Barbara Ann O'Sullivan v Challenger Managed Investments Ltd

CASES CITED : Campbell's Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 ALR 58

Barbara Ann O'Sullivan PARTIES : v Challenger Managed Investments Ltd (No. 2)

COUNSEL : Plaintiff: A Leopold Defendant: P Whitford, M Henry

SOLICITORS : Plaintiff: Maurice Blackburn Cashman Defendant: Arnold Bloch Leibler

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

4799/06 Barbara Ann O'Sullivan v Challenger Managed Investments Ltd (No. 2) JUDGMENT 1 HIS HONOUR: Following the delivery of my reasons for judgment of 24 April 2007, the plaintiff seeks leave to amend the originating process and statement of claim in order, it is said, to conform with my reasons for judgment as to what claims could appropriately be brought as a representative action for declaratory relief. 2 The substantive amendments proposed to the originating process are to delete the claim for damages by the represented persons and to confine the damages claim to a claim by the plaintiff. 3 No substantive amendment is sought in relation to the terms of the declaration. The plaintiff seeks leave to file an originating process which would relevantly claim the following relief: that "the plaintiff claims ... in her own right and on behalf of the each of the Represented Persons a declaration that in the issuing of the prospectus, the defendant engaged in conduct which was misleading or alternatively which was misleading or deceptive were likely to in contravention likely to mislead or deceive in contravention of s 12DA of the ASIC Act and/or s 42 of the Fair Trading Act." 4 The amendments to the statement of claim are more extensive. Rather than pleading the non-disclosure of facts to the plaintiff and the represented persons, the plaintiff pleads that certain facts were in existence when the prospectus was issued and at all times during which the invitation in the prospectus to apply for units in the trust was on foot. In substance, those facts were the same matters which formerly were pleaded as matters which were not disclosed to the plaintiff and the represented persons. It is then pleaded that, by its conduct in issuing the prospectus and making statements alleged to be contained in the prospectus, the defendant made certain representations to the public which are themselves alleged to be misleading and deceptive. The amendments cure the problem which was identified in paragraphs 54-57 of my reasons for judgment of 24 April 2007 in relation to the difficulty of the proceedings continuing as representative proceedings in relation to the claim for declaratory relief. The proposed amendments to the statement of claim also delete the claims for damages for the represented persons.

5 Paragraph 15 of the statement of claim is not proposed to be amended. It pleads that the plaintiff and each of the represented persons acquired units in the trust. I accept that such a pleading is appropriate. It may be material to the exercise of the discretion to make the declaration sought. It also identifies the basis upon which the represented persons are said to be members of the same class having the same interest in the proceedings. 6 The defendant opposes the proposed amendments on a number of grounds. Some of those are grounds I have already rejected and I will not deal with them further. The grounds which are new, or which are raised in relation to the new matters arising on the proposed pleading, are as follows. 7 First, it was submitted that the pleading fails to plead the facts showing that the represented persons are members of the same class such that they have the same interest in the proceeding (Campbell's Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 ALR 58 at [227]). In my view, paragraphs 11, 14 and 15, do sufficiently plead those matters. 8 Secondly, it is submitted for the defendant that there was disconformity between what is pleaded as the alleged misleading conduct and the terms of the declaration sought. It is submitted that the alleged misleading conduct is constituted by representations, expressed and implied, made by the combination of issuing the prospectus and making statements in it. I do not accept that there is a disconformity between the relief sought and the pleaded grounds on which the relief is claimed. 9 The representations pleaded in paragraphs 11 and 14 are said to arise by the conduct of the defendant alleged in paragraphs 2 and 9 of the statement of claim. Paragraphs 2 and 9 allege the issuing of the prospectus and the making of statements in it. 10 The declaration sought in paragraph 4(b) of the proposed amended originating process is a declaration that, by issuing the prospectus, the defendant engaged in misleading or, alternatively, misleading or deceptive, conduct. I see no difference between the issuing of the prospectus and the making of the statements contained in the prospectus which is issued. 11 It may well be that, if the plaintiff is successful at the final hearing in making good some or all of her claims as to the basis upon which she says that the representations were misleading, a more specific declaration would be made as to the respects in which the defendant engaged in misleading or deceptive conduct. That will be particularly important in the representative proceedings if, for example, it were held that the prospectus was misleading in respect of one of its statements but not in respect of others. However, the way in which the relief sought is presently framed, when read with the statement of claim, is sufficiently clear. 12 The third objection concerns paragraph 17 of the statement of claim. Paragraph 16 of the statement of claim alleges that the representations pleaded were material to the decision of the plaintiff to acquire units which she acquired in the trust. 13 Paragraph 17 alleges that further, and in the alternative, if the plaintiff had known of the facts pleaded in paragraph 10 above (which she did not) she would not have acquired any units in the trust. 14 It was put that this may be an attempt to plead an alternative case based on misleading conduct by silence without any specific allegation of the facts relied on for such a case. However, that is not the pleader's intention. It is not how I would have read paragraphs 16 and 17. 15 Mr Leopold for the plaintiff confirmed that paragraph 17 is pleaded in the alternative only to paragraph 16. It is, counsel said, a pleading of the causal mix by which the plaintiff alleges she suffered loss as a result of the defendant's conduct. 16 Paragraph 17 should be amended before the proposed statement of claim is filed to add the words "to paragraph 16" after the words "in the alternative".

17 Counsel for the plaintiff also said that the heading "Loss or Damage by the Defendant's Contraventions" on page 16 of the document should follow and not precede paragraph 15. That should also be corrected on the document to be filed. 18 Subject to those two matters, for the reasons I have given, it is appropriate to grant leave to the plaintiff to file the proposed amended originating process and the proposed amended statement of claim, handed up by counsel this morning. 19 The other questions concern costs. Although the plaintiff was successful on some of the arguments advanced, she failed on the two major questions which were argued on the defendant's interlocutory process, namely, whether the claim for declaratory relief, as it was propounded in the statement of claim, could go forward as a representative proceeding, and whether the claim for damages could go forward in representative proceedings. 20 In my view, the costs order should reflect that fact. The question is then whether there should be an order that the plaintiff pay the defendant's costs of the defendant's interlocutory process, or whether those costs should be the defendant's costs in the proceedings. 21 In the usual run of cases, the reason for ordering that costs be costs in the proceedings is that it can be unfair to order a party who has been unsuccessful in an interlocutory application to pay the successful party's cost if, at the end of the day, it could be seen that the successful party on the interlocutory application should never have been brought, or defended, the proceedings at all. 22 These representative proceedings are in a different position. The defendant could not have done otherwise than defend the claim as it was formulated in the statement of claim as a representative proceeding. 23 In these circumstances, the appropriate order is that the plaintiff pay the defendant's costs of the defendant's interlocutory process filed on 18 October 2006, and I so order. 24 Costs of the plaintiff's interlocutory process filed on 18 October 2006 will be costs in the proceedings. 25 I order that paragraphs 16 to 18 of the statement of claim be struck out in so far as those paragraphs refer to "represented persons". 26 As the plaintiff will have leave to amend, it is not appropriate to make any orders for dismissal of the proceedings or any part of them. 27 I grant leave to the plaintiff to file the amended originating process dated 5 June 2007 handed up by counsel this morning. 28 I give leave to the plaintiff to file an amended statement of claim in the form of the document handed up by the plaintiff's counsel this morning, subject to its being further amended by moving of the heading on page 16 to follow paragraph 15, and by adding the words "to paragraph 16" after the word "alternative" in paragraph 17. 29 I order that the defendant's interlocutory process filed on 18 October 2006 be otherwise dismissed. 30 The amended originating process and the amended statement of claim should be filed in the registry by 5.00 pm, 5 June 2007. 31 I order that the defendant file its defence to the amended statement of claim by 5.00 pm on 12 June 2007. 32 I stand over the proceedings to the registrar's list at 11.00 am on 19 June 2007.

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