(2) The alternative claims
89 The claims under s 52 of the TPA and s 12DA of the ASICA are expressed as alternatives. Section 12DA will apply if, in respect of the period from 1 July 1998, the conduct alleged was 'in relation to financial services'. The respondents contend that there is no foundation alleged in the SOC for a finding that the conduct alleged could arguably fall within the description of being 'in relation to financial services'.
90 In one sense, the point is opportunistic. I do not mean that observation to be taken in a way critical of the respondents. But the point is simply that, if the alternative claims under s 12DA of the ASICA are struck out, the respondents would technically still be entitled to assert ultimately that, from 1 July 1998 the conduct alleged was in relation to financial services, so the claims under s 52 of the TPA should be dismissed. Moreover, there is nothing to suggest the applicant's evidentiary case would be any different with the existing SOC containing the alternative pleas. The nature of the conduct alleged is the same: the publication of the documents alleged to contain misrepresentations. The respondents know the case they must meet.
91 Nevertheless, if it is plain that the conduct alleged after 1 July 1998 could not be in relation to financial services, then the alternative claim under s 12DA of the ASICA may be struck out. To consider the contention, it is necessary separately to deal with the communications concerning the annual and half-yearly results of Holdings, and with the issue of the 19 May 2000 prospectus.
92 From 13 March 2000, s 12DA of the ASICA ceased to apply to 'dealings in securities'. At the same time s 56 of the FTA ceased to apply to 'dealings in securities'. Section 995(2) and s 999 of the Corporations Law provided for a liability for engaging in conduct that constitutes dealings in securities and which is misleading and deceptive. From that date, the SOC alleges contraventions of s 999 of the Corporations Law as alternatives to the contraventions of s 52 of the FTA and s 12DA of the ASICA. At the same time as s 995(2) of the Corporations Law provided 'coverage' of misleading conduct in respect of dealings in securities, s 995(2A) provided that it did not apply insofar as the conduct contravened s 670A (misleading or deceptive takeover documents) or insofar as the conduct contravened s 728 (misleading or deceptive fundraising document) of the Corporations Law.
93 The comments which I have made in [90] apply also to how the SOC deals with the legislative changes effective from 13 March 2000. That includes the issue as to whether s 56 of the FTA may still apply, in the face of s 995A. The nature of the alleged conduct is the same. The issue prompted by the challenge to the alternatives expressed is not whether it is conduct engaged in by the respondents, but under which of the potentially applicable provisions the conduct may fall from time to time. There is no relevant additional element to any of the alternative causes of action, other than the definitional siphoning of the conduct into one or other of the legislative provisions. Whichever of the alternatives applies, if any of them is found to apply, there is not said to be any significant difference in the elements of the causes of action or in the nature of the available remedies. Both the Application (to comply with O 4 r 3 of the Federal Court Rules) and the SOC identify the provisions of the enactments which are said to give rise to the right to relief. But the nature of the applicant's claim and the material facts on which it is based (see O 4 r 6(2) of the Rules) in the SOC remain constant, whichever provisions of the enactments are said to give rise to the right to the relief claimed.
94 There seems to be a lack of real benefit in the conduct of the proceedings by the exercise of challenging the applicability of particular legislative provisions, where the fallback or alternative involves the same conduct in substance and provides for the same type of remedy. In Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633, Davies J at 639-640 said:
'However, pleadings are not always well-drafted and expressed with clarity and, however expressed, they cannot require a judge to decide a case otherwise than in accordance with the law. If the pleadings proceed on a misapprehension of the law, the judge should, as the trial judge did in this case, make it clear to the parties what is the correct approach and should proceed accordingly. When that happens, as it did in the present case, then the case must proceed otherwise than in accordance with a strict reading of the words of the pleading.''
His Honour followed the observations of Mason CJ, Wilson, Brennan and Dawson JJ in Water Board v Moustakas (1988) 180 CLR 491 at 497 to the following effect:
'In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of a duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings. Nevertheless, failure to amend will not necessarily preclude a verdict upon the facts as they have emerged: see Dare v Pulham (1982) 148 CLR 658.'
95 In a matter such as the present, the points to be raised at trial are clear enough from the SOC. Certain conduct is alleged to have been undertaken by the respondents. It is alleged to have been misleading or deceptive. It is alleged to have been relied upon to the detriment of the applicant (and other group members). Whether, if those facts are made out, contravention of s 56 of the FTA or s 52 of the TPA or s 12DA of the ASICA or s 999 of the Corporations Law is then made out will not depend upon any different factual issues. It will depend upon the characterisation of the conduct in relation to the terms of those provisions, including whether the conduct fell within s 6(3) of the TPA or s 12AA(3) of the ASICA. Those are additional, and essentially legal issues. They do not give rise to different issues on the 'primary' factual matters going to establish a cause of action and a right to relief under each of those statutory provisions.
96 Accordingly, the issues so raised by the respondents are sterile. If the Court finds that the applicant has established that conduct of the respondents was misleading and deceptive and caused her loss, it is not confined to awarding relief under the statutory sources identified (or remaining) in the Application or in the SOC. Relief under s 56 of the FTA or under s 999 of the Corporations Law may be granted, whether or not those potential statutory sources of liability remain specified in the SOC. And if the Court finds, in addition, that the respondent's conduct as claimed involved the use of postal or telegraphic services, relief under s 52 of the TPA or under s 12DA of the ASICA may be granted whether or not those potential statutory sources of liability remain specified in the SOC. The source of the contravention, and so the source of the power to grant relief, will depend upon the characterisation of the conduct as falling within one or other of those potential statutory sources of liability. But the primary findings to establish a contravention will be the same. The evidence going to the characterisation of the conduct will in essence be the nature of the representations pleaded, possibly also having regard to the context in which they were made. The identification of the statutory source for alleged liabilities, and for the grant of relief, would really involve the legal question to be resolved by applying the relevant statutory definition to the nature and context of the representation. It is difficult at present to see that the selection of the appropriate provision as the vehicle for relief would cause injustice to the respondents.
97 In those circumstances, in my discretion I would decline to strike out the expressed alternative statutory sources of potential liability or potential relief in the SOC.
98 In addition, I do not consider that the pleadings make the position so clear that any one of the alternative pleas should be struck out as unarguable. In my view, the allegations in the SOC as to the nature and contents of the documents constituting the representations allegedly made after 1 July 1998 may fall within the definition of 'financial service' in s 12BA of the ASICA. The respondents accept that, but for the 13 March 2000 changes to the legislation, the conduct in relation to the 19 May 2000 prospectus may fall within the definition of 'financial service'. They contend the remainder of the documents constituting the representations cannot do so. Hence they contend, the alternative claim under s 12DA of the ASICA should be struck out. The claim in respect of the 19 May 2000 prospectus is said to clearly rise from a document which is dealing in securities so that it also cannot give rise to a claim under the FTA.
99 Section 12BA of the ASICA defines a 'financial service' to include a service 'otherwise supplied in relation to a financial product'. A financial product is also defined in s 12BA to include a security. Section 5(2) of the ASICA provides that expressions used in the ASICA have the same meaning as in the Corporations Law unless they are otherwise defined. By ss 9 and 92 of the Corporations Law, a 'security' includes shares in a body such as Holdings. In s 12BA of the ASICA 'service' is defined to include any rights, benefits, privileges or facilities that are provided, granted or conferred in trade or commerce, and the supply of a service is defined to including the provision, grant or conferral of a service.
100 The applicant's contention is that from 1 July 1998 the preparation and distribution of the documents said to contain the representations arguably amounts to services supplied in relation to a financial product (Holdings shares), because they are rights, benefits, privileges or facilities provided in trade or commerce supplied in relation to Holdings shares. They are said to have been supplied in relation to Holdings shares because they relate to Holdings' financial position and performance. In Australian Competition & Consumer Commission v Maritime Union of Australia (2001) 187 ALR 487; [2001] FCA 1549, Hill J at 501-502, [68]-[69] referred to authorities in which the expression 'in relation to' has been considered. His Honour pointed out they are wide words which, without reference to context, do no more than signify the need for there to be at least some relationship or connection between the two subject matters. The extent of the relationship will depend upon the context in which the words are used.
101 It is not necessary at present to refer in detail to the context in which those words appear in the definition of 'financial service'. I have considered the context. I do not consider the applicant's contentions to be unarguable, so I do not consider that the references to s 12DA of the ASICA in relation to the alleged conduct from 1 July 1998, that is the making of the communications referred to (putting aside the communication by the 19 May 2000 prospectus), should be struck out.
102 The applicant's contention in relation to the 19 May 2000 prospectus is a little more subtle. She accepts that the 19 May 2000 prospectus is a document which contains an offer to shareholders and members of the public to subscribe for convertible notes in Holdings. It is therefore accepted that it is a 'dealing in securities' as defined in the Corporations Law. It is, to that extent, a communication which falls squarely within the scope of operation of s 995A of the Corporations Law. The corollary is that, to that extent, it cannot fall within the scope of operation of s 52 of the TPA (see s 51AF of the TPA) or s 12DA of the ASICA (see s 12DA(1A) of the ASICA) or s 56 of the TPA. Section 999 of the Corporations Law appears to be part of the provision of a comprehensive and self-contained regime for controlling or regulating dealings in securities, and itself to be part of a comprehensive and self-contained liability regime for misstatements in and omissions from 'disclosure documents'. As noted above, the 19 May 2000 prospectus falls within the description of a disclosure document.
103 The applicant makes two responses to that position. The first is to acknowledge it. Thus, to the extent group members relied upon the 19 May 2000 prospectus to influence their financial judgment by taking up convertible notes in Holdings, their claim is properly confined to one made under s 999 of the Corporations Law. Section 995(2) is not available to them in such circumstances: s 995(2A), and s 728 appears to confine relief for its contravention to that based on conduct of the offeror.
104 The applicant secondly contends that the 19 May 2000 prospectus also had the character of a document containing statements by the respondents as directors of Holdings with respect to the financial affairs of Holdings. As the applicant did not subscribe for convertible notes in Holdings on the strength of the document, she is not a person who can claim under s 728 of the Corporations Law to the extent that she relied upon its content for her investment decisions. It is contended that Div 1 of Part 6D.3 of the Corporations Law does not operate to exclude such a claim, based upon s 56 of the FTA and s 52 of the TPA or s 12DA of the ASICA. Such a claim is available, so the argument runs, because the second or additional characterisation of the 19 May 2000 prospectus is that, in that character, it is not a 'dealing in security' because it does not involve action to 'deal' in relation to securities. The word 'deal' is defined in s 9 of the Corporations Law, and the definition is imported into the ASICA: see s 5(2) of the ASICA.
105 There is considerable attraction in the respondent's contention that any liability for misstatement in the 19 May 2000 prospectus is intended to be limited to that provided for in Div 1 of Part 6D.3 or in s 999 of the Corporations Law. The applicant's contention that, where the prospectus is not a cause of subscription for securities, the prospectus may have a different character from that as dealing in securities is somewhat strained. One can, however, conceive of circumstances where, upon receipt of a prospectus, an existing shareholder in Holdings may decide not to subscribe for shares but also decide to maintain an existing shareholding. It is not clear to me that the legislature intended in such circumstances that any consequential loss should not be recoverable even though it does not fall within the ambit of s 995(2) or s 728 or s 999 of the Corporations Law. In addition, as I have indicated above, in essence the factual and legal issues raised by a claim under s 999 are the same as those raised by claims under s 56 of the FTA, s 52 of the TPA and s 12DA of the ASICA. There seems to be no real point in forcing the SOC to apply one only of a series of possible statutory labels to the cause of action in those circumstances, especially where the Court may ultimately (if it determines the factual and legal issues in the applicant's favour) determine which is the appropriate label to apply.
106 I accordingly decline to strike out those parts of the SOC which deal with the 19 May 2000 prospectus in terms which invoke relief for statutory causes of action outside that provided under s 999 of the Corporations Law.