations omitted):

17.    First, the rule is “concerned only with the adequacy of the pleading” and “does not permit or allow consideration of facts or evidence outside the pleadings”.

18.    Second, a pleading will be embarrassing, “where it is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him”. The term “embarrassment” refers to a pleading that is “susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense”.

19.    Third, a pleading will only be struck out as failing to disclose a reasonable cause of action or defence “where it is clear that there is no real question to be tried”. Where a claim is not so clearly untenable that it cannot possibly succeed, it will not be struck out.

20.    Finally, and like the power conferred by s 31A, the power is to be exercised with caution and it is not to be lightly exercised. A “pedantic approach” should not be pursued.

61    The power to strike out pleadings or portions of pleadings must be exercised “sparingly, with caution, and only in a clear case” (Morris v IMF Bentham Limited [2018] FCA 1009 at [67] per Wigney J) “lest one deprive a party of a case which in justice it ought to be able to bring [or defend]”: Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164 at 175. The power to strike out a pleading under r 16.21 “will only be exercised in plain and obvious cases, where it is clear that no reasonable amendment can cure the alleged defects and there is no reasonable question to be tried”: Young v Facebook Australia Pty Ltd [2015] FCA 1440 at [44] per Griffiths J.

62    Unless futile to do so, a court would ordinarily grant parties leave to re-plead those parts of a pleading that have been struck out, at least up to a point: Takemoto at [87]-[90] per Flick J.

Consideration

63    The respondents submit, correctly, that the defences to the Lindeman Claim and Shareholding Claim are unlikely candidates for summary judgment in favour of Mr Richards, or for striking out, because the agreements in question are oral agreements and most of the critical discussions are contested. The respondents point to the fact that the discussions were conducted by Mr Han, whose first language is not English and who seldom communicates by email, and Mr Richard’s former business partner, Mr Stephen Dawn, who is not party to these proceedings.

64    Having examined the extensive evidence filed on this application and the parties’ written submissions and having carefully considered the pleadings, I have come to the view that the interlocutory applications are hopeless. They have brought about significant delay and expense in circumstances where the parties’ time and money would have been better spent preparing for trial. Applications of this kind in circumstances such as these should be discouraged.

65    In essence, Mr Richards seeks to conduct a mini-trial on the issue of liability. In large part, he seeks to do so by adducing what has been described in written submissions filed on his behalf as “incontrovertible” evidence in favour of the cases he brings, but which in truth is not determinative, on a summary dismissal basis, of the underlying issues. One example of many, is his submission that photographs he took of a whiteboard are “unlikely to be challengeable” as evidence of Mr Han’s purpose in incorporating White Horse Holdings BVI. Quite why this is so and why Mr Han should not have the opportunity of explaining for himself, by evidence at trial, what purpose or purposes he had was not explained in written submissions. Perhaps the photographs are “incontrovertible” evidence of what was on the whiteboard, but on no view could that conclusively establish Mr Han’s purpose in incorporating White Horse Holdings BVI.

66    The respondents submit, correctly, that the evidence shows that “there is a conflict in the facts deposed to in [the] affidavits”, with the result that “it is apparent that there are real factual issues in dispute which are required to be tested at trial”: Cargill Consulting Ltd v BTAC Coal Pty Ltd [2019] FCA 2070 at [21] per Anderson J.

67    The disputed facts include the existence and terms of the alleged oral contracts and the relationship between them. The credibility of those involved on both sides is likely to be crucial: Adnunat at [40] per Sundberg J.

68    A central contention made by Mr Richards is that paragraph 20(a) of the defence to the Shareholder Claim is “logically incoherent and on the facts has no prospects of success”. Paragraph 20(a) of the statement of claim pleads:

20.    The services described in paragraphs 8(b), 8(c), and 16(a), 16(b) above were provided by the Applicant:

a.    without remuneration…

69    Paragraph 20(a) of the defence pleads:

20.    To the extent that the applicant provided services to the respondents, they say in answer to paragraph 20:

(a)    they admit paragraph 20(a) and say further that this occurred in consideration for the applicant being provided an opportunity for an equity interest in any profits generated at a development at Lindeman Island which is the subject of Federal Court proceeding ACD71 of 2019 to which the applicant and first respondent (inter alia) are parties…

70    The services to which paragraph 20 of the Lindeman Claim refers are those alleged to have been provided under a contract which Mr Richards asserts was entered into on 31 May 2016. The “logical incoherency” which Mr Richards perceives is that he could not have agreed to perform work from 31 May 2016 pursuant to a contract which first came about on 22 July 2017.

71    Whilst paragraph 20(a) of the defence admits that services were provided without remuneration, it does not admit that they were provided under a contract of 31 May 2016. The respondents, as I have mentioned, deny there was a binding contract formed on 31 May 2016.

72    In their written submissions, the respondents explain what should otherwise have been obvious from the balance of the pleadings: that paragraph 20(a) was intended to be directed to work performed by Mr Richards after 22 July 2017. On the respondent’s case, this work occurred in consideration for Mr Richards being provided an opportunity for an equity interest in any profits generated by the development on Lindeman Island.

73    The respondents should be granted leave to amend paragraph 20(a) of the defence by deleting the word “this” and replacing it with the words “certain work performed after 22 July 2017”.

74    The following factual and legal disputes between the parties are obvious from the evidence filed and the pleadings:

(1)    whether any binding agreement was reached in the conversation between Mr Richards and Mr Han on 31 May 2016 and, if so, precisely what was agreed;

(2)    whether an agreement capable of constituting a legally enforceable contract was reached in the conversation between Mr Richards and Mr Han on 22 July 2017 and the terms of the agreement, including the nature of the services to be provided;

(3)    the applicant’s entitlement to a $10,000 flat-fee payment;

(4)    the facts relating to the applicant’s issuing of invoices and whether his conduct amounted to a repudiation of the contract;

(5)    the conversation between Mr Richards and Mr Han on 5 September 2019, and whether Mr Han “cancelled” any arrangement with Mr Richards relating to Lindeman Island.

75    In reply submissions, Mr Richards submitted that the respondents had not reached what he referred to as the threshold necessary to raise sufficient credible evidence to supplant the force of the evidence in support of his application. Mr Richards submitted that it is insufficient for the respondents to say that there is a genuine dispute on some issues. In Mr Richards’ submission, there must be a credible explanation of the dispute, with reference to at least some reasonable evidence that shows that it is an issue of fact that needs to be heard in full. Mr Richards compares the situation to that of a respondent having to satisfy the court in a statutory demand context that a genuine dispute exists. Mr Richards referred to TR Administration Pty Ltd v Marchetti and Sons Pty Ltd [2008] VSCA 70, where Dodds-Streeton JA said at [71] that the dispute should have a “sufficient objective existence” and, whilst a fully evidenced claim is not necessary, something “between mere assertion and the proof that would be necessary in a court of law” may suffice.

76    I am comfortably satisfied that there is sufficient evidence before the Court to show the existence of a real dispute between the parties on issues of both fact and law which warrants determination at trial in the ordinary way.

77    Both parties provided detailed written submissions on why individual paragraphs should or should not be struck out. Perhaps the most important issue was what Mr Richards described as the respondents’ attempt to “link” the two proceedings, described as “linkage”, arising from paragraph 20(a) and 47(c) of the defence to the Shareholding Claim and paragraph 7(a) of the defence to the Lindeman Claim. I have already dealt with this. The respondents plainly deny the existence of a binding agreement made on 31 May 2016. The parties are in dispute about whether a binding contract was formed on that day and, if so, the terms of it. The parties are also in dispute about what was agreed on 22 July 2017. The respondents do not contend that services provided before 22 July 2017 were provided under a contract formed on 22 July 2017. This construction of the pleadings is achievable only by reading paragraph 20(a) of the defence to the Shareholding Claim in ignorance of the balance of the pleadings.

78    I will deal briefly with the other main disputes.

Defence to the Shareholding Claim

Paragraph 22

79    Mr Richards claims that White Horse Holding BVI, “was incorporated for the purpose of listing the e-commerce and retail business on a stock exchange”. The respondents deny this.

80    Paragraph 22(a) of the Shareholding Claim pleads:

22.    The White Horse BVI Company:

a.    was incorporated for the purpose of listing the e-commerce and retail business on a stock exchange…

81    Paragraph 22(a) of the defence pleads:

22.    In answer to paragraph 22:

(a)    they deny paragraph 22(a)…

82    Mr Richards submits (footnotes omitted):

As to the purpose of the incorporation, pars 44-46 and 81-84 of the Richards Affidavit set out the incorporation of the BVI company. This includes the Applicant attending a meeting with the First Respondent, and his lawyers, in relation to the incorporation of the BVI company on 19 April 2016, with the Applicant taking a photograph of the meeting whiteboard notes taken on that day. The facts deposed to are not likely to be challengeable, and the denial therefore has no likelihood of success. Indeed, it is difficult [to] postulate what other reason exists for the BVI company to have been incorporated, and the Applicant being a director of it, if it did not relate to the E-Commerce and Retail Business. Further, the circumstances alleged are not in serious dispute between the parties, so the denial is merely obstructive to the efficient resolution of the dispute.

83    This submission is difficult to understand. The purpose of incorporation of White Horse Holdings BVI is not demonstrated solely by reference to photographs Mr Richards took. In any event, the parties are in dispute about the nature of the business it was proposed to list.

84    Paragraph 22(a) of the defence to the Shareholding Claim should not be struck out.

Paragraph 23

85    Mr Richards claims that from late 2016, Mr Richards and Mr Han had intended to list the “E-commerce and Retail Business” on the Shanghai Stock Exchange. The respondents deny this. Paragraph 23 of the Shareholding Claim pleads:

23.    From late 2016:

a.    the Applicant and the First Respondent have intended to list the e-commerce and retail business on the Shanghai Stock Exchange; and

b.    the Applicant has assisted the First Respondent with the proposed listing of the e-commerce and retail business on the Shanghai Stock Exchange.

86    Paragraph 23 of the defence pleads:

23.    In answer to paragraph 23:

(a)    they deny the allegations in the paragraph;

(b)    they repeat paragraph 15 herein;

(c)    say further that the applicant was only a potential shareholder in a company that listed the Proposed Australian Business on the Australian Stock Exchange and not in relation to any other company that the first respondent may decide to attempt to list on any stock exchange in any other jurisdiction; and

(d)    say further that the business the first respondent is considering listing on a stock exchange in Asia is substantially and fundamentally different from the Proposed Australian Business and the applicant does not have an interest in it.

87    Mr Richards submitted:

The Richards Affidavit at pars 104-144 goes into enormous detail as to the work done by the Applicant directly in connection with the proposal to float on the Shanghai Stock Exchange. Much of what is deposed to in these paragraphs is documentary, and is incontrovertible.

The denial in par 23(a) is simply not sustainable on the evidence. The denial has no prospect of success …

88    Again, the submission advanced is difficult to understand. Mr Richards has not requested particulars of this aspect of the defence. Rather, Mr Richards assumes the basis for the denial in the defence and then asserts that this assumed basis for the denial cannot be correct. There are various reasons why paragraph 23(a) of the Shareholding Claim might have been denied, including the applicant’s references to the “e-commerce and retail business”, whether there was a shared intention between the parties, and the timing of the purported shared intention.

89    It is clear that the parties depart from each other on the nature of the business it was intended to float on whatever stock exchange. Mr Richards’ argument ignores a critical difference between the parties’ positions. Mr Richards pleads at paragraphs 4 and 6 of the Shareholding Claim:

4.    From about 2015, the First Respondent commenced an e-commerce and retail business in China, Hong Kong and Macau (the e-commerce and retail business) …

6.    On or about 31 May 2016, the First Respondent intended to incorporate the Second Respondent, White Horse V Alliance Pty Ltd (now registered as White Horse Global Holdings Pty Limited) ACN 613 378 108, for the purpose of listing the e-commerce and retail business on the Australian stock exchange.

90    The respondents plead at paragraphs 4 and 6 of their defence to the Shareholding Claim:

4.    They do not admit paragraph 4.

…

6.    They deny the allegations contained in paragraph 6 and say further that on or about 31 May 2016:

(a)    the first respondent was considering the possibility of listing a company on the Australian Stock Exchange;

(b)    the purpose of the proposed company for listing on the Australian Stock Exchange was to conduct a business centred around the sourcing of products from Australia and New Zealand for import and sale to China.

91    The respondents’ position is that there never existed an intention to float a business on the Shanghai Stock Exchange at all and that Mr Han has never done so given the difficulties he considers are associated with such a listing.

92    Mr Richards sought to justify his position in respect of his application to strike out the denial in paragraph 23(a) by adducing evidence which he described as largely “documentary” and “incontrovertible”. Having so described his evidence, Mr Richards submitted:

To maintain [the denial in par 23(a)] is inconsistent with the overarching purpose of litigation, as it merely makes the proceedings more time consuming and costly. This is particularly so when it is realised that some of the conversations and documents were in Chinese and to present them in evidence in a formal hearing in this court will necessitate translations, as well as probably requiring witnesses from Hong Kong and China to either attend proceedings in Australia or give evidence by video link. In the context of the circumstances of the case, and the parties referred to in the Lindeman Submissions at par 6, this particular denial is especially egregious as involving much effort and expense to respond to with no likelihood that the denial can be sustained.

93    The respondents submitted that the evidence contained in the relevant paragraphs of Mr Richards’ affidavit were not largely “documentary” or “incontrovertible”, submitting:

34.1     Many paragraphs entirely or partly concern events before “late 2016” which the applicant pleads to be the beginnings of [the] Shanghai float. This includes references to the “Butchers Club” (at Richards Affidavit at [126]-[128]) and reference to the supply agreement with Penley Estate (at [130]) which, on the respondents’ evidence, was central to consideration of the ASX float (only).

34.2     The majority of the paragraphs do not exhibit documents. Where documents are exhibited, it is unclear how they show the applicant’s activities were “directly in connection” with a proposed Shanghai float. Examples include the applicant’s entry/exit stamps into China, unexplained meeting notes occasionally with untranslated Chinese text (at [109], [112]), and a miscellany of correspondences apparently irrelevant to the allegation.

34.3     The clearest identified reference to a “Shanghai Float” appears in an email dated 10 September 2019 from the applicant to the first respondent’s Hong Kong lawyers ([122(e)], DR1-751). This email appears to be the subject of Hill Affidavit [54]-[55], describing that it was brought to the first respondent’s attention and who promptly confronted the applicant about why it had been sent. This represents a credit issue to be investigated in due course.

34.4     The other references to “float” which are scattered throughout the applicant’s evidence appear without explanation. For example, Submissions [29] highlights the 51 page “White Horse Project Basic Data List” as clear evidence. Even assuming the untranslated Chinese text is immaterial, the document lacks any detail about what the “White Horse Project” is. That evidence is inadequate for the Application to succeed even before weighing it against the respondents’ evidence which explains that floats and investments of various types are occasionally considered across White Horse’s various businesses: Hill Affidavit at [47]-[48].

(Footnotes omitted).

94    Paragraph 23(a) of the defence should not be struck out. There is a dispute between the parties as to the underlying facts, appropriately reflected in the pleading.

95    Mr Richards also took issue with paragraph 23(d) of the defence to the Shareholder Claim, which pleads that “the business [Mr Han] is considering listing on a stock exchange in Asia is substantially and fundamentally different from the Proposed Australian Business and the applicant does not have an interest in it”.

96    Mr Richards asserts and gives evidence of his view that the e-commerce and retail business underlying the proposed Shanghai and Australian floats was and has remained the same for the last three years. Paragraph 23(d) of the defence to the Shareholding Claim is therefore said to be “not sustainable on the evidence either, and is merely obstructive to the efficient resolution of the dispute between the parties”. This submission merely assumes that the evidence Mr Richards has adduced on this application conclusively establishes his position. It does not. Referring to the fact that Mr Han’s first language is not English and that documents are in both Chinese and English and that translations will therefore be required, Mr Richards submitted that his claim “involves the same practical problems of proof, if it is required to be addressed in the evidence, in which the end result is going to be that this denial has no prospects of success”. The identified difficulties, including language difficulties, do not militate in favour of striking out the pleading or granting summary judgment; they militate in favour of not striking out the pleading and proceeding to trial in the ordinary way.

97    Paragraph 23(d) of the defence to the Shareholding Claim should not be struck out.

Paragraph 25

98    Paragraph 25 of the Shareholding Claim pleads:

On 25 October 2017, the Applicant was appointed as director of the Third to Eleventh Respondents, and has since provided services, including legal and management services as an employee, and directorship services to those Australian companies.

99    Paragraph 25 of the defence pleads:

In relation to paragraph 25, they:

(a)    admit that the applicant was appointed as director of the third to eleventh respondents on 25 October 2017;

(b)    admit that the applicant provided services to some of the respondents since that time;

(c)    say further that the applicant was not authorised to act as the general agent or attorney of the third to eleventh respondents in their business or dealings with others;

(d)    repeat paragraph 20 herein; and

(e)    deny that the applicant provided services as an employee and say further that the Applicant was not entitled to practice law as an employee.

Particulars

Rules 75(a) and 81 of the Legal Profession (Barristers) Rules 2014.

100    The applicant submits:

33.    Par 25(c) responds to the claim in par 25 that the Applicant was appointed as director of the 3rd to 11th Respondent Companies, and provided services to those companies, by vaguely ‘saying further’ that the Applicant was not authorised to act as the general agent or attorney of the 3rd to 11th respondents. However, par 25(a) admits the appointments as director, while par 25(b) admits that some services were provided.

34.    In that context par 25(c) is confusing, imprecise and ambiguous. Simply as a matter of corporate law, a director has ostensible authority to act on behalf of the company. The paragraph of the defence asserts no specific contradiction of that ostensible authority, so the ostensible authority would stand. Further, given that par 25(b) admits that certain services were provided, it is completely unclear what particular services were or were not provided when these two paragraphs are read together.

35.    In any event, par 25(c) is against the weight of extensive evidence detailed in the Richards Affidavit and already referred to in pars 104-144, where there is great detail as to the work performed by the Applicant that related in part to these companies. This evidence is incontrovertible. Par 25(c) should be struck out as being embarrassing, obstructive, and without any prospects of success.

36.    Par 25(d) repeats par 20, especially the attempt in that paragraph to link the work performed by the Applicant to the agreement alleged in the Lindeman Claim. The reason why this should be struck out is found in the submissions on that topic in the Lindeman Claim submissions. It is also elaborated in the Richards Affidavit at pars 145-150. The allegation of linkage is embarrassing. It is also bordering on absurd on the evidence, as the Richards Affidavit sets out in pars 145-150. It has no prospects of success, as well as being embarrassing and obstructive to the efficient resolution of the dispute between the parties.

37.    Par 25(e) repeats allegations raised in the Lindeman Defence at pars 7(e) and 25. The Applicant repeats his submissions made in relation to those paragraphs in the Lindeman defence. In short, the Barristers Rules do not mean what the Defence says, they do not preclude the work done by the Applicant, and in any event are only a matter of discipline and do not invalidate the work done by the Applicant. This paragraph should be struck out for the same reasons as the corresponding paragraphs of the Lindeman Defence should be struck out.

101    The respondents submit:

Para 25(c)

43.    Shareholding Claim at SOC [25] pleads in one sentence several related allegations. To the extent possible, Defence [25] divides the respondents’ responses to the rolled-up pleading into separate propositions.

44.    Shareholding Submissions [33] criticises Defence [25(c)] on the ground that it “vaguely” pleads its proposition. Defence [25(c)] alleges “that the applicant was not authorised to act as the general agent or attorney of the third to eleventh respondents in their business or dealings with others”. Submissions [34] say that this allegation is “confusing, imprecise and ambiguous”. The Shareholding Submissions do not refer to the particulars included at Defence [25], including r 75(a) of the Legal Profession (Barristers) Rules 2014 (Bar Rules) which is in substantially the same terms as Defence [25(c)]. Had r 75(a) been read, it would have become clear that the allegation at Defence [25(c)] is directed to the existence of a professional conduct rule proscribing certain activities. That is relevant because Shareholding Claim at SOC [25] alleges that the applicant has provided services, “including legal and management services as an employee”.

45.    Shareholding Submissions [34]-[25] rely on evidence and aspects of corporations law as arguments against Defence [25(c)]. Neither is directed to what the respondents plead and reliance on the applicant’s evidence is irrelevant as a response to the legal proposition pleaded at Defence [25(c)].

Para 25(d)

46.    Part of the allegation pleaded at Shareholding SOC [25] is that the applicant “provided services, including legal and management services as an employee, and directorship services to those Australian companies”. Particulars of the services are not provided.

47.    Defence [25(d)] repeats Defence [20]. Contrary to the characterisation at Shareholding Submissions [35], the allegation does not “especially” attempt to do anything beyond that. The Submissions overlook the absence of particulars or specification about the alleged services. Shareholding SOC [20] is the only part of the Shareholding Claim where the (presumed) services appear to be collected together. Defence [25(d)] repeats Defence [20] in its response to the services the applicant presumably intends. The applicant offers no persuasive reason to strike-out the paragraph.

48.    Nor is Defence [25(d)] “bordering on the absurd”. Contrary to Richards Affidavit [146] and [148], the respondent’s evidence is that throughout their dealings, the applicant was keen to be involved with the applicant’s businesses. When one project was at an end, he sought to participate in another, such as V-Travel, or Lindeman Island. That there is a genuine dispute about the 22 July 2017 conversation is yet another reason that summary judgment is inappropriate.

Para 25(e)

49.    Paragraph 46 above extracts the applicant’s pleading, including the allegation that he provided services “as an employee”. Defence [25(e)] denies the factual allegation that the applicant provided services as an employee. That denial is consistent with the respondent’s evidence, that the applicant was treated as a businessman and investor, not an employee: Hill Affidavit at [57(b)-(c)]. It also pleads the existence of a professional conduct rule proscribing ways in which barristers may practise, ie r 81 Bar Rules.

50.    The Shareholding Submissions [37] state that “the Barristers Rules do not mean what the Defence says”. Defence [25(e)] denies that the applicant provided services as an employee, and says further that the applicant was not entitled to practice law as an employee. The first is a contested factual allegation to be determined in due course based on the evidence adduced at trial. The latter is a legal proposition about which submissions will be made in due course. For present purposes, it is sufficient to note that s 16(1) Legal Profession Act 2006 (ACT) lists “Examples of engaging in legal practice”, which form part of the statute, and which include “preparing an instrument creating or regulating rights between people”. Rule 81 Bar Rules states that a “barrister … must not practise… as the employee of any person”. There are genuine disputes of fact and law justifying the matter proceeding to trial.

(Footnotes omitted).

102    The issues raised by Mr Richards are ones for trial. The days of having interlocutory arguments over matters such as raised here should be over. The defence appropriately identifies the respondents’ position. Whether that position is correct or not can be determined at trial.

Paragraph 49

103    Paragraph 49 of the Shareholding Claim is:

The First Respondent and the Second Respondent and the White Horse Australian Companies have received benefit and enrichment from the Applicant’s services, including legal and management services as an employee, and directorship services.

104    Paragraph 49 of the defence to the Shareholding Claim is:

They do not admit paragraph 49.

105    The applicant submits (footnotes omitted):

40.    This pleading is inconsistent with the way the defence admits that the Applicant performed services for the Respondents (see for example pars 20 and 25). Those admissions do not allege that the work done was worthless: indeed, par 20 alleges that it was done in the context of the Lindeman Agreement which implicitly accepts that the work done was valuable.

41.    In any event, the Richards Affidavit at pars 104-144 in particular sets out an extremely detailed account of the work done. This includes work going beyond the general float works, and included:

(a)    the Applicant drafting franchise agreements for the E-Commerce and Retail Business;

(b)    preparing Deeds for the First Respondent and Stephen Dawn in relation to a comparable 3% interest in the E-Commerce and Retail Business held by Mr Dawn (which further make the denial of the Applicant’s 3% shareholding implausible and embarrassing);

(c)    assisting with purchase orders for the E-Commerce and Retail Business;

(d)    arranging for transfer of assets across the 2nd to 11th Respondents;

(e)    selling shares for the First Respondent; and

(f)    being the Australian based director for the 2nd to 11th Respondents;

(g)    various other ad hoc duties, as set out in Richards Affidavit par 100.

42.    That evidence is largely incontrovertible, as it includes documents that speak for themselves. The Respondents have no likelihood of sustaining this blanket denial of valuable services provided to them by the Applicant. Indeed, the fact the services were requested and performed, ascribes to them some value. For example, clearly the First Respondent saw value in the Applicant being the Australian based director of the 2nd to 11th Respondents.

43.    Consequently par 49 is ambiguous, incoherent with the rest of the pleadings, and thus embarrassing. It also has no prospects of success on the facts. It is merely obstructive to the efficient resolution of the dispute, and is inconsistent with the overarching purpose of litigation.

106    The respondents submit:

52.    Shareholding Submissions [39] incorrectly state that “Para 49 denies…” (emphasis added). Defence [49] actually does not admit the allegation contained at Shareholding SOC [49]. That error alone defeats this aspect of the Application.

53.    Shareholding SOC [49] pleads that “The First Respondent and the Second Respondent and the White Horse Australian Companies have received benefit and enrichment from, the Applicant’s services, including legal management services as an employee, and directorship services.” The White Horse Australian Companies are defined to be the third to eleventh respondents (SOC at [1(d)]). As pleaded, the respondents cannot know what benefits are said to have been received by which entity. Consistently with other allegations in the Defence, the respondents accept the applicant performed some work for some entities, but cannot admit the allegation as pleaded.

107    Mr Richards has mischaracterised the respondents’ defence. Paragraph 49 of the defence to the Shareholding Claim should not be struck out.

Defence to the Lindeman Claim

Paragraphs 6B, 7A to 7E, 8(a), 8(b), 9(d) and 10

108    In paragraphs 6B and 7A to 7E of the defence in the Lindeman Claim, the respondents allege that the applicant repudiated the Lindeman Agreement. In his affidavit, Mr Richards gives evidence that:

(1)    between September 2017 and September 2019, the invoices he issued were paid every month by the respondents without issue as to the format of the invoice;

(2)    the respondents paid the invoices notwithstanding the resort had not been completed;

(3)    the invoices were budgeted by White Horse Lindeman’s company accountant in advance of them being issued;

(4)    the two invoices each in the sum of $400,000 plus GST issued by Mr Richards on 5 July 2019 were withdrawn by him the next morning and were neither pressed by him nor raised as an issue by the respondents.

109    In particular, Mr Richards submits that the respondents routinely paying without objection the flat fee invoices issued by Mr Richards leads to the conclusion that paragraph 6B of the defence to the Lindeman Claim has no prospects of success. Whether Mr Han monitored White Horse Lindeman’s actions in this respect is submitted to be immaterial, because his agents were so aware. Further, it was submitted, on at least 3 January 2019, the monthly expenditure was emailed to Mr Han.

110    Mr Richards submits (footnotes omitted):

As to par 7A, the uncontroverted facts are that the invoices [for $400,000] were withdrawn, and never arose as an issue between the parties again. Importantly, the invoice for August was presented and paid without objection, and the Applicant performed extensive work on behalf of the Lindeman project at the request of the Respondents without any issue of the July invoices being raised (see pars 62, 64, 75, 76, and 78 of the Affidavit in particular). At least three important matters flow from this:

(a)    first, the allegation that the invoices of 5 July were a repudiation duly accepted by the Respondents has no prospects of success on the facts, as the facts show incontrovertibly that the Applicant continued to perform duties for the Respondents at their request, and was duly paid for that work;

(b)    second, the invoices in question were immediately withdrawn and never subsequently pressed, and were thus incapable as a matter of law of amounting to a repudiation;

(c)    if, contrary to these submissions they were capable in fact or law of being a repudiation, the subsequent conduct of the Respondents identified in this paragraph of the submissions amounts to an election in law, it being conduct inconsistent with accepting a repudiation of the contract.

111    The respondents submit (footnotes omitted):

35.    Defence [7A] pleads that on 5 July 2019 the applicant issued two invoices and that this act breached the terms of a binding agreement. Both propositions ought to be examined at trial:

35.1    Contrary to Lindeman Submissions [35], the applicant’s own evidence warrants scrutiny. The applicant submits that the invoices were “immediately withdrawn” during an oral conversation with John Dale [on] 6 July 2019. The applicant’s email dated 2 October 2019 to Mr Dale suggests otherwise, it refers to “invoices sent to you in my email dated 5 July 2019” and “advise[s] that I withdraw these invoices”.

35.2    Lindeman Submissions [35(b)] is predicated on the invoices having been “immediately withdrawn”, which for the reasons give above, is not “uncontroverted”. Further, the applicant’s submission ignores the “long established rule of law” that a party can rely on facts existing at the time of termination, even if not known to it at the time, to justify termination.

35.3    Lindeman Submissions [35(c)] introduces a waiver argument. To succeed on that argument, the applicant must persuade the Court to make legal findings that the respondents faced inconsistent, alternative rights, and factual findings that the respondents were aware of those of [sic] rights and chose to act inconsistently with one. It is submitted such findings should not be made on a summary/strike-out application. Further, the Defence alleges two repudiatory grounds justifying termination (at [7C], [7D]). The applicant’s submission will fail if the respondents establish both grounds and termination could be relied on either ground, known or unknown at the time.

…

37.    Not only is strike-out unjustified, the applicant’s evidence reveals issues of credit to be explored at trial. The Richards Affidavit deposes that “my arrangement with Mr Han did not require me to be paid until development of Lindeman Island was complete” at [55]. Two additional inconsistent versions of that statement are also in evidence:

37.1    The applicant’s email dated 5 July 2019 to Mr Dale asserts: “I met with William Han in Guangzhou in September 2017 and he agreed to pay me $400,000 p/a plus GST per annum, but only payable when financing, construction commenced, or when the land was sold” (DR1-296).

37.2    The applicant’s email dated 2 October 2019 to Mr Dale refers to “my letter dated 3 October 2019” (DR1-465). That letter, which is at Richards Affidavit Annexure F, makes no reference to a September 2017 agreement. It stated: “In lieu of receiving a salary or contract payment, I would receive an additional payment for my services out of the profits of the development of Lindeman Island when it was completed” (at Ann F p52 [4b]). At [7], the letter conceded: “I asked William Han for a contract payment amount for managing Lindeman Island… William Han would not engage in a conversation about a contract payment to me”. At [19] (Ann F p57) the letter stated: “I claim the remuneration at the same rate as the previous manager Mr Paul Nyholt from my appointment date (22 July 2017) until the last day of my appointment (4 December 219). … Mr Paul Nyholt was receiving a total remuneration of $400,00 per annum…”.

112    Mr Richards submits that, given the affidavit evidence filed on the interlocutory application and for the reasons provided in submissions in relation to paragraph 6B of the defence to the Lindeman Claim, paragraphs 7B to E relating to the applicant’s purported repudiation by the issuing of the 5 July 2019 invoices, have no prospects of success. Similar submissions are advanced in relation to paragraphs 8(a), 8(b), 9(d) and 10. Mr Richards accepts that an issue will remain as to the quantum of damages.

113    In my view, none of these paragraphs of the defence should be struck out. There are clear and genuine disputes about the underlying facts and the legal consequences of them as is made clear by the submissions made by the respondents, extracted above.

Paragraph 34

114    Another dispute concerns paragraph 34 of the defence in the Lindeman Claim, which pleads:

34.    In further alternative answer to paragraphs 1-9 of the ASOC, the respondents say that:

(a)    if the Contract pleaded in the ASOC is found to exist (which is denied), the terms are so vague that no definite meaning can be assigned to them and the Contract fails for uncertainty; and

(b)    if the Lindeman Island Agreement, and the First Lindeman Island Variation and the Second Lindeman Island Variation pleaded herein are found to exist, the terms are impermissibly vague such that no definite meaning can be assigned to them and they must fail for uncertainty.

115    In written submissions filed on Mr Richards’ behalf, surprise is expressed at the respondents’ decision to plead the agreement, contend it was repudiated and thus validly terminated by that party, but then allege that the agreement was nevertheless void for uncertainty.

116    Mr Richards also submits:

The first point to note is that no term is identified for which there it is alleged that there is no precise meaning. It is merely alleged that the entirety of both agreements is vague, for unspecified reasons. For this reason alone the paragraph is embarrassing as it does not properly define an issue or provide a reasonable basis for that issue to be tried.

117    Mr Richards submits that his and the respondents’ versions of the agreement set out in the pleadings have “broadly similar important terms”. Mr Richards takes issue with the respondents alleging that he breached essential terms of the agreement whilst claiming that the agreement is too uncertain to be enforced. On this basis, paragraph 34 is said to be “embarrassing, vexatious, and has no prospects of success”. It is also said that it is “not consistent with the overarching purpose of litigation because it obfuscates the dispute and thus obstructs its efficient resolution at a cost [dis]proportionate to the dispute”.

118    It is not particularly remarkable to plead alternative cases. Nor is there particular additional expense associated with a brief argument that whatever was said in a conversation between Mr Richards and Mr Han was insufficiently certain to give rise to a binding contract. Paragraph 34 of the defence in the Lindeman Claim should not be struck out.

Paragraph 7(a)

119    In paragraph 7(a) of the defence to the Lindeman Claim, the respondents deny that Mr Richards performed work with their approval after 5 September 2019. Mr Richards refers to a number of paragraphs of his affidavit which detail a list of actions taken at the request of the respondents in connection with the development of the derelict resort on Lindeman Island. Paragraph 7(a) is said to have no reasonable prospects of success given Mr Richards’ evidence as to requests for work to be done or authority from the respondents to carry out that work.

120    The respondents submitted (footnotes omitted):

27.    Lindeman Submissions [20] rely on a long list of actions said to have been taken “at the request of the Respondents” and “in connection with … Lindeman Island”. Regarding the list which is relied on:

27.1    Richards Affidavit at [84]-[85] refers to WeChat voice messages that are not in evidence, and gives evidence that Mr Richards received messages that “spoke fondly” and “gave pleasantries” – none of which evidences actions taken at the request of the respondents.

27.2    Richards Affidavit at [86]-[88] refers to various emails the applicant sent to third parties – none of which evidence requests from the respondents to do so.

27.3    Lindeman Submissions at [20(b)] note that Richards Affidavit at [89]-[90] are “matters pertaining [to] the Shareholding Claim”. That cannot support criticism of the Defence pleading, the applicant’s insistence that the two proceedings are wholly independent or that the respondents requested actions “in connection with … Lindeman Island”.

27.4    Richards Affidavit at [91] evidences Mr Dale’s response to a request from the applicant; [92], refers to matters not in connection with Lindeman Island and [93] refers to WeChat voice messages not in evidence.

27.5    Richards Affidavit at [95] refers to an email exchange with Mr Dale regarding White Horse company structures. This exchange follows an earlier email to the first respondent’s Hong King lawyers and which appears to be the subject of evidence that it was brought to the first respondent’s attention and who promptly confronted the applicant about why it had been sent since he had not requested it.

27.6     Of the remaining paragraphs of the Richards Affidavit relied on, several relate to the applicant’s issuing his own invoices for payment (eg [100], [102]), to his concerns over the insolvency of the second respondent (WHAL) ([95], [101]) and solicitors’ correspondences threatening winding-up proceedings. Unsurprisingly, there is no evidence these things were done at the respondents [sic] request.

28.    Contrary to Lindeman Submissions [21], the actions relied on by the applicant may equally demonstrate that Mr Richards was concerned to comply with his directors duties, that he persisted with activities after being asked to stop, or, as the respondents’ evidence shows, Mr Richards had been involved in a range of White Horse activities and the conclusion of one did not necessarily mark the end of other arrangements. Additionally, Hill Affidavit at [57] explains that the first respondent does not recall informing Calvin Han of his 5 September 2019 conversation with the applicant and that it took a little while for arrangements to be made for an alternative manager to take over of Lindeman Island.

29.    Finally, and contrary to the applicant’s current submissions, his letter dated 3 October 2019 to the respondents and others indicates that notwithstanding the conversation on 5 September 2019, the applicant continued to manage Lindeman Island until 3 December 2019, and claimed payment for the period: see Hill Affidavit at Ann F p56 [14]. That evidence applies equally to Lindeman Submissions at [22] and shows a genuine dispute to be determined at trial.

30.    Incidentally, the applicant’s concern with WHAL’s insolvency during September and October 2019 raises an additional credit-issue that ought to be explored at trial. Namely, Richards Affidavit [95] deposes to the applicant corresponding on 17 September 2019 with Mr Dale regarding WHAL’s solvency. On 19 September 2019, the applicant expresses “becoming obsessed about the low balance of the Lindeman account” (DR1-453). On 2 October 2019, the applicant delivered a letter indicating he was “very concerned about incurring further debts on behalf of [WHAL]” (DR1-463 at [8]). Incidentally, the same day the applicant issued WHAL invoices totalling $880,000 for payment by 17 October 2019 (DR1-465).

121    Paragraph 7(a) should not be struck out. There is a clear and genuine dispute between the parties appropriate for resolution at trial. I do not accept that paragraph 7(a) of the defence has no real prospect of success as submitted.

Paragraphs 7(d), 31(b) and 31(c)

122    Mr Richards takes issue with the respondents’ allegation that he performed services “with little to no supervision” and with the non-admission by the respondents “that the applicant performed the services competently or with due care and diligence”. The relevant pleadings are found at paragraphs 7(d) and 31(b) and (c) of the defence to the Lindeman Claim. Mr Richards submits (footnotes omitted):

24.    The first thing to say about these matters is that they do not appear to go anywhere as pleaded issues. That is particularly true of the allegation of minimal supervision. For this reason alone they are embarrassing, in that they do not link to any triable issue raised in the pleadings.

25.    Next, on the question of supervision it not alleged, by anyone, that the Applicant was required to be supervised and, indeed, the uncontroverted fact is that the Applicant was the Second Respondent’s Australian based director. It is of course permissible for the First Respondent to reside in his native China, though he cannot complain when appointing an Australian resident to perform services in Australia that the services were not supervised.

26.    In any event, the Richards Affidavit (at paras 42 to 54) details many examples of the First Respondent or his agents having supervision of what the Applicant was doing. This included the Applicant travelling to China on four occasions to report to the First Respondent, as well as the Applicant reporting to the First Respondent directly on employee management issues. As such this aspect of the Lindeman defence on the facts has no prospect of success.

27.    Next, to the extent the defence alleges no due care and diligence, this is impossible to maintain by the Respondents. This is particularly so where the services alleged in paragraph 7(a) to 7(i) of the Lindeman Claim are pleaded in terms of measurable objectives, which the Respondents in par 7(b) were achieved. Par 35 of the Richards Affidavit sets out the work done and the achievements of the Applicant. Noting in particular that one of his most important projects was to obtain necessary development and building approvals for the redevelopment of the Island, that paragraph sets out the obtaining of those approvals. The achievement of those approvals speaks for itself, and is admitted by para 7(b) of the defence. Absent any particulars or specific matters raised in these paragraphs as to want of due care or diligence, these paragraphs have no reasonable prospects of success.

123    The respondents submit (footnotes omitted):

31.    The “pleaded issues” on the Lindeman Claim includes an alleged entitlement to quantum meruit (at ASOC Pt F). That pleading necessarily implicates the “reasonable value” of the work allegedly performed by the applicant. Defence [7(d)] alleges that the respondents did not supervise (ie observe) the applicant’s work and therefore cannot admit whether it was performed reasonably (ie competently or with due care and diligence).. The respondents’ evidence on this issue is at Hill Affidavit [49], [51], [54]. In response to the applicant’s submissions at [27] regarding “no due care and diligence”:

31.1    Defence [7(d)] does not “allege” no due care and diligence – the pleading does not admit it – a matter that was emphasised in further particulars.

31.2    The applicant apparently submits that achievement of “measurable objectives” establishes work was performed with due care and diligence. That is not so, objectives may have been achieved in a timely, efficient and cost-appropriate way, or not.

31.3    The respondents are not required to particularise specific matters “as to want of due care of diligence”. The reasonableness of the applicant’s work is a matter of evidence.

32.    Lindeman Submissions at [25]-[26] correctly submit that it is “not alleged, by anyone, that the Applicant was required to be supervised”. The confusion is unfortunate as further particulars of Defence [7(d)] were provided to clarify the pleaded “supervision”.

124    Paragraph 7(d) of the defence should not be struck out. The issue is one which has been properly raised by the respondents. The parties’ respective positions are ones for determination at trial, not by summary judgment. I do not accept that paragraph 7(d) has no prospect of success as submitted by Mr Richards.

Paragraph 7(e)

125    In response to Mr Richards’ claim that he performed services for White Horse Lindeman, the respondents refer at paragraph 7(e) of their defence to Rule 75 of the Legal Profession (Barristers) Rules 2014. Rule 75(a) of the Legal Profession (Barristers) Rules provides: “A barrister must not act as a person’s general agent or attorney in that person’s business or dealings with others”.

126    In his submissions, Mr Richards relies on Rule 76(a), which provides: “A barrister will not have breached Rule 75 by: (a) doing any of the matters referred to in that Rule on the barrister’s own behalf”. Mr Richards says that he was performing these services in both claims as a shareholder, director and manager of companies in which he held, or expected to hold, substantial shareholdings. Mr Richards points to activities he undertook as a resort manager, including (footnotes omitted):

(a)    meeting with government officials for development application purposes, and ultimately obtaining those critical approvals;

(b)    carrying out tender processes for, and the selection of, building companies for development on the Island;

(c)    preparing numerous feasibility studies for the First Respondent;

(d)    submitting finance applications for the Second Respondent;

(e)    management responsibilities, including:

(i)    management of staff;

(ii)    engaging of engineers;

(iii)    management of Second Respondent account and debts;

(iv)    being the sole Australian director of the Second Respondent until 8 October 2017;

(v)    various other mundane management tasks.

(f)    travelling to China to present to the First Respondent on the above, as well as countless communications with the First Respondent and/or his agents that fairly cannot be described as barrister services.

127    Mr Richards submits that the only relevance of Rule 75 is, at best, that he may have to answer to the ACT Bar Association for a breach of discipline. It is not a defence available to the respondents in the proceeding because the Rule does not purport to invalidate any agreement that involves such conduct, and nor does the power to make disciplinary rules of this kind extend to such dramatic consequences. Mr Richards also points to the fact that his shareholding was through a family company held jointly with his wife, so he was also acting on behalf of a family member. This paragraph of the defence is therefore said to be one with no reasonable prospects of success and embarrassing as disclosing an allegation to which there is a complete answer in Rule 76.

128    The respondents submit that Mr Richards has incorrectly described the respondents’ pleading because [7(e)] of the defence does not allege a breach of Rule 75. Rather, the allegation pleads the existence of a professional conduct rule proscribing certain activities. The respondents submit that no factual allegation is made, and it is unclear how the applicant’s reliance on his affidavit evidence justifies striking out this paragraph of the defence.

129    The reference to Rule 75 is in the particulars to paragraph 7 of the defence. The particular should not be struck out. Its relevance, if any, can be determined at trial. It is unlikely to consume much time.

Paragraph 25

130    The Lindeman Claim pleads at paragraph 25:

Further or alternatively to paragraphs 1 to 23 above, by reason of the services requested by the First Respondent listed in paragraph 6(a) to 6(e) above, and performed by the Applicant, from 22 July 2017 to 5 September 2019, the Applicant was an employee of the Second Respondent (the Employment).

131    The defence pleaded:

25.    They deny paragraph 25 and say further that the Applicant was not entitled to practise law as the employee of the first or second respondent.

Particulars

Rule 81 of the Legal Profession (Barristers) Rules 2014.

132    Rule 81 of the Legal Profession (Barristers) Rules, referred to in the particulars, provides:

A barrister must be a sole practitioner, and must not practise:

(a)     in partnership with any person;

(b)     as the employer of any legal practitioner who acts as a legal practitioner in the course of that employment; or

(c)     as the employee of any person.

133    Mr Richards incorrectly characterises the defence as alleging a breach of Rule 81 and then proceeds to submit that the allegation has no prospects of success as a matter of law because it rests on an erroneous interpretation of the rule. The respondents do not plead a breach of Rule 81. Paragraph 25 should not be struck out.

Paragraph 32

134    Paragraph 32 of the Lindeman Claim pleads:

The Applicant claims damages and or compensation for his services, and for his legal services, and for his management services, and for his directorship services, and for his services resulting in the Queensland Government and Commonwealth Government approval of the Three Tourist Resorts on Lindeman Island, performed by him between 22 July 2017 and 5 September8 October 2019.

135    The defence to the Lindeman Claim says the following:

They deny paragraph 32.

136    Mr Richards submitted:

This paragraph denies, without any particularity, compensation for services and work performed for which there is no possible controversy that it was carried out, and (in the case of the development and building approvals already referred to) to a suitable standard of care and diligence. As a matter of fact, for the reasons already set out above in relation to par 7(d), this denial has no prospects of success and serves only to delay and frustrate the efficient resolution of the proceedings. To the extent it may be construed as being justified on the premise the Lindeman [Agreement] was repudiated, for reasons already covered, no such repudiation is capable of being found. Accordingly par 32 also stands to be struck out as being not consistent with the overarching purpose of litigation under s 37M and 37N.

137    The respondents submitted (footnote omitted):

Lindeman Submissions [44] overlooks several bases for justifiably denying the allegation. A few examples: the availability of a quantum meruit may be denied where the respondents allege a valid contract existed. For the reasons given at paragraph 31 above, alleging that services were provided does not establish that they were performed reasonably. Critically, a denial may be justified for failure to plead an express or implied request for the performance of services. The challenge to this paragraph must fail.

138    Paragraph 32 of the defence to the Lindeman Claim should not be struck out. The respondents deny that they are liable for damages and compensation. Whether or not they are is an issue to be determined at trial.

conclusion

139    The interlocutory application should be dismissed and the respondents in the Shareholding Claim should be granted leave to amend their defence in the way indicated.

COSTS

140    The respondents apply for indemnity costs of the interlocutory applications from the date of inception of the interlocutory applications, or alternatively, from 1 September 2020 when they wrote letters to the applicant informing him, in broad terms, of the respondents’ view that the interlocutory applications were hopeless and should be abandoned. The relevant communications have been tendered. The respondents also apply for those costs to be payable forthwith and, therefore, for rule 40.13 not to apply. I am not satisfied that costs should be awarded on an indemnity basis from the inception of the interlocutory applications. However, I am satisfied that a comprehensive communication in both proceedings was provided to the applicant informing the applicant that an application would be made for indemnity costs and pointing out in some detail the difficulties with the applicant’s interlocutory applications. In my view it is unreasonable for the respondents not to receive their costs on an indemnity basis after 1 September 2020 in the circumstances of these particular interlocutory applications which, in my view, should have been abandoned after reading those letters.

141    I am not prepared to order that those costs be payable forthwith. The matter should be able to obtain a hearing date relatively expeditiously from here and the issues were not so discrete as to militate in favour of an order that costs be payable forthwith – cf: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV (No 5) [2018] FCA 19 at [9].

Associate:

Dated:    21 January 2021

SCHEDULE OF PARTIES