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[2003] FCA 1004
Federal Court of Australia
2003-09-23
Carr J
Original judgment source is linked above.
the applicant's contentions 58 The applicant submitted that the amendment should be allowed because it was not shown to be futile or manifestly hopeless with no chance of success, nor would it cause substantial injustice. The applicant relied upon the observations made in the majority judgment in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533. 59 The applicant also relied upon a decision of a Full Court of this Court, Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 at 123-124. In that case the Court held that the time limited for bringing claims under s 82 does not exclude the possibility of a claim for damages under s 87 outside that time, if the damages are claimed in proceedings other than under s 82. The grant of relief by way of damages in such a case was discretionary. 60 It was not necessary for the applicant, in order to obtain an injunction under s 80 of the Act, to establish that the third respondent intends to engage again, or to continue to engage in misleading conduct - see s 80(4)(a). Nor was it necessary, in order for the applicant to obtain relief under s 87 for it to be granted an injunction under s 80. The justification for at least applying for an injunction against the third respondent was that it was directly involved, so the applicant alleges, in the promotions of these mass-marketed schemes. It was guilty of misleading or deceptive conduct and was not just an agent. 61 The grant of an injunction against the third respondent would, so the applicant submits, signify the Court's disapproval of the misleading or deceptive conduct engaged in by the third respondent. As I have mentioned earlier, the applicant did not concede that the limitation period had expired.
my reasoning 62 I have some doubts (and this applies to the objections of the other respondents) whether the prayer for relief is so much part of the statement of claim as to be susceptible to striking out on the usual pleading grounds. The matter was not addressed in argument, so I proceed on the basis that it may be so susceptible. In any event, there is the matter of proposed amendments to the application. 63 In my opinion, I should not form any view about whether any relevant limitation period has expired. I note the arguments put by counsel for the applicant to the effect that time is still running. I do not think that such evidence as is before the Court at this stage is sufficiently clear to determine that question: see Wardley Australia Ltd at 533 and Mayne Nickless Ltd at 118. 64 I do not think that the applicant's proposed amendments, so far as the third respondent is concerned, are so devoid of merit as not to be allowed. Nor do I consider that (even if the limitation period has expired) they would amount to an abuse of the Court's process. 65 The Full Court's explanation in Mayne Nickless Ltd about the time for bringing an application under s 87(1) of the Act enlarges the choices of relief potentially open to an applicant. I do not think that there would have been any substance in the third respondent's objections if the applicant had initially in his statement of claim pleaded this injunctive relief as a basis for a claim under s 87 from the outset. The fact that he seeks to do so by way of an amendment does not, in my view, in the present circumstances make any difference.
Conclusion 66 For the foregoing reasons there will be orders that the applicant have leave to amend the application and the statement of claim in terms of the respective minutes lodged on 6 June 2003. In the notice of motion the applicant sought an order that costs be in the cause. I will hear the parties on the question of costs of the motion. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Carr.
Associate: Dated: 23 September 2003 Counsel for the Applicant: Professor J O'Donovan
Solicitors for the Applicant: Messrs Gadens, Lawyers
Solicitors for the First Respondent: Messrs Jackson McDonald
Solicitors for the Second Respondent: Messrs Versace & Co
Counsel for the Third Respondent: Mr P C Doherty
Solicitors for the Third Respondent: Messrs Minter Ellison
Date of Hearing: 15 August 2003
Date of filing of last submissions: 3 September 2003
Date of Judgment: 23 September 2003
Lean
Tumut River Orchard Management Ltd
factual and procedural background 2 This matter has already been the subject of an interlocutory judgment, delivered on 28 March 2003, in respect of a motion to strike out the statement of claim: Lean v Tumut River Orchard Management Ltd [2003] FCA 269. The following descriptive paragraphs are taken largely from that judgment. 3 At the material times the first respondent was the registered proprietor of land at Coonabarabran in New South Wales and Mundubbera in Queensland on which it carried on and managed orchards of peaches and nectarines for the purposes of investment schemes. Those activities were conducted pursuant to the terms of two investment deeds ("the Investment Deeds") and two prospectuses ("the Prospectuses") which had been issued under the terms of the Investment Deeds. 4 On 28 April 1999, the first respondent went into voluntary liquidation. Messrs Maxwell William Prentice and Vince Christopher Barilla became joint liquidators pursuant to s 446A(4)(a)(ii) of the Corporations Law. 5 On 20 November 2002 I gave leave, under s 500(2) of the Corporations Act 2001 (Cth), to the applicant to commence proceedings against the first respondent - see Lean v Tumut River Orchard Management Ltd [2002] FCA 1419. The principal application in this matter is the proceeding brought pursuant to that leave. 6 The application is brought by the applicant as a representative action under Part IVA of the Federal Court of Australia Act 1976 (Cth) on his own behalf and as a representative party on behalf of the group members described in paragraph 2 of the application and paragraph 3 of the statement of claim in which latter paragraph seven persons are named as being group members. 7 In summary, the matters pleaded by the applicant in the statement of claim are as follows. The applicant and the other group members entered into contractual arrangements with the first respondent with a view to investing in two schemes (one in respect of the first respondent's New South Wales property and the other in respect of the first respondent's Queensland property - each respectively described as "the Project") to produce and market peaches and nectarines. Those arrangements included: · a licence agreement ("the Licence Deed") under which the first respondent granted a licence to an investor ("the Grower") to occupy a farming allotment; · a farming agreement ("the Farming Agreement") whereby the first respondent undertook to cultivate and harvest the fruit trees; and · Investment Deeds entered into between the first respondent and a trustee company (a different trustee company in relation to each Project) on behalf of the Growers. 8 Some of the Growers ("the Borrowers") took up the offer of a loan ("the Investor Loans") to meet their financial commitments under the Licence Deed and the Farming Agreement. The agreements in respect of those loans are known as "Investor Loan Agreements". 9 The applicant alleges that in brochures (one in respect of each Project) published by the first respondent and in a document described as a "Project Summary", copies of which were distributed on its behalf by the third respondent at "seminars", the first respondent made certain representations to the applicant and the other group members. In the brochures the representations were said to have been as follows: · that the information provided in the brochure gave a summary that exactly reflected the information contained in the Prospectus; · the Growers would be required to pay the operating costs attributable to their allotments out of the gross sale proceeds of the fruit produced by the Project which operating costs included the cost of harvesting and marketing; and · the borrowers would be required to "pay the first two interest payments and the minimum principal repayments" required by the terms of the Investment Loan Agreements but that all other payments would be made from income derived from the investor's orchard. 10 The brochure in relation to the Coonabarabran Project, so it is pleaded, contained a further statement that the Grower's liabilities, apart from the subscription price, would be limited to the income derived from the investor's orchard. The brochure in relation to the Queensland Project, again so it is pleaded, contained a further statement that "if these payments are made as and when due" the Grower's liabilities, apart from the subscription price, would be limited to the income from the investor's orchard. 11 The applicant alleges that the Project Summary stated that the investment in the Project was a non-recourse loan and that the investors would have no personal liability for principal or interest payments. 12 The applicant alleges that publication of the statements in the brochures and in the Project Summary constituted conduct which was misleading or deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Act"), because contrary to the express and implied representations summarised above, the various agreements exposed the group members to personal liability in respect of Harvesting and Marketing Costs (a defined term) and the loans are recourse loans. 13 In a related, but distinct, claim the applicant sues the first respondent for damages for breaches of the Farming Agreements. Leave to commence proceedings (referred to above), in relation to the breach of contract claims, was confined to the commencement of proceedings with liberty to apply further. 14 In the statement of claim the applicant pleads that by a series of agreements, dated between 1 September 1997 and 31 August 2001, the rights of the first respondent under the Investor Loan Agreements, the Licence Deed and an amending deed in respect of each Project ("the Amending Deeds") were assigned to the second respondent which is a finance company dealing in debt recovery. The applicant pleads that the second respondent is in the course of suing approximately 30 of the group members in Local Court actions in New South Wales for Harvesting and Marketing Costs, interest and legal costs. 15 The applicant pleads that as a result of the first respondent's misleading or deceptive conduct the group members have incurred or may be likely to incur loss or damage which is particularised as including demands made by the second respondent and the proceedings in the Local Court in New South Wales. There are other particulars of loss, including the possibility of accelerated liability to repay the principal and interest under the Investor Loan Agreements. 16 The relief which the applicant seeks (at present) includes damages pursuant to s 82 of the Act against the first and third respondents for misleading or deceptive conduct and against the first respondent for unconscionable conduct. 17 The applicant claims against the second respondent that if the second respondent acquired the first respondent's rights under the Investor Loan Agreements and the Licence Deeds and the Amending Deed, those rights are subject to any rights of set-off that are available to the group members against the first respondent. The applicant seeks declarations that the group members are entitled to an equitable set-off or a statutory set-off under s 533C of the Corporations Act against the first respondent and that the second respondent takes its rights under what are described as "the alleged assignments" from the first respondent or intervening parties subject to the group members' equitable set-off against the first respondent. [The description in this paragraph includes some non-controversial proposed amendments.] 18 In the application and in the statement of claim the applicant originally sought declarations that: "(i) the Group Members are not personally liable for the Harvesting and Marketing Costs; (ii) the Investor Loans are non-recourse loans; (iii) the Group Members have not committed an event of default within clause 4.1 of the Investor Loan Agreement by: (1) ceasing to carry on the Farm Business [another defined term]…; (2) making default in the observance or performance of any obligation contained in the Investor Loan Agreements or in Any Security (sic) or on any other account or transaction between the Lender and the Borrower under the Investor Loan Agreements as a result of a failure by the Borrowers to pay the Harvesting and Marketing Costs or any instalment of principal and interest apart from the Borrowers' original subscriptions to the Project; or (3) any Security becoming enforceable according to its terms as a result of a failure by the Growers to pay the Harvesting and Marketing Costs or any instalment of principal and interest apart from the Borrowers' original subscriptions to the Project. (iv) the Farming Agreement may not be terminated on grounds that the Group Members have failed to pay the Harvesting and Marketing Costs or on other grounds attributable to the First Respondent's breaches of contract …; (v) the Group Members are entitled to an equitable set-off against the First Respondent; and (vi) the Second Respondent takes its rights under the alleged assignments from the First Respondent or intervening parties subject to the Group Members' equitable set off or statutory set off against the First Respondent;" 19 The applicant seeks orders for certain refunds to be made by the first respondent. He also seeks injunctions against the second respondent restraining it from making demands or instituting or continuing legal process or any enforcement process against the group members under the agreements, restraining it from disposing or dissipating any funds collected by it from group members and from enforcing any Security (another defined term). The applicant also seeks an order for the refund of moneys from the second respondent.
(1992) 175 CLR 514
(2001) 114 FCR 108