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[2016] FCA 134
Federal Court of Australia
2016-02-23
Reeves J
Original judgment source is linked above.
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Counsel for the Applicant: The applicant appeared in person
Solicitor for the Respondents: King & Wood Mallesons
AND: BUNDABERG PORT AUTHORITY First Respondent
BUNDABERG PORTS CORPORATION PTY LTD Second Respondent
PORT OF BUNDABERG, A WHOLLY OWNED BUSINESS OF GLADSTONE PORTS CORPORATION Third Respondent
JUDGE: REEVES J DATE OF ORDER: 23 FEBRUARY 2016
Introduction and procedural history 1 Mr Keenan commenced this proceeding in December 2014. Throughout it he has represented himself although, from to time, he has claimed that he is receiving advice from a lawyer. From the outset, it was quite apparent that Mr Keenan's statement of claim suffered from numerous deficiencies. 2 In March 2015, the Bundaberg Port Authority and the other two respondents (who I will refer to jointly as the Port Authority, except where the context requires otherwise) filed an application seeking to strike out Mr Keenan's statement of claim under r 16.21(1)(d) and (e) of the Federal Court Rules 2011 (Cth) (the Rules). 3 In April 2015, at his request, I gave Mr Keenan leave to file an amended statement of claim in order to address the deficiencies highlighted by the Port Authority's application. However, the amended statement of claim that he subsequently filed suffered from many of those same deficiencies. In response, the Port Authority sought, and was given leave, to amend its application to direct it to Mr Keenan's amended statement of claim and to include an application for summary judgment against Mr Keenan under s 31A of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) and r 26.01(1) of the Rules. At the hearing of the Port Authority's amended application in June 2015, having had the opportunity to consider the written submissions filed in support of it, Mr Keenan made a further request for leave to file a further amended statement of claim. I granted that application essentially because Mr Keenan informed me that he would be able to obtain the assistance of a lawyer to prepare that further amendment. 4 Notwithstanding this legal assistance, when Mr Keenan's further amended statement of claim was filed, the Port Authority considered it, too, was deficient and once again sought leave to further amend its application to direct it to that version of the statement of claim. At about the same time, Mr Keenan indicated he wished to apply for leave to bring the proceeding on behalf of a company called Coral Coast Mariculture Pty Ltd (Coral Coast) pursuant to s 237 of the Corporations Act 2001 (Cth) (the Corporations Act) and, assuming that leave were to be granted, for leave to join that company as the second applicant in the proceeding under r 9.05 of the Rules. Coral Coast figured prominently in Mr Keenan's further amended statement of claim and I gathered from what he said at the hearing that he was taking this step on advice from the lawyer who had assisted him to prepare that document. Mr Keenan filed his s 237 application in July 2015. It was supported by an affidavit which purported to address the criteria set out in s 237. Except to include the usual epithet in its name: "Receiver and Manager appointed", neither this affidavit, nor Mr Keenan's further amended statement of claim, provided the details of when, why or how this appointment had occurred. 5 At the hearing of the Port Authority's further amended application in August 2015, Mr Keenan once again sought leave to file a further amended statement of claim. Since he had, by that time, been given three opportunities to plead his claims and had obtained legal assistance for at least the last attempt, I refused his application. I then proceeded to hear, first, Mr Keenan's s 237 application and, secondly, the Port Authority's twice amended application for summary judgment or, in the alternative, to strike out Mr Keenan's further amended statement of claim. 6 Before turning to consider these applications, it is convenient to broadly summarise the factual context to Mr Keenan's claims in this proceeding. In large part, this summary is taken from Mr Keenan's further amended statement of claim. That being so, it is convenient to, at the same time, outline the structure and content of that document.
Factual context and the structure and content of Mr Keenan's further amended statement of claim 7 Mr Keenan is a marine biologist. He claims to have extensive research, development, and production experience in aquaculture. In his further amended statement of claim, he alleges that the Port Authority had variously engaged in misleading or deceptive conduct and unconscionable conduct; had made negligent misrepresentations to him; and has breached a contract it entered into with him. By way of relief, he seeks damages, interest and costs. 8 These claims are said to arise out of Mr Keenan's dealings with the Port Authority, commencing in December 2003, in connection with the leasing of two parcels of land adjacent to the Port of Bundaberg, which were owned by the Port Authority. The first is a 14 hectare parcel of land and water suitable for aquaculture, and the second is a parcel of land that contained an office, a seafood processing shed and a cold store. In his further amended statement of claim, Mr Keenan refers to these leases as the Farm Lease; and the Factory Lease, respectively. In his further amended statement of claim, Mr Keenan claims that, until 30 September 2007, the land comprising these leases was owned by the Bundaberg Port Authority; then from 1 October 2007 until 31 October 2009, it was owned by the Bundaberg Port Corporation Pty Ltd (the second respondent); and finally, from 1 November 2009, it has been owned by the Port of Bundaberg (the third respondent), a wholly-owned business of the Gladstone Ports Corporation Ltd (although there is a discrepancy in its name in the further amended statement of claim vis-à-vis the originating application). 9 Coral Coast was incorporated on 5 April 2005 and Mr Keenan was, and is, the sole director of, and one of the shareholders in, that company. 10 Mr Keenan alleges that, from "at least" December 2003, the Port Authority "represented, assured, advised and agreed" that, "within the time limits required", it would "conclude the Farm Lease essential for an aquaculture farm project producing soft shell crabs". In addition, he alleges that, among other things, the Port Authority represented to him that it would "support and enable" Coral Coast to set up this aquaculture project on the Farm Lease, that it would support an application for an aquaculture licence, and that it would support an application to the Department of Transport and Regional Services (Cth) to enter into a Sustainable Regions Funding Agreement with the Commonwealth Government. He also alleges that it represented to him that it would "easily comply" with the conditions of this Funding Agreement and that "it fully knew" that those conditions had to be met within one year of entering into this Funding Agreement. Finally, he alleges that it represented "as the conclusion of the Farm Lease to [Coral Coast] was certain, [Coral Coast] should also, prior to entering into the Farm Lease, enter into the Factory Lease". 11 These representations are central to the claims in the further amended statement of claim and are described throughout as "the Farm Lease representations". In particular, they are the factual basis for Mr Keenan's claims that the Port Authority engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth) (the TPA). Insofar as they were in writing, Mr Keenan alleges they were contained in letters and other documents variously dated 14 April 2004, 14 May 2004, 12 January 2005, 25 February 2005 and 28 February 2005. Insofar as they were made orally, Mr Keenan broadly alleges they were made in conversations, meetings, or discussions he had with Mr Johnson, the CEO of the Port Authority, between December 2003 and December 2006. 12 In November 2005, Mr Keenan claims that Coral Coast signed the Funding Agreement mentioned above which would allow it to obtain funding of $500,000 from the Commonwealth Government for the aquaculture farm project. However, he claims that this funding would only be made available to it if certain conditions were met, one of which was that, by 10 November 2006, it had to put in place an "operational lease of land to [Coral Coast] suitable for the aquaculture project". As is already mentioned above, Mr Keenan claims that the Port Authority knew of this condition and represented to him that it would be met within the stated period. 13 As to the Factory Lease, Mr Keenan claims that, on 1 March 2006, "induced by and in reliance upon" the Port Authority's Farm Lease representations and "in consideration of the agreement between" the Port Authority and Coral Coast and Mr Keenan, "through (sic - though) not required before conclusion of the Farm Lease", Coral Coast purchased the Factory Lease from the Port Authority for the sum of $484,000, plus stamp duty. Thereafter, Mr Keenan claims that in further reliance on those representations both Coral Coast and he expended approximately $450,000 in rehabilitating the seafood processing facility on the Factory Lease site and planning for the construction on that site of a hatchery, a moulting shed and ponds. Mr Keenan also claims that the Port Authority knew that the Factory Lease could only be successfully utilised if aquaculture was being produced from the aquaculture farm project which was to be conducted on the Farm Lease. As well, and curiously, he claims that "the purchase of the Factory Lease was not necessary or a condition of" the Funding Agreement, but that lease was purchased in reliance on the Farm Lease representations and he and Coral Coast "were led to believe it was a necessary requirement for the [Port Authority's] support and assistance". 14 While the details are not pleaded in Mr Keenan's further amended statement of claim, it appears that, at some point in 2005 or 2006, Coral Coast obtained loan funds from the Australia and New Zealand Banking Group Limited (ANZ) to finance some, or all, of the above transactions and works. Similarly, Mr Keenan alleges, without pleading any details, that he agreed to guarantee at least a part of Coral Coast's liability to the ANZ for the loan funds in question. While Mr Keenan has provided no details of these matters, nor, as noted above (at [4]), the circumstances in which the Receiver and Manager was appointed to Coral Coast, it is reasonable to assume from the contents of the affidavit Mr Keenan filed in support of his s 237 application (see below at [26]) that the ANZ made this appointment acting under the terms of its agreement with Coral Coast. 15 By September 2006, despite his lawyers exchanging various amended agreements and correspondence with the lawyers acting for the Port Authority, Mr Keenan claims the Farm Lease had not been concluded. As a result, he claims that, "in order to have any prospect of obtaining" the $500,000 funding under the Funding Agreement, on 28 September 2006, Coral Coast entered into a contract to purchase another aquaculture business (referred to in the further amended statement of claim as "the Queensland Prawn Farm"). That purchase was settled on 13 November 2006. 16 In his further amended statement of claim, Mr Keenan claims that the Farm Lease representations were "false, untrue, inaccurate and misleading". In particular, he claims that the Port Authority: "was seeking to sell the lease of a run-down seafood processing plant that had been vacant and abandoned for over 3 years"; "did not in reality support [Coral Coast's] aquaculture project"; "did not have the…willingness to conclude the Farm Lease…"; "did not necessarily want [Coral Coast] carrying out the project but needed to sell the Factory Lease"; "did not have the necessary resources to complete approvals and consider and assist in the building and engineering works necessary for the Farm Lease"; and "was not in a position to comply with the strict time constraints of the $500,000 Funding Agreement". 17 Further, he claims that if he "and/or [Coral Coast]" had known of the true position, he "and/or it" would not have purchased the Factory Lease, or expended funds to rehabilitate the Factory Lease site; would not have chosen the Farm Lease land on which to conduct the aquaculture project; and would not have moved to Bundaberg and given up his existing business and employment. He also claims that Coral Coast would not have borrowed any monies from ANZ and, as a result, he would not have entered into any agreement to guarantee Coral Coast's liability for the monies so borrowed. Finally, he claims that "had [Coral Coast] known the true position, it would have purchased the Queensland prawn farm and not sought to conclude the Farm Lease and/or purchase the Factory Lease". In the alternative, he claims that "had the representations, assurances etc been true, [Coral Coast] would have not had to purchase the Queensland prawn farm". 18 Having pleaded all these allegations directed to the Farm Lease representations, Mr Keenan then alleges in his further amended statement of claim that the identical matters that were said to constitute those representations comprised the terms and conditions of a contract between him "and/or [Coral Coast]" and the Port Authority. Thus, he does not nominate whether the parties to this contract included him alone, or Coral Coast alone, or both him and Coral Coast. Further, bearing in mind that the Farm Lease representations were allegedly made over a three year period, he does not nominate when it was that this contract was made, nor does he identify what consideration was allegedly provided for it. More perplexingly, he relies, in part, upon the allegations that the Farm Lease representations - that is, the matters said to constitute the terms and conditions of the contract - were false (see at [16] above) as evidence of the Port Authority's breach of this contract. 19 Next, Mr Keenan purports to plead what appears to be a negligent misrepresentation claim. The duty of care that is said to found this claim is pleaded in these terms: "[i]n representing, explaining and advising [Mr Keenan] and/or [Coral Coast] [the Port Authority] owed [Mr Keenan] and/or [Coral Coast] a duty of care". The Port Authority is then said to have breached this duty of care by failing to explain or advise Mr Keenan "and/or" Coral Coast about various matters, including: "that [Coral Coast] did not need to purchase the Factory Lease"; and that the Port Authority "did not in fact regard itself as bound to complete the Farm Lease within one year". 20 Finally, Mr Keenan alleges that the Port Authority engaged in unconscionable conduct in breach of s 52A of the TPA and, insofar as the representations constitute "predictions", s 51AA of that Act. This claim relies upon the same facts as the other claims, namely the making and falsity of the Farm Lease representations, together with two further specific, albeit unparticularised, allegations. The first is that: "[the Port Authority] increased the rent under the Factory Lease by 66% with no jurisdiction". The second is that the third respondent, the Port of Bundaberg, "threatened to take action and terminate the seafood factory leases without just cause". Two letters are referred to in the particulars provided in support of these allegations: a letter dated 2 April 2007 from the Port Authority to Coral Coast; and a letter dated 27 May 2011 from the lawyers for the Port of Bundaberg, the third respondent, to Coral Coast, respectively. 21 In the final paragraph of the further amended statement of claim, Mr Keenan claims: "By reason of the matters set out above, [he] and/or [Coral Coast] are entitled to the following orders": essentially damages, interest and costs. It will be apparent from its terms that this is not a plea of causation or damage. There is, however, an earlier pleading which, while it appears in the duty of care, or negligent misrepresentation section of the pleading, may be taken to plead causation in relation to all of the heads of claim. It pleads: "By reason of the aforesaid misrepresentations, breach of contract and/or breach of duty of care, [Coral Coast] and/or [Mr Keenan] have suffered loss and damage". The following particulars of loss and damage are then provided: (i) Moneys expended to purchase the Factory Lease, renovate and maintain it. (ii) Moneys expended to comply with the requirements of the Funding Agreement and have the Farm Lease constructed and repaired. (iii) All moneys paid to and any liability to ANZ Bank, including under any [Mr Keenan] guarantee of [Coral Coast's] indebtedness to ANZ bank. (iv) The purchase price of the Queensland farm property. (v) Money spent by [Mr Keenan] in giving up his prior business and employment and moving to Bundaberg. It is to be noted that these particulars do not clearly identify which of Coral Coast "and/or" Mr Keenan suffered each of the identified items of loss and damage. However, it can be inferred from other parts of the pleading that items (ii) and (iv) appear to relate solely to Coral Coast and item (v) appears to relate solely to Mr Keenan. The other two items appear to relate to both of them.
Mr Keenan's section 237 application 22 Mr Keenan has presumed success in his application under s 237 of the Corporations Act. To reflect this, he has included the following passage in his further amended statement of claim: [Coral Coast] brings these proceedings as a derivative action by [Mr Keenan] on behalf of [Coral Coast] as a member and officer of [Coral Coast] pursuant to leave granted on [___] by his Honour Justice Reeves pursuant to s 237 of the Corporations Act. As will emerge later in these reasons, this presumption, and particularly the inclusion of references to Coral Coast throughout, has an effect on the integrity of Mr Keenan's further amended statement of claim (see at [56]). However, it is first necessary to dispose of Mr Keenan's s 237 application. 23 Section 237(1) of the Corporations Act provides that an officer, or former officer, of a company may apply to the Court for leave to bring, or to intervene in, proceedings. Such proceedings are commonly described as derivative proceedings. Section 237(2) provides that the Court must grant such an application if it is satisfied as to all of the following criteria: (a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and (b) the applicant is acting in good faith; and (c) it is in the best interests of the company that the applicant be granted leave; and (d) if the applicant is applying for leave to bring proceedings--there is a serious question to be tried; and (e) either: (i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or (ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied. 24 Leave to bring proceedings under s 237 of the Corporations Act is "not to be given lightly": see Swansson v RA Pratt Properties Pty Ltd (2002) 42 ACSR 313; [2002] NSWSC 583 (Swansson) at [24] per Palmer J and Gaertner v Dharah Gibinj Aboriginal Medical Service Aboriginal Corporation [2013] FCA 1330 (Gaertner) at [27] per Jacobson J. While the latter decision was directed to s 169-5 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), that section is the analogue of s 237 of the Corporations Act (see Gaertner at [25]). 25 Mr Keenan bears the onus of satisfying the Court about all of the above criteria on the balance of probabilities: see Swansson at [24]; and Pottie v Dunkley (2011) 82 ACSR 561; [2011] NSWSC 166 (Pottie) at [36] per Ward J. For the reasons set out below, I do not consider he has discharged this onus.
Section 237(2)(a) - whether Coral Coast will not itself bring the proceedings 26 In order to discharge his onus in relation to both this criterion and that in s 237(2)(e), Mr Keenan has annexed to his affidavit in support of this application an email exchange he had in April 2015 with a Mr Fanshawe of the ANZ. In his email to Mr Fanshawe, Mr Keenan requested the ANZ "to consider providing assistance or joining with [him] in prosecuting [his] case, as it concerns one of the mortgaged assets of [Coral Coast]". Mr Fanshawe replied that "neither ANZ nor the Receivers (sic) are able to provide any assistance to you in relation to the Federal Court proceedings, nor to join with you in prosecuting that claim". 27 While this email exchange establishes that neither the ANZ, nor the Receiver, is willing to provide any assistance to, or join with, Mr Keenan in prosecuting this proceeding, it proves nothing about Coral Coast's attitude to the proceeding and, more particularly, whether it will "itself bring the proceedings, or properly take responsibility for them, or for the steps in them …": see s 237(2)(a) at [23] above. Nonetheless, since Mr Keenan has put it forward to attempt to satisfy this criterion, that would appear to indicate that he believes the Receiver has control over any decision by Coral Coast to commence litigation. That may well be so if the instrument under which the Receiver was appointed has vested that power in him or her and removed it from the sole director, Mr Keenan: see Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd (1969) 92 WN (NSW) 199 and, more recently, Oswal v Burrup Fertilisers Pty Ltd (ACN 095 441 151) (Receivers and Managers Appointed) (2013) 295 ALR 708; [2013] FCAFC 9 (Oswal) at [54]-[62] and Kilcran, in the matter of Allco Finance Group Limited (Receivers and Managers Appointed) (In Liquidation) v Gothard [2014] FCAFC 6 at [71]. However, I do not know whether that is the position because, in addition to providing no evidence of the circumstances in which the Receiver was appointed to Coral Coast, Mr Keenan has not provided any evidence of the terms of the instrument under which that appointment was made. 28 In this respect, I should interpolate that the Port Authority filed an affidavit of Ms LeBherz in this application which, among other things, annexes a copy of a mortgage debenture between Coral Coast and the ANZ given on 9 May 2006. Mr Keenan did not refer to, or rely upon, this debenture during the hearing of this application, nor provide any indication that it is the instrument under which the Receiver was appointed to Coral Coast. Nonetheless, even if it is the relevant instrument, while clause 11 of it gives the Receiver the powers to "exercise all the company's powers"; to "exercise all or any of the powers conferred by s 420 of the Corporations Law"; and specifically, to "take or defend any proceedings if the Receiver considers it expedient to do so in the course of exercising the Receiver's power", it does not appear to expressly remove the director's powers to cause Coral Coast to commence litigation. Of course, it may do so implicitly, but that is a question the determination of which would need to take account of the considerations examined in authorities such as those mentioned above, and Newhart Developments Ltd v Co-operative Commercial Bank Ltd [1978] QB 814; NEC Information Systems Australia Pty Ltd v Lockhart (unreported, Supreme Court of New South Wales, 8 June 1990); Charmae Investments Pty Ltd v Australia and New Zealand Banking Group Ltd [1991] ATPR 41-063; Phillips Oysters Pty Ltd v National Australia Bank Ltd (unreported, Federal Court of Australia, 13 November 1992); and Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia [2001] FCA 173. 29 Since Mr Keenan has not provided any evidence going to any of these matters, nor made any submissions about them, I do not consider he has discharged his onus to show that Coral Coast will not itself bring these proceedings. It follows that I do not consider he has discharged his onus to establish this first criterion. It is worth adding that one possibility arising from this conclusion is that, as the sole continuing director of Coral Coast, Mr Keenan has always had the power to cause Coral Coast to commence, or join in, this litigation. If that is so, his application under s 237 is misconceived. It would also follow that, instead of making this application, he could have applied to join Coral Coast as a second applicant. This raises the application Mr Keenan has made consequent upon the grant of leave under s 237 to do exactly that: see at [4] above. However, without having any of this evidence before me to establish whether Mr Keenan does have that power, I do not consider he has, at least in this application, met the prerequisites for such a joinder set out in r 9.05 of the Rules. For these reasons, Mr Keenan's joinder application must be rejected. 30 While Mr Keenan's failure to satisfy this first criterion would suffice to dispose of his application under s 237, for completeness I will proceed below to briefly consider the other four criteria set out above.
Section 237(2)(b) - whether Mr Keenan is acting in good faith 31 The second criterion in s 237(2) is whether Mr Keenan is acting in good faith in bringing this application: see s 237(2)(b) at [23] above. On this aspect, Mr Keenan asserts in his affidavit in support of this application that: As the sole director of the Company I am acting in good faith on behalf of the Company by including the Company as an Applicant to my case, as the pleadings and facts relating to my application are essentially the same for both myself and the Company. 32 At least two interrelated factors have been identified as bearing on the satisfaction of this criterion. In Swansson, Palmer J described them (at [36]) as: … whether the applicant honestly believes that a good cause of action exists and has a reasonable prospect of success. Clearly, whether the applicant honestly holds such a belief would not simply be a matter of bald assertion: the applicant may be disbelieved if no reasonable person in the circumstances could hold that belief. The second factor is whether the applicant is seeking to bring the derivative suit for such a collateral purpose as would amount to an abuse of process. See also Gaertner at [32] and Pottie at [41]. However, as Ward J pointed out in Pottie at [42], the inquiry concerning an applicant's good faith is not limited to these two factors. 33 On this criterion, the Port Authority contended that Mr Keenan is, indeed, pursuing a collateral purpose in making this application because, if it were to succeed in this proceeding, any potential damages payable to Coral Coast would be used to meet its liability to the ANZ, which would, in turn, reduce Mr Keenan's liability under the guarantee he has provided to that Bank, rather than provide any direct benefit to Coral Coast. 34 In Swansson (at [38]), Palmer J elaborated upon his observations above as follows: Where the application is made by a current shareholder of a company who has more than a token shareholding and the derivative action seeks recovery of property so that the value of the applicant's shares would be increased, good faith will be relatively easy for the applicant to demonstrate to the Court's satisfaction. So also where the applicant is a current director or officer: it will generally be easy to show that such an applicant has a legitimate interest in the welfare and good management of the company itself, warranting action to recover property or to ensure that the majority of the shareholders or of the board do not act unlawfully to the detriment of the company as a whole. His Honour then proceeded to contrast these examples with applications made by a former shareholder, or officer, of the company "with nothing obvious to gain directly by the success of the derivative action": see Swansson at [39]. 35 While the Port Authority's predictions as to the likely course of events should Coral Coast succeed in this proceeding may be quite accurate, given that Mr Keenan is both the sole continuing director, and a current shareholder of Coral Coast and that Coral Coast's overall financial position is likely to be favourably affected by success in this proceeding, I do not consider that the pursuit of the proceeding can be described as pursuing an ulterior purpose such that it reflects a lack of good faith on the part of Mr Keenan in making this application. With regard to the other factor mentioned above, I accept that Mr Keenan honestly believes that Coral Coast has a good cause of action and has reasonable prospects of success in this proceeding. However, given his lack of legal qualifications and the present state of his further amended statement of claim, this does not mean that I consider this honest belief is well-founded. I will return to this issue when considering the criterion in s 237(2)(d) below.
Section 237(2)(c) - whether it is in the best interests of the company to grant leave 36 On this criterion (prescribed by s 237(2)(c): see at [23] above), Mr Keenan asserted in his supporting affidavit that "I am acting in the best interests of the creditors and investing shareholders of [Coral Coast] to recover the funds expended by the Company at the Port of Bundaberg". 37 This criterion has been described as demanding of a "high standard". Thus, it is necessary to establish what is in the best interests of the company, not what may be: see Swansson at [55]-[56], Pottie at [59], Vinciguerra v MG Corrosion Consultants Pty Ltd (2010) 79 ACSR 293; [2010] FCA 763 (Vinciguerra) at [111] and Gaertner at [43]. In making an assessment as to where the best interests of the company lie, it is necessary to consider all of the relevant circumstances, including the character of the company, the nature of its business activities and the effect the proceeding may have on the company; whether or not the proceeding could be brought in the name of the applicant alone; whether the proceeding is of any practical benefit to the company; and whether the applicant is a proper person to bring the proceeding on behalf of the company: see Swansson at [55]-[60], Pottie at [59]-[60]; Vinciguerra at [112]-[119] and Gaertner at [44]. 38 Mr Keenan has failed, in my view, to meet the high standard required by this criterion. I will briefly summarise the more salient matters that have led me to this conclusion. First, beyond the bald assertion set out above, Mr Keenan has not provided any evidence about any of the surrounding circumstances. For example, as I have already observed above, I know little, if anything, about the financial position of Coral Coast, or the circumstances that led to the Receiver being appointed to it. Secondly, Mr Keenan has not explained to me why he thinks it is now necessary to introduce Coral Coast to this proceeding, rather than continuing to pursue the proceeding in his own name. While I inferred earlier in these reasons that he has made this application on advice from the lawyer who assisted him to prepare his further amended statement of claim, Mr Keenan has not expressly stated that that is so, nor, if it is, has he provided me with any details of that advice. Thirdly, granting this application will expose Coral Coast to the risk of an adverse costs order. In this respect, Mr Keenan has not taken the usual course of offering an indemnity against that contingency. Moreover, even if he were to offer such an indemnity, there is no evidence to establish whether it would be of any value. Finally, I do not consider Mr Keenan is an appropriate person to conduct this proceeding on behalf of Coral Coast. Mr Keenan is not qualified as a lawyer and he has no legal experience or training. Consistent with these shortcomings, he has displayed significant difficulties thus far in conducting this proceeding on his own behalf. His attempts to provide a satisfactory statement of claim in respect of his own claims is one telling example of these difficulties.
Section 237(2)(d) - whether there is any serious question to be tried 39 To discharge his onus with respect to this criterion, Mr Keenan stated in his affidavit in support of his application that: I believe that there is a serious question to be tried that involves a redundant and unnecessary purchase of an aquaculture farm which cost approximately $1 million and the now worthless expenditure of approximately $1.5 million of my funds and the Company's funds at the Port of Bundaberg. The applicant relies on his FASOC to demonstrate the serious nature of his case …. (Emphasis in original) 40 This criterion has been held to set a "relatively low threshold to surmount" and it has been compared to the standard applicable to the grant of an interlocutory injunction: see Swansson at [25] and Gaertner at [46]. It has also been observed that this criterion "does not require the Court to enter into the merits of the proposed derivative action to any great degree": see Vinciguerra at [147]. Nonetheless, it is clear on the authorities that "the application must be supported by evidence. A mere 'indication of the evidence' without actual evidence is insufficient": see Vinciguerra at [141] and Gaertner at [47]. 41 Mr Keenan has failed to produce any evidence to support the existence of a serious question to be tried with respect to Coral Coast's involvement in this proceeding. Instead, he has made a broad assertion about the amount and nature of the funds that were expended on the aquaculture farm project at the Port of Bundaberg. He has not even taken the step of swearing to the truth of the allegations of fact made in his further amended statement of claim. Instead, he has merely referred to that document generally and annexed it to his affidavit. Even if he had taken this step, the extremely vague and imprecise manner in which Mr Keenan has pleaded his claims in his further amended statement of claim make it impossible to make any assessment as to whether they give rise to a serious question to be tried. And in this respect, it is to be emphasised that this is Mr Keenan's third attempt at producing a document that sets out the factual foundations for his claims. I do not therefore consider that Mr Keenan has met the relatively low standard required to discharge his onus in relation to this criterion.
Section 237(2)(e) - whether notice has been given 42 The evidence Mr Keenan relies upon to satisfy this criterion is already set out at [26] above. As is already noted at [27] above, in engaging in this email exchange with Mr Fanshawe of the ANZ, Mr Keenan seems to have assumed that the Receiver has control over any decision by Coral Coast to commence litigation such as this. Acting under that belief, he also seems to have assumed that he needed to give the notice required under s 237(2)(e) to the Receiver for Coral Coast rather than to Coral Coast itself. For the reasons given at [27] above, on the state of the evidence in this application, I consider these assumptions are erroneous. Even if that were not so, and this notice should have been directed to the Receiver of Coral Coast, the email exchange between Mr Keenan and Mr Fanshawe of the ANZ does not evidence the delivery of a notice to the Receiver, but rather to the entity that apparently appointed the Receiver. Further still, Mr Keenan did not state in his email to Mr Fanshawe his reasons for making this application, as required by s 237(2)(e)(i). For these reasons, I do not consider Mr Keenan has discharged his onus with respect to this criterion.
Conclusion on Mr Keenan's s 237 application 43 For these reasons, I consider that Mr Keenan has failed to discharge his onus with regard to four of the five criteria prescribed in s 237(2). His s 237 application for leave to commence this proceeding on behalf of Coral Coast must therefore be refused.
The Port Authority's summary judgment application 44 I turn next to the Port Authority's summary judgment application. The principles applicable to such an application have recently been outlined by me in a number of decisions: see Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256; [2013] FCA 641 (Cassimatis) at [15]-[30]; Krajniw v Newman (No 2) [2015] FCA 673 at [9]-[13]; and Crocker v Toys 'R' Us (Australia) Pty Ltd (No 3) [2015] FCA 728 at [8]-[11]. I will apply those principles in this application but, in the interests of brevity, I will not reiterate them here. 45 However, it is appropriate to add that, in reaching the conclusions set out below I have taken account of the following diverse and countervailing factors: (a) the caution one should employ before summarily determining a proceeding: see Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 at [24] and [60] and Cassimatis at [50]; (b) the need to distinguish between whether the true concern is one of form or one of substance - by this I mean whether Mr Keenan has a cause of action that is not properly pleaded, or whether he has no cause of action at all: see Spencer at [23], White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511 at [50] and Cassimatis at [46]; (c) in addition to the circumstances outlined in Cassimatis at [47]-[49], summary judgment under s 31A of the Federal Court Act is justified where a party completely fails to identify any valid claim or cause of action or fails to provide any factual materials that could amount to such: see Mulhern v Bank of Queensland [2015] FCA 44 at [60]-[61] per Gleeson J and Dowling v Commonwealth Bank of Australia [2008] FCA 59 at [30] per Reeves J; (d) related to the two factors identified immediately above, this is Mr Keenan's third attempt to produce a proper statement of claim; and (e) finally, Mr Keenan is self-represented, although there are obvious limitations to this consideration most obviously fairness to the three respondent parties. 46 On the last factor, it is worth adding that experience shows that for every self-represented litigant who has a valid claim, there are many, many, more who do not. And, in the process of defending the claims lodged by the large latter group, the unfortunate respondents concerned very often devote considerable time and resources to that exercise without, in the vast majority of cases, being able to rely upon a costs order to compensate them. That is so because one concomitant of self-representation is almost invariably impecuniosity. 47 For the following reasons, I consider that summary judgment should be entered against Mr Keenan in relation to all the claims he has made against the second and third respondents; and in relation to the unconscionable conduct, negligent misrepresentation and breach of contract claims he has made against the first respondent. With respect to his remaining claim against the first respondent, his misleading and deceptive conduct claim, I consider his further amended statement of claim should be struck out and he should be given a further opportunity to plead the material facts necessary to make out that claim. 48 First, as to the second and third respondents, the only specific allegation made against either of them is that in paragraph 40 of the further amended statement of claim where it is alleged that the third respondent: "threatened to take action and terminate the seafood factory leases without just cause". The only particulars provided of this allegation were: "27 May 2011 letter from lawyers for the Third Respondent to [Coral Coast]". This is a bare allegation in a vacuum. No particulars have been given as to what parts of the letter dated 27 May 2011 constituted the alleged threat, or why it is alleged to have been made "without just cause". None of the terms and conditions of the "seafood factory leases" has been pleaded and no attempt has been made to describe why this alleged threat was not justified under those terms and conditions, or otherwise. It is not even clear whether these "seafood factory leases" are one and the same as the Factory Lease that is specifically defined earlier in the further amended statement of claim. Further, no facts have been pleaded to correlate this alleged threat with any of the other misconduct alleged in the further amended statement of claim, all of which is centrally based upon the Farm Lease representations that were allegedly made between December 2003 and December 2006 (see at [11] above). Finally, no attempt has been made to identify any damage that Mr Keenan suffered, or relief to which he (or Coral Coast for that matter) claims to be entitled to as a result of this alleged threat. 49 Apart from the above allegation, the only other mention of the second and third respondents in the further amended statement of claim are in the passages relating to their status as corporations and to their subsequent ownership of the land comprised in the Farm Lease and the Factory Lease (see at [8] above). However, no facts are pleaded to demonstrate why their ownership of that land is in any way connected with any of the allegations made, or any of the relief claimed by Mr Keenan in the further amended statement of claim. There are, therefore, no facts pleaded in the further amended statement of claim that could, if proved at trial, result in Mr Keenan succeeding against either of these two respondents. For these reasons, I consider they are entitled to summary judgment under s 31A of the Federal Court Act on the basis that Mr Keenan has no reasonable prospect of successfully prosecuting this proceeding against them. 50 Secondly, as to the three claims made against the Port Authority, in relation to which I consider it is entitled to summary judgment (see at [47] above), I turn, first, to Mr Keenan's contract claim. To begin with, I have already identified three material facts that are absent from Mr Keenan's pleading of this contract claim: the failure to identify the parties to the contract, the failure to state the time when it was made, and the failure to identify the consideration for it (see at [18] above). Apart from these fundamental deficiencies the claim, as pleaded, relies on two interrelated allegations that are quite irrational. They are that the terms and conditions of this contract constitute the same matters that are alleged elsewhere in the further amended statement of claim, to be representations, namely the Farm Lease representations. More importantly, those terms and conditions (or representations) are alleged, elsewhere in the further amended statement of claim, to be "false, untrue, inaccurate and misleading" (see at [16] above). Taking into account these aspects of this contract claim, I consider it squarely falls into that category of claim that I identified in above (at [44]-[45]) that warrants a summary determination by the entry of judgment under s 31A of the Federal Court Act. Despite three attempts, no real question of fact is pleaded which could at trial result in success for Mr Keenan. Furthermore, the pleaded facts described above "can truly be described as "fanciful … implausible, improbable" or, as noted above, irrational: Cassimatis at [47]. 51 Mr Keenan's negligent misrepresentation claim is in a similar position. It is based upon the proposition that the Port Authority, the counterparty to a proposed contractual relationship with Mr Keenan, at a time when lawyers were acting for both parties to that proposed transaction, owed Mr Keenan a duty of care to advise him on various aspects of the same proposed transaction. In the absence of some special factor that may alter the usual relationship between parties in these circumstances, and none is pleaded, this claim defies commercial reality. It, too, therefore also falls into the same category as identified above justifying its summary determination under s 31A of the Federal Court Act. That is, it, too, is a claim that Mr Keenan has no reasonable prospect of successfully prosecuting. 52 The unconscionable conduct claim is also in a similar position. As pleaded, it relies upon the Farm Lease representations and ss 52A and 51AA of the TPA. As noted above, the Farm Lease representations are alleged to have been made between December 2003 and December 2006. Although the TPA has been superseded by the Competition and Consumer Act 2010 (Cth), it continues to apply to these alleged acts or omissions because they occurred before 1 January 2011: see item (vi) of Schedule 7 to the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth). 53 Section 52A of the TPA no longer exists. It was renumbered as s 51AB in 1992. As well, s 51AA of the TPA did not deal with "predictions" or future matters. Instead, s 51A of the TPA is the section that dealt with such matters. While s 51A, by its terms, only applied to Div 1 of Part 5 of the TPA (see s 51A(1): "for the purposes of this Division"), it was extended to apply to s 51AB by subsection 51AB(7) of the TPA. For the purposes of dealing with this claim, I will therefore assume that the references to ss 52A and 51AA of the TPA in the further amended statement of claim are mistaken references to ss 51AB and 51A, respectively. 54 Nonetheless, even on these assumptions, I consider Mr Keenan's unconscionable conduct claim contains so many fundamental deficiencies that he has no reasonable prospect of successfully prosecuting it and it, too, is liable to be determined summarily under s 31A of the Federal Court Act. I will mention three such fundamental deficiencies. First, by subsection 51AB(5) of the TPA, the unconscionable conduct provisions of s 51AB were limited in their application to goods or services "of a kind ordinarily acquired for personal, domestic or household use or consumption". Nothing is pleaded in Mr Keenan's further amended statement of claim which addresses this limitation. To the contrary, the facts that are pleaded clearly suggest the services in question were acquired for commercial use, namely the aquaculture farm project. 55 Secondly, s 51AB(2) of the TPA sets out a non-exclusive list of matters that a court may have regard to in determining whether or not a corporation has engaged in unconscionable conduct in breach of s 51AB(1). While this list is, as noted above, non-exhaustive, Mr Keenan has not attempted in his further amended statement of claim to identify why the making and falsity of the Farm Lease representations is said to constitute unconscionable conduct whether that be by reference to this list of matters, or otherwise. It follows that there has been no attempt to identify why the making of the Farm Lease representations failed to meet the standards of: "honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests …", and so forth, as discussed by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 at [258]-[300], particularly at [296]. 56 Finally, s 51A, which, as is already noted above, is, by s 51A(7), extended to s 51AB, applies where a corporation makes a representation about any future matter where it does not "have reasonable grounds for making [that] representation". Mr Keenan's further amended statement of claim does not plead any facts which engage this requirement. 57 Based upon this critical examination of the available materials, I am therefore not satisfied that Mr Keenan's unconscionable conduct claim raises any real question of fact that could, if proved at trial, allow him to succeed in this claim: see Cassimatis at [47]. Taking account of this and the factors mentioned above (at [45]), I do not consider Mr Keenan has any reasonable prospect of successfully prosecuting this claim. Accordingly, it should also be summarily determined under s 31A of the Federal Court Act. 58 Finally, I turn to consider Mr Keenan's remaining claim against the Port Authority, namely his misleading and deceptive conduct claim. While that claim suffers from many pleading defects, on balance, I do not consider it demonstrates the same fundamental deficiencies as I have identified above. Rather, subject to the observations I have made below, I consider it manages to plead sufficient of the material facts necessary to allow that claim to remain extant, at least for the time being. Whether Mr Keenan is eventually able to plead it in a form that will allow it to advance to trial is another matter. By that I mean in a form that fairly notifies the Port Authority of the case it has to meet and which, at the same time, satisfactorily identifies the issues of law and fact in a way that will ensure that the trial of that claim is conducted efficiently. In its current form, it achieves neither of these purposes. To put it in that form, it will need to address at least the following matters - this list is not intended to be exhaustive and only includes some of the matters the Port Authority identified during the hearing of this application: (a) While the five documents said to evidence the representations that were made in writing have been particularised (see at [11] above), none of the particular parts of those documents said to constitute the various Farm Lease representations has been identified in the further amended statement of claim. Similarly, the conversations said to evidence the various Farm Lease representations that were made orally have been particularised as occurring over a three year period (see at [11] above) without identifying the particular statements Mr Johnson made that constitute them and when and in what circumstance he made those statements. Once these matters are properly pleaded, it will then be necessary to correlate each of them to one or more of the 12 Farm Lease representations as pleaded. (b) To comply with r 16.43 of the Rules, the facts and circumstances relied upon to establish that the Port Authority held the items of knowledge alleged in the further amended statement of claim will have to be pleaded. For example, the allegation that the Port Authority knew about the conditions of the Funding Agreement: see at [12] above. (c) Since damage is an essential element of a claim for misleading and deceptive conduct under ss 52 and 82 of the TPA, the facts necessary to prove that Mr Keenan was caused damage by the alleged conduct will need to be pleaded with some specificity. Whether those facts are presently pleaded in the further amended statement of claim is debatable: see at [21] above. 59 The final question is whether all of Mr Keenan's further amended statement of claim should be struck out or only a part, or parts, of it. The answer to that question lies in the effects my various conclusions above will have on that document. Because of them, Mr Keenan will need to delete from his further amended statement of claim: most, if not all, of the references to Coral Coast; all of the references to the second and third respondents; and all of the allegations contained in the three claims against the Port Authority upon which I propose to order summary judgment. He will also need to amend that document to address the sorts of defects I have outlined above. Given the extent of these changes, I consider the most efficient course is to order that the whole of the document be struck out and that Mr Keenan be given leave to file a new pleading in its place limited to his misleading and deceptive conduct claim.
Conclusion 60 In summary, for the reasons set out above, I consider that: (a) Mr Keenan's interlocutory application filed 30 July 2015 (i) to bring this proceeding on behalf of Coral Coast pursuant to s 237 of the Corporations Act; and (ii) to join Coral Coast as the second applicant in this proceeding under r 9.05 of the Rules should be dismissed, with costs. (b) Summary judgment should be entered against Mr Keenan in favour of the second and third respondents under s 31A of the Federal Court Act. (c) Summary judgment should be entered against Mr Keenan in favour of the first respondent with respect to his contract claim as pleaded at [32]-[33] of his further amended statement of claim; his duty of care claim as pleaded at [34]-[36] of his further amended statement of claim; and his unconscionable conduct claim as pleaded at [39]-[41] of his further amended statement of claim. (d) The whole of Mr Keenan's further amended statement of claim should otherwise be struck out under r 16.21(1) of the Rules. (e) Mr Keenan should be given leave to file a further statement of claim provided he does so within 28 days. (f) Mr Keenan should be ordered to pay the costs of the second and third respondents in this proceeding and of the first respondent with respect to the claims upon which summary judgment has been ordered in its favour. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.
Keenan
Bundaberg Port Authority
(2013) 220 FCR 256
(2013) 295 ALR 708
(2010) 241 CLR 118
(2007) 160 FCR 298