Meaden v Bell Potter Securities Limited

Federal Court of Australia|2012-04-27|Before: Mr AJ, Edmonds J

Introduction 1 This is an application by the respondent ("Bell Potter") for an order pursuant to s 33N of the Federal Court of Australia Act 1976 (Cth) ("the Act") that the proceedings no longer continue as representative proceedings under Pt IVA of the Act.

Background 2 These proceedings are brought by the applicant ("Ms Meaden") as a representative applicant pursuant to Pt IVA of the Act. Bell Potter is sued based on allegations arising out of its dealings as a stockbroker and, in particular, in relation to broking activities concerning a listed company known as Progen Pharmaceuticals Limited ("PGL"). 3 The proceedings were commenced by application and statement of claim filed on 6 October 2010. Although the application seeks various declarations, in substance the proceedings relate to a claim for damages or, alternatively, equitable compensation, primarily for various alleged contraventions of the Australian Securities and Investment Commission Act 2001 (Cth) ("ASIC Act") and the Corporations Act 2001 (Cth).

"The Group" as defined 12 The Pt IVA group is defined in para 2 of the application and para 2 of the statement of claim in the following terms: "The group members to whom this proceeding relates are all persons who during the period from 13 December 2006 until 5 December 2007 ('Period'): (a) were party to a Financial Products Trading Account Agreement with the respondent ('Bell Potter'); (b) acquired interests in shares in Progen Pharmaceuticals Limited ('PGL'); and (c) as at the commencement of this proceeding have entered into a funding agreement with Litigation Lending Services Limited ACN 129 188 825 and a retainer agreement with Slater & Gordon Lawyers Limited ACN 097 297 400; ('group members')." 13 As the Court concluded in an earlier interlocutory judgment of 24 February 2011 (Meaden v Bell Potter Securities Limited [2011] FCA 136) at [8]: "It can be seen from this definition that the group is, and was at the commencement of the proceeding, a closed group, all members of which must of necessity be known to Ms Meaden's solicitors." 14 Consequent upon that judgment, the Court ordered Ms Meaden to provide particulars, including particulars of the identity of each of the group members. The provision of these particulars has been a slow, but informative, process. Over a period of approximately twelve months, there have been numerous changes in the particulars provided as to the size of the group and the identity of the members of the group, as well as other pertinent matters. At its highest the group comprises 56 individuals, couples and entities; but there are individuals or entities whose membership of the group is problematic (as to which see [57]-[60] below) and the true number of group members (as defined) is, undoubtedly, less than the asserted number of 56.

"The Claimants" as defined 15 The term "the Claimants" is defined in para 5 of the statement of claim as meaning: "The Applicant and each group member (together and severally 'the Claimants')." 16 This definition is significant because it is then used extensively in the substantive allegations from para 5 onwards in the statement of claim. 17 The allegations made in the statement of claim are not, as is sometimes the case in representative proceedings, directed to conduct with respect to the applicant, Ms Meaden, but, without exception, are allegations that Bell Potter engaged in certain conduct with respect to "the Claimants". 18 That is certainly the case with all of the pivotal allegations including: (1) at para 5, that Bell Potter agreed to supply financial services to each Claimant; (2) at paragraph 6, that each Claimant was either: (i) a consumer within the meaning of s 12ED(1) of the ASIC Act; and (ii) a retail client within the meaning of Pt 7.7 of the Corporations Act; (3) at paras 9 and 10, that by entering into specific relationships with each Claimant, Bell Potter came to owe fiduciary obligations to each Claimant; (4) at para 14, that Bell Potter made representations to each of the Claimants, and that those representations were "partly in writing and partly oral"; (5) that those representations are essential building blocks to the other representational cases pleaded, see for example para 15; (6) at para 20, that Bell Potter took no or no adequate steps to disclose to "the Claimants" various matters; (7) at para 24, that Bell Potter impliedly represented to each Claimant certain matters; (8) at paras 41 to 44 in relation to causation, loss and damage for each Claimant; (9) at para 45, that Bell Potter did not take any or any adequate step to warn the Claimants; (10) at para 46, that Bell Potter did not exercise due care and skill in providing financial services to the Claimants; (11) at para 48, somewhat inconsistently, that "the Applicant and each of the group members suffered loss and damage"; (12) at para 49, that Bell Potter took no or no adequate step to inform each Claimant; (13) at para 50, that "in respect of each Claimant" Bell Potter acted in a position of conflict of interest and breached its fiduciary obligation "to the Applicant and each Claimant"; (14) at para 52, that "in respect of each Claimant" Bell Potter profited and breached its fiduciary obligations to "each Claimant"; (15) at para 55, that Bell Potter was required to give certain disclosures to "each Claimant"; and (16) at para 57, that "the Applicant and some or all of the group members suffered loss or damage". 19 It is plain that the allegations as pleaded pertain not only to the applicant, but to the individual circumstances of each and every Claimant. All of the critical allegations in the proceedings are going to necessitate an examination of the individual circumstances of the particular group member to determine whether the allegation is made good. 20 Moreover, despite, for example, the para 6 statement of claim allegation referred to at [18(2)] above that each Claimant was a consumer and a retail investor, the particulars provided by Ms Meaden's solicitors have made good the fact that that is not the case. In the particulars provided it is admitted that at least the following group members are not retail clients: (1) Quatro Financial Services Pty Ltd (in liq) (Schedule A, group member number 3); (2) MDS Tiling Pty Ltd (Schedule A, group member number 4); (3) Christopher Perdis (Schedule A, group member number 6); (4) Technical Investing Pty Ltd as trustee for Technical Investing Super Fund (Schedule A, group member number 23); (5) Cranport Pty Ltd (Schedule A, group member number 31); (6) Tim Star (Schedule A, group member number 40); (7) Mazal Finance Pty Limited (Schedule B, group member number 9); and (8) Lepin Trading Pty Limited (Schedule B, group member number 10). 21 In response, Ms Meaden submitted that the fact that eight members of the group were not retail clients does not as a matter of law, or having regard to the remainder of the claims, take the case outside s 33C(1)(c). With respect, that is not the issue. As indicated at [4] to [11] above, s 33C(1)(c) provides one of the criteria for the commencement of a proceeding under Pt IVA; it has no role to play in relation to the task imposed on the Court under s 33N.

Financial Products Trading Account Agreements 22 Sub-paragraph (a) of the group definition (see [12] above) prescribes, as a qualifying criterion for a group member, that they were a person "who during the period from 13 December 2006 until 5 December 2007…were party to a Financial Products Trading Account Agreement ["FPTA Agreement"] with [Bell Potter]". The particulars given with respect to para 5 of the statement of claim provide: "Each FPTA Agreement is partly in writing and partly to be implied. … A copy of the document as pertains to the Applicant may be inspected by appointment at the offices of the Applicant's solicitors. In so far as it is to be implied each FPTA Agreement is to be implied as set out in paragraph 7 below." Paragraph 7 of the statement of claim provides: "Each FPTA Agreement was an agreement for the supply of financial services in the course of Bell Potter's business, within the meaning of s 12ED(1) of the ASIC Act." 23 It now transpires that no instrument in writing between Ms Meaden and Bell Potter, signed by Ms Meaden, can be produced for inspection. Ms Meaden submitted that the fact that the share trades in PGL were done by Bell Potter on her behalf and that Bell Potter charged her commission, remains undisputed. Further, that this does not affect the entry into the agreement pleaded because it is alleged that it was entered into by a course of dealing. On the other hand, its terms would have to be proved orally. 24 Ms Meaden submitted that even if it is found that some agreements did not arise by a course of dealing, para 5 of the defence admits that 32 group members entered into a FPTA Agreement or a form of agreement, which number is more than sufficient for the purposes of Pt IVA of the Act. Again, with respect, this confuses one of the criteria for the commencement of a proceeding under Pt IVA with the task imposed on the Court under s 33N.

The Alleged Representations 25 Paragraph 14 of the statement of claim alleges that during the period 13 December 2006 to 5 December 2007 (see the definition contained in the definition of "the Group" reproduced at [12] above), Bell Potter had made representations to each of the Claimants valuing the PGL shares at a value significantly higher than the price at which PGL shares were then trading on the ASX ("the Value Representation"); had prepared each valuation using a probability-weighted DCF valuation model, further or alternatively using conservative assumptions ("the Modeling Representations"); and had recommended that each of the Claimants buy PGL shares ("the Buy Recommendations"). The particulars provided that the representations and recommendations were partly in writing and partly oral. Insofar as they were in writing they were contained in 10 "Bell Potter 'Company Update' Reports" bearing dates from 13 December 2006 to 23 August 2007 both dates inclusive and insofar as they were oral, were "communicated to the Applicant … during conversations between the Applicant and an employee of Bell Potter whose name shall be supplied on a confidential basis, on or about each of the dates from December 2006 to May 2007, and August 2007 referred to above, the substance of which was as alleged". 26 Paragraph 15 of the statement of claim alleges that by the Value Representations, the Modeling Representations and the Buy Recommendations, individually and in combination, Bell Potter made five implied representations to each Claimant ("the First Implied Representations"). 27 Bell Potter observed that the further and better particulars provided consequent upon the orders of the Court have made plain that the oral aspects of these representations do not have a high degree of commonality. They depend upon separate conversations, apparently quite different in substance. There are eight Bell Potter representatives who are alleged to have made representations particularised in respect of para 14 of the statement of claim. There are 33 individuals (not including Ms Meaden) who are alleged to have received oral representations. The balance apparently received no oral representations, contrary to the allegation in the statement of claim. 28 Although the particulars in the statement of claim would appear to apply to all Claimants, it is clear that not all Claimants rely on oral representations and that for those who do, the oral representations are different. For example: (1) At first Ms Meaden relied upon no oral representations, but now apparently relies upon oral representations made to her husband, alleged to be her "agent", that the stock would be a "good investment over time and should produce good returns" and that "all indications are that this stock will take off in the Australian market". The representations were made by Mr Richard Meaden of Bell Potter, believed to be Ms Meaden's son; (2) David Azar (Schedule A, group member number 9) relies on no oral representations; (3) Brett Johnson (Schedule A, group member number 10) relies on oral representations that include a representation that "it is going to reach $15"; (4) Peter Cope Pty Ltd as trustee for the Cope Family Superannuation Fund (Schedule A, group member number 11) relies on oral representations including that "PGL wasn't inconsistent with his required risk profile; that it was a very good opportunity to make some serious capital gains"; (5) Haymond Royce Corporation Pty Limited as trustee for the Len David Super Fund (Schedule A, group member number 12) relies on oral representations that "Bell Potter's biotech analyst was very excited about Progen and that it was a really exciting opportunity"; (6) Clare Plumbing Services Super Fund (Schedule A, group member number 25) relies on oral representations that include a representation that "this is a good thing"; and (7) Iatrix Enterprises Pty Ltd (Schedule A, group member number 11) relies on oral representations by Bell Potter that: (i) "biotech stocks were risky, that Mr Koulouris could invest in a few PGL shares, but that he should no [sic] put all of his money there"; and (ii) "PGL had reported that its drug had increased disease free survival rates which was promising". 29 Bell Potter submitted that the trial of Ms Meaden's allegations about oral representations made to her will be incapable of resolving whether these other, quite different, oral representations were made to group members. 30 To the extent that the representations were written, according to Bell Potter there is a further difficulty as they depend upon no fewer than 10 "Company Update" reports spanning in date from 13 December 2006 to 23 August 2007. Whether particular representations were or were not made may depend upon which of those 10 reports had been received and read at that point in time and further, potentially, on what oral representations (if any) had been received at that point in time. According to Bell Potter, this case was not a neat case where a representation is said to flow from a single document sent in identical form to all group members. 31 The allegations in para 25 of the statement of claim (that on or about 5 December 2007 Bell Potter stated to each Claimant that it was moving its recommendation for PGL shares to 'speculative buy' following its introduction of new rating and valuation methodologies) concern statements that were allegedly "communicated orally and in writing". The difficulty, according to Bell Potter, is that on the further and better particulars given, only five individuals in fact had such oral representations made to them. 32 The key allegations of market manipulation in paras 26 and 28 of the statement of claim are dependent upon a series of earlier representations, including the Value Representations, the Modeling Representations and the Buy Recommendations. According to Bell Potter, given the oral aspects of these representations, that is problematic for any common determination. Equally, the number of individual written documents said to form the written part of these representations causes further difficulties. 33 Bell Potter pointed out that the first key allegation of misleading or deceptive conduct in para 30 of the statement of claim is also dependent upon the Value Representations and the Modeling Representations, as well as the First Implied Representations, which are themselves dependent upon all of the Value Representations, the Modeling Representations and the Buy Recommendations. 34 The next key allegation, at para 35 of the statement of claim, is that contrary to the First Implied Representations certain facts were true. Bell Potter again observed that the First Implied Representations were entirely derivative of the Value Representations, the Modeling Representations and the Buy Recommendations. 35 It further observed that the loss and damage alleged in para 41 of the statement of claim is said to have been caused by some combination of conduct, including at least the Value Representations, the Modeling Representations, the Buy Recommendations and the First Implied Representations. 36 Ms Meaden contended that her submissions proceeded on the basis of the written representations and implied representations (but only such as are derived from the written representations) alone, as the oral representations added nothing to the substance of the written representations and are not dealt with as a common issue. The only or principal difficulty with this submission is that the statement of claim is not so framed. Moreover, the statement of the questions of law or fact common to the claims of Ms Meaden and group members in para 59 of the statement of claim is not so confined. Both as to allegations of market manipulation and misleading and deceptive conduct, the questions of law or fact said to be common to both Ms Meaden and group members is not confined by para 59 to allegations predicated solely on written representations, or implied representations derived solely therefrom. 37 Ms Meaden submitted it is settled that differences in the actual terms of statements made to various group members is not a bar to a proceeding continuing as a representative proceeding. Reference was made to what was said by Goldberg J in Williams v FAI Home Security Pty Limited (No. 2) [2000] FCA 726 at [12]: "…It is no bar to such a representative proceeding that the claim is brought in respect of representations founded in different conversations made to different members of the class. The threshold criterion is satisfied if the representations, albeit not in the same terms, are directed to substantially the same matters. … The relevance of that observation, for present purposes, is that notwithstanding the need for allegations to be formulated in sufficiently precise terms to enable a respondent to understand the case it has to meet, there needs to be some leeway allowed where there have been representations made to various persons of a particular class in circumstances where there will be a divergence in the actual words by which the representations were conveyed. So long as the representations are directly linked to a sufficiently defined subject matter and are to the same effect, a pleading should be allowed to stand even though there may be some differences in the actual words spoken to each group member." 38 But Williams was not a s 33N application and what his Honour said at the passage reproduced from his reasons has no relevance to the task imposed on the Court under s 33N. 39 The other authority referred to by Ms Meaden, TMAC Pty Ltd trading as Northstar Property Services v Thomas Ford Trading Pty Ltd trading as Fresh Telecoms [2010] FCA 445 at [22] per Cowdroy J, whilst concerning a s 33N application, contributes nothing to a resolution of the issue at hand. 40 Ms Meaden submitted that each of the Value Representations, Modeling Representations and the Buy Recommendations pleaded were written and contained in the Company Updates particularised at para 14 of the statement of claim. True, she submitted, that some group members additionally received oral representations, but each received the written version of these representations and recommendations. 41 With respect, this elides the difficulties raised by Bell Potter and referred to in [30] above, arising out of the number of reports that are alleged to contain such written representations, said to be no fewer than 10; the temporal period over which such reports were issued, said to be from 13 December 2006 to 23 August 2007; which of the 10 reports were received and read at that point in time; and the time of acquisition of the PGL shares, it being common ground that Ms Meaden acquired all her PGL shares by two transactions on 14 December 2006. Only the first of the reports in point of time could have been received by her prior to her acquisition of the PGL shares, a fact which hardly provides a representative context for all other written representations alleged to have been made to and received by other group members by the issue of the balance of the reports over the period.

The Underwriting Case 42 The lack of contemporaneity between Ms Meaden's acquisitions of her shares in PGL in December 2006 and the case made against Bell Potter in respect of its alleged silence as to its proposed role as an underwriter of PGL's capital raising from 10 May 2007 until 20 June 2007 (paras 17-20 of the statement of claim); and its alleged silence as to its obligations as such an underwriter and the conflicts of interest that were thereby created for it (paras 21-24 of the statement of claim) are said to make Ms Meaden a totally inappropriate vehicle to adjudicate the impact of these alleged misrepresentations by silence. 43 According to Bell Potter, Ms Meaden does not appear to have any case based on these issues because: (1) She does not appear to have acquired any PGL shares after the capital raising the subject of the underwriting; (2) she did not acquire shares as part of the sub-underwriting placement; and (3) there is even a dispute that she was a client of Bell Potter's at that time. Put shortly, it was said that the adjudication of Ms Meaden's case will do nothing to resolve whatever liability Bell Potter has, if any, arising out of the allegations of silence in relation to the underwriting issue. 44 In response, Ms Meaden pointed to the pleading at para 43 of the statement of claim, in particular, sub-para (ii). Para 43 provides: "Further and in the alternative, the contraventions alleged in: (a) paragraph 29; (b) paragraph 33; (c) paragraph 37; further or alternatively (d) paragraph 40; were a cause of each Claimant: (i) acquiring PGL shares: (1) using their own funds; or (2) using loan funds obtained for the purpose, including loan funds obtained under margin loan facilities arranged by or to the knowledge of Bell Potter; further or alternatively (ii) retaining PGL shares already acquired." (Emphasis added.) 45 Paragraph 43 was particularised in the statement of claim in the following terms: "The Applicant received and had regard to Value Representations, the Modeling Representations and the Buy Recommendations in deciding to acquire PGL shares during the Period, and in deciding thereafter to retain the shares despite declines in the trading prices of the shares." (Emphasis added.) Although this adds little to the formal pleading other than being specifically directed to Ms Meaden. 46 It was submitted on her behalf that even though Bell Potter's 2007 conduct post dated her acquisition of PGL shares, that conduct will still have to be determined in her case and dealt with because her claim is not only that she was misled in the valuations in acquiring the shares, but also that she was misled, or by reason of misleading conduct, she retained the shares already acquired. Therefore, it is said that a representation post her acquisition which is relevant to all other Claimants is one which is necessarily involved in determining her claim. 47 But with respect, the submissions made on Ms Meaden's behalf miss the point. What is put against her, with which I totally agree, is that the non-disclosure alleged in para 20 (called "the pre-June Underwriting Silence") and the non-disclosure alleged in para 23 (called "the post-June PGL Obligations Silence") giving rise to the alleged implied representations in para 24 (called "the Implied Representations as to Conflict") will not be adjudicated on in her case for the simple reason that it is not pleaded that the alleged non-disclosures in relation to the underwriting agreement entered into in April or May 2007 had any impact on her decision to retain the PGL shares; and that is not surprising. Indeed, what would be surprising is if, in the case of Ms Meaden, who had not been a client of Bell Potter since the time of, or shortly after, her acquisition of the PGL shares in December 2006, it was pleaded that the pre- and post-June 2007 non-disclosures referred to in paras 20 and 23 of the statement of claim had that impact. 48 That aside, it is one thing to allege that there was a causal connection between an on-going retention of shares and some 2007 non-disclosure, and a completely different thing to allege the non-disclosure had a causal connection with a contemporaneous act of acquisition. A finding on the former circumstances would not necessarily cross over for the latter, and that is what one would need to be satisfied on having regard to the binding effect of s 33ZB of the Act.

Other Matters 49 According to Bell Potter, the claimed "breach of statutory warranty" in para 45 of the statement of claim is first dependent upon an agreement, the FPTA Agreement, which, if it exists, is not common to all group members; and further, that the alleged breach is a failure to "take any or any adequate step to warn the Claimants" about various matters. That of necessity requires an individual analysis of what Bell Potter did not do vis à vis each individual Claimant. For Ms Meaden it was submitted that it is not an impediment to the bringing of a representative action that there needs to be independent consideration of such issues. So much may be conceded, but again this confuses a criterion for commencement and the task of the Court under s 33N. 50 Equally, at para 49 of the statement of claim, it is alleged that Bell Potter took "no or no adequate steps to inform each Claimant" of certain matters. According to Bell Potter, that can only be resolved by an individual analysis of the circumstances of each Claimant. 51 The allegation at para 55 of the statement of claim concerns whether Bell Potter was required to give individual Claimants an additional Financial Services Guide, and whether it in fact did so. According to Bell Potter, that again depends upon an individual by individual analysis. 52 Bell Potter argued that, given the fundamental nature of the Value Representations, the Modeling Representations and the Buy Recommendations to the case as a whole, the lack of commonality between the Claimants in relation to those key representations renders the proceeding one that is ill-fitted to determination on a representative basis. 53 Section 33H(l)(c) of the Act requires the originating process to specify the questions of law or fact common to the claims of the group members. This obligation was discussed by Lindgren J in Bright. After criticising the originating process in that case for failing to specify "questions" (at [13]), his Honour said at [14]: "Careful compliance with this requirement is of the greatest importance. Its purpose is to elicit the identity of questions, the answering of which in the representative party's claim can be expected also to perform the useful purpose of answering them in the claims of the represented parties." (Emphasis added) 54 The application and statement of claim purport to list the common questions of law or fact said by Ms Meaden to arise in this case. It is convenient to refer to those in the statement of claim at para 59, although the questions listed in the application are identical in form. Bell Potter argued that the purported common questions are cast at such a high level of generality that they serve only to obscure rather than elucidate the true issues that will need to be tried by the Court. 55 Upon an analysis of each of those proposed common questions, Bell Potter argued that the trial of Ms Meaden's case will be incapable of disposing of any of those questions on a common basis. The only exception might be questions 59(c)(ii) and (iii), 59(d)(ii), 59(e)(iii) and 59(f)(ii), which pose questions about the correct method of calculating or quantifying loss but, absent concrete findings on antecedent factual questions, these questions would be entirely hypothetical and incapable of a proper answer. 56 Bell Potter further submitted that there are (highly) contentious factual matters contained in the affidavit of the applicant's solicitor, Mr Van Moulis. In particular, it referred to the answer given by Mr Van Moulis to the proposition that the representative proceeding will not provide an efficient and effective means of dealing with the claims of all group members; namely, the provision of some information about a small minority (that is, eight group members). Bell Potter submitted that, with respect, it is of limited assistance to the exercise of discretion called for by s 33N to focus merely on a small minority. 57 According to Bell Potter there is reason to apprehend why an approach that looks to the whole of the class is eschewed; it seems quite plain that some at least of the putative members on no view should ever have been included. The case of Richard Azar is said to exemplify and support this submission. The applicant's solicitors alleged that he acquired 1900 shares at $7.18 on 20 March 2007 for $13,642. There were only 78 trades of PGL shares on market on that day. There were eight when Bell Potter was the broker for the buyer. None of those eight traded at $7.18. None of those eight trades, either individually or as parcels, could result in an acquisition of 1900 shares. 58 Bell Potter had no record of any PGL trades on behalf of Mr Azar. 59 However, a different broker, CCZ Statton Equities Stockbrokers, bought two parcels of shares (400 and 1500), both priced at $7.18, at 12.08 pm and 13.56 pm. As a matter of arithmetic certainty, the only way that any person could have acquired a parcel of 1900 shares of PGL at $7.18 on 20 March 2007 on market was if he or she used CCZ Statton Equities Stockbrokers. 60 It is not clear what information was provided to Ms Meaden's solicitors by their client Mr Azar in order to advance the case that has been advanced to date, but it is clear that in many cases, even though there should be no dispute as to when, and at what price, and through what broker, shares were sold, there have been erroneous claims made. Mr Azar is not an isolated case: reference was made to the affidavit of Hugh Robert Scott sworn 16 February 2012 (Ex 3 on Bell Potter's application) at paras 22-57, dealing with Jadwiga Maj, Anne Azar, Michael Azar, Andre Guichon, Andrew George, Woodvest Pty Limited, Sarah and Tim Conquest as well as Richard Azar. 61 In response to the matters raised by Bell Potter in [56]-[60] above, Ms Meaden submitted that the criticism of Mr Van Moulis was unjustified; the statutory requirement for a representation proceeding under Pt IVA prescribed in s 33C(1) of the Act is only seven persons. This again confuses a statutory criterion for commencement with the task of the Court under s 33N. 62 Ms Meaden accepted that of the persons named in [60] above: (1) the following had Bell Potter accounts, received the written and implied representations but did not buy PGL shares through Bell Potter - (i) Jadwiga Maj; (ii) Andre Guichon; (iii) Woodvest Pty Limited; and (2) the following did not have Bell Potter accounts and will not be pursued in these proceedings by way of any future amendment - (i) Richard Azar; (ii) Anne Azar; (iii) Andrew George; (iv) Sarah and Tim Conquest. 63 As to the members in [62(1)] above, Ms Meaden said that no amendment was required to para 43 of the statement of claim but accepted that leave will be required to amend para 41(e)(i) of the statement of claim to make clear that these persons purchased PGL shares from another broker by simply adding the following bolded words: "(i) clients of Bell Potter, including the Claimants, instructing Bell Potter or others to place orders…" 64 In any event, said Ms Meaden, all these matters are not of themselves sufficient to deny the remainder of the group members access to the provisions of Pt IVA of the Act. Again this exemplifies the confusion previously referred to on a number of occasions throughout these reasons.

Conclusion 65 The entire theory of Pt IVA representative proceedings is that the trial of one representative action will determine for all group members the common question or questions. The efficacy of that process depends upon true commonality of issues. Any determination will ordinarily bind all group members, other than those opting out, see: s 33ZB(b). I agree with the submission of Bell Potter that the fundamental problem with this case is that it is impossible to see how the trial of an action based on evidence from and concerning only Ms Meaden will determine any issue of sufficient significance to render it a process that has any real utility. There is such a lack of commonality that any determination of Ms Meaden's claim would offer no real guide as to how the balance of the claims by the Claimants would be determined were they to proceed to be determined individually. 66 There are 282 separate alleged share transactions for all group or potential group members (or 268 when the members who do not fall within the definition are excluded). 67 There are at least 10 separate reports issued over the 12 month period each of which is alleged to give rise to the same representations and upon which each group member is alleged to have relied in making their separate purchases and choosing not to sell. Although it is pleaded that each group member received and relied on all of the reports, that is in issue. 68 There are a number of oral statements alleged to have been made separately to a minority of individual group members over the period, said to give rise to the same alleged representations notwithstanding the different content of the statements alleged. The effect of those statements, if established, will turn upon their timing, whether they were accompanied by all or any of the reports, as well as the state of mind of the investor. 69 Following such a trial on Ms Meaden's case, there would be a necessity for individual appearances by all remaining group members under s 33R to determine their remaining individual issues. That process, following a contest on so-called common issues, would not lead to a proceeding very much different than if all the asserted group of 56 and Ms Meaden simply proceeded to advance their individual claims concurrently in the one proceeding. 70 Allowing the proceeding to continue as a Pt IVA proceeding will be productive of only difficulty and delay. 71 The foregoing considerations aside, it is clear, in my view, that Ms Meaden is a totally inappropriate vehicle to be the representative of the group in relation to non-disclosure allegations concerning the underwriting proposal and the obligations assumed by Bell Potter thereunder, for the reasons canvassed at [42]-[48] above. 72 In my view, both grounds (c) and (d) of s 33N(1) are, therefore, made out and I am satisfied that it is in the interests of justice that the proceeding no longer continue under Pt IVA of the Act. 73 I will hear the parties on costs at the time of publication of these reasons or, if that is not convenient, at a mutually convenient time. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Australian Securities and Investment Commission Act 2001(Cth)s 12ED(1)

Federal Court of Australia Act 1976(Cth)ss 33C, 33N, 33ZB, 33H, 33R

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