Citation: Diamantidis Group Pty Ltd Trading As Ray White St Marys v The Agarwal Group Real Estate Pty Limited [2024] NSWDC 354
Court: District Court of New South Wales
Date: 19 April 2024
Judge(s): Neilson DCJ
Background
The plaintiff, a real estate agency trading as Ray White St Marys, brought proceedings against a group of defendants including a former employee, a former independent contractor, and several related companies. The second defendant had worked for the plaintiff as an employee and then as an independent contractor, before his commercial arrangement with the plaintiff ended. The fifth defendant, a former employee, resigned in May 2023. Both were alleged to have misused confidential client and customer information acquired during their time with the plaintiff.
The plaintiff alleged that the former contractor and employee had diverted clients, listings, and property management arrangements to the defendant companies. The amended statement of claim set out a table of specific properties, identifying lost sales commissions and diverted property management income as the plaintiff's claimed losses.
The defendants filed a notice of motion seeking further particulars of certain paragraphs and, critically, seeking to strike out paragraph 75 of the amended statement of claim. That paragraph pleaded that the corporate defendants received confidential information knowing of the individual defendants' breaches of fiduciary duty, which the plaintiff characterised as knowledge of a "dishonest or fraudulent design."
Legal Issues
- Whether the plaintiff was required to provide further particulars of what the second and fifth defendants were alleged to have done in "exploiting Client and Customer Information" under paragraphs 53 and 61 of the amended statement of claim.
- Whether paragraph 75 of the amended statement of claim, which referred to the defendants' "dishonest or fraudulent design," should be struck out.
- Alternatively, whether the plaintiff should be required to provide particulars of any fraud alleged in paragraph 75.
Decision
On the question of further particulars for paragraphs 53 and 61, the court was satisfied that the existing pleading, read alongside paragraph 53A and the detailed property table in paragraph 59, provided sufficient particularity. Paragraph 53A identified a specific act: the downloading and emailing of a compiled list of client and customer information to a private address on 19 May 2022. The table in paragraph 59 then identified the specific properties, clients, and financial losses said to flow from the broader conduct. Taken together, the pleading gave the defendants a sufficient picture of the case they had to meet.
On the application to strike out paragraph 75, the court declined to do so. Neilson DCJ held that the phrase "dishonest or fraudulent design" in this context is a term of art in equity, drawn from the line of authority governing accessory liability for breach of fiduciary duty, and is not an allegation of the common law tort of fraud. Because the phrase carries an established equitable meaning, the plaintiff was not required to furnish further particulars of fraud as that concept is understood in tort law.
The broader pleading structure, including paragraphs 74 through 78, sought to establish that the corporate defendants were liable in equity for the benefits they obtained through the second defendant's breaches of fiduciary duty. The court recognised this as a legitimate equitable claim, designed to render entities accountable for benefits flowing from another's improper conduct. On that basis, the notice of motion was dismissed in its entirety.
Orders Made
- The defendants' notice of motion was dismissed.
- The defendants were ordered to pay the plaintiff's costs of the notice of motion.
Key Takeaways
- The District Court confirmed that the phrase "dishonest or fraudulent design" in an equitable pleading is a recognised term of art, not an allegation of the tort of fraud, and therefore does not attract a requirement to provide particulars of fraudulent misrepresentation or deceit.
- A pleading alleging exploitation of confidential information may be sufficiently particularised where it identifies a specific act of misuse (such as emailing a client list to a private address) and provides a table of specific properties, clients, and quantified losses said to flow from that conduct.
- Where a party seeks to hold corporate defendants liable in equity for benefits obtained through an individual's breach of fiduciary duty, it is permissible to plead the defendants' knowledge of the individual's "dishonest or fraudulent design" as the basis for accessory liability, without separately pleading the elements of fraud at common law.
- In dismissing the motion, the court reinforced that terms of art carrying established equitable meanings should be read in their proper equitable context, not through the lens of common law torts that happen to share similar language.
- Requests for further particulars will not succeed where the existing pleading, read as a whole, provides the opposing party with a sufficient understanding of the case alleged against them.
Legislation and Cases Referenced
Cases:
- Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609
- Wentworth v Rogers (No 5) [1986] NSWLR 534
Legislation:
No legislation was cited in this decision.