Federal Court of Australia

Trueline Kerbing SA Pty Ltd v Administrative Incentivised Management Systems Pty Ltd [2026] FCA 564

ORDERS

THE COURT ORDERS THAT:

1.    Leave to the second respondent to amend his interlocutory application filed 23 March 2026 to seek an order under r 16.21(1)(e) of the Federal Court Rules 2011 (Cth).

2.    The second respondent has leave to represent the interests of the third respondent at the hearing of the interlocutory application.

3.    The second respondent’s interlocutory application is dismissed.

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

REASONS FOR JUDGMENT

O’SULLIVAN J:

1    The second respondent, Mr Simeone, applies by an amended interlocutory application filed 23 March 2026 for the removal of the first, third and fifth respondents from these proceedings.

2    Mr Simeone is the sole director and shareholder of the first respondent, Administrative Incentivised Management Systems Pty Ltd, and the husband of the third respondent, Mrs Simeone.

3    The fourth respondent, Simeone Pty Ltd, is in liquidation and the fifth respondent is a company of which Mr Simeone was a director for a period of time, but whose current director is Mr Simeone’s son.

4    The application, as framed, is defective insofar as it seeks the removal of parties pursuant to r 9.02 of the Federal Court Rules 2011 (Cth). It is tolerably clear from Mr Simeone’s written submissions that what he is applying for is for certain parts of the amended statement of claim (ASoC) filed by the applicants on 2 February 2026 to be struck out pursuant to FCR 16.21, in particular 16.21(1)(e), on the ground that the ASoC fails to disclose a reasonable cause of action.

5    I note Mr Simeone’s submissions filed 15 March 2026 referred in [11] to FCR 16.21(1)(b) and 16.21(2), however, at the hearing of this matter Mr Simeone confirmed that he applied under FCR 16.21(1)(e).

6    Since that was not apparent on the face of the application, I granted leave to amend the application to rely on FCR 16.21(1)(e) and there will be orders accordingly. There was no objection to that course.

Representation

7    Mrs Simeone did not attend the hearing, indeed she has not attended any hearing in this matter.

8    Although Mr Simeone has no right to represent Mrs Simeone, in the circumstances particular to the proceedings, I permitted Mr Simeone to advance submissions on Mrs Simeone’s behalf. However, on all further occasions whilst Mrs Simeone remains a party, she is to attend. It was made clear to Mr Simeone that he does not have permission to appear for Mrs Simeone at large.

9    The first respondent, AIMS, is a company which Mr Simeone is the sole director. He did not have leave to appear for the company and did not apply for leave such that it was unrepresented at the hearing: FCR 4.01.

Principles

10    The principles relating to the strike out of a pleading, or part of a pleading, are well-settled.

11    The applicable test is that no reasonable cause of action is made out on the face of the pleading. That is a high standard and an applicant must be able to establish that the claim is “so obviously untenable that it cannot possibly succeed”: General Steel Industries Inc. v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129-130 (Barwick CJ).

12    The term, “reasonable cause of action” under FCR 16.21(1)(e) means one with some chance of success if regard is had only to the allegations contained in the pleadings: National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 at 529 and the cases cited therein (Lindgren J).

13    FCR 16.21 concerns the adequacy of the pleadings. A consideration of facts or evidence outside of the pleadings is not permitted and the Court proceeds on the basis that the allegations in the pleading are true. If, taken at their highest, the allegations are established the issue then becomes whether a cause of action is made out on the face of the pleading: Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liquidation) (receivers and managers appointed) [2008] FCA 1920, (2008) 252 ALR 41 at [4] and the cases cited therein (Finkelstein J).

14    The power to strike out should only be exercised in plain and obvious cases and where no reasonable amendment to the pleading is able to cure the alleged defect: National Mutual Property Services at 529.

15    Striking out a pleading is a serious step. A Court is cautious in denying a party the opportunity of bringing a case which it ought to be able to bring: Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164 at 175 (Sheppard J).

Basis of the application

16    The interlocutory application proceeds on three bases:

(1)    As against Mrs Simeone, there is no cause of action pleaded against her.

(2)    That insofar as the ASoC relies on s 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law), there was no conduct that was in trade and commerce.

(3)    That the ASoC discloses no reasonable cause of action against Mr Simeone insofar as it pleads a management agreement, the fiduciary relationship, and seeks relief by way of tracing.

Documents read

17    Mr Simeone filed two affidavits in support of his application, the first sworn 17 October 2025 and the second sworn 7 April 2026.

18    Those affidavits were read on the application without objection but generally they contained irrelevant information in the sense that Mr Simeone attempted to put evidence before the Court which he contended was against the applicant’s case. The Court had explained previously the approach the Court takes when considering an application such as this. Nonetheless, Mr Simeone persisted. At the hearing of the application, the Court explained once again the approach the Court takes, informed by the principles set out above.

The causes of action pleaded against Mrs Simeone

19    Mr Simeone’s contention that no cause of action is pleaded against Mrs Simeone is incorrect.

20    The allegation against Mrs Simeone proceeds on the basis she was involved in making certain misleading representations: ASoC [36], [76]-[77].

21    Those representations arise out of Mrs Simeone’s responsibility for production of a general ledger for the first applicant which was not accurate.

22    In summary, the ASoC pleads:

(a)    Mrs Simeone’s responsibility for the general ledger: ASoC [36.5];

(b)    the representations arising out of the general ledger: ASoC [36.5];

(c)    the representations in the general ledger were made in trade and commerce: ASoC [71];

(d)    the general ledger was not true and accurate and thereby was misleading and deceptive: ASoC [74.3]; and

(e)    since Mrs Simeone produced the general ledger, she was involved in making the representations and thereby contravened s 18 of the ACL: ASoC [76]-[77]: ACL ss 2 and 236.

23    Consideration of the ASoC reveals that Mr Simeone’s submission, that there is no pleaded cause of action against Mrs Simeone, is unsustainable.

24    The application that those parts of the ASoC which allege a cause of action against Mrs Simeone be struck out, is dismissed.

The conduct alleged to be in breach of the ACL was in trade and commerce

25    Mr Simeone submits that the conduct in question was not in trade and commerce.

26    The applicants submit that the question of whether the impugned conduct was in trade and commerce is a matter of fact that has to be determined in context. That submission is clearly correct and I accept it.

27    The applicants submit further that they have pleaded the material facts capable of supporting the allegation that the conduct in question was in trade and commerce. I accept that submission: see ASoC [71] and the matters referred to therein.

28    Still further, the applicants submit that the conduct of AIMS, Mr Simeone and Simeone Pty Ltd in which:

(a)    it was represented that Simeone Pty Ltd, a company of which Mr Simeone was the sole director and shareholder, acted as an insurance broker and provided “holistic” accounting, bookkeeping, taxation and business management advice;

(b)    there was an oral agreement between Mr Simeone and the second applicant, Mr Toscano, for the provision of services by which AIMS/Mr Simeone took full control of the first applicant’s business; and

(c)    in consideration of which AIMS/Mr Simeone received a weekly payment of $2,000,

are more than sufficient to provide a basis for an allegation that the impugned conduct occurred in trade and commerce: ASoC [28], [28.6].

29    The application to strike out those parts of the ASoC dealing with the ACL fails.

The ASoC discloses a reasonable cause of action against Mr Simeone

30    Mr Simeone submits the ASoC discloses no reasonable cause against him for three reasons:

(1)    There is no enforceable management agreement;

(2)    There is no identified fiduciary relationship; and

(3)    There is no relief available in tracing the disputed funds.

There was an enforceable management agreement

31    Mr Simeone’s submission that there is no enforceable management agreement proceeds on the basis that there is no identified offer and acceptance, no meeting of minds on material terms, and no consideration distinct from a pre-existing mutual arrangement.

32    Mr Simeone’s submissions are a one-dimensional consideration of what is required for the formation of a contract. Although some of the matters to which he refers are undoubtedly correct, the question of contract formation is by no means confined to whether a written contract exists. Mr Simeone’s submission, limited as they were to the matters to which I have referred, may be explained by Mr Simeone’s reliance on artificial intelligence in preparing his submissions.

33    The applicants submit that it has been pleaded and particularised at ASoC [27] and [28] that the parties entered into a management agreement.

34    I accept that submission. The allegations are apparent on the face of the ASoC.

35    Mr Simeone’s contention that the ASoC does not reveal a basis for the finding of an enforceable agreement fails.

There was a fiduciary relationship

36    Mr Simeone submits that there was no formal retainer and that the ASoC does not plead what he describes as, the “critical feature” of fiduciary relationships: Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 96-97 (Mason J).

37    The applicants submit that sufficient facts are pleaded to give rise to fiduciary obligations, in particular a relationship of trust and confidence, and an agreement by which AIMS/Mr Simone agreed to take full control of the first applicant’s business, including its bank account, its receipt of funds and its payments to creditors: ASoC [22], [28.2]-[28.5].

38    Ultimately, the question of whether fiduciary obligations exist is a matter which will have to be determined at trial taking into account the factual scenario that evolved in determining whether, on its facts, a relationship sufficient to enliven fiduciary obligations arose.

39    It is for that reason that I accept the applicants’ submissions.

40    Mr Simeone’s contention that the ASoC does not reveal a basis for the finding of a fiduciary relationship fails.

Tracing particulars

41    Mr Simeone submits that the party claiming a constructive trust must plead the material facts establishing the property in funds said to be held on trust and where tracing is relied upon as relief, the pathway by which the relevant funds or property passed from the claimant property to the property in which the trust is said to subsist.

42    It should be noted that tracing is not a remedy, right or claim but rather a process by which assets are identified and plaintiff’s rights are determined. Put simply, tracing is an evidentiary process of identifying assets: see Re Magarey Farlam Lawyers Trust Accounts (No 3) [2007] SASC 9; (2007) 96 SASR 337 at [117] and the cases cited therein.

43    The applicants submit that Mr Simeone’s submissions misapprehend the ASoC, in particular the detailed pleadings at [68A] to [68Q] which identify the funds that were misapplied and the pathway of those funds into the relevant property, being Unit 5, Angas Court, South Australia.

44    Next, the applicants submit that a question of whether a constructive trust arises depends on the circumstances as found and whether it is inequitable for the respondents to retain a benefit: Thorn, as executrix of the estate of the late Betty McCauley v Boyd [2016] NSWSC 1344, [32]-[42].

45    Relying on that authority, the applicants submit that rather than providing the evidence upon which the applicants rely, it is sufficient if the applicants plead the circumstances which, it will contend, give rise to a constructive trust. In that context, the applicants point to the ASoC at [94A]-[94D].

46    I accept the applicants’ submissions.

47    With respect, Mr Simeone’s contentions misunderstand the nature of a tracing exercise. His submissions that the ASoC does not provide a basis upon which constructive trust might be found and a tracing exercise performed has no basis and fails.

Conclusions

48    It is for these reasons that the application is dismissed.

Associate:

Dated:    7 May 2026

SCHEDULE OF PARTIES