Fuller v Toms

strike out application 24 Before considering whether the applicant's statement of claim should be struck out in whole or in part, it is worth briefly summarising the nature of the applicant's case. 25 The applicant's case centres on a claim he suffered damages in the order of $144 million as the result of a lost opportunity to acquire, during 2008-2009, a shareholding of approximately 10% in the 5th respondent (AACo). 26 The applicant pleads that on behalf of a group of prospective buyers, he led negotiations for the acquisition of a 43% controlling interest in AACo held by Futuris Corporation Ltd (which later changed its name to Elders Limited (Elders), the 22nd respondent). The applicant pleads that he also had the alternative "equivalent" opportunity to be part of a "buy-in-or-buy-out reverse takeover" of AACo, which proposal he did not elect to pursue. 27 The applicant alleges that there were difficulties created by the misrepresentations, fraud or other unlawful conduct of various of the respondents in overstating the true correct cattle inventory of AACo. 28 The applicant contends that when he made statements about this discrepancy he found himself as the defendant in a defamation proceeding in the Supreme Court of Queensland at the instance of the 1st to 4th respondents (proceeding BS3234/2009), which proceeding was ultimately discontinued by them. He further alleges, in effect, that the defamation proceeding taken against him was strategic in nature and designed to force him out of the negotiations for the acquisition of the controlling interest in AACo. The applicant also alleges that the defamation proceeding brought against him caused him to incur wasted expenditure and resulted in a loss of income. He seeks damages of $1.1 million to compensate him for these losses. 29 The applicant takes the view that if there had not been any relevant misrepresentations, fraud or other unlawful conduct in failing to disclose the true position in relation to the cattle, then there would have been a real probability that he and his group of investors would have acquired the controlling stake in AACo, but as it turns out he was denied that opportunity. He alleges that if that opportunity had been realised - for which he says there was a 90% probability of success - then his share would have been a percentage of the value of the shares acquired by his group in AACo. That is how he calculates the proposed damages claim in the amount of $144 million. 30 The applicant also alleges that by reason of the misrepresentations, fraud or other unlawful conduct of various of the respondents he lost the opportunity to be part of the "buy-in-or-buy-out reverse takeover" of AACo, which opportunity he also values at $144 million. 31 The general principles of pleading in the modern context are well-established. The function of pleadings is to state with sufficient clarity the case that must be met: Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 (Mason CJ and Gaudron J). In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. 32 The Rules also make provision for the content of pleadings in this Court. For example, pursuant to R 16.02(1)(b) a pleading must be as brief as the nature of the case permits. Further, in accordance with R 16.02(1)(d) material facts on which a party relies must be stated, but not the evidence by which the material facts are to be proved. 33 Importantly, I note that pursuant to R 16.21(1) all or part of a pleading may be struck out on the ground that the pleading: (a) contains scandalous material; or (b) contains frivolous or vexatious material; or (c) is evasive or ambiguous; or (d) is likely to cause prejudice, embarrassment or delay in the proceeding; or (e) fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or (f) is otherwise an abuse of the process of the Court. 34 Before considering specific paragraphs and sections of the statement of claim filed in the current proceeding, there are a number of general points which can be made about the pleading as a whole. 35 The statement of claim is extremely lengthy at 102 pages and 320 paragraphs long. As I will discuss further below, it is very similar in terms to the proposed substituted statement of claim which on 1 February 2012 I refused the applicant leave to file in proceeding WAD322/2011 (proposed substituted statement of claim). (It is also similar to the pleadings which the applicant filed, or applied to file, in the Supreme Court of Queensland proceeding.) Like the proposed substituted statement of claim, the statement of claim suffers from narrative, prolixity, irrelevancies. In this sense it is legally embarrassing in that it is not a pleading to which the respondents can be expected to plead a defence to: compare Fuller v Toms [2012] FCA 27 at [80], [84]. A respondent cannot be expected to respond to mere context, commentary, history, narrative material or material of a general evidentiary nature: Fuller v Toms [2012] FCA 27 at [83]. 36 I now turn to consider specific faults with the pleading. 37 In [5]-[17], the statement of claim describes "The applicant" and "The opportunity". These paragraphs are in a narrative, story-telling style, rather than only pleading material facts. 38 The next section, [18]-[45], titled "The lost opportunity", is also in a narrative form. This section includes irrelevant allegations (for example, at [25]) and pleads evidence (for example, at [45]). In [33]-[35], the applicant alleges various losses suffered as a result of the defamation proceeding brought against him in the Supreme Court of Queensland. He states reliance on the tort of malicious prosecution. However, the applicant does not plead facts which show no reasonable cause in bringing the defamation proceeding, nor malice on the part of the 1st to 4th respondents. 39 In [46]-[50], the statement of claim outlines the history of the litigation between the applicant and various of the respondents. These paragraphs are irrelevant. 40 In [51]-[67], the statement of claim describes "The respondents; knowledge and fraudulent intent (conditions of mind)". These paragraphs did not appear in the proposed substituted statement of claim in proceeding WAD322/2011. They are presumably included in attempted compliance with R 16.42 and R 16.43 of the Rules (compare Fuller v Toms [2012] FCA 27 at [43]), which provide: 16.42 Fraud, misrepresentation etc A party who pleads fraud, misrepresentation, unconscionable conduct, breach of trust, wilful default or undue influence must state in the pleading particulars of the facts on which the party relies. 16.43 Conditions of mind (1) A party who pleads a condition of mind must state in the pleading particulars of the facts on which the party relies. (2) If a party pleads that another party ought to have known something, the party must give particulars of the facts and circumstances from which the other party ought to have acquired the knowledge. (3) In this rule: condition of mind, for a party, means: (a) knowledge; and (b) any disorder or disability of the party's mind; and (c) any fraudulent intention of the party. 41 However, in my view, [51]-[67] repeat the problem in the proposed substituted statement of claim in that they rely substantially on the fact that the individual respondents held certain offices in the corporate respondents: compare Fuller v Toms [2012] FCA 27 at [43]. In my view, these paragraphs do not provide sufficient particulars from which a fraudulent intention of any of the respondents may be inferred. Furthermore, given that the fraud was allegedly committed in 2008-2009, none of the allegations can properly apply to the individuals who have been directors or officers since that period: compare Fuller v Toms [2012] FCA 27 at [76]. 42 In [68]-[99], the statement of claim is again in a narrative, argumentative style. These paragraphs largely repeat [150]-[168] and [260]-[264] of the proposed substituted statement of claim. The paragraphs continue to make a number of allegations including abuse of process, malicious prosecution and defamation against various of the respondents arising out of the defamation proceeding brought against the applicant in the Supreme Court of Queensland. However, to the extent that the applicant alleges the Supreme Court of Queensland proceeding was an abuse of process, this is a matter for that Court to determine. Further, to the extent that the applicant pleads that he was defamed by various of the respondents in around March and April 2009, it should be noted that such a cause of action would be statute barred under both Western Australian and Queensland law: see Limitation Act 2005 (WA) s 15; Limitation of Actions Act 1974 (Qld) s 10AA. 43 In [100]-[127], the statement of claim identifies the respondents to the proceeding and their respective roles and alleged culpabilities. These paragraphs largely repeat [7]-[31] of the proposed substituted statement of claim, the main differences being the addition of three respondents and the attempted articulation of causes of action under the Trade Practices Act 1974 (Cth), the Fair Trading Act 1989 (Qld) and the Fair Trading Act 2010 (WA) (whereas previously the applicant had sought to rely on the Australian Consumer Law). The paragraphs continue to contain irrelevant material (for example, at [101(d)], [101(e)], [102(c)], [103(b)], [103(c)], [105(c)], [106(b)], [106(c)] and [106(d)]), commentary (for example, at [123(c)] and [123(d)]) and insufficient particularity. 44 The next section, [128]-[146], purports to outline further information on "The two respondent companies" (AACo and Elders). These paragraphs repeat [32]-[50] of the proposed substituted statement of claim (save for a minor change in [145]). The paragraphs continue to contain broadly stated allegations (which, in any event, have been extensively repeated elsewhere) and an irrelevant historical commentary. 45 In [147]-[217], the statement of claim outlines what is titled the "Buy-in-or-buy-out negotiations", concerning the alleged prospective sale of the Elders shareholding in AACo. 46 The first part of this section, [147]-[162], largely repeats [51]-[66] of the proposed substituted statement of claim. Once again, these paragraphs are in a narrative style and refer to irrelevant matters (for example, at [148]-[151] and [158]). The next paragraphs, [163]-[164], were not in the proposed substituted statement of claim but are also in a narrative style rather than only pleading material facts. 47 In [165]-[182], the statement of claim largely repeats [113]-[129] of the proposed substituted statement of claim. These paragraphs relate to the alleged discovery of the overstated cattle inventory and the subsequent analysis of the problem. In Fuller v Toms [2012] FCA 27 at [59], with respect to [113]-[129] of the proposed substituted statement of claim, I commented: … the paragraphs have the real tendency to distract attention from what should be the pleaded material facts and clear statements of claim that the applicant wishes to make. If the story or narrative account is allowed to remain in a pleading document like this, then the difficulty for a respondent is to know how they should deal with the story, the narrative and the evidence that is recorded in it. Such a document is, in truth, the antithesis of a pleading required by the Rules because it prevents the parties agreeing or joining issue on material facts that relate to clearly formulated causes of action. These paragraphs do not meet the standard that must be met in progressing a claim of the nature outlined by the applicant. I am of a similar view with respect to [165]-[182] of the current statement of claim. 48 The next part of this section of the current statement of claim, [183]-[199], was not in the proposed substituted statement of claim. These paragraphs essentially continue the analysis of the alleged overstated cattle inventory. Once again, they are in a narrative style, refer to evidence and are in parts particularly argumentative (for example, at [192], [195] and [197]). 49 The last part of this section, [200]-[217], substantially repeats [77]-[98] of the proposed substituted statement of claim. These paragraphs are a narrative account of the applicant's reliance on the AACo accounts and the basis upon which the cattle accounts were produced. They do not only plead material facts. 50 In [218]-[232], the statement of claim outlines what is titled the "Harm caused; imputation and damage". The first part of this section, [218]-[227], largely repeats [67]-[76] of the proposed substituted statement of claim. Through these paragraphs, the applicant attempts to outline the loss he has allegedly suffered as a result of the conduct of various of the respondents. 51 In [224], the applicant pleads: The main claim in this statement of claim is on the basis of a 90% probability of successful completion of either my group's original well-advanced plans or the equivalent AACo buy-in-or-buy-out deal at the high proposed overall debt and equity funding $3.775 billion. Either way, my equity share at par value would have been reduced from $200m to $160m; hence basic damages claim for $144m. (Footnote omitted.) 52 Through this paragraph, the applicant appears to allege that he lost the opportunity to be involved in an alternative deal when he discovered the alleged misrepresentations, fraud or other unlawful conduct. He values the lost opportunity on exactly the same basis, and in the same amount, as the loss alleged in the proposed substituted statement of claim (see [73]) as comprising the value of his share of AACo had the takeover proceeded. As previously pleaded, the statement of claim suffered from what the Full Court termed "a fatal flaw", as it calculated the loss allegedly suffered by the applicant by reference to the price at which he would have acquired his shareholding in AACo assuming the representations as to cattle inventory were true: Fuller v Toms [2012] FCAFC 155 at [6]. However, on the applicant's own pleading (see [74] of the proposed substituted statement of claim), he would not have sought to complete the takeover on behalf of the group of investors if the alleged misrepresentations, fraud or other unlawful conduct had not occurred and he had known the true cattle inventory. 53 The applicant's case as currently pleaded at [224] attempts to overcome this "fatal flaw". 54 First, though, it should be noted that it is still not open to the applicant to plead a claim (as an alternative basis of loss) based on the assumption that the deal to acquire AACo would have gone ahead: Fuller v Toms [2012] FCA 27 at [28]-[29]; Fuller v Toms [2012] FCAFC 155 at [6]. 55 Secondly, while the value of the lost opportunity is a claim that was missing in the proposed substituted statement of claim, in my view this claim as pleaded is still defective. The alleged opportunity is pleaded vaguely, and it is unclear exactly what "the equivalent AACo buy-in-or-buy-out deal" was and how it is valued. 56 In [228]-[231], the statement of claim repeats [240]-[243] of the proposed substituted statement of claim. In my view, [228]-[231] and [232] of the current statement of claim are, at the least, repetitive and in [231(a)] asserts a cause of action which is now statute barred. 57 The next section, [233]-[240], titled "Accounting Standards - IFRS - AASB; and Continuous Disclosure - ASX-Listing Rules - r 3.1", substantially repeats [190]-[197] of the proposed substituted statement of claim. These paragraphs are discursive and do not appear to identify material facts relevant to a cause of action or loss allegedly suffered. 58 In [241] and [242], the applicant alleges that the respondents engaged in fraud, deceit and misleading or deceptive conduct, without pleading facts from which knowledge of the alleged incorrect accounts is established or may be inferred, or from which the respondents ought to have acquired the alleged knowledge. In these respects, these paragraphs do not comply with R 16.42 and R 16.43 of the Rules. As outlined above, [51]-[67] do not, in my view, overcome the defect evident in [241] and [242]. 59 In [243]-[254], the applicant alleges various breaches of the Corporations Act 2001 (Cth) (Corporations Act). These paragraphs are substantially similar to [104]-[112] and [143]-[149] of the proposed substituted statement of claim. Those paragraphs were previously struck out on the basis that, while the applicant could potentially bring an action alleging loss resulting from breach of the continuous disclosure obligations of AACo and Elders (if properly pleaded, which was not the case), he could not bring an action with respect to alleged breaches of the other named provisions of the Corporations Act: Fuller v Toms [2012] FCA 27 at [48]-[52]. For similar reasons, I am of the view that [243]-[254] of the current statement of claim should be struck out. In particular, I consider [243], which alleges loss resulting from breach of the continuous disclosure obligations of AACo and Elders, to still be deficiently pleaded: compare Fuller v Toms [2012] FCA 27 at [52]. 60 In [255]-[275], the applicant appears to allege fraudulent accounting on the part of the respondents. These paragraphs are substantially similar to [198]-[209] and [214]-[219] of the proposed substituted statement of claim. Those paragraphs were previously struck out on the grounds they contained irrelevancies and inadequately pleaded the causes of action alleged: Fuller v Toms [2012] FCA 27 at [68]-[69]. I see no reason why [255]-[275] of the current statement of claim should not also be struck out. 61 The analysis in [276]-[312] addresses alleged fraudulent accounting in 2011 and 2012. These paragraphs are thus irrelevant to the facts and losses alleged to have occurred in 2008 and 2009. 62 The next section, [313]-[317], provides a background on young cattle and how to deal with them. These paragraphs do not plead material facts. 63 The final section, [318]-[320], is illustrative of many of the problems with the statement of claim as a whole. These paragraphs provide commentary rather than only pleading material facts. 64 The applicant filed lengthy submissions in opposition to the respondents' interlocutory application. The applicant submits that the interlocutory application is an abuse of process. Seeking to rely on Ashby v Commonwealth (No 4) [2012] FCA 1411; (2012) 209 FCR 65 (Ashby), the applicant alleges that the respondents' legal representatives have made a number of false and unsupported allegations under absolute privilege. The applicant also contends that the respondents have failed to mention what he alleges to be material facts, being: the applicant's right to commence an action against the 1st to 4th respondents within a specified time, which was a condition of these respondents being granted leave to discontinue their defamation suit against him in the Supreme Court of Queensland; that two of the corporate respondents had conceded in an earlier proceeding that the applicant did have reasonable causes of action against them; and his right to commence and prosecute the current proceeding as a consequence of the prior proceeding being struck-out in an interlocutory decision. 65 In reference to the statement of claim in this proceeding, the applicant submits that: There are numerous very fundamental changes in my fresh pleadings including specific corrections, intended to better-ground my claims and to constructively respond to several criticisms of my prior pleadings; and there is an highly material updating time element in it all which makes a big difference. (Emphasis in original.) According to the applicant, these "fundamental changes" in his statement of claim include: the number of named respondents; "some completely new claims" (including some in substitution for prior claims and some modified claims); the "spelling-out in greater detail" of a number of relevant facts, including alleged lost opportunities and the condition of mind of various of the respondents; and the presentation of "contextual aspects" with more simplicity. 66 Finally, in his written submissions, the applicant seeks to respond directly to the points raised in written submissions filed on behalf of the respondents. There is no need to repeat these submissions here, although it suffices to say they have been carefully considered in considering whether any paragraphs or all of the applicant's statement of claim should be struck out. 67 In the result, however, I reject the applicant's submissions. 68 In my view, there is no basis on which it can be said that the respondents' interlocutory application is an abuse of process. I do not consider that Ashby assists the applicant in this regard. 69 Further, I have already outlined what I consider to be the deficiencies in the statement of claim. The statement of claim is defective in both the general and particular ways which I have outlined above. There are not, in my view, "fundamental changes" in the statement of claim in this proceeding as compared to the statement of claim filed in proceeding WAD322/2011. Accordingly, in my view, pursuant to R 16.21(1) of the Rules the statement of claim should be struck out in its entirety. 70 Furthermore, in my view, there is no point in granting the applicant leave to re-plead a new statement of claim. This is now the third statement of claim that the applicant has filed or attempted to file with the Court, all of which have serious and extensive deficiencies. In my view, the applicant has shown an unwillingness or inability to properly plead a case against the respondents: compare Fuller v Toms (No 2) [2012] FCA 103 at [10]. Accordingly, I consider it appropriate that the proceeding be dismissed with costs.

further relief sought by the respondents 71 In their interlocutory application, the respondents applied for an order pursuant to R 6.02 of the Rules that the applicant not continue the proceeding or start or continue any other proceeding in the Court against any of the respondents without the leave of the Court. From 11 June 2013, however, the Court's power to make an order of this nature is additionally granted by s 37AO of the Federal Court of Australia Act 1976 (Cth) (FCA Act). Pursuant to s 37AO(3), the respondents would have standing to apply for this order, or, alternatively, the Court may make an order on its own initiative. 72 Section 37AO relevantly provides: (1) This section applies if the Court is satisfied: (a) a person has frequently instituted or conducted vexatious proceedings in Australian courts or tribunals; or (b) a person, acting in concert with another person who is subject to a vexatious proceedings order or who is covered by paragraph (a), has instituted or conducted a vexatious proceeding in an Australian court or tribunal. (2) The Court may make any or all of the following orders: (a) an order staying or dismissing all or part of any proceedings in the Court already instituted by the person; (b) an order prohibiting the person from instituting proceedings, or proceedings of a particular type, in the Court; (c) any other order the Court considers appropriate in relation to the person. … 73 Two matters must thus be satisfied before the Court's jurisdiction under s 37AO(1)(a) is triggered. First, that the person has instituted or conducted "vexatious proceedings" as defined in s 37AM(1); secondly, that these proceedings have been instituted or conducted "frequently". 74 Section 37AM(1) defines "vexatious proceeding" as including: (a) a proceeding that is an abuse of the process of a court or tribunal; and (b) a proceeding instituted in a court or tribunal to harass or annoy, to cause delay or detriment, or for another wrongful purpose; and (c) a proceeding instituted or pursued in a court or tribunal without reasonable ground; and (d) a proceeding conducted in a court or tribunal in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose. 75 As outlined above, the applicant has instituted multiple proceedings which, in my view, have harassed the respondents and wasted their time and costs (as well as those of the court) by involving them in proceedings in which the applicant seems unable or unwilling to plead only relevant allegations in a proper and comprehensible manner. Indeed, as mentioned, the applicant appears to largely ignore criticisms of his pleadings and instead continues to file or attempt to file essentially the same pleading in each of the different proceedings. In such circumstances, I consider that these proceedings may be considered "vexatious proceedings" for the purposes of s 37AM(1). 76 In Attorney General in and for the State of NSW v Gargan [2010] NSWSC 1192, at [7], Davies J summarised the principles associated with the making of an order under s 8(1)(a) of the Vexatious Proceedings Act 2008 (NSW) (which is relevantly identical to s 37AO(1)(a) of the FCA Act). His Honour noted: (a) the test of 'frequently' is a less demanding test than was required under s 84 Supreme Court Act 1970; (b) the term 'frequently' is a relative term and must be looked at in the context of the litigation being considered; (c) the number of proceedings considered may be small if the proceedings are an attempt to re-litigate an issue already determined against the person; (d) regard may be had to applications made by the person in proceedings commenced against that person; (e) regard may be had to the way the person has behaved and conducted himself or herself in the proceedings before the Court; (f) regard may be had to proceedings in any Australian court or tribunal; (g) regard may be had to the findings and result in the proceedings under consideration. 77 The history of the litigation involving the applicant and various of the respondents in the courts in Australia, including this Court, has been outlined above. It may be noted that the applicant has commenced five proceedings: the appeal to the Queensland Court of Appeal, the application for leave to appeal to the High Court, proceeding WAD322/2011 in this Court, the appeal to the Full Court and proceeding WAD332/2012 (the current proceeding). However, when considering whether the applicant has "frequently" instituted or conducted vexatious proceedings, regard should also be had to the applications made by the applicant in the Supreme Court of Queensland proceeding BS3234/2009. Further, regard should also be had to the fact that while the number of proceedings may be considered small, the proceedings have generally been an attempt to re-litigate an issue determined against the applicant. Lastly, and in any event, I note that in Jones v Cusack (1992) 109 ALR 313 Toohey J, at 315, held that an application for leave, two summonses and three notices of motion in six years "readily answer[ed] [the] description" of "frequently" instituting legal proceedings. 78 Therefore, I consider that the Court's jurisdiction under s 37AO(1)(a) is triggered. 79 I am satisfied that an order should be made in essentially the terms sought by the respondents. While in Fuller v Toms [2012] FCA 27 at [88] (see also Fuller v Toms [2012] FCAFC 155 at [9]), I considered that the applicant's case against the respondents was not, on its face, necessarily hopeless at that point, subsequent events, including the pleading in this proceeding, demonstrate that the applicant is simply unable to plead a case against the respondents. Nonetheless, he continues to agitate the same claims in a succession of cases. The time has arrived at which the applicant should be restrained from recommencing a proceeding without leave of the Court. 80 No other order is necessary in these circumstances.

conclusion and orders 81 For these reasons, the appropriate orders are that: 1. The statement of claim filed in this proceeding be entirely struck out. 2. The proceeding be dismissed. 3. Pursuant to s 37AO(2) of the Federal Court of Australia Act 1976 (Cth), the applicant must not start or continue any other proceeding in the Court against any of the respondents without the leave of the Court. 4. The applicant pay the respondents' costs of the proceeding, to be taxed if not agreed. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.