Dresna Pty Ltd v Misu Nominees Pty Ltd - [2003] FCA 1537 - FCA 2003 case summary — Zoe

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Dresna Pty Ltd v Misu Nominees Pty Ltd

[2003] FCA 1537

Federal Court of Australia|2003-07-01|Before: Weinberg J

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Court

Federal Court of Australia

Decision date

2003-07-01

Before

Weinberg J

Source

Original judgment source is linked above.

Judgment (47 paragraphs)

[1]

BACKGROUND TO THE APPLICATION 2 This proceeding concerns a managed sell-down by Franklins Limited, a large supermarket operator, of its assets in Australia in 2001. Dresna contends that it sustained significant loss and damage by reason of the actions of various parties in depriving it of the benefit of a contract into which it had entered. 3 The respondents fall into three distinct categories: · the first and second respondents are Misu Nominees Pty Ltd and Kandada Pty Ltd. For convenience, I shall refer to them collectively as "the Lessor"; · the third and fourth respondents are Franklins Management Services Pty Ltd (now Linknarf Management Services Pty Ltd (in liq)), and Franklins Limited (now Linknarf Limited (in liq)). They will be referred to collectively as "Franklins"; and · the fifth respondent is Coles Myer Limited ("Coles"). 4 There were, at one time, three national supermarket retail chains in Australia: Franklins, Coles, and "Safeway". Woolworths Limited operated Safeway, which is not a party to this proceeding. 5 In January 2001, Franklins commenced a strategic review of its Australian operations. On 18 April 2001, it announced that its parent company, Dairy Farm International Holdings Ltd ("Dairy Farm"), based in Hong Kong, was to commence a managed sell-down of Franklins' assets in Australia. 6 In June 2001, both Dairy Farm and Franklins gave undertakings to the Australian Competition and Consumer Commission ("the ACCC"). These undertakings ("the Franklins Undertakings") were given pursuant to s 87B of the Trade Practices Act 1974 (Cth) ("the TPA"). Their apparent purpose was to ensure, so far as possible, that the remaining Franklins stores were sold to "independent operators" rather than to Coles or Safeway. That purpose was to be achieved by a process known as the Joint Independent Divestiture Alliance process ("the JIDA process"). 7 In May 2001, Mr Leo Blake entered into an agreement with Franklins to purchase Franklins' business at two stores, Mentone and North Blackburn. The total purchase price was $2.8 million. The agreement provided that Mr Blake had a right to nominate a substitute purchaser. 8 On 8 August 2001, Dresna, as nominee for Mr Blake, entered into an agreement with Franklins to purchase Franklins' business at its Mentone store for $2.3 million. This agreement is described in Dresna's Proposed Further Amended Statement of Claim ("the PFASC") as "the Mentone BSA". 9 Dresna alleges that the Mentone BSA contained a series of express and implied terms. They included: · Dresna and Franklins were only obliged to complete the purchase if the Lessor consented in writing to the transfer of the Mentone lease ("the condition precedent"); · Franklins and Dresna were required to use their reasonable endeavours to satisfy the condition precedent; · If the condition precedent was not satisfied by 13 September 2001, either party could terminate the Mentone BSA by giving two days' notice in writing; · The right of the parties to terminate the Mentone BSA was subject to a duty to act in good faith ("implied term"); · Franklins would do all such acts as were necessary on its part to enable Dresna to enjoy the benefit of the agreement ("implied term"); · Franklins would not, during the course of the agreement, do anything that had the effect of depriving Dresna of the benefit of the agreement ("implied term"); and · Franklins would act in good faith in relation to the implementation of the agreement, including making full and frank disclosure to Dresna of all matters within Franklins' knowledge relevant to the implementation of the agreement (including the assignment of the Mentone lease) ("implied term"). 10 Shortly after entering into the Mentone BSA, Franklins and Dresna sought the Lessor's consent to the assignment of the Mentone lease to Dresna. Franklins' lease of the Mentone premises had, at the time, approximately 14 years left to run, plus options. 11 Between August and October 2001, Franklins and Dresna made three separate requests for an assignment of the lease, each of which the Lessor rejected. 12 In September 2001, Franklins and Dresna agreed to commence proceedings against the Lessor, in the Supreme Court of Victoria, seeking to procure an assignment of the lease ("the Litigation Agreement"). 13 On 16 October 2001, that proceeding was commenced. It is important to note that both Dresna and Franklins were plaintiffs in that proceeding. As the action was framed in contract, and Dresna was not a party to that contract, it was necessary that Franklins be joined as a plaintiff. Coles was not, at that stage, a party to the proceeding. 14 On 28 November 2001, Franklins gave Dresna seven days' notice of its intention to terminate the Mentone BSA. It claimed that it had not been possible to procure the Lessor's consent to the assignment of the lease. Franklins further advised that it would withdraw as a plaintiff from the Supreme Court proceeding. 15 On 20 December 2001, Franklins sold its supermarket business at the Mentone store to Coles. 16 Dresna subsequently discovered certain facts that caused it to completely reformulate its claims, this time not just against the Lessor, but also against Franklins and Coles. Dresna says that it learned, some time in 2001, that Coles had devised a scheme, known as Project Noah, to acquire the Franklins' supermarket business at a number of stores that were to be sold to independent operators under the JIDA process. Dresna claims that Project Noah involved a series of "secret dealings" between the Lessor, Franklins and Coles. 17 The "secret dealings" are summarised in the PFASC as follows: · In June 2001, Coles commenced dealings with the Lessor with a view to securing a lease of the Mentone store. On or about 28 June 2001, Coles entered into a letter agreement with the Lessor for a lease of that store. · Significantly, there were terms of that letter agreement that, if legally entitled to do so, the Lessor would negotiate with Franklins to purchase items of stock, plant and equipment, nominated by Coles, for a price not more than a figure to be stipulated by Coles, and for Coles to pay or reimburse the Lessor for that stock, plant and equipment. Dresna claims that the letter agreement demonstrates that both the Lessor and Coles were aware that Coles could not deal directly with Franklins. It also claims that the letter agreement shows that the Lessor proposed to act as an intermediary between Franklins and Coles to achieve indirectly that which could not be done directly. In substance, Dresna claims that the letter agreement shows that Coles devised a plan to circumvent the JIDA process. · In August 2001, the Lessor and Coles had further dealings. On or about 24 August 2001, Coles conducted a site visit of the Mentone store. · Some time between September and November 2001, Franklins and Coles reached an "agreement, arrangement or understanding" that Franklins would sell to Coles the businesses conducted at a number of stores that were listed in a schedule to the Franklins Undertakings. · In or about October 2001, Franklins became aware that Coles had "done a deal in principle" with the Lessor to lease the Mentone store, based on vacant possession. However, Franklins did not disclose that fact to Dresna, or to the ACCC. Dresna claims that Coles' "deal in principle" presented a formidable obstacle to obtaining the Lessor's consent to the assignment of the lease. · On 23 November 2001, Franklins addressed a confidential submission to the ACCC, seeking its consent to the sale of the Mentone supermarket business to Coles. That confidential submission too was not disclosed to Dresna. It did not refer to the fact, which Franklins knew, that Coles had "done a deal in principle" with the Lessor. · On about 28 November 2001, Coles commenced a due diligence on Franklins' Mentone business. Once again, that fact was not disclosed to Dresna. · On or about 5 December 2001, Coles sent the ACCC a letter containing a "supporting submission" which stated that "CML has not sought to interfere with the divestment process agreed to by Franklins and incorporated into the undertakings provided to the ACCC by Woolworths and Franklins". It further stated, "CML has respected the [divestment] process and has not sought to undermine it by negotiating with landlords in a bid to frustrate the process". · Initially, on 5 December 2001, the ACCC refused consent to the sale of the Mentone business to Coles. However, Dresna claims that the ACCC must have changed its mind as the sale proceeded shortly thereafter, on or about 20 December 2001.

[7]

Conspiracy by unlawful means between the Lessor and Coles 29 Dresna claims that the Lessor and Coles conspired, by unlawful means, to injure it by engaging in the conduct specified in pars 53, 55, 56, 58, 60, 61, 62, 63, and 64 of the PFASC. Essentially that conduct includes dealing with the Lessor in relation to leasing the Mentone store, offering to lease that store (that is, the letter agreement), approving the letter agreement, inducing the Lessor to refuse consent to the assignment of the lease to Dresna, and undertaking to the Lessor that in the event it was able to purchase the business at the Mentone store, Coles would honour the terms of the lease that had been agreed between itself and the Lessor (rather than take an assignment of the lease). 30 Dresna claims that the conspiracy occurred in two stages. The first stage occurred prior to 10 August 2001. Dresna says that, at that time, the Lessor and Coles entered into an agreement whereby Coles would purchase the Mentone business with the intention of depriving the "independent operator" that entered into an agreement to purchase that business of the benefit of that agreement. 31 The second stage of the conspiracy occurred after 10 August 2001. Dresna claims that after that date, the Lessor and Coles, now having knowledge of the Mentone BSA, conspired to deprive Dresna of the benefit of that agreement. 32 Dresna identifies the "unlawful means", by which the conspiracy was said to be implemented, as the Lessor's refusal to consent to the assignment of the Mentone lease. It should be noted, in that regard, that the Lessor claimed, when it refused to assign the lease, that Franklins had not proved to its reasonable satisfaction that Dresna was "of comparable commercial standing" to Franklins. The Lessor also claimed that the lease provided for an assignment to "a major supermarket chain with national representation". Manifestly, the Lessor argued, Dresna did not meet that description. 33 Dresna claims that the Lessor was not entitled to refuse consent to the assignment upon either of these grounds. It takes particular exception to the second ground, since it claims that the Mentone lease did not contain any such requirement. It argues that the refusal to consent was unreasonable, and that the Lessor thereby breached the terms of the lease. 34 Dresna claims that the conspiracy resulted in its having lost the benefit of the Mentone BSA, and otherwise having suffered loss and damage.

[9]

THE APPLICATION FOR LEAVE TO FILE THE PFASC 38 When Dresna originally commenced this proceeding in the Supreme Court of Victoria, its case was essentially quite straightforward. It claimed, at that stage, that the Lessor had acted wrongfully, and in breach of the Mentone lease, by refusing to consent to the assignment of that lease. As indicated earlier, because Dresna was not a party to that lease, it could not itself sue for that breach. Rather, it needed Franklins to bring that proceeding. The Litigation Agreement was the mechanism by which Franklins was to undertake that role. Dresna agreed to indemnify Franklins for any costs incurred as a result of agreeing to act as plaintiff in that proceeding. 39 Once Franklins terminated the Litigation Agreement, and Coles' involvement in what had occurred became clear, the nature of Dresna's claim changed fundamentally. Franklins was no longer a plaintiff, and had to be joined as a defendant instead. Coles, too, was brought in to the proceeding as a defendant. The case became significantly more complex. It was inevitable that Dresna would have to make substantial amendments to its statement of claim. New causes of action were included, while others were discarded. At least with regard to these early amendments, Dresna was not to blame. 40 In December 2002, Dresna's case changed dramatically. For the first time, it pleaded a claim of misuse of market power under s 46 of the TPA. It was virtually inevitable thereafter that the Supreme Court of Victoria would transfer this proceeding to the Federal Court, given its exclusive jurisdiction under Pt IV of that Act. Indeed, the proceeding was transferred on 13 December 2002. 41 Shortly thereafter, Dresna sought yet again to amend its statement of claim. According to an affidavit sworn by its solicitor, on 12 March 2003, these amendments resulted from a "review" of its "conspiracy related claims". Importantly, Dresna now sought to abandon its misuse of market power claim, the very matter that had led to the transfer. It also sought to abandon certain conspiracy claims that it formerly made against Coles. On 20 March 2003, I granted Dresna leave to file an "Amended Statement of Claim" reflecting these changes. 42 The application to this Court for leave to file the PFASC is, as I have previously indicated, either its ninth or eleventh application to amend its statement of claim. As against the Lessor, it is said to be the eleventh such application. As against Franklins, it is said to be the ninth such application. It is the fourth application to amend the case against Coles. 43 Dresna says that leave should be granted in order that the "real questions raised" can be determined, in accordance with O 13 r 2(2) of the Federal Court Rules. That sub-rule provides: "All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings." 44 Dresna submits that the principles governing the operation of this rule, and others like it, are well established. In The Commonwealth v Verwayen (1990) 170 CLR 394, Dawson J said at 456: "The rules of court have always provided that leave to amend pleadings may be given for the purpose of determining the real question in controversy between the parties … and an amendment should ordinarily be allowed if any harm arising from so doing can be compensated for by the imposition of terms upon the party asking for the amendment… The usual terms which are imposed are an order for costs or an adjournment. In granting leave to amend, a court is concerned with the raising of issues and not with their merits. Of course, an amendment which is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed. That will be an issue upon trial. An amendment may, however, be refused because it is made at such a late stage that neither costs nor an adjournment can compensate the other side for the failure to raise the issue at an earlier stage." 45 Dresna argues that, subject to certain specific objections, to which I shall return, leave to amend should be granted. It claims that any prejudice to the respondents arising from the grant of such leave can be the subject of compensation by an appropriate order for costs. It accepts that it has had a number of opportunities, in the past, to plead its case. However, it contends that the earlier pleadings, at least, should be disregarded because it lacked the information necessary to enable it to formulate its case with precision. 46 Dresna relies, in support of its application for leave to amend, upon Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 ("JL Holdings"). In that case, the High Court referred to the well known passage in the judgment of Bowen LJ in Cropper v Smith (1884) 26 ChD 700 where his Lordship said at 710: "…the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases…." 47 Dresna argues that the High Court made it clear in JL Holdings that justice is the paramount consideration in determining an application for leave to amend. It contends that save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its past mistakes. 48 In responding to the specific objections raised by the respondents to particular paragraphs in the PFASC, Dresna adopts what Dawson J said in Verwayen. An amendment that is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim that ought not to succeed. Dresna argues that the well known statements in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, and General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125 at 129, should govern this aspect of its application.

[11]

The Lessor's specific objections 51 Dresna's only cause of action against the Lessor in the PFASC is a claim that it conspired with Coles, by unlawful means, to injure Dresna. That cause of action is pleaded in pars 99 to 104. The Lessor claims that these paragraphs do not disclose a reasonable cause of action, have a tendency to cause prejudice, embarrassment or delay, and are an abuse of process of the Court. 52 The Lessor claims that the conspiracy pleading is defective for the following reasons: · In relation to the period prior to 10 August 2001, the target of the alleged conspiracy is not identified with sufficient particularity. Rather, the target seems to be "the world at large". In addition, Dresna does not plead any facts that support its allegation that the Lessor and Coles agreed, or combined, to deprive "the independent operator" of the benefit of any agreement to purchase Franklins' business, and thereby cause "it"harm. In substance, the Lessor claims that the pleading is defective because it does not, and cannot, allege that there was an agreement, the object of which was to injure Dresna. · In relation to the period after 10 August 2001, the Lessor argues that Dresna has not pleaded any facts that support its allegation that the Lessor, together with Coles, "breached the Mentone lease". Nor does Dresna plead any facts that support its allegation that the Lessor, together with Coles, sought to deprive Dresna of the benefit of the Mentone BSA, or otherwise cause it harm. · The Lessor further contends that the PFASC fails to plead any facts to suggest that, but for the supposedly unlawful means agreed upon between the Lessor and Coles, there is any basis for concluding that Dresna, or some other "independent operator", would have received the benefit of the Mentone lease. Thus Dresna cannot establish that it sustained any loss or damage as a result of anything that the alleged conspirators supposedly did. 53 The Lessor also argues that the PFASC offends a number of the rules governing pleadings. It refers, in that regard, to O 11 of the Federal Court Rules, which requires a statement of claim to state, with sufficient clarity, the case that must be met. It also makes clear that the purpose of a statement of claim is, in substance, to define the issues. A pleading must contain, and contain only, a statement in a summary form of the material facts upon which a party relies. The material facts are those necessary for the purpose of formulating a complete cause of action. Statements that are conclusory, drawn from facts not alleged in a statement of claim, are not material facts. Particulars are no substitute for material facts. 54 The Lessor submits that the PFASC does not plead all material facts. Pars 99 - 104 allege that the Lessor, together with Coles, acted in combination, in two stages, to injure Dresna. There is the pre-10 August 2001 stage, and the post-10 August 2001 stage. Dresna seeks to rely upon the same unlawful means, namely the breaches of the Mentone lease, as the basis for both stages of the conspiracy. However, the Lessor contends that this cannot be done. In order to sustain a cause of action for conspiracy by unlawful means, Dresna must plead facts that, if proved, would establish that the Lessor agreed with Coles to use unlawful means in order to injure it. Dresna must also prove that it thereby sustained harm. The Lessor argues that par 103 of the PFASC fails to plead any facts capable of leading to either of these conclusions. 55 More specifically, the Lessor claims that the pleading regarding the first stage of the conspiracy is irredeemably defective because it fails to allege what must be a material fact, namely that the conspirators intended, by unlawful means, to injure Dresna. The pleading alleges that the parties "acted in combination", intending to injure "the independent operator", whoever that might be. The Lessor submits that this is tantamount to targeting "the world at large". It says that it is not surprising that the pleading is drafted in this way. The Mentone BSA was not executed until about 10 August 2001. Prior to that time, Dresna could not have been the target of the alleged conspiracy. 56 The Lessor questions whether an unlawful means conspiracy can be pleaded in this way. It notes that the PFASC does not define "the independent operator". Nor does it provide any basis for the assertion that the Lessor was aware that this entity, whoever it might be, intended to enter into an agreement with Franklins to purchase the Franklins business. 57 The Lessor argues that an intention merely to harm some entity cannot found a cause of action in conspiracy. The party targeted by the conspirators must be identified. It is not sufficient simply to establish that the conspirators combined to do an unlawful act, and that the applicant suffered loss or damage as a result of that act. 58 The Lessor accepts that there may be cases where it will be sufficient to allege that the conspirators intended to cause harm to a number of persons as a "class". However, that principle has no application to the present case. It can only be invoked where all members of the class are targeted, and the class is finite. The allegation in the PFASC is that the conspirators combined, by unlawful means, to harm anyone who might fall within the category of "independent operator" (that is, anyone other than the miniscule class of national supermarket operators). The class is almost infinite. 59 As for the period after 10 August 2001, the Lessor argues that the PFASC does not contain any facts that, if proved, would establish that it intended to injure Dresna. There is nothing in the PFASC to suggest that the Lessor was even aware of the existence of the Mentone BSA, still less that the Lessor was aware that Dresna was a party to that agreement. Likewise, Dresna has not pleaded any facts to support its allegation that the Lessor set out to harm it by depriving it of the benefit of that agreement. 60 The Lessor submits that a critical aspect of any pleading alleging a conspiracy by unlawful means must be an allegation, supported by material facts, that the conspirators intend to adopt "unlawful means" to effect their purpose. The only unlawful act identified in the pleading is the breach of the Mentone lease. However, Dresna does not plead any facts that, if proved, would establish that the Lessor, or for that matter Coles, in fact breached the lease. Dresna pleads only that Coles induced the Lessor to refuse consent to the assignment, and that the Lessor ultimately refused such consent. No facts establishing a causal link between the inducement and the refusal are pleaded. Moreover, it cannot be assumed that even if there had been such an inducement, the Lessor could not validly have refused consent. In fact, the Lessor contends, consent was validly refused. 61 Another of the Lessor's arguments is that the unlawful means alleged for depriving Dresna of the benefit of the Mentone BSA is not the same act on its part, as the act on the part of Coles. To speak of "breaches of the Mentone lease" as the unlawful means employed is to conceal the fact that the lease involved a contract between the Lessor and Franklins. Coles was not, at any time, a party to that lease. It could not breach a contract to which it was not a party. The Lessor argues that one party cannot conspire with another to breach its own contract with a third party. Because the acts allegedly committed by the Lessor and by Coles must necessarily be different, there can be no combination between them "to do the same act". 62 Finally, the Lessor contends that even if "the unlawful means" alleged are sufficient to found a cause of action, Dresna has failed to plead that, but for those unlawful means, it would not have suffered damage. The breach alleged is a refusal on the part of the Lessor, and Coles, to consent to the assignment by Franklins of its lease to Dresna. The Lessor submits that it was impossible for Coles to either grant or withhold such consent. 63 The Lessor further notes that, the terms of the Mentone lease provided that consent to an assignment ought not be unreasonably withheld. The Lessor was required to consent to the assignment if Franklins proved to its reasonable satisfaction that the proposed assignee was a "respectable, responsible and solvent person or company of sound financial standing of comparable commercial standing" to the assignor. The Lessor argues that all that can be said, assuming that the facts pleaded in the PFASC are proved, is that the Lessor considered that Dresna did not meet this description. It was open to the Lessor to come to that conclusion.

[16]

Unlawful means conspiracy 74 Dresna alleges in par 94 of the PFASC that Franklins conspired with Coles, by unlawful means, to deprive Dresna of the benefit of the Mentone BSA. As noted earlier, Dresna relies upon "false suggestions", the breaches of the Franklins Undertakings, and the misleading or deceptive conduct in breach of s 52, as well as Franklins' breaches of the Mentone BSA and the Litigation Agreement to which I have previously referred, as the "unlawful means" in question. 75 Franklins contends that, for the reasons it advances, none of these allegations, even if proved, is capable of amounting to "unlawful means". Accordingly, the conspiracy claim itself is untenable. 76 Franklins also argues that the alleged conspiracy adds nothing to Dresna's other claims against it. It is therefore "mere surplusage". The purpose of the conspiracy, as alleged, is to deprive Dresna of the benefit of the Mentone BSA. Dresna says that this purpose was to be achieved, at least in part, by breaching that same agreement (as well as the Litigation Agreement). Yet the breaches of the Mentone BSA, and of the Litigation Agreement, are pleaded as distinct causes of action in pars 84-93 of the PFASC. Franklins argues that it is not generally open to a party to plead, as an alternative to a substantive cause of action already pleaded, the tort of conspiracy to commit that substantive wrong. 77 In addition, Franklins complains that Dresna has failed to allege a mutual intention on the part of the supposed conspirators "to perform the same unlawful act". This too is said to constitute an irremediable defect. 78 Finally, Franklins contends that there are major deficiencies in the PFASC's treatment of Dresna's supposed loss and damage. Par 89 alleges that as a result of the breaches of the Mentone BSA, Dresna lost the benefit of that agreement and "otherwise suffered loss and damage". Particulars are then provided for amounts totalling over $11 million. That figure is said to represent lost profits anticipated from operating the supermarket, costs incurred in this proceeding during the period September to December 2001, and costs ordered to be paid by Dresna. Dresna claims that but for these breaches, it would have learned that Coles had entered into an agreement to lease the Mentone store. It would then have notified the ACCC of that fact, and taken legal action seeking interim and interlocutory injunctive relief against Coles to restrain it from entering into that lease. 79 Franklins argues that the claim for loss of profits is plainly doomed to fail. Irrespective of anything that it may have done, Dresna could only have obtained and operated the Mentone store if the Lessor had consented to an assignment, which, plainly, it did not do. There would also need to be proof that an expedited hearing of the matter would have been granted in the Supreme Court of Victoria, and that Dresna would have succeeded, against the Lessor, in having its refusal to assign the lease declared unreasonable. Franklins submits that all of this is highly problematic. 80 Franklins also advances lengthy and detailed arguments as to why Dresna cannot possibly hope to succeed in relation to its claims for costs actually incurred. In the interests of keeping these reasons for judgment within reasonable bounds, I shall not attempt to set these out.

[29]

General principles 99 The traditional formulation of the tort of conspiracy is as follows. Conspiracy is "the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means": Mulcahy v R (1868) LR 3 HL 306 at 307. See also Ahern v The Queen (1988) 165 CLR 87 at 93. In other words, conspiracy takes two distinct forms:

an "unlawful means" conspiracy in which the parties combine together to perform acts which are themselves unlawful; and
a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant. 100 There is now a substantial body of authority dealing with these two forms of conspiracy. The major English cases include: Allen v Flood [1898] AC 1 at 108; Quinn v Leathem [1901] AC 495; Sorrell v Smith [1925] AC 700; Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435; Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 ("Lonrho v Shell"); and Lonrho v Fayed. This Court has considered a number of these cases in recent years. See for example: Elliott v Seymour [1999] FCA 976; McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409; and Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34. 101 In Bullen & Leake & Jacob's Precedents of Pleadings, 14th ed., 2001, at 823, the necessary elements of an action in conspiracy are said to be: · a combination or agreement between two or more individuals (required for both types of conspiracy); · an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type 2 above); · pursuant to which combination or agreement and with that intention certain acts were carried out; · resulting loss or damage to the claimant. 102 In Maritime Union v Geraldton, RD Nicholson J elaborated upon the legal requirements necessary to establish the tortious conspiracy pleaded by the applicants. His Honour said, at 102, that the following matters had to be proved: "(a) each of the alleged three co-conspirators was a party to an agreement or combination with either of the other two co-conspirators; (b) the purpose of that agreement or combination was to injure the applicants by unlawful means; (c) the agreement or combination was carried into effect by the commission of agreed unlawful acts; and (d) those unlawful acts caused damage to the applicants." 103 A conspiracy can be proved without evidence of an express agreement. A court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert. 104 As indicated above, the two forms of conspiracy differ in relation to the mental element that must be proved. It is now established that, for an "unlawful means" conspiracy, it is not necessary to show a predominant intent to injure: see the House of Lords' decision in Lonrho v Fayed, overruling Metall und Rohstoff A.G. v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391, and explaining Lonrho v Shell. However, an "unlawful means" conspiracy still requires proof of an intention to injure. Regrettably, a number of the cases tend to be decided on assumed facts, or on applications to strike out. This means that the concept of "intention" is often glossed over, and analysed with less precision than it ought to be. 105 Lonrho v Shell provides a useful illustration of the difficulties associated with this concept. Shell had constructed an oil refinery in what was then Southern Rhodesia. Lonrho constructed a pipeline to that refinery from a port in Mozambique. In November 1965, the government of Southern Rhodesia unilaterally declared independence. The United Kingdom enacted legislation, the "sanctions order", making it a criminal offence to supply oil to Southern Rhodesia. No further oil was shipped to Lonrho's pipeline, causing that company loss and damage. The facts to be assumed by the House of Lords for the purpose of the appeal were that Shell, and others, had, in breach of the "sanctions order", covertly supplied Southern Rhodesia with oil by other means, thereby prolonging the state of illegal independence, and the time during which Lonrho's pipeline was out of use. 106 It was clear that the breach of the "sanctions order" did not give rise to any action in tort for breach of statutory duty. However, Lonrho also framed its case as a conspiracy by Shell and others to contravene the "sanctions order". That claim, too, failed because although Shell might well have been aware of the effect of its actions on Lonrho, in no sense did it, and the alleged co-conspirators, "intend" to injure Lonrho. 107 It is generally thought that the correct test of intention in this context is that stated by Lord Denning MR in the Court of Appealdecision in Lonrho Ltd v Shell Petroleum Co Ltd [1981] Com LR 74. His Lordship said at 75: "I would suggest that a conspiracy to do an unlawful act - when there is no intent to injure the plaintiff and it is not aimed or directed at him - is not actionable … But if there is an intent to injure him then it is actionable. The intent to injure may not be the predominant motive. It may be mixed with other motives … It is sufficient if the conspiracy is aimed or directed at the plaintiff, and it can reasonably be foreseen that it may injure him, and does in fact injure him." 108 In Grupo Torras SA v Sheikh Fahad Mohammed Al-Sabah [1999] All ER (D) 698, Mance LJ adopted Lord Denning's formulation. His Lordship said that it was a requirement of this form of conspiracy that it be "aimed or directed" at the claimant. In McKellar, I too adopted this formulation. I said, at 435, that the requirement, though perhaps difficult to apply in some cases, was intended to prevent claims by those who suffered incidental, though foreseeable loss, as a result of the commission of what is sometimes described as "undirected conduct". 109 In Grupo Torras, Mance LJ went on to say that the tort required that it be shown that the defendant reasonably foresaw that the unlawful acts would injure the claimant. However, his Lordship noted that reasonable foreseeability would not, of itself, give rise to liability. Importantly for present purposes, he made it clear that the target "aimed at" could be "a general one". Where, for example: "…persons combine to abstract monies from a group and then to cover up and account for the abstraction in any way they can, an intent to injure or defraud any company which, as a result of their operations, ends up bearing the loss, may readily be inferred." 110 Grupo Torras was ultimately reversed on appeal. However, this passage was not subjected to criticism. 111 Grupo Torras is discussed in Winfield & Jolowicz on Tort, 16th ed., 2002, at 653. The learned authors observe that, on the approach taken by Mance LJ, a conspiracy by unlawful means could be established in circumstances where, for example, A and B conspired to use such means with the aim of driving competitor C out of the market, thereby creating a monopoly. There would be no need to establish any malice on the part of A and B towards C. 112 In Bullen & Leake & Jacob,the requirements for pleading an "unlawful means" conspiracy are set out in some detail at 824. It is suggested that each unlawful act should be pleaded as a separate cause of action. The learned authors note, however, that the cause of action for such a conspiracy: "…is probably not limited to circumstances where the wrongful means are themselves actionable by the claimant in the conspiracy action". 113 Winfield & Jolowicz, at654, agree with this proposition. 114 There is, however, an alternative view. Some cases suggest that each unlawful act relied upon in an unlawful means conspiracy must itself be actionable. See generally Rookes v Barnard [1964] AC 1129 at 1204; Lonrho v Shell at 186; Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department [1998] 1 Lloyds LR 19 at 32; Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia (No. 2) [1998] 4 All ER 83 at 98-101; Michaels v Taylor Woodrow Developments Ltd [2001] Ch 493 at 503-511. See also Surzur Overseas Ltd v Koros [1999] 2 Lloyds CR 611 at 616-617; Grupo Torras; and Fatimi Ltd v Bryant (2002) Aust Tort Rep 81-677. 115 There is also an ongoing debate regarding the nature of the "unlawful means" required for the purpose of this variant of the tort of conspiracy. In Michaels v Taylor Woodrow, it was said that the cases at present "do not present an entirely consistent picture". That statement seems to be borne out by an analysis of the authorities. What is clear, however, is that the unlawful act may be a tort, or a breach of statute. See, for example, Williams v Hursey (1959) 103 CLR 30 at 76-79 per Fullagar J, and 104-108 per Taylor J; Coal Miners' Industrial Union of Workers (WA), Collie v True (1959) 33 ALJR 224; and Maritime Union of Australia v Geraldton Port Authority at 104. 116 There are dicta that suggest that a conspiracy by unlawful means can be committed where a third party was deceived in a way that ultimately caused the claimant loss i.e. where the unlawful act relied upon was not actionable at the suit of the plaintiff: see the Court of Appeal decision in Lonrho v Fayed at 489 and 492, referring to National Phonograph Company v Edison-Bell Consolidated Phonograph Company [1908] 1 Ch 335. In Yukong Line, Toulson J took the opposite view. See also the discussion of this point by Mance LJ in Grupo Torras, and by Laddie Jin Michaels v Taylor Woodrow.

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Is the "target" too general? - the conspiracy prior to 10 August 2001 117 Dresna alleges in par 103(b) of the PFASC that there was an: "…intention to deprive the independent operator that entered into an agreement to purchase the Franklins' business at Mentone, of the benefit of that agreement, and thereby cause it harm". 118 The Mentone BSA was not executed until 10 August 2001. It follows, so the respondents say, that the Lessor and Coles could not have acted in concert, with the intention of depriving Dresna of anything, prior to that date. 119 In my view, the respondents' submission should be accepted. It is not sufficient for Dresna to plead a cause of action in conspiracy in this form. The tort requires an intention to injure: Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135 at 150 per Drummond J. An agreement to do an unlawful act that results in damage to another party is not the same as a conspiracy to injure that party. 120 The starting point in considering this issue is Vickery v Taylor (1910) 11 SR (NSW) 119. By his statement of claim, the plaintiff in that case alleged that the defendant company conspired with the other defendants to raise the price of its shares and to induce members of the public to pay more for those shares than would otherwise be the case. 121 Street J said at 130: "the authorities… show that when a conspiracy is aimed, not at an individual or at a class of individuals, but at the public, the damage sustained by a member of the public is too remote to give a right of action. If the law were otherwise, the result would be that if, for instance, persons combined to raise the price of flour by making false statements as to the available supplies of wheat, and if, as a result of this, the price of flour rose, any member of the public who had to pay more for his flour would have a right of action against the members of the combination." 122 His Honour went on to say, at 130-131, that the judgments in Quinn v Leathem, if carefully examined, showed that, in order to prove conspiracy, it was necessary for the plaintiff to demonstrate that "the wrongful act complained of was done with the design of injuring him" (emphasis added), and that it did in fact injure him. Otherwise the damage would be too remote. 123 It is true that Street J also said, at 130, that a conspiracy could be directed, not at a particular individual, but at a "class". However, it is tolerably clear that what his Honour had in mind in making that observation was a conspiracy directed at all the members of the class, and not simply at any members of the public who might be affected by what was being done. As the Lessor submits, Dresna has not pleaded, and cannot plead, that either the Lessor, or Coles, intended to injure the entire class of persons known as "independent operators". The PFASC refers to "the independent operator". This could be any member of the public, apart from a national supermarket chain. 124 Several cases cited by the Lessor implicitly support this conclusion. In Beach Petroleum NL v Johnson (1993) 43 FCR 1, von Doussa J said at 19: "As the alleged conspiracy is one involving unlawful means, it is sufficient merely for the applicants to prove that the combination of the defendants to do one or more of those unlawful acts resulted in damage to them. It is not necessary for the applicants to further prove that the predominant purpose of the conspirators was an intention to injure the applicants: Lonrho plc v Fayed [1992] 1 AC 448; Williams v Hursey (1959) 103 CLR 30..." (emphasis added) 125 In McWilliam v Penthouse Publications Ltd [2001] NSWCA 237, Mason P, with whom Handley and Hodgson JJA agreed, stated, in relation to an allegation of conspiracy to injure by unlawful means, that an agreement to do an unlawful act, such as a tort or breach of contract, will be an actionable conspiracy if carried into effect and causative of damage. After citing various authorities, his Honour said at [13]: "These principles emphasise that a plaintiff in a case such as the present must establish intent to injure the plaintiff. It is not enough to establish that the acts of the conspirators necessarily involved injury to the plaintiff or that the plaintiff was a person reasonably within the contemplation of the conspirators as a person likely to suffer damage…" (emphasis added). 126 I am unable to accept Dresna's submission that expressions of this kind do not mean what they say. It is true that in Grupo Torras, Mance LJ held that an intention to injure "any" company within a group that was targeted would suffice. However, that is a far cry from what is pleaded in the PFASC. There is no small, and easily ascertainable group of the kind that his Lordship must have had in mind when he used the word "any". 127 There has been considerable debate, in the criminal law, regarding the question of how precise the terms of one or more of the alleged conspirators' purpose or agreement must be before liability for conspiracy is incurred. The better view seems to be that a conspiracy should not be charged in generalised terms. There must be a sufficient degree of precision, as identified in the particulars, to enable the accused to know the nature of the allegations brought against him. Where there is clearly an agreement for a relevant unlawful purpose, in acceptably specific terms, it does not matter that the precise details of its implementation have not been settled. But if the failure to agree on aspects of a scheme goes beyond transactional details to more fundamental matters, the conspiracy will not be established. See generally P Gillies, The Law of Criminal Conspiracy, 2nd ed., 1990, at 34-36. 128 In Elliott v Seymour, Ryan J indicated that he would only be prepared to allow the applicant to continue to allege a conspiracy between the National Crime Authority, and various other alleged co-conspirators, if the statement of claim specified with sufficient particularity the time and making of each agreement between the alleged conspirators, the unlawful means agreed to be employed, and the facts or circumstances which made them unlawful. 129 The degree of precision required by the authorities tells strongly against Dresna's somewhat amorphous formulation, where the intent to injure is expressed in terms that are nebulous at best. This part of the PFASC does not identify any specific targets, or any group within which such a target could readily be ascertained. In these circumstances, I am of the view that Dresna should not be granted leave to plead a conspiracy, by unlawful means, to injure "the independent operator", in the form contemplated.

[31]

The post-10 August 2001 conspiracy 130 That takes me to the second stage of the conspiracy alleged against the Lessor and Coles. As indicated earlier, the Lessor submits that Dresna has failed to plead any facts that, if proved, would establish that the Lessor and Coles intended to injure it. In particular, the Lessor submits that the PFASC pleads no facts to support the allegation that it was aware of the Mentone BSA, or that Dresna was a party to that agreement. The Lessor further submits that no facts are alleged that, if proved, would establish that it, or for that matter, Coles, breached the Mentone lease. It argues that all that Dresna has asserted is that the Lessor refused consent to the assignment after Coles induced it to do so. However, that is of no consequence if such refusal was justified as, the Lessor submits, it was. Accordingly, the Lessor contends no "unlawful means" could ever be established, in relation to the period post-10 August 2001. 131 In addition, the Lessor argues that even if Dresna was deprived of the benefit of the Mentone BSA by unlawful means, any unlawful act on the part of the Lessor was not "the same" as any unlawful act on the part of Coles. The Mentone lease was a contract between the Lessor and Franklins. Coles was not a party to that contract. Obviously, the Lessor could breach its contract with Franklins. It could not, however, conspire with Coles to breach its contract with Franklins. See IMAC Security Services Pty Ltd v Tyco Australia Pty Ltd [2002] VSC 592 at [27] per Redlich J. 132 The Lessor relies upon O'Brien v Dawson (1942) 66 CLR 18 as support for this contention. There, Starke J dealt with an allegation that the defendant company and one of its directors conspired to procure a breach of an agreement between the director and the plaintiff. His Honour made it clear that, in his view, this contention was untenable. The director breached his contract and the company knowingly procured him to do so. However, as his Honour observed at 27: "Both committed an unlawful act, but they were acts of a different nature and not a combination to do the same act." 133 Dresna argues that the Lessor's submission on each of these points is misconceived. It denies having alleged that Coles breached the Mentone lease. It says that it has pleaded sufficient facts to support the allegation contained in par 103(c) of the PFASC that the Lessor and Coles combined, from about 10 August 2001, to use unlawful means to breach the Mentone lease with the intention of depriving Dresna of the benefit of the Mentone BSA. It refers to the particulars of that allegation: "That this was the intention of Coles and the Lessor is to be inferred from the fact that a prerequisite for a lease of the premises to Coles was that the sale of the business to the Applicant (pursuant to the Mentone BSA) could not proceed. Both Coles and the Lessor were aware, as at or about August 2001 of the Mentone BSA (see paragraphs 34 and 57 above)." 134 Dresna submits that these particulars provide a proper foundation for this inference. It says that if the matters set out in the particulars ought to have been pleaded as material facts, then that is a matter that can be rectified. 135 Dresna further submits that a breach of contract is capable of amounting to "unlawful means" for the purposes of the tort of conspiracy: Clerk and Lindsell on Torts, 18th ed., 2000, par 24-128. It says that the Lessor is wrong in suggesting that "both participants in a conspiracy must commit the [same] unlawful act or acts": Clerk and Lindsell, par 24-120. 136 Were this the trial of the proceeding, I would have to resolve the debate surrounding this issue. However, I am being asked to deal with these matters on a quite different basis. The only question that I need to consider, for present purposes, is whether Dresna's proposed claim is arguable. Both the Lessor and Coles submit that it is not. I am unable to accept their submission. 137 If there are material facts that Dresna ought to have pleaded, but has omitted to plead, that is a matter that can be cured. If some of the facts alleged have been set out in the particulars, rather than in the pleadings, as they ought to have been, then that too is a matter that can be rectified. 138 The respondents may be correct in a number of their legal submissions. It is certainly arguable that a conspiracy by unlawful means requires that the unlawful acts relied upon themselves be actionable on the part of the applicant. It is also arguable that such a conspiracy requires that the alleged conspirators commit the same unlawful act or acts. There is case law to support both propositions. 139 It cannot be said, however, that these propositions are self-evident. Nor can it be said that the contrary views are untenable. 140 Dresna argues that there is no requirement that unlawful acts be actionable at the suit of the plaintiff if they are to be relied upon in an unlawful means conspiracy. In Fatimi, Campbell J referred at [183] to the observations of Laddie J in Michaels v Taylor Woodrow. His Honour held that the view expressed by his Lordship to the effect that the unlawful activities had to be actionable in their own right, did not correctly state the law applicable in New South Wales. He referred to various statements by the High Court in Coal Miners at 227 and Williams v Hursey at 78-80, 108, and 122, and by the New South Wales Supreme Court in Southan v Grounds (1916) 16 SR (NSW) 274, as authority for the proposition that "unlawful means" did not need to be activity which, if committed by one person alone, without any conspiracy, would be actionable in damages. Moreover, as Dresna submits, none of the Australian textbooks on tort, and none of the Australian cases dealing with conspiracy, refer to this limitation. It seems to me, therefore, that Dresna's contention must at least be arguable. 141 The same is true of Dresna's submission that there is no requirement that the unlawful act or means must be "the same act". The Lessor relies for this limitation largely upon what Starke J said in O'Brien v Dawson. It can be argued, however, that his Honour was not seeking to lay down any proposition of general application. 142 Dresna makes the same point regarding Redlich J's proposition in IMAC Security Services that "a party cannot conspire with another to breach its own contract with a third party". It argues that in principle, there is no difficulty with the notion that a party can conspire in this way. Dresna's point seems to me to be at least arguable. 143 The principles that govern summary dismissal of a claim because it discloses no reasonable cause of action require that this remedy be "sparingly invoked": Dey v Victorian Railways Commissioners, and General Steel Industries. I discussed these and other similar cases at some length in McKellar at 415-417. The respondents accept that a similar approach must be adopted when determining whether specific objections to a proposed pleading should prevail on an application for leave to amend. They say, however, that this is a case where it is clear that a number of the pleadings in the PFASC are untenable. 144 Having given this matter careful consideration, and approaching the issue in accordance with the Dey and General Steel principles, I am not persuaded by the respondents that Dresna's claims regarding the second stage of the alleged conspiracy, post 10 August 2001, are untenable.

[32]

Can false suggestions constitute unlawful means? 145 Dresna relies heavily upon the House of Lords' decision in Lonrho v Fayed in support of its contention that "false suggestions" can constitute unlawful means. In that case, Lonrho wished to acquire control over a company that owned, inter alia, Harrods. It was prevented from increasing its stake in that company by an undertaking given to the Secretary of State, pending the outcome of a reference to the Monopolies and Mergers Commission. 146 The first three defendants, by the medium of the fourth defendant, made a rival bid for one hundred per cent of the share capital of the company. The directors of the company approved that offer, and the defendants gained control. The plaintiff issued a writ against the defendants and, in its statement of claim, alleged that the first three defendants, by false statements about their financial capacity to acquire the share capital and develop the company's business, had persuaded the board of directors to accept their bid, and the Secretary of State not to refer their bid to the Commission. Lonrho claimed that by such action the defendants had tortiously interfered with its right to bid for the shares. Alternatively, it claimed that the defendants had conspired against it. 147 The defendants applied for an order striking out the statement of claim on the ground that it disclosed no cause of action. The Court of Appeal held that since the statement of claim did not allege that the predominant purpose of the alleged conspiracy was to injure the plaintiff, the Court was bound by previous authority to hold that the pleaded cause of action in conspiracy must fail. However, the plaintiff reserved the right to contest that issue in the House of Lords. 148 On appeal to the House of Lords, it was held that where the primary or predominant purpose of the alleged conspirators was to further or protect their own legitimate interests, but where there was also the intent to injure the plaintiff, it sufficed to render their conduct tortious that they used unlawful means. The case was not one that should be struck out, but should proceed to trial. 149 Dresna submits that in Lonrho v Fayed, the House of Lords implicitly accepted that the false statements allegedly made constituted a sufficient basis for the tort of conspiracy by unlawful means. 150 As noted earlier, Dresna also relies upon the analysis of Gummow J in Prestige as support for the proposition that an interest or benefit obtained from the Crown by a material falsehood is amenable to impeachment at common law, or in equity. By analogy, it claims that "false suggestions" are "unlawful means" for the purposes of the tort of conspiracy. 151 Franklins and Coles submit that these arguments are misconceived. They say that Lonrho v Fayed is not in point. There was no plea of "false suggestion" in that case. The judgment did not specifically address the question whether proof of such conduct could amount to unlawful means. They submit that the plea of "false suggestion" adds nothing to Dresna's claim, except to complicate it unnecessarily. Dresna already has a s 52 claim against Franklins in relation to the confidential submission made to the ACCC. They argue that striking out a pleading that is speculative, and likely to be time-consuming, would be in everyone's interest. 152 In my view, there is substance in some, at least, of the respondents' submissions. Prestige is of no real assistance to Dresna. That case dealt specifically with the construction of the expression "obtained on a false suggestion or representation" in s 100(1)(k) of the Patents Act 1952 (Cth). It is true that Lockhart J observed, at 198, that the words "false suggestion or representation" were of wide import, and that this expression was based on "equitable notions of good faith, fairness, conscionable conduct and honesty". However, his Honour did so in a specific context. He had to determine whether an applicant for a patent who had misled the Commissioner, in a material respect, in the course of procedures that led to the grant of the patent, should be deprived of the benefit of his misleading conduct. He concluded that such conduct warranted the revocation of the patent. He did not conclude, however, that merely making a false suggestion was an unlawful act. 153 Gummow J construed the relevant expression against the historical background of "recall of grants not regularly made" by writ of scire facias. His Honour observed, at 204, that the term "false suggestion" had a long history in relation to the repeal of patents. He noted, for example, that a United States statute of 1793 provided for repeal if a patent had been "obtained surreptitiously or upon false suggestion". He also noted that the writ of scire facias had been utilised, prior to its final abolition in the United Kingdom in 1947, to repeal grants made by letters patent. He dealt, at 216, with the alternative procedure for revocation of letters patent by bill in equity, based upon equitable fraud. Once again, however, there was nothing in his Honour's reasons for judgment that suggested that the making of a "false suggestion" to a body such as the ACCC was, of itself, unlawful. 154 It is important to note that Pt II of the TPA provides for the establishment of the ACCC, and confers upon that body various powers. The TPA makes provision for persons to appear before the ACCC to give evidence, and makes it an offence to give evidence that is false or misleading in a material particular. There are also provisions, such as s 152DH, that make it an offence to produce documents in answer to a summons that, to the knowledge of the person producing them, are false or misleading in a material particular. There are, however, no provisions within the TPA, of which I am aware, that render the making of a "false statement", or "false suggestion", unlawful per se. 155 The common law has always proceeded upon the basis that what is not specifically prohibited is permitted. It may be morally reprehensible to make a "false suggestion" to the ACCC. Much will depend upon whether the word "false", in that context, means objectively incorrect, or deliberately untrue. See generally Murphy v Farmer (1988) 165 CLR 19, and Musgrave v Martin [2003] FCA 920. Whatever conclusion one comes to regarding that proposition, I doubt that merely telling a lie to a regulatory agency, such as the ACCC, could, of itself, be regarded as unlawful. It would require a specific statutory proscription to bring about that result. 156 The only statutory proscription that I have been able to discover that might conceivably be relevant is the current form of what was formerly the offence of imposition under s 29B of the Crimes Act 1914 (Cth) (now repealed). That section provided: "Any person who imposes or endeavours to impose upon the Commonwealth or any public authority under the Commonwealth by any untrue representation, made in any manner whatsoever, with a view to obtain money or any other benefit or advantage, shall be guilty of an offence." 157 The offence of imposition carried a maximum penalty of two years' imprisonment. On one view, it made it unlawful to make a "false suggestion" to a body such as the ACCC, assuming that it is "a public authority under the Commonwealth", and provided that this was done with a view to obtaining money or any other benefit or advantage. The offence did not require proof of dishonesty. 158 The offence of imposition dates back to the Middle Ages. Its origins lie in legislation providing for the punishment of rogues and vagabonds. The history of the offence was considered in detail in Joyce v Grimshaw (2000) 105 FCR 232 at 241-243. As noted in that case, there are the clearest links between the Vagrancy Acts of the nineteenth century, and the offence under s 29B introduced in 1926. 159 Section 29B was repealed by the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth). That Act came into force on 24 May 2001 and was in force at the time the "false suggestions" pleaded in the PFASC were made. Imposition was no longer an offence. It was replaced by two new offences, contained in ss 136 and 137 of the Criminal Code Act 1995 (Cth). Section 136.1 prohibits the making of false or misleading statements in "an application for a licence, permit or authority", "an application for registration", or "an application or claim for a benefit". It is difficult to see how either the confidential submission provided by Franklins, or the letter of support sent by Coles, could be characterised as falling within any of these descriptions. 160 Section 137.1 is more problematic. It prohibits knowingly giving false or misleading information to, inter alia, "a Commonwealth entity". It seems to me to be arguable that knowingly making a "false suggestion" to the ACCC could constitute an offence under this section, assuming that the "false suggestion" contains "information", and assuming that the ACCC is a Commonwealth entity. The question is whether the pleading, as presently drafted, alleges facts that, if proved, might give rise to an offence of that kind. 161 Dresna alleges in par 82 of the PFASC that, by reason of the matters set out in pars 65, 66 and 68, Franklins' confidential submission made "false suggestions" in the respects referred to in par 70, and Coles' supporting letter made "false suggestions" in the respects referred to in par 74. Par 70 describes Franklins' confidential submission as "misleading or deceptive". It alleges that the submission did not refer to the fact, which Franklins knew, that Coles had entered into an agreement with the Lessor, contingent on the Lessor obtaining vacant possession, and did not refer to the "agreement, arrangement or understanding" between Coles and Franklins referred to in par 65, or alternatively par 68. Par 74 does not refer to Coles' letter as misleading or deceptive. However, it contrasts what is said to be the true position with what the supporting letter itself represented. 162 To describe this method of pleading "an unlawful act" for the purpose of this form of conspiracy as complex would perhaps be an understatement. There is, of course, no reference in the pleading to any possible statutory offence, still less to an offence under s 137.1. It is unlikely that those responsible for drafting the PFASC ever considered the possibility that the conduct alleged might amount to a criminal offence. 163 If s 137.1 can be invoked as the basis for Dresna's contention that the confidential submission and the supporting letter were relevantly "unlawful means", the pleading would need to be amended in order to make that allegation clear. Neither Franklins nor Coles can reasonably be expected to plead to the allegation in its present form. For that reason, I would not grant leave to Dresna to pursue its "false suggestion" allegation without first making some significant amendments. 164 Because Dresna has relied upon the making of "false suggestions" to the ACCC as a basis for its claim of conspiracy by unlawful means, and because I consider that there may be some justification (though not presently pleaded) for the contention that the making of such suggestions is unlawful, I am unable to say that the PFASC raises a cause of action that is obviously untenable. It follows that subject to a properly drawn pleading being filed regarding this issue, I would be disposed to permit Dresna to rely upon the alleged "false suggestions" as the unlawful means. I shall return to the question whether Dresna should be permitted to file the PFASC, as a matter of general discretion, shortly.

[34]

Whether the alleged breach of s 52 can constitute "unlawful means" 168 Both Franklins and Coles dispute Dresna's contention that the confidential submission, and the supporting letter, contained misleading or deceptive statements. It follows, they say, that the alleged breaches of s 52 of the TPA cannot amount to "unlawful means" for the purposes of the tort of conspiracy. 169 However, their main argument against Dresna's reliance upon s 52 is that the alleged conduct did not, and could not, have occurred "in trade or commerce". As indicated earlier, the leading authority on the meaning of that expression is Concrete Constructions. In that case, the High Court held that the phrase should be narrowly construed, confining it to "the central conception" of trading and commercial activities of a corporation. Franklins argues that its confidential submission to the ACCC could not conceivably be so described. Coles argues that self-evidently, neither could its supporting letter. 170 Dresna submits that both the confidential submission and the supporting letter were written for the purpose of advancing Franklins' and Coles' commercial and business interests. Franklins wanted to sell the stores, and Coles wanted to buy them. Whether a representation is made "in trade or commerce" will often depend upon the detailed evidence in the case. No a priori conclusion can be reached about this matter. The fact that neither Franklins nor Coles was dealing with a consumer, but rather with a regulator, did not mean that their conduct was not "in trade or commerce". 171 In my opinion, Concrete Constructions dictates that neither the provision of the confidential submission, nor the sending of the supporting letter, can be viewed as conduct "in trade or commerce". It is not sufficient that these documents were written with a view to gain. That does not bring them within "the central conception" of trading and commercial activities. At most, it places them within some proximity of that conception. Accordingly, I will not permit Dresna to rely upon any alleged breach of s 52, arising out of the documents provided to the ACCC, as a basis for the tort of conspiracy by unlawful means.

[35]

Is the conspiracy claim "mere surplusage"? 172 Franklins contends that the conspiracy claim that Dresna has pleaded is "mere surplusage". The purpose of the conspiracy, as alleged, is to deprive Dresna of the benefit of the Mentone BSA. That purpose is to be achieved, in part, by breaching both the Mentone BSA and the Litigation Agreement. In pars 84-93 of the PFASC, Dresna alleges that Franklins breached both these agreements, and relies upon these breaches as separate and distinct causes of action. For that reason, Franklins submits, Dresna should not be permitted to maintain its conspiracy claim. 173 Franklins relies primarily upon a passage in the judgment of Campbell J in Fatimi. His Honour said at [195]: "…the line of authority which says that if a combination of persons do an act, which, if done by one of them would amount to a tort, an averment of conspiracy to do that act is "mere surplusage": Sorrell v Smith [1925] AC 700 at 716, Cabasi v Vila (1940) 64 CLR 130 at 142-143, 151; O'Brien v Dawson (1942) 66 CLR 18 at 27. Some cases go further and say that, in consequence, it is not open to a party to plead, as an alternative to a substantive cause of action already pleaded, the tort of conspiracy to commit that substantive wrong: Galland v Mineral Underwriters Ltd [1977] WAR 116 at 119-120; McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 445; Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 13 ACSR 117 at 128." 174 Dresna denies that its conspiracy claim is "mere surplusage". It does not seek relief in relation to a number of the primary contraventions that are said to constitute "unlawful means". These include the "false suggestions", the breach of the Franklins Undertakings, and the contraventions of s 52. They are merely the heads upon which the conspiracy claim is grounded. Moreover, as indicated earlier, Dresna argues that the conspiracy pleading increases the number of defendants, and allows aggravated damages to be claimed. 175 In my opinion, nothing said in Fatimi precludes Dresna from relying upon a claim in conspiracy against Franklins and Coles. Dresna has every reason to plead conspiracy, rather than rely upon the substantive matters that are said to constitute the "unlawful means", given that they are unlikely to be actionable in and of themselves. However, as I have already indicated, some of the "unlawful acts" upon which Dresna proposes to rely are problematic for other reasons.

[37]

Discretionary grounds for refusal of leave 177 Franklins describes the history of this proceeding as "one of appalling delay, indecision and continual revision by Dresna". It says that Dresna has demonstrated an inability to plead a settled case against it, as well as the other respondents. It points out, in a chronology and summary of the various claims made against it, that in the two years or so since this proceeding was commenced in the Supreme Court, Dresna has attempted on no fewer than nine separate occasions to plead a case. Moreover, in the PFASC, Dresna now proposes to add still more new and substantial causes of action against it, including allegations of conspiracy, and breach of fiduciary duty. 178 The Lessor claims that this is Dresna's eleventh attempt, and the third in this Court, to draw and settle a statement of claim against it. The only cause of action that Dresna now pleads against the Lessor is a conspiracy with Coles, by unlawful means, to deprive it of the benefit of the Mentone BSA. The Lessor argues that Dresna has had ample opportunity to formulate a claim against it, and has been unable to do so. Accordingly, the proceeding against the Lessor should now be dismissed. 179 Coles cannot say that it has been subjected to the same number of attempts to plead a cause of action against it, as have the Lessor and Franklins. Nonetheless, it too submits that leave to file and serve the PFASC ought to be refused. 180 Dresna responds by pointing out that it is misleading to refer to either nine, or eleven, previous attempts to plead a cause of action against Franklins and the Lessor. The early pleadings, in the Supreme Court, were drawn at a time when Dresna believed that Franklins was on its side, and the only real defendant was the Lessor. It was not until certain documents came to light in answer to various notices to produce, and a subpoena, that the role that Coles had played first emerged. That necessitated a complete revision by Dresna of its case, with Franklins having to be joined as a defendant, and Coles added as well. 181 The only explanation that Dresna has proffered for seeking to reformulate its case yet again is that it is now represented by different senior and junior counsel. That is not, of itself, a particularly compelling consideration. I should also say that I am singularly unimpressed by the fact Dresna included a claim under Pt IV of the TPA in December 2002 (which led to the proceeding being transferred to this Court from the Supreme Court) only to abandon that claim within weeks of the case finding its way into my docket. 182 There must come a point at which a Court will conclude that an applicant who has repeatedly failed to plead a valid cause of action simply has no case. I have given anxious consideration to whether that point has been reached in this case. I have concluded, though not without some hesitation, that it has not. 183 In McKellar, I endeavoured to summarise the principles governing summary dismissal at 415-417. As I noted, the authorities make it plain that a proceeding should not be dismissed summarily merely on the ground that it appears, at the early stage of the hearing of a motion brought for that purpose, to advance a highly implausible claim that will probably fail. Summary dismissal should be ordered only where the claim may properly be described as unarguable, and almost incontestably bad. 184 The statement of claim that I dealt with in McKellar was replete with defects. It was an incomparably worse pleading than the PFASC. However, it was only the second pleading in that case, and not the ninth or eleventh. In McKellar, I granted the applicants leave to replead their case. The question is whether I should do the same in the present case. 185 After careful consideration, I have concluded that Dresna should be given one last chance to plead its case. In the end, my reasons are simple. In JL Holdings, the High Court laid down a series of principles that govern the manner in which courts should approach applications for leave to amend pleadings. Those principles are binding upon me. They seem to me to support the grant of leave in this case. 186 The issue in JL Holdings was whether the defendants should have been permitted to amend their defence. The parties were engaged in a long-running commercial dispute concerning a lease to develop certain land. The estimated length of the trial was four months. There had been a number of interlocutory hearings, and the defence had previously been amended several times. The trial judge refused leave to add a defence that, though arguable, was likely to result in the trial date, which had been fixed for some six months, having to be vacated. Her Honour held that maintaining the trial date was a more pressing consideration than permitting the defendants to present a further defence. 187 On appeal, the Full Court of the Federal Court held, by majority, that the disruption that would be caused to the Court's lists by adjourning the case outweighed the potential injustice in denying the defendants the opportunity to ventilate the issue, which the proposed amendment raised. The Full Court referred to a passage from the judgment of Toohey and Gaudron JJ in Sali v SPC Ltd (1993) 116 ALR 625 at 636 as support for that proposition. 188 In JL Holdings, in a joint judgment, Dawson, Gaudron and McHugh JJ said at 154: "It may be said at once that in the passage which we have cited from Sali v SPC Ltd Toohey and Gaudron JJ are not to be taken as sanctioning any departure from the principles established in Cropper v Smith and accepted in Clough and Rogers v Frog. Sali v SPC Ltd was a case concerning the refusal of an adjournment in relation to which the proper principles of case management may have a particular relevance. However, nothing in that case suggests that those principles might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim." 189 There is a particularly helpful exposition of principle in the judgment of Kirby J at 164-172. Without analysing his Honour's comments in detail, it is sufficient to note his endorsement of the following approach to pleading amendments. In summary, his Honour identified the following matters as relevant to the exercise of the discretion to grant leave to amend: · no rigid rules apply to the manner in which a discretion to permit an amendment of pleadings should be exercised; · the power to amend must be exercised for the purpose for which it was conferred, in the case of amendment, by rules of court; · modern techniques of case management, and particularly the advent of active judicial management, have altered the traditional approach taken to such matters; · among considerations which may tend to favour the extension of an indulgence to a party seeking it, are the fact that this is only way in which the true issues and the real merits can be litigated, that the oversight which occurred is adequately explained, that the proposed amendment is of considerable importance to the rights of a party, that any fault is that of the parties' legal representatives, that it was simply the product of unavoidable human error, or possibly the application to the case of fresh legal minds who perceived an important new point, and that costs orders, or the imposition of other conditions could adequately rebalance the competing claims to justice; and · among considerations which may tend to argue against the grant of an indulgence, include many which are the counterparts of the foregoing. In addition, courts now take into account the strain which litigation may place upon those involved, and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. Costs orders are not necessarily an adequate balm to the other party. 190 As Kirby J noted, justice will not necessarily require that a party should have multiple opportunities to plead and present its case. There must be a point at which a court will say, "enough is enough". 191 In concluding that Dresna should be permitted to file the PFASC, save for those paragraphs that I have held to be untenable, I am influenced by the fact that, with certain notable exceptions, the document in its present form is tolerably clear, and contains detailed allegations that are easily understood, and can readily be answered. In addition, this case is not yet so old as to enable it to be described as stale. Dresna can be ordered to pay any costs thrown away by reason of the amendments. There may also be additional costs consequences. 192 It seems to me that having arrived at this conclusion, the best course is simply to order that the parties bring in minutes of orders that give effect to these reasons for judgment. I will hear the parties as to the final form of those orders, and any issues relating to the costs of the application to amend, at the next directions hearing in this matter. I certify that the preceding one hundred and ninety-two (192) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

Parties

Applicant/Plaintiff:

Dresna Pty Ltd

Respondent/Defendant:

Misu Nominees Pty Ltd

Legislation Cited (6)

Trade Practices Act 1974(Cth)ss 46, 52, 87B

Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000(Cth)

Patents Act 1952(Cth)s 100(1)(k)

Patents Act 1990(Cth)s 138, s 138.

Criminal Code Act 1995(Cth)ss 136, 137

Crimes Act 1914(Cth)

Cases Cited (25)

Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537

Trade Practices Act 1974 (Cth) ss 46, 52, 87B Patents Act 1952 (Cth) s 100(1)(k) Patents Act 1990 (Cth) s 138 Criminal Code Act 1995 (Cth) ss 136, 137 Federal Court Rules O 11, O 13 r 2(2) The Commonwealth v Verwayen (1990) 170 CLR 394 at 456 discussed Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 applied Cropper v Smith (1884) 26 ChD 700 at 710 cited Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 applied General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 applied Prestige Group (Australia) Pty Ltd v Dart Industries Inc (1990) 26 FCR 197 at 213-219 distinguished Lonrho plc v Fayed [1990] 2 QB 479 at 489-490 and 492 discussed Lonrho plc v Fayed [1992] 1 AC 448 at 470 discussed Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 applied Mulcahy v R (1868) LR 3 HL 306 at 307 referred to Ahern v The Queen (1988) 165 CLR 87 at 93 referred to Allen v Flood [1898] AC 1 at 108 referred to Quinn v Leathem [1901] AC 495 referred to Sorrell v Smith [1925] AC 700 referred to Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435 referred to Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 at 186 discussed Elliott v Seymour [1999] FCA 976 discussed McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 415-417, 435 discussed Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 at 102, 104 discussed Metall und Rohstoff A.G. v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 referred to Lonrho Ltd v Shell Petroleum Co Ltd [1981] Com LR 74 discussed Grupo Torras SA v Sheikh Fahad Mohammed Al-Sabah [1999] All ER (D) 698 discussed Rookes v Barnard [1964] AC 1129 at 1204 referred to Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department [1998] 1 Lloyds LR 19 at 32 referred to Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia (No. 2) [1998] 4 All ER 83 at 98-101 referred to Michaels v Taylor Woodrow Developments Ltd [2001] Ch 493 at 503-511 discussed Surzur Overseas Ltd v Koros [1999] 2 Lloyds CR 611 at 616-617 referred to Fatimi Ltd v Bryant (2002) Aust Tort Rep 81-677 at [183] and [195] discussed National Phonograph Company v Edison-Bell Consolidated Phonograph Company [1908] 1 Ch 335 referred to Williams v Hursey (1959) 103 CLR 30 at 76-80, 104-108, 122 referred to Coal Miners' Industrial Union of Workers (WA), Collie v True (1959) 33 ALJR 224 at 227 referred to Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135 at 150 referred to Vickery v Taylor (1910) 11 SR (NSW) 119 at 130-131 discussed Beach Petroleum NL v Johnson (1993) 43 FCR 1 at 19 cited McWilliam v Penthouse Publications Ltd [2001] NSWCA 237 at [13] cited IMAC Security Services Pty Ltd v Tyco Australia Pty Ltd [2002] VSC 592 at [27] cited O'Brien v Dawson (1942) 66 CLR 18 discussed Southan v Grounds (1916) 16 SR (NSW) 274 referred to Murphy v Farmer (1988) 165 CLR 19 referred to Musgrave v Martin [2003] FCA 920 referred to Joyce v Grimshaw (2000) 105 FCR 232 at 241-243 referred to Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106 at 139 referred to Davies v Nyland (1975) 10 SASR 76 at 96 referred to

[2002] VSC 592

(1990) 170 CLR 394

(1997) 189 CLR 146

(1949) 78 CLR 62

(1964) 112 CLR 125

(1990) 26 FCR 197

(1990) 169 CLR 594

(1988) 165 CLR 87

(1999) 165 ALR 409

(1999) 93 FCR 34

(1959) 103 CLR 30

(1959) 33 ALJR 224

(1998) 157 ALR 135

(1993) 43 FCR 1

(1942) 66 CLR 18

(1988) 165 CLR 19

(2000) 105 FCR 232

(1975) 10 SASR 76

(1940) 64 CLR 130

(1993) 116 ALR 625

[2001] NSWCA 237

[1999] FCA 976

[2003] FCA 920